Credit the Fed for slashing interest rates to keep the economy above water. Better late than never. Further stimulus may come in the form of lower taxes. Now, if we can only break the back of sky-high oil.THE ASTUTE BLOGGERS - YESTERDAY :
Global markets have plunged this week, fearful that the U.S. economy is tumbling into recession and dragging the rest of the world with it. Losses on Monday alone in London, Paris and Frankfurt equaled the combined GDPs of New Zealand, Hungary and Singapore. In the wake of such damage, U.S. futures were pointing to a 500-point drop in the Dow at Tuesday's open in New York — a 5% haircut.
Seeing all this, the Fed responded, holding its first emergency meeting since the one right after 9/11 and slashing rates three-quarters of a point to 3.5%. It was the biggest cut since October 1984. Well done, though a bit late.
We've been warning for some time that the economy faced growing future dangers from soaring oil prices, the subprime mortgage mess and a credit crunch. Well, if markets are any guide — and they usually are — the trouble is here and Fed action is in order. More than interest rate cuts will be needed, however.
Congress, spooked by a faltering economy and its own abysmal approval ratings, has joined with the Fed and President Bush to seek ways to stimulate growth. Both House Speaker Nancy Pelosi and Sen. Majority Leader Harry Reid met with the president Tuesday and emerged vowing a "bipartisan" stimulus plan.
But it's plain that Pelosi and Reid are interested mainly in cutting checks for potential voters — not in the long-term health of the economy. Why else would they propose only short-term aid — including rebates, extended jobless benefits and increased food stamp aid — that will just take money from one pocket and put it into the other, but do little to boost actual economic growth?
By contrast, Bush's $150 billion stimulus plan, amounting to 1% of GDP, looks pretty good. Yes, it includes up to $800 in rebates for each taxpayer — a sop to the Dems. But it would cut taxes on small businesses. And hopefully, it would make Bush's 2003 tax cuts permanent.
Instead of the "timely, targeted and temporary" stimulus Pelosi says her party wants, Congress should sign on to Bush's broader approach. Bush's stimulus will actually provide incentives for people to save, invest and start new businesses. These, in turn, will create jobs, produce new goods and services, and ease inflation pressures.
But, again not surprisingly, Congress is neglecting perhaps the most important stimulus of all: lower oil prices. We have billions of barrels of oil locked underground in Alaska's Arctic National Wildlife Refuge and on the Outer Continental Shelf. We have two trillion barrels of crude in oil sands here and in Canada.
All this supply is enough to keep our economy humming until adequate oil replacements can be found. With prices today nudging $90 a barrel, we're paying roughly $1 billion a day more for crude than we did just two years ago.
This amounts to a tax that the Democrat-led Congress has irresponsibly refused to remove by letting us develop more oil. And the tax falls heaviest on the lower-income Americans that the Democrats profess to represent.
Remember: Our economy, like the rest of the world's, runs on carbon-based energy. Any long-term stimulus must respect that fact. Congress, however, has kept oil supplies tight to wage a phony fight against global warming. This is the height of irresponsibility.
Those in Congress who continue to undermine our economy by blocking every effort to increase energy supplies should be voted out of office. They're as much to blame as the foreign petrotyrants who hold us hostage to high prices knowing that America will not take matters into its own hands.
FED MAKES MONEY CHEAPER - NOW WE MUST MAKE ENERGY CHEAPERAND THAT WASN'T THE FIRST TIME WE BLOGGED THAT THE DEMS ARE THE ONE RESPONSIBLE FOR OIL BEING TOO EXPENSIVE. WE POSTED ON THIS ON FRIDAY THE 18TH, TOO.
The economy needs cheaper energy as much or more than it needs money.
And we don't have to wait for OPEC to take pity on us for oil to become cheaper.
We can reduce the price of oil with the stroke of a pen: just by opening up ANWR and the coasts of CA and FL for oil exploration - and by granting licenses for 20 nuclear power plants and 20 clean coal-burning power plants.
Oil will hit $60/barrel in a week.
If we really want to keep America and the world's economy growing, then we will do these things.
- ALL THIS PROVES - ONCE AGAIN - THAT THE ASTUTE BLOGGERS DOESN'T FOLLOW THE PACK; WE LEAD.
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