Friday, March 20, 2009

The Daily Strike-3/20/09-Gearing Up for a Budget Fight/Botched Joke/Final AIG Remarks

Good Friday evening and welcome to the Daily Strike. Washington had a very quiet day today, which was very refreshing after a week of yapping about those AIG bonuses. Let's get to it.

TONIGHT SHOW: The President went on the Tonight Show with Jay Leno last night, and besides his extremely off-color joke about the Special Olympics, he seemed to do quite well. He notably stood up for his Treasury Secretary Tim Geithner, who is under a lot of pressure from members of both parties. He also showed that he can walk and chew gum at the same time. All of these ridiculous Republican attack lines about how he shouldn't be on Leno during an economic crisis don't properly understand the role of the President. Should FDR have stopped doing those fireside chats?

I have to say, his quip about the Special Olympics was really horrible. The usually measured President cracked that his bowling skills were like "the Special Olympics." I'm glad he apologized, and I'm sure the story will be overblown by his critics, but there's no excuse for saying something like that on National TV.

The one person who has absolutely no credibility to criticize him on this issue is good old Sarah Palin. But America's favorite hockey mom wasted no time expressing her outrage at Obama's remarks, noting her son's Down Syndrome. This, of course, came on the same day that Governor Palin turned down Federal stimulus money to help struggling people in her state, including increased benefits for the disabled.

SCARY DEFICIT: The Congressional Budget office today released its own estimate of the projected federal deficit under President Obama's budget proposal, and it is $1.6 trillion higher than the administration's estimates. OMB Director Peter Orszag claims that the discrepancy comes from different views on how much the economy will recover over the next few years. The administration always projects a lower estimated deficit than the OMB, but this discrepancy is pretty large. Orszag said that the new projections won't change Obama's ambitious proposals for health care reform, cap-and-trade, and education legislation for this year.

The Republicans, of course, pounced on the budget numbers to argue that the budget wasn't fiscally responsible. The irony is that it would be far more fiscally irresponsible to CONSTRAIN spending right now. Almost every economist agrees that there is a huge shortage of consumer demand. Our actual output is about $1.2 trillion below our potential output. Private companies don't have the money right now to invest. The only entity that can make up this deficit in consumer demand is the government. I know this will be a difficult argument to make for two reasons. One, it's counter intuitive to think it's fiscally responsible to spend more. Second, the mainstream media (like the editorial pages in the Washington Post and New York Times) are obsessed with deficit reduction. Only someone with communications skills like Obama can make that case to the American people, and you can bet that he will try.

PELOSI'S LETTER: Speaking of the budget, House Speaker Nancy Pelosi sent a very encouraging letter to her members today asking them to be foot soldiers for Obama's budget. It's good to see the Democrats play as a team for once. Pelosi is asking members to hold at least one event during the upcoming April recess to highlight either:

-economic recovery and the budget blueprint
-strengthening the economy with affordable health care
-Creating clean energy jobs and reducing global warming

I'm very happy that the Speaker sent out this letter. Obama can't be the only one sticking his neck out there for the ambitious budget. Democrats need to stop complaining about this or that provision and this or that parliamentary procedure and start making the case to the American people that we need bold change.

LAST THOUGHTS ON AIG: On the way to work this morning, I was reading the editorial in the Washington Post slamming the House-passed measure to tax bonuses from companies receiving federal bailouts at 90 percent. They interviewed all these "financial analysts" from Wall Street who were saying that this populist outrage is dangerous, and that this plan will cause financial ruin. They're argument was that most workers in financial services receive the bulk of their payments in yearly bonuses, which are based on incentives and company profits. For a second there, the Post almost got me. They almost got me to believe that maybe Washington leaders were acting in haste. But then I thought about it, and I realized just how absurd this editorial was. First of all, bonuses would only be taxed on workers making more than $250,000 per year, so those people would be doing just fine. Second, and most importantly, it's been 30 years that we've let the financial services industry tell us that every regulation will ruin the economy. Even under the Clinton administration, we've had Wall Street hands come into the White House, and do everything they can to eliminate "burdensome" rules that they say will constrain "their ability to create wealth." I'm at the point where I'm never going to listen to these types of arguments again. They're undoing of federal regulations created this mess in the first place.

That's it for this evening. See you tomorrow!

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