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:

If the U.S. government shuts down, the Republicans will likely get the blame but the American people will be the losers.

Federal finances are in a shambles and in need of radical overhaul. President Barack Obama’s budget ignores this; however, with a shutdown, he will be able to tar Republicans as ideologues, steal the initiative on spending and taxes, and leave his successor with a mess.

From 2007, the last full year before the financial crisis, to 2011, the second year of recovery, spending has jumped $1.1 trillion–40%. The president’s budget plan would trim the deficit to $774 billion by 2022, but his projections have been rejected as too optimistic by private economists and political analysts of all stripes–he assumes cost savings and new revenues from health-care reforms that are unlikely to materialize and a 4% economic growth through 2014, which few private economists endorse.

Most legitimate deficit reductions the president’s budget accomplishes are through higher taxes on the wealthy, and a new interest and dividend tax that will likely drive business investment and personal wealth offshore.

Higher taxes are not the answer. In 2011, spending is projected at $3.8 trillion and revenues at $2.2 trillion. A 50% increase in all taxes and fees–personal income, Social Security, Medicare, and corporate taxes, entry fees into national parks and the like–would leave the deficit at $560 billion. Even if phased in over several years, such a dramatic increase in taxes and fees would send the economy into a depression from which it would never recover.

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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 economic consequences of a U.S. government shutdown can’t be calibrated on a spreadsheet with an economic model. It all depends on who wins public opinion–Congressional Republicans or the president and Democrats.

Federal spending is out of control. From 2007, the last full year before the financial crisis, to 2011, the second full year of economic recovery, spending has jumped $1.1 trillion, 40%, when a $200 billion increase would have satisfied inflation.

For any other country, a deficit exceeding 10% of gross domestic product would force austerity by sending interest rates on government bonds through the roof. Alas, the U.S. prints the world’s currency–the dollar–so it can inflate its way to solvency, and the bond market is starting to take that bet.

Enter the Tea party, that troublesome bunch of youngsters pushing elder Republicans to stand up for fiscal solvency, end the madness or halt funding for the government.

Closing federal offices for a few days will have not a great, lasting impact. On reopening the checks will go out. What counts, though, is whether the newly elected conservative majority in the House of Representatives keeps its mandate as measured by the polls.

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These are the personal views of Mike Splinter, president and chief executive officer of Applied Materials:

On the horizon is the next great global industry, and “American Power Act,” the climate and energy bill introduced by Sens. John Kerry (D., Mass.) and Joe Lieberman (I., Conn.), is an important first step in making this happen. If we make the right decisions today, the country can be the beneficiary of what I believe will be the biggest creator of jobs and economic development this century–energy technology– innovative technologies that will revolutionize the energy landscape. The proposed legislation would use market-based solutions to establish a price for the carbon we emit and drive a real commitment to renewable energy in this country.

These kinds of policies would help spur the energy technology industry in the U.S. and build the foundation of a long-term economic engine, much like the space program did for integrated circuits in 1960 when two government programs, the Minuteman missile and the Apollo space program, jump started today’s $300 billion semiconductor industry. They will help create scale, which will drive down prices, expand access and ultimately create a low-cost domestic energy industry that will solve the environmental, national security, economic challenges we face today.

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   By Suzanne Barlyn
   A DOW JONES NEWSWIRES COLUMN

NEW YORK (Dow Jones)–It’s getting trickier for federal lawmakers to oppose a fiduciary standard that would protect the retail investor, especially when their sympathy now extends to the institutional investor.

Recent legislative proposals would establish a fiduciary duty for brokers who advise certain institutional investors, mainly states, municipalities and public pension funds. That is, those brokers would have to act in these investors’ best interests.

The initiatives stem from the recent Goldman Sachs mortgage derivatives case and the company’s insistence that it did not need to take the side of “sophisticated institutional investors” to whom it sold risky products. Civil fraud charges were filed last month against Goldman Sachs Group Inc. (GS) by the Securities and Exchange Commission and high-profile hearings by a Senate panel put the company’s executives in an unpleasant spotlight.

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These are the personal views of Anthony Accetta, a former assistant U.S. Attorney in New York:

In the classic three-card Monte game, the hustler puts out three cards in plain sight, shows the victim one of the cards with a quick swipe and a wink, and then slips the cards in and out, ’round and ’round, in a blurring whirl of activity, until the target card is lost forever. The hustler makes his living by knowing the victim will never find the real card.

The Senate Permanent Subcommittee on Investigations, led by Sen. Carl Levin (D-Mich.), is in the process of sending the mortgage fraud card ’round and ’round.

The Senate Subcommittee has defined the Goldman Sachs card as being whether Goldman “bet against its customers” and made money by selling securities backed by bad mortgages short in its own portfolio, while selling the same securities on the open market without disclosing its bet that the securities would decrease in value. What the Senate is leaving out, however, is how did they know the securities and the mortgages backing them would be bad? That’s the wild card being shuffled right under the public’s collective nose, and the question that is not being asked.

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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:

Scott Brown’s Massachusetts victory serves notice that Americans don’t want big government policies championed by liberal Democrats.

It is not a mandate for Republican tax cuts and deregulation. Rather, from health care to the economy, Democrats should stop accusing critics of deceiving the public and ask what voters would embrace.

To cover the uninsured, Americans would support reforms that made Medicaid and similar programs less expensive and lowered health insurance premiums for the middle class.

Real reform would reduce drug and administrative costs to those in other advanced countries, like Germany or Holland, and end waste imposed by malpractice suits those countries don’t endure.

Reform should not impose higher taxes but rather lower costs–the president should apply that yardstick, not budget neutrality.

Regarding unemployment, the $789 billion stimulus package will not deliver the 4 million jobs promised. Fanciful dreams of creating million jobs in green industries are just that–fanciful dreams.

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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:

Whoever is declared the winner, the outcome of the Massachusetts senatorial election is neither a mandate for President Obama’s liberal agenda nor a license for a return to status quo ante of George Bush.

The fact that a conservative put Ted Kennedy’s seat at play is a repudiation of Democrats recent partisan governing style, and an agenda that is simply out of step with the real change Americans want.

From health care to jobs to the banks, it’s time for Democrats to stop accusing critics of deceiving the public and to step back ask what voters will accept. Continue reading…