Thursday, August 05, 2004
Whither the Kerry economy? And what does the Democratic Convention have to do with it?
.... Kerry will return the federal government to the principle of paying for new initiatives without increasing the deficit. Known as "pay-as-you-go," these common-sense budget rules were instrumental in creating the economic growth of the 1990s but were quickly abandoned by the Bush administration. In addition to reintroducing "pay-as-you-go," Kerry will take steps to ensure discretionary spending - excluding defense and homeland security - does not grow any faster than inflation.
Later this afternoon, Kerry is scheduled to discuss his budget framework with members of the Business Roundtable. He will be joined at this meeting by former Clinton Treasury Secretary Robert Rubin and Deputy Treasury Secretary Roger Altman. [emphasis added]
If you really want to know what to expect for the economy in the next four years, should Kerry win (and he will), you’d better tune in to "Wall $treet Week" on PBS, then start reading the Wall Street Journal, the Financial Times, and maybe Bloomberg.com.
I know, I know. You don’t own any stocks and the last bond you owned was a bail bond. The headlines are puzzling, the writing is as dry as the Sahara, and why should you care?
The reason you should care is that the folks being discussed and the corporations they control are going to have far more to do with the direction this country takes than the President or Congress. That’s, of course, because they own the President and Congress.
Those who should know tell me that "Wall $treet Week" can be absolutely hilarious when viewed on a psychedelic. Taken alone, Karen Gibbs, one of the moderators, is worth the price of admission. She has this way of mumbling that looks and sounds as if she’s trying to keep her dentures from falling out.
So here I was, tuned in last Friday night, listening to a Wall Street panel discuss the Democratic Convention, when I heard this:
Colvin [the panel moderator]: I didn't hear any of the network commentators mention this, but during Kerry's acceptance speech, seated in the audience next to his wife, on one side of him was John Edwards. On the other side, on her right hand was Robert Rubin, who of course was Treasury Secretary during the Clinton administration. Mark Zandi, would the markets like to see Bob Rubin in a Kerry administration?
This is the kind of talk that can bring thousands of capitalists to the edges of their seats. There’s a lot of meat in this question.
First, Colvin is correct that the network commentators didn’t point out the seating arrangement. In fact, the only other outlet I’ve discovered that noted the seating arrangement was Bloomberg.com.
Watching the speech in the hall, Kerry's wife, Teresa Heinz Kerry, was flanked by Edwards and Robert Rubin, chairman of Citigroup Inc.'s executive committee. Rubin encouraged President Bill Clinton to push deficit-reduction legislation in 1993 and served as his Treasury Secretary from 1995 to 1999.
The seating arrangement wasn’t mentioned by the popular media because it’s what is known as “a signal to the markets.” You’re not supposed to know, much less care, about such things. 1
Second, “Rubinomics” is so hot on Wall Street that just a few weeks ago a number of media hacks were actually speculating that Rubin was going to be Kerry’s choice for Vice President.
But back to "Wall $treet Week,"
COLVIN: Kevin Hassett [right-wing thinktank-head], you've spent a lot of time in Washington. You've worked on a campaign or two. Robert Rubin seated next to Teresa Heinz Kerry doesn't happen by chance at a political convention. What does it mean?
HASSETT: I would have to say that what it means is that Kerry's trying to signal that even though he's promised things that don't add up and that would vastly increase the deficit, what he really is is a deficit hawk of the Rubin style, and that really what's going to happen after he's elected is he's going to give up those promises and pursue deficit reduction first.
The subtext of the panel talk was that Kerry is going to win. I mean, here’s a Bush supporter from the American Enterprise Institute saying “after he’s elected.” Now, I know. I know that sentence doesn’t say that Kerry will be elected. But on the other hand, Hassett might easily have picked a more skeptical expression, such as, “if he’s elected.”
Poor Bush. Wall Street has decided he's toast, and there ain’t a damned thing he can do about it. The only things he's still got going for him are ignorance and fear.
But all this economic talk has got Ryan Lizza at the New Republic worried,
[T]he left has good reason to be worried about Kerry's first 100 days, at least on economic policy. This afternoon CNBC brought together a small group of journalists over at the Old State House for a luncheon with Kerry's senior economic advisers. Bob Rubin and Roger Altman ... were the main speakers, but also in attendance were Gene Sperling, Clinton's chief economic adviser, and Jason Furman, Kerry's economic policy director. The message from Altman and Rubin was that Kerry is a passionate advocate of Clintonomics—especially an emphasis on deficit reduction and the return of congressional spending rules. Altman made a point of noting that like no other politician he knows, Kerry has publicly said he would trim some of his spending priorities back to achieve a fiscally conservative budget.
Asked about why corporate America sometimes fears a Democratic administration, Rubin told a story about how Clinton once confided to him that ... some in the business world are always scared that somewhere in the White House "a liberal was going to jump out of the closet." ... [T]he message to the media—and perhaps the warning to the left—was that in a Kerry White House, on economic policy there won't be any liberals hiding in the closets. However, I think there will probably be a lot more knocking on the front door. [emphasis added]