Yep, you read that right. Here’s Kudlow:
When President-elect Obama had a chance to squash the tax-hike threat once and for all at his news conference Monday, he took a pass and let the question linger for another day. But his new economic cabinet appointments strongly suggest there will be no tax hikes next year.
Stocks, for one, like what they’re seeing from Obama’s latest cabinet selections. On Friday, Obama announced Tim Geithner will be his Treasury man, and on Monday he made Larry Summers his White House economics tsar and named Christine Romer to the top spot in the Council of Economic Advisers (CEA). Stocks rallied 900 points across this stretch. That’s not the end of the stock story. Markets also like the new super-TARP government plan to bailout Citigroup, which effectively guarantees the banking system with a massive insurance-like policy. But markets may also sense a little pro-growth good news in the Obama policy mix.
When asked about tax hikes on Monday, Obama said the debate is between repeal and not-renewal. In other words, repeal the Bush tax cuts in 2009, thereby raising tax rates on capital gains and successful earners, or wait until the Bush tax cuts expire at the end of 2010. Investors want to hear the latter, and Mr. Obama said his team will make a recommendation.
Here’s my thought on his team. Summers, Geithner, and Romer will all recommend no tax hikes in a recession. Maybe for Keynesian reasons; maybe a nod to supply-siders. Obama talked about a liberal-conservative consensus. But what’s especially encouraging is the appointment of Ms. Romer, who easily could serve as CEA head in a Republican administration (just like Geithner could have been McCain’s Treasury man).
About a year and half ago economist Don Luskin sent me a long article about taxes by Christine and her husband David Romer, who were writing for the National Bureau of Economic Research. From the introduction: “The resulting estimates indicate that tax increases are highly contractionary. . . . The large effect stems in considerable part form a powerful negative effect of tax increases on investment.”
Later in the article, the Romers write: “In short, tax increases appear to have a very large, sustained, and highly significant negative impact on output.”
That’s what makes the Romer appointment so interesting. In fact, there is no question that Obama’s economic team is right of center. All three are market-oriented. They’re also pro-free-trade. Hopefully Summers and Geithner maintain the Robert Rubin King Dollar policy of the Clinton years. And if Ms. Romer can stop tax hikes, that will help the greenback even more.
At a minimum, both Romer and Geithner could have served under Gerald Ford or George H. W. Bush. But they may be more pro-growth than that. Romer’s study of the damage of tax hikes on the economy and her emphasis on investment are right on target. In a New York Times story, a former Treasury colleague of Geithner’s says, “he’s no liberal.” As for Summers, while he has been mau-maued by Democratic feminists and some of the unions, he is a tough, clear-headed thinker who has for years tried to merge Keynesian and supply-side policies. No mean feat.
My emphasis. And with the decision to keep Sec. Gates at Defense, a Republican foreign policy realist at heart, one has to wonder whether Obama’s presidency will look more like Ford’s second term than Carter’s second or Clinton’s third. Is Barack Obama the President Rockefeller we never had? Regardless of the answer to that and other only halfway serious questions, I am a bit relieved by the appointments Obama is making, which seem to acknowledge that this is still a temperamentally conservative country, if not an ideologically or politically conservative one.
November 25th, 2008 at 10:31 pm
But…but….RUSH and Hannity said he’s a radical!
November 25th, 2008 at 10:41 pm
Not as concerned as I used to be since some of Obama’s appointments have been announced. It would be a pleasant surprise if Obama’s first term looked more like Ford’s second than Carter’s 2nd.
I don’t ever listen to Rush and very seldom to Hannity. It was Obama’s own words that had me concerned.
November 25th, 2008 at 10:45 pm
#1 – lol
Hannity is the biggest reactionary blow bag on the radio today. His constant appeals to emotion and labels as means of winning an argument bore and annoy this libertarian education urban intellectual.
Larry Kudlow is as big a free market capitalist as exists in business today. If he has something positive to say about Obama–it would be wise for conservative policy makers on the Hill to take note. There may be more to work with than they believe. After listening to CNBC analysts (several whom are expressly anti-Democrat) I am cautiously optimistic.
November 25th, 2008 at 10:53 pm
kudlow is is the standard fake free market thinker that pervades the supply side movement…..aka free markets are always fine on the upside…but when something bad happens he calls for fed intervention, cheap money, stupidly low interest rates and other “growth” measures…..which are really just inflationist be it in assets or commodities….the conservative movement would do very well to rid themselves of Kudlow types they are all intellectual lightweights
November 25th, 2008 at 10:57 pm
It’s too bad that instead of great minds like Hayek and Friedman we now have Larry Kudlow.
November 25th, 2008 at 11:00 pm
#5, you mean the “My ideology, right or wrong” thinkers?
November 25th, 2008 at 11:28 pm
Oh My God. and you wonder what is wrong with the Repbulican party. Rush Limbaugh, appeals to a no offense but mainly white, southern, appala, skin head and senior bunch of folks. All other minority groups for the most part are turned off by him. Why do you think McCain got only 10% of all minority groups as a whole. 90% of his support overall as a whole not in splinters was cauc. look at the rallies McCain had and the convention. It was pretty cookie cutter ish. Rush Limbaugh knows nothing about race realations in this country and for him to act like he does is an insult to ethnic groups and really to his own intellegence.
I will give him he has smarts on some things but is an idiot about race realations. Limbaugh just sits up and calls people names that turns people other than the base mainly off.
Another thing, when the economy was sinking it was Obamas fault (who has not even taken office yet) yet when the economy rebounded, he said you see Bush is turning it around and Obama will make it worse…………WhATTTT…he will spin it anyway that gives blame to all the dems and none of the rebubs
This party needs to find away to draw others into it and if y ou are counting on Rush to to it and Hanity then……….well………see you in 2016
November 25th, 2008 at 11:54 pm
#7, I think you need to get your sarcasm detector fixed
.
November 26th, 2008 at 12:39 am
Rush and Hannity are both blowhards.
November 26th, 2008 at 1:21 am
” Obama’s presidency will look more like Ford’s second term than Carter’s second or Clinton’s third.”
gee, lets see now. He has a Republican SecDef, like Clinton did, and an economic team that all worked in the Clinton administration, and your conclusion is that Obama’s administration will NOT look like Clinton’s third term?????
That is might rather resemble an administration that featured people like Don Rumsfeld and Dick Cheney?
Can I have some of what you are smoking Dave?
November 26th, 2008 at 5:04 am
Lol it wasn’t just that freak Hannity. More than half of you guys on here were all like “the world is going to end if Barry is elected”.
November 26th, 2008 at 8:25 am
Tano,(10)
yes, this lookslike Clinton’s third term, it is Clinton’s couple who were supporting his campaign deep down to red-states to his fantastic win,
so what would you want to say, that Obama is a Clinton’s puppet?
thanks
November 26th, 2008 at 10:06 am
tonyk,
a clinton puppet? Not hardly. Why is it a surprise that a new dem president hires people with experince in the last dem presidency? The policies will be different, but you do need people who know how governance works in order to implement the policies.
November 26th, 2008 at 11:34 am
There isn’t a sarcasam dect, I am serious. If Limbaugh is the face of the Repbublican Party in a sense, then that tells you were the Rep party is right now.
1. Appeal- White, Evang, Skin Head, Southern States, App Mt and far far right people. Look back at the Repub Convention and Rallies. You will see exactly what I mean. McCain won the overall minority vote by 10% 90% of his support overall was cauc
2.The Economy- Obama is a socialist Limbaugh says. I guess a bail out for Citi Group Bush is doing is not socilism nor was his proposed bailout plan.
People please consistent. One thing non partisian voters do not like is the incon views when it comes to their party. Two parties can be doing similar things but their is a biased double standard that only one of the parties, the party you are not in is wrong and yours is right.
Yo Yo you may love Limbaugh which is your right but to win over other groups of people by good margins that I mentioned………LIMBAUGH AINT GOING TO CUT IT………….
November 26th, 2008 at 3:23 pm
For all ya guys on a rant about how ridiculously concerned Rush, Sean etc. were about Obama, all they were doing were accurately citing his record. That he had the most liberal record in the senate, an insane record as an Illinois state senator (BAIPA, 130 votes “present” etc.), and close ties to radicals, bigots, and crooks are FACTS. I’m happy to give him the benefit of the doubt that he’ll be wiser and more pragmatic in the White House.(As an aside, many liberal commentators are opining that Obama is only takng a centrist cabinet to give him more credibility to be able to incrementally move policy leftward. We’ll see.)
However, all this does not negate the fact that we can only judge a candidate running for office based on his record, and not on some hopeful prophecy. It’s never wise to take a gamble with filling the Oval Office, even if it may occasionally pay off.
November 26th, 2008 at 3:40 pm
Tano is quite right.
Unless Obama does hire some Clinton veterens, he would have to go with completely inexperienced people in key administrative positions. And this is a good thing for America? How is that exactly?
So instead of castigating him for selecting well-qualified candidates to run the country, I am cheering him on.
Let’s face it, Republicans have little room to criticise thanks to eight years of George “My little crony” Bush. You have to go back to the Grant administration to find as large of collection of incompentent appointments foisted upon the country. If Barack Obama is consistent in selecting competent, capable people to serve in his Administration and run the country, then I am all for it.
Just a side note. Do you think John McCain would have as readily selected people for key positions who were strongly linked with his rivals? Just something to soberly to think about for a minute or two.
November 26th, 2008 at 5:15 pm
It appears to me that Obama is very much aware of the demographic shifts that have been underway in voting patterns since 1992. A major one being the willingness of a larger percentage of the “investor class” and what might be characterized as the entrepreneur/creative class to vote for a Democrat provided they support sensible, reasonably pro-business, economic policies. I suspect that Obama and his senior advisors are seeking to reinforce that trend and perhaps turn it into some kind of long-term realignment of voting patterns. It also may indicate their perception of the declining power of labor unions.