The Ticker Quick Views on Politics, Economics and Finance
To gauge how Democrats and Republicans perceive their relative strengths in Washington today, the State of the Union address by President Barack Obama and the response by Republican Senator Marco Rubio of Florida are useful guides.
Obama, who spent his first term hemmed in by constraints -- fiscal crisis, skittish Democrats and then, starting in 2011, a Republican majority determined to destroy his presidency -- is still operating in a box. Republicans have a majority in the House and an operational veto over the Senate, where they have made 60 votes the threshold for passing legislation.READ MORE
One of President Barack Obama’s biggest proposals in yesterday’s State of the Union Address was a big minimum wage increase, from $7.25 per hour to $9. The trade-off with any minimum wage increase is that it reduces inequality and poverty, but may raise unemployment. As Evan Soltas wrote for the Ticker last month, within the wage range that is on the table, the former effect should be substantial and the latter effect small, if existent. So, raising the minimum wage is a better idea than doing nothing.
But while a higher minimum wage is a way to address poverty, it’s not the best way. It would be preferable to increase the Earned Income Tax Credit, a government program that makes payments to workers in low-income households. Unlike a higher minimum wage, a larger EITC would not create any disincentive to hire; and while some of the benefits of a minimum wage hike will go to teenagers in middle-class households, everyone who benefits from the EITC is poor.READ MORE
This is a response to Margaret Carlson's column on Pope Benedict XVI.
The sexual crimes of so many Catholic priests; the malfeasance of bishops who “failed to deal justly and responsibly with allegations of abuse”; the tardiness and inadequacy and excuse-making of the official response when word of these horrors began to spread: The sex-abuse scandal is a wound that feels like it will never heal.READ MORE
Time magazine says Senator Marco Rubio is going to save the Republican Party. It's wrong.
The response Rubio gave to President Barack Obama’s State of the Union speech offered little that was new or interesting. It consisted mostly of lines that could have come from any Republican politician, at any time in the last four years.READ MORE
In the briefest of terms, in his State of the Union address, President Barack Obama promised to save as much money on Medicare in the next decade as was proposed by the Bowles-Simpson commission. That would include, he said, lowering tax subsidies for drug companies and asking more affluent beneficiaries to pay more.
And he said it would also include making a fundamental change in the way the government pays for care -- by basing bills not on fee-for-service but on "the quality of care our seniors receive." This explains why John Kitzhaber, the governor of Oregon, was watching the State of the Union address from first lady Michelle Obama's box. Kitzhaber has made his state's Medicaid program a laboratory that will test a promising model for making that change.READ MORE
President Barack Obama's State of the Union address posed its most interesting question in the first few moments: Can his administration break free of the challenges of recession? Or will it be weighed down for another four years?
"We have cleared away the rubble of crisis," the president said. Yet in the policy landscape he went on to describe, plenty of rubble remained. The Obama agenda, if this speech is any guide, continues to be defined by fiscal issues and deficit reduction.READ MORE
You could almost hear the sound of a collective breath being exhaled on the other side of the Atlantic tonight as President Barack Obama announced that the U.S. would open talks on a comprehensive trade agreement with the 27-nation European Union.
Whether the president would commit to the arduous negotiations in his State of the Union address had been the subject of much speculation after EU officials took the first step last week and invited the U.S. to the table.READ MORE
Remarks of Republican Senator Marco Rubio -- As Prepared for Delivery
Good evening. I'm Marco Rubio. I’m blessed to represent Florida in the United States Senate. Let me begin by congratulating President Obama on the start of his second term. Tonight, I have the honor of responding to his State of the Union address on behalf of my fellow Republicans. And I am especially honored to be addressing our brave men and women serving in the armed forces and in diplomatic posts around the world. You may be thousands of miles away, but you are always in our prayers.READ MORE
Talk about just-in-time: If President Barack Obama focuses some of tonight's State of the Union address on income inequality and the opportunity gap (as the Bloomberg View editors urge), the issue's leading data-cruncher has new figures and analysis to buttress any initiatives.
Emmanuel Saez, an economics professor at the University of California at Berkeley, calculates that, during the 2007 to 2009 recession, average income per family declined dramatically by 17 percent, the largest two-year drop since the Great Depression.READ MORE
North Korea would like nothing more than for the U.S. and its allies to hyperventilate over the North's third test of a nuclear device. Indeed, with two satellite-cum-missile launches and one nuclear test during his first year in power, North Korean leader Kim Jong Un has already displayed an appetite for foreign-policy brinksmanship that goes beyond the political need to show his people that he's large and in charge.
That said, there is good reason for the U.S. to remain calm and carry on, building a united front with the new governments in South Korea and Japan, trying to bring the Chinese along and then strengthening and refining sanctions through the United Nations.READ MORE
Over the past few decades, states with no income tax have significantly outpaced states with the highest income taxes in population growth and therefore in economic growth. Conservatives like to point to this as an argument for cutting state income taxes.
But states in these groups have confounding similarities. For example, the highest income-tax states (a group dominated by California and New York) tend to have restrictive development policies and resultantly high housing costs; no-income-tax states (a group dominated by Florida and Texas) tend to have much easier development rules and lower home prices.READ MORE
"We have a problem," former Representative Gabrielle Giffords says in a new television ad. In halting, elliptical speech, impaired by the brain damage she suffered when she was shot in the head two years ago, she explains: "Where we shop; where we pray; where our children go to school. But there are solutions we can agree on, even gun owners like us. Take it from me. Congress must act. Let's get this done."
Giffords is referring to the package of gun control legislation President Barack Obama proposed in the wake of the massacre in Newtown, Conn., last year. Her endorsement -- and her embodiment of both the exorbitant cost of gun violence and the courage it takes to overcome it -- is admirable.READ MORE
Kim Jong Un has a stark message for Barack Obama, Shinzo Abe and Xi Jinping: I won't be ignored.
The North Korean leader clearly won the attention today of his counterparts in the U.S., Japan and China with the nation's third nuclear test. It was the first since Kim took over from his late father, who died in December 2011, and it adds another test to a world already awash in international flashpoints. Let's hope Obama, Abe and Xi get the memo.READ MORE
Margaret Carlson & Jim Kelly
This week Jim Kelly and Margaret Carlson are corresponding about Washington's moment on the small screen. Kelly is the former editor of Time magazine (and of Carlson) and is now a contributing editor at Vanity Fair. Carlson is a Bloomberg View columnist.
Margaret: I love House Speaker John Boehner: There, I’ve said it. My affection was born over the weekend as I watched "House of Cards" straight through to Episode 12. Only one episode left.READ MORE
In his past three State of the Union addresses, President Barack Obama devoted less than 15 percent of his speech to the world beyond the U.S. So those speech paragraphs are pricey real estate. We asked some Bloomberg View columnists and regular contributors what foreign policy issues they thought the president should raise in the first State of the Union of his second term. Links to their suggestions are below:
Jonathan Alter on fighting terrorism morally. Clive Crook on expanding trade. Edward Glaeser on economic freedom. Jeffrey Goldberg on Israel and the Palestinians. Megan Greene on Europe and the economy. Albert R. Hunt on democracy promotion. Simon Johnson on the real Chinese economic threat. Tim Judah on cooperating with the EU. Pankaj Mishra on the “pivot to Asia.” Virginia Postrel on intellectual property. Amity Shlaes on U.S. leadership.READ MORE
When four academics examined the Securities and Exchange Commission's revolving door seven months ago, they concluded that concerns about lax oversight were unfounded. If anything, they said, the prospect of future job opportunities for SEC lawyers resulted in more aggressive enforcement.
The Project on Government Oversight, a left-leaning Washington think tank, offers an alternative view. In a report out today, POGO devastatingly picks apart the earlier study. At the same time, POGO shows that the SEC's door isn't just revolving: It's spinning out of control.READ MORE
Amid the wreckage confronting conservatives after President Barack Obama's re-election, all sorts of ideas are getting a trial run. The only trouble for the Republican Party seems to be that most of them are ideas that are more acceptable to liberals.
Peggy Noonan got things started last month in a column in the Jan. 11 edition of the Wall Street Journal with the risible headline "It's Pirate Time for the GOP" (never mind that pirates are thieves and murderers without a whole lot of respect for property rights). At the top of her list of policy recalibrations was dismantling the big banks. This, she said, would be an expression of conservative opposition to concentrated power.
Bob Wilmers, the chairman and chief executive of M&T Bank Corp., gave me a call after my column last week about some of the bizarre allegations in the Justice Department's lawsuit against Standard & Poor's and its parent, McGraw-Hill Cos.
Before I get to his comments, a little backstory: The government's lawsuit last week listed about two dozen collateralized-debt obligations issued in 2007 as examples where S&P allegedly defrauded banks and credit unions. Citigroup was identified as a defrauded investor in nine CDOs that were created and sold by Citigroup itself. Bank of America Corp. was listed the same way for two CDOs it underwrote.READ MORE
In 2006, the Royal Swedish Academy of Sciences awarded the Nobel Memorial Prize in Economic Sciences to Edmund Phelps "for his analysis of intertemporal tradeoffs in macroeconomic policy." Phelps showed that, contrary to the original Phillips curve, there is no long-run trade-off between inflation and unemployment, only a short-term one. Translated into lay speech: You can fool some of the people some of the time and reduce unemployment by paying workers what looks like a higher wage. Eventually, they wise up to the fact that their higher nominal wage is a function of higher inflation, not a higher real wage. Unemployment reverts to its so-called natural rate.
Phelps is the director of Columbia University's Center on Capitalism and Society. I talked with him over the phone on Jan. 25 and Feb. 4 about his views on rational expectations: the notion that people’s expectations of economic outcomes are generally right and policy makers can’t outsmart the public.READ MORE