February 21, 2010THE GREAT GREEN JOBS FRAUDGreen Jobs Took Away Double The Number of Jobs They Created at a Cost of $774,000 For Each Green Job
February 9, 2010REAL CLEAR POLITICS
February 8, 2010
Big Government's Big Shortfall
By Robert Samuelson
Excerpts:
WASHINGTON -- In all the recent reports, speeches and news conferences concerning the federal budget outlook -- including the administration's proposed budget for 2011 -- hardly anyone has posed these crucial questions: what should the federal government do and why; and who should pay? We ought to go back to first principles of defining a desirable role for government and abandon the expedient of assuming that anyone receiving a federal benefit is morally entitled to it simply because it's been received before.
We have a massive candor gap, led by President Obama but also implicating most leaders of both parties. The annual budget necessarily involves a bewildering blizzard of numbers. But just a few figures capture the essence of our predicament.
First, from 2011 to 2020, the administration projects total federal spending of $45.8 trillion against taxes and receipts of $37.3 trillion. The $8.5 trillion deficit is almost a fifth of spending. In the last year (2020), the gap is $1 trillion, again approaching a fifth: spending is $5.7 trillion, taxes $4.7 trillion. All amounts assume a full economic recovery; all projections may be optimistic. The message: There's a huge mismatch between Americans' desire for low taxes and high government services.
Full article Robert Samuelson Real Clear Politics
January 5, 2010Real Clear Politics
January 4, 2010
In the Aftermath of the Great Recession
By Robert Samuelson
Excerpts:
One insistent question at the start of a new decade involves the lingering effects of the old: What scars will the Great Recession leave? We are already seeing some. Americans are moving less than at any time since World War II, reports demographer William Frey of the Brookings Institution. People are tied to existing homes, can't get loans for new ones and won't move without job commitments, Frey says. Only 1.6 percent of Americans are now moving across state lines, half the rate of a decade ago.
With a grim job market, the young also seem more cautious. A new survey by Fidelity Investments found that a quarter of workers ages 22 to 33 want to stay with their present employer until retirement; in 2008, that was only 14 percent. John Irons of the liberal Economic Policy Institute worries that many young Americans, lacking tuition funding, will delay or abandon attending college, lowering their long-term earning power.
So the Great Recession's nastiest scar could be an era of economic frustration, characterized by slower growth and contentious competition for scarce resources. Stunned by huge wealth losses in stocks and real estate, Americans save more and spend less. Businesses suffer from weak demand. Hiring remains sluggish. Worse, the slowdown coincides with an aging population, which could compound the effect. In 2020, the projected number of Americans 55 and older will reach almost 100 million, 29 percent of the total population. That's up from 59 million, or 21 percent, in 2000.
Robert Samuelson Real Clear Markets
Dec. 22, 2009REAL CLEAR POLITICS
A Parody of Leadership
By Robert Samuelson
December 21, 2009
Excerpts:
WASHINGTON -- Barack Obama's quest for historic health care legislation has turned into a parody of leadership. We usually associate presidential leadership with the pursuit of goals that, though initially unpopular, serve America's long-term interests. Obama has reversed this. He's championing increasingly unpopular legislation that threatens the country's long-term interests. "This isn't about me," he likes to say, "I have great health insurance." But of course, it is about him: about the legacy he covets as the president who achieved "universal" health insurance. He'll be disappointed.
Even if Congress passes legislation -- a good bet -- the finished product will fall far short of Obama's extravagant promises. It will not cover everyone. It will not control costs. It will worsen the budget outlook. It will lead to higher taxes. It will disrupt how, or whether, companies provide insurance for their workers. As the real-life (as opposed to rhetorical) consequences unfold, they will rebut Obama's claim that he has "solved" the health care problem. His reputation will suffer.
It already has. Despite Obama's eloquence and command of the airwaves, public suspicions are rising. In April, 57 percent of Americans approved of his "handling of health care" and 29 percent disapproved, reports The Washington Post-ABC News poll; in the latest survey, 44 percent approved and 53 percent disapproved. About half worried that their care would deteriorate and that health costs would rise.
Full article Robert Samuelson Real Clear Politics
January 5, 2010Real Clear Politics
January 4, 2010
In the Aftermath of the Great Recession
By Robert Samuelson
Excerpts:
One insistent question at the start of a new decade involves the lingering effects of the old: What scars will the Great Recession leave? We are already seeing some. Americans are moving less than at any time since World War II, reports demographer William Frey of the Brookings Institution. People are tied to existing homes, can't get loans for new ones and won't move without job commitments, Frey says. Only 1.6 percent of Americans are now moving across state lines, half the rate of a decade ago.
With a grim job market, the young also seem more cautious. A new survey by Fidelity Investments found that a quarter of workers ages 22 to 33 want to stay with their present employer until retirement; in 2008, that was only 14 percent. John Irons of the liberal Economic Policy Institute worries that many young Americans, lacking tuition funding, will delay or abandon attending college, lowering their long-term earning power.
So the Great Recession's nastiest scar could be an era of economic frustration, characterized by slower growth and contentious competition for scarce resources. Stunned by huge wealth losses in stocks and real estate, Americans save more and spend less. Businesses suffer from weak demand. Hiring remains sluggish. Worse, the slowdown coincides with an aging population, which could compound the effect. In 2020, the projected number of Americans 55 and older will reach almost 100 million, 29 percent of the total population. That's up from 59 million, or 21 percent, in 2000.
Robert Samuelson Real Clear Markets
October 13, 2009REAL CLEAR POLITICS
October 12, 2009
A Path to Downward Mobility
By Robert Samuelson
Excerpts:
WASHINGTON -- Every generation of Americans should live better than its predecessor. That's Americans' core definition of economic "progress." But for today's young, it may be a mirage. Higher health spending, increasing energy prices and stretched governments at all levels may squeeze future disposable incomes -- what people have to spend -- and public services. Are we condemning our children to downward mobility?
Good question. Considering how health spending could threaten future living standards, it ought to be center stage in the "reform" debate. Instead, it's ignored. An oft-stated view is that the growth of the U.S. economy will make the young so much richer than their parents that they can afford a bigger health care sector and still enjoy large increases in their living standards. Complaining about providing more generous health care is selfish. This is a powerful argument; unfortunately, it isn't true.
Look at the table below. It portrays the U.S. economy from 1980, with a projection for 2030 from Moody's Economy.com. The projection assumes that the recession ends and growth revives. Superficially, the table suggests that economic growth can easily pay for more health care. In 2007, the economy's total output -- gross domestic product, our national income -- was $13.3 trillion. In 2030, it projected to $22.6 trillion, a huge 70 percent increase. (All amounts are in 2005 "constant" dollars to eliminate inflation.)
Year Total GDP Per Capita GDP Per Capita Health Spending
1980 $5.8 trillion $25,700 $2,300
1990 $8 trillion $32,100 $3,900
2007 $13.3 trillion $43,900 $7,100
2030 $22.6 trillion $60,600 (see below)
Surely that's ample. Not really. First, the economy's growth is projected to slow in the future, reflecting an aging population. Lots of workers retire; the labor force doesn't expand much. From 1980 to 2007, GDP grew an average 3.1 percent annually. From 2007 to 2030, Moody's projects 2.4 percent annually.
Full article Robert Samuelson Real Clear Politics
September 15, 2009REAL CLEAR POLITICS
September 14, 2009
The Candor Gap
By Robert Samuelson
Excerpts:
WASHINGTON -- We cannot, it seems, have a candid national conversation on health care. President's Obama speech the other night was a brilliant performance, and it may improve prospects for congressional passage of his "reform." But no possible plan will fix the "health care problem" for all time. When Obama says that "I am not the first president to take up this cause, but I am determined to be the last," he is indulging his ambition for a special place in history and illustrating why Americans don't discuss health care honestly.
The political problem was simple: support for "reform" was collapsing. In April, 43 percent felt they'd be better off with his "reform" and only 14 percent didn't, according to a poll by the Kaiser Family Foundation. By August, it was 36 percent to 31 percent. To restore momentum, Obama needed to convince more people that his program would help them.
Americans generally want three things from their health care system. First, they think that everyone has a moral right to needed care; that suggests universal insurance. Second, they want choice; they want to select their doctors -- and want doctors to determine treatment. Finally, people want costs controlled; health care shouldn't consume all private compensation or taxes.
Full article Robert Samuelson Real Clear Politics
September 8, 2009REAL CLEAR POLITICS
September 7, 2009
A Somber Labor Day
By Robert Samuelson
Excerpts:
WASHINGTON -- The first Labor Day, held in New York City in 1882, was less a celebration of the dignity of work than a demonstration in favor of the eight-hour day, down from the prevailing 10 to 12 hours. Compared to then, American workers have come a long way. Congress made Labor Day a national holiday in 1894, and over the years, it evolved into a day off rather than a moment to reflect on the state of labor, broadly defined and extending beyond unions. Well, not this year.
It's the bleakest Labor Day since at least the early 1980s (unemployment in September 1982: 10.1 percent ). With the unemployment rate at 9.7 percent in August and expected to go higher, cheery news is scarce. The Economic Policy Institute, a liberal think tank, has painted a statistical portrait of today's labor market. Here are some lowlights:
-- Since the recession's start in December 2007, the number of lost payroll jobs totals 6.9 million. A third of today's jobless have been unemployed more than six months, almost double the share a year ago and a post-World War II high.
Full article Robert Samuelson Real Clear Politics
July 28, 2009Real Clear Politics
Obama's Misleading Medicine
By Robert Samuelson
July 27, 2009
Excerpts:
PURGE CONGRESSBARACK'S SHAMEFUL HEALTH CARE DECEPTION CONTINUESSTARVING THE FEDERAL BEAST IS THE ONLY WAY WE CAN BRING FEDERAL SPENDING BACK DOWN TO 17%--SEE HOW--O HAS TAKEN IT FROM 18% TO WAY ABOVE 30% TO REDISTRIBUTE TO HIS WELFARE DEADBEATS-ENOUGH IS ENOUGHTHIS OUT OF CONTROL CONFISCATION OF YOUR DAILY LABOR IS THE ROOT OF ALL CORRUPTION AND CRONYISM-CONGRESS HAS LET HIM DO ITSPEAK OUT AGAINST THE HEAVY HANDED TACTICS TO SILENCE DISSENTSEE THE STEP BY STEP PLAN
PURGE CONGRESS
WASHINGTON -- The most misused word in the health care debate is "reform." Everyone wants "reform," but what constitutes "reform" is another matter. If you listen to President Obama, his "reform" will satisfy almost everyone. It will insure the uninsured, control runaway health spending, subdue future budget deficits, preserve choice for patients and improve quality of care. These claims are self-serving exaggerations and political fantasies. They have destroyed what should be a serious national discussion of health care.
The health care conundrum involves a contradiction that the administration steadfastly obscures: In the short run -- meaning four to eight years -- government cannot both insure the uninsured and rein in health spending. Here's why. The notion that the uninsured get little or no care is a myth: They now receive about 50 percent to 70 percent of the health care of the insured. If they become insured, their health care would rise toward 100 percent; that would increase both government and private health spending, depending on how the insurance is provided.
Until health costs are better controlled, expanding insurance coverage will be expensive. The president talks endlessly about the need to limit spending and eliminate waste. These are worthy goals. But changing the way medical care is delivered and paid for would take years and involve disruptive and unpopular measures. Patient co-payments might increase; networks of doctors and hospitals might displace individual practices; the tax exclusion for employer-paid health insurance might be curbed. Obama downplays the obstacles. Any "reform" isn't likely to compel needed changes, partly because it's not clear what will work.
Full article Robert Samuelson Real Clear Politics
July 20, 2009REAL CLEAR POLITICS
July 20, 2009
The Squandered Stimulus
By Robert Samuelson
Excerpts:
WASHINGTON -- It's not surprising that the much-ballyhooed "economic stimulus" hasn't done much stimulating. President Obama and his aides argue that it's too early to expect startling results. They have a point. A $14 trillion economy won't revive in a nanosecond. But the defects of the $787 billion package go deeper and won't be cured by time. The program crafted by Obama and the Democratic Congress wasn't engineered to maximize its economic impact. It was mostly a political exercise, designed to claim credit for any recovery, shower benefits on favored constituencies and signal support for fashionable causes.
As a result, much of the stimulus' potential benefit has been squandered. Spending increases and tax cuts are sprinkled in too many places and, all too often, are too delayed to do much good now. Nor do they concentrate on reviving the economy's most depressed sectors: state and local governments; the housing and auto industries. None of this means the stimulus won't help or precludes a recovery, but the help will be weaker than necessary.
How much is hard to determine. By year-end 2010, the package will result in 2.5 million jobs, predicts Mark Zandi of Moody's Economy.com. But as Zandi notes, all estimates are crude. They involve comparing economic simulations with and without the provisions of the stimulus. The economic models must make assumptions about how fast consumers spend tax cuts, how quickly construction projects begin and much more.
Full article Robert Samuelson Real Clear Politics
July 13, 2009REAL CLEAR POLITICS
July 13, 2009
The Consequences of Big Government
By Robert Samuelson
Excerpts:
WASHINGTON -- The question that President Obama ought to be asking -- that we all should be asking -- is this: How big a government do we want? Without anyone much noticing, our national government is on the verge of a permanent expansion that would endure long after the present economic crisis has (presumably) passed and that would exceed anything ever experienced in peacetime. This expansion may not be good for us, but we are not contemplating the adverse consequences or how we might minimize them.
We face an unprecedented collision between Americans' desire for more government services and their almost-equal unwillingness to be taxed. The conflict is obscured and deferred by today's depressed economy, which has given license to all manner of emergency programs, but its dimensions cannot be doubted. A new report from the Congressional Budget Office ("The Long-Term Budget Outlook") makes that crystal clear. The easiest way to measure the size of government is to compare the federal budget to the overall economy, or gross domestic product (GDP). The CBO's estimates are daunting.
For the past half-century, federal spending has averaged about 20 percent of GDP, federal taxes about 18 percent of GDP, and the budget deficit 2 percent of GDP. The CBO's projection for 2020 -- which assumes the economy has returned to "full employment" -- puts spending at 26 percent of GDP, taxes at a bit less than 19 percent of GDP, and a deficit above 7 percent of GDP. Future spending and deficit figures continue to grow.
Full article Robert Samuelson REAL CLEAR POLITICS
June 18, 2009Robert Samuelson on President Obama's Lack of Truthfulness on Health Care
REAL CLEAR POLITICS
June 15, 2009
Naive, Hypocritical and Dishonest
By Robert Samuelson
Excerpts:
WASHINGTON -- It's hard to know whether President Obama's health care "reform" is naive, hypocritical or simply dishonest. Probably all three. The president keeps saying it's imperative to control runaway health spending. He's right. The trouble is that what's being promoted as health care "reform" almost certainly won't suppress spending and, quite probably, will do the opposite.
A new report from Obama's own Council of Economic Advisers shows why controlling health costs is so important. Since 1975, annual health spending per person, adjusted for inflation, has grown 2.1 percentage points faster than overall economic growth per person. Should this trend continue, the CEA projects that:
-- Health spending, which was 5 percent of the economy (gross domestic product, GDP) in 1960 and is reckoned at almost 18 percent today, would grow to 34 percent of GDP by 2040 -- a third of the economy.
Full article Robert Samuelson Real Clear Politics
June 5, 2009WASHINGTON POST
The Obama Infatuation
By Robert J. Samuelson
Monday, June 1, 2009
Excerpts:
The Obama infatuation is a great unreported story of our time. Has any recent president basked in so much favorable media coverage? Well, maybe John Kennedy for a moment, but no president since. On the whole, this is not healthy for America.
Our political system works best when a president faces checks on his power. But the main checks on Obama are modest. They come from congressional Democrats, who largely share his goals if not always his means. The leaderless and confused Republicans don't provide effective opposition. And the press -- on domestic, if not foreign, policy -- has so far largely abdicated its role as skeptical observer.
Obama has inspired a collective fawning. What started in the campaign (the chief victim was Hillary Clinton, not John McCain) has continued, as a study by the Pew Research Center's Project for Excellence in Journalism shows. It concludes: "President Barack Obama has enjoyed substantially more positive media coverage than either Bill Clinton or George W. Bush during their first months in the White House."
Full article Robert Samuelson Washingtion Post
May 26, 2009REAL CLEAR POLITICS
May 25, 2009
The Bankruptcies We Need
By Robert Samuelson
Excerpts:
WASHINGTON -- When the trustees of Social Security and Medicare recently reported on the economic status of these programs, the news coverage was universally glum. The recession had made everything worse. "Social Security, Medicare Face Insolvency Sooner," headlined The Wall Street Journal. Actually, these reports were good news. Better would have been: "Social Security, Medicare Risk Bankruptcy in 2010."
It's increasingly obvious that Congress and the president (regardless of the party in power) will deal with the political stink bomb of an aging society only if forced. And the most plausible means of compulsion would be for Social Security and Medicare to go bankrupt: trust funds run dry; promised benefits exceed dedicated payroll taxes. The sooner this happens, the better.
That the programs will ultimately go bankrupt is clear from the trustees' reports. On pages 201 and 202 of the Medicare report, you will find the conclusive arithmetic: Over the next 75 years, Social Security and Medicare will cost an estimated $103.2 trillion, while dedicated taxes and premiums will total only $57.4 trillion. The gap is $45.8 trillion. (All figures are converted to "today's dollars.")
Full article Robert Samuelson Real Clear Politics
May 9, 2009REAL CLEAR POLITICS
April 27, 2009
Selling the Green Economy
By REAL CLEAR POLITICS
Excerpts:
WASHINGTON -- Few things are more appealing in politics than something for nothing. As Congress begins considering anti-global warming legislation, environmentalists hold out precisely that tantalizing prospect: We can conquer global warming at virtually no cost. Here's a typical claim from the Environmental Defense Fund (EDF):
"For about a dime a day (per person), we can solve climate change, invest in a clean energy future, and save billions in imported oil."
This sounds too good to be true, because it is. About four-fifths of the world's and America's energy comes from fossil fuels -- oil, coal, natural gas -- which are also the largest source of man-made carbon dioxide (CO2), the main greenhouse gas. The goal is to eliminate fossil fuels or suppress their CO2. The bill now being considered in the House would mandate a 42 percent decline in greenhouse emissions by 2030 from 2005 levels and an 83 percent drop by 2050.
Full article REAL CLEAR POLITICS REAL CLEAR POLITICS
April 14, 2009REAL CLEAR POLITICS
April 13, 2009
Obama's Economic Mirage
By Robert Samuelson
Full article Robert Samuelson REAL CLEAR POLITICS
Excerpts:
WASHINGTON -- President Obama has made no secret of his vision for America's 21st century economy. We will lead the world in "green" technologies to stop global warming. Advancing medical breakthroughs will improve our well-being, control health spending and enable us to expand insurance coverage. These investments in energy and health care, as well as education, will revive the economy and create millions of well-paying new jobs for middle-class Americans.
It's a dazzling rhetorical vista that excites the young and fits the country's present mood, which blames "capitalist greed" for the economic crisis. Obama promises communal goals and a more widely shared prosperity. The trouble is that it may not work as well in practice as it does in Obama's speeches. Still, congressional Democrats press ahead to curb global warming and achieve near-universal health insurance. We should not be stampeded into far-reaching changes that have little to do with today's crisis.
What Obama proposes is a "post-material economy." He would de-emphasize the production of ever-more private goods and services, harnessing the economy to achieve broad social goals. In the process, he sets aside the standard logic of economic progress.
April 8, 2009Protectionism Puts Recovery At Grave Risk
INVESTOR'S BUSINESS DALILY
By ROBERT SAMUELSON
Posted Monday, April 06, 2009 4:20 PM PT
We are in a race between economic recovery and economic nationalism.
At last week's G-20 summit, leading nations agreed to roughly $1 trillion of additional lending, mostly through the International Monetary Fund, to help end the worldwide slump.
But beneath the veil of consensus, countries are maneuvering to protect their economies and blame someone else for the crisis. Will the world economic order overcome these stresses or give way to a global free-for-all, characterized by protectionism, nationalistic subsidies and preferences?
Emblematic of the tension is a recent proposal by Zhou Xiaochuan, governor of the People's Bank of China, to replace the dollar as the world's major international currency. In a paper, Zhou argued that today's crisis reflects "the inherent vulnerabilities and systemic risks" of the dollar-based global economy. The PBOC is China's Federal Reserve; Zhou is no obscure bureaucrat.
Full article INVESTOR'S BUSINESS DAILY
Excerpts:
March 23, 2009REAL CLEAR POLITICS
Can American Capitalism Survive?
By Robert Samuelson
March 23, 2009
"Can capitalism survive? No. I do not think it can."
-- Joseph Schumpeter, 1942
Full article Robert Samuelson
Excerpts:
WASHINGTON -- The story of American capitalism is, among other things, a love-hate relationship. We go through cycles of self-congratulation, revulsion and revision. Just when the latest onset of revulsion and revision began is unclear. Was it when Lehman Brothers collapsed? Or when General Motors pleaded for federal subsidies? Or now, when AIG's bonuses stir outrage? No matter. Capitalism is under siege, its future unclear.
Schumpeter, one of the 20th century's eminent economists, believed that capitalism sowed the seeds of its own destruction. Its chief virtue was long-term -- the capacity to increase wealth and living standards. But short-term politics would fixate on its flaws -- instability, unemployment, inequality. Capitalist prosperity also created an oppositional class of "intellectuals" who would nurture popular discontents and disparage values (self-enrichment, risk-taking) necessary for economic success.
Almost everything about Schumpeter's diagnosis rings true with the glaring exception of his conclusion. American capitalism has flourished despite being subjected to repeated restrictions by disgruntled legislators. Consider the transformation. In 1889, there was no anti-trust law (1890), no corporate income tax (1909), no Securities and Exchange Commission (1934) and no Environmental Protection Agency (1970).
March 16, 2009REAL CLEAR POLITICS
The Shadow of Depression
By Robert Samuelson
March 16, 2009
Full article Robert Samuelson Real Clear Politics
Excerpts:
WASHINGTON -- We live in the shadow of the Great Depression. Americans' gloom does not reflect just 8.1 percent unemployment or the loss of $13 trillion worth of housing and stock market value since mid-2007. There is also an amorphous anxiety that we are falling into a deep economic ravine from which escape will be difficult. These worries may prove ill-founded. But until they do, they promote pessimism and the hoarding of cash, by consumers and companies alike, that further weaken the economy.
Our only frame of reference for this sort of breakdown is the Great Depression. Superficially, the comparison seems absurd. We are a long way from the 1930s, as Christina Romer, head of President Obama's Council of Economic Advisers, noted recently in a useful talk. Unemployment peaked at 25 percent in 1933. At its low point, the economy (gross domestic product) was down 25 percent from its 1929 high. So far, U.S. GDP has dropped only about 2 percent.
What's more, the Depression changed our thinking and institutions. The human misery of economic turmoil has diminished. "American workers (in the 1930s) had painfully few of the social safety nets that today help families," Romer said. Until 1935, there was no federal unemployment insurance. At last count, there were 32 million food stamp recipients and 49 million on Medicaid. These programs didn't exist in the 1930s.
March 9, 2009Obama Can't Double-Talk Us Out Of This
By ROBERT SAMUELSON
Posted Friday, March 06, 2009 4:20 PM PT
Full article R S INVESTOR'S BUSINESS DAILY
Excerpts:
To those who believe that Barack Obama is a different kind of politician — more honest, more courageous — please don't examine his administration's budget.
If you do, you may sadly conclude that he resembles presidents stretching back to John Kennedy in one crucial respect. He won't tax voters for all the government services they want.
That's the main reason we've run budget deficits in 43 of the past 48 years.
Obama is a great pretender. He repeatedly says he's doing things that he isn't, trusting his powerful rhetoric to obscure the difference. He has made "responsibility" a personal theme; the budget's cover line is "A New Era of Responsibility." He says the budget begins "making the tough choices necessary to restore fiscal discipline." It doesn't.
March 1, 2009REAL CLEAR POLITICS
December 29, 2008
2008: We Learned What We Don't Know
By Robert Samuelson
Full article R S REAL CLEAR POLITICS
Excerpts:
It's the end of an era. We know that 2008, much like 1932 or 1980, marks a dividing line for the American economy and society. But what lies on the other side is hazy at best.
The great lesson of the past year is how little we understand and can control the economy. This ignorance has bred today's insecurity, which in turn is now a governing reality of the crisis.
Go back to the onset of the crisis in mid-2007. Who then thought that the federal government would rescue Citigroup or the insurance giant AIG; or that the Federal Reserve, striving to prevent a financial collapse, would pump out more than $1 trillion in new credit; or that Congress would allocate $700 billion to the Treasury for the same purpose; or that General Motors would flirt with bankruptcy?
In 2008, much conventional wisdom crashed.
It was once believed that the crisis of "subprime" mortgages -- loans to weaker borrowers -- would be limited, because these loans represent only 12 percent of all home mortgages. Even better, they were widely held, diluting losses to individual banks and investors.
Robert Samuelson February 20, 2009WASHINGTON POST
The Obama Delusion
By Robert J. Samuelson
Wednesday, February 20, 2008; Page A17
Full article R S Washington Post
Excerpts:
It's hard not to be dazzled by Barack Obama. At the 2004 Democratic convention, he visited with Newsweek reporters and editors, including me.
I came away deeply impressed by his intelligence, his forceful language and his apparent willingness to take positions that seemed to rise above narrow partisanship.
Obama has become the Democratic presidential front-runner precisely because countless millions have formed a similar opinion. It is, I now think, mistaken.
Robert Samuelson
As a journalist, I harbor serious doubt about each of the most likely nominees. But with Sens. Hillary Clinton and John McCain, I feel that I'm dealing with known quantities.
They've been in the public arena for years; their views, values and temperaments have received enormous scrutiny. By contrast, newcomer Obama is largely a stage presence defined mostly by his powerful rhetoric.
The trouble, at least for me, is the huge and deceptive gap between his captivating oratory and his actual views.
Robert Samuelson February 16, 2009REAL CLEAR POLITICS
Obama's Health Care Headache
By Robert Samuelson
January 12, 2009
Full article R S REAL CLEAR POLITICS
Excerpts:
WASHINGTON -- Barack Obama talked somberly last week about getting the federal budget under control once the present economic crisis is past.
To do that, he'll have to confront the rapid growth of health spending, which in 2007 was already a quarter of total federal spending of $2.7 trillion.
If Obama is serious, he should read a fascinating new study from the McKinsey Global Institute, the research arm of the famed consulting company.
American health care has gone haywire. It provides much splendid care but has glaring deficiencies. It is so costly that 15 percent of the population lacks health insurance.
Runaway spending is also crowding out other government programs and, through bloated insurance premiums, squeezing workers' take-home pay.
Robert Samuelson
What McKinsey provides is a plausible estimate of the overspending: one-third. In 2006, U.S. health spending totaled $2.1 trillion. Of that, McKinsey figures that $650 billion exceeded the norms of other rich nations.
For the extra money, we receive no indisputably large benefit in national well-being.
On some health measures (breast cancer survival rates), we do better than many countries; on some others (life expectancy), we do worse.
We are constantly searching for villains to explain this unsatisfactory situation. The McKinsey study debunks some popular candidates.
Robert Samuelson February 12, 2009REAL CLEAR POLITICS
January 18, 2009
Boomers vs. the Rest
By Robert Samuelson
Full article R S REAL CLEAR POLITICS
Excerpts:
WASHINGTON -- Probably no political platitude is more invoked or more ignored than this: Let's do it for the kids. Everyone recognizes the moral power of making present sacrifices for our children's future well-being. That's why most politicians embrace the promise, as Barack Obama has. "We know that we have to get spending under control in Washington so that we're not mortgaging our children's future" was a favorite campaign line. Just last week, in an interview with The Washington Post, Obama again promised to overhaul "entitlements." But politicians don't always practice what they preach.
Generational conflict, and maybe generational war, is an inevitable part of the Age of Obama. Everyone knows that America is graying. Today, one in seven Americans is 65 or over, but by 2030, it's expected to be one in five. What's less understood is that the whole political system favors the old over the young in this fateful transformation. We risk becoming a society that invests in its past.
The plight of the U.S. auto industry provides an ominous warning. For years, the "Big Three" and the United Auto Workers constructed an ever-more generous system of early retirement and retiree health benefits for autoworkers. But ultimately the costs became oppressive. The main victims: younger workers, whose jobs, wages and fringe benefits were squeezed to preserve retiree pension and health benefits.
Robert Samuelson February 9, 2009REAL CLEAR POLITICS
February 09, 2009
The Bailout Isn't a Morality Play
By Robert Samuelson
Full article R S REAL CLEAR POLITICS
Excerpts:
Today's IRS Tax Tip
WASHINGTON -- If this were a movie, we'd call it "TARP, the Sequel." The Obama administration will soon unveil its plan to bolster the nation's financial system. Given the widespread revulsion against financial "fat cats," the public reception may be underwhelming. But we need to move beyond populist denunciations of "bailing out Wall Street." The purpose is more compelling. It is to reverse a massive worldwide credit contraction that's clobbering the real economy of production and jobs.
Global finance has swung from one extreme to the other. Having engaged in excessive risk-taking -- by misjudging the hazards of "collateralized debt obligations" (CDOs) and other feats of financial engineering -- banks and investors have become terrified of almost any risk. The result is paradoxical. As individual financial institutions try to minimize their risks, they increase the risk for the broader economy by denying needed credit or dumping securities (bonds, mortgages).
Here's how the vicious circle works.
With the economy weakening, more loans go into default. Distressed households and businesses can't meet payments. Diane Vazza of Standard & Poor's predicts that the default rate on low-grade corporate bonds will reach a record 13.9 percent in 2009 -- up from only 1 percent just two years ago. Firms that took on heavy debts in "private equity" buyouts seem highly vulnerable.
Robert Samuelson February 8, 2009January 19, 2009
The Great Foreboding
By Robert Samuelson
Full article R S Real Clear Politics
Excerpts:
WASHINGTON -- For Barack Obama, the Great Foreboding is both an enormous burden and a splendid opportunity. We are now suffering from more than depressed retail sales, stock prices and production. Americans have drifted, or been dragged, into a state of collective despair and bewilderment. They don't know what lies ahead and wonder whether anyone does. Americans have lost their sense of mastery over the future, and if Obama can restore that, he will have gone a long way toward reviving the economy and ensuring a successful presidency.
It is not the present economy that most disturbs people. That's bad, but not unprecedented. Despite recent increases, the unemployment rate of 7.2 percent in December remains below the average peak unemployment of 7.6 percent in the previous 10 post-World War II recessions. What unsettles and scares people is the vague notion that we're headed into something new, menacing and enduring. Unemployment, predicted to reach 9 percent or more, will remain high. Expansion will resume grudgingly, if at all. Income gains will be slight or nonexistent.
Precisely this specter explains why the word "depression" is now so routinely deployed, even though we're a long way from the bread lines of the 1930s. But the Great Depression also signifies a period when we lost control. For all the New Deal programs, the Depression lasted a decade and ended only with World War II. Even in 1940, unemployment averaged almost 15 percent. It's the worry that government won't triumph over today's economy that justifies, for many people, the bleak analogies.
February 03, 2009
REAL CLEAR POLITICS
January 26, 2009
Three Economic Crises In One
By Robert Samuelson
Full article R S REAL CLEAR POLITICS
Excerpts:
WASHINGTON -- We all want President Obama to succeed in reviving the economy, but that shouldn't obscure his long odds. We need to recognize that we're grappling with three separate crises that, though interwoven, are also quite distinct. The solution to any one of them won't automatically resuscitate the larger economy if the others remain untreated and unchanged.
Here are the three.
First: the collapse of consumer spending. American consumers represent 70 percent of the economy. Traumatized by plunging home values and stock prices -- which have shaved at least $7 trillion from personal wealth -- they've curbed spending and increased saving. That's led directly to layoffs. In December, vehicle sales were down 36 percent from year-earlier levels.
Second: the financial crisis. Lower lending deprives the economy of the credit to finance businesses, homes and costly consumer purchases (cars, appliances). The deepest cuts involve "securitization" -- the sale of bonds. Investors have gone on strike. In 2008, the issuance of bonds backing credit card loans fell 41 percent and those backing car loans 51 percent.
February 02, 2009
Too Little Bang for The Bucks
By Robert Samuelson
"Now is the time to make the tough choices."
-- Barack Obama, Jan. 26
Full article R S REAL CLEAR POLITICS
Excerpts:
WASHINGTON -- Among the many claims made for the "economic stimulus" package now before Congress is that it will "jump-start" a "bigger, better, smarter" electric grid, enabling Americans to use energy more efficiently. The package commits $4.5 billion to this, which (says the White House) will help finance 3,000 miles of transmission lines and 40 million "smart meters." Sounds great.
But it may be mostly hype. For starters, the $4.5 billion is a pittance. An industry study in 2004 -- surely outdated -- put the price tag of modernizing the grid at $165 billion. More important, says a report from J.P. Morgan, the "smart grid" isn't mainly a matter of building new transmission lines or installing new meters. It's more "communications and information processing technology" that allows the more efficient transportation and use of power.
"The smart grid, while a great idea, is basically a software project," says economist Marc Levinson of J.P. Morgan. "The reason utilities aren't pushing it faster is not lack of money or will, but because there are lots of technical issues and also important compatibility problems so that the various companies' grids can communicate freely with one another."REAL CLEAR POLITICS
Robert J. Samuelson (Born Robert Jacob Samuelson is a contributing editor of Newsweek and Washington Post where he has written about business and economic issues since 1977.
Among other publications in which his columns appear are: The Los Angeles Times, The Boston Globe, among other widely read and popular sellings newspapers.
He writes almost exclusively on economic issues.
His career in journalism began as a reporter on the business desk of The Washington Post 1969.
After 4 years, he left the Post and became a freelancer.
Other publications where his work has appeared are:The Sunday Times
The New Republic
His main employer now is Newsweek.
Robert Samuelson To Editorials
