Cap-and-trade still a problem for Huntsman

While it’s hard to find a Republican running for president that hasn’t supported cap-and-trade - although most of them have magically changed positions, Jon Huntsman, the former Governor of Utah and US Ambassador to China, still seems to support the concept, according to comments recently made in an interview with Time:

Cap-and-trade ideas aren’t working; it hasn’t worked, and our economy’s in a different place than five years ago. Much of this discussion happened before the bottom fell out of the economy, and until it comes back, this isn’t the moment.

So, “this isn’t the moment”? I guess we’ll wait until the economy improves to try it? Sorry, that’s not good enough. The proposal that has been put forward is not something to be so passive about. It would could cost American families a lot of money. The Obama Administration estimated that it would cost the average family nearly $2,000 a year; or as CBS noted, the “equivalent of hiking personal income taxes by about 15 percent.” The Heritage Foundation gave a much higher figure in terms of average costs over the long-term; nearly $7,000 by 2035.

Even if the economy improves, would you really consider implementing a policy that is clearly going to make energy more expensive? That is the question that Republican voters should be asking Huntsman.

NLRB hands Republicans an good issue in a bad economy

The Obama Administration has handed Republicans a gift thanks to the National Labor Relations Board going after Boeing, the Chicago-based aircraft manufacterer.

For those of you unfamiliar with this story, here is what is going on. Boeing, citing future labor costs and production disruptions due to strikes, decided to build a new plant in South Carolina, a right to work state, instead of at an existing plant in Washington. The local chapter of the International Association of Machinists and Aerospace Workers successfully sought help from the NLRB, which is now suing Boeing to prevent the opening of the new plant, possibly killing new jobs in the process.

Meanwhile, Boeing is warning that this action by the NLRB could have very real consequences:

If it succeeds, a suit by the National Labor Relations Board seeking to block Boeing from building airplanes in a non-union facility in South Carolina will set a precedent that could cost hundreds of thousands of jobs nationwide, the company’s vice president and general counsel Michael Lutting said at a Senate hearing on Thursday.

Most directly, if Boeing is forced to shut down its new factory, it would kill thousands of jobs in South Carolina. But it would also have wider-ranging effects, Luttig argued in testimony before the Senate Health, Education, Labor and Pensions (HELP) Committee.

Debt ceiling vote approaching

A vote to increase the debt ceiling, the statutory amount the United States government is permitted to borrow, will happen in Congress at some point in the next week or so. But as that vote approaches, more Republicans are expressing opposition unless that Obama Administration goes along with spending cuts:

A bill to raise the debt limit without spending cuts attached would not get a single Republican vote in the House, the GOP’s top vote-counter said Wednesday.

“I can tell you as the whip, there is not one Republican vote on a negative-debt-limit bill where no cuts are proposed,” House Majority Whip Kevin McCarthy (R-Calif.) told reporters at a news conference.

While Republicans have demanded significant spending cuts and budget reforms in exchange for authorizing more U.S. borrowing, a majority of the House Democratic caucus has called for a “clean” debt ceiling vote, saying the GOP is holding hostage the full faith and credit of the federal government.

Majority Leader Eric Cantor (R-Va.) said Tuesday the party was still considering holding a clean vote as a way of demonstrating it doesn’t have majority support in the House.

While some Democrats are saying that this is out of the mainstream, the position held by House Republicans is consistent with the views of the American public.There is also a majority in the Senate on record against a “clean” increase in the debt ceiling.

Inflation rears its ugly head

We’ve all noticed rising prices. God knows I have every time I fill up my Jeep. Over at Newsweek, Joshua Roberts notes that reason prices are rising is because inflation is back; and worse, the Federal Reserve is in denial:

Back in March, the president of the New York Federal Reserve, William Dudley, was trying to explain to the citizens of Queens, N.Y., why they had no cause to worry about inflation. Dudley, a former chief economist at Goldman Sachs, put it this way: “Today you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.” Quick as a flash came a voice from the audience: “I can’t eat an iPad.”

Dudley’s boss, Ben Bernanke, was more tactful in his first-ever press conference on Wednesday of last week. But he didn’t succeed in narrowing the gap between the Fed’s view of inflation and the public’s.

I respect Bernanke. As an expert on the financial history of the 1930s, he was one of the very few people in power back in 2008 who grasped how close we were to another Great Depression. But if we’ve avoided rerunning the 1930s only to end up with a repeat of the 1970s, the public will judge him to have failed.
To ordinary Americans, however, it’s not the online price of an iPad that matters; it’s prices of food on the shelf and gasoline at the pump. These, after all, are the costs they encounter most frequently. And with average gas prices hitting $3.88 a gallon last week, filling up is now twice as painful as when President Obama took office.

GOP presidential candidates to debate tonight

Republican vying for the their party’s nomination in 2012 will square off for the first tonight in Greenville, South Carolina at the Peace Center. The debate will carried live by Fox News, which is a sponsor, beginning at 9pm.

The debate will feature:

  • Herman Cain
  • Gov. Gary Johnson
  • Rep. Ron Paul
  • Gov. Tim Pawlenty
  • Sen. Rick Santorum

Noticably absent is Mitt Romney, who declined an invitation to attend even though he recently launched his exploratory committee and attended a presidential summit hosted by Americans for Prosperity last Friday. Rep. Michele Bachmann is also absent; who, like Romney, attended the AFP summit. Others note the absence of Sarah Palin and Tax Hike Mike Huckabee, but neither have begun putting a campaign team together.

Speaker Newt Gingrich is expected to announce his campaign any day now, but won’t participate in this debate either.

Just so you can get an idea of the themes for this cycle, here is video the recent AFP summit:

Trump signs Taxpayer Protection Pledge with promise to sink economy

Donald Trump, who plans to announce his decision on a presidential bid on his TV show during the season finale (there’s a shocker), has signed the Americans for Tax Reform’s Taxpayer Protection Pledge; but there is a catch:

Billionaire developer and GOP presidential frontrunner Donald Trump has signed Americans for Tax Reform’s pledge to oppose any new taxes, according to ATR President Grover Norquist.

“I Donald J. Trump pledge to the taxpayers of the United States of America that I will oppose and veto any and all efforts to increase taxes,” the pledge reads. But Trump apparently added in his own writing “Except on China and other countries that have consistently taken advantage of our great country.”

The pledge was dated Tuesday, April 26.

What’s the point to signing the tax pledge, the purpose of which is to oppose destructive economic policies, when you’re going to support tariffs on our trading partners? That’s an absurd notion. We know how protectionism played a significant role in causing the Great Depression because of the passage of the Smoot-Hawley tariff.

Don’t get me wrong. We need to become more competitive, but you don’t do that by imposing tariffs or pushing for “fair trade” (what exactly is fair trade, anyway?). You do that by getting rid of the deregulation, reducing the tax burden and getting rid of impediments to trade (ie. tariffs).

IMF: Chinese economy to surpass United States by 2016

Last week, Standard & Poor’s downgraded the long-term debt outlook for the United States to negative. This sent waves through Washington as many believe it was a wake up call to members of Congress. This week a second shot was fired across the bow as the International Monetary Fund put Washington on notice that China will overtake the United States as world’s economic superpower by 2016:

According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.

Put that in your calendar.

It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.

According to the IMF forecast, which was quietly posted on the Fund’s website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.
[T]he Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising.

Just 10 years ago, the U.S. economy was three times the size of China’s.

Income inequality

Over at RedState, there’s an interesting post about alleged income inequality and unfairness that is pretty good.  The points are well documented and worth a read.  There were a couple of points I wanted to talk about specifically though.  I agree with the writer’s points, but there’s some other comments to add.

For example:

In the March 2nd NYT, Robert Frank invokes the spectre of inequality, this time in the guise of a so-called “toil index”.  The interesting (and silly) aspect of Frank’s assertions is the idea of using “family goals” as an indicator of the “cost” of inequality.

The index rejects the standard economic assumption that well-being depends primarily on absolute consumption. Instead, it assumes that the context of that consumption is often far more important. Context matters because the brain requires a frame of reference to make any evaluative judgment.

For example, is a particular family’s house adequate? The answer invariably depends on the quality and size of other houses in the surrounding area.

Rising inequality has shifted the context that governs housing choices. Higher incomes at the top have led the wealthy to build bigger mansions, shifting the frame of reference that shapes demands for those with slightly smaller incomes, who travel in overlapping social circles. The near-rich respond by building bigger houses as well, shifting the frame of reference for others just below them, and so on, all the way down the income ladder.

TARP was not a successful program

Over at NetRight Daily, Adam Bitely explains that despite Robert Samuelson’s claims that TARP was a success it has set taxpayers up for future abuse because the market was not allowed to weed out irresponsible businesses:

Writing in the Washington Post, Samuelson claims that “[w]hen the entire financial system succumbs to panic, only the government is powerful enough to prevent a complete collapse.” Clearly, Samuelson has never taken an economics course.

First, when the financial markets tumbled in 2008, the correct reaction would have been to allow the financial system to naturally collapse and allow it to rebuild itself by reallocating resources to those entities that were best suited to do that. Instead, the government stepped in and provided the TARP fund, which propped up zombie corporations and companies that had mismanaged resources. Such activity allowed bad business practices to continue.

Second, the government does not exist to prevent businesses from failing. When the Founding Fathers designed the Constitutional system of government, they laid out a system that allows the American citizen to perform at his best with extremely limited government intrusion.
While Samuelson celebrates that this program did not cost the taxpayer as much as it was originally forecast to cost, he misses the key point that such programs should never exist in the first place. The only good cost of such a program is zero, and the only way to ensure that such a program does indeed cost zero is to never implement it in the first place.

Why spending needs to be nipped in the bud

In London, there’s been protesting against government cuts.  Money is tight, and the government seeks to restore a little fiscal sanity.  Not much, this is England after all, but some.  The people, on the other hand, are bound and determined to get what they think they deserve.  This, more than anything else, is why it’s imperative to stop the fiscal insanity early.

Once an entitlement or program starts, people become attached to it quickly.  Nothing stirs the blood in politics more than the idea of a favorite program being cut, despite the necessity of it.  As more and more spending programs get trotted out, more and more money is needed to pay for it.  That means you need to actually get more money from folks, and when tough times like a down economy hits, it becomes even more important that you reign in the spending.

However, since you spend like crazy during the good times, people have gotten used to it.  They want their programs to stay, and they’re not going to just quietly let you take it away from them.  After all, they’re entitled to it!

Spending needs to be cut, and there will clearly be people who aren’t happy with it.  The cuts need to be drastic and nothing should be sacred and off the table.  However, that should be followed up in better times with more fiscal sanity.  Just because we might be in a boom time in the future doesn’t mean we should go back to spending like a drunken sailor on a three day pass.  Instead, we should hold onto any extra revenue as a cushion for further lean times.  This will help prevent need to take on more and more debt.

Of course, those people protesting usually don’t care about that.  So long as they get theirs.

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