United Liberty

We often ride Republicans here for the out of control spending of the past, but according to the Wall Street Journal, the Democratic-controlled Congress has increased spending by 21.4% over the last two years:

Spending rolled in for the year that ended September 30 at $3.45 trillion, second only to 2009’s $3.52 trillion in the record books. But don’t think this means Washington was relatively less spendthrift. CBO reports that the modest overall spending decline results from three one-time events.

The costs of TARP declined by $262 billion from 2009 as banks repaid their bailout cash, payments to Fannie Mae and Freddie Mac were $51 billion lower (though still a $40 billion net loser for the taxpayer), and deposit insurance payments fell by $55 billion year over year. “Excluding those three programs, spending rose by about 9 percent in 2010, somewhat faster than in recent years,” CBO says.

Somewhat faster. You’ve got to laugh, or cry, when a 9% annual increase qualifies as only “somewhat faster” than normal.

What did Washington spend more money on? Well, despite two wars, defense spending rose by 4.7% to $667 billion, down from an annual average increase of 8% from 2005 to 2009.

Once again domestic accounts far and away led the increases. Medicaid rose by 8.7%, and unemployment benefits by an astonishing 34.3%—to $160 billion. The costs of jobless insurance have tripled in two years. CBO adds that if you take out the savings for deposit insurance, funding for all “other activities” of government—education, transportation, foreign aid, housing, and so on—rose by 13% in 2010.

The Club for Growth has declared war on Blue Dog Democrats, launching a new website called The Blue Dog Report, which documents the fiscal profligacy of these so-called “deficit hawks.” Chris Chocola, president of the Club for Growth, accompanied the launch of the new site with an editorial in the Wall Street Journal:

Every year since 2007, the Democratic advantage in the House has been fewer than the number of seats held by Blue Dogs: If they had wanted to, the Blue Dogs could have made themselves masters of the House. They could have held an effective veto over any bill they pleased, insisting that Mrs. Pelosi, Majority Leader Harry Reid and even President Obama himself heed their call for fiscal responsibility.

Instead, the Blue Dogs became Mrs. Pelosi’s lap dogs, voting with her 80% of the time on economic issues. Every one of them voted for the bailout of Fannie Mae and Freddie Mac. Sixty-three percent voted for the $700 billion Troubled Asset Relief Program; 91% voted for the stimulus package in February 2009; 85% voted for the cash-for-clunkers program; 74% voted for President Obama’s debt-tripling 2010 budget; 73% voted for the auto bailout; and 54% voted for the federal takeover of health care.

The evidence is overwhelming: The Blue Dogs are not fiscal conservatives, and only a few can credibly claim even to be fiscal moderates.

Consider the Blue Dogs’ signature legislative priority: “paygo,” the pay-as-you-go rule requiring the House to offset any new spending and tax cuts with spending cuts or tax increases elsewhere in the budget. In 2007, to much Blue Dog fanfare, House Democrats established paygo as a standing rule of the House.

As if you needed us to point out another draw back of ObamaCare, Reuters reports that the doctor shortage will be made worse by President Barack Obama’s health care “reform” law:

The U.S. healthcare reform law will worsen a shortage of physicians as millions of newly insured patients seek care, the Association of American Medical Colleges said on Thursday.

The group’s Center for Workforce Studies released new estimates that showed shortages would be 50 percent worse in 2015 than forecast.

“While previous projections showed a baseline shortage of 39,600 doctors in 2015, current estimates bring that number closer to 63,000, with a worsening of shortages through 2025,” the group said in a statement.

Additionally, the Wall Street Journal reports that another insurer, Principal Financial, will stop offering health insurance policies as a result of ObamaCare:

Des Moines, Iowa,-based Principal took in about $1.6 billion worth of health-insurance premiums last year but says it now wants to focus on its asset management, retirement and life insurance businesses. New sales of Principal’s health insurance will cease immediately and it will cut about 150 related positions.

Principal primarily provides plans for small businesses, covering about 14,000 employer groups. Its membership has been declining over the past couple years but the business remained profitable, said Dan Houston, president of Principal’s retirement, insurance and financial services businesses.

The Wall Street Journal reported yesterday that McDonald’s, the internationally known burger restaurant, may drop health insurance coverage for employees due to the new regulations placed on them through ObamaCare:

McDonald’s  Corp. has warned federal regulators that it could drop its health insurance plan for nearly 30,000 hourly restaurant workers unless regulators waive a new requirement of the U.S. health overhaul.

The move is one of the clearest indications that new rules may disrupt workers’ health plans as the law ripples through the real world.

Trade groups representing restaurants and retailers say low-wage employers might halt their coverage if the government doesn’t loosen a requirement for “mini-med” plans, which offer limited benefits to some 1.4 million Americans.

McDonald’s is dismissing the report, claming that they will seek a waiver from from the Department of Health and Human Services, exempting them from from mandates that may drive up costs.

Over at the Cato Institute, Michael Cannon explains that “[t]hese are the health plans (and the workers) that are seeing the highest premium increases under ObamaCare” and and expresses concern:

House Speaker Nancy Pelosi has a lot on her plate these days. Her party is expected to lose control of the lower chamber of Congress in November, more than 40 members of her party are openly defying her on the extension of the Bush tax cuts and Americans have rejected major parts of her party’s agenda.

To give you an idea of how unpopular Nancy Pelosi is, a recent survey shows her to be just as unpopular with Americans as BP, the company responsible for the months long oil spill in the Gulf of Mexico:

House Speaker Nancy Pelosi’s negative ratings have hit an all-time high in the new Wall Street Journal/NBC News poll. A full 50 percent of those surveyed have a somewhat or very negative impression of Pelosi, while just 22 percent have a somewhat or very positive impression of her.

Pelosi’s negative rating is precisely the same as oil giant BP, which has taken a public relations beating in the aftermath of the Gulf oil spill. While 50 percent of those surveyed view BP negatively, just 12 percent view the company favorably — a rating even lower than Pelosi’s.

Pelosi has failed at nearly everything she set out to do. She promised “the most honest, most open, most ethical Congress in history.” As the AP recently pointed out, it hasn’t happened.

The Cato Institute purchased an ad in the Wall Street Journal, New York Times,  Washington Post, Los Angeles Times, Politico and the Washington Examiner encouraging President Barack Obama to visit their website, DownsizingGovernment.org, to find ways to cut spending since his bailouts and numerous “stimulus” program have failed.

DownsizingGovernment.org goes into the different departments of the federal government, finding ways to reform government and eliminating waste, fraud and abuse.

This isn’t the first time Cato has purchased an ad in newspapers to push a policy proposal or oppose a government program. Shortly after Obama took office, they put out an ad opposing the stimulus and in July of last year they ran ads, both in print and on air, opposing the president’s health care proposal.

Here is the ad the ran yesterday (click to enlarge):

The fight between Keynesians and free-marketers over the best way to handle the economy in a recession is decades old. Keynesians say that government spending will drive demand, thus stimulating the economy while also creating large deficits.

Alberto Alesina, an economics professor at Harvard, writes at the Wall Street Journal that the empirical evidence shows that cuts in government spending and tax rates are what boosts an economy (not Keynesian economics) by analyzing 200 fiscal adjustments in 21 countries over the last 40 years:

Politicians argue for increased stimulus spending, as opposed to spending cuts, on the grounds that it would speed up economic recovery. This argument might have it exactly backward. Indeed, history shows that cutting spending in order to reduce deficits may be the key to promoting economic recovery.

In Europe today, the risk of a renewed recession comes not from the spending cuts that some governments have enacted, but from a sovereign debt overhang and multiple bank failures. July’s stress tests were not reassuring because they didn’t test the exposure of European banks to sovereign debt; had they done so, many banks would have failed. Those banks remain a threat to the European economy.

In the U.S., meanwhile, recent stimulus packages have proven that the “multiplier”—the effect on GDP per one dollar of increased government spending—is small. Stimulus spending also means that tax increases are coming in the future; such increases will further threaten economic growth.

Yesterday, I noted that the Obama Administration is threatening insurers that are considering rate increases to pay for mandates and regulations brought on by ObamaCare. The Wall Street Journal is calling these threats “political thuggery”:

Witness Kathleen Sebelius’s Thursday letter to America’s Health Insurance Plans, the industry trade group—a thuggish message even by her standards. The Health and Human Services secretary wrote that some insurers have been attributing part of their 2011 premium increases to ObamaCare and warned that “there will be zero tolerance for this type of misinformation and unjustified rate increases.”

Zero tolerance for expressing an opinion, or offering an explanation to policyholders? They’re more subtle than this in Caracas.

What Ms. Sebelius really means is that the government will prohibit insurers from doing business if reality is not politically convenient for Democrats. ObamaCare includes a slew of mandated benefits for next year, such as allowing children to remain on their parents’ plans until age 26 and “free” preventative care (i.e., no direct out-of-pocket cost sharing for consumers). The tone of Ms. Sebelius’s letter suggests that she doesn’t understand that money is exchanged for goods and services, and that if Congress mandates new benefits, premiums will rise.

Over at Investors Business Daily, Douglas Holtz-Eakin, a former head of the Congressional Budget Office, and Paul Howard warn that ObamaCare could bring us back to where we just left…in another financial crisis:

Layering a new entitlement program with essentially unknown costs on top of the two programs that are already draining the federal Treasury — Medicare and Social Security — is the height of legislative irresponsibility. ObamaCare also reached a new low in Washington’s perennial budget games.

The $138 billion in estimated first-decade savings is illusory. It includes $53 billion in Social Security revenue that should go to that program, and $70 billion in premiums for a new federal long-term care program.

Counting these as health care “savings” merely generates a deficit somewhere else.

Program costs to get ObamaCare up and running — which aren’t appropriated in the bill — could easily add $110 billion or more in additional spending and wipe out any remaining savings. Democrats are also desperately trying to double-count $500 billion in Medicare cuts in ObamaCare as both shoring up Medicare’s long-term finances and funding a new entitlement program.

The CBO has ruled that it can only do one — not both. After ObamaCare becomes law, Democrats are expected to vote on a “doc fix” for increasing Medicare physician payments that will add another $371 billion to the price of health care reform.

When the $500 billion in Medicare cuts are added into the mix (remember, they can’t be counted twice) deficit costs in the first 10 years alone could easily approach $900 billion. The president and Democrats in Congress, of course, promise to get spending under control later, perhaps through a bipartisan commission.

Earlier today, Zach mentioned the Gallup numbers that came out yesterday. While I agree with him that Republicans need to focus on real issues (jobs should be the theme), the numbers from Gallup are confusing.

Last week, Gallup showed Republicans with a 10 point advantage in the generic ballot and a 25 point advantage in voter enthusiasm. This week Gallup shows both parties tied at 46% in the generic ballot, however, voter enthusiasm is exactly the same as it was the previous poll. It doesn’t pass the smell test.

Over at Outside the Beltway, Doug Mataconis makes a great point:

For some reason Gallup is still measuring Registered rather than Likely Voters. With only eight weeks left to go until election day, the predictive value of a Registered Voter poll is fairly low.

Gallup has tracked registered voters in generic ballots. Other polling firms, such as a Rasmussen (+12 for GOP), Washington Post/ABC (+13 for GOP) and Wall Street Journal/NBC, are using likely voters to measure their numbers, which gives a more accurate picture of what we can expect in November.