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By Michael Nagle for The New York Times

EYE OPENERS Mika Brzezinski, left, with her teammate and sparring partner, Joe Scarborough, on the set of “Morning Joe,” their news program on MSNBC.

LAST week on the north lawn of the White House, the morning after the annual White House Correspondents’ Association dinner, Joe Scarborough and Mika Brzezinski held court on the grass, presiding over a special Sunday edition of their MSNBC daily news program “Morning Joe.” As they sat beside one another in directors’ chairs — Mika in a black evening gown with a plunging neckline; Joe in a dinner jacket (sans tie), both of them wearing dark sunglasses — they exuded the reckless, easy glamour of old-style Hollywood stars: Rock Hudson and Doris Day (but Doris Day with a tan and killer abs).

For more information about Joe & Mika or to invite them to your next meeting check out Mika’s Bio at Speakers.com. For more of this article follow this link

Michael Barone

Government is not very good at price discovery. That’s one lesson, I think, of the cash for clunkers program. Whoever set the rebate at $3,500 and $4,500 (let’s average it to $4,000 for illustrative purposes) evidently calculated that 250,000 car owners would trade in their vehicles for new cars that get at least four miles per gallon more between July and November. That calculation proved to be hilariously wrong. Washington Post media reporter Howard Kurtz asks the question, “Also, isn’t is apparent that the $4,500 payments for older gas-guzzlers was extremely generous? That’s a huge chunk of change to spur people who probably would have bought a new car anyway.”
Well, yes. If Congress had set the rebate at $2,000 rather than $4,000, it might have netted 500,000 trade-ins over the four-to-five month period—or maybe fewer or maybe the $1 billion would have been exhausted earlier. The fact is that price discovery—figuring out how big a rebate is needed to produce the desired number of transactions—is very difficult for even the most competent of individuals, much less for Congress. Look at it this way. If Congress had set the rebate at $100,000, almost all of us would have rushed to trade in our cars, and the $1 billion would have probably have been exhausted in 24 hours. Only people with net worths on the order of Bill Gates could afford to ignore an incentive like that. If Congress had set the rebate at $25, almost no one would bother to trade in a car except those who would have done so in any case.

So Congress needed to set the rebate at somewhere between $25 and $100,000, and not surprisingly it got the number wrong. Markets are good at price discovery; government isn’t. If the House bill adding $2 billion in stimulus funds to the cash for clunkers program passes the Senate, the government will spend $3 billion for 750,000 trade-ins. If Congress had set the rebate at $1,333 instead of $4,000, it might well have had to spend only $1 billion for the same number of trade-ins. In which case Congress will have spent an extra $2 billion for no good reason. Note that I am assuming that it’s a good idea to spend government money to induce such trade-ins or subsidize those which would have occurred without any rebate.

My sense is that voters had got this kind of thing figured out. Pollster Scott Rasmussen reports that voters opposed cash for clunkers by a 54%-35% margin and that now they oppose spending additional money by an almost identical 54%-33% margin. Why should we let Congress which couldn’t design an intelligent cash for clunkers program redesign the health care system which comprises one-sixth of our economy? It’s a very good question which members of Congress are already hearing from their constituents.

Michael Barone is senior Political Analyst for the Washington Examiner. He is also a Fox News Channel contributor and co-author of The Almanac of American Politics. More information on Michael Barone’s speaking availability can be found at Speakers.com.

Wayne Angell

Stock market gains in the midst of introduction and application of Obama economic policies have confounded political-economic skeptics.  The Dow Jones Industrial Average has increased 39 percent since the March 9 low of 6547 and the Dow at 9093.24 is only 36 percent below the all time high of 14198 posted on October 11, 2007.  What goes—how has the market posted the sharpest rate of gain since 1975 while market participants see President Obama’s economic policies as of high risk to market capitalism?

The answer for now and more likely than not for the balance of the year is that the Obama economic prescription is more harmful to labor than for capital.  Who can safely say that the stock market will not see the Dow break 10000 and 11000 before the end of the year?  Could the Dow finish the year near 12000?  My answer is maybe.

Judging the effects of the Obama economic policy is complicated by the fact that while labor seems to be Obama’s favorite constituency, employment bears the horrible burden of increased labor costs.  While wage gains are likely to escalate from an anemic 2 to 3 percent to a 3 to 4 percent range gain due to an untimely increase of 10.7 percent in the legal mininimum wage which rose today to $7.25.   Employment costs are escalating with the forecast rise in health care cost estimates.  More Obama problems are coming.

How could policy be more wrong for labor?  Employers are even more ready to lay off workers and to postpone hiring new workers.  Cost cutting zeal has contributed to the earnings surprise—76 percent have surpassed analysts estimates.

Another major benefit for capital has been the more robust turn around from declining output to positive output growth in the second half of 2009.  In my view acceleration of the output growth that may have begun in the second quarter of 2009 is likely to extend through 2011.  It is early to predict 2010 real output growth of 6 to 7 percent, but that is my number.   Rapid output growth will go along way to keep earnings growth that will call for higher stock prices.

But, alas for labor, employment growth is likely to be significantly below the Obama promises.  Unfortunately President Obama is not yet ready to change his goal to focus on reducing the rate of growth of health care and other employment costs.

The outlook for stocks is positive.  My major concern is that Chairman Bernanke is not ready to let rising commodity prices lead him to an increase in the target Fed funds rate from near zero to one percent sooner rather than later.  The problem is that Bernanke is not ready to act and will be tempted by the same difficulty this year and next year.  The Federal Open Market Committee seems to find too much comfort in the employment gap—they continue to be willing to rely on a high unemployment rate to keep inflation at bay.

Although the Fed continues to distribute a weekly commodity price report to all members of the Board of Governors action to increase the target Fed funds rate seems to be remote.

Dr. Angell is an engaging speaker, highly sought for his financial expertise, especially in the areas of interest rates, bond market, equity market, and currency futures and is renowned for his monetary policy forecasting. More information about his speaking ability can be found at Speakers.com.