Spending

Yes, the Stimulus Really Did Fail

I have to disagree with Dave Weigel here. He wrote on Friday in Slate that the stimulus bill really didn’t fail, although everyone is saying it is:

Veterans of the stimulus wars talk about it that way—as a war. They lost. The implication of the loss is that Keynesian economics are, arguably, as discredited with voters as neoconservative theories were discredited when the invasion of Iraq failed to turn its neighbors into vibrant democracies, highways clogged with female drivers.

This week, we got a concrete example of what it meant to lose. The Weekly Standard published a back-of-the-cocktail-napkin analysis of the seventh quarterly report on the stimulus, stipulating that every job created by its spending has cost $278,000. Republicans, who’d previously said the stimulus created no jobs, immediately started repeating the $278,000 figure. They kept doing it even after the magazine followed up, suggesting that the cost-per-job could have been as low as $185,000. $278,000, $185,000. $0.00? It didn’t really matter, because the White House and liberal response was perfunctory. As the stimulus winds down, with most of the money spent, everyone knows that it failed.

VIDEO: The Spending Cut Shell Game, Cato Institute Style


Consider this an open thread.

Mr. President, Think of the Children

In his press conference, President Barack Obama said that we must close the deficit by tackling everything—naturally, with as many contradictions as possible—including entitlements, though we must still “keep faith with seniors and children with disabilities.”

It sounds grand and noble, but the problem is that if Obama decides to “keep faith” with seniors, he’s going to have to do that by vigorously screwing over the next generation. As Professor Lawrence J. Kotlikoff of Boston University points out in a recent Bloomberg column, we’re broke. (Yes, I know that’s his schtick. But he’s absolutely right.)

How big is the fiscal gap? By my own calculations using the CBO data, it now stands at $211 trillion — a huge sum equaling 14 times the country’s economic output. To arrive at that figure, I assumed that annual noninterest spending, as well as taxes, would grow indefinitely by 2 percent a year beyond 2075, the point at which the CBO’s estimates end.

Most of that comes from entitlement spending, which was where Cato policy analyst Michael Tanner came up with the $119.5 trillion in the hole figure just a few months ago. Obviously, it’s getting worse all the time.

US Department of D’oh!

Personally, I wouldn’t trust government officials to lock a barn door (unless the horses already got out, that is.) There’s a good reason for that. From the Washington Times front page:

Federal authorities responsible for granting security clearances to government employees and contractors are spending hundreds of thousands of dollars investigating the investigators.

Government inspectors say they have undertaken a broader campaign in recent years to root out fraud in background checks as more national security clearances are being sought than ever before.

Overall, court records reviewed by The Washington Times show at least 170 confirmed falsifications of interviews or record checks and more than 1,000 others that couldn’t be verified. The background investigators, whose work helps determine who gets top-secret security clearance, were submitting forms saying they conducted interviews or verified official documents when they never did.

“The monetary loss sustained by the government does not, nor cannot, represent the cost associated with potential compromise of our nation’s security and the trust of the American people in its government’s workforce,” Kathy L. Dillaman, associate director in charge of investigations at the Office of Personnel Management, wrote in a victim-impact statement for a recent court case involving a convicted investigator.

George Pataki Launches New Website “No American Debt”

Congressman Tom McClintock stated many times recently that America is headed towards a “sovereign debt crisis” that our only hope is to make serious budget cuts or the “Titanic will hit the iceberg”. Congressman Ron Paul says that the collapse of the dollar is “imminent” if Washington doesn’t drastically change. A group called No American Debt was officially launched last night by their Chairman George Pataki. They say that they will address these serious issues and brings them to the foreground of discussion.

According to their website, No American Debt is a group dedicated to holding elected officials accountable for our debt crisis. Their purpose is to educate the public about the debt and they will focus their efforts to persuade President Obama and Republican candidates for President to propose real solutions to the number one issue facing our country today.

Former Governor of New York George Pataki is the Chairman of No American Debt. Speculation has arisen that Pataki would be running for President, although he has recently stated that he will not be running for President in 2012. He did say, however, “but I’ve been around politics long enough to know you never say never”.

George Pataki announced No American Debt on April 20th on the Sean Hannity Show (See Below). Since then the Wall Street Journal has also featured them in an Article.

Visit their website at www.NoAmericanDebt.com and their FaceBook page for more information on their campaign.

And Now It’s Time for a Breakdown

Cue En Vouge:

Never gonna get it,
Never gonna get it,
Never gonna get it,
Never gonna get it,
Never gonna get it,
Never gonna get it,
Never gonna get it,

Woo, woo, woo, woo!

That is my message to all of you out there who supported the Republicans this last election and thought they would make a material change to reduce the federal deficit. You’re never gonna get it!

All references to 90’s R&B groups aside, let’s take a serious look at this. We are about ready to have a showdown on the debt ceiling. As of yesterday, January 6, 2010, the federal debt subject to the debt ceiling was just shy of $14T. The current ceiling is $14.294T and we will reach that figure sometime between March and May this year. The date cannot be exactly determined because day-to-day receipts and expenditures are not fixed - just like your own budget. (See this entry from 2009 to get a little more detail on short-term Treasury securities.) But, the showdown is coming; there is no doubt about that.

Now, many fiscal conservatives want to see material cuts in the budget. I’d also venture to guess your average Tea Party Republican is squarely opposed to raising the debt ceiling. These GOP supporters are going to be very disappointed when their House leadership (not to mention, and I’m guessing here, all but a handful of GOP Senators) votes to raise the debt ceiling. It is inevitable and what we’ll hear is a bunch of lip service that they’ve made some sort of grand compromise to get us on the right track.

The Big Tax Cut Debate

In a shocking turn of events, the federal government has voted to maintain the status quo. That is, of course, sarcasm as the feds have an amazing track record of kicking the can. The “irresponsible” Bush tax cuts have been extended based on a deal cut by the Obama administration with the Congressional Republicans. In addition, unemployment benefits have been extended yet again.

This debate has been somewhat of a false debate. The Bush tax cuts were passed in 2001 with a provision to expire at the end of 2010. Rates would then return to the levels which prevailed during the Clinton administration. The debate and rhetoric on this issue have allowed Washington to shine at its finest.

Take, for example, Rep. John Shadegg (R-AZ) a couple weeks ago on MSNBC’s Morning Joe. Shadegg makes two incredulous claims all-too-typical from partisan Republicans.

Of course Republicans don’t want to tax the job creators, because that will bring revenue down… Ah, your answer is that spending money drives the economy, and I don’t think that’s right. It’s the creation of jobs that drives the economy. The truth is, that the unemployed will spend as little of that money as they possibly can… Do we want… to continue to ignore the issue of jobs and increase taxes?

Why I’m not excited about Herman Cain

As you may have heard, Herman Cain is planning on forming an exploratory committee for a presidential run in 2012. I’m not surprised. Cain has always held ambition to hold elected office. He ran for the United States Senate here in Georgia in 2004; losing to now-Senator Johnny Isakson without a runoff.

Many don’t realize that this isn’t the first time Cain, who once served as chairman of the Federal Reserve Bank of Kansas City, has discussed a presidential bid. As Matt Lewis has noted, Cain ran for president in 2000.

Like many conservatives, Cain has used the tea party movement as a platform to build up his name and slam the policies of Barack Obama and Democrats. Unfortunately, the criticism of Obama and friends inside the tea party movement is no longer limited to economic policy.

However, Cain was largely silent during the six years of runaway spending under the Bush Administration and a Republican-controlled Congress. Like most Republicans, he only acknowledged his party’s failings after it was too late to do anything about it.

He backed the Wall Street bailout, or according to Cain, the “recovery plan,” as he called it on his radio show. Cain wrote that nationalizing banks “is not a bad thing.” He even went as far as criticizing opponents of the bailout, calling them “free market purists” and absurdly claiming that no valid criticism had been brought forward.

Counter-Point: The fight against earmarks is the opening shot in a much larger battle

This is part two in a debate between Doug Mataconis, a contributor at Outside the Beltway and United Liberty, and Jason Pye, editor of United Liberty, over whether the current debate over earmarks is distraction from the larger fiscal issues facing the nation.

Over the last several years, there has been much debate in Congress over earmarking, which is the process of designating funds for a specific purpose in a spending bill. Critics of the practice call most of these earmarks “pork barrel projects.”

Earmarks are an issue for several reasons. They can distort the marketplace, allowing the government to pick winners and losers. More often than not, the cost of an earmark is greater than the benefit, a point that is especially true with mass transit projects. And there is almost no sunlight on how they are inserted into appropriations bill.

There also is not much public support for the practice. According to a CBS News poll conducted in 2007, 67 percent of the public viewed earmarks as “not acceptable.”

Members of Congress use the practice in order to secure funds for their districts and proudly point them out during their next campaign to prove they are in Washington to “bring home the bacon.” Leadership of parties in Congress will often use earmarks to entice members to vote a certain position on legislation. The 2003 expansion of Medicare and the 2007 emergency spending bill for Iraq are both examples of this practice.

Point: The earmarks debate is a diversion

This is part one in a debate between Doug Mataconis, a contributor at Outside the Beltway and United Liberty, and Jason Pye, editor of United Liberty, over whether the current debate over earmarks is distraction from the larger fiscal issues facing the nation.

On Tuesday, Senate Republicans will take up the issue of whether to forswear earmarking during the upcoming session of Congress. On one side stands Jim DeMint who contends that earmarking is a corrupting process that helps increase the size of spending bills. On the other stands Minority Leader Mitch McConnell who contends that earmarking is an important legislative prerogative and that eliminating it would do nothing to cut Federal spending. While earmark opponents do have a point that the process can be corrupting when not done transparently, the truth is that the so-called “war on earmarks” is a diversion from the real battles that have to be fought in order to reduce the size, scope, and power of government.

Let’s take the Omnibus Spending Bill passed early last year as an example.

 


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