This past September, Federal Reserve Chairman Ben Bernanke, announced the central bank’s QE3 plan— a decision to buy more bonds with the hope that lower interest rates will goose domestic spending and kick start economic growth. However, it is unlikely that QE3 will have any palpable effect on the economy after QE1, QE2, and Operation Twist failed to.
The Manhattan Institute just released the latest in its Issues 2012 series of policy briefs, “Why Savings are Suffering: Fed QE3 Policy Costs Seniors.” Authored by MI senior fellow and former chief economist at the U.S. Department of Labor Diana Furchtgott-Roth, the report argues that while the Fed is hedging that people who have been saving during the economic downturn will start spending, the lower interest rates will hurt those who live on fixed incomes and rely heavily on their savings—most specifically, senior citizens.
Nicole Gelinas:
Romney made a good point about the Dodd-Frank financial-reform law, e.g. that it enshrined five big banks as “too big to fail.”
This point is correct in that the law allows the Financial Stability Oversight Council (FSOC) to designate Systemically Important Financial Institutions (SIFIs), including the nation’s five largest banks.
The implication is that the government will be responsible for ensuring that they don’t fail, so if they do fail, it is the government’s fault, and the government would have to make up for that. This issue not just domestic, but one of foreign policy.
To wit: right now, we see Europe devoting tremendous sovereign resources to help Spain bail out its banks. If Europe is taking this tack, it expects America to do so if and when it is necessary in the future, and the Dodd-Frank law does not discourage this thinking.
It is surprising and gratifying that Romney, who doesn’t often mention Wall Street, brought up the financial system largely on his own and got into a little bit of detail.
Romney should make his point into a big speech about what it means for capitalism in general to have a financial system that is immune from market discipline.
His point about people not starting banks in their garages, though, is less promising. We need more small start-up banks, and there is no reason good regulations could not encourage people to start one-branch banks to grow and compete with larger banks. Otherwise, we have an oligopoly in finance.
Diana Furchtgott-Roth:
Mitt Romney said that the amount of money that President Obama has wasted on green jobs programs could have hired two million teachers. Green jobs programs are truly a waste—of the 33 energy loan guarantees or grants made under the Energy Department’s programs, 26, or almost 80 percent, have filed for bankruptcy or have missed production goals.
Plus, as I show in my new book, Regulating to Disaster: How Green Jobs Policies Damage America’s Economy, green energy is more expensive and raises Americans’ utility bills. Generating a megawatt hour of electricity from natural gas in 2015 will cost between $49 and $79. A megawatt hour from onshore wind will cost between $75 and $138, and from solar photovoltaic will cost between $242 and $455.
"…Obama’s energy policy rests on moral superiority. In Wednesday’s debate, Romney should make the case that green energy is neither moral nor superior, but merely condemns America to slower economic growth with only smugness to show for it."
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Diana Furchtgott-Roth in today’s Washington Examiner.
Wednesday night’s debate marks the first time President Obama and Mitt Romney will spar head to head on the economic issues that underpin the 2012 presidential election. While both candidates have spoken on the trail about tax and labor issues, neither has announced the steps they would take to safeguard the economy from another financial crisis.
The Manhattan Institute just released the latest in its Issues 2012 series of policy briefs, “WALL STREET AND DODD-FRANK: The Right Questions to Ask the Candidates.” Debate moderator, PBS’s Jim Lehrer, should consider deploying a few questions to encourage the contenders to break the silence. Authored by MI Senior Fellow, Nicole Gelinas, the report suggests thirteen questions on financial regulation for Wednesday’s presidential debate. A few of those questions include:
For President Obama:
If the Dodd-Frank law fixed Wall Street, how would you explain that just this May, 52 percent of potential voters told pollsters that they had little or no confidence in the financial industry – not much different from the 55 percent who had such little faith in the industry in the weeks after Lehman Brothers collapsed?
For Governor Romney:
You favored the idea of a government-funded “managed bankruptcy” for General Motors and Chrysler even before Obama took office and pursued such a course.[i] Do you think that large financial firms, too, should have to go through such a “managed bankruptcy” process, with creditors as well as employees taking substantial losses? In other words, is it fair to treat one industry different than the other?
For both candidates:
A lot of people like the Facebook social-media website. But they are upset that Facebook’s stock-market listing earlier this year seemed to fall prey to insider manipulation, causing big losses for small investors. Do you think the stock market gives all investors a fair shake? If not, how would you fix i
Today on NRO’s the Corner, Nicole Gelinas writes:
Conventional wisdom holds that the National Football League lockout of unionized referees will hurt Mitt Romney, because the lockout reminds union workers and former union workers in swing states that owners and their agents are often incompetent when it comes to understanding what exactly workers do. Skilled workers, they might remember, are not just interchangeable cogs, something that managers often don’t get.
There is another way of looking at it, though…
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"The challenge for America lies in getting the 47% who don’t pay income taxes into a position where they can. Now, all Romney has to do is say how."
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Marketwatch.com, Diana Furchtgott-Roth
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In the new Issues 2012 paper , “The Food Stamp Recovery: The Unprecedented Increase in the Supplemental Nutrition Assistance Program 2008-12,” author Diana Furchtgott-Roth argues:
“The Supplemental Nutrition Assistance Program is to be applauded for making strides in combating fraud, allowing state flexibility in administration, and providing the neediest citizens with choices in how to best fulfill their dietary needs. But the data beg the question: Does 15 percent of our population truly qualify as the neediest among us?
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The need for corporate tax reform is becoming urgent as high tax rates are increasingly driving American companies overseas. While both President Obama and Mitt Romney have vowed to overhaul the tax code, which has remained unchanged for 26 years, each has different plans on how their reforms will match the new realities of our 21st century economy.
