Wall Street Journal
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.
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.
Democrats have spent the last couple of months trying to beat Republicans by reminding voters of George W. Bush, despite fact that Democrats have held control of Congress since 2007 and President Barack Obama has effectively taken ownership of the economy, Iraq and Afghanistan. They’re even having trouble lining up college voters.
A new poll from the Wall Street Journal and NBC shows that voters aren’t buying that message. According to the numbers, 58% of voters believe that Republicans “will have different ideas for how to deal with the economy, while 35% believe that they’ll return to the policies of George W. Bush.
On the other side, 62% believe that Democrats, should they remain in control of Congress, will continue to fall in line with Barack Obama, while only 32% believe otherwise.
Those aren’t numbers you can win on and the White House knows it, which is why they are “panicking” about the mid-term election. Sen. Russ Feingold (D-WI) knows he has to stay away from Obama, but Rep. Joe Sestak is embracing him in a state where 58% of voters disapprove of the president, including 70% of independents.
The Wall Street Journal ran a story yesterday on the electoral prospects for Democrats in the 2010 mid-term elections. It doesn’t look good, but I’m not telling you anything you don’t already know. But how bad? Two nationally known election gurus have put out their thoughts on the mid-terms.
Larry Sabato, Director of the University of Virginia Center for Politics, writes that Democrats have all but lost the House:
Given what we can see at this moment, Republicans have a good chance to win the House by picking up as many as 47 seats, net. This is a “net” number since the GOP will probably lose several of its own congressional districts in Delaware, Hawaii, and Louisiana. This estimate, which may be raised or lowered by Election Day, is based on a careful district-by-district analysis, plus electoral modeling based on trends in President Obama’s Gallup job approval rating and the Democratic-versus-Republican congressional generic ballot (discussed later in this essay). If anything, we have been conservative in estimating the probable GOP House gains, if the election were being held today.
In a farewell speech given yesterday, Christina Romer said that the United States averted a depression thanks to actions taken by the Obama Administration:
Christina Romer, the departing chairman of President Obama’s Council of Economic Advisers, is to say in a farewell speech today that the administration’s responses to the economic crisis it inherited averted “a second Great Depression” and kindled a slow recovery, according to excerpts released on Wednesday morning by the White House.
Ms. Romer’s last day as a member of Mr. Obama’s economic team, and its only leading woman, is Friday, which coincides with the release of unemployment figures for August that are expected to show joblessness still hovering above 9 percent. And she returns to California in a campaign season in which Republicans insist, and many voters believe, that administration policies have failed, despite nonpartisan analyses to the contrary.
“I am proud of the recovery actions we have taken. I believe they have made the difference between a second Great Depression and a slow but genuine recovery,” Ms. Romer will say, according to her speech draft. “And the passage of health care reform and financial regulatory reform are accomplishments that will be with us long after the recession is over.”
As the Wall Street Journal noted back in July, there is no way to know what would have happened without the bilions upon billions of “stimulus” dollars pumped into the economy, which haven’t done much other than drive up budget deficits:
The Wall Street Journal reports that baseline spending estimates, which the Congressional Budget Office uses in reports to Congress, has jumped by a staggering $4.4 trillion over the next ten years:
To appreciate the magnitude of this spending blowout, compare CBO’s budget “baseline” estimate in January 2008 with the baseline it released Thursday. The baseline predicts future spending based on the law at the time. As the nearby chart shows, in a mere 31 months Congress has added more than $4.4 trillion to the 10-year spending baseline. The 2008 and 2009 numbers are actual spending, the others are estimates. As recently as 2005, total federal spending was only $2.47 trillion.
Keep that $4.4 trillion in mind the next time you hear Mr. Obama or Speaker Nancy Pelosi say they “inherited” this budget mess. Let’s assume the recession that Mr. Obama inherited—Mrs. Pelosi was already in power—was responsible for causing $1 trillion or so in deficit spending. That still doesn’t explain why the annual deficit of roughly $1.4 trillion will be nearly as high in fiscal 2010, after a year of economic growth, as it was in 2009. Or why CBO says the deficit will still be nearly $1.1 trillion in 2011 even if all of the Bush-era tax cuts are repealed.
The deficit is barely declining because of the lackluster economic recovery, which continues to yield too little revenue, and especially because of the record levels of spending passed by the Democratic Congress and eagerly signed by Mr. Obama.
The national debt stands at $13.3 trillion and there are $50+ trillion in unfunded liabilities in Medicare and Social Security. Yet, Congress continues to spend under the tried and failed Keynesian belief that they can spend like drunken sailors and not face consequences for it.p