Capital Commerce
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Dems Ready for Romney
Continue reading… 5 CommentsJimmy P. at the DNC—Earlier today, a top Obama campaign adviser I was talking to seemed to relish the idea of Mitt Romney being picked as veep. Democrats certainly have their rhetoric ready. During the economic-themed speeches tonight, I keep hearing the phrase "country club economics." That seems made for millionaire Mitt and multiple-home McCain. As it is, expect veep Biden, unions, and outside liberal groups to push the class-warfare angle hard.
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Insta-Poll of Delegates
Continue reading… 2 CommentsJimmy P. at the DNC—I took a poll of 24 Democratic delegates. I asked them how much money a person had to make a year to be considered "rich." Their choices were $250k or more, $500k or more, $750k or more, or $1 million or more. The results: 38 percent said $250k, 13 percent said $500k, 25 percent said $750k and 25 percent said $1 million. What's interesting about this is that their candidate sees $250,000 as the magic level at which wealthy people need to pay higher taxes. But 60 percent of Obama's own delegates don't seem to think that level of income makes one wealthy. I'll have a new poll tomorrow.
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5 Good Things About Obamanomics
Continue reading… 8 CommentsJimmy P. at the DNC—I chatted briefly yesterday with Obama economic adviser Austan Goolsbee while we were both roaming the halls at the Pepsi Center. I told him I would write a post about five good things in his boss's economic plan. (He didn't charm me. I was going to do it anyway. Really.) I already touched on this earlier today but I wanted to expand on it just a smidge. So here goes:
- Obama cuts taxes for the middle-class.
- Obama thinks growing the economy is an imperative.
- Obama thinks protectionism is bad.
- Obama hasn't bought into the theory that investment income should be taxed at the same high level as labor.
- Obama seems willing to consider a corporate tax reduction if subsidies and tax exemptions also were eliminated.
So there you go.
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Will Warner and Clinton Mention This?
Continue reading… 1 CommentJimmy P. at the DNC—The focus is on the economy today. Interesting timing. First, you had yesterday's IRS numbers which showed that taxpayer incomes finally rose above their 2000 level in 2006. Now today, the Census Bureau reports that "real median household income in the United States climbed 1.3 percent between 2006 and 2007, reaching $50,233... This is the third annual increase in real median household income." Even better, income inequality decreased. Of course, the economy has weakened thanks to higher oil prices and the credit/housing crunch. But I think this is more evidence that a growing economy tends to solve a lot of the problems they are worried about here at the convention like income inequality.
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What Obamanomics Gets Right
Continue reading… 4 CommentsJimmy P. at the DNC—The economy is tonight's theme here in Denver. (The formal title is "Renewing America's Promise.") So, in honor of that, I thought I would point out a positive in Barack Obama's economic agenda: Obama realizes that economic growth is good.
Now, that sounds like a joke, but it isn't. As a former aide to President Clinton told me yesterday, one of his boss's big accomplishments was to convince his party that growing the economic pie, not just redistributing wealth, was indispensable. (Now, this is a battle that Democratic centrists may have to refight given the growing hostility of many environmentalists to economic growth.)
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Shhh! Americans Getting Richer
Continue reading… 9 CommentsJimmy P. at the DNC— A common economic critique from liberals is that people are poorer today than they were in 2000. I have heard that statistic repeatedly here in Denver. (Dems pick that number because it was the peak of bubble boom.) But new IRS numbers show that isn't the case. A few factoids:
1) Adjusted gross income reported on tax returns in 2006, adjusted for inflation, averaged $58,029, up 1.2 percent from 2000.
2) Some 60 percent of the increase in total income went to those making more than $75,000, but less than $1 million a year.
3) Average income rose $2,291 in 2004 and $2,210 in 2005, and $1,369 in 2006—the slowdown because of the effect of inflation.
4) Salaries fell by almost 1 percent among taxpayers whose total income was $1 million or more.
Me: I am not surprised by these numbers. Although you almost never hear about it, incomes began growing strongly starting in 2003. (This is a big reason Bush got re-elected.) Here is what real disposable personal income did from the first quarter of 2003 through the first quarter of 2007: 1.7 percent, 5.0 percent, 6.3 percent, 1.7 percent, 3.7 percent, 2.4 percent, 2.9 percent, 7.5 percent, (-4.7 percent), 2.5 percent, (-1.3 percent), 7.5 percent, 5.1 percent, 1.3 percent, 2.3 percent, 5.8 percent, 4.4 percent. Then came the credit crunch and oil price spike. Again, it seems to me that when we keep the economy growing at a good clip, concerns about income inequality and wage stagnation fade. The big problem with the economy is not enough hypergrowth quarters of 5 percent or more.
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Pelosi Hearts Clintonomics
Continue reading… 2 CommentsDENVER—In her big speech, Pelosi, clad in white, mentions how the Clinton budget surpluses turned into the Bush deficits. Yet Obama has said he will not focus on the budget deficit during his first term. Basically, he is following the spending agenda of candidate Bill Clinton rather than deficit-cutting President Bill Clinton. Should be a fascinating economic experiment.
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Obamanomics on Display
Continue reading… 1 CommentDENVER—Right now I am watching a panel on the American economy. There are no business people. No entrepreneurs. (What about the Google guys?) And it is hosted by free-trade critic Sen. Sherrod Brown of Ohio. They are answering video questions, and in one this "regular guy" asks what Obama is going to do for the middle class. Former (Bill) Clinton economic adviser Laura Tyson gives this answer: Obama will give you a $1000 tax credit and spend money on education and healthcare. No mention that we have the second highest corporate tax rate in the world. (That suppresses worker wages and job growth.) No mention that we face a $600 billion deficit next year. Strange.
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One Nation or Two Americas?
Continue reading… 1 CommentTonight's convention theme is One Nation. Yet more and more, Team Obama seems to be playing the economy card by running a "Two Americas," class-warfare campaign not much different than if John Edwards had been the nominee. There is nothing postpartisan about Joe Biden, a class warrior without peer. Obama, Dem insiders say, needs to heighten his appeal to working-class whites, and it's my guess that Biden was ultimately seen as a better vehicle for that than Hillary Clinton. Yet outside of the Delaware delegation, it's tough to find too many folks excited by Biden. So why should independents, then, see Biden as a plus?
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Obama Adviser Buffett to America: You’re Rich Enough
Continue reading… 22 CommentsI know Barack Obama thinks pretty highly of Warren Buffett's economic wisdom. The so-called Oracle of Omaha has helped persuade Obama that higher taxes will have no effect on economic growth. Obama mentions it in his book, The Audacity of Hope. And in a recent New York Times interview, Obama said the following: "If you talk to Warren, he'll tell you his preference is not to meddle in the economy at all—let the market work, however way it's going to work, and then just tax the heck out of people at the end and just redistribute it."
But I wonder if Obama also buys into this little bit of Buffettology that the billionaire unleashed at a symposium on the U.S. indebtedness to promote I.O.U.S.A., a new documentary: "Even if we grow at 1 percent per year, we double the GDP per capita in 75 years. The pie will grow enough that everyone will get more of the pie."
Except, Mr. Buffett, typical U.S. per capita GDP growth is usually more like 3 percent a year. At that rate of growth, our standard of living would go up by 10 times rather than just double over the next 75 years. And the richer we are, the easier it will be to deal with just about any problem you can name. Take Social Security, for instance. Under a slow-growth, Buffett scenario, the trust fund will be exhausted around 2030. Under a high-growth scenario, the trust fund never runs out. That's why when we think about how to deal with our huge entitlement debt, it's important not to do anything that will hurt economic growth. Like taxing the heck out of people.
