Wednesday, January 29, 2014

The Administration Indicts Itself

In a very Clintonesque State of the Union address with a host of small bore initiatives President Obama made a stunning confession. Early on in his speech he noted:

   “The cold hard fact is even in the midst of recovery, too many Americans
    are working more than ever just to get by – let alone get ahead. And
    too many aren’t working at all.”

No Republican critic could have said it better. To be sure the Republican response given by Representative Cathy McMorris Rodgers was long on her personal biography and content free. It appears that both parties are not yet ready to make the concessions needed to improve the lot of the American people.

Also of significance was what was not said. Given all of the pre-speech hoopla about economic inequality, President Obama struck a moderate tone on the subject speaking of “ladders of opportunity” and increasing the minimum wage. My guess is that the class struggle rhetoric of the Elizabeth Warren-Bill deBlasio wing of the party didn’t poll well in this most political of White Houses.  One can only hope that the cooler rhetoric will open the way useful compromise later in the year.

Monday, January 27, 2014

My Amazon Review of Doris Kearns Goodwin's, "The Bully Pulpit: Theodore Roosevelt, William Howard Taft and the Golden Age of Journalism"

Doris Kearns Goodwin has written a big book and a great book. She tells quite a yarn that holds your interest throughout. It is really three books in one where she brings together the lives of President's Roosevelt and Taft who were lifelong friends until their very public break in 1910 along with the great muckrakers of the day (Ida Tarbell, Ray Baker, William Allen White, Lincoln Steffens and Sam McClure). Theodore Roosevelt is larger than life and an ego-maniac to boot. He brings the verve of the West and the intellect of the East into the White House and with his journalist allies he remakes America into his progressive mold .His break with Taft splits the Republican Party and enables the election of Democrat Woodrow Wilson in 1912. For readers specifically interested in that election, I would recommend James Chace's, "1912 Wilson, Roosevelt, Taft and Debs-The Election that Changed the Country."

However it is Robert Taft and his very modern wife Nellie who come off with their reputations enhanced. Taft is a true progressive, but because of his judicial temperament he never won the love of the progressives of the day. Sounds familiar. It was Taft who successfully governs the Philippines and brings peace to the islands. It was his diplomacy that opens the way to the Portsmouth Peace Conference that settles the Russo-Japanese War and brings along a Noble Peace Prize for Roosevelt and it was under his Administration that the progressive reforms of Roosevelt are solidified. He also establishes a postal savings system to protect the savings of Americans from the risk of bank failure and expands the enforcement of the anti-trust laws. Taft was well ahead of his time in promoting a free trade treaty with Canada that ultimately passes the Congress, but is turned down by the Canadians. Moreover Taft never wanted a break with Roosevelt and did his best to avoid it and after the break it was he who opened the way to their reconciliation.

His wife Nellie is leader in the Kindergarten movement, a percussor to what today we would call early childhood education. It was her political acumen that propels Taft from a judicial to a political career and were were it not for a stroke in 1909, she probably would have enabled Taft to hold on to the presidency in 2012. It was she who brings the cherry blossoms to Washington D.C. You can tell that Kearns Goodwin really loves her.

As to the muckrakers they were true investigative journalists who did real reporting. They were not the blowhards of the MSNBC's and the Fox's of today. They did real work. They were also way to close to the White House for our more modern sensibilities by working hand and glove with Roosevelt to move their joint agendas.

Where Kearns Goodwin goes astray is that she buys way to much of the progressive myth. The poor weren't getting poorer. To be sure the rich were getting richer, but the overall economy was booming. Real wages were rising and the farm depression of the late 1880s and early 1890s was over. She also ignores the work of the so called reactionary Republicans in putting together a national monetary commission that would lead to the establishment of the Federal Reserve. There was a rising middle class who could afford to buy the muckraking journals that were made more economical by improved print technology. She leaves out the facts that the automobile, aircraft and motion picture industries were germinating and would flower in the 1920s. And the country was felling proud of its new role on the world stage, surpassing Britain as the leading economic power and showing off its two ocean navy. Doris Kearns Goodwin has written a hopeful book and she reminds us that we as a nation were young once and we once again can be. If only we can summon the will.

See the Amazon URL at:

Thursday, January 16, 2014

"The Inflation to Come in Housing, Healthcare and Wages," UCLA Economic Letter, January 2014

 For the past year, U.S. inflation has remained at very low levels. But that is about to change, led by price increases in housing and healthcare, and by modest wage increases. And that will eventually cause the Fed to abandon its zero interest rate policy.

“Rent controlled jurisdictions (i.e. New York, Los Angeles, San Francisco and Washington, D.C.) are over- weighted in housing price indices. As a result, housing inflation will accelerate as controlled rents are marked to market through vacancy decontrol. Furthermore, 2014 will bring with it the eighth year of under-building.”

As a result, the combination of higher housing costs, a modest snap back in health care inflation and moderate wage increases will soon push inflation up from the extraordinarily low level of the past year. Instead of having a very low inflation rate of 1%, we will soon be witnessing a low inflation rate of 2%. The Fed wants this increase and it will get it. The uptick in inflation combined with an improving labor market will cause the Fed to abandon its zero interest rate policy in early 2015.

For the full article go to the following URLs:


Thursday, January 9, 2014

Chris Christie and "Bridge-gate"

New Jersey Governor Chris Christie is certainly and rightly being raked over the coals over the role of his gubernatorial and campaign staffs in causing four days of monstrous traffic jams on Fort Lee's on-ramps to the George Washington Bridge. The ostensible reason was a pique over the failure of Fort Lee's mayor to endorse Christie in last year's gubernatorial race.

No sector of the political class is more gleeful than the running jackals of the hard left who are now feasting over Christie's wounded political carcass. It is he who they fear most in 2016. Nevertheless I would caution them that what does not kill him, will only make him stronger. After watching Christie's presser this morning, I think he is on his way to recovery. Unlike other politicians, Christie is willing to accept blame for the mistakes of his staff. Would that only be true in Washington, D.C.