Tim Geithner Plays with Words on Fox Business

Liz Claman of the Fox Business Network is one of my favorite interviewers in media today. She is warm and cordial, which also means her guests are easily disarmed and she follows that up with some of the tougher questions in business news.

Recently Treasury Secretary Timothy Geithner was a guest of Liz Claman on the Fox Business Network and said that we will be able to “solve this financial crisis at a dramatically lower cost than we initially anticipated," he goes on to actually claim that the U.S. taxpayers have made money on banks paying back TARP.

On whether the US taxpayer made money on banks paying back TARP:

Geithner: “Absolutely. Just on that particular investment (Bank of America) the taxpayer got probably more than $2.5 billion even before we sell our warrants…We’re going to be able to solve this financial crisis at a dramatically less cost than we initially anticipated.” On the flip side, our financial industries have developed a new type of "freezing effect" as banks stop making investments because they have huge reserves to sit on and are paid for by taxpayers. Loans are risky; government subsidies have allowed banks to avoid that type of risk. Furthermore, this does not even address the bigger issue of nationalization and the inappropriate use of government power.

On the opposition to government tax credits to small businesses:

Geithner: “There’s a pretty good case for looking at targeted tax incentives to encourage investment and new hiring.” Unfortunately this administration seems to "target" tax cuts or subsidies to political allies, be it political organizations that support its agenda (e.g., ACORN) or corporations that they are trying to win favor (first Wall Street and now a "new" bailout for Main Street).

On what it will take to create jobs:

Geithner: “It will not be one thing. It’s going to have to take a mix of approaches, and you’re right, we have limited resources.” What happened to the money we "made" from TARP? This type of political double talk is common for Obama and his team. With the highest unemployment in a quarter of a century, it is difficult to stomach watching this President spending close to $1 trillion just to launch a health care program that is unconstitutional, promises to create a systems of rationing, and will not event go into effect for almost a half of a decade. Allowing the states to determine its own minimum wage, eliminating taxes on corporations (since those taxes only undermine competitiveness), and making it easier for employers to hire should be on the top of Geithner's priorities.

You can watch the interview by visiting here.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

"No New Taxes" Meet Barack Obama

In the eyes of most people, including political pundits, scholars, and every day voters, the beginning of the end of the George H.W. Bush presidency began in June 1990 when he decided to raise taxes. Raising taxes is the occupational hazard of a politician. Even my favorite tax cutter, Ronald Reagan, found himself doing such near the end of his second term. For George Bush, it was absolutely fatal.

In 1988 Bush was desperately trying to make the case that he could carry the Reagan mantle. Conservatives have long been suspicious of Bush's tax cutting credentials. In 1980 Bush described Reagan's tax cut objectives as "Voodoo Economics." Many rank and file Republicans feared that the candidate of 1980 would become the President of 1989. During the 1988 Republican National Convention, Bush tried to placate those concerns with a paragraph that would at first lift up his candidacy and then later haunt his presidency. During that speech, Bush told the enthusiastic crowd: "And I'm the one who will not raise taxes. My opponent now says he'll raise them as a last resort, or a third resort. But when a politician talks like that, you know that's one resort he'll be checking into. My opponent, my opponent won't rule out raising taxes. But I will. And the Congress will push me to raise taxes and I'll say no. And they'll push, and I'll say no, and they'll push again, and I'll say, to them, ‘Read my lips: no new taxes.’ Many believed that statement both sealed the deal and cursed his presidency when he turned back on his pledge in less than two years.

Fast forward to 2008 and candidate Obama has pledged that the middle class would not see an increase in taxes. In fact, we were told that the vast majority of those making less than $250,000 would actually receive a tax cut. This was a constant theme of the Obama campaign and we were even given a nifty calculator on the Obama website so people could see how much they would save under the Obama plan. Fox News reports that is about to change: "'We will not get this economy back on track, recovery will be not strong and sustained, unless we ... can convince the American people that we're going to have the will to bring these deficits down once recovery is firmly established,' Treasury Secretary Tim Geithner said on ABC's 'This Week.' Asked point blank whether it was right to suggest it is a matter of when, not if, taxes will be raised, Geithner responded, 'It is absolutely right.'" The Associated Press went on to point out that Geithner would "not rule out tax increases for the middle class." The Administration can't afford to do such because the middle class has the vast majority of the taxable income "available."

According to Steve Moore of the Wall Street Journal, "The latest data show that a big portion of the federal income tax burden is shoul­dered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes."

When Obama begins to go after this "treasure chest" of dollars, his positive polling numbers will go the exact opposite direction as the unemployment figures. The amount of days that will be left in his administration will likely become very numbered indeed.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Sweden, US, and Answering the Socialism Question

The economic lessons the vast majority of us received in high school and college is grossly inadequate. Most people can't answer the simple question as to whether the US is making a dramatic move towards socialism. In fact, most can't even explain what socialism is. Socialism is simply defined as "government control or ownership of the means of production." What are the means of production? You and I are, of course, as are the businesses we own and work for.

Recently and with questionable Constitutional authority, the Congress has financed (largely through fiat money) the massive taking over of numerous financial institutions. So ambitious is the government's reach, Congressional leaders are "naming names" of individuals who received bonuses from companies that garnered a bailout to an angry mob and retroactively taxing these executives in an effort to punish the businesses they claimed a commitment to protect.

Secretary of Treasury Timothy Geithner and company are not finished yet. The Associated Press are reporting that he and Federal Reserve Chairman Bernanke "sought broad new powers Tuesday to regulate tottering nonbank financial companies like insurance giant AIG, and President Barack Obama said he hopes 'it doesn't take too long to convince Congress' to grant them.'" These powers don't merely transfer to the Fed and to Treasury, but to the President himself. Furthermore "Along with the new authority to regulate and, if necessary, take over giant financial companies whose collapse might endanger the broader economy, the administration wants increased oversight and controls of previously unregulated markets such as hedge and private equity funds." The government's reach will even go into financial institutions that didn't participate in the bailout programs.

I remember when Americans were shocked back in 1979 when Chrysler successfully negotiated a bailout from the federal government that was a fraction of what GM received in January, which was a very small fraction of what the government gave in bailouts in general.

Historically, when we typically think of socialism, we think of Europe. Furthermore, the most socialistic of all the European governments is arguably Sweden, which is famous for its "cradle to grave" government programs. But recently George Bush, without Congressional approval, gave $15 billion to help bailout the Automobile industry. Sweden's government had a very different message to its struggling and iconic Saab motor company. The New York Times reported that the "enterprise minister, Maud Olofsson, put it recently, 'The Swedish state is not prepared to own car factories.'" Saab lost over $340 million last year and has begun the process of "reorganization," which is one step short of bankruptcy.

Ironically, the Washington Times has noted that "Treasury Secretary Timothy Geithner said Monday that the administration decided on its public-private plan to rescue the U.S. financial system because "we are not Sweden," the country known for nationalizing troubled banks and other sectors of its economy. We are the United States of America, we are not Sweden," Mr. Geithner said.

Geithner is right, Sweden had enough sense and, maybe a commitment to free market principles, to avoid socializing the automobile industry. One thing we know for sure is that there is no question the US is making a dramatic move towards becoming socialistic and seems to be trying to surpass, rather than merely catch up, with Europe's poster child of socialism.

Kevin Price is Host of the Price of Business, the longest running show on CNN 650 (M-F at 11 am). Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com.

The Arrogance of Officialdom

"The budget should be balanced, the treasury should be refilled, public debt should be reduced, the arrogance of officialdom should be tempered and controlled, and the assistance to foreign lands should be curtailed lest Rome become bankrupt." Marcus Tullius Cicero, circa 63 B.C.

Cicero's quote is one of my favorite when it comes to expressing my frustration with politicians who are out of control. The Obama administration is full of such characters. Very rarely has a politician failed to be confirmed by the United States Senate because of tax issues. We have never certainly seen this happen to three in one administration (with two on one day with former Senator Tom Daschle who was nominated for Secretary of Health and Human Services and Nancy Killefer, who was chosen as the President's performance czar).

It is extremely bold that the candidates forced to pull out of their positions found themselves in this predicament:

• Tom Daschle was a member of the Finance Committee for many years while in the United States Senate. This is the committee that oversees tax laws. It is hard to imagine that someone with that kind of background could find himself owing over $140,000 in back taxes, interest, and penalties. This is more than what most Americans make over several years. To be ignorant about owing this amount in taxes seems very hard to believe.


• Nancy Killefer has years of experience as a government and business consultant. With a BA in economics from Vassar College and a MBA from the Massachusetts Institute of Technology, Killefer looked like a great appointee on paper, but she too had to withdraw because the District of Columbia had filed a more than $900 tax lien for failing to pay state unemployment taxes on domestic help. A person in charge of the efficiency of the US Government being unable to keep track of her tax obligations became more than the administration could bear and she withdrew as a result of it.


• Timothy Geithner, our new Secretary of Treasury and the man who oversees the IRS is another person who had serious tax issues. Geithner failed to pay tens of thousands in taxes over several years. You would think that, if any person would be forced to withdraw, it would be Geithner. However, the Obama administration told us that this would be an isolated incident and the Senate chose to over look it. Now, tax evasion seems to be a prerequisite of getting an offer from this President.

Obama lectures us about the importance of maintaining the highest standards in government and tells us that he is choosing the "best and the brightest" for his administration in the Kennedy tradition of "Camelot." However, it is looking more like "Spamalot" as people ask if Obama's appointees believe they are "so good" and "so smart" that they don't have to abide by the same standards as the rest of the population? That is the exact impression that the Obama administration is conveying to the American people.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Jackson is Furious and Limbaugh is Confused by Obama's Choices

Barack Obama is about to announce the make up of his economic team as Wall Street, Main Street, and the media pundits hold their collective breath. His choices appear to be very surprising. This is not because they are very radical, but surprisingly conventional. They are the type of choices that will likely relieve Wall Street and infuriate the radical base that brought him to power. Furthermore, all of those who wished Clinton had gotten elected, don't worry, your favorite members of that team are showing up for an encore. What is most surprising of all is that Obama seems to be drawing on the more pragmatic and technocratic wing of the Democratic Party. Limbaugh and Hannity might go crazy over how boring these choices are.

Don't get me wrong, this team is liberal. But it is not the rampant ideologues that had many on the Right worried. On the other hand, they could also be the ultimate collective Trojan Horse, creating a sense of complacency that may make it possible for Obama to pursue the far reaching agenda he campaigned on.

The following is a breakdown of two of his most prominent team members:

• Timothy Geithner will be nominated as the new Secretary of Treasury. Geithner has worked in government almost his entire adult life with positions that have included Deputy Assistant Secretary for International Monetary and Financial Policy (1995-1996), Senior Deputy Assistant Secretary of Treasury for International Affairs (1996-1997), and Assistant Secretary of Treasury for International Affairs (1997–1998). In 2003 he was appointed the President of the Federal Reserve Bank of New York. He has been a foot soldier of Bush's recovery efforts on Wall Street and was there when the disaster happened, which should raise questions as to why he would be a good Secretary of Treasury. However, I think he is a safe bet, since Democrats will want to make Obama look as strong as possible and Republicans will be pleased by such a "moderate" choice.


• Lawrence Summers, who was Treasury Secretary under President Bill Clinton, will be appointed to head the National Economic Council. Summers is the poster child of technocrats. Under Obama, Summers will actually be the architect of the new administration's economic policies. Considering Summers' faux paux while President of Harvard in which he claimed that women were not as capable as men in performing the hard sciences, I was surprised to see him in politics again so soon. Not only did it leave to his quick departure as Ivy League administrator, I thought it would see him exit the political scene entirely. However, it appears Democrats can say things that are politically incorrect without consequence. Summers will be perceived moderate by the political powers that be and should enjoy confirmation without incidence.

In the end, what we learn, is that Obama is actually was quite impressed by the accomplishments of Bill Clinton, as we see the former President's influence in virtually every area of policy in the new President's appointments. It is safe to assume that the radicals that drove Obama to the White House are going to feel like they are in the out house, if the new President continues to make such safe appointments. They have to be patient for a while, but I am sure Jesse Jackson is already sharpening his verbal sword. Finally, conservative pundits must be at a lost trying to figure out what kind of President Obama will in fact be. I don't have any doubt what Obama would like to do. His radical up bringing and the course he took to power makes that obvious. However, he may be shrewed enough to know that his agenda will have to be pursued with caution and such is reflected in his team.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media.

Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.