Peter Orzag on the Economy Former Congressional Office of Management and Budget director Peter Orzag puts forth a bleaker economic outlook than that projected by official figures--including his own former office's official figures--in Bloomberg. The CBO's figures are "misleading," he says, and perhaps overly optimistic, partly because the CBO "assumes a recovery more robust than what other nations have experienced following financial crises." Historically, though, Orszag notes, financial implosions in other countries have led to years of elevated unemployment: "the peak was reached from three to 10 years after the meltdown," and the countries still haven't regained "pre-crisis" employment levels. Orzag asks a budget expert to recalculate the projected budget deficit if economic growth is more sluggish than officials project and finds that "the impact from sluggish growth on the budget shortfall over the same period exceeds $2.5 trillion--which is more than the roughly $2 trillion in deficit reduction that may wind up being agreed to as part of a deal to lift the debt ceiling." He continues that "this is only more evidence that the right policy response is a combination of more aggressive action to bolster the job market now and much more deficit reduction enacted now to take effect in a few years."
Ahmed Rashid on the Political Vacuum After Ahmed Wali Karzai American officers in Afghanistan may have disliked Ahmed Wali Karzai, but his murder yesterday could cause them problems, Ahmed Rashid writes in The New York Times. Rashid notes Karzai's complex and sometimes unsavory career as a ruthless power broker in the south of Afghanistan, an accused drug smuggler, and a racketeer. "However much Ahmed Wali Karzai was loved or loathed," Rashid cautions, "his death leaves a huge political vacuum for the Americans and President Karzai at a critical moment for three efforts--the war against the Taliban, the start of the drawing down of American forces, and American efforts to talk to the Taliban and forge a peace agreement." Rashid recounts Karzai's role as a "practical operator" for his half brother during the years of exile in Pakistan, and his quick rise to power in the south in the years after 2001. With the sudden absence of this long-time power broker, Rashid says, "uncertainty has once again returned to the south."
Josh Kraushaar on Jon Huntsman's Misguided Campaign Josh Kraushaar seeks new answers to the question of Jon Huntsman's unimpressive polling numbers in National Journal. Kraushaar rejects the explanation that Huntsman is too moderate to win a Republican primary. "The biggest problem with Huntsman's campaign isn't his centrist ideology; it's his campaign's tactics." Kraushaar lists the points Huntsman should be highlighting--his record of lowering taxes and anti-abortion stance as governor of Utah as well as his early support for Paul Ryan's entitlement cut proposals. In fact, says Kraushaar, "it's striking that Huntsman hasn't used his biography and his work for the president to greater effect. He could argue that he was in the belly of the beast--and that the president's mismanagement of the economy brought him back from China to set the nation back on the right path. He could talk about how disappointed he'd been ... ." Instead, Kraushaar says, Huntsman has put forward a "milquetoast message" that doesn't hammer Obama hard enough on economic issues. "My hunch is that Huntsman made a bad bet after the 2008 election," Kraushaar says, recalling a press conference where Huntsman "sounded like a candidate already preparing for the inevitability of an Obama reelection, awaiting a run for office eight years down the road as a moderate savior."
David Leonhardt on Why Taxes Will Eventually Rise The American people are suffering from "free-lunchism" says David Leonhardt in The New York Times. A majority of respondents to a poll do not support raising the debt ceiling, even if it means default. But just as Americans do not want higher taxes, neither do they want to accept cuts to entitlements. The public's view "imagines a budget in which the United States indefinitely has the world's highest medical costs, its largest military, an aging population and, nonetheless, taxes that are among the world's lowest." Leonhardt predicts that Republicans are inching toward a compromise that means accepting the closing of loopholes--an effective tax hike. But voters do not support the closing of loopholes as much as they support a simple tax hike for those earning over $250,000. Still, Leonhardt thinks the most likely of tax raises will be the repeal of the Bush tax cuts, set to expire in 2013 unless Congress should act. Neither the Republicans or Democrats want to cut all of them, but in the event that neither side can agree on just which ones to repeal, there will be a stalemate that results in their repeal. "After the last few days," he concludes, "a stalemate doesn't seem like such a bad bet."
The Los Angeles Times on Marijuana Research Last week the Drug Enforcement Agency renewed its decision to classify marijuana as a Schedule I narcotic, meaning it has no medical value and a high potential for abuse. In an editorial, Los Angeles Times opposes that decision. "The [National Cancer Institute] and the DEA are right that there's not enough scientific evidence about the medical uses of cannabis," the Times editors write, "but whose fault is that? The biggest reason there is so little proof about marijuana, one way or the other, is that the federal government is paranoid about legitimate research on the drug and has refused to relist it as Schedule II." Currently, "all research-grade marijuana in this country is under the control of the National Institute on Drug Abuse, whose mission is to research the addictive properties of drugs, not their potential medical benefits." We need to know more, and that means the federal government needs to loosen its grip.