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Archive for the ‘Republicans’ Category

If you like to go along to get along, I suggest you don’t become a libertarian. At least not if you follow politics or work in Washington.

Otherwise, you’re doomed to a life of endlessly pointing out that the emperor has no clothes. Here are three examples.

1. When almost every Republican and Democrat argued for a Keynesian-style stimulus in 2008, libertarians had the lonely job of explaining that you don’t get more growth by increasing the burden of government spending.

2. And when most Republicans and Democrats said we needed a TARP bailout that same year, it was libertarians who futilely argued that the “FDIC-resolution” approach was a far more sensible way of dealing with the government-created crisis.

3. More recently, there were a bunch of stories complaining that 2013 was a very unproductive year for Congress, and libertarians were among the few to state that we’re better off with fewer laws rather than more laws.

The same is true for “bipartisanship.” Almost every pundit, politician, and lobbyist in Washington will extol the virtues of bipartisanship. But what they really mean is that they want both Republicans and Democrats to join arms in a business-as-usual game.

Indeed, the standard libertarian joke is that you get bipartisanship when the Stupid Party and the Evil Party both agree on something. Needless to say, that often means laws that are both stupid and evil.

Which is a good description of Bush’s 2008 stimulus and the corrupt TARP legislation.

But since we’re at the end of the year, I don’t want to get overly depressed. So let’s share some cartoons that celebrate the Murray-Ryan budget, which is the most recent example of “bipartisanship.”

We’ll start with ones that have a Christmas theme.

The politicians were glad to escape the fiscal constraint of sequestration, but Lisa Benson is not overly impressed by their cooperative effort.

Budget Deal Cartoon 8

Gary Varvel isn’t very happy, either.

Budget Deal Cartoon 1

Varvel is very explicit in this cartoon about Democrats and Republicans being united against taxpayers.

Budget Deal Cartoon 4

The bag should have been labelled “spending,” but that’s a minor complaint.

Steve Breen points out that the budget deal achieved three out of four goals.

Budget Deal Cartoon 2

And Michael Ramirez astutely identifies too much spending as the problem and shows that the budget deal did nothing to address that issue.

Budget Deal Cartoon 3

Here’s another Lisa Benson cartoon, though this one focuses on establishment GOPers trying to hook the Tea Party on the demon rum of big government.

Budget Deal Cartoon 5

Sort of reminds me of this great Henry Payne cartoon about Obama and Greece. Or maybe this Nate Beeler cartoon about weak-willed GOPers.

I’ve saved the best for last.

This Glenn McCoy cartoon shows what bipartisanship really means inside the DC beltway.

Budget Deal Cartoon 6

McCoy had another cartoon last year with a similar theme, as did Michael Ramirez.

In closing, I want to say something vaguely optimistic. The Murray-Ryan budget deal was unfortunate, but it was a rather minor setback compared to the kinds of “bipartisan” big-government schemes we got during the Bush years.

It was sort of akin to the fiscal cliff deal at the beginning of the year. Government got a bit bigger and a bit more expensive, but it was peanuts compared to TARP, the prescription drug entitlement, and many of the other schemes that eroded economic liberty last decade.

P.S. Fairness requires that I point out that bipartisanship doesn’t automatically mean bad legislation. The bipartisan 1997 budget deal between the GOP Congress and Bill Clinton cut some taxes and reduced the growth of federal spending. And the successful sequester came about because of the bipartisan 2011 debt limit legislation.

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There’s a saying in the sports world about how last-minute comebacks are examples of “snatching victory from the jaws of defeat.”

I don’t like that phrase because it reminds me of the painful way my beloved Georgia Bulldogs were defeated a couple of weeks ago by Auburn.

But I also don’t like the saying because it describes what Obama and other advocates of big government must be thinking now that Republicans apparently are about to do the opposite and “snatch defeat from the jaws of victory.”

More specifically, the GOP appears willing to give away the sequester’s real and meaningful spending restraint and replace that fiscal discipline with a package of gimmicks and new revenues.

I warned last month that something bad might happen to the sequester, but even a pessimist like me didn’t envision such a big defeat for fiscal responsibility.

You may be thinking to yourself that even the “stupid party” couldn’t be foolish enough to save Obama from his biggest defeat, but check out these excerpts from a Wall Street Journal report.

Sen. Patty Murray (D., Wash.) and Rep. Paul Ryan (R., Wis.), chief negotiators for their parties, are closing in on a deal… At issue are efforts to craft a compromise that would ease across-the-board spending cuts due to take effect in January, known as the sequester, and replace them with a mix of increased fees and cuts in mandatory spending programs.

But the supposed cuts wouldn’t include any genuine entitlement reform. And there would be back-door tax hikes.

Officials familiar with the talks say negotiators are stitching together a package of offsets to the planned sequester cuts that would include none of the major cuts in Medicare or other entitlement programs that Mr. Ryan has wanted… Instead, it would include more targeted and arcane measures, such as increased fees for airport-security and federal guarantees of private pensions.

But the package may get even worse before the ink is dry.

Democrats on Thursday stepped up their demands in advance of the closing days of negotiations between Ms. Murray and Mr. Ryan. House Democratic Leader Nancy Pelosi (D., Calif.) brought a fresh demand to the table by saying she wouldn’t support any budget deal unless in included or was accompanied by an agreement to renew expanded unemployment benefits that expire before the end of the year—which would be a major threat to any deal.

Gee, wouldn’t that be wonderful. Not only may GOPers surrender the sequester and acquiesce to some tax hikes, but they might also condemn unemployed people to further joblessness and despair.

That’s even worse than the part of the plan that would increase taxes on airline travel to further subsidize the Keystone Cops of the TSA.

But look at the bright side…at least for DC insiders. If the sequester is gutted, that will be a big victory for lobbyists. That means they’ll get larger bonuses, which means their kids will have even more presents under the Christmas tree.

As for the rest of the nation? Well, you can’t make an omelet without scrambling a few eggs.

P.S. I suppose we should consider ourselves lucky that this looming agreement isn’t as bad as some past budget deals, such as the read-my-lips fiasco of 1990.

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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.

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I sometimes make fun of Republicans for being the “Stupid Party,” but I get genuinely agitated when they’re the “Statist Party.”

You can forgive someone for not being intelligent, after all, but it’s much harder to look the other way when they deliberately and knowingly do the wrong thing.

And that seems to be a good description of how the GOP handled the recent farm bill.

Farm subsidiesFirst, some background. The farm bill traditionally has also been the legislation that funded food stamps. The special interests adopted this approach because it created an unholy alliance of big-city Democrats and farm-state Republicans, with both groups agreeing to support each other’s wasteful spending.

Advocates of smaller government have long objected to this arrangement for the simple reason that neither agriculture subsidies nor food subsidies are proper functions of the federal government.

So it seemed like good news when the House of Representatives defeated a $1 trillion farm bill last month. And it seemed like even better news when House GOP leaders announced that they would separate the farm subsidies and food stamps into separate pieces of legislation.

But here’s where we run into problems. The insiders and special interests who are cozy with the GOP used this new approach as an excuse to increase the role of the federal government!

I’m not joking. Darren Bakst of the Heritage Foundation explains what happened.

When the House leadership first announced it would separately consider the food stamp and farm components of the “farm” bill, it looked like they got the message that current farm policy was in dire need of reform. With separation, real reform to rein in market-distorting programs and special interest handouts could finally happen. But now that separation has occurred, they’ve forgotten the very reason why separation was needed in the first place. …With the passage of this bill, the House has gone even further to the left than the Senate bill. It would spend more money than Obama on the largest farm program, crop insurance. …In fact, they made this new bill even worse—by making sneaky changes to the bill text so that some of the costliest and most indefensible programs no longer expire after five years, but live on indefinitely. This means the sugar program that drives up food prices will be harder to change, because it doesn’t automatically expire. It also means the new and radical shallow loss program that covers even minor losses for farmers will indefinitely be a part of the law.

To be fair, there were a few changes that arguably moved the ball in the right direction.

Here’s what the Wall Street Journal opined.

The new farm bill still has more subsidies than is desirable, especially amid a booming agriculture economy and record land prices. The supports for prospering sugar and dairy farmers are especially dreary. Republicans defeated a proposal by Budget Chairman Paul Ryan to put income limits for receiving subsidies, so “farmers” with non-farm incomes of nearly $1 million a year can still dun taxpayers. But at least the bill spends $20 billion less over 10 years than current law. One major reform is the repeal of a 1949 law that reinstates New Deal-era production controls and price supports if Congress failed to pass a new bill.

I’m not an expert on agriculture subsidies, but I think the Heritage Foundation has a stronger argument. In any event, it’s unambiguously true that House Republicans didn’t use this opportunity to approve big, pro-market reforms.

Moreover, the Republicans have left themselves wide open to the charge that they’re perfectly happy to subsidize rich contributors while not subsidizing those with modest incomes.

Ross Douthat was very critical of the GOP ploy in his New York Times column.

It should go without saying that America’s agriculture policy has always been a terrible, stupid, counterproductive exercise in self-dealing cronyism. But when House Republicans severed the traditional connection, arbitrary but politically effective, between farm subsidies and food stamps, it briefly seemed like they were looking for an opportunity to put libertarian populist principle into practice, by separating both outlays in order to trim or reform both separately. But no — instead they were just making it easier for the party’s congressmen to vote for a bloated, awful big government program that benefits mostly-Republican states and interest groups, knowing that they weren’t also voting for something that pays out to the (mostly-Democratic) poor as well. This is egregious whatever you think of the food stamp program… Practically any conception of the common good, libertarian or communitarian or anywhere in between, would produce better policy than a factionally-driven approach of further subsidizing the rich.

Sort of confirms my argument that the worst people in Washington are GOP insiders.

Needless to say, this approach creates a big opening for the left, as illustrated by this cartoon.

Big Ag GOP

But the reason this cartoon is effective is that it is based on reality. Republicans did push through a wasteful farm bill. And they don’t have any plans to deal with the food stamp component.

And even though there will be some agreement on food stamps, the GOP has left itself open to the charge that they want handouts for their rich friends and nothing for the poor.

From a libertarian perspective, I don’t care if Republicans open themselves up to unflattering stereotypes.

But I do want to abolish the Department of Agriculture at some point. And I also want to clean up the cesspool of corruption in Washington by shrinking the size and scope of the federal government.

Unfortunately, we seem to be moving in the wrong direction and the farm bill is merely the latest example of a very bad trend.

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I’m currently in Paris for my final stop on the Free Market Road Show. In other words, I’m in the belly of the beast of big-government statism.

So you would think I might be depressed, but I’m actually in a good mood.

Not because I’m surrounded by millions of socialists, but because voters in my home state just punished a couple of entrenched incumbent Republican politicians who sided with special interest groups and voted to rape and pillage taxpayers.

Here are some bring-a-smile-to-your-face details from a Washington Post report.

Two 20-year veterans of Virginia’s House of Delegates lost their seats Tuesday, falling to GOP primary challengers who assailed their support for a tax-heavy transportation funding overhaul. Del. Joe T. May (Loudoun) and Del. Beverly J. Sherwood (Frederick) lost to political newcomers who railed against the transportation plan, which imposes a $1.2-billion-a-year tax increase. … No sitting Republican delegate had faced a primary challenge since 2005, when activists went after some of those who supported a $1.5-billion-a-year tax hike pushed by then-Gov. Mark Warner (D).

You probably won’t be surprised to learn that these Republican-in-name-only lawmakers claimed tax hikes were necessary because there was no room to cut spending.

But the real problem is that too many Republicans in Richmond decided that the cesspool of big government was actually a hot tub. So rather than drain the swamp (yes, I’m mixing my metaphors), they decided they wanted more money to waste.

So, over the past several years, the burden of spending rose. Not just rose. It climbed twice as fast as inflation.

But they needed more money to maintain and support bigger government. So they disregarded their anti-tax promises.

And two of them paid the price at the polls. That may not sound like much since 34 GOP lawmakers sided with the left and voted for the tax hike.

But remember that it’s very hard to defeat incumbent politicians. So when a pair of 20-year incumbents lose, you can be sure that other lawmakers now will be far less likely to side with the political class instead of the people back home.

By the way, what makes the story in Virginia so pathetic is that Republicans normally get seduced into tax increases because of stupidity. As the Charlie Brown parody indicates, they get tricked into believing higher revenues will be used to lower deficits.

But in this case, the RINO Republicans openly admitted that they wanted more revenue to expand the state budget.

Heck, they didn’t just deserve to lose. They should have been tarred-and-feathered.

The no-tax-hike position is a line in the sand that shouldn’t be crossed.

The starve-the-beast rejection of tax hikes isn’t a sufficient condition to control big government, but it darn sure is a necessary condition.

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Among the right-leaning policy wonks and intellectuals in Washington, there’s a lot of attention being given to the something called “reform conservatism.”

Underlying this school of thought is the notion that the Reagan-era message no longer works since Republicans have lost the popular vote in five out of the last six elections.

A few people have asked my opinion about this movement, and since Ross Douthat of the New York Times just put together a good description of this school of thought, it makes it easy for me to offer my thoughts.

But before digging into his column, I think that some of the angst on the right is misplaced. Why blame a Reagan-era message for GOP electoral problems when all the Republicans presidential nominees in recent years have favored big government? Does anybody really think that Bush 41, Dole, Bush 43, McCain, and Romney were Reaganites?!?

Could any of those candidates have given these remarks, at least with any credibility? Or made these comments in a sincere fashion? It’s much more plausible to say that Republicans have lagged because they didn’t have candidates with a Reagan-style message.

But let’s assume, for the sake of argument, that Republicans would have fared poorly even if Reaganites had been nominated. Does “reform conservatism” offer a path to electoral salvation.

Here’s what Douthat identifies as the “two major premises” of reform conservatism.

1. First, he writes that the “core economic challenge facing the American experiment is not income inequality per se, but rather stratification and stagnation — weak mobility from the bottom of the income ladder and wage stagnation for the middle class.” Conservatives, he says, should strive to make “family life more affordable, upward mobility more likely, and employment easier to find.”

2. Second, he warns that the “existing welfare-state institutions we’ve inherited from the New Deal and the Great Society, however, often make these tasks harder rather than easier: Their exploding costs crowd out every other form of spending, require middle class tax increases and threaten to drag on economic growth.”

I’m not an expert on income mobility, so I’m not sure I would identify stratification and stagnation as the nation’s core economic challenge, but he may be right. Regardless, it’s definitely a good idea to have more mobility.

And I definitely agree that the welfare state hinders upward mobility by creating dependency. And he’s right that this is a drag on growth. That being said, I disagree with his assertion that rising entitlement expenditures crowd out other spending and lead to middle class tax hikes. Those things may happen at some point, particularly once we get into the peak years for retiring baby boomers, but they haven’t happened yet.

The more important question, at least to me, is what sort of policies do reform conservatives embrace? Here’s Douthat’s list, bolded, followed by my thoughts.

a. A tax reform that caps deductions and lowers rates, but also reduces the burden on working parents and the lower middle class, whether through an expanded child tax credit or some other means of reducing payroll tax liability. Tax Distribution CBOI obviously like the idea of lowering rates and reducing deductions since that moves the system closer to a flat tax. That being said, it’s difficult to reduce the tax burden on the lower middle class since they pay very little income tax under the current system (see accompanying table from CBO). But I like the idea of addressing the payroll tax, though I disagree with their approach (see section “c” below).

b. A repeal or revision of Obamacare that aims to ease us toward a system of near-universal catastrophic health insurance, and includes some kind of flat tax credit or voucher explicitly designed for that purpose. I fully agree with repeal of Obamacare, and I think an unfettered marketplace would evolve into a system of near-universal catastrophic insurance, but I don’t want the federal government subsidizing or coercing that approach (though current healthcare policy has far more subsidies and coercion, so Douthat’s plan would be a big improvement over the status quo).

c. A Medicare reform along the lines of the Wyden-Ryan premium support proposal, and a Social Security reform focused on means testing and extending work lives rather than a renewed push for private accounts. I’m glad they embrace Medicare reform, but I’m puzzled by the hostility to personal retirement accounts.  If you increase the retirement age and/or means test, you force people to pay more and get less, yet Social Security already is a bad deal for younger workers. So why make it worse? How can that be good for those with low mobility? Personal accounts would be akin to a tax cut for such workers since the payroll tax would be transformed into something much closer to deferred compensation.

d. An immigration reform that tilts much more toward Canadian-style recruitment of high-skilled workers, and that doesn’t necessarily seek to accelerate the pace of low-skilled immigration. As I noted in this interview, I very much favor bringing more high-skilled people into the country.

e. A “market monetarist” monetary policy as an alternative both to further fiscal stimulus and to the tight money/fiscal austerity combination advanced by many Republicans today. I try to avoid monetary policy. That being said, I’m a bit skeptical of “market monetarism.” No nation has ever tried this system, so it’s uncharted territory, and I’m reluctant to embrace an approach which is premised on the notion that bubbles can’t exist (what about the tech bubble of the late 1990s or the housing bubble last decade?!?). I’m also suspicious of a system which requires an activist central bank. Watch this George Selgin video if you want to know why.

f. An attack not only on explicit subsidies for powerful incumbents (farm subsidies, etc.) but also other protections and implicit guarantees, in arenas ranging from copyright law to the problem of “Too Big To Fail.” Amen. I fully agree.

Since I’m a tax policy wonk, let me address in greater detail some of the tax reform proposals put forward by reform conservatives.

Jim Pethokoukis of the American Enterprise Institute is identified in the column as a reform conservative, and he recently expressed skepticism about the flat tax in a column for National Review.

It’s an elegant, compelling model that might work  splendidly if you were creating a tax code ex nihilo. …America, however, is in a much different place. Millions of individuals and businesses have made long-term plans based on expectations that the tax code will remain more or less the same. Half the nation, thanks to all those deductions and credits, pays no income tax. …it’s unlikely the U.S. can keep spending down at historical levels of 20 percent to 21 percent of GDP while also maintaining a floor for defense spending at 4 percent of output. The best a group of AEI scholars could manage was limiting spending to 23 percent of GDP by 2035.

The clear implication of his column is that we need a tax system that raises more revenue. I obviously disagree. We should never “feed the beast” by giving politicians more money to spend.

Pethokoukis also says the flat tax is politically unrealistic. Since I’m not expecting a flat tax in my lifetime, I obviously can’t argue with that statement. But he then proposes another plan that would be far less popular – and far more dangerous.

One solution is to take the essentially flat consumption tax devised by economists Robert Hall and Alvin Rabushka and give it a progressive rate structure. Or we could combine a consumption tax with a flat income tax on wealthier Americans, as suggested by Yale’s Michael Graetz.

So we should keep the income tax as a vehicle for class warfare and augment it with a VAT?!? Yeah, good luck trying to sell that idea. And Heaven help us if it ever succeeded since politicians would have another major source of tax revenue.

Another plan, which Douthat explicitly cites in his paper, was put together by Robert Stein, a former Bush Treasury official. He thinks traditional supply-side policies today are either irrelevant or unpopular.

Lowering tax rates today could still enhance the incentives to invest, particularly in the corporate sector. But the distortions caused by marginal tax rates are not nearly as great as they were in 1980. And attempts to solve other problems caused by the tax code itself — like the biases in favor of consumption over saving, or home building over business investment — could never in themselves garner the public support necessary for a major overhaul.

As I noted, I’m not holding my breath for a flat tax, so I can’t disagree with Stein’s prognostication.

He also has a very novel way of defining the problem we should be trying to fix.

…it is time to rethink how the tax code treats ­parents. …raising children is hardly just another pastime: It is one of the most important services any American can perform for our country. …even as Social Security and Medicare depend on large numbers of future workers, they have created an enormous fiscal bias against procreation, undermining an important motive for raising children: to safeguard against poverty in old age. ……our system of taxes and entitlements not only fails to reward parents — it actively discourages Americans from having children. …Recent studies (especially work by Michele Boldrin, ­Mariacristina De Nardi, and Larry Jones and by Isaac Ehrlich and Jinyoung Kim) show that Social Security and Medicare actually reduce the fertility rate by about 0.5 children per woman. In European countries, where retirement systems are larger, the effect is closer to one child per woman.

As a libertarian, the beginning section of that passage grated on me. My children are individuals, not a “service” to prop up entitlement programs. I agree with Stein that these programs are a problem, but the solution is to reform entitlements, not to rejigger the tax code in hopes of pumping out more taxpayers.

Stein disagrees.

Unfortunately, these negative effects on fertility cannot be cured simply by converting old-age entitlement programs into mandatory savings programs, as the Bush administration proposed for Social Security in 2005. After all, requiring workers to save for retirement through private financial instruments would also crowd out the traditional motive to raise kids.

Instead, he wants to change the tax system based on the notion that today’s kids are tomorrow’s taxpayers.

…the present value of future Social Security and Medicare contributions for a typical worker born today is about $150,000. Rewarding parents for creating these future contributions suggests annual tax relief of about $8,500 per child. To correct for this inadequate treatment of households with ­children, the existing dependent exemption for children, the child credit, the ­child-care credit, and the adoption credit should be replaced with one new $4,000 credit per child that can be used to offset both income and payroll taxes. (This amount is set much closer to the $3,250 figure than the $8,500 one mostly to reduce the plan’s negative impact on federal revenue.)

I have no philosophical objection to some form of exemption – or even credit – based on family size. Almost all flat tax systems, for instance, have some sort of family allowance.

But it’s also important to realize that bigger family allowances generally don’t have pro-growth effects. It’s the marginal tax rate that impacts incentives.

And Stein, unfortunately, would “pay” for his credits by raising marginal tax rates on a significant share of taxpayers.

Some of these costs would be offset by eliminating itemized deductions (other than mortgage interest and charitable contributions). The rest would have to be offset by ­allowing the top rate of 35% to touch more taxpayers than it currently affects. …who pays more? Primarily high-income workers, but also upper-middle-class taxpayers who do not have children in the home (either because they have decided not to raise children at all, or because their children have already turned 18). To be blunt, the plan is a tax hike on the rich and makes the tax code even more progressive than it is today.

To be fair, Stein also proposes some good policies such as AMT repeal and reductions in double taxation, so he’s definitely not in the Obama class-warfare camp. But it’s also fair to say that his plan won’t do much for growth. Some tax rates are lowered but others are increased.

Yet if you really want families to be in stronger shape, more growth is the only long-run solution.

Moreover, it’s not clear that Stein’s agenda would be terribly popular. Though I confess that’s just a guess since no politician has latched onto the idea in the years since the proposal was unveiled.

Returning to the broader issue of “reform conservatism,” it’s difficult to assign an overall grade to the movement since I’m not sure whether we’re supposed to interpret it as a political strategy or an economic plan.

Regardless, I guess I’m generally sympathetic. I assume the RCers want government to be smaller than it is today and I don’t think you have to be a 100 percent libertarian to be my ally in the fight to restrain excessive government. And I also think it’s a good idea for people to be thinking of how to best articulate a message of smaller government. Heck, I do that every time I go on TV or give a speech.

So I reserve the right to object to any of the specific proposals that reform conservatives put forward (such as the tax plans discussed above), but I like the project.

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I’ve shared some nightmare stories of excessive and mindless government regulation.

  1. The Food and Drug Administration raiding a dairy for the terrible crime of selling unpasteurized milk to people who prefer unpasteurized milk.
  2. New York City imposing a $30,000 fine on a small shop because it sold a toy gun.
  3. The pinheads at the Equal Employment Opportunity Commission going after Hooters for not having any male waiters in hot pants and tight t-shirts.
  4. Indiana’s Department of Natural Resources is legally attacking a family for rescuing a baby deer.
  5. An unlucky guy who is in legal hot water for releasing some heart-shaped balloons to impress his sweetheart.

But the regulatory burden goes way beyond these odd anecdotes. We’re talking about a huge cost to the economy, and it’s been getting worse for the past 12 years.

Here are some comments on the President’s inauspicious record from the Wall Street Journal.

Team Obama is now the red tape record holder. …pages in the Code of Federal Regulations hit an all-time high of 174,545 in 2012, an increase of more than 21% during the last decade. …the cost of federal rules exceeded $1.8 trillion, roughly equal to the GDP of Canada. These costs are embedded in nearly everything Americans buy…at $14,768 per household, meaning that red tape is now the second largest item in the typical family budget after housing. Last year 4,062 regulations were at various stages of implementation inside the Beltway. The government completed work on 1,172, an increase of 16% over the 1,010 that the feds imposed in 2011, which was a 40% increase over 722 in 2010. …the Obama Administration did not break the all-time record of 81,405 pages it set in 2010. But the 78,961 pages it churned out in 2012 mean that the President has posted three of the four greatest paperwork years on record. And to be fair, if Mr. Obama were ever to acknowledge that this is a problem, he could reasonably blame George W. Bush for setting a lousy example. Despite the Obama myth that the Bush years were an era of deregulation, the Bush Administration routinely generated more than 70,000 pages a year in the Federal Register.

If those numbers don’t make you sit up and take notice, how about these ones?

My personal “favorite,” as you can imagine, is the regulatory burden of the income tax.

  1. The number of pages in the tax code.
  2. The number of special tax breaks.
  3. The number of pages in the 1040 instruction booklet.

Today’s Byzantine system is good for tax lawyers, accountants, and bureaucrats, but it’s bad news for America. We need to wipe the slate clean and get rid of this corrupt mess. And you know how to make that happen.

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In recent months, people have asked me why I’m acting all giddy and optimistic. Am I hooked on cocaine? Have I fallen in love? Did I inherit several million dollars?

These questions started after I said the fiscal cliff was a smaller loss than I expected. Then people wondered what was going on when I wrote that we should celebrate the sequester victory. The questions got more intense when I opined that the Tea Party had made a positive difference. And people were even more nonplussed when I wrote that we should enjoy a win over the IMF.

But I’m not the only person thinking that things may be heading in the right direction.

Conn Carroll explains his optimism in the Washington Examiner. He starts by noting how bad Congress was back in 2009 and 2010.

…its liberal predecessor passed a trillion-dollar stimulus, enacted a government takeover of health care and institutionalized the power of Wall Street’s Too Big To Fail banks by passing the Dodd-Frank financial regulation law.

Then he explains that the new Tea Party Congress has changed the fiscal outlook.

…if you look at the hard numbers — if you look at the tax-and-spending trajectory that the United States was on before the 112th Congress was sworn into office, and then look at the path the U.S. is on now — you’d see that Republicans in Congress have made tremendous progress in shrinking the size and scope of the federal government.

But is there any proof?

Conn points out that the CBO “baselines” from early 2011 showed government growing very rapidly.

…the nonpartisan Congressional Budget Office released its annual Budget and Economic Outlook for fiscal years 2011 through 2021. That document showed the federal government was on track to spend…a total of almost $50 trillion ($49.8 trillion to be exact) through 2021. At the same time, tax revenues were set to rise from just 14.8 percent of GDP in 2011 to 20.8 percent in 2021.

The same estimates from early this year, by contrast, show government growing at a slower pace.

The CBO’s Budget and Economic Outlook for fiscal years 2013 through 2023 shows just how much House Republicans have actually accomplished. The federal government is now on track to spend just $46.2 trillion through 2021. That is a $3.6 trillion spending cut. And instead of taxes eating up 21 percent of the U.S. economy in 2021, now the government is set to take in just 18.9 percent.

Here are the respective baselines from those CBO publications. Let’s start by looking at how spending is projected to grow at a slower pace for the rest of the decade.

2011-2013 Spending Projections

That’s $3.5 trillion of savings. Not genuine spending cuts, of course, but it’s real progress if government doesn’t grow as fast.

Here are the revenue numbers.

2011-2013 Revenue Projections

This data basically shows that the tax burden will be much smaller than projected because about 98 percent of the Bush tax cuts were made permanent as part of the fiscal cliff deal.

And if you believe in the Starve-the-Beast theory (and you should), this will make it harder for politicians to increase the burden of government spending in the future.

Conn also notes that the unemployment rate has fallen.

Despite all of this supposedly economy-killing “austerity,” unemployment has steadily fallen, too. When Republicans took control of the House in 2011, the nation’s unemployment rate was 9 percent. Today, it has fallen to 7.7 percent.

If this seems like a familiar point, it’s because I share his assessment. I wrote back in February of last year that gridlock was a positive thing for the economy since it reduced the likelihood of new bad policies.

What’s remarkable about these developments, as Conn notes, is that folks were expecting Obama to have momentum as his second term began.

Just three months ago, many in Washington were predicting Obama would steamroll Republicans into accepting higher taxes for millions of earners, undoing the sequester and maybe even passing new stimulus spending. Instead, Republicans have stayed unified, outfoxed Obama, preserved and made permanent most of last decade’s tax cuts (including permanent indexing of the Alternative Minimum Tax) and let the sequester cuts occur on schedule. As a result, Obama’s approval ratings have tumbled, and his entire second-term agenda is in jeopardy.

The final sentence in that excerpt explains why I’m feeling semi-optimistic. Obama’s agenda of more taxes and more spending is being thwarted.

To be sure, that doesn’t mean we’re seeing good policies of tax reform and fiscal restraint. And we still face a very dour fiscal future unless entitlements are reformed.

But we’re going in the wrong direction at a slower pace, and that beats the alternative.

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By the time you read this post, it’s possible that the buffoons in Washington will have announced a deal on the fiscal cliff. Or perhaps we’ll have another month or more of fake drama.

Regardless of when the deal is announced, I fear the final result will be some sort of victory for Obama, with class-warfare tax policy that will undermine the economy’s long-run growth and reduce American competitiveness.

So let’s at least enjoy some good cartoons while taking another step in our journey to Greek-style fiscal collapse.

If you wonder why I’m feeling so glum, this cartoon is a pretty good summary of the debate. Or perhaps I should say bad summary. No wonder I’ve been wearing my red jacket to cheer myself up.

GOP Dem Fiscal Cliff Cartoon

By the way, don’t think the higher taxes will be balanced by any spending restraint. Click here to see a very depressing chart about Obama’s “balanced” proposal.

At the beginning of the month, I posted a bunch of cartoons that portrayed Obama as being very dogmatic and inflexible in the negotiations, while showing Republicans as being clueless and naive. Well, here’s another one with the same message.

Obama Fiscal Cliff Cartoon 2

So true. If anyone thinks we’ll get something good out of this, such as entitlement reform, get in touch with me because I have some great oceanfront property in Kansas that I’m willing to sell you.

This one targets Congress instead of Republicans, but the idea’s the same.

Obama Fiscal Cliff Cartoon 1

And in the middle of the month, while speculating why the GOP has been losing the debate, I shared a couple of cartoons illustrating potential explanations. Here’s a Chuck Asay cartoon based on the “co-conspirator” theme in that earlier post.

Boehner Fiscal Cliff Cartoon

The part in the final frame about the fiscal cost of Obamacare is a nasty touch, but sadly true.

All told, this is a very unpalatable situation. We’re going to give more of our income to a bunch of spendaholics, and they’re going to use the money to increase the burden of government spending and dig us into a deeper fiscal hole.

Heckuva start to 2013!

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I recently did a post explaining five policy reasons and five political reasons why Republicans should maintain a firm no-tax-hike position.

Realizing I left out a powerful argument, I then added another political argument in this post.

But the GOP isn’t taking my advice. But why?

Is it because they’re well-meaning doofuses, as suggested by this Chuck Asay cartoon?

Cartoon GOP Poker

Or are they co-conspirators, as suggested by this Michael Ramirez cartoon?

Cartoon GOP Dem Pickpocket

Since I’ve already explained that politicians are a combination of good and evil, I actually think both cartoons are accurate.

All I know is that I would like to force these clowns to spend a couple of minutes watching this video from Mattie Duppler of Americans for Tax Reform. They would then realize there is no legitimate argument for Obama’s class-warfare policy.

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The Benson and Holbert cartoons at this link do an excellent job of mocking Obama’s class-warfare agenda.

But Michael Ramirez is unmatched. Here’s his latest gem, making fun of gullible and brainless Republicans.

Cartoon Ramirez rich

The cartoon is great, both because it visually captures the vapid naiveté of GOPers (the eyes are classic) and it also correctly implies that higher taxes on the “rich” will be just the beginning.

Of course, since more and more leftists are admitting they also want to tax the middle class, I’m not sure why anyone thinks that’s a controversial proposition.

You can enjoy some of my favorite Ramirez cartoons by clicking here, here, here, here, here, here, here, here, here, here, here, here, here, herehereherehereherehere, and here.

P.S. I don’t want to neglect Chuck Asay, who is probably tied with Ramirez as favorite cartoonist on my list. You will understand why if you click here and here.

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Unless the law is changed, big tax increases will be imposed on all taxpayers next year. This is the so-called fiscal cliff, and President Obama is using this unpalatable situation as an excuse to push for his class-warfare tax policy.

I talk about the political and economic ramification of this fight with Glenn Reynolds, author of the famous Instapundit blog.

As is my habit, there are a couple of points that deserve some elaboration.

  • Budget deals don’t work – I wrote about this issue back in 2010, but I think the most persuasive piece of evidence came from the New York Times, which inadvertently admitted that the only successful budget deal was the 1997 pact that cut taxes rather than raising them.
  • We should only raise taxes on those who say they want higher taxes – Since the Hollywood left (with some noble exceptions such as Jon Lovitz and Rob Schneider) is in favor of bigger government and higher tax rates, Glenn has suggested a restoration of the federal tax on movie receipts. That hasn’t worked very well in Spain, but I like the idea. In the same spirit, I’ve proposed a tax on CEO salaries since the big business community is trying to curry favor with the political class by endorsing tax hikes.
  • Republicans won this fight in 2010 when they had less power – The same fiscal cliff fight took place two years ago, before the Republicans controlled the House and when they had fewer seats in the House. Yet GOPers prevailed because Senate Republicans stuck together. It would be a sign on remarkable incompetence if they lost this year’s fight since they now have much more power.
  • Long-term incumbents get too comfortable with big government – I joked about politicians who come to Washington thinking it’s a cesspool, but eventually think it’s a hot tub, but that’s actually a very serious point. As I explain in this post, too many GOPers get corrupted by big government.
  • It’s simple to balance the budget with modest spending restraint – According to Congressional Budget Office data, we can make the Bush tax cuts permanent and balance the budget in just 10 years if lawmakers simply exercise some modest fiscal restraint and limit spending so it grows by an average of 2.5 percent yearly.
  • Most important, I sneak in an endorsement of my beloved Bulldawgs at the end of the interview – I’ve been very restrained and have not used this blog as a platform to celebrate Georgia being two wins away from the national title. Actually, the SEC Championship Game this weekend is the de facto national title game, though whichever team that prevails will have to take the pro forma step of mopping the floor with Notre Dame in January. This cartoon shows the state of play.

P.S. I appreciated Glenn’s reference to Lucy, Charlie Brown, and the football. To see my re-creation of that Peanuts classic, look at the cartoon in this post.

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Eugene Robinson is one of the group-think columnists at the Washington Post. Like E.J. Dionne, he is an utterly predictable proponent of big government. So it won’t surprise you to know that he wants taxes to go up and he’s a big fan of Obama’s class-warfare agenda.

He’s also a very partisan Democrat and wants the GOP to lose. Again, that’s not exactly a stunning revelation.

So when someone like Eugene Robinson starts offering advice to the Republican Party about tax policy, a logical person instantly should be suspicious that he’s actually trying to advance his own ideological and partisan agenda.

An obvious analogy would be me giving the Alabama coaches some advice as they prepare to play my beloved Georgia Bulldogs on Saturday night (“hey, Coach Saban, you should have your quarterback play like he’s left-handed…that surely will surprise the Georgia defense…oh, and have your secondary and D-lineman trade places…I’m serious, that would be a brilliant strategy…I only want what’s best for you guys”).

In this spirit, Mr. Robinson wants the GOP to abandon the no-tax-hike pledge.

…we’re seeing the first signs in years that on the question of taxation — one of the fundamental responsibilities of government — the GOP may be starting to recover its senses. …the anti-tax pledge never made a bit of sense. …Grover Norquist…has dangerously loopy ideas about the proper size and scope of government. …Republicans who signed the pledge — and who now find themselves in a box — have only themselves to blame. …They pretended it was possible to provide the services that Americans need and want without collecting sufficient revenue.

In other words, a columnist who wants bigger government and a stronger Democratic Party is telling Republicans to raise taxes.

And he’s not alone. Some Democrats have openly admitted that their top political goal is suckering Republicans into a tax hike.

So if you’re a Republican, there are two possible reactions to Robinson’s column.

“Where’s Bob Dole when we need him?”

1. “Gee, Eugene is a swell guy to offer this advice. He really cares about my best interests, so I’m going to tell Grover to get lost and then I’m going to vote to give my opponents more money so they can create more dependency and make it harder for me to win future elections! I bet Chris Matthews will praise me for being a statesman.”

2. “Hmmm, let’s think about this. My opponent wants me to do X and I can see how doing X will be good from his perspective. Since my IQ is above room temperature, I’m going to explore doing Y or Z instead.”

For most of us, the answer is obvious. But, then again, there’s a reason the GOP is known as the “Stupid Party,” which is why the modified cartoon in this post showing Charlie Brown, Lucy, and a football is so appropriate.

“The DC cesspool isn’t bad once you get used to it”

But that’s not completely fair. Some Republican do the wrong thing with full knowledge and forethought. These are the politicians who perhaps came to Washington many years ago thinking it was a cesspool, but they’ve since learned to work the system and now they think it’s a hot tub.

P.S. This post is based on real-world analysis. Yes, there are hypothetical scenarios where even I would agree to a tax hike, but they’re about as realistic as the possibility of me throwing five touchdown passes for the Bulldogs on Saturday (hey, I have still have four years of eligibility!).

P.S.S. Here’s another example of a Washington Post columnist offering self-help suicide advice to the GOP.

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I get several emails per week asking my view on various topics and many of the questions raise very interesting issues.

So I’ve decided to start a new feature. Every weekend, I will endeavor to answer one question.

My first chore is to explain why I hate Republicans, and as you can see here and here, there’s certainly ample reason to think I hold GOPers in low esteem.  The actual question, though, is:

You seem to be more critical of Republicans than Democrats and you went out of your way to attack Romney. Doesn’t that play into the hands of Obama?

The answer is yes and no. I don’t mean to sound like a politician, but I view my job as providing nonpartisan analysis on public policy issues. That means I criticize the statist schemes of the folks in Washington, regardless of whether the politicians have a “D” or an “R” at the end of their names.

To be fair, I’m probably a bit harder on Republicans, but only because they’re the ones who often pretend that they are on my side.

And sometimes they are on my side. My two favorite presidents are Reagan and Coolidge, and I have great admiration for those few politicians – such as Ron Paul – who almost always do the right thing.

But I also have discovered that bad Republicans usually do more damage than Democrats. Nixon was one of the most statist presidents of my lifetime, and Bush 41 and Bush 43 were almost as bad.

And even the politicians I’m willing to praise, including Ron Paul, sometimes do the wrong thing. And as much as I praise Reagan, he had some huge mistakes, such as the catastrophic health insurance program.

My simple rule of thumb is I will support a politicians who, in my estimation, will be a net plus for liberty. So notwithstanding my reputation for being a libertarian ideologue, I have a very practical approach to politics.

That’s the good news. The bad news is that it’s rather disappointing that so few Republicans satisfy that simple test.

But now let’s return to the question. Doesn’t that view play into the hands of Obama? As I said, yes and no

“Hey, you libertarians should vote for me”

I want to maximize liberty (or minimize statism) in the long run. So if I have a choice between a big-government Republican and big-government Democrat, I sometimes think we’re better off if the Democrat prevails.

Jimmy Carter, for instance, probably wasn’t that much worse than Gerald Ford. And he paved the way for Reagan.

And Bill Clinton, in retrospect, was a much better choice than Bush 41. And he paved the way for the GOP landslide in 1994.

So the question before us today is whether Barack Obama is paving the way for a good Republican…or whether he’s a Lyndon Johnson paving the way for a Richard Nixon.

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When leftists do something clever, like this video making fun of libertarians or this image portraying the greed of the industrialized world, I’m willing to give them credit.

So you’ll understand why this cartoon about Fox News is worth sharing.

What makes the cartoon effective are the little touches, such as the “free stuff” truck and the “Sharia Law Now” sign.

Speaking of Fox News, it makes a cameo appearance in this cartoon, though the main focus is to link the GOP with empty-suit blowhards.

If you have the self-awareness to laugh at yourself, here’s some anti-libertarian humor to close up this post.

We have two cartoons, one on libertarian ice fishing and the other showing libertarian lifeguards.

Then there’s the very funny poster showing the 24 types of libertarians.

Last but not least, here’s an image of how the world see libertarians.

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I’m in Slovenia where I just finished indoctrinating educating a bunch of students on the importance of Mitchell’s Golden Rule as a means of restraining the burden of government spending.

And I emphasized that the fiscal problem in Europe is the size of government, not the fact that nations are having a hard time borrowing money. As explained in this video, spending is the disease and deficits are one of the symptoms.

This is also an issue in the United States, and Steve Moore of the Wall Street Journal is worried that the GOP ticket is debt-obsessed and doesn’t have sufficient enthusiasm for lower tax rates and tax reform.

Stylistically, Paul Ryan’s Republican convention speech last night was a grand slam. …But was it the growth message that supply-siders wanted to hear, or debt-clock obsession? There were clearly apocalyptic claims. “Before the math and the momentum overwhelm us all, we are going to solve this nation’s economic problems,” said Mr. Ryan in reference to the federal rea ink. “I’m going to level with you; we don’t have that much time.” …In fact, he talked about turning around the economy with “tax fairness.” Ugh, that’s an Obama term. …Larry Kudlow of CNBC and a former Reagan economist tells me, “Paul’s speech just didn’t have the growth, tax-cutting message. We didn’t even get the words tax reform. I don’t know what happened, but it worries me.” It’s a question of priorities. Are Mitt Romney and Paul Ryan signaling that they will put spending cuts ahead of pro-growth tax-rate cuts?

I share Steve’s concern, but with a twist.

I’m not worried that the Republicans will put spending cuts ahead of tax cuts. I’m worried that they won’t do spending cuts at all (even using the dishonest DC definition) and therefore wind up getting seduced into some sort of tax-increase deal that facilitates bigger government.

As a general rule, it is always good to do spending cuts (however defined). And it is always good to lower tax rates. And if you can do both at the same time, even better.

But since I have low expectations, I’ll be delighted if we “merely” manage to get entitlement reform during a Romney-Ryan Administration. That would mean some progress on the spending side and presumably reduce the risk of bad things (like a VAT!) on the revenue side.

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I wish the Republican Platform was binding.

Too bad it’s meaningless fluff

Why? Because the GOP, for all intents and purposes, has just proposed to eliminate the Department of Education, the Department of Housing and Urban Development, the Department of Energy, the Department of Agriculture, the Department of Transportation, the Department of Health and Human Services, along with a host of other government programs, agencies, and departments.

More specifically, they endorsed the 10th Amendment to the U.S. Constitution, which means they put themselves on record in favor of getting rid of all federal spending and intervention that is inconsistent with the Founding Fathers’ vision of a limited central government.

Here’s some of the story, as reported by The Hill,

All federal spending should be reviewed to ensure powers reserved for the states are not given to the federal government, according to the GOP platform approved Tuesday. The platform language is meant to ensure all federal spending meets the requirements of the 10th amendment, which prohibits state powers from being given to the feds. “We support the review and examination of all federal agencies to eliminate wasteful spending, operational inefficiencies, or abuse of power to determine whether they are performing functions that are better performed by the States,” the platform reads. “These functions, as appropriate, should be returned to the States in accordance with the Tenth Amendment of the United States Constitution.”

For those of you who don’t have your Cato Institute pocket Constitutions handy, here’s what the 10th Amendment says.

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

In other words, the 10th Amendment is basically a back-up plan to re-emphasize that the federal government was prohibited from exercising power in any area other than what is specified in the enumerated powers section of Article I, Section VIII.

And if you look at those enumerated powers, that pretty much invalidates much of what happens in Washington.

That’s the good news. The bad news is that the Republican platform will have less impact on a potential Romney presidency than this blog.  In other words, Republicans don’t intend to live up to this promise. Heck, they don’t even know that they have such a position. That’s why I included the asterisk in the title and must draw your attention to this fine print.

*Offer not good when GOP holds power.

But I suppose it’s good that they included this language in the platform, even if it’s merely empty political rhetoric

P.S. If they did abide by the 10th Amendment, it means that Obamacare also would be repealed.

P.P.S. Yes, this implies limits on democracy. Our Founding Fathers, contrary to E.J. Dionne’s superficial analysis, were opposed to untrammeled majoritarianism and wanted to make sure 51 percent of the people couldn’t vote to rape and pillage 49 percent of the people.

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While I have strongly praised the GOP for embracing entitlement reform and supporting the Ryan budget, I’m not under any illusions that the average Republican politician is fully committed to free markets and limited government.

Even after the Tea Party election of 2010, there have been some very disappointing moments.

This doesn’t mean that GOPers are hopeless, but it does confirm my point that almost all politicians are a combination of good and bad impulses. It’s sort of like they have an angel on one shoulder and a devil on the other shoulder.

So who is winning, the angel or the devil? The Wall Street Journal opines in favor of the angel.

Four years in the wilderness seem to have had the salutary effect of returning the Party of Lincoln to a focus on government reform and economic revival. …The surprise is how quickly the GOP has rebounded from the routs of 2006 and 2008, starting in the states. …The reform momentum has since gained speed as a reaction to the Obama Presidency. First in 2009 with Chris Christie in New Jersey and Bob McDonnell in Virginia, Governors from the East across the Midwest and through the Southwest have won on reform agendas that they have been able to implement to varying degrees. …The common theme is ‘s ability to finance them. The contrast of these GOP states couldn’t be greater with the union-dominated Democratic governments of Illinois, California and Connecticut, which resist reform and simply default to ever-higher taxes. …The reform impulse has carried over to Washington, thanks to the Congressional victories of 2010. …Much of the credit here goes to the Tea Party, which has used GOP primaries to elevate reformers and motivate incumbents to change or face defeat.

I agree with much of the column, particularly the credit to the Tea Party and the indirect reference (“restraining governments that were growing far more rapidly than the private economy”) to Mitchell’s Golden Rule.

But I’m more pessimistic about whether the GOP has truly learned the right lessons from the failures of Bush-Rove era. Take this quiz and see if you share my qualms.

  1. If Mitt Romney wins and proposes to burden the U.S. economy with a value-added tax, would a majority of Republicans rise up in revolt and oppose that dangerous idea?
  2. If Mitt Romney wins and decides to only make cosmetic changes to Obamacare, would most Republicans rebel and push to fully repeal the costly legislation?
  3. If Mitt Romney wins and endorses a new version of TARP, would the Republican caucus stand firm in opposition?

To be blunt, I don’t think a majority of Republicans would do the right thing if these tests took place. The GOP leaders on the Hill, after all, are the same crowd that gladly supported all the reckless spending and foolish intervention of the Bush years.

Yes, there are some fresh faces and Tea Party types who would stand with taxpayers, but I don’t think they’re anywhere close to being a majority of the GOP caucus.

And don’t forget that the Republican establishment in Washington is heavily influenced by corrupt lobbyists – many of them former GOP politicians!

So what’s it all mean? Well, as the cartoon indicates, Republicans are now more likely to say the right thing. But rhetoric is easy. I’m much more interested in their actions.

The only great president of my lifetime famously said “trust, but verify.” But I don’t even trust the GOP, so I definitely want to see results first.

P.S. If you like the cartoon, you’ll like this poster featuring Ron Paul and this English-to-Republicanese dictionary.

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Beginning with the very first policy-oriented post on this blog, I’ve been criticizing Keynesian economics, usually with lots of cheering and support from the GOP. Indeed, more than 98 percent of Republicans in the House and Senate voted against Obama’s so-called stimulus.

They understood – or at least seemed to understand – that you don’t create jobs by diverting money from the private sector so it can be spent by politicians in Washington.

And they have the satisfaction of seeing history justify their votes. Unemployment rose after the faux stimulus was enacted and the joblessness rate has stayed above 8 percent.

But some Republicans are now sounding like born-again Keynesians. They object to the automatic budget savings – known as sequestration – that are scheduled to take effect next year, and they are warning that less government spending means fewer jobs. Here’s a small sampling of their statements.

I would have no objection to these lawmakers arguing against a sequester if they based their concerns on national security, even if I think those concerns are exaggerated.

And I would understand if they objected to a sequester because defense is disproportionately impacted (the Pentagon accounts for only about one-fourth of the budget, yet it absorbs one-half of the sequester).

And I wouldn’t even complain if they claimed that a sequester is painful because of short-term economic dislocation and transition costs. Heck, I even said that might be a legitimate excuse when Mitt Romney said something that sounded suspiciously Keynesian.

But it doesn’t seem like those caveats apply.

Let’s close with some good news and bad news. The good news is that I don’t actually think any of the anti-sequestration lawmakers are genuine Keynesians.

The bad news is that they are genuine politicians, so they think there is nothing wrong with using the coercive power of government to take as much from the rest of the country as possible and redistribute those resources to their states or districts.

They may vaguely understand that big government undermines economic performance, but that’s a secondary concern. They’re main goal is buying votes with other people’s money.

P.S. You can peruse some good cartoons about Keynesian economics by clicking here, here, here, and here.

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Democrats have openly admitted that their top political objective is to get Republicans to give up their no-tax-hike position.

You would think, therefore, that Republicans would instinctively recognize that they should hold firm. After all, when your enemy wants you to do something, it’s not because he has your best interests at heart.

But there’s a reason that the GOP is known as the “stupid party” and this year’s tax fight may give them an opportunity to further demonstrate their ineptitude. Especially because Democrats have launched a two-pronged attack in hopes of bullying Republicans into surrender.

  1. Democrats are saying that there will be automatic cuts to the defense budget (sequestration) unless Republicans agree to raise taxes.
  2. Democrats are saying that they’ll let all the Bush tax cuts expire at the end of the year – thus screwing all taxpayers – unless Republicans agree to Obama’s class-warfare proposals to soak the rich.

I’ve already dealt with the first threat, pointing out that the defense budget still grows by 17 percent over the next 10 years with a sequester, so there’s no need to surrender to a tax hike (especially since the Pentagon accounts for 45 percent of global military spending).

As such, let’s deal with the second threat, which is actually a repeat of the fight we had back in 2010. Back then, Republicans said that extending the 2001 and 2003 tax cuts was an all-or-nothing proposition, while Democrats issued their own ultimatum and said that the rich should be hit with higher tax rates.

Republicans won that fight, even though they were heavily outnumbered in both the House and Senate. So why, given that they control the House and have many more seats in the Senate, isn’t this year’s fight an easy win for the GOP?

Beats me, but the Democrats are playing hardball, perhaps because they think a fight over class warfare is a good way of distracting voters from the weak economy.

One of the Senate’s top Democrats, Patty Murray of Washington, has thrown down the gauntlet and stated that her colleagues are willing to push all taxpayers off the fiscal cliff. Here’s some of what the Wall Street Journal opined about her remarks.

Democrats must feel really good about their election chances, because their latest campaign strategy is to say how willing and eager they are to leap off the January tax cliff. They’re all but daring Republicans to make the Democrats’ day by refusing to raise taxes before the election. …In a speech at the Brookings Institution, she declared that if Republicans won’t raise taxes on income above $250,000 before November, Democrats will gladly let all of the Bush tax rates expire at the end of the year—even on the middle class, and no matter the economic consequences.

The editors at the WSJ are mystified as to why Democrats are willing to undermine an already weak economy with an election just a few months away.

The Murray Democrats are the ones holding the middle-class rates hostage to a GOP vote to raise taxes on the affluent. …Mrs. Murray may think she’s putting Republicans on the political spot, but her real hostage is the already weak economy. Growth in the first quarter was a mere 1.9%, and economists have steadily downgraded their expectations for the second. As the tax cliff approaches, the policy uncertainty is already causing businesses to hold off on hiring and investment. Even the Keynesians at the Congressional Budget Office say that if all of the Bush tax rates expire, growth will fall close to recession territory.

Since the Democrats aren’t coming to me for advice, I’m not sure about their motives. Are they so wedded to class-warfare tax policy that they’re willing to sacrifice other goals in hopes of penalizing success?

Or are they playing a clever political game, figuring that a GOP surrender on taxes will generate so much discord on the right that it will more than offset any electoral downside of a weaker economy?

I suspect the answer to both questions is “yes,” but mostly to the second question. Which is why this Lisa Benson cartoon is an appropriate way to conclude this post.

P.S. You can find more Lisa Benson cartoons here, herehere, here, here, herehere, and here.

P.P.S. If you somehow think that higher taxes are necessary because it’s impossible to otherwise balance the budget, I hope you’ll change your mind when you learn we can balance the budget in just 10 years if politicians merely limit spending increases to 2 percent annually.

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Statism is a bad idea, regardless of which political party is promoting bigger government. And it’s a really bad idea when people who should know better decide to increase the burden of government spending.

Consider, for example, the supposedly pro-marriage programs adopted last decade by Republicans. It turns out that millions of dollars were wasted and there was no positive impact on relationships.

Here are some excerpts from a story in Mother Jones.

With congressional Republicans beating the drum about profligate and wasteful government spending, they may want to take a hard look at a federal program pushed by a host of top GOPers during the Bush-era… Originally championed by Republican lawmakers including Iowa Sen. Chuck Grassley, former Pennsylvania Sen. Rick Santorum, and current Kansas Gov. Sam Brownback, a federal initiative to promote marriage as a cure for poverty dumped hundreds of millions of dollars into programs that either had no impact or a negative effect on the relationships of the couples who took part, according to recent research by the Department of Health and Human Services (HHS). …Starting in 2006, millions of dollars were hastily distributed to grantees… The money went to such enterprises as “Laugh Your Way America,” a program run by a non-Spanish speaking Wisconsin minister who used federal dollars to offer “Laugh Your Way to a Better Marriage” seminars to Latinos. It funded Rabbi Stephen Baars, a British rabbi who’d been giving his trademarked “Bliss” marriage seminars to upper-middle-class Jews in Montgomery County, Maryland, for years. …when the federal government started dumping million of poverty dollars into marriage education, there was virtually no research on how such programs would fare with poor, inner-city single moms. Now, though, the data is in, and it doesn’t look good for proponents of taxpayer funded marriage education. This month, HHS released the results of several years of research about the performance of the marriage programs, and it indicates that the Bush-era effort to encourage Americans (straight ones, at least) to walk down the aisle has been a serious flop. …Take the Building Healthy Families program…, couples in the eight pilot programs around the country actually broke up more frequently than those in a control group who didn’t get the relationship program. The program also prompted a drop in the involvement of fathers and the percentage who provided financial support.

Isn’t that wonderful? Taxpayers are financing programs that undermine marriage. Not that we should be surprised by that results. The federal government declared a “War on Poverty” and wound up increasing dependency and destitution.

And even when researchers found results that vaguely could be interpreted in a positive fashion, the cost was absurd.

…married couples who participated in a government-funded relationship class reported being somewhat happier and having slightly warmer relationships with their partners. But the cost of this slight bump in happiness in the Supporting Healthy Marriage program was a whopping $7,000 to $11,500 per couple. Imagine how much happier the couples would have been if they’d just been handed with cash.

One would hope that this evidence of government failure would motivate GOPers to eliminate this example of waste. But I wouldn’t recommend holding your breath until that happens.

Given the underwhelming track record of the federal marriage program, it would seem a ripe target for GOP budget hawks, especially given that many of the original proponents of the program are no longer in Congress to defend it. Instead, in November 2010, Congress allocated another $150 million for healthy marriage and fatherhood related programs, with another $150 million budgeted for 2013. And this fall HHS doled out $120 million worth of grants.

What really irks me is that a former Bush Administration official defends the marriage handouts because we waste even more money on a Head Start program that doesn’t produce good results.

Ron Haskins, a marriage program supporter who is a former adviser to Bush on welfare issues and a senior fellow at the Brookings Institution, thinks Obama did the right thing. He points out that research on poverty programs beloved by liberals, such as Head Start, doesn’t look so good either, but that doesn’t mean the government should simply get rid of it. “When there’s tremendous pressure on the budget, there is a reason for reducing the spending,” he says. “The exception is, if it’s a new program you ought to try to figure out if you can improve it.” Haskins notes that in the grand scheme of the federal budget, the marriage program is but a blip. “We don’t spend a lot of money on these programs. [We spend] $7 billion on Head Start, but not even a $100 million on these [marriage] programs.”

I realize this is heresy in Washington, but what would be wrong with saying, “Neither marriage programs nor Head Start generate positive results, so let’s get rid of both and save $7.1 billion.”

No wonder we’re likely going to be another Greece in just a few decades.

P.S. I shouldn’t have to write this (especially since I’ve already explained my socially conservative inclinations), but allow me to deflect foolish attacks by saying that being against federal programs to subsidize marriage doesn’t make me anti-marriage. I like softball, apple pie, chocolate milk shakes, and the Georgia Bulldogs football team, but I don’t want the federal government subsidies for any of those things either. Indeed, I fear subsidies and handouts will have a negative impact.

P.P.S. The conservatives who support these programs are making the mistake of legislating based on good intentions. They correctly understand that stable marriages are a good thing (as Walter Williams has explained, an intact family is a sure-fire way of avoiding poverty if accompanied by a high school education, any sort of job, and obeying the law), but they erroneously jump to the conclusion that a good thing can be made better with money from the federal government.

P.P.P.S. Conservatives who want stronger marriages and healthier families should concentrate on ending the pernicious welfare handouts that, for all intents and purposes, replace fathers with government programs. I won’t pretend that’s a full solution because it’s not easy to put toothpaste back in a tube, but it can’t hurt given the strong correlation between the growth of the welfare state and the decline in stable low-income families.

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I am sometimes at a loss for words to describe the stupidity of the Republican Party.

Let’s use an analogy to explain what I mean. Imagine you were playing a game of chess and your opponent openly stated that he wanted you to move your rook to a certain point on the board.

If your IQ was above room temperature, you would probably be suspicious that he wasn’t trying to help you win the game.

Well, the same thing happens in fiscal policy. I quoted the Hill newspaper last year when some Democrats admitted that their top political goal was to seduce the GOP into a tax increase.

Now we have more evidence.

The Democrats’ counter-strategy is a bit more subtle, but has essentially been to find ways to make it very uncomfortable for Republicans to maintain such a rigid anti-tax orthodoxy — to ultimately force Republicans to break their anti-tax pledges and badly splinter their party. That’s what the Buffett Rule is about; that why Dems insist they won’t dismantle the so-called “sequester” — big cuts to defense and even to Medicare — unless Republicans agree to tackle deficits in a balanced way, i.e. by supporting significant new tax revenues. The results have been mixed. They’ve won a small number of GOP votes here and there, and vulnerable members are nowadays more likely to trash or dismiss Grover Norquist in the press than they were last year. But at a very high level within the Democratic Party, there’s a recognition that breaking the GOP on taxes is an absolutely crucial strategic imperative for defending safety net programs over the long term.

That’s a pretty clear statement. We have folks on the left who say they want higher taxes both to prop up big government and to cause internal damage to the GOP.

So we’re now left with a rather strange puzzle. Why would any Republicans (most recently Sen. Lindsey Graham and Jeb Bush) want to help the Democrats achieve those goals?!?

Unless, of course, they’re motivated by a belief in bigger government (high likely) or a suicidal desire to harm their own electoral prospects (highly unlikely since even I don’t think GOPers are that stupid).

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In a post last week, I explained that Obama has been a big spender, but noted his profligacy is disguised because TARP outlays caused a spike in spending during Bush’s last fiscal year (FY2009, which began October 1, 2008). Meanwhile, repayments from banks in subsequent years count as “negative spending,” further hiding the underlying trend in outlays.

When you strip away those one-time factors, it turns out that Obama has allowed domestic spending to increase at the fastest rate since Richard Nixon.

I then did another post yesterday, where I looked at total spending (other than interest payments and bailout costs) and showed that Obama has presided over the biggest spending increases since Lyndon Johnson.

Looking at the charts, it’s also rather obvious that party labels don’t mean much. Bill Clinton presided during a period of spending restraint, while every Republican other than Reagan has a dismal track record.

President George W. Bush, for instance, scores below both Clinton and Jimmy Carter, regardless of whether defense outlays are included in the calculations. That’s not a fiscally conservative record, even if you’re grading on a generous curve.

This leads Jonah Goldberg to offer some sage advice to the GOP.

Here’s a simple suggestion for Mitt Romney: Admit that the Democrats have a point. Right before the Memorial Day weekend, Washington was consumed by a debate over how much Barack Obama has spent as president, and it looks like it’s picking up again. …all of these numbers are a sideshow: Republicans in Washington helped create the problem, and Romney should concede the point. Focused on fighting a war, Bush — never a tightwad to begin with — handed the keys to the Treasury to Tom DeLay and Denny Hastert, and they spent enough money to burn a wet mule. On Bush’s watch, education spending more than doubled, the government enacted the biggest expansion in entitlements since the Great Society (Medicare Part D), and we created a vast new government agency (the Department of Homeland Security). …Nearly every problem with spending and debt associated with the Bush years was made far worse under Obama. The man campaigned as an outsider who was going to change course before we went over a fiscal cliff. Instead, when he got behind the wheel, as it were, he hit the gas instead of the brakes — and yet has the temerity to claim that all of the forward momentum is Bush’s fault. …Romney is under no obligation to defend the Republican performance during the Bush years. Indeed, if he’s serious about fixing what’s wrong with Washington, he has an obligation not to defend it. This is an argument that the Tea Party — which famously dealt Obama’s party a shellacking in 2010 — and independents alike are entirely open to. Voters don’t want a president to rein in runaway Democratic spending; they want one to rein in runaway Washington spending.

Jonah’s point about “fixing what’s wrong with Washington” is not a throwaway line. Romney has pledged to voters that he won’t raise taxes. He also has promised to bring the burden of federal spending down to 20 percent of GDP by the end of a first term.

But even those modest commitments will be difficult to achieve if he isn’t willing to gain credibility with the American people by admitting that Republicans helped create the fiscal mess in Washington. Especially since today’s GOP leaders in the House and Senate were all in office last decade and voted for Bush’s wasteful spending.

It actually doesn’t even take much to move fiscal policy in the right direction. All that’s required is to restrain spending so that is grows more slowly than the private sector (with the kind of humility you only find in Washington, I call this “Mitchell’s Golden Rule“). The entitlement reforms in the Ryan budget would be a good start, along with some much-needed pruning of discretionary spending.

And if you address the underlying problem by limiting spending growth to about 2 percent annually, you can balance the budget in about 10 years. No need for higher taxes, notwithstanding the rhetoric of the fiscal frauds in Washington who salivate at the thought of another failed 1990s-style tax hike deal.

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I’ve remarked before that Democrats are the evil party and Republicans are the stupid party. Well, if anyone needs additional proof about GOPers being clueless and tone deaf, exhibit A is Congressman Rick Crawford of Arkansas, who has decided to preemptively capitulate in favor of higher tax rates.

Here are the relevant details from a Politico story.

Freshman Republican Rep. Rick Crawford will propose a surtax on millionaires Thursday morning, a crack in the steadfast GOP opposition to extracting more money from the nation’s top earners. The Arkansas Republican will unveil the plan during a local television interview Thursday morning, and plans to introduce legislation when the House returns next week, according to sources familiar with his thinking. Crawford will propose the additional tax— expected to be north of 2.5 percent — on individual income over $1 million as part of a broader fiscal responsibility package.

I have no idea if Congressman Crawford is simply naive, unaware that tax-increase deals inevitably lead to higher spending and more red ink. Or perhaps he’s trying to become the kind of Republican who thinks he can advance his career by saying things that will earn him pats on the head from the establishment media.

But I do know that America’s fiscal problem is a government that is far too big. You don’t solve the problem with more taxes, just as you don’t cure alcoholics by giving them more to drink.

Congressman Crawford, though, wants to give away the keys to a liquor store without even asking for an insincere commitment for future sobriety in exchange. Indeed, the Congressman’s naiveté is so impressive that he is the first winner of the Charlie Brown Award for Vapidness and Gullibility.

There’s a rumor that he is sending former President George H.W. “read my lips” Bush to collect his award, but I’m unable to confirm at this point.

This new award is part of a series, with the “Bob Dole Award” having been announced earlier this year.

In the same vein, but recognizing concepts rather than people, we also have “Mitchell’s Law” and “Mitchell’s Golden Rule.”

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In a grand Washington tradition, I periodically make imperious demands. In the past year or two, I’ve issued the following ultimatums to the GOP.

o No tax increases, since more money for Washington will encourage a bigger burden of government and undermine prosperity.

o Reform the biased number-crunching methodology at the Congressional Budget Office and Joint Committee on Taxation.

o No more money from American taxpayers to subsidize the left-wing bureaucrats at the Paris-based Organization for Economic Cooperation and Development.

I don’t actually expect any politicians to pay attention when I make these demands, of course, but I am highlighting issues that send a signal about whether Republicans actually learned any lessons after getting shellacked in 2006 and 2008.

So far, they’re holding reasonably firm on the tax issue. They don’t have control over the CBO and JCT thanks to Harry Reid, so we’ll give them a pass on that topic. And we’ll see later this year whether they agree to squander another $100 million on the OECD.

Well, here’s another test to see whether the GOP is on the side of taxpayers or the establishment. The Obama Administration has agreed that the fiscal pyromaniacs at the International Monetary Fun should have more money and power to provide more and bigger bailouts.

Here are some relevant parts of a Washington Post story.

…a brewing election year fight with congressional Republicans…could restrict the IMF’s finances at a time when agency officials say they need a substantial boost to protect the world economy. The dispute centers on Republican opposition to increasing the United States’ financial contributions to the agency, reflecting anger over IMF rescue programs in Europe that some GOP lawmakers argue have become too expensive and have put U.S. taxpayers at risk. …opposition is growing to a permanent increase in U.S. government support for the IMF, as well as to a $100 billion credit line the United States provided in 2009 as part of an international move to help the IMF respond to the global financial crisis. The IMF has been dipping into that credit line for emergency loans to Portugal and elsewhere… Planned changes at the IMF, which would shift seats on the fund’s governing board from Europe to the developing world, cannot proceed without congressional approval. For practical purposes, neither can a related doubling, from $370 billion to $740 billion, in the total permanent contribution that IMF members make to support the agency.

As you can see from the excerpt, Republicans in the House of Representatives have the ability to stop this global boondoggle. The interesting question, though, is whether they defend the interests of ordinary people or whether they cater to the whims of the political elite.

By the way, I’m irked by the Post’s biased presentation. They refer to IMF “rescue programs,” yet all the evidence seems to suggest that the international bureaucracy is simply making the debt bubble bigger. We certainly don’t see any evidence that problems are getting solved. Greece is still in trouble, as are the other nations that stuck their hands in Uncle Sam’s pocket.

But that could be excused as a bit of sloppy reporting. Here’s a part of the story that is hopelessly biased.

The potential for a stalemate over the issue in the United States has the IMF and other international officials worried that it could put broader agency reform efforts at risk. IMF officials say that to backstop the global economy they need about $500 billion in addition to the increase in permanent contributions.

Since when is it appropriate to use the term “reform efforts” to describe policies that subsidize moral hazard and reward profligacy? And how is it accurate to say that IMF actions “backstop the global economy” when the bureaucrats don’t seem to achieve anything other than encouraging more debt?

Congresswoman Rodgers, Defending Taxpayers

But this isn’t a post about media bias, even though I sometimes can’t resist pointing out sloppy or dishonest journalism. Let’s get back to the main point. Giving the IMF more resources would be like giving the keys to a liquor store to a bunch of alcoholics.

Republicans have the ability to stop this raid on the Treasury by saying no. What they decide will reveal a lot about whether they’re still part of the problem.

Some GOPers in the House, such as Cathy McMorris Rodgers of Washington, already are fighting against expanded bailout money for the IMF. The real key, though, will be whether the Republican leadership does the right thing.

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When I first saw this picture, I thought it must have been created by a Ron Paul fan. And since Congressman Paul is the closest to my views according to the Reason political quiz, it’s easy to see why I would jump to that conclusion.

But maybe the person who created this image wasn’t really trying to boost Ron Paul, but was instead taking a swipe at other Republicans?

Since I’ve dinged Newt GingrichRick Santorum, and Mitt Romney, that also appeals to me.

But what really matters is that corporatism is morally and economically odious, regardless of the party. That’s why the TARP bailout was reprehensible. It’s why Fannie Mae and Freddie Mac subsidies are disgusting. And it’s why industrial policy in the tax code is corrupt.

So regardless of how you interpret this picture, enjoy the humor and remember the lesson.

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I’ve written before about the importance of getting rid of the Department of Transportation, and I’ve also written about Republicans getting in bed with big government.

So you can imagine how agitated I was to read this article about transportation spending at National Review. Written by Andrew McCarthy, it shows that the GOP still has a long way to go before cleansing themselves of the big-government corruption of the Bush-Rove years. Here are some nauseating passages.

The problem is not the GOP infighting. The problem is the GOP. Republicans are simply not interested in limiting government or addressing our death spiral of spending. …The federal government should not be in the transportation business at all. A federal role was rationalized in the mid-Fifties to finance the construction of interstate highways. As National Review’s editors observed in 2005, that project was completed in the early Eighties, at which time the fuel tax that funded it should have been repealed and the upkeep of highways left to the states. “Instead,” they wrote, “Congress morphed the program into a slush fund for some of its most indefensible pork-barrel spending.” …see how easily a “highway system” morphs into a “transportation system.” The taxes that Leviathan confiscates from drivers, purportedly for road construction and maintenance, are actually redistributed to subsidize other forms of transit preferred by progressives — including walking. For that, you can thank Republicans. With a compassionate wink from President Bush, the Republican Congress enacted an obscene $286.5 billion transportation bill in 2005… SAFETEA-LU featured all the uglies that outraged voters into telling the GOP to take a hike in the 2006 and 2008 elections. These included Alaska’s infamous $250 million “Bridge to Nowhere,” one of the bill’s 6,376 earmarks totaling $24 billion — you know, the sorts of budget-busting recklessness Republicans promised us they’d sworn off in order to get elected in 2010. …And now that the “Pledge to America” crowd that promised to stop the madness is back in charge, what do you suppose the plan is? Why, to persist in the madness. Team Boehner, whose “pledge” to voters explicitly promised “to stop out-of-control spending and reduce the size of government,” proposes to continue funding transportation at “current levels” for the next five years, which translates to an additional budget shortfall of about $60 billion dollars. So much for decrying “Washington Democrats [who] refuse to listen to the American people and eliminate, restrain, or even budget for their out-of-control spending spree.” …Naturally, conservatives who expected Republicans to do what they promised are apt to go ballistic. So, just as in the debt-ceiling fiasco, the establishment’s plan is to dazzle the rubes with some smoke-and-mirrors. On the debt ceiling, it was phantom cuts that would occur, um, someday. This time around it is a commitment to ramp up oil and gas production, the additional revenues from which, we’re told, will alleviate the transportation burden. …The brute fact is that today’s Republican establishment does not believe in limited government. “Limited government” is a slogan reserved for campaigns and fund-raising drives. The idea is not to rein in big government; it’s to hold the reins of big government.

Amen. Every time someone posts a comment or sends an email to complain that I’m too mean to GOPers, they should read this column. Principles should come first, not the self interest of a political party filled with corrupt hacks.

Yes, I realize that “corrupt hacks” is a bit unfair and over the top. After all, these are the folks who voted last year for real entitlement reform, so I need to remind myself that politicians are combinations of good and bad.

But this transportation bill shows what happens when the bad part is running amok.

And it teaches us a lesson that it is not progress to replace big-spending Democrats with big-spending Republicans.

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Never let it be said I back down from a fight, even when it’s the other team’s game, played by the other team’s rules, and for the benefit of the wrong person.

And that definitely went through my mind when U.S. News & World Report asked me to contribute to their “Debate Club” on the topic of “Should Mitt Romney pay higher taxes?”

I’m not a Romney fan, and it irks me to defend good tax policy on behalf of someone who is incapable and/or unwilling to make the same principled arguments.

But my job is to do the right thing and bring truth to the economic heathens, so I agreed to participate. And I’m glad I did, because it gave me a chance to try out a new argument that I hope will educate more people about the perverse impact of double taxation.

Let me know what you think of this approach, which asks people whether they would think it would be fair if they couldn’t take credit for withheld taxes when filling out their 1040 tax return.

Capital gains taxes and dividend taxes are both forms of double taxation. That income already is hit by the 35 percent corporate income tax. So the real tax rate for people like Mitt Romney is closer to 45 percent. And if you add the death tax to the equation, the effective tax rate begins to approach 60 percent.  Here’s a simply analogy. Imagine you make $50,000 per year and your employer withholds $5,000 for personal income tax. How would you feel if the IRS then told you that your income was $45,000 and you had to pay full tax on that amount, and that you weren’t allowed to count the $5,000 withholding when you filled out your 1040 form? You would be outraged, correctly yelling and screaming that you should be allowed to count those withheld tax payments.  Welcome to the world of double taxation.

By the way, if you like my argument, feel free to vote for my entry, which you can do on this page.

I won my previous debate for U.S. News, so I’m hoping the keep a good thing going. As they say in Chicago, vote early and vote often.

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Last night’s GOP debate did nothing to change my sour opinion of Mitt Romney.

During a discussion about tax reform, he attacked Newt Gingrich for the supposed crime of not wanting to double tax capital gains. Here’s how Politico reported the exchange.

Newt Gingrich joked about Romney’s 15 percent tax rate, saying: “I’m prepared to describe my flat tax as the Mitt Romney flat tax.” Romney jumped in to ask: Do you tax capital gains at 15 percent or zero percent? Gingrich’s answer: Zero. “Under that plan, I’d have paid no taxes in the last two years,” Romney said, alluding to the fact that all his income is from investments.

Romney’s remarks are amazingly misguided. Getting rid of the capital gains tax doesn’t result in a tax rate of zero. It simply means that there is no second layer of tax on top of the punitive 35 percent corporate income tax.

I’ve had to correct Warren Buffett when he makes this mistake. One would think, though, that GOP presidential candidates would have a better understanding of taxation.

In addition to being wrong on policy, Romney also is politically tone deaf. By demagoguing against Gingrich’s tax plan, he lends credibility to the dishonest claims that his personal tax rate is “too low.”

In a column for today’s Wall Street Journal, John Berlau and Trey Kovacs of the Competitive Enterprise Institute explain how the GOP candidates should deal with this issue.

The former Bain Capital CEO and Massachusetts governor caused a brouhaha last week when he estimated the tax rate on his investment income at 15%. “How unfair!” pundits exclaimed, noting that the top marginal rate for wage income is more than 30%. The tax rate on investors is unfair, but for the opposite reason. Our tax code layers taxation of dividends and capital gains on top of a top corporate tax rate of 35%—which even President Obama acknowledges is one of the highest in the world. …This double taxation brings the effective tax rate on investment income to as much as 44.75%. In other words, after the combined top tax rates hit $100 of corporate income, $55.25 remains for the investor. And this figure doesn’t even include various state and local taxes, or the death tax. Moreover, like the rest of us, Mr. Romney paid income taxes before investing… Mr. Romney and other presidential candidates should use the opportunity of releasing their tax returns to make an important policy statement. They should include not only their individual returns, but information about the taxes their corporations pay. …In this way the candidates can help explode the myth of the U.S. as a low-tax nation. As Cato Institute tax experts Chris Edwards and Daniel J. Mitchell write in their book, “Global Tax Revolution,” while the U.S.’s “overall tax burden . . . is lower than in many other nations,” the country “imposes more punishing taxes on savings and investment than many advanced economies.” The most popular tax reforms—from the “9-9-9 plan” of former candidate Herman Cain to flat tax proposals—all have in common the reduction or elimination of double taxation on investment. …If the traditional disclosure of tax returns is elevated into a “teachable moment” about the burdens of double taxation, all Americans could be winners.

The authors are very kind to reference the book Chris and I wrote, but I mostly like this article because it does such a good job of explaining double taxation.

I made many of the same points in my video on capital gains taxation.

And keep in mind that the capital gains tax isn’t indexed for inflation, so the rate of double taxation in many cases is far higher than these estimates suggest.

As illustrated by this chart, double taxation is a serious self-inflicted barrier to American growth and competitiveness. Too bad Republicans are too short-sighted to address this issue intelligently.

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I’m a big believer in fairness. And since I’ve written about the shortcomings of Newt Gingrich, Mitch Daniels, Ron Paul, Herman Cain, Michele Bachmann, and Mitt Romney, I need to say something about Rick Santorum.

Actually, I don’t need to say anything, because other people have done that job already.

Here’s an excerpt of what Conn Carroll of the Washington Examiner wrote.

“Don’t tread on me” — the rallying cry emblazoned on the Gadsden flag — might as well have been the official motto of the Tea Party. If there is one central theme to the most politically effective movement in recent memory, it’s that the federal government needs to get out of our lives. Which is why it is so disheartening that Rick Santorum has become the supposed conservative alternative to Mitt Romney in the Republican primary. You would be hard-pressed to identify a Republican who better embodied the Bush era’s failed big-government/compassionate conservatism experiment.

Conn’s column includes a list of all the terrible legislation Santorum has supported, so feel free to read the entire article if you want to get depressed.

And here’s some of what Kevin Hassett of the American Enterprise Institute wrote for National Review.

The good news is that much of Santorum’s plan is centered on lowering taxes. The bad news is that much of his tax relief is either welfare in disguise or social engineering. …Santorum would also triple the personal exemption for dependent children while maintaining the earned-income tax credit and the child tax credit. This move would radically reduce the percentage of taxpayers paying any federal income tax whatsoever. Since he would retain most of the other major individual tax deductions, complexity would not be reduced… This plan caters to the fetishistic political focus on giveaways to manufacturing. An optimal code would reward job-creating businesses regardless of their industry. The radical differences between taxes for manufacturing and other activities would introduce perhaps the biggest and most damaging tax distortion in American history. It would also invite endless fraud. As I type this piece, I am manufacturing sentences, am I not? Shouldn’t my income be taxed as manufacturing?

Kevin also points out good features of Santorum’s plan, such as getting rid of the tax penalty on new investment, but concludes that Santorum’s plan is an implausible mess.

Even the people who say nice things about Santorum inadvertently point out bad policies.  Here’s some of what David Brooks wrote as part of a column praising the Pennsylvania Republican.

Santorum has sought to use the federal government to nurture healthy communities. …he came to support AmeriCorps, the federal community service program. Santorum believes Head Start should teach manners to children. He has supported efforts to police the airwaves and corporate marketing campaigns.  …If you believe in the centrality of family, you have to have a government that both encourages marriage and also supplies wage subsidies to men to make them marriageable.

I’m not sure if the last excerpt is something Santorum has endorsed, or if it’s something Brooks is endorsing, but it’s probably the most absurd idea I’ve heard in a long time. Do these people really think it’s the job of the federal government to make men more marriageable? Or that such a program would actually work?

Last but not least, Jon Henke neatly shows what’s wrong with Rick Santorum by juxtaposing two quotes to illustrate the decline of the GOP.

From Ronald Reagan:

If you analyze it I believe the very heart and soul of conservatism is libertarianism. … The basis of conservatism is a desire for less government interference or less centralized authority or more individual freedom and this is a pretty general description also of what libertarianism is.

To Rick Santorum:

One of the criticisms I make is to what I refer to as more of a libertarianish right. … This whole idea of personal autonomy, well I don’t think most conservatives hold that point of view. Some do. They have this idea that people should be left alone, be able to do whatever they want to do, government should keep our taxes down and keep our regulations low, that we shouldn’t get involved in the bedroom, we shouldn’t get involved in cultural issues. You know, people should do whatever they want. Well, that is not how traditional conservatives view the world and I think most conservatives understand that individuals can’t go it alone. That there is no such society that I am aware of, where we’ve had radical individualism and that it succeeds as a culture.

Santorum’s straw-man attack on libertarians is especially silly and sophomoric. We want a smaller federal government precisely because we value the institutions of civil society as well as the principle of individual liberty.

Someone who doesn’t understand the value of freedom probably shouldn’t be in the White House. Heck, Santorum probably thinks this satirical video is an accurate portrayal of libertarianism.

But if you want another George W. Bush, feel free to support Santorum.

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