The Ticker Quick Views on Politics, Economics and Finance
President Barack Obama and House Speaker John Boehner appear to be tiptoeing their way toward some form of an agreement to avert an automatic $600 billion of tax increases and spending cuts at year-end. It will not be the grand bargain envisioned by many of the non-profit groups devoted to fixing the debt. At best it will be a small compromise that raises taxes, provides some additional "stimulus" (spending by another name) and promises to fix the long-run entitlement problem next year.
Politicians claim that there isn't enough time to put together a major tax or entitlement reform in the 11 days that remain. And they're right. But that's because they ignored it when then had the opportunity.READ MORE
If anyone enjoys a sense of clarity about what will happen in Tunisia over the coming months, you'd hope it would be the governor of the central bank, Chadli Ayari. With admirable candor, he says he does not.
Speaking today at his office in the bank's concrete bunker-like headquarters in central Tunis, Ayari said he was sanguine about the fiscal deficit of 6.6 percent of gross domestic product that the government ran this year. That's up from last year and is in part the result of about 4.5 percent of GDP worth of cash, fuel and food subsidies handed out since the 2011 revolution to cushion the shock to living standards.READ MORE
My Bloomberg View colleague Ezra Klein notes today that the adoption of the chained consumer price index -- a more accurate and also a lower measure of inflation -- to govern Social Security and the tax code is really a tax-raising and benefit-cutting measure masquerading as a technical change. He’s right.
But the change also highlights a bigger problem: Our income tax and old-age benefit policies are linked, for dubious reasons, to price inflation. They shouldn't be. Instead of tightening our price inflation measure, we should move in the opposite direction: less price indexing, more wage indexing.READ MORE
Has the King of Search found a way out of a sticky antitrust settlement?
Bloomberg News reports that Google Inc. (GOOG) is preparing to make voluntary concessions to end an almost two-year investigation of its business practices by the Federal Trade Commission. The federal scrutiny came in response to arguments from Google's competitors that the search company has abused its dominance in Internet search and given its own products and services an advantage.READ MORE
President Barack Obama and House Speaker John Boehner must enjoy the art of haggling. How else to explain the painfully long, drawn-out negotiations over a fiscal-cliff deal whose parameters are by now well-known?
The question at this point is largely one of math -- which income levels will see their tax rates rise (not whether they'll go up at all) and how much spending on entitlement and other programs will come down.READ MORE
Here's what happened in Tunisia on Monday, the second anniversary of the self-immolation of Mohamed Bouazizi, the suicide that lit the fire of the Arab uprisings.
Several thousand people gathered to mark the day in Sidi Bouzid, where Bouazizi killed himself on Dec. 17, 2010 after his cart was confiscated by a local official. The anniversary gathering was, according to local reports, a subdued event. People expressed impatience at rising unemployment and the lack of improvement in living standards since Bouazizi's death.READ MORE
South Carolina Governor Nikki Haley is single-handedly diversifying the Republican Party. Haley, an Indian-American, just appointed Representative Tim Scott to replace the state's departing senator, Jim DeMint. Scott will be the only black in the Senate. And South Carolina will have an Indian woman in the governor's office and a black senator. That's remarkable.
The Democratic Party incorporated black voters into the fold after championing civil rights legislation in the 1960s, then gradually made room for black elected officials. It diversified from the ground up. Republicans are working in the opposite direction. The party rank and file is overwhelmingly white. But Republican elected officials are increasingly diverse. Scott will join Cuban-American Republicans Marco Rubio and Ted Cruz in the Senate. And in addition to Haley, Republicans can point to Louisiana Governor Bobby Jindal, and Governors Brian Sandoval of Nevada and Susana Martinez of New Mexico.READ MORE
How's this for reminding Wall Street banks of how little they have to fear from government?
Massachusetts Secretary of the Commonwealth William Galvin today fined Morgan Stanley $5 million "for the improper influence by their investment bankers over research analysts prior to the initial public offering of Facebook.''READ MORE
A funny thing happened on the way to the fiscal cliff: Too many people forgot that elected leaders prefer to avoid injuring the public that votes for them and the businesses that bankroll their campaigns.
Over the last month, with signs of early progress scarce, the public, investors, commentators and even many Capitol Hill staffers grew skeptical that any deal to avert the fiscal cliff could be inked. It became conventional wisdom to assert that, rather than make tough political choices, the newly re-elected president and speaker of the House would end up tanking the economy with a toxic cocktail of immediate tax increases and automatic spending cuts in hopes of increasing their leverage over fiscal policy in 2013.READ MORE
Hard-money advocates warn darkly of the risks of inflation to the dollar. They believe excessive monetary easing could lead to spiraling inflation and severe recession. One problem with this account is that it's wrong, as you can see from the still-rock-bottom inflation estimates that are implied by bond markets, despite the Federal Reserve's unprecedented easing efforts.
But the even bigger problem is that it does not account for the opposite risk: that insufficient monetary easing can spur an economic crisis. To see that risk, you only have to look to southern Europe, which has been forced into monetary austerity by the European Central Bank.READ MORE
Argentine president Cristina Fernandez de Kirchner's attempt to use dodgy statistics to create a parallel economic universe won't ever compare to the stories of Jorge Luis Borges, Argentina's foremost magical realist. And yet as the gap grows between Argentina's official inflation rate and the one calculated by private economists, one has to give her points for trying. Today marks the deadline set by Christine Lagarde, the head of the International Monetary Fund, for Argentina to explain how it will fix its number-fiddling. Don't hold your breath.
Argentina's numbers trouble began in 2007, when Fernandez's predecessor (and husband) Nestor Kirchner purged Argentina's statistics institute, known as Indec, in what he called an effort to "improve operations." Later, the government began fining researchers for what it said was inaccurate reporting of inflation data. There are even allegations that it has pressured McDonalds outlets in Argentina to under-price Big Macs, lest the country's high inflation rate show up in the Economist's "Big Mac Index."READ MORE
As risky compromise offers often do, the Republican proposal came late on Friday, with much of Washington's attention fixed on the Newtown massacre. House Speaker John Boehner, in a phone call to President Barack Obama, proposed a major breakthrough in the fiscal-cliff negotiations. It could finally end the deadlock with Democrats.
Boehner's offer would move the fiscal talks forward first and foremost by raising $1 trillion in tax revenue over 10 years -- up from the $800 billion he previously proposed -- and largely from tax-rate increases on income over $1 million. The offer would cut about $1 trillion from entitlements such as Medicare but also from other domestic programs. And it would extend the debt ceiling an entire year.READ MORE
Japan has given new meaning to the moniker "Group of Seven." Last week, the phrase merely referred to the seven largest industrialized economies. Now, it's also an allusion to the number of Japanese leaders in just six years.
Sunday's election win by the Liberal Democratic Party means Shinzo Abe is likely to round out Japan's own G-7; he'll be named prime minister as soon as next week. Here's another worrisome metric: Japan is about to name its 10th finance minister since the "Lehman Shock" of 2008, something that's a bit shocking all its own. Japan, you see, has its own Group of 10, too.READ MORE
Albert R. Hunt
For Republican supply-siders, denying that marginal tax rates are the sole way to induce or impede economic growth is equivalent to apostasy.
In the 1980s, under President Ronald Reagan, the supply-side tax cutters were in their element. As the debate rages anew -- President Barack Obama wants to raise the top rate to 39.6 percent from 35 percent -- the records of the incumbent president's two predecessors give supply-siders political heartburn.READ MORE
In the annals of failed nominees -- from Robert Bork and Tony Lake to Kimba Wood and John Tower -- Susan Rice's "withdrawal" from consideration for a nomination that was never actually made would rate as an asterisk.
That doesn't mean she wasn't treated remarkably badly, both by her Republican tormenters Senators John McCain and Senator Lindsey Graham, who were more interested in blood than truth, and by President Barack Obama, who let her play a human pinata while he weighed the pros and cons of her formal nomination as secretary of state.READ MORE
Reading Christopher Flavelle’s Bloomberg View piece on the importance of lowering doctors' compensation to control health-care costs, I come away with two reactions. One, this is an ideal issue for Republicans to capitalize on. Two, Republicans will never capitalize on it.
Republicans love to fight "crony capitalism," and doctors are the ultimate crony capitalists. Their high salaries -- more than double the Organization for Economic Cooperation and Development average for physicians -- are driven almost entirely by government policy. The government accounts for about half of all health-care spending in the U.S., and the government agrees to pay doctors well.READ MORE
Pajamas Media founder Glenn Reynolds had a sort of amazing op-ed in yesterday's New York Post, arguing that the Republican Party’s underperformance among women is driven by a failure to reach low-information female voters, who “vote based on a vague sense of who’s mean and who’s nice, who’s cool and who’s uncool.”
What’s his proposed solution to the problem of the ignorant, Democratic-voting female? Wealthy Republicans should found or buy women’s magazines, excise the liberal bias in their political coverage, and instead seed them with favorable fluff stories about Republicans and negative ones about Democrats. No, really:READ MORE
Republicans crushed a weaker opponent in Michigan this week, passing a right- to-work law that infuriated unions. But the effort -- an attempt to defund and depopulate Democratic campaigns by defunding and depopulating unions – points to some of the difficulties Republicans face due to a diminished coalition.
The law exempted Republican-friendly police officers and fire fighters, thereby underscoring the naked politics behind it. But more than 17 percent of Michigan workers are members of a union, one of the highest rates of unionization in the nation.READ MORE
Margaret Carlson & Ramesh Ponnuru
We made it. It was a long, arduous journey, filled with wrong turns, hospitals that turned out to be supermarkets and time spent stranded in Australian national parks. Three months later, however, we've finally arrived at our destination: Google maps is back on the iPhone.
In his New York Times review of Google Inc.'s new free app, David Pogue describes Apple Inc.'s failed foray into navigation: "For a company that prides itself on flawless execution, it was quite a detour."READ MORE