Monthly Archives: September 2008

How to Make TARP Politically Acceptable: Add a Tax on Securities Transactions

I propose that the Congressional leadership re-introduce the Trouble Asset Relief Program accompanied by a major new policy: a small tax on securities market transactions. This will accomplish the political goal of aiming a silver bullet into the heart of the (understandable) popular outrage that blocked passage of the TARP bill on Monday. It will […] Continue reading

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The Revised Troubled Asset Relief Plan Deserved to Pass

When the Treasury came out with its $750 bailout plan on September 22, I  thought it lacked so many necessary ingredients that it deserved a thumbs down.  (Many others had similar objections, including George Soros.)

But in the negotiations between the Treasury and Congressional leaders over the course of last week, the missing ingredients were inserted.    […] Continue reading

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An Emerging Consensus on the Paulson Plan: Government Should Force Bank Capital Up, Not Socialize the Loans

In time of war, there is a tendency for both parties to rally around the president, as we saw (all too well) in Iraq after September 11.    In time of financial panic, there is often a similar inclination.  The two presidential candidates, for example, are being very careful in their statements.   I don’t blame them.  […] Continue reading

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What Does It Take to Define Away the Statistics Showing Superior Economic Performance Under Democratic Presidents than Under Republicans?

A panel on Supply Side Economics in Washington, September 12, included statistics on the superior performance of the American economy under President Clinton compared to his Republican successor. (The graph to the right, from Ettlinger & Irons, shows the first term of each administration.  The growth gap widened subsequently.) Former Treasury Secretary Larry Summers gave […] Continue reading

Posted in Conservatives and Liberals, Laffer Curve | Tagged , | Leave a comment

Supply-Side Economics Contradictions Live on in Washington

Politicians have always faced the temptation to give their constituents tax cuts.    But in recent decades “conservative” presidents have enacted large tax cuts that have been anything but conservative fiscally, and have justified them by appealing to theory.   In particular, they have appealed to two theories:   the Laffer Proposition, which says that cuts in tax […] Continue reading

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Goldman Sachs Puts Odds That NBER Committee Will Declare Current Recession at 95%

A guest post, from Goldman Sachs — U.S. Economic Research:
September 9, 2008


To us, the very weak employment report last Friday pretty much closes the argument when it comes to whether or not the economy is in recession—it is.


The model puts the chance that August will be classified as part of a recession by the NBER […] Continue reading

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Anti-Shirking Import Penalties in US Climate Change Bills Could Backfire

 So both the Democratic and Republicans have officially nominated their candidates.  Remarkably — from the vantage point of just a few years ago – both Senators McCain and Obama are on record as supporting strong action for aggressive cuts in US emissions of greenhouse gases (GHGs).   In June 2008, the floor manager’s version of the […] Continue reading

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