Talk Back

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

President Barack Obama faces three daunting challenges–jobs, deficits and re-election. His actions reveal he places a second term ahead of fixing the economy and federal finances.

If Obama runs on the economy, he loses. Too many voters are unemployed, underemployed, standing discouraged on the sidelines, or watching their paychecks dwindle for Obama to win. And most voters recognize, had President Obama’s economic policies permitted the economy to grow as it should, deficits in Washington and state capitals would be much more manageable.

If he runs on handling the financial crisis, he loses. He inherited a mess, but trillions in bailouts for Wall Street, Chrysler and GM rewarded the best-paid white collar and blue collar workers for lousy management and worse, while the other 98% watch their paychecks shrink in value. Now charges of fraud in his solar energy program and revelations about White House management dysfunction cast a president lacking judgment and leadership qualities.

On both jobs and the deficit, the president seeks to present a sharp contrast with his eventual GOP rival premised on “fairness”–presenting himself as guardian of the working family, and his prospective Republican opponents as champions of privilege.

An additional $447 million in stimulus and tax cuts, over two years, if spent smartly, could create about 2.5 million jobs for that period. However, he proposes paying for teachers by cutting aid to states for health-care workers and that won’t create many jobs. Extending the payroll tax holiday for the middle class by taxing those who earn over $200,000 only adds marginally to new spending and few jobs. Continue reading…

These are the views of Thomas Lam, group chief economist at OSK Group/DMG & Partners:

Clearly, financial markets thirst for clues from the prepared remarks of Chairman Bernanke and President Obama on Thursday. But the reality of the situation is that policy recommendations from the president and chairman are not likely to sail through without hurdles and bumps.

Given the earlier extension of the September FOMC meeting to two days to allow for more collective discussions, it was apparent that Bernanke was unlikely to litter meaningful hints in his speech roughly two weeks prior to the meeting. Indeed, the latest speech from Bernanke more or less mirrored the gist of the August FOMC minutes and his Jackson Hole remarks about two weeks ago. The most likely outcome is for the FOMC to embark on some type of asset maturity extension, perhaps by raising and flexibly targeting the average maturity of the Treasury portfolio, together with additional guidance on the future level of overall security holdings (while maintaining the size of the balance sheet) at the September meeting. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

President Obama’s budget deficit task force is clever politics but poor leadership.

Instead of drafting a responsible budget, he seeks to force Republicans to endorse wasteful spending and higher taxes, or be cast as obstructionists.

President Bush was no model of austerity. He inherited a $263 billion surplus from Bill Clinton. By fiscal 2007, the year before the Great Recession, the deficit was $161 billion.

Bush’s foolishnesses started with unnecessary increases in farm subsidies and ended with a TARP that bailed out the banks without imposing needed reforms.

Bush and a Democratic Congress instigated economic collapse by appeasing China on trade, neglecting the cost of imported oil and permitting Americans to borrow profligately to finance a resulting trade deficit exceeding $700 billion.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

In politics, whatever the president can get voters to believe becomes the truth, but in economics the numbers establish the facts.

Unfortunately for President Barack Obama, Americans can add, and their sums are destroying fantasies the president would hoist upon a more gullible public.

Despite claims that the $787 billion stimulus package and bank bailout averted calamity, the U.S. economy is in shambles.

The Commerce Department reported gross domestic product grew 5.7% in the fourth quarter, but 60% of that was an accounting adjustment. Businesses ran down inventories at a slower pace, but in the arcane world of GDP accounting, that scores an increase in investment and growth.

Domestic consumption and real investment, which define the sustainable pace of economic expansion, contributed a paltry 1.8% to growth. That’s less than half of productivity growth, indicating more pink slips are coming.

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These are the personal views of David M. Walker, former U.S. comptroller general from 1998-2008, president and CEO of the Peter G. Peterson Foundation, and author of “Comeback America”:

It’s been over 10 months since President Obama held a Fiscal Responsibility Summit in the White House. During 2009, we saw a huge amount of increased federal spending, some of which was “emergency” spending designed to stimulate the economy and address several housing and financial services related non-business cycle challenges. There have also been a number of unprecedented federal government interventions (e.g., General Motors) and various proposals to expand the size of government, especially in the health care area. In addition, based on the fiscal 2009 and 2010 annual appropriations bills, the level of annual “discretionary” federal spending will increase by more than 20 percent over fiscal 2008 levels.

At the same time, there has been no meaningful progress to establish a process that will enable us to address our nation’s huge and growing structural deficits and increasing debt levels.

Increasingly, Americans are not just focused on today, they are also concerned about what tomorrow may bring. They are fearful that life for their children and grandchildren may not be as good as theirs has been. They know that business as usual in Washington is unacceptable and they want to see more action in connection with a range of key sustainability challenges that serve to threaten our collective future. Continue reading…

These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

You have to admit President Barack Obama obfuscates embarrassing facts and pays off his supporters as well as any politician since Huey Long.

He slams health insurance companies, while endorsing heath-care reforms that would compel 30 million more Americans to buy their policies or face a poll tax.

Now he slams the bankers for paying themselves $140 billion in bonuses.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

White House chief economic adviser Lawrence Summers has declared the recession over, but as with most things economic, the opinion you get depends on whom you ask.

Seven million families are behind on their mortgages and at risk of foreclosure, and 25 million Americans wanting full time work can’t find it. I doubt many of them would share Summers’s rosy assessment of the business climate.

In the third quarter, the economy did manage to grow by about $90 billion, and Wall Street banks are divvying up $140 billion in year-end bonuses on the back of $280 billion in new profits.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

The trade deficit, new home-buyer tax credits and Federal Reserve support for the mortgage market threaten a double-dip recession.

More than anything, U.S. businesses need customers–people buying American-made goods and services–to hire workers and continue the economic recovery.

Money spent on imports of Middle East oil or Chinese coffee makers cannot be spent on American products unless those dollars return to purchase U.S. exports.

Thursday, the Commerce Department is likely to report that imports of goods and services exceeded exports in October by about $35 billion–a $420 billion annual pace.

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These are the personal views of Peter Morici, a professor at the University of Maryland’s Robert H. Smith School of Business and former chief economist at the U.S. International Trade Commission:

U.S. workers face a jobless recovery and more stimulus spending won’t fix what’s broke.

Unemployment fell to 10% in November, but progress was achieved only because 291,000 more adults did not look for work and were not counted in the monthly tally of jobless Americans.

Though job losses were trimmed, the footprint of the $789 billion dollar stimulus package was not to be found. Construction, despite an uptick in housing starts, shed 27,000 jobs, and governments added a paltry 7,000 new workers.

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WASHINGTON — The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: The $700 billion financial rescue.

The administration wants to keep some of the unspent funds available for emergencies, but is considering setting aside a chunk for debt reduction, according to people familiar with the matter. It is also expected to lower the projected long-term cost of the program — the amount it expects to lose — to as little as $200 billion from $341 billion estimated in August.

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