How to Freeze the Debt Ceiling Without Risking Default

Posted by osurce, 19th January 2011

DebtPat Toomey
1/19/2011

Regarding the coming Congressional debate over whether to raise the US debt ceiling, Toomey says that under no circumstances is it acceptable for the US to default on its debt. By honoring our debts we benefit from the nearly universal conviction that those who lend to us will always be repaid in full. We should never undermine that conviction. Toomey opposes raising the debt ceiling without regaining control of federal spending. The recent surge in spending, both in absolute dollars and as a percentage of our GDP, has produced record deficits and debt. Congress can address the looming fiscal crisis created by overspending without jeopardizing the full faith and credit of our country–and it should.

Toomey, a Republican, is a US senator from Pennsylvania.

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Big business is back in business

Posted by osurce, 13th January 2011

US Chamber of Commerce logoDana Milbank
1/12/2011

The US Chamber of Commerce is enjoying renewed influence in Washington after this past November’s elections. Not only did the Chamber support a number of winning candidates across the nation, but corporate interests have returned to prominence among both the legislative and executive branches. Lobbyists have gained key staff positions with incoming Representatives and Senators and the Chamber expects a more business friendly tone in the years ahead.

Milbank writes about political theater in the nation’s capital.

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An American Message for the Chinese President

Posted by osurce, 13th January 2011

President Hu JintaoKelly Currie
1/12/2011

Chinese President Hu Jintao arrives in Washington for a state visit next week as the Obama administration’s thinking on the US-China relationship has evolved. Curry suggests that Obama may give greater prominence to human rights as he recalibrates relations with Beijing. She thinks freedom of expression should be the leitmotif of the summit. The summit provides an opportunity to contrast the weaknesses of the Chinese political system with the strengths of the American one. Aspects of the visit involving freedom of expression should be non-negotiable. If the Chinese side objects, the White House should be willing to cancel events of importance to Beijing’s protocol-obsessed leaders.

Currie is a senior fellow with the Project 2049 Institute.

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Why Teacher Pensions Don’t Work

Posted by osurce, 10th January 2011

TeacherJoel Klein
1/10/2011

Throughout the country public-employee pension plans have been massively underfunded and defined-benefit systems aren’t merely Ponzi schemes. They discourage talented teachers who would prefer front-loaded compensation. Defined-benefit pensions helped bring the once-vibrant US auto industry to its knees. The promised benefits just proved too costly. The same kind of pension is now hollowing out public education. Because there’s essentially no competition in education, however, the effect has been hidden from public view. Today incoming governors–Democrats and Republicans–faced with this dismal equation are looking for a way to undo the damage and get out from under these unsustainable promises.

Klein, former chancellor of New York City’s public schools, is the CEO of News Corporation’s educational division.

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Raising the Red Flag on Red Capitalism

Posted by osurce, 10th January 2011

China Stock MarketRick Carew
1/10/2011

The conventional wisdom, propagated by senior businessmen, pundits, and policy makers, holds that the 21st century is China’s for the taking, says Carew. He reflects on a book by Carl E. Walter and Fraser J.T. Howie who argue that China isn’t immune from normal economic laws as its cheerleaders argue. Scratch the surface and China’s economic model is less impressive than it looks. The authors discuss unacknowledged bad loans piling up within China’s system (implying that leaders have misallocated capital), and put its public debt at 76% of GDP. With an aging population and a weak social safety net, China cannot afford a banking crisis in the next decade. If and when one comes, Beijing could regret not creating a more resilient, genuinely capitalist market.

Carew is a former Asia M&A reporter for The Wall Street Journal.

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Friends with Benefits

Posted by osurce, 5th January 2011

William D. Cohan
1/5/2011

Facebook is now considered to be worth more than Time Warner, DuPont, and Goldman’s rival Morgan Stanley. Cohan says it is worth the $450 investment Goldman Sachs pumped into the company. This is because Goldman’s cost of capital is close to zero since, as a bank holding company, it can borrow from the Federal Reserve at negligible interest rates. Any capital gain Goldman Sachs makes would be sheer profit. In addition it will have locked up the role of lead manager of Facebook’s initial public offering when it happens. Cohan also looks at other business deals Goldman has negotiated on its behalf and says it will come out ahead. The loser will be the average investor who will be left holding the bag when Wall Street realizes its performance doesn’t live up to the hype.

Cohan blogs about Wall Street and Main Street for The New York Times.

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The States Versus ObamaCare

Posted by osurce, 5th January 2011

Pam Bondi
1/5/2011

As new state attorneys general take office in the coming weeks, Bondi expects an increase in the number of states challenging ObamaCare in court. No legislation in our history alters the balance of power between Washington and the states so much as ObamaCare does. The lawsuit brought by 19 states to challenge it is based on the notion that an individual’s decision not to purchase health insurance is not an act of “commerce” that can be regulated under Congress’s constitutionally enumerated powers. If the courts deem the federal health-care law to be constitutional, then there are no meaningful constitutional restraints on Congress’s power to regulate virtually every facet of our lives.

Bondi is the attorney general of Florida.

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China’s National Insecurity

Posted by osurce, 22nd December 2010

ChinaJohn Lee
12/22/2010

As social unrest rises exponentially each year throughout China, the Communist Party remains as insecure as it has ever been. A regime that is awkward in its own skin and uncomfortable among its own people is always in danger. Beijing sees Liu Xiaobo’s Nobel Peace Prize as part of an international strategy to contain China’s rise. Chinese leaders observe that awarding the prize to past winners like Poland’s Lech Walesa, Burma’s Aung San Suu Kyi, and Iran’s Shirin Ebadi weakened the legitimacy of authoritarian regimes in those countries. Lee notes that Beijing’s official line has always been that reforms will only occur “when the time is right.” It had better democratize soon or domestic discontent will destabilize it.

Lee is a foreign policy fellow at the Centre for Independent Studies in Sydney and at the Hudson Institute in Washington, DC.

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In Belarus, a slide toward Eastern aggression

Posted by osurce, 21st December 2010

LukashenkoAnne Applebaum
12/21/2010

In Belarus, Alexander Lukashenko was “elected” to a fourth term as president after a violent crackdown by his regime. The violence, says Applebaum, was evidence of Lukashenko’s weakness. Truly popular leaders do not need to resort to bloodshed and beatings to intimidate their opponents and shut down communication. Lukashenko rejected a deal with the European Union that involved Belarus receiving, among other things, more open borders in exchange for free elections. He did, however, sign an oil deal with Moscow. This represents the decline of the West. The United States and Europe are “out of money and out of ideas” and can not offer any “carrots” as attractive as Russian oil.

Applebaum is a weekly columnist for The Post, writing on foreign affairs.

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