The Stan Collender Archives
Ben Bernanke may have painted a big bullseye on the Federal Reserve when he spoke last week in Jackson, Wyoming, about the Fed providing additional stimulus if the economy needs it.
There's no quicker way to get long-time federal budget watchers to curl up in a fetal position and rock back and forth while moaning in pain than to mention three words: general revenue sharing. Yet Robert Shiller not only used that phrase this morning in this excellent piece in The New York Times, he recommended that the program be brought back to life as a way to help state and local governments out of their fiscal problems and, therefore, to help fix the U.S. economy.
Some background for those too young to remember or for who the original experience is still too painful to recall voluntarily.
Long-time CG&G readers know that my Beautiful and Talented Wife (The BTW) is a professional actor. What you don’t know is that one of The BTW’s favorite and most celebrated roles was when she played Sarah Daniels, the lead in Rebecca Gilman’s wonderful, and wonderfully controversial, play, Spinning Into Butter.
The phrase “Spinning Into Butter” comes from the now largely discredited children’s story Little Black Sambo. In that book, Sambo gives his clothes, shoes, and umbrella to four tigers so they won’t eat him. But instead on agreeing among themselves on how to divide up what Sambo gives them, the tigers chase each other around a tree so fast as they argue that they spin themselves into butter.
Matt Miller's column in today's The Washington Post has to make you ask, "What about the budget?" After two years of demands, recriminations, and demagoguery galore about the budget deficit, national debt, and fiscal policy in general, won't dramatic political changes like the ones pollsters are predicting will happen in this election inevitably lead to massive changes in what the federal government spends and taxes?
Not a chance.
Assuming there are no big changes between now and election day (that is over just 10 more weeks), Republicans either will have narrow majorities in one or both houses of Congress or the Democrats will have smaller majorities in the House and Senate than they have now. In general, that's not a situation conducive to compromises, cooperation, and large changes.
The answer to the question I posed below...Who did the voiceover for the Golden Dollar commercial featured in yesterday's post on dollar coins?...was Michael Keaton. Alex Baldwin had agreed to do it but ended up not being able to do so and Keaton was recruited. Keaton was in a studio in LA while the ad agency directed him from the East Coast. He did several television and radio commercials at the same time. If I remember correctly, Bob Giraldi, who is best known for directing Michael Jackson's video "Beat It," directed this commercial for the Mint.
"Larry"...You were the first commenter with the correct answer so please send your full name and mailing address to stan@capitalgainsandgames.com and the dollar coin will be on its way.
Thank you all for playing.
This op-ed from Friday's The Washington Post about the failure of the current version of the dollar coin to become a circulating coin brought back lots of memories.
In 1999 and 2000, I headed the team that was hired by the U.S. Mint to increase consumer awareness of the new "Golden Dollar" coin. The was the coin with Sacagawea and her child that replaced the much-reviled Susan B. Anthony dollar. Thanks to it's color and design, not to mention an aggressive (and eventually award-winning) marketing campaign, the Golden Dollar was embraced by consumers. Within 3 months consumer awareness -- which was all we were hired to do -- was at 85 percent and people were lining up for hours outside Wal-Mart stores to get them.
According to this story by Floyd Norris in today's New York Times...
...domestic investors purchased more Treasuries than did overseas ones — including foreign governments — in 2009 and again in the first half of this year. Those purchases came as government borrowing rose to pay for bailouts and recession-related spending.
Several weeks ago Paul Krugman said in his blog that he wished he had written one of my columns. Today I want to reciprocate in kind: I truly wish I had written this from a few days ago. Paul's money quote:
So how do austerians deal with the reality of interest rates that are plunging, not soaring? The latest fashion is to declare that there’s a bubble in the bond market: investors aren’t really concerned about economic weakness; they’re just getting carried away. It’s hard to convey the sheer audacity of this argument: first we were told that we must ignore economic fundamentals and instead obey the dictates of financial markets; now we’re being told to ignore what those markets are actually saying because they’re confused.
I took some grief (and some praise) for two posts (here and here) from a week or so ago that said the bond market was unambiguously signaling that the current economic situation warranted deficit increases rather than reductions and that it had no problem with that. Now Floyd Norris at the New York Times has come to the same conclusion as I did. The money quote:
But for now, the financial markets seem to fear recession and deflation much more than they fear deficit spending.
What you see below was published today at Niemanwatchdog.org.
ASK THIS | August 12, 2010
House Minority Leader John Boehner (OH) has made some headlines over the past month about somehow stopping regulations from being issued next year. Boehner originally suggested a complete moratorium. He recently modified that to suggest something more limited.
The proposed moratorium was obviously an appeal to the financial community. The vast majority of regulations required by the Dodd-Frank Wall Street reform bill are supposed to be in place by close to the end of 2011 so the most immediate effect of stopping the regulatory process would be to put that law on hold.
But the real question is whether there's any way for Boehner to make his plan happen. The answer is no: The Dodd-Frank and other regulations are far more likely to move ahead than to be stopped.
The more you hear about the business community being worried about the future because it is "uncertain" about federal income taxes, the more you realize that it actually is the one pushing for increased uncertainty.
There already is absolute certainty about the tax cuts enacted in the early 2000s: Under existing law they expire at midnight December 31, 2010. Do nothing and we can all be absolutely certain that rates will go up. Somehow, however, that certainty is being defined as creating uncertainty.
By contrast, the changes to the existing law the business community is saying are so important to economic growth will require new legislation and, especially these days, the legislative process is about as unpredictable as you can get. So pushing for the three changes the business community says are so important to the economic recovery -- keeping the current rate on upper income individuals and the existing rates on capital gains and dividends -- has nothing to do with certainty and everything to do with lowering taxes compared to what they would be under current law.
Troy, Andrew, Bruce, Pete, Ed, and I are pleased to announce that CG&G will be adding another big name to its roster of regular posters.
The newest member of the family will focus on national security overall and Pentagon and international affairs spending in particular.
Details and a formal introduction very soon.
My column from this morning's Roll Call is about Wall Street's clearly changing opinion about the federal deficit and national debt. I wonder why CNBC hasn't discussed this yet.
Bond Vigilantes Are Now Deficit Cheerleaders
Aug. 3, 2010
The story is that the bond market forced President Bill Clinton to change his budget plans. Bob Rubin, director of the newly created National Economic Council, supposedly convinced Clinton that those who buy and sell Treasury securities on Wall Street would force interest rates much higher and hurt the economy if he didn’t do something about the deficit and federal borrowing.
The question I keep getting asked in one form or another is "Why hasn't the White House stepped up to the plate and proposed a long-term deficit reduction plan yet?"
My response: Why would you do that when, once you've stepped in to the batter's box, the only thing that's going to happen is that Roger Clemens-like fast balls are going to be thrown at your head.
If you haven't looked at this yet, you should: It's Bruce at his absolute best.
To say the least, Andrew, Ed, Pete, Troy and I are so proud.....
As my column in today's Roll Call explains, I'm having a very hard time figuring out why anyone thinks a deficit reduction deal is going to happen next year.
This story from Jay Newton-Small of Time confirms what I posted earlier today about the Senate Democratic leadership wanting to vote before the election on extending the tax cuts enacted during the Bush administration.
I will resist the strong urge to say I told you so.
Here's the money quote:
The emerging tax plan is designed, as much as anything else, to clarify the differences between the two parties as they hurtle toward the fall elections. Following on their success with the financial-regulatory-reform bill, Democrats are betting that Republicans will once again take up a legislative battle on behalf of the wealthy. "Republicans are going to have a real choice ahead of them," says a Democratic aide.
It's hard for me to disagree with Pete's reporting and analysis in his post from July 14 that Congress will likely vote to extend the tax cuts enacted during the Bush administration in a lame duck session after the election.
But Pete's statement is misleading. Although Congress as a whole is more likely to act after the election, the Senate is far more likely to debate and pass the extension before the election. In fact, the only way the Senate may be able to get enough votes to stop what may be a virtually inevitable filibuster is if it acts before anyone goes to the polls in November.
The calculus for the Senate Democratic leadership has become a bit easier in recent days as the Republican leadership has increasingly indicated it wants all of the tax cuts -- including the three provisions (the 35 percent top marginal rate on individual income and the 15 percent rate on dividends and capital gains) whose extension the White House did not propose
