Fighting to Preserve Liberty in America
Drawing by Red State
Okay, so we have heard Harry Reid, flanked by Durbin and Schumer, scold the Republicans for stonewalling. Today we learn the news that another Democrat was bluff called to find they have nothing.
Photo by Bill Herndon
As the drama unfolds regarding the debt limit, the American people are probably unaware of a subtle distinction. When the House of Representatives passed Cut, Cap, and Balance and sent it to the Senate, it was not voted down in the Senate. Instead the Senate voted to table it, pigeon hole it, lock it in a drawer, do everything they could not to actually debate it and vote on it. Why?
K-12 education is in trouble. A recent report on schools in New York City said that of the 60% or so of students who actually graduate, about half need remedial classes before they can perform at the college level. We have a Department of Education that has spent over $1 trillion since it was created by President Jimmy Carter and school performance has declined.
Bailouts
I’ve seen Tim Bishop’s new ad to help re-elect him to Congress. He glares into the camera and says “no more bailouts.” Having voted with the Democratic leadership (Nancy Pelosi) more than 97% of the time, who is Tim Bishop running against, himself? Is this another “I voted for the bill before I voted against it?”
So the guy who helped give us all these bailouts is now talking tough that he is protecting us from bailouts.
Credit Cards
His ad then goes on to say how he is protecting consumers and their credit cards. One of the features he voted for is to cap the interest rate on credit cards at 16%. Well that sounds good, but what is so magical about 16%? Why not 17%, why not 12%? Wait a minute, New York State used to have a cap on credit card interest rates of 12%, but then we got the Jimmy Carter economy where interest rates skyrocketed. What happened then? Major banks with credit card operations in New York state moved to other states that had no limit. I worked at Citibank shortly thereafter, and they picked up their operations and moved them to South Dakota and Nevada. New York lost thousands of jobs. So what Mr. Bishop wants to do is place a limit at the federal level so those tricky people in South Dakota and Nevada can’t steal jobs from New York. So instead, if we get another Carter economy, those jobs will go overseas. But wait, doesn’t his commercial say he will create jobs here, not overseas? What it proves is that Tim Bishop doesn’t understand economics and free markets, which he opposes.
Does Tim Bishop know what he’s talking about, or just waiting for the next instructions from Nancy Pelosi?
Back on the campaign trail where he feels comfortable that he knows what he is doing, Barack Obama traveled to Las Vegas to stump for Harry Reid. Harry Reid used to be a boxer and when he told Barack Obama this he said, “Barack, I wasn’t the fastest. I wasn’t the hardest-hitting, but I knew how to take a punch.” Based on all the legislation that has been passed since 2008 that an overwhelming majority of the American people have opposed, makes one wonder if Harry Reid took a few punches too many.
Shortly after taking office and settling into his “bash business” mode Obama blasted businesses for their extravagant meetings held in places like Las Vegas. Someone then whispered in the president’s ear that extravagant business meetings in Las Vegas were good for Las Vegas and Harry Reid. Oops. And there you have the crux of the problem.
What, exactly, is government’s role to tell private companies how to spend their money? What is the role of governments to say to a BP, “Give us the $20 billion, or we’ll take it from you,” as was attributed to Joe Biden, without first going to court? What is the role of government to say to its citizens, you must buy this health care product or pay a fine? Well in Hugo Chavez’s Venezuela, it is probably all fine and dandy, but in America?
Barack, the standup comic, used the analogy that he and Harry Reid had mud on their shoes, were pushing hard to get the car back on the road, and were making progress little-by-little and when they finally got one wheel on the pavement the Republicans want to throw the car into reverse. Really? I would compare it more to conservatives telling everyone to get out of the car and help push, instead of waiting for Nancy Pelosi to come back from Dunkin Donuts with free food for all the overweight union bosses jammed in the car squawking that they didn’t do manual labor. Their contract didn’t call for pushing cars out of ditches.
So, while this car should have been out of this ditch and well down the road by now, Harry and Barry will try to convince us that what they’re doing is absolutely brilliant; it’s just that we are too stupid to see it. After all, it took the greatest president in history, FDR, over eight years and a World War to get us out of the Great Depression, so relax we have another 6 ½ years to go.
Imagine what would have happened if the ever resilient American economy was allowed to work on its own without all the government intervention in the 1930s. Perhaps the Depression would have been shorter like the recession of 1920-1921, and perhaps we would not have had World War II, and Fannie Mae, and a bankrupt Social Security, and a couple of generations later all of us swimming in debt. It’s time the tow truck of the most powerful economy on the face of the earth to come along and be allowed to do its job. Tell Harry and Barry to go sit down on that stump over there, and watch how it is really done. “You’re making a mess of yourselves and embarrassing the rest us.”
The New York Times had some, what was to me, shocking news today. The article said that there was now consensus that the Obama stimulus plan was working. Is this the same kind of consensus that man-made global warming was settled science, despite the glaring evidence that carbon dioxide emissions continue to grow while the globe stopped warming ten years ago? This is also close on the heels of breaking stories of extraordinary misinformation if not outright deceit on how the $787 billion is being spent.
Smoke and Mirrors
Early on in the article we have this gem:
“The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.”
There is no mechanism that exists to measure a job saved. None. So how do they do it? It goes something like this:
“Here, Mr. Stimulus Funds applicant, I have this check for you for $642,000. No can you tell me, if I give this to you, how many jobs would you create or save?”
“Create? Er, none.”
“Hmmm,” the bureaucrat mutters, staring down at the check in his hand, “what about jobs you would save? You know, if I don’t give you this nice, rather large check, how many of your people would you be forced to lay off?”
“Oh, I get it,” the potential recipient says with a wink and a smile, “probably all of them!”
The bureaucrat scribbles down a number, and hands over the check, walking away shaking his head.
That’s about how it’s done. The government surveys the people getting the money and asks them what would have happened if they didn’t get the stimulus. And what would you expect them to say? Keep the check?
Revenue Starved States
What a concept, “Revenue Starved States.” The article complains that not enough money was provided to “Revenue Starved States.” Does he mean states like California and New York? I believe the correct term is states where spending is out of control. It means states where taxes are so high that people are moving out in droves, and among them the “wealthy” people they love to tax to the eyeballs, meaning a dramatically shrinking revenue base. After all, if one of the wealthiest people in the state, who is part of the group that pays 70% of the taxes, moves out of the state or (out of the country when it gets bad enough), that means a lot of people are going to see their taxes raised to make up for it. So the statists seem to think a stimulus package that keeps these bloated bureaucracies fat, dumb and happy is the way to go, until when exactly?
The Multiplier Fallacy
The other great fraud being foisted on us is the multiplier effect, where for each dollar of stimulus money spent more than a dollar of economic activity results:
That sort of impact is what makes federal aid to state governments rank high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 “bang” for each federal buck.
Even more effective are increases for food stamps ($1.74) and unemployment checks ($1.61), because recipients quickly spend their benefits on goods and services.
Okay, then how is this for a solution. Let’s spend $10 trillion on infrastructure, food stamps and unemployment checks, since they will result in $15 trillion or so in economic activity, because of the multiplier, right? For that matter, let’s have the government spend $100 trillion and we’ll really be rocking.
Where’s the So Called Consensus
From what I read in the article, there was only one economist that could be called a conservative, Martin Feldstein, that they were willing or able to quote, and this was his take on the stimulus.
While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.
“There should have been more direct federal spending that would have added to aggregate demand,” he said. “Temporary tax cuts and one-time transfers to seniors were largely saved and didn’t stimulate spending.”
That’s it? That’s the consensus? It seems to me that he is pointing out what was wrong with the package rather than what was right. He was in the Reagan administration and he knows what works: permanent cuts in marginal tax rates. Those dreaded tax cuts for the “rich.” The thing is that when the people above the subsistence level get to keep more of what they earn, yes it does belong to them and not to the government, they tend to invest it, which means the provide capital to businesses that grow and create jobs. Yes, capitalism. What the stimulus does is take money away from these people, or borrows it and steals it from future generations, and gives that money, as in the example above, to highway projects, food stamps and unemployment checks. The first of these may create jobs until the road project is completed, but the latter two only increase the dependency of those recipients on the government. So how exactly does the stimulus plan that puts money into a highway project and unemployment benefits, help a banker who got laid off? How does it help the unemployed executive from United Technologies? It doesn’t. It’s like a drug fix. You may feel good for a while, but then it wears off and you need another fix.
The Genius of Government
You would think that with all the examples of government planning lying on the waste heap of history, the statists will finally catch on that they can’t successfully pick the winners and losers in an economy. Government has to get out of the way and let the market work.
Government must be drastically cut down to size. Think of the popular TV show “The Biggest Loser.” Picture the governments of the United States, California, New York, New Jersey, Rhode Island, Michigan, Nevada, for starters, as contestants. Let’s see who can lose the most weight. Ready? Go.
