The View from Right Field

President Obama to America: You’ve Gone “Soft”

In an interview yesterday with a TV station in Orlando, Florida, President Obama said this about us:

"The way I think about it is, you know, this is a great, great country that had gotten a little soft and, you know, we didn't have that same competitive edge that we needed over the last couple of decades. We need to get back on track."

Did he just say that it’s our fault he’s doing a lousy job?  Is this his "malaise" moment?

Ryne Sandberg’s First Hit: September 27, 1981

Thirty years ago today Ryne Sandberg got his first hit at Wrigley Field – and his only hit for a team other than the Chicago Cubs.  In September of 1981, Ryne Sandberg was a September call-up for the Philadelphia Phillies.  In the second game of a doubleheader against the Cubs, Sandberg came in to play shortstop in the sixth inning.  In the eighth inning, with two outs, Ryno singled to right field off Mike Krukow.  

And the best part (other than that the Cubs won, 14 to 0):  I was there.  It was, however, only years later, after Jennie, Ross and I saw Ryno’s last hit at Wrigley Field (on September 21, 1997*), that I was looking through some old scorecards and realized I had seen Ryno’s first hit.  Which is why you always keep your scorecards.  You never know when you might see history – and sometimes you might not know you have seen it until years later.

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* The Cubs were playing the Phillies that day, too, and the Cubs won, 11 to 3.

If the Cardinals Make the Playoffs, Carlos Marmol Deserves a Quarter-Share

Without him they wouldn't have a chance.

President Obama’s Debt Reduction Plan

I apologize for not commenting earlier on the deficit reduction plan that President Obama submitted to Congress on Monday, but I have been busy going to a couple of Cubs games against the Brewers (fortunately, I went to the two games the Cubs won and not the one they lost) and some other things.  Also, there didn’t seem to be any real rush to comment on it.  It’s not like it’s going to pass. 

A week and a half ago I said that President Obama wasn’t really serious about trying to pass his American Jobs Act because of how he was proposing to pay for it:  He suggested raising taxes that the Democrats wouldn’t vote for when Nancy Pelosi was Speaker.

The President’s plan to reduce the deficit was similarly unserious – except as a campaign document.  First, of the $3 trillion in cuts that the President is claiming, $1 trillion is money that we save by cutting our troops in Iraq and Afghanistan.  This is obviously phony since those cutbacks are going to happen anyway.  It’s sort of like saying I’m going to cut my expenses in 2012 by not having another wedding.  The Associated Press wouldn’t call it phony because Republicans were proposing the same thing.  Well, if Republicans are counting those reductions in their plan, then that part of their plan is phony, too.

Three-quarters of the rest of the deficit reduction plan is tax increases – on the rich, of course.  These aren’t going to pass in this Congress.  For that matter, given the reception they are getting from a lot of Democrats, they aren’t going to pass in the next Congress either, even if President Obama is re-elected.*

While the President’s plan isn’t going to pass, it is interesting.  I think it probably answers certain questions I asked about Barack Obama back on September 1, 2008:

“So what does this tell us about [Barack] Obama? Does it tell us he is very liberal, except when political expedience makes him take more moderate positions? Or does it tell us that he is really moderate, except when political expedience (and his constituents) requires him to take liberal positions?”

I think what his deficit reduction plan and his American Jobs Act tell us about President Obama is this:  He thinks government should spend lots more money.  He thinks government can do good things when it spends money.  Things like green energy (for example, Solyndra), high speed rail, and more.  And he thinks he can pay for all those things by raising taxes on people who aren’t paying their fair share of taxes, people who really have more money than they need.  President Obama still thinks, as he said back in 2008, “when you spread the wealth around, it’s good for everybody.”

House Majority Leader Eric Cantor (R, Va.) said this about one of the Democrats who participated in the debt talks with Vice President Biden in May and June: “[H]onestly, one of them said to me, ‘Some people just make too much money.’”**  While it wasn’t President Obama who said it, you get the feeling that he believes it, that this belief is a central part of his political philosophy, and that this is how he’s going to pay for all that increased government spending he is in favor of.

Which means the next 13-1/2 months is going to be a very long campaign.

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* And if they did pass, I can assure you they would not generate nearly as much money as is projected.  Rich people will figure out how to pay less tax than Congress thinks it is imposing.  Count on it.

** Joseph Rago, “The Weekend Interview with Eric Cantor: Obama and the Narcissism of Big Differences,” The Wall Street Journal, August 6, 2011.

Cubs Season Is Now Officially Complete

Kerry Wood is having surgery on his knee.  He is out for the rest of the season, such as it is.

A Thought On 0% Interest Rates

In August the Federal Reserve announced that it would be keeping the Federal funds rate between 0-.25% for another two years. The theory is that the economy is weak, and one way to get it moving is to cut interest rates or, if you can’t do that because they are already virtually zero, at least continue to keep them down. The idea is that making money cheaper to borrow will encourage people to borrow and spend – and that will help the economy grow. But it doesn’t seem to be working all that well – unless things would be even worse if interest rates weren’t so low.

But while the Federal Reserve, and economists and politicians (the last two pretty much non-overlapping categories, especially on the Democratic side), talk about how low interest rates are good for borrowers, something I have not seen talked about much is the effect that these low interest rates is having on savers. The problem is that, if interest rates on loans are low, interest rates on savings must be even lower, and this causes problems of its own. For example, a number of retired people rely on interest from fixed income investments to help pay for their retirement. With interest rates near 0%, the income isn’t there. And people who aren’t retired are finding it harder to save money for retirement when interest rates are so low.

I remember how worried my mother was back in 2003-2004 when the Fed, under Alan Greenspan, reduced the Federal funds rate to 1.25% and then 1.00% for about 1½ years. It was a real hit to my mother. She used the interest on CDs and her money market fund to supplement her Social Security checks and the amount she got from my dad’s pension. With interest rates at 1%, she was starting to have to dig into principal, and it worried her.

I can only imagine what she would be thinking now, and how much she would be worrying, if she had to live through five years of virtually 0% interest rates. It would have been a real problem. But there hasn’t been any talk about it, which is unfortunate because it is an issue for a lot of people.

Ryan Crocker On Afghanistan

Back in April I posted a summary of comments Ryan Crocker made to the Chicago Council on Global Affairs about Iraq and more.  In June I complimented the Obama Administration for appointing Mr. Crocker to be our new ambassador to Afghanistan.  Mr. Crocker is now on duty in Kabul, and in recent interviews he has been reporting on what he sees there and how things are going.

According to The Wall Street Journal:

“Peace negotiations with the Taliban are unlikely to bear results until additional military pressure is brought on the insurgents, the new American ambassador to Kabul said ….

‘The Taliban needs to feel more pain before you get to a real readiness to reconcile, Ambassador Ryan Crocker cautioned in an interview ….’”*

The idea that the Taliban needs to feel that things aren’t going their way before they will seriously negotiate is both obvious and something that people who want to leave Afghanistan NOW, don’t seem to understand.** 

Just because we want the war with al-Qaeda to be over, doesn’t mean we can end it.  In military matters, as in many others, the other side gets a vote, too.  Ambassador Crocker told The Washington Post:  “It’s hard.  It’s going to go on being hard.  But it’s not hopeless. … The key is strategic patience, which is hard for us Americans.  We need it here, we needed it in Iraq and we certainly need it with Pakistan.” 

The questions are whether the President, including those in his Administration, and the various candidates pursuing the Republican presidential nomination, have that strategic patience themselves and whether they are willing to try to convince the American people of the need for the U.S. to exercise it in Afghanistan.

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* Yaroslav Trofimov and Maria Abi-Habib, “Taliban Need ‘Pain’ to Talk, Envoy Says,” The Wall Street Journal, September 9, 2011.

** Many people didn’t understand it in Vietnam, either.

President Obama Isn’t Really Serious About the American Jobs Act

President Obama has now explained how he proposes paying the cost of his American Jobs Act, which he proposed last Thursday.  And apparently, in spite of President Obama’s claims that he wants Congress to pass this bill immediately, he really isn’t serious about them passing it.  He might be serious about using it as a campaign issue next year, but passage now?  Nope.  Not serious.

Why do I say this?  Because of how the President wants to pay for it.  86% of the money is supposed to come from Congress limiting itemized deductions for “millionaires and billionaires” (i.e., couples earning over $250,000 and individuals earning over $200,000).  What you have to remember is that President Obama couldn’t get the prior Congress, the one that was controlled by Democrats, to pass this idea.  Why would he think this Congress would pass it?  It might be a good campaign issue, but expect Congress to pass it.  No way.

One other thing that was a little tacky on the President’s part.  The 12-member special committee that was created by Congress in August to try to cut the deficit by $1.2 to $1.5 billion is supposed to start meeting soon.  Well, the President is claiming $450 billion of possible revenue increases that they could have used to meet their goal.  In other words, he just made their job harder.

Obstructionist Republicans?

If Congress doesn’t pass his American Jobs Act, President Obama will, of course, blame the Republicans.  But as The Wall Street Journal noted in an editorial on Friday*:

“This ignores that Mr. Obama has been the least obstructed President since LBJ in 1965 or FDR in 1933 ….

He passed $830 billion in stimulus, $3 billion for cash for clunkers, $30 billion in small business loans, $30 billion for mortgage modification, the GM-Chrysler bailouts, Obama-Care, Dodd-Frank, credit card price controls, Build America Bonds, jobless benefits for a record 99 weeks, and more. …

Even last December, after Republicans had retaken the House, Mr. Obama won his one-year payroll tax cut, more jobless benefits and most of what he wanted.”

Obstructionist Republicans?  We should have been so lucky.

President Obama’s “American Jobs Act”

There’s not much to say about President Obama’s “jobs” (f/k/a stimulus) speech last Thursday.  Now I will admit that my posts over the last couple of years worrying about inflation have been – um, what’s the word, oh yes – wrong.  But that doesn’t mean I think more attempted stimulus spending, more temporary tax cuts, etc., are going to help.

The additional one-year cut in the Social Security tax will give people more money to spend, but it’s not going to help the economy grow.  Employers aren’t going to increase hiring because of a one-year tax cut (or a one-year increase in consumer spending).  We need long-term tax reform.  To be honest, even if we cut federal spending (and I will believe it when it happens), we are so far in the hole we still need to collect more tax revenues.  But that can be done without raising tax rates. 

On Thursday night, President Obama asked: “Should we keep tax loopholes for oil companies?”  No, we shouldn’t have loopholes for oil companies.  But we don’t need tax credits for people who buy electric cars, either.  We need to get rid of lots of the special deductions and credits in the tax laws, provisions that people call loopholes if somebody else is getting them.  Let’s collect more money with a simpler tax system.  The President’s National Commission on Fiscal Responsibility and Reform suggested this last December.  Unfortunately, the President ignored these ideas when they came out.  (Leading Republicans didn’t do any better since the Commission called for increased tax collections, as well as spending cuts.)

Similarly, the President’s call for an infrastructure bank seems to ignore the President’s own comment earlier this year that he didn’t realize, back in 2009, when the that stimulus plan was passed, how few really shovel-ready projects there were out there.  That hasn’t changed.  Maybe we need to increase infrastructure spending (though we are going to have to cut spending someplace else, if we do).  But it’s not going to be a quick fix for unemployment.

The thing the President doesn’t seem to understand is that there isn’t an unlimited supply of money out there to spend.  So far, the federal government has been able to borrow as much money as it wants to spend.  But that is not going to go on forever.  Someday we are going to have to reduce our national debt as a percentage of our national income.  Either we are going to have to pay some of our debt back (by spending less than we collect) or we are going to have to have inflation reduce its relative size. 

Which means that, unless the spending President Obama is proposing will really do some long-term good (which based on the results of the 2009 stimulus plan seems unlikely at best) and we have a real plan in place for getting spending and tax collections in line with each other in the future (which we don’t have yet), President Obama’s plan, whether you call it a jobs plan or a stimulus plan (or a banana*), should not be passed.

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* When Alfred Kahn served as President Carter’s Chairman of the Council on Wage and Price Stability, he at one point said certain administration policies could lead to a depression.  President Carter was, not surprisingly, very upset with Dr. Kahn’s statement, so Dr. Kahn stopped using the word “depression” and used "banana" instead.  He later switched to kumquat when banana producers complained.

Update (9/13/11 10:40 pm): Fixed a typo in the second paragraph.