Economic Roundup

More of last week's leftovers, as a phone that won't stop ringing - and whose ring is to my psyche like Quint's fingernails on that chalkboard were to the townspeople in Jaws - slowly drives me up the wall.

1) Supply-side tax reform is dead:

George W. Bush's chances of engaging the country with a dynamic second-term initiative were sabotaged this week. His own tax reform advisory panel Tuesday reported two plans exceeding the worst expectations. Not only would they be dead on arrival if actually sent to Congress, but they probably stifle President Bush's hopes for seriously reshaping how Americans are taxed.

The President's Advisory Panel on Federal Tax Reform created 10 months ago released its report Tuesday, and it turned out to have precious little to do with what Republicans think of as reform. Instead of a low flat tax, it proposes a high graduated tax. It retains pretty much intact the dysfunctional Internal Revenue Code....

Bush faces this dilemma. He can either buy into a reform that is going nowhere or, alternatively, disregard his panel's work and start from scratch. It is unlikely the graduate of Harvard Business School who now occupies the Oval Office would take the unconventional latter approach.

You could also argue that if Bush were truly interested in radical tax reform, he wouldn't have punted the matter to an establishmentarian "commission" in the first place. On the other hand, that's what he did with Social Security reform in his first term and he went all out to get it passed this past spring, although he did so without having a plan of his own in hand, which pretty much guaranteed it wouldn't go anywhere.

You can tell this is a Bob Novak story from the dark clouds socking it in on all sides, but really, was this result what the President had in mind when he gave Breaux and Mack this assignment?

2) On the brighter side, it looks as if Republicans are finally getting serious about controlling the federal spending they let rage out of control in the first place. And that realization is "trickling down" to the state level as well.

3) Meanwhile the economy continues to "chug along" as evinced by unemployment dropping again in the third quarter. And Bill Kristol added his voice to the beseechment of the President to actively take credit for this unstoppable prosperity:

"You can’t assume that the facts speak for themselves,” Kristol said. "The White House now has awakened to the fact - both on Iraq and on the economy - that they have to make a case for themselves in order to change public opinion.”

In other words, in modern politics one must campaign 24/7/365, not just a couple of months every other year.

I could swear I've seen that argument before. I just hope that Dubya does, indeed, finally take it to heart. It's a case that desperately needs refurbishment.

UPDATES:

4) The high gas price story seems to be petering out, now that pump prices are plummeting:

Retail gas prices plunged an average of 23 cents nationwide in the past two weeks, marking a return to pre-Hurricane Katrina levels, according to a survey.

The weighted average price for all three grades declined to $2.45 a gallon on Friday, said Trilby Lundberg, who publishes the semimonthly Lundberg Survey of 7,000 gas stations around the country.

Self-serve regular averaged $2.43 a gallon nationwide. The price for midgrade was $2.53, while premium-grade hit $2.63.

Cap'n Ed points to a proximate cause the Extreme Media would prefer the public not notice:

Why has the media remained so silent about the drop? The superficial reason is that people don't complain about cheap gas, and all consumers can see quite clearly that it has dropped; the price improvements don't qualify as news. However, the quick response by the Bush Administration to the disasters in waiving all regional special formulation requirements and in issuing a strategic but small release of crude from the National Reserve allowed the markets to balance themselves, keeping the nation from panicking into price controls or hoarding, both of which could have touched off long gas lines and out-of-control secondary market behaviors.

Of course this doesn't fit in with the "Big Oil is evil" template, nor does it contribute to the "crisis only massive government intervention can solve" sentiment that drives it. Mostly, though, it's a press non-starter because it would give the President the credit for solving a problem with which they have delighted in pistol-whipping him for the past few months. They'd rather swim up a Heinz-57 stream filled with pirhannas than let that kind of story see the light of day.

5) In a speech at the University of Minnesota last Saturday, Bill Clinton told the free general admission audience that the reason the entire world hates the United States is because of George Bush's tax cuts.

All of which illustrates that his listeners got exactly as much wisdom as they paid for.