One big difference between Washington and private markets is that politicians think everything they do is free-standing. Markets, however, combine all the potential costs of Washington's policies and then decide whether to invest, or not. Consider what private decision-makers see in their future:
A 2,074-page, trillion-dollar health-care bill to redesign 17% of the U.S. economy. A carbon tax—cap and trade—that remains an Obama priority ahead of the Copenhagen climate summit next month. A falling dollar and gyrating commodity prices, with no idea where those prices will go next.
Democratic liberals are talking about an income tax surcharge to pay for any commitment in Afghanistan. Card check, to expand unionization of the private economy, remains a priority. Domestic discretionary spending in fiscal 2010 is set to rise at 12.1%, with inflation near zero.
Agreed - the administration's "Race to the Top" program is a step in the right direction, and it should resist pressure to dilute it.
My response? Geithner's done a solid, if imperfect, job. I haven't seen Summers behind the scenes but I'd bet he's not the reason for the economic craziness that's been coming out of the government. If anything, we need a new Congress.
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