Feeds:
Posts
Comments

Archive for October, 2013

You would think Halloween would be the favorite holiday for leftists. After all, you go to other people’s houses and get free candy.

But since the entire process is voluntary, that spoils the fun for our coercion-loving statist friends.

Which may explain why a lot of Halloween humor has a libertarian bent. My favorite example is the video of a comedian explaining how to teach your kids about taxes after they’re done trick-or-treating.

Today, though, we’re going to enjoy a bunch of cartoons, starting with this Jerry Holbert gem showing Obama and his senior staff putting together his healthcare plan.

Obamacare Halloween Witches

The part about taxpayer wallets is painfully accurate.

Sticking with the witch theme, Ken Catalino’s cartoon makes a good point about Obamacare’s economic impact.

Obamacare Halloween Witch

This Tim Hartman cartoon could have been taken directly from today’s headlines.

Obamacare Halloween White House

It seems kids always have bad experiences when they make Halloween stops at the White House.

The witch theme returns with this Lisa Benson cartoon featuring Harry Reid and Nancy Pelosi.

Obamacare Halloween Reid Pelosi

Steve Kelley mocks the President’s serial dishonesty about Obamacare in this cartoon.

Obamacare Halloween Pinochio

And this Henry Payne cartoon reminds us that maybe it’s not a bad idea to shut down the government.

Obamacare Halloween NSA IRS

Hmmm…I think I’ve already seen that idea.

Here’s Henry Payne again.

Obamacare Halloween Glitch

Yet another example of what happens when you trick-or-treat at the White House.

Last but not least, here’s John McPherson celebrating some very scary costumes.

Obamacare Halloween Congressmen

Speaking of which, click here if you like mocking politicians.

Read Full Post »

Keynesian economics is the perpetual motion machine of the left. You build a model that assumes government spending is good for the economy and you assume that there are zero costs when the government diverts money from the private sector.

With that type of model, you then automatically generate predictions that bigger government will “stimulate’ growth and create jobs. Heck, sometimes you even admit that you don’t look at real world numbers.

Which perhaps explains why Keynesian economics has a long track record of failure. It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Nixon, Ford, and Carter in the 1970s. It didn’t work for Japan in the 1990s. And it hasn’t worked this century for either Bush or Obama.

But politicians love Keynesian theory because it tells them that their vice is a virtue. They’re not buying votes with other people’s money, they’re “stimulating” the economy!

Given this background, you won’t be surprised to learn that Keynesians are now arguing that the recent partial government shutdown hurt growth.

Here’s some of what Standard and Poor’s wrote about that fight and why the shutdown supposedly reduced economic output, along with their warning of economic cataclysm if politicians had been forced to balance the budget in the absence of an increase in the debt ceiling.

…the shutdown has shaved at least 0.6% off of annualized fourth-quarter 2013 GDP growth, or taken $24 billion out of the economy. …the resulting sudden, unplanned contraction of current spending could see government spending cut by about 4% of annualized GDP. That would put the economy in a recession and wipeout much of the economic progress made by the recovery from the Great Recession. …The bottom line is the government shutdown has hurt the U.S. economy.

Part of me wonders whether the bottom line is that S&P was simply looking for an excuse for having made a flawed economic prediction earlier in the year. They basically admit they goofed (though, to be fair, all economists are lousy forecasters), as you can see from this excerpt, but we’re supposed to blame the lower GDP number on insufficient government spending.

In September, we expected 3% annualized growth in the fourth quarter… Since our forecast didn’t hold, we now have to lower our fourth-quarter growth estimate to closer to 2%.

Unsurprisingly, the Obama Administration has been highlighting S&P’s analysis.

A number of private sector analyses have estimated that the shutdown reduced the annualized growth rate of GDP in the fourth quarter by anywhere from 0.2 percentage point (as estimated by JP Morgan) to 0.6 percentage point (as estimated by Standard and Poor’s)… Most of the private sector analyses are based on models that predict the impact of the shutdown based on the reduction in government services over that period.

And the establishment press predictably carried water for the White House, echoing the S&P number. Here’s an example from Time magazine.

The financial services company said the shutdown, which ended with a deal late Wednesday night after 16 days, took $24 billion out of the U.S. economy, and reduced projected fourth-quarter GDP growth from 3 percent to 2.4 percent.

If nothing else, this is a good example of how a number gets concocted and becomes part of the public policy discussion.

Let’s take a step back,however, and analyze whether that $24 billion number has any merit.

The Keynesian interpretation is that the shutdown took money “out of the economy.” According to the theory, money apparently disappears if government doesn’t spend it.

In reality, though, less government spending means that more funds are available in credit markets for private spending. This video explains why Keynesian theory is misguided.

And if you want to dig further into the issue, you can click here for a video that explains why we might get better decisions if policy makers focused on how we earn income rather than how we allocate income.

Now that I’ve shared the basic arguments against Keynesian economics, let me give two caveats.

First, resources don’t get instantaneously reallocated when the burden of government spending is reduced. So I’ve always been willing to admit there could be a few speed bumps as some additional labor and capital get absorbed into the productive sector of the economy.

Second, a nation can artificially enjoy more consumption for a period of time by borrowing from overseas. So if deficit spending is financed to a degree by foreigners, overall spending in the economy will be higher and people will feel more prosperous.

But these caveats aren’t arguments for more spending. The ongoing damage of counterproductive government outlays is much larger and more serious than the transitory costs of redeploying resources when spending is reduced. And overseas borrowing at best creates illusory growth that will be more than offset when the bills come due.

Ultimately, the real-world evidence is probably the clincher for most people. As noted above, it’s hard to find a successful example of Keynesian spending.

Yet we have good evidence of nations growing faster when government outlays are being controlled, including Canada in the 1990s and the United States during both the Reagan years and Clinton years.

And the Baltic nations imposed genuine spending cuts and are now doing much better than other European countries that relied on either Keynesian spending or the tax-hike version of austerity.

P.S. Here’s a funny video on Keynesian Christmas carols. And everyone should watch the famous Hayek v Keynes rap video, as well as its equally clever sequel.

P.P.S. Switching to another topic, we have an encouraging update to the post I wrote last year about an Australian bureaucrat who won a court decision for employment compensation after injuring herself during sex while on an out-of-town trip. Showing some common sense, the Australian High Court just ruled 4-1 to strike down that award.

Read Full Post »

The Washington metropolitan area has become America’s wealthiest region because trillions of dollars are taken every year from the productive sector of the economy and then divvied up by the politicians, bureaucrats, lobbyists and interest groups that benefit from federal largess.

But there’s always an appetite in Washington for even more money.  Former Senator Kent Conrad just wrote in the Washington Post that “Our country needs more revenue to help us get back on track.”

I guess that means back on track to becoming Greece, though I suspect he would have an alternative explanation. All I can say for sure is that he probably wasn’t paying attention when I testified to his Committee last year about pro-growth tax policy.

But it’s not just Democrats who are greedy for more of our money. Republican Congressman Tom Cole of Oklahoma joined the Charlie Brown Club by stating, “we’re willing to put more revenue on the table.”

If you ask politician why they want more revenue in Washington, they invariably state that America’s long-term fiscal challenges are so large that you need a “balanced” package.

But why should there be “balance” between tax hikes and spending cuts (which would merely be reductions in planned increases) when more than 100 percent of America’s long-run fiscal problem is because of a rising burden of government spending?

Does that sound like an exaggeration? Well, check out this data from the Congressional Budget Office’s 2013 Long-Term Budget Outlook.

As you can see, tax revenues are supposed to jump substantially as a share of GDP in coming decades. Indeed, they will rise far above the long-run average of 17.7 percent of economic output.

Long-Run Tax Revenue

In other words, a big increase in the tax burden already is set to occur, largely because of real bracket creep. This means tax cuts (ideally accompanied by tax reform) are needed to protect taxpayers from rising tax rates.

And if we want to deal with America’s real fiscal challenge, that means modest spending restraint in the short run and genuine entitlement reform in the long run.

P.S. Do you need more evidence that taxes should go down rather than up? Well, the New York Times inadvertently revealed that the only “grand bargain” that actually resulted in a budget surplus was the 1997 pact that lowered the tax burden.

P.P.S. I’ve admitted that – in theory – it might be reasonable to acquiesce to a tax hike if accompanied by some genuine reforms to control spending. But in reality that will never happen. The evidence from Europe is very persuasive that more revenue simply leads to a larger burden of government spending.

Read Full Post »

I’m glad I work for a principled and libertarian organization. At the Cato Institute, there’s never any pressure to say or do the wrong thing for partisan reasons.

When Republicans screw up, I don’t have to think twice about exposing their misdeeds.

I have repeatedly criticized President Bush (and his former top aide) for expanding the burden of government. Buying votes with other people’s money isn’t compassionate.

Incurable spendaholics?

I have excoriated former GOP Hill staffers who became lobbyists for various special interests groups looking to fleece taxpayers. Stealing is wrong, even when you get a lot of money to use government as middleman.

I have slammed a former Reagan Administration official for defending earmarks. I think it is morally offensive that he gets rich by facilitating the transfer of money from taxpayers to powerful interest groups.

I have condemned the former Senate Republican leader for defending Obamacare. I think it is disgusting that he puts his lobbying income ahead of America’s best interests.

I have denounced Illinois Republican legislators for killing school choice. I think it is downright nauseating that they condemn inner-city children to terrible schools in exchange for campaign contributions from teacher unions.

And I have pointed out that statist policies don’t become acceptable merely because they come from Republican presidential candidates. The road to serfdom oftentimes is bipartisan.

We now have another candidate for our “Republican Hall of Shame.” The governor of Ohio, John Kasich, is embracing Obamacare. Moreover, not only does he want bad healthcare policy, but he’s using third-world tactics and making morally reprehensible arguments.

The Wall Street Journal savages Kasich in a stinging editorial. Here’s a key excerpt that explains the overall situation.

…there are still a few disciples with faith in an ObamaCare higher power, and one of them happens to run Ohio. Governor John Kasich is so fervent a believer that he is even abusing his executive power to join the Affordable Care Act’s Medicaid expansion. Not to be sacrilegious, but the Republican used to know better. Now Mr. Kasich seems to view signing up for this part of ObamaCare as an act of Christian charity and has literally all but claimed that God told him to do so.

But Gov. Kasich has a slight problem. The legislature hasn’t approved this budget-busting part of Obamacare. So Kasich has decided that he can arbitrarily change policy, just like Obama did with the employer mandate and the Obamacare exemption for Capitol Hill.

The problem is that his evangelizing failed to convert the Ohio legislature, which is run by Republicans who understand the brutal budget and regulatory realities of participating in new Medicaid. So Mr. Kasich simply decided to cut out Ohio’s elected representatives and expand Medicaid by himself. …he appealed to an obscure seven-member state panel called the Controlling Board, which oversees certain state capital expenditures and can receive or make grants. …Mr. Kasich asked the panel to approve $2.56 billion in federal funding, and then he’ll lift eligibility levels via executive fiat. It’s a gambit worthy of President Obama, who also asserts unilateral powers to suspend laws that displease him and bypass Congress.

But what’s really nauseating is that Kasich equates big government and welfare spending with religious values.

Mr. Kasich really must feel like he’s guided by the Holy Spirit… “When you die and get to the meeting with St. Peter, he’s probably not going to ask you much about what you did about keeping government small. But he is going to ask you what you did for the poor,” to quote one of his favorite lines.

I suppose I could make a joke about communists presumably being super religious if you use this twisted metric, but there’s a serious point to be made. I’m not a religious scholar, but I wrote several years ago that, “Doesn’t Christianity (and, I assume, Judaism and other faiths) require individuals – using free will – to act charitably? Using the coercive power of government to forcibly redistribute other people’s money, by contrast, is moral preening at best.”

Moreover, Kasich must be delusional if he thinks making government bigger is good for the poor. Redistribution traps the poor in dependency and a larger public sector hinders economic growth, making life even more difficult for the less fortunate.

Heck, just compare Hong Kong and Argentina over the past 50-plus years and ask yourself which jurisdiction afforded more opportunity for those trying to climb the economic ladder.

Fortunately, the battle isn’t over yet.

Thirty-nine House Republicans signed a formal protest and some of them are threatening to sue, and well they should. They argue that circumventing the legislature subverts the Ohio constitution’s separation of powers and exceeds the statutory legal authorities of the Controlling Board, which is supposed to “take no action which does not carry out the legislative intent of the General Assembly.”

I don’t know whether a legal case will be successful, but I can share data showing that Ohio already is in deep fiscal trouble.

It ranks 39th in the Tax Foundation’s State Business Tax Climate Index.

It was the 7th-worst state on controlling spending over the past decade.

It ranks in the bottom 10 on measures of bureaucrats to teachers.

It was listed as one of America’s 11 states facing an economic death spiral.

And John “Barack” Kasich thinks he’ll make Ohio better by adding an additional layer of government spending to finance Obamacare expansion?!?

What makes this situation so sad is that Kasich was Chairman of the House Budget Committee in the mid-1990s, so he deserves some of the credit for restraining federal spending during that period, a very successful policy that led to better economic performance and budget surpluses.

P.S. Kasich’s push to expand Medicaid shows one of the reasons the program should be reformed. He’s being lured by the promise that Washington will pick up the entire tab for the first few years. Afterwards, state taxpayers will get saddled with some of the burden, but Kasich probably assumes he won’t be around to deal with that problem. This is why the entire program should be block-granted to the states. If Kasich really thinks God wants a bigger Medicaid system, he should go to Ohio voters and ask them to pay for it.

Read Full Post »

Most of my political humor is designed to mock statists. That’s true whether I’m sharing cartoons, videos, jokes, or one-liners.

But I also enjoy clever left-wing humor, even when libertarians are the target. Here are examples that tickled my funny bone.

I rarely find explicitly pro-libertarian humor, however, perhaps because we’re too busy fretting about the dangers of excessive government.

But I think you’ll agree that “Libertarian Jesus” is worth a laugh or two.

Libertarian Jesus

I like this poster because it makes the very important and serious point (which Cal Thomas has succinctly explained) that it’s not compassion when you use coercion to spend other people’s money.

If you want more pro-libertarian humor, all I can find is this poster about confused statists and the libertarian version of a sex fantasy.

Read Full Post »

You would think the bureaucrats who run government schools would want to focus on the basics, such as teaching reading, writing, and arithmetic.

After all, no nation spends more per pupil on education than the United States. And based on some Cato Institute research, I suspect the OECD estimate of about $15,000 per student is a low-ball estimate of the burden on American taxpayers.

So what do we get for all this money? To be blunt, the results are miserable, with Americans ranking well below average compared to our overseas competitors.

Here are some comparisons on both literacy and numeracy from the Organization for Economic Cooperation and Development. You’ll have to click the images to get an enlarged view. But maybe you won’t want to do that since it’s depressing to see that Americans are near the bottom for math skills and well below average for verbal skills.

OECD NumeracyOECD Literacy

Geesh, this is embarrassing. I like Slovaks, but I don’t want Americans to be less intelligent. I also like Belgians, but why are they kicking our tail? And I really like Estonians, but they’re putting us to shame.

So how is the education establishment dealing with these dismal results?

Well, they keep asking for more money. But as this remarkable chart from the Cato Institute illustrates, throwing more money at the system is a great way of building bureaucracy. But it sure doesn’t do much for kids. Education spending Cato chart

So you could say this is a form of child abuse. But that would trivialize the plights of kids who are grossly mistreated. So let’s say that the sub-par education provided by government schools is a form of child victimization. Or mistreatment. Or some word that signifies how they are not well served by the government’s education monopoly.

But let’s also remember that sub-par education is not the only bad thing that happens in government schools.

We also have amazing (in a bad way) episodes of intrusive and abusive political correctness.

Here’s a story from Massachusetts about a student being punished for doing the right thing.

It’s tough for Eleanor Cox to talk about how heartbroken her daughter Erin is over the punishment she received for doing what she thought was right. …Two weeks ago, Erin received a call from a friend at a party who was too drunk to drive. Erin drove to Boxford after work to pick up her friend. Moments after she arrived, the cops arrived too and busted several kids for underage possession of alcohol. A North Andover High School honor student, Erin was cleared by police, who agreed she had not been drinking and was not in possession of alcohol. But Andover High told Erin she was in violation of the district’s zero tolerance policy against alcohol and drug use. In the middle of her senior year, Erin was demoted from captain of the volleyball team and told she would be suspended from playing for five games. …the parents of Erin’s teammates have started a petition to support her.

I’m dismayed, of course, that the school wants to punish someone who didn’t do anything wrong, but what really irks me is that the school wants to regulate and control behavior that takes place off school property and outside of school hours.

To be blunt, it’s none of their you-know-what business. Parents should have primary responsibility for their kids and law enforcement has a role if they’re breaking the law.

Let’s now travel down south and read part of a report about how some mindless school bureaucrats punished an autistic student because he drew a picture of a bomb and brought the drawing to school.

…it all started when her son had made the hand-drawn picture of the bomb during the weekend at home. Parham said Rhett is a fan of the video game Bomber Man and drew the cartoon-ish like explosive. She told FOX Carolina on Monday that her son took the picture to Hillcrest Middle School, and that’s where problems arose. Parham said she was told that her son showed the picture to some older children, who reported him to school administration. …She said her son was suspended indefinitely by the school.

Fortunately, the government backed down after the story generated some unfavorable attention for the bureaucratic drones.

But we should ask ourselves why it even got to that stage. And perhaps get some counseling for the little brats who snitched on him. Sounds like they’re future IRS agents in training.

Sadly, this is just part of a pattern we’ve seen in government schools, with bureaucrats hyperventilating over normal kid behavior. Here are some other examples.

Now ask yourself to key question: Do we want to maintain and perpetuate a failed government school monopoly, or should we implement school choice to get better results and less political correctness?

Heck, we should be able to reform our schools if there’s already choice in countries such as Chile, Sweden, and the Netherlands.

Read Full Post »

I posted a video back in 2010 that used biting humor to complain about overpaid firefighters.

That video stirred a hornet’s nest, generating some spirited debate in the comments section. But there was no resolution, in part because you can’t make sweeping judgements when firefighter pay is determined locally.

Some firefighters may be underpaid and some almost certainly are overpaid.

And you can find a jaw-dropping example of the latter category in southern California.

Andrew Biggs at the American Enterprise Institute looks into a controversy about compensation levels for firefighters in Orange County and says the critics are wrong – but also right – about excessive pay and benefits for the firefighting bureaucracy.

UnionWatch.org reports that the average firefighter in Orange County, California pulls in total pay and benefits of $234,000 per year, making them among the best-paid public employees – and, for that matter, among the best-paid of any kind of employees – in the country. But is this true? No. But yes. UnionWatch relies on compensation data provided by Orange County itself, which appears to buttress their claims. Average salaries for firefighters top $91,000, on top of which they typically receive another $65,000 in overtime and other supplementary pay. Firefighters then receive an employer pension employer contribution of around $61,000 and health insurance benefits of about $15,000, for a total of over $234,000.

Here’s why UnionWatch.org is incorrect.

…why is this not right? Because in Orange County and most other cities and states, much of the employer’s pension contribution is to pay off unfunded liabilities from prior years, which is different from pension benefits earned by employees in the current year. Only the latter is truly compensation. The “normal cost” of Orange County Fire pension benefits accruing this year is about 23.49 percent of salaries, or around $37,685. So, average annual compensation would be around $23,000 less, so make that total compensation of about $211,000. Still not shabby, but less than the headline.

But it seems that the group also is right. Indeed, they understated the cost of employing a firefighter.

But here’s the bad news: total compensation is actually a lot higher than $211,000, and even higher than UnionWatch’s $234,000 figure. The reason is that Orange County calculates its pension contribution based on the assumption the plan’s investments will 7.75% investment returns every year. …If we assume a 4% interest rate – something above the riskless Treasury yield, but lower than the pensions’ own risky investment return – the normal cost of Orange County Fire pensions rises a lot – to about 75 percent of salaries. (…the Congressional Budget Office applied the same risk-adjustment in valuing pensions for federal government employees.) In other words, in an average year an Orange County firefighter accrues future pension benefits worth over $118,000. So total annual compensation for an average Orange County firefighter is somewhere in the neighborhood of $290,000 per year.

That’s a nice pile of cash. Not as good as the city manager in one California town who raked in more than $787,000 per year, but definitely not shabby.

But the real issue is whether $290,000 is too much or too little. Being a firefighter is a risky profession, after all, and higher compensation is an efficient way of compensating for danger. And I assume there are fitness requirements that restrict the pool of eligible applicants.

Unfortunately, the article doesn’t give us the information needed to specifically assess whether Orange County firefighters are overpaid.

For what it’s worth, though, I think the answer is yes. We have data from the Department of Labor showing that state and local government bureaucrats are far less likely to voluntarily leave their jobs compared to workers in the private sector.

That’s a very strong indication that they’re receiving above-market wages. And since firefighters are paid a lot more than the average state or local bureaucrat, we can make some educated assumptions about their relative compensation.

To put this issue in context, here’s a video I narrated from the Center for Freedom and Prosperity on the issue of bureaucratic compensation.

If I had to simplify this video into a couple of short messages, one of them would be that a lot of bureaucrats are grossly overpaid for the simple reason that their jobs shouldn’t exist. I’m sure there are some very nice and wonderfully conscientious people working at places such as the Department of Agriculture and the Department of Housing and Urban Development, but their jobs should be phased out as those departments are eliminated.

The other message is that we should use market indicators to determine compensation for government jobs that would still exist. Whether we’re talking about military pay at the federal level or compensation for cops at the local level, it makes sense to pay enough to get the right people but not so much that taxpayers are getting the short end of the stick.

In Orange County, California, taxpayers are left with a twig.

P.S. I already mentioned the fat-cat city manager from Bell, California. Here are some other bureaucrats who are living on Easy Street courtesy of taxpayers.

Read Full Post »

Older Posts »

Follow

Get every new post delivered to your Inbox.

Join 2,433 other followers

%d bloggers like this: