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Friday, June 20, 2003

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KRUGMAN'S BORE MARKET   
A lot of Paul Krugman critics seem to feel obliged to imagine that if only he'd stop wasting his time on all those angry partisan tirades he'd be able to write great columns on economics. He's such a brilliant guy... what a waste of a great mind... Wrong! Check out today's New York Times op-ed. It's just about the most pedestrian, commonplace, cliché-ridden, shop-worn bear case for equities that you're ever likely to read. This stuff wouldn't even make it on CNBC.

Just because the New York Times Company's stock crashed when it lowered earnings guidance earlier this week -- because audiences and advertisers are sick of partisan bias and the scandal it breeds -- that doesn't mean the rest of corporate America isn't recovering nicely, thank you very much.

Update... Robert Musil is back... and posts a powerful dissection of Krugman's bear case on his Man Without Qualities blog.

Update 2... Here's David Hogberg on Cornfield Commentary revealing how Krugman's bear case is really all about politics-as-usual.

Posted by Donald L. Luskin at 12:09 AM | link  


Thursday, June 19, 2003

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WHO SEZ DEMOCRATS DON'T UNDERSTAND ENTREPRENEURSHIP?   
Here's a site that's selling bumper-stickers for Democratic presidential candidates. When you buy a bumper-sticker for a candidate, they log one vote for him in the "bumper-sticker primary." Two bumper-stickers, two votes. Get it?

But if you send in a photo of a bumper-sticker or write an essay, your candidate gets a "free vote" without your having to buy anything. But there's a catch. According to the site,

"One free vote per street address, person or e-mail... You can only stuff the ballot box by paying us money, just like in the real world!"

Emphasis added. Thanks to reader Matthew Harris for the link.

Posted by Donald L. Luskin at 2:49 PM | link  

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RANDOM MOODSWINGS: LAFFER MOVES, ANTLER LAUNCHES, DEAN DRIVELS   

LAFFER REALLY MEANS IT   Arthur Laffer, the economist who ignited the supply-side economics revolution with his eponymous Laffer Curve, is relocating his economic consulting business from high-tax La Jolla, California to low-tax Nashville, Tennessee. According to the Nashville Post, "Laffer said that the firm was moving to Nashville 'because Tennessee has no income tax. If Tennessee enacts an income tax, we’ll move to Texas.'" Actually, Tennessee does have an income tax -- on dividend and interest income. If Laffer needs some economic consulting to get the details right, I know who he should call. Thanks to Bill Hobbs for the link.

A NEW ECONOBLOGGER  Steve Antler -- an economics professor known around Roosevelt University as "Dr. A," and a contributor to my Krugman Truth Squad series at National Review Online -- has launched Econopundit, and outstanding new blog devoted to economics. Good stuff. Check it out -- this guy could develop into an anti-Brad Delong.

DEAN-MENTED  David Hogberg of the Cornfield Commentary blog points out this op-ed in the Des Moines Register by Democratic presidential candidate and online darling Howard Dean -- reading straight from anti-Bush fiscal-catastophe cue-cards written for him by Paul Krugman. And while we're on the subject, check out this column by Howard Mortman, offering an amusing (if totally unsourced) catalog of Dean lies, exaggerations, obfuscations and self-aggrandizements. Catchy stuff, but since I first looked at this column, he's already posted one correction.

Posted by Donald L. Luskin at 12:12 AM | link  


Wednesday, June 18, 2003

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TIMES STOCK OFF 7%   
Stock of the New York Times Company is down 7%, as the company lowered earnings guidance below Wall Street expectations against a backdrop of disappointing advertising revenue and volume growth.

Why? Blame it on Iraq, SARS, weak retail, newsprint prices, you name it... Not a single word in the company's press release about Howell Raines or Jayson Blair.

The typically smarmy press release -- the kind Times columnists Gretchen Morgenson or Floyd Norris would roast alive if it were from any other company -- starts out by trumpeting a year-on-year ad revenue increase. It's not till deeper down we discover that various non-Raines non-Blair factors are "constraining our second-quarter advertising growth."

Credit where credit is due: my old trader friend Jeff Lin as been urging me to short the stock. Should have done it.

Posted by Donald L. Luskin at 12:52 PM | link  

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REPUBLICAN PLOT REVEALED IN SCARY CONFESSION!   
The Washington Post's columnist David Broder seems stunned today that Grover Norquist, head of Americans for Tax Reform and an influential Republican policy consultant, would have written an op-ed for the Post last week declaring the GOP's strategy to continually cut taxes during eight years of a Bush presidency. Broder regards Norquist's statement as an inexplicable confession, as an act of inadvertently "Tipping the Republicans' Hand" as the title of Broder's column puts it. Broder seems so sure that Norquist somehow spilled the beans, let the cat out of the bag, sang, squealed -- whatever! -- he even quotes Norquist explaining that White House political chief Karl Rove didn't complain about it, or even mention it.

Why should Broder be so shocked (yes, I know... "shocked -- shocked!" is what I'm supposed to say here) that a Republican spokesman should openly admit that the party endorses reining in the complex, corrupt and confiscatory beast known as the US Tax Code?

Well, as it turns out, Broder's shock is feigned. Broder reveals mid-way through is column that he believes Norquist's real and unconfessed agenda is the "shrinkage" of "social programs designed to provide a safety net beneath the private economy." Yep -- it's just the same old Democratic talking point: Republican tax-cutting is really about how they want to "slash programs" and push old ladies in wheelchairs off the nearest sheer cliff.

Which, of course, reveals the Democratic agenda much more shockingly than Norquist revealed the Republican one. The Democratic agenda is to continually expand the intervention of government action into the private sphere, disguised as the establishment of what Broder calls "a safety net beneath the private economy."

But let us not confuse Republicans with libertarians. Our Republican president and congress have been on an unprecedented spending spree these last two and a half years, and it's only getting worse with the current bipartisan orgy over prescription drug benefits. So could it be that Norquist really does just want to cut taxes? Could it be that he thinks an economy liberated from the draconian Tax Code would produce more of the wherewithal required to support the programs apparently desired by both parties?

Posted by Donald L. Luskin at 9:43 AM | link  


Tuesday, June 17, 2003

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DIONNE VS. KRUGMAN: WHICH LIE DID I TELL?   
Tom Maguire of the Just One Minute blog points out that E. J. Dionne, Jr., the liberal columnist in the Washington Post, has a substantially different version of reality than Paul Krugman, the New York Times' ultra-liberal columnist, on the purportedly scandalous closed door meeting of the House Appropriations Homeland Security Subcommittee (I wrote about Krugman's version earlier today, here).

According to Krugman, the "The ranking Democrat announced that he would introduce an amendment adding roughly $1 billion for areas like port security and border security that, according to just about every expert, have been severely neglected since Sept. 11. He proposed to pay for the additions by slightly scaling back tax cuts for people making more than $1 million per year." The unnamed "ranking Democrat" on the subcommittee is Martin Olav Sabo of Minnesota. But according to Dionne, it was David Obey, Democrat of Wisconsin who introduced the amendment. But according to the Appropriations Committee's website, Obey isn't even a member of the Subcommittee.

But best of all, according to Dionne, Obey's amendment -- or whoever's it was, and wherever he made it, if he even made it at all -- was just a political stunt. An "experiment" as Dionne puts it. He had tried the same "experiment" a couple days earlier in the Subcommittee on Military Construction, trying to trade off a tax-increase against improved soldiers' barracks.

Who knows what to believe. At least Dionne names the people he's talking about.

Posted by Donald L. Luskin at 9:29 AM | link  

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KRUGMAN'S INAPPROPRIATIONS   
The New York Times -- once America's newspaper of record -- chose not to report at all on the fact that the House Appropriations Subcommittee on Homeland Security approved its 2004 appropriation bill last Thursday. That is, until today. The story finally showed up -- in the op-ed column of Paul Krugman, America's most dangerous liberal pundit. Is this the Times' new paradigm for handling political news in the post-Jayson Blair, post-Howell Raines era?

Here are the first two paragraphs of Krugman's column-cum-story.

"Last Thursday a House subcommittee met to finalize next year's homeland security appropriation. The ranking Democrat announced that he would introduce an amendment adding roughly $1 billion for areas like port security and border security that, according to just about every expert, have been severely neglected since Sept. 11. He proposed to pay for the additions by slightly scaling back tax cuts for people making more than $1 million per year.

"The subcommittee's chairman promptly closed the meeting to the public, citing national security — though no classified material was under discussion. And the bill that emerged from the closed meeting did not contain the extra funding."

Now let's take those paragraphs apart one phrase at a time.

"Last Thursday a House subcommittee met to finalize next year's homeland security appropriation."

Yes, believe it or not, "a House subcommittee" is not identified by name -- and this is the lead in a column in America's newspaper of record (you'd flunk high school journalism class for pulling such an obviously boneheaded move). But why leave out such a simple and critical piece of information? One less fact to fact-check? Nah, can't be that -- Krugman's columns aren't fact-checked to begin with. Must be to establish a sinister, mysterious mood... "It was a dark and stormy night...and bloodthirsty Republicans were prowling the halls of Congress..."

"The ranking Democrat announced that he would introduce an amendment adding roughly $1 billion for areas like port security and border security that, according to just about every expert, have been severely neglected since Sept. 11."

"The ranking Democrat" doesn't get named any more than his subcommittee did. He's Martin Olav Sabo, Democrat of Minnesota, but there's no record that I can find of Sabo's amendment. It's so unimportant to Sabo that the only thing remotely related to it on his web site is a press release of June 6 in which he crows that "Minnesota will receive $26,690,000 for first responder preparedness and to help ease the state’s costs of enhanced security during elevated threat levels."

"Just about every expert" doesn't get named, either. But it only takes a moment or two of web-surfing to find proof that port and border security has hardly been "severely neglected." The first story I found was in, of all places, the New York Times -- and it ran the very same day that un-named subcommittee met. According to the Times story, "The Bush administration has decided to place teams of American inspectors at major seaports in Muslim nations and other smaller, strategically located foreign ports to prevent terrorists from using cargo containers to smuggle chemical, biological or nuclear weapons into the United States... [Homeland Security Secretary] Ridge is also expected to announce the distribution of $170 million in federal grants to strengthen port security around the country, most of it directed to state and local governments, and $30 million for research and development on cargo security."

"He proposed to pay for the additions by slightly scaling back tax cuts for people making more than $1 million per year."

Yeah, right. The House and the Senate just agreed on historical tax reform (after an equally historic battle over it) -- now we are supposed to believe that a congressman would seriously act as though an appropriations subcommittee is a place where that just-enacted bill is going to be revised to the tune of a lousy $1 billion? No, even congressmen -- even Democratic congressmen -- aren't that stupid. To be that stupid you have to be an economics professor or a New York Times columnist (maybe both).

"The subcommittee's chairman promptly closed the meeting to the public, citing national security — though no classified material was under discussion."

"The subcommittee's chairman" isn't named (he's Harold Rogers, Republican of Kentucky). And how does Krugman know that "no classified material was under discussion" if the meeting was closed to the public? An Associated Press story reported that "Democrats said sensitive information was not discussed during the closed-door session, though Rogers said it was." Krugman repeats the Democratic side of the dispute as a fact. The idea is to create the impression that Rogers closed the doors to the public so that he wouldn't be seen doing anything so unseemly as arguing against taxing the rich. But the same AP story quotes David Obey, Democrat of Wisconsin, offering an entirely different explanation: "They just don't want a public airing, any more than necessary, of the incompetence of some agencies."

"And the bill that emerged from the closed meeting did not contain the extra funding."

Well, at least that last sentence appears to be a fact. Although Krugman omits to mention that, even though "the ranking Democrat's" particular $1 billion didn't make it into the bill, the bill nevertheless appropriated more than $1 billion over the administration's request.

In the absence of any other Times coverage of the homeland security appropriation bill, Krugman goes on to claim that

"...according to Fred Kaplan in Slate, the administration's latest budget proposal for homeland security actually contains less money than was spent last year."

Astonishingly, Krugman's own cited source contradicts him. In a June 6 Slate column Fred Kaplan wrote,

"The department is requesting $36.1 billion for next year, which looks at first glance like a $2.4 billion increase over this year's $33.7 billion. This boost would be slight enough under the circumstances, but in fact it's not a boost at all. Congress doled out an additional $3.9 billion to DHS earlier this year, putting its total 2003 budget at $37.6 billion. So the request for the coming fiscal year amounts to a $1.5 billion reduction. (This charge may be a bit unfair; there's bound to be an FY04 supplemental request later on. Still, the department's budget isn't exactly soaring.)"

Even Kaplan and the fact-checkers at Slate -- nothing but a liberal online rag -- had the integrity to qualify the claim with "may be a bit unfair" -- and to effectively nullify it by rephrasing it as "isn't exactly soaring." But the newspaper of record left all that out.

If this really is the Times' new paradigm for handling political news, I want the old paradigm back! I'd rather have seen this appropriations bill covered on the Times' Washington page -- yes, even with Jayson Blair's byline. Anything but Paul Krugman's lies, disguised as news. It was bad enough when they were disguised as opinion.

Posted by Donald L. Luskin at 4:25 AM | link  


Monday, June 16, 2003

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RANDOM MOODSWINGS: PAYING OFF HOWELL, CLARK'S PROGRESSIVE FANTASIES   

HOWELL'S OWN PRIVATE PARACHUTE   Edward Boyd on the Zonitics blog is asking, what color is Howell Raines' parachute? Just how much is he being paid to go away quietly? Boyd notes that nothing about Raines' compensation is included in New York Times Company filings with the Securities and Exchange Commission.

I called Catherine J. Mathis in the Times Company's public relations department and asked her if she could tell me what Raines' severance package consisted of, and her answer consisted of the single word "No." She would not tell me if his severance package had been altered in any way in light of the circumstances of is departure, nor would she disclose to me whether Raines held options on Times Company stock. She explained that this was "for reasons of privacy."

The business section of the Times, of course, never extends such courtesies to executives of other corporations, whose "obscene" and "excessive" compensation and severance packages are routinely held up to the public as evidence of unconscionable greed. Typical "do as I say, not as I do" business practice from the Times Company. As I noted a year ago, the Times Company still doesn't include the expense of stock options in its income statement, though it repeatedly excoriates other companies who don't (without ever once having mentioned their own stance).

THOSE PROGRESSIVE DEMOCRATS   General Wesley Clark, introduced Sunday on "Meet the Press" as a potential Democratic presidential candidate, established his bona fides by saying, "I thought this country was founded on a principle of progressive taxation."

Our friend Bret Swanson says, "Whooooaaaa, General! Founded on the idea of progressive taxation? Thanks to Madison and Hamilton and their crew, the Constitution explicitly forbade progressive taxation. It took the 16th amendment to enshrine the socialist concept."

Posted by Donald L. Luskin at 9:21 AM | link