Spending

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.

CBO long-term budget outlook shows nothing new

The Congressional Budget Office (CBO) released the 2011 Long-Term Budget Outlook yesterday. As you might expect, both sides are talking up the aspects of the report that play to their talking points. For example, if you listen to our progressive/liberal friends, they’re quick to point to charts in the report showing that budget deficits wouldn’t be as large if the 2001/2003 tax cuts hadn’t been extended. Of course, most, if any at all, don’t acknowledge that the CBO also says this in the report:

Changes in marginal tax rates (the rates that apply to an additional dollar of a taxpayer’s income) also affect output. For example, a lower marginal tax rate on capital income (income derived from wealth, such as stock dividends, realized capital gains, or the owner’s profits from a business) increases the after-tax rate of return on saving, strengthening the incentive to save; more saving implies more investment, a larger capital stock, and greater output. However, if that lower marginal tax rate increases people’s after-tax returns on savings, they do not need to save as much to have the same future standard of living, which reduces the supply of saving. CBO concludes, as do most analysts, that the former effect outweighs the latter, such that a lower marginal tax rate on capital income increases saving. A higher marginal tax rate on capital income has the opposite effect.

A shift toward libertarianism

Over at FiveThirtyEight, Nate Silver points to a recent CNN poll showing that the public shifting more towards libertarian ideas (emphasis mine):

Since 1993, CNN has regularly asked a pair of questions that touch on libertarian views of the economy and society:

Some people think the government is trying to do too many things that should be left to individuals and businesses. Others think that government should do more to solve our country’s problems. Which comes closer to your own view?

Some people think the government should promote traditional values in our society. Others think the government should not favor any particular set of values. Which comes closer to your own view?

A libertarian, someone who believes that the government is best when it governs least, would typically choose the first view in the first question and the second view in the second.
[…]
[I]n CNN’s latest version of the poll, conducted earlier this month, the libertarian response to both questions reached all-time highs. Some 63 percent of respondents said government was doing too much — up from 61 percent in 2010 and 52 percent in 2008 — while 50 percent said government should not favor any particular set of values, up from 44 percent in 2010 and 41 percent in 2008. (It was the first time that answer won a plurality in CNN’s poll.)

Cut Europe

With all this talk of isolationism in the GOP, namely over our “kinetic military action” in Libya and the wearying, ongoing wars in Afghanistan and Iraq, there’s an atmosphere that Republicans will be more willing to cut defense spending and reorganize our military to better fit in with the rest of the world. No more Dubya’s and silly foreign expeditions, more or less. But there’s one area that I see missing: Europe. I think it should be front and center.

When we Americans start arguing over welfare spending, it almost inevitably comes to be that those on the “left” say “Well, we’re spending billions and billions of dollars on bombing people in foreign countries, maybe we should cut that first, huh?” Naturally, conservatives balk at cutting military spending (while libertarians agree and then continue arguing to cut welfare anyways), but in terms of Europe, this is an area where they can make a great tactical manuever. I say this because, also almost inevitably, some liberal or progressive will then cite Europe as a great example of their welfare state ideal, saying “See, they can do it! Why can’t we, with the #1 economy in the world, do the same?” This was almost always brought up in the healthcare debate, focusing on the United Kingdom’s NHS, Germany’s social insurance policies, and infant mortality. And what else can conservatives and libertarians say? Europe sucks? Only in some limited aspects, and that’s simply not a respectable argument anyway.

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.

President Pyro and the Field of Straw Men

Eight hundred and fourteen days. That is how long it has taken me to lose my last shred of respect for the current President of the United States. Erupting onto the national political stage at the 2004 Democratic National Convention, Barack Obama was immediately praised as a rising star. A charismatic, well-spoken young politician, he clearly had a future in politics. A tall, lanky senator from Illinois, he drew comparisons to Abraham Lincoln. A black man that avoided being characterized as a black politician (as opposed to a politician who happens to be black), he avoided bombastic speeches about racism and reparations. He gave white Americans still harboring guilt over our ancestors’ participation in the evil of the human slave trade the chance to prove they were no longer racist by voting for him. His entire campaign was a nebulous celebration of “Hope and Change”. He was the post-racial, post-partisan candidate that as president would heal the divide between black and white, Republican and Democrat.

That was then, this is now.

Last month, having given speech after speech decrying the need for fiscal responsibility and the need to rein in the deficits and get the debt under control, President Obama unveiled a $3.7 trillion dollar federal budget that increased federal spending and projected (based on unrealistically optimistic growth rates for the next few years) $1.6 trillion in deficits for the year, with annual deficits averaging around $1 trillion over the next decade. It increased spending. It did nothing to control the largest contributors to the deficit and long term debt (Social Security, Medicare, Medicaid and interest on the $14.2 trillion national debt). In short, the serious discussion he claimed to want regarding fiscal responsibility was nowhere to be found in his budget.

Soak the rich? Or class warfare?

In any time of financial crisis, there’s a rallying cry to “soak the rich”.  The wealthy are an easy target because there’s relatively few of them and they’ve got money.  The poor resent the wealth of the so-called rich (not everyone described as rich really is all that rich).  It’s “unfair” that they have so little while those few have so much.  Income disparity is used as evidence that our system is somehow flawed.  However, the class warfare has got to stop.

Yes, there are rich people.  And yes, they often have the means to get out of paying all the taxes they might be supposed to pay via tax shelters, charitable donations, etc.  That’s not the point.  Let’s leave off tax rates and things of that sort and focus on some simple facts.

I’ve been accused of kissing rich people’s butts because I actually admire what so many of them have done.  They built massive corporations, often from the ground up.  Or they helped them grow into bigger companies.  They are what Ayn Rand termed as “producers” in the grandest sense of the word.  They’re not a factory worker who simply takes pride in their job.  They are the producers of jobs for those factory workers.

However, there’s been an effort throughout the years to vilify these producers.  There’s been an extreme effort to paint them as evil because they have achieved more than the rest of us.  That is one of the purest sins: avarice.  Those who seek to tear down the rich do so because the rich have what they themselves are missing…or think they’re missing.  They seek to destroy what these producers have built because they feel that these same producers aren’t doing enough.

Manifesto of a Right-Wing Extremist

Chuck Schumer (D-NY), the second most powerful Democrat in the Senate, was exposed this week for engaging in a coordinated effort to paint Republicans, and especially those with ties to the TEA Party movement, as “extremists”. Speaking to fellow Senate Democrats (and not realizing that the media had already been connected in on the conference call), Schumer explained that he “always use[s] the word extreme”, because “that is what the caucus instructed me to use this week”. This intentional attempt at character assassination comes because House Speaker Boehner is getting pressure from freshmen Republicans and the conservative base to do something more than offer lip service to fiscal responsibility.

Indeed, the problem is not that Republicans are too extreme. The problem is that they are not extreme enough; the $61 billion in budget cuts, from a $3.78 trillion dollar budget which increases the deficit by about a trillion and a half dollars, is little more than a rounding error. Much deeper cuts to spending are necessary if we are to get our fiscal house in order, and Republicans had better show some spine and get serious if they expect to keep the support of conservatives and the majority of independents come November 2012.

To be sure though, any Republican with an ounce of intelligence and awareness knew these attacks would come. After all, this is an administration who refuses to acknowledge the radical Islamic roots of the terrorist attacks on American soil over the last few years, yet whose Department of Homeland Security two years ago published a report entitled “Rightwing Extremism: Current Economic and Political Climate Fueling Resurgence in Radicalization and Recruitment”. Obama himself has repeatedly refers to his political opposition as being extreme and dangerous.

Rand Paul goes to Washington

While laid up in bed last week recovering from surgery, my coworkers sent me a care package that included Sen. Rand Paul’s new book, The Tea Party Goes to Washington. Unfortunately, I haven’t had a chance to get past the first few pages. But Matt Welch brings us this passage from the book of Sen. Paul slamming George W. Bush:

Imagine this-what if there had never been a President George W. Bush, and when Bill Clinton left office he was immediately replaced with Barack Obama. Now imagine Obama had governed from 2000 to 2008 exactly as Bush did-doubling the size of government, doubling the debt, expanding federal entitlements and education, starting the Iraq war-the whole works. To make matters worse, imagine that for a portion of that time, the Democrats actually controlled all three branches of government. Would Republicans have given Obama and his party a free pass in carrying out the exact same agenda as Bush? It’s hard to imagine this being the case, given the grief Bill Clinton got from Republicans, even though his big government agenda was less ambitious than Bush’s. Yet, the last Republican president got very little criticism from his own party for most of his tenure.

For conservatives, there was no excuse for this.

Welch also notes:

Paul goes on to say stuff like “any self-described conservative who ‘misses’ the last president and his version of the Republican Party should probably quit subscribing to that label,” and “if judgment is based on spending and the budget, then Bill Clinton should be considered preferable to Bush.”

Wow. Agreed.

High Speed Idiocy

Since President Obama took office, the phrase “high speed rail” has become the buzzword for just about anything. Supposedly, it will stimulate our economy, reduce carbon emissions, and make cats and dogs live in perfect harmony. There’s just one problem I foresee with the President’s grand ambitions. I can’t find to many people interested in riding the damn thing.

High speed rail will cost the taxpayers billions of dollars. An entire infrastructure has to be put in place to support it as standard railways can’t handle the speed these trains can generate. That means more eminent domain seizures. That means less money for things people expect from government, be it law enforcement or welfare. That means years of construction with little to show for it prior to the grand unveiling.

For many that’s not that big of a deal. They’re willing to wait for something if it’s pretty awesome. They’re even willing to spend tax dollars for it. The question is, will it be worth a damn?

One of the knocks on Amtrak is best summed up by my trip to Manhattan, Kansas several years ago. I needed to actually get to Kansas City where a friend would pick me up. Taking Amtrak was going to take longer than a bus, and cost me more than taking a plane. There was no incentive to take a train at all, especially since a large chunk of that time period was a lay over.

In theory, high speed rail should solve that. The train moves faster after all. But the question is, will there be enough trains? A large part of my reason to not take a train - despite a desire to actually travel that way for once - was due to a very long lay over. The reason for that was because there isn’t enough traffic to justify more trains. So far, there’s little reason to assume high speed rail will have more travelers and therefore more trains running.


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