United Liberty

Despite promises to get our economic problems under control, Americans are looking at still high unemployment, an enormous budget deficit, and rising gas prices. It seems that every time government steps in to “do something,” they just make things that much worse. That is the point of this new video from Bankrupting America, who notes that if you “want to know where Washington is taking us,” then “look at where they’ve gotten us”:

During an interview on Face the Nation, Maryland Gov. Martin O’Malley was asked by Bob Schieffer if the country was better off today that it was four years ago. O’Malley, who is thought to be looking at a presidential run in 2016, stunningly admitted that it’s not:

No,” replied O’Malley, a prominent Obama surrogate, adding “but that’s not the question of this election.”

“Without a doubt, we are not as well off as we were before George Bush brought us the Bush job losses, the Bush recessions, the Bush deficits, the series of desert wars, charged for the first time to credit cards — the national credit card,” he added, according to a transcript.

At least part of his initial response was honest, that being that the country isn’t better off. He’s since backed off that statement. But look, there is not question that Bush is responsible for huge budget deficits, but President Obama hasn’t exactly done anything to put an end to the river of red ink flowing from Washington. If fact, with four years of $1 trillion budget deficits, he’s made it worse.

It’s time for conservatives to stop using the Left’s argument that government spending creates jobs, and get serious about cutting wasteful military spending. So says Americans for Tax Reform president Grover Norquist, in this video produced by my Cato colleagues Caleb Brown and Austin Bragg.

“Conservatives need to remember that just as spending money on something called ‘education’doesn’t mean people are educated, and spending money on ‘welfare’ doesn’t mean it adds to the General Welfare. Calling something ‘national defense’ doesn’t mean it is. It may not be. It may undermine national defense if it’s a waste of resources.” - Grover Norquist

As Mitt Romney and Republicans complain about cuts to defense spending as a part of the sequestion agreement that agreed to last year, Grover Norquist, president of Americans for Tax Reform, told Caleb Brown of Cato Institute in yesterday’s daily podcast that these spending cuts need to be on the table.

By the way, if you’re not already subscribing to the Cato Daily Podcast, you should, either via iTunes or by RSS.

Written by Mark A. Calabria, Director of Financial Regulation Studies at the Cato Institute. Posted with permission from Cato @ Liberty.

You have to give Treasury Secretary Tim Geithner some credit for spin: today the Treasury announced “Further Steps to Expedite Wind Down of Fannie Mae and Freddie Mac.” The only problem is that the steps announced largely put the taxpayer at greater risk in order to protect holders of Fannie and Freddie debt.

Essentially, the Treasury has amended its agreements with Fannie and Freddie so that the companies no longer have to pay a fixed dividend to the U.S. taxpayer, but instead “every dollar of profit” from the companies to the taxpayer. The problem is that the Government Sponsored Enterprises (GSE) have never had a year where their profits would have covered the dividend payments, so while we can debate if the taxpayer will recover anything from the GSEs, shifting to just collecting profits definitely means the taxpayer’s potential recoupment is lower.

The GSE’s regulator, the Federal Housing Finance Agency (FHFA) was at least a little more honest in its announcement of the changes, stating that, “as Fannie Mae and Freddie Mac shrink, the continued payment of a fixed dividend could have called into question the adequacy of the financial commitment contained in the PSPAs.”  Read “financial commitment” to mean protecting debtholders from loss.

Politico ran an interesting story on Wednesday about how Rep. Paul Ryan (R-WI), chairman of the House Budget Committee and now Mitt Romney’s running mate, “spurned” the Simpson-Bowles commission, which was put together by President Barack Obama to find a solution to the United States’ debt and long-term entitlement issues:

he commission has lived larger in mythology after its demise than it ever did while doing its work. Partisans and commentators on all sides — and in particular centrists and business leaders — hail the efforts of co-chairmen Alan Simpson, a Republican, and Erskine Bowles, a Democrat, as exactly what Washington needs more of.

And they cite the inability of its recommendations — a mix of spending cuts and increased revenue proposals — to gain momentum as deplorable evidence that Obama and GOP leaders won’t put the national interest in solving the budget crisis over their own narrow partisan concerns.

Now the saintly, do-good aura that surrounds Simpson-Bowles presents an awkward challenge for Mitt Romney and his running mate. Romney is pitching Ryan as a problem solver who wants to use his command of the budget to forge bipartisan deals to solve the nation’s fiscal crisis.

But in reality, Ryan, according to the recollection of some commission members and staffers, was a key part of the dynamic that undermined the commission and allowed the triumph of partisan and ideological loyalties over a budget deal.

Under its charter, the commission needed a supermajority of 14 members in order to give its formal endorsement to any recommendations. Ryan joined six other members — the dissenters came from both parties — in voting against the final proposal, with 11 members in favor.

Watching the reaction to Romney’s VP pick has been rather interesting. For those of us who read both liberal and conservative media, the nomination of Paul Ryan has been a rather schizophrenic event. To liberals, Ryan is an extremist devil. To conservatives, he’s the second coming of Christ (or at least the second coming of Romney’s candidacy).

From the Left:

Since being introduced as Mitt Romney’s running mate, President Barack Obama’s campaign and Democrats have been hammering Paul Ryan over his budget proposal. The narrative at the moment is that Ryan’s plan would “end Medicare as we know.”

The suggestion is absurd. Ryan’s plan, which was crafted with Sen. Ron Wyden (D-OR) doesn’t touch Medicare for anyone 55 and older and only creates a a voucher system as an option to going along with the traditional program.

Romney is hitting back at Obama’s campaign on Medicare, emphasizing cuts to the government-run healthcare program that will be made as a result of ObamaCare — cuts that would have been made under Ryan’s budget, which has been noted by Ezra Klein and Avik Roy. But, as Philip Klein explains, there are dangers to Romney’s campaign if they focus too much on the issue:

In the past several days, Romney has attempted to turn the tables on Obama by noting that his own national health care law — Obamacare — cut Medicare significantly.

Note: This is part three of a three-part series covering some reasons that a voter may choose to support a specific presidential candidate. Part 1 for Mitt Romney is available here, and part 2 for Barack Obama is available here.

Written by Christopher Preble, Vice President for Defense and Foreign Policy Studies at the Cato Institute. Posted with permission from Cato @ Liberty.

Yesterday, Cato released a new video pointing out that the military spending cuts specified under the Budget Control Act’s sequestration provision are not large relative to total spending, and would still have the U.S. government spending nearly $5.2 trillion on the Pentagon’s base budget over the next ten years. Under sequestration, the average annual total, $472 billion in constant, 2012 dollars, is well above the level spent during the 1990s (average $422 billion), and comparable even to what we spent during much of the Cold War. The video (building on my and Ben Friedman’s earlier writing, especially here) spells out the strategic rationale for even deeper cuts.