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Archive for March, 2011

Washington is Fantasy Land.

Only in this corrupt city can you turn increases into cuts merely by increasing spending by less than previously planned. And almost every politician magically knows how to transform “spending” into “investment.”

So I’m used to Orwellian word games. But sometimes even I’m shocked, and this excerpt from a Washington Post story is a good (or perhaps bad) example.

The Senate approved another stopgap budget bill Thursday that would keep the federal government open until April 8. The measure, which had already passed the House, is expected to be signed by President Obama on Friday. The bill would cut $6 billion in federal spending. That makes twice this month that lawmakers from both parties have agreed to slash billions from the budget.

Let me see if I understand correctly. Federal spending has soared by more than $2,000,000,000,000 during the Bush-Obama years, pushing the burden of government up to $3,800,000,000,000, yet the reporters who put together this story said that an agreement to trim a trivially tiny slice of 2011 spending would “slash the budget.”

As Charlie Brown would say, good grief. This is the budgetary equivalent of going on a diet by leaving a couple of french fries in the bottom of the bag after binging on three Big Mac meals at McDonald’s.

You probably won’t be surprised to know that sauce for the budget-cutting goose is not sauce for the government-expanding gander.

When Obama wanted to spend about $1 trillion on a failed “stimulus,” did the Washington Post write that he wanted to “bloat” or “explode” the budget? I certainly don’t remember such language.

When Obama wanted to increase the net burden of spending by about $500 billion for his healthcare scheme, did the Washington Post explain that he wanted to “dramatically boost” or “significantly expand” outlays? Maybe I missed the story, but I don’t recollect such language.

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Sam Kazman of the Competitive Enterprise Institute has a withering critique of dumb government policies that have taken away our freedom to buy low-cost and effective washing machines and instead forced us to buy expensive machines that don’t do a good job of cleaning our clothes.

I guess we shouldn’t be surprised that politicians are undermining our quality of life. These are the same jackasses, after all, that are in the process of requiring us to use crummy light bulbs. And they’ve already coerced us into ridiculous “low-flow” toilets that don’t work very well if you happen to…um…deposit something that reminds you of Washington.

Here’s an excerpt from Sam’s column, but read the whole piece since he also discusses how the Senate wants to make a bad situation even worse, and he also reveals how corrupt big businesses favor these mandates so they can eliminate low-cost options.

…for decades the top-loading laundry machine was the most affordable and dependable. Now it’s ruined—and Americans have politics to thank. …The culprit is the federal government’s obsession with energy efficiency. Efficiency standards for washing machines aren’t as well-known as those for light bulbs, which will effectively prohibit 100-watt incandescent bulbs next year. Nor are they the butt of jokes as low-flow toilets are. But in their quiet destruction of a highly affordable, perfectly satisfactory appliance, washer standards demonstrate the harmfulness of the ever-growing body of efficiency mandates. The federal government first issued energy standards for washers in the early 1990s. When the Department of Energy ratcheted them up a decade later, it was the beginning of the end for top-loaders. …Front-loaders meet federal standards more easily than top-loaders. Because they don’t fully immerse their laundry loads, they use less hot water and therefore less energy. But, as Americans are increasingly learning, front-loaders are expensive, often have mold problems, and don’t let you toss in a wayward sock after they’ve started. When the Department of Energy began raising the standard, it promised that “consumers will have the same range of clothes washers as they have today,” and cleaning ability wouldn’t be changed. That’s not how it turned out. …even though these newer types of washers cost about twice as much as conventional top-loaders, overall they didn’t clean as well as the 1996 models. …We know that politics can be dirty. Who’d have guessed how literal a truth this is?

Hat tip to Advice Goddess.

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It’s a long time until Christmas, but this clever t-shirt I saw linked on Instapundit is going to be near the top of my list.

And unlike the Ben Bernanke toilet paper, this gift will be visible to everyone you see, not just people who visit your bathroom.

On the other hand, if you like the toilet paper approach, this IRS version is amusing.

But if you like t-shirts, there’s always this Tim Geithner classic for those who understand laws are only for the little people.

Last but not least, this quirky r-rated gift is for the environmentalists on your list.

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I confess to mixed feelings on this type of issue. If taxpayers are financing sidewalks, does that mean anybody has a right to use them for any purpose, at any time?

Here’s a blurb from the People’s Republic of San Francisco.

San Francisco police officers have started enforcing the city’s new ban on sitting and lying on the sidewalk. In November, voters approved the sit/lie law, which makes it illegal to hang out on San Francisco sidewalks between 7 am and 11 pm. “The cops said that the first time, we get admonished. And then after that, they’ll start filling out tickets,” he said. “They only have a select few that they’re going to choose to do that with.” Those tickets will start at $50 and could escalate to $500 or even jail time.

One thing I do know, however, is that giving bums tickets is not going to be very effective.

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Some of these numbers are a bit dodgy, and some of the assumptions are pathetically flawed (more spending by government leads to less poverty being a clear example of faulty thinking), but this comparison of big numbers is very interesting.

I now know, for instance, that the net worth of Bill Gates is supposedly equal to the annual earnings of the porn industry. Maybe that will help me win a game of Trivial Pursuit some day.

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A buddy from Monaco was at a different conference in the same hotel in Switzerland, and he sent me this great humor from David Letterman.

Here are the top 10 ways to tell if you are a bureaucrat.

10.) You take a week off to protest in Wisconsin and your office runs better. 

9.) On a snow day, when they say “non-essential” people should stay home you know who they mean. 

8.) You get paid twice as much as a private sector person doing the same job but make up the difference by doing half as much work. 

7.) It takes longer to fire you than the average killer spends on death row. 

6.) The worse you do your job, the more your boss avoids you. 

5.) You think the French are working themselves to death. 

4.) You know by having a copy of the Holy Koran on your desk your job is 100% safe. 

3.) You spend more time at protest marches than at church. 

2.) You have a Democratic congressman’s lips permanently attached to your butt. 

1.) You pay more in union dues than you do for your healthcare insurance.

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I posted yesterday about the horrible unfairness of life (i.e., I’m not rich). Interestingly, there are a number of rich left-wingers that feel guilty about having a lot of money. In a burst of genius, I came up with an idea that will kill two birds with one stone. They should give their money to me.

Unfortunately, I doubt this idea will work. Rich statists with neurotic disorders tend to deal with their feelings of guilt by supporting higher taxes on other people. I’ve actually debated these crazies (see here, here, and here).

Now more of these odd people are crawling out of the woodwork. Here’s an excerpt from a Yahoo story.

Add PIMCO founder Bill Gross to the list of wealthy Americans who think they aren’t being taxed enough, already. “Of course we should” pay higher taxes, Gross says. …In addition to tax hikes on the wealthy, “let’s raise corporate taxes too,” the famed bond fund manager says, a view that runs in direct opposition to the current discussions in Washington. “Corporations complain and complain and complain and have got the Obama administration suggesting there should be some corporate tax reform,” Gross notes. But at just 1% of GDP, corporate taxes are “historically low.”

To be sure, perhaps the PIMCO guy is just trying to boost his net worth through the back door. His bond fund probably has lots of government debt, so perhaps he thinks higher taxes will protect the value of those bonds. A strange theory, but being a statist means never having to understand how the real world works.

Then we have Stephen King, who apparently feels guilty about his wealth, so he wants the government to rape and pillage other people. And I’m not aware of any back-door rationale for him to support higher taxes, so this presumably is a classic case of GRLWND (guilt-ridden left-wing neurotic disorder). Here are some of the details from an editorial in a Florida paper.

The horror novelist, a part-time Florida resident, addressed a “Wake the State” rally Tuesday in Sarasota, took a swipe or two at Gov. Rick Scott and complained that rich people — like himself — are getting off too easy. “As a rich person,” he said, “I pay 28 percent taxes. What I want to ask you is, why am I not paying 50? Why is everybody in my bracket not paying 50?”

Of course, there’s nothing to stop Mr. King or Mr. Gross from pissing away their money by voluntarily sending checks to Washington. Indeed, the Daily Caller is offering free psychiatric advice to guilt-ridden left wingers by directing them to the Treasury Department website with the information about making gifts to Uncle Sam.

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Greetings from Montreux, Switzerland, on the shores of Lake Geneva. There aren’t many places where palm trees are framed by snow-capped mountains. Heck, even I managed to take a decent photo.

But let’s shift back to the world of public policy. Every time I’m in Switzerland, my admiration for the country increases. Here are five ways Switzerland is better than the United States.

1. The burden of government spending is lower in Switzerland. According to OECD, the public sector consumes only 33.1 percent of economic output in Switzerland, compared to 41.1 percent of GDP in the United States.

2. Switzerland has genuine federalism, with the national government responsible for only about one-third of government spending. The United States used to be like that, but now more than two-thirds of government spending comes from Washington.

3. Because of a belief that individuals have a right to control information about their personal affairs, Switzerland has a strong human rights policy that protects financial privacy. In the United States, the government can look at your bank account and does not even need a search warrant.

4. Switzerland has a positive form of multiculturalism with people living together peacefully notwithstanding different languages and different religions. In the United States, by contrast, the government causes strife and resentment with a system of racial spoils.

5. Gun ownership is pervasive in Switzerland, and the Swiss people value this freedom. Moreover, how can one not admire a nation where all able-bodied males have fully automatic rifles in their homes? To be sure, the United States is very good by world standards in protecting this freedom, so the  Swiss don’t really have an advantage on this issue, but it’s still worth mentioning.

Notwithstanding my admiration for Switzerland, there are five reasons why I don’t plan on expatriating.

1. I’m not rich and don’t particularly see how I will get rich anytime soon. Switzerland is not a cheap place to live.

2. It would be very time-consuming and expensive to go to Georgia Bulldog games, and I doubt the games would be on TV.

3. Speaking of sports, the Swiss share the disturbing European propensity to follow soccer.

4. It’s not warm enough.

5. Even though it’s considered a bit uncouth among some libertarians, I do have certain patriotic impulses. I’m not about to surrender my nation to the plundering thieves from Washington.

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Forget the victory over the union bosses in Wisconsin. Yes, that was important, but school choice is an ever bigger threat to the left.

Breaking the government education monopoly would reveal the inefficiency and incompetence of government, while simultaneously threatening the power of the National Education Association, which is a major source of money and power for the left.

Even more important, school choice would give poor kids a much better education, thus increasing their ability to achieve the American dream.

Helping poor people lead better lives, though, is not a priority for the left. If people are less dependent on government, they probably are less likely to reflexively support those who want to make government even bigger.

This is why it is good news that the promise of school choice in Pennsylvania (which I wrote about last year) is about to become a reality.

The Wall Street Journal’s excellent editorial page has the key details.

The most promising development is occurring in Pennsylvania, where a state-wide voucher bill supported by new Governor Tom Corbett is moving through the Republican-controlled legislature. Children in the Keystone State’s 144 worst schools—where students scored in the lowest 5% on recent state exams—would be eligible for a voucher. …in 1996, but unions blocked the idea by claiming that lack of spending was the real education problem. Time has proven that wrong again. According to the Commonwealth Foundation, a state think tank, “taxpayer spending on public schools has doubled to $26 billion per year” over the past 15 years. Pennsylvania taxpayers spend more than $13,000 per student, or “$2,000 more than the national average and more than 39 other states.” In some of the worst school districts, per pupil spending approaches $20,000. Yet scores on national tests have been flat for years, with only 40% of Pennsylvania 8th graders at or above proficiency in reading and math. Even state tests, which have lower standards, show that only about half of Pennsylvania 11th graders are proficient in reading and math.

What’s especially encouraging about the developments in Pennsylvania is that some traditionally left-wing folks have realized that it’s time to put the best interests of kids above the interests of the teacher unions. I particularly admire the role of a black state senator.

Mr. Williams, who is black, has taken some heat for his pro-voucher stance from local civil rights groups. “The NAACP nationally is opposed to this and locally is opposed to this, and they call me all sorts of funny names,” he tells us. “But the truth is that a lot of the people in the NAACP don’t acknowledge that they send their own kids to private schools. They’ve left. They’ve moved away.” Several local labor groups in Philadelphia have also broken with the teachers union and endorsed vouchers. “We believe that children from all economic backgrounds deserve a chance for a bright future,” said John Dougherty of the International Brotherhood of Electrical Workers Local 98. “School choice programs will give them that chance.”

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I don’t particularly like soccer and I’m not normally a fan of the research of Professor Emannuel Saez, so it is rather surprising that I like Professor Saez’s new research on taxes and soccer.

While Saez may have a reputation for doing work that often is used by advocates of class warfare, his latest research is classic, supply-side economics. He and his co-authors studied soccer players and found that they are very sensitive to marginal tax rates.

They even confirmed that the Laffer Curve is sometimes so strong that governments can collect more revenue by reducing tax rates on the rich. Krugman won’t be happy about this.

Here are some segments from a story about the research in the Christian Science Monitor.

…on one subject, Europe’s soccer stars have an important message for Americans: Tax rates. It turns out that highly paid soccer players are sensitive to taxes. They tend to move to those nations that give them a break. Why is Spain’s top league a sudden soccer powerhouse? One reason is tax policy. Why are Denmark and Belgium’s leagues stronger than in other similar countries? Ditto. In perhaps the first study to provide compelling evidence of a link between tax rates and worker migration, three economists look at this highly paid, highly mobile workforce and make several surprising conclusions: 1) Top marginal tax rates matter to big earners. 2) If you’re going to cut taxes to lure such highly skilled workers, make it a big tax cut. Otherwise, it won’t have much effect. …Professor Saez and his colleagues found something striking: The leagues in low-tax nations attracted better players and had better teams. The effect was also pronounced in individual nations that reformed their taxes. For example, Spain in 2004 introduced a new flat rate of 24 percent for foreign soccer players, nearly half the top marginal rate it charged its residents. After that law – called the “Beckham law” because British star David Beckham took advantage of it – Spain saw its share of foreign players increase while the foreign talent in nearby Italy shrank. Tax cuts for foreign players in Denmark and Belgium had similar effects.

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I was part of a debate for an English-language Russian TV program on the international implications of economic policy, particularly with regard to the United States and China. My job was simple because I am not a big fan of either nation’s policy.

Government intervention and favoritism is bad policy – regardless of skin color.

My only comment, other than welcoming feedback, is that Michael Hudson should be in the Obama cabinet since he has no idea what he’s talking about.

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Having just done a blog post where I explained that government should stay neutral in fights between labor and management in the private sector, let’s look at a real-world example to understand why.

The millionaire owners and millionaire players from the National Football League are locked in a labor dispute. This is somewhat understandable since there are ten of millions of dollars of profit available and both sides obviously have an interest in getting the biggest slice of that income.

I don’t care who wins, but government has no role in this squabble (or in discussions about college football championships).

In a free society, people have the right to sign contracts. But freedom also means they have a right to not sign contracts. Indeed, these principle of self-ownership and control over property are key defining characteristic of liberty.

That’s why it is disappointing that the players are trying to get the government to tilt the playing field in their direction. Led by big-name stars (for PR value), the players are going to court in hopes of getting the government to use misguided and coercive antitrust laws to hamstring the negotiating position of owners.

The market should determine the outcome of this dispute, however, not the sordid world of government and politics. The players do not have a right to jobs with NFL teams, just as NFL teams do not have a right to force people into playing football.

Yes, it is a “restraint on trade” for NFL owners to not sign contracts, but it is also a “restraint of trade” for top athletes to choose not to play. But this simply illustrates why antitrust laws are so foolish and so inconsistent with the freedom of contract.

Here’s a blurb from the Associated Press report.

…quarterbacks Tom Brady, Peyton Manning and Drew Brees were among 10 players who sued the NFL in federal court Friday, accusing the league of conspiracy and anticompetitive practices that date back years. Their lawsuit asked the court to prevent a lockout. …They filed a request for an injunction that would keep the NFL and the teams from engaging in a lockout. Invoking the Sherman Act, a federal antitrust statute from 1890 that limits monopolies and restrictions on commerce, the players said they were entitled to triple the amount of any damages they’ve incurred. …The players accused the 32 NFL teams of conspiring to deny their ability to market their services “through a patently unlawful group boycott and price-fixing arrangement or, in the alternative, a unilaterally imposed set of anticompetitive restrictions on player movement, free agency and competitive market freedom.” The collective bargaining agreement with the league was expiring Friday.

One caveat. The title of this post says there is no role for government, but that’s not completely true. The courts have a role as neutral arbiters if there is a dispute about whether one side or the other has failed to live up to the terms of a voluntary contract. Though I suppose my caveat has a caveat since the two sides also could pick a private arbitration service to be the neutral judge of any dispute.

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Appearing on Bloomberg TV, I debate the role of unions in American society.

My first point, regarding labor issues in the productive sector of the economy, is that the government should not intervene on the side of either unions or management. Personally, I think unions are sometimes so inflexible and intransigent that they kill the geese (profits) that generate golden eggs (jobs). But I don’t want my thumb on the scale, just as I don’t want Barack Obama’s thumb on the scale.

My second point is the public sector unions are an entirely different issue, involving a special interest group that colludes with politicians to screw taxpayers.

As always, would welcome feedback on how I can improve. You’ll have to click through to watch the video on the youtube site (at least that’s how it works on my computer).

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This is beautiful. It’s so refreshing to have a handful of Republicans who actually understand that their job is promoting freedom.

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There’s a significant debate now taking place in Washington – largely behind closed doors, but sometimes covered by the media – on whether fiscal conservatives should maintain a rigid no-tax-increase position. One side of the debate features Grover Norquist of Americans for Tax Reform, which is the organization that maintains the no-tax increase pledge. The other side features Senator Coburn of Oklahoma, who is part of a small group of GOP Senators who might be willing to increase the tax burden as part of a deal that supposedly reduces deficits.

I’m a huge fan of Senator Coburn, who was in favor of cutting wasteful spending before it became fashionable. His office, for instance, releases a “Pork Report” every couple of days. But you shouldn’t read it if you have high blood pressure, because it will confirm (and reconfirm, and reconfirm, ad nauseum) your worst fears about tax dollars getting wasted.

Nonetheless, I’m on Grover’s side on this tax debate for two reasons.

First, we have a spending problem, not a revenue problem or a deficit/debt problem. Red ink is undesirable, to be sure, but it is a symptom of the underlying problem of a government that is too big and spending too much.

But don’t believe me. Here is a chart from the House Budget Committee showing long-run projections for spending and revenues over the next 70 years. As you can see, the long-run fiscal shortfall is completely caused by higher spending. In other words, 100 percent of red ink is due to government spending. So why put taxes on the table?

But this chart actually understates the case against tax increases. It uses revenue numbers from the Congressional Budget Office’s “alternative” forecast, which shows taxes steady at 19.3 percent of GDP. That’s more than the historical average of about 18 percent of GDP, which surely indicates that revenues are not the problem.

However, that 19.3 percent estimate is completely artificial. As CBO states in its long-run forecast, “the alternative fiscal scenario also incorporates unspecified changes in tax law that would keep revenues constant as a share of GDP after 2020.”

I’ll actually be delighted if we can permanently keep federal revenues below 20 percent of GDP, but I’m not overly optimistic because the tax burden is projected to automatically increase over time. And I’m not talking about the expiration of the Bush tax cuts or the alternative minimum tax. Yes, those factors would push up tax revenues (at least based on static revenue estimates), but the tax burden also is expected to climb because even modest economic growth slowly but surely pushes more and more people into higher tax brackets.

This second chart shows CBO’s estimate of personal income tax revenue based on current policy (as opposed to estimates based on current law, which includes already legislated tax hikes). To be more specific, it shows how much revenue the government will collect from the individual income tax even if the 2001 and 2003 tax cuts are made permanent and the AMT is indexed.

As you can see, the aggregate individual income tax burden will increase by roughly 5 percentage points of GDP when compared to the long-run average of about 8 percent of GDP (the CBO estimate only goes to 2035, so I extrapolated to show the same time period as the first chart). And remember, this is the forecast of what will happen to income tax revenues even if politicians don’t impose any new laws to coercively extract more revenue.

This might not be too bad if other taxes were falling, but that’s not what CBO is projecting. As such, this big increase in revenue from the individual income tax means that the overall tax burden will climb by approximately the same amount.

In other words, revenue likely will rise close to 25 percent of GDP as we approach the next century. So if we use this more realistic baseline, we can say that more than 100 percent of the long-run deficit problem is because spending is out of control.

The second reason for a firm no-tax increase position is that higher taxes are a very ineffective way of reducing budget deficits. Indeed, tax increases generally backfire and lead to more red ink. To understand why, it’s important to put away the calculator and instead consider the real world of politics and public policy. For instance:

o  Tax increases rarely raise as much revenue as predicted by government forecasters. This is because of “Laffer Curve” effects, as taxpayers change their behavior to earn less income and/or report less income. Simply stated, people respond to incentives, and this means taxable income falls as tax rates increase.

o  Tax increases erode pressure to control spending. Why would politicians want to make tough decisions and upset special interest groups, after all, when there is going to be more revenue (or at least the expectation of more revenue)? Using more colloquial language, trying to control spending with higher taxes is like trying to cure alcoholics by giving them keys to a liquor store.

o  Milton Friedman was right when he said that, “In the long run government will spend whatever the tax system will raise, plus as much more as it can get away with.” In other words, if politicians think they can get away with deficits averaging, say, 5 percent of GDP in the long run, then the the only impact of higher taxes is an equal amount of additional spending – while still retaining deficits of 5 percent of GDP.

The real-world evidence certainly points in this direction. We’ve seen “bipartisan budget summits” several times in Washington, and the result is more spending rather than lower deficits. Americans for Tax Reform has a good analysis of what happened after the two big budget summits in 1982 and 1990, but I think the problem is best captured by my adaptation of a famous Peanuts cartoon strip.

Every year, if my aging memory is correct, Lucy would ask Charlie Brown if he wanted to kick the football. At first, Charlie was skeptical. But Lucy always managed to trick him into giving it a try. And the inevitable result was Charlie Brown lying on his back wondering why he had been so foolish.

In the Washington version of this cartoon, Democrats hypnotize gullible Republicans with ostensibly sincere promises of future spending restraint. Republicans eventually acquiesce, naively assuming that Democrats will be their new best-friends-forever in the fight against big government.

Needless to say, that’s not the way the story ends.

Ronald Reagan is reported to have said that the 1982 tax increase was the “biggest mistake” of his presidency. And since Congress never followed through on commitments to reduce spending by $3 for every $1 of higher taxes, he wryly remarked that, “I’m still waiting on those three dollars of spending cuts I was promised from Congress.”

Like Ronald Reagan, Tom Coburn wants to do the right thing. But good intentions are not the same as good policy. America’s fiscal challenge is too much spending. Government is too big and it is wasting too much money. Taking more money from the American people is not the way to solve that problem.

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People periodically ask me why I’m so down on David Cameron, the Prime Minster of the United Kingdom. I’ve already pointed out that his pre-election agenda was big government. And I’ve pointed out that his post-election record is more spending.

(and you can read more of my whining and complaining here, here, here, here, and here)

But now I’m really disgusted, because the United Kingdom’s version of  George W. Bush is now reversing one of the few pro-market aspects of British policy.

The Wall Street Journal Europe is appropriately disappointed.

On Tuesday Iain Duncan Smith announced a sweeping reform of the U.K.’s state-pension system. In the name of simplification, the Work and Pensions Secretary plans to raise the basic pension, eliminate the current multitiered system—and pay for it all by rolling back the personal retirement accounts that were first introduced by the Thatcher Government in 1987. Pension systems across the developed world are being stretched to the breaking point as populations gray and governments face ballooning public debts. Britain today is in the privileged position of possessing on top of its public savings system an extensive private one, relatively insulated from the government’s increasingly uncertain ability to deliver on its pension liabilities. Pity, then, that Mr. Duncan Smith’s reforms serve in the long run mostly to entrench the unsustainable elements of the British system and trash the desirable ones.

Addendum: Jose Pinera reminds me that George W. Bush actually proposed personal retirement accounts in 2005, one of the few positive actions of his eight-year reign. So Cameron’s actions may put him even further to the left than Bush on economic policy, a rather challenging achievement.

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A lot of guests for this appearance, but I think I got a fair share of airtime. More important, I explained why it is not a good thing for Ben Bernanke and the Federal Reserve to let the inflation genie out of the bottle.

Monetary policy is one area where I always try to display some humility. While I know the right goal is zero inflation, I realize that achieving that goal requires central bankers to know both the supply of money (not as easy as it used to be) and the demand for money (always a challenge).

This is why I’m skeptical of QE2, but also willing to admit that it might be the right approach (though it grates on me that it is often portrayed as a form of stimulus, which definitely is wrong).

I’ll soon release a video that begins to tackle monetary policy. I don’t want to give away too much right now, but suffice to say that a monopoly central bank run by government is a recipe for mischief.

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The world is filled with evil governments run by evil people who do evil things to innocent people. Libya is a stark example of this tragic reality. But that does not necessarily mean it is the responsibility of the United States government to intervene in Libyan affairs – particularly if there is no clear mission or implication for U.S. national security.

George Will opines on this issue today, asking more than a dozen probing questions about the wisdom of another nation-building experiment in the Muslim world. This excerpt has a handful of the questions that I think are most important. I’m especially concerned that the U.S. government might intervene after asking permission from the kleptocrats at the United Nations – thus doing the wrong thing in the worst possible way.

Today, some Washington voices are calling for U.S. force to be applied, somehow, on behalf of the people trying to overthrow Moammar Gaddafi. Some interventionists are Republicans, whose skepticism about government’s abilities to achieve intended effects ends at the water’s edge. All interventionists should answer some questions:

The world would be better without Gaddafi. But is that a vital U.S. national interest? If it is, when did it become so? A month ago, no one thought it was.

Before we intervene in Libya, do we ask the United Nations for permission? If it is refused, do we proceed anyway? If so, why ask? If we are refused permission and recede from intervention, have we not made U.S. foreign policy hostage to a hostile institution?

Would it be wise for U.S. military force to be engaged simultaneously in three Muslim nations?

I’m surely not an expert on these issues, but my aversion to nation building does not mean I’m opposed to slapping around people who attack the United States. If the President happened to drop a cruise missile on Gaddafi and said it was a delayed response for the Pan Am Lockerbie bombing, I wouldn’t lose a second of sleep.

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In the past 10 years, the burden of federal spending has skyrocketed, more than doubling from$1.86 trillion in 2001 to an estimated $3.82 this year.

President Bush deserves a lot of the blame thanks to the no-bureaucrat-left-behind bill that bloated the Department of Education, the corrupt farm bills, the pork-filled transportation bills, the new prescription drug entitlement, and bailouts for banks and auto companies.

Obama then came to office promising hope and change, but he simply grabbed the baton and continued the spending spree, adding more TARP bailouts, and then giving us the boondoggles of a fake stimulus and government-run healthcare.

Taxpayers finally said enough is enough last November and there’s a new Congress with marching orders to stop Washington’s spending orgy.

But Barack Obama and Harry Reid are saying no. They want us to believe that the House spending cuts are too severe.

What does this mean? Are Republicans trying to reduce spending to $2.98 trillion, which is where it was in 2008? That would be a spending cut of nearly $1 trillion and music to my ears. Or are they being even more aggressive, perhaps trying to cut spending to about $2.5 trillion, about halfway between the 2001 and 2008 totals? That would be a spending cut of almost $1.5 trillion, which would be a fantasy for a libertarian wonk like me.

If these were the options being considered, we could understand President Obama and Senator Reid vigorously resisting  spending cuts of that magnitude.

But that’s not what’s happening. Republicans in the House are not trying to reduce spending by a big amount. They’re not even trying to reduce the budget by $500 billion. Heck, they’re not even trying to lower this year’s spending levels by $100 billion.

Instead, the House GOP has put forward a very modest proposal to trim spending by $61 billion – and that tiny bit of nibbling around the edges of the welfare state has Barack Obama and Harry Reid acting as if the safety net is being ripped to shreds.

This video from my colleagues at the Cato Institute puts $61 billion of cuts in context – and indirectly shows that President Obama and Senator Reid have no credibility on fiscal policy.

I can’t resist making one final observation. The burden of government spending has jumped by about $2 trillion in the past 10 years. Does anybody think our economy is stronger as a result? More stable? More competitive? More vigorous? More entrepreneurial?

The answer to all these questions is a resounding no. So if the 10-year Bush-Obama experiment of bigger government has failed, isn’t it time we try a different approach?

To conclude, here’s one of my videos, looking at just a small fraction of the evidence in favor of smaller government.

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Taxpayer-funded cowboy poetry? Is this an example of when parody becomes reality? Or is it the other way around, when reality becomes parody?

All I know for sure is that it is nauseating that the corrupt crowd in Washington thinks it is not only proper, but also praiseworthy, to steal money from the rest of the nation to fund vote-buying gimmicks in their home states.

Here’s a blurb from Politico about Harry Reid and his boondoggle.

In the middle of his tirade against House Republicans’ “mean-spirited” budget bill on the Senate floor Tuesday, the Senate Majority Leader lamented that the GOP’s proposed budget cuts would eliminate the annual “cowboy poetry festival” in his home state of Nevada. …“The mean-spirited bill, H.R. 1 … eliminates the National Endowment of the Humanities, National Endowment of the Arts,” said Reid. “These programs create jobs. The National Endowment of the Humanities is the reason we have in northern Nevada every January a cowboy poetry festival. Had that program not been around, the tens of thousands of people who come there every year would not exist.”

I must have an out-dated version of the Constitution, because my copy doesn’t say that cowboy poetry is one of the enumerated powers of the federal government.

I suppose a caveat is appropriate. I realize that I’m not the most sophisticated guy in the world. I wouldn’t recognize good poetry from bad poetry. I’d rather chew on broken glass than attend an opera. My idea of a good time is playing softball with a bunch of guys, talking sports and swapping jokes.

So I’m not attacking poetry in general or cowboy poetry in particular. But I am objecting to federal subsidies for such events. I don’t ask other people to subsidize my softball. All I ask in exchange is that they don’t coerce me into subsidizing their hobbies.

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In this discussion on Larry Kudlow’s show, I reiterate the central point from my National Review article and explain that the government shutdown in 1995 led to real fiscal restraint. If that was a loss for the GOP, I hope they lose again this year.

But will this happen? If Republicans don’t surrender, a shutdown is inevitable. The Democrats clearly have adopted a rope-a-dope strategy, hoping GOPers will preemptively compromise. Here’s an excerpt from a story in the Washington Times.

A top Senate Democrat said Sunday that the $6 billion in additional spending cuts that his party offered is the limit Democrats can accept — drawing a line well short of Republicans’ goal with less than two weeks to go before a government shutdown if the two sides can’t agree. Sen. Richard J. Durbin of Illinois, the second-ranking Democrat in the chamber, said the $6 billion proposal, released Friday, has “pushed this to the limit” on domestic spending. …Meanwhile, the Senate’s top Republican said his talks with President Obama and Vice President Joseph R. Biden Jr. show that the White House is not serious about tackling longer-term spending challenges, making it difficult for Congress to work with the president. …“I’ve had plenty of conversations with them. What I don’t see now is any willingness to do anything that’s difficult,” Senate Minority Leader Mitch McConnell, Kentucky Republican, said on CBS‘ “Face the Nation” program. “So far, I don’t see the level of seriousness that we need.”

There’s no reason why Republicans should unilaterally compromise, but I’m worried. One major problem for the GOP is a misguided focus on red ink. Too many people, including Senators, Representatives, pundits, and policy wonks, keep talking about deficits and debt. Government borrowing is not desirable, but red ink is merely a symptom of excessive spending.

This is why all the focus should be about controlling the size and scope of Washington. That’s not only smart economics, it’s also astute politics. If the short-term question is how to save $61 billion from FY2011 spending levels and the long-term question is how to cap federal government spending at 20 percent of GDP, higher taxes obviously are not relevant.

But if Republicans keep talking about deficits and debt, that automatically puts tax increases on the table. And the primary long-run goal of the Democrats is to seduce GOPers into going along with a tax increase.

The next thing to watch for is what happens, presumably later today, when the Senate votes on the House plan and the Democrat’s proposal. The Associated Press is probably correct that these are key test votes.

The Senate appears likely to reject both a slashing GOP budget bill and a less ambitious Democratic alternative. …Neither measure can muster the 60 votes required under Senate procedures to advance; not a single Democrat is likely to vote for the GOP measure, and some may shy away from the Democratic bill as well. That could put pressure on House Speaker John Boehner, R-Ohio, as well as other congressional leaders of both parties to find a compromise. …By the same standard, the vote on the Senate Democratic alternative — it would cut about $5 billion from domestic agencies compared with about $60 billion under the House GOP plan — is unlikely to get unanimous support from Democrats, especially moderates up for re-election in 2012.

What Republicans need to understand is that they hold the trump card. Taxpayers will save much more than $61 billion if Democratic obstinacy results in a government shutdown.

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Kudos to Governor Walker of Wisconsin. Republicans rarely have the intelligence or the fortitude to win battles that reduce the burden of government, but it appears that he is on the verge of prevailing in his effort to limit special privileges for government workers. Fugitive Democrats from the State Senate apparently are giving up on their plan to block the Governor’s reforms by hiding in Illinois.

I won’t fully believe it until they’re back in their chairs and casting votes, but at the very least Governor Walker is showing why it is important to stand up to greedy special interests. Let’s hope Republicans in Washington can display the same courage in their fight to trim a tiny amount of spending from this year’s spending – even if it means a government shutdown.

Here’s a report on the Wisconsin fight from today’s Wall Street Journal.

Playing a game of political chicken, Democratic senators who fled Wisconsin to stymie restrictions on public-employee unions said Sunday they planned to come back from exile soon, betting that even though their return will allow the bill to pass, the curbs are so unpopular they’ll taint the state’s Republican governor and legislators. …The Wisconsin standoff, which drew thousands of demonstrators to occupy the capitol in Madison for days at a time, has come to highlight efforts in other states to address budget problems in part by limiting the powers and benefits accorded public-sector unions. Sen. Mark Miller said he and his fellow Democrats intend to let the full Senate vote on Gov. Scott Walker’s “budget-repair” bill, which includes the proposed limits on public unions’ collective-bargaining rights. The bill, which had been blocked because the missing Democrats were needed for the Senate to have enough members present to vote on it, is expected to pass the Republican-controlled chamber. He said he thinks recent polls showing voter discontent with Mr. Walker over limits on bargaining rights have been “disastrous” for the governor and Republicans and give Democrats more leverage to seek changes in a broader two-year budget bill Mr. Walker proposed Tuesday. …Mr. Walker’s bill would prohibit bargaining over health care and pensions for about 170,000 public employees in the state and would allow public employees to opt out of paying dues or belonging to a union. The bill also would end the automatic collection of dues by the state, and require that every public-employee union get recertified to represent workers through an annual election. …Mark Jefferson, head of the Wisconsin GOP, said…even after Mr. Walker’s plan is passed, the state’s public workers will still have more collective-bargaining rights than most federal workers, who can bargain over working conditions but not pay and benefits.

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The fiscal fight on Capitol Hill has triggered a firestorm of lobbying, as greedy special interests are squealing about a potential loss of handouts.

This USA Today story focuses on funding for the Corporation for Public Broadcasting and Planned Parenthood, both of which are whining that the world will come to an end if they can no longer stick their snouts in the public trough.

But it doesn’t matter whether you like watching Sesame Street or what you think about abortion. This is a debate about whether funding those activities in a proper function of the federal government. If we can’t stop mooching in these areas, we may as well surrender now and start learning French or Greek.

Planned Parenthood, public radio stations and scores of other interests are scrambling to make their cases heard on Capitol Hill, hiring new lobbyists, mailing petitions, buying TV ads and, in one case, deploying PBS’ Arthur the Aardvark cartoon character to Congress to rescue the Corporation for Public Broadcasting from budget cutters. A focus of the lobbying free-for-all: a House-passed bill to fund the government through Sept. 30 that would cut $61 billion in federal spending. …The Corporation for Public Broadcasting, which helps fund public radio and television stations, has “outlived its usefulness,” said Rep. Doug Lamborn, R-Colo., who authored legislation to cut the funding. The corporation is set to receive $430 million this year. “In this day and age, we have 150 cable channels and the Internet over our cellphones,” Lamborn said. “We no longer need a government source of media. This seems to be a natural place to start the discussion about getting our fiscal house in order.” Patrick Butler, head of the Association of Public Television Stations, called the measure a “mortal threat” and said it would do little to reduce this year’s $1.6 trillion federal deficit. …Planned Parenthood receives $330 million annually from Medicaid and the family planning program, spokesman Tait Sye said. Planned Parenthood officials say no federal funds are used for abortions, but opponents say the federal support frees up money to perform the procedure. Rep. Mike Pence, R-Ind., a strong opponent of abortion, pushed the measure. “He doesn’t believe the nation’s largest abortion provider should be the largest recipient of federal funding under Title X,” Pence spokesman Matt Lloyd said. …The lobbying frenzy over the budget won’t end soon. President Obama, who threatened to veto the House-passed bill, and congressional leaders are working to negotiate a new spending bill to keep the government running past midnight March 18. Even if they can reach a deal to fund agencies through the Sept. 30 end of the current fiscal year, another confrontation lies ahead — this one over the fiscal year 2012 budget, which Obama sent to Congress last month.

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Regular readers of this blog already know (see here, here, and here) that I’m not a big fan of the new “CFL” light bulbs that we will be forced to use in a couple of years.

In a more entertaining fashion, here’s a video from a few years ago, featuring a Republican Congressman railing against the new bulbs.

Repealing the idiotic mandate for these inferior bulbs should be a gimme for the new Republican majority. Somehow, though, I predict they’ll screw up and leave the requirement in place.

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Since I believe in federalism and decentralization, I tend to be somewhat tolerant of stupid decisions by local governments – particularly when those choices are made thousands of miles away and I don’t have to deal with the consequences.

With this in mind, I find it rather amusing that San Francisco is now plagued by sewer smells as a result of mandates for low-flow toilets. The article doesn’t explain what rules the city imposed, but I assume they are even worse than the federal rules (if you want a good laugh about the federal law, this Dave Barry column is worth reading).

Reading the excerpt below, part of me hopes for a dry summer and that the city’s politicians all live near AT&T Park.

San Francisco’s big push for low-flow toilets has turned into a multimillion-dollar plumbing stink. Skimping on toilet water has resulted in more sludge backing up inside the sewer pipes, said Tyrone Jue, spokesman for the city Public Utilities Commission. That has created a rotten-egg stench near AT&T Park and elsewhere, especially during the dry summer months. The city has already spent $100 million over the past five years to upgrade its sewer system and sewage plants, in part to combat the odor problem. Now officials are stocking up on a $14 million, three-year supply of highly concentrated sodium hypochlorite – better known as bleach – to act as an odor eater and to disinfect the city’s treated water before it’s dumped into the bay. It will also be used to sanitize drinking water.

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This is one of those a-picture-says-a-thousand-words moments.

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One of my many frustrations of working in Washington is dealing with perpetual-motion-machine assertions. The classic example is Keynesian economics, which is based on the notion that you magically create additional economic activity by having the government spend money instead of allowing the private sector to decide how it gets spent (in an especially bizarre display of this thinking, Nancy Pelosi actually said that subsidizing unemployment was the best way to create jobs).

Another example of this backwards analysis can be found in the debate over the IRS budget. The President is resisting a GOP proposal to modestly trim the IRS’s gargantuan $12.5 billion budget and his argument is that we should actually boost funding for the tax collection bureaucracy since that will mean more IRS agents squeezing more money out of more taxpayers.

Here are some excerpts from an Associated Press report about the controversy.

Every dollar the Internal Revenue Service spends for audits, liens and seizing property from tax cheats brings in more than $10, a rate of return so good the Obama administration wants to boost the agency’s budget.House Republicans, seeing the heavy hand of a too-big government, beg to differ. They’ve already voted to cut the IRS budget by $600 million this year and want bigger cuts in 2012. …IRS Commissioner Doug Shulman told the committee Tuesday that the $600 million cut in this year’s budget would result in the IRS collecting $4 billion less through tax enforcement programs. The Democrat-controlled Senate is unlikely to pass a budget cut that big. But given the political climate on Capitol Hill, Obama’s plan to increase IRS spending is unlikely to pass, either. Obama has already increased the IRS budget by 10 percent since he took office, to nearly $12.5 billion. The president’s budget proposal for 2012 would increase IRS spending by an additional 9 percent — adding 5,100 employees. …Obama’s 2012 budget proposal for the IRS includes $473 million and 1,269 new positions to start implementing the health care law.

Unlike Keynesian economics, there actually is some truth to Obama’s position. The fantasy estimate of $10 of new revenue for every $1 spent on additional bureaucrats is clearly ludicrous, but it is equally obvious that many Americans would send less money to Washington if they didn’t have to worry about a coercive and powerful tax-collection bureaucracy that had the power to throw them in jail.

This is an empirical question, at least with regards to the narrow issue of whether more IRS agents “pay for themselves” by shaking down sufficient numbers of taxpayers. Reducing the number of IRS bureaucrats by 90 percent, from about 100,000 to 10,000, for instance, surely would be a net loss to the government since the money saved on IRS compensation would be trivial compared to the loss of tax revenue.

But that doesn’t mean that a reduction of 10,000 or 20,000 also would lead to a net loss. And it certainly does not mean that adding 10,000 or 20,000 more IRS agents will result in enough new revenue to compensate for the salaries and benefits of a bigger bureaucracy. Even left-wing economists presumably understand the concept of diminishing returns.

But let’s assume that the White House is correct and that more IRS agents would be a net plus from the government’s perspective. The Administration would like us to reflexively endorse a bigger and more aggressive IRS, but public policy should not be based on what is a “net plus” for the government.

There are two ways to promote better tax compliance. The Obama approach, as we’ve read above, is to expand the size and power of the IRS. Up to a point, this policy can be “successful” in extracting additional money from the productive sector of the economy.

The alternative approach, by contrast, seeks better compliance by lowering tax rates and reforming/simplifying tax systems. This course of action boosts compliance by making evasion and avoidance less attractive. People are much less likely to cheat if the government isn’t being too greedy, and they’re also more likely to comply if they think there is less waste, fraud, corruption, and favoritism in the tax code.

Let’s now put this discussion in context. Obama wants more IRS agents in large part to enforce his new scheme for government-run healthcare. Yet that’s a perfect example of what I modestly call Mitchell’s Law – politicians doing one bad thing (expanding the IRS) only because they did another bad thing (enacting a health care bill that made the tax code even more convoluted and punitive).

So instead of making the IRS bigger in response to a bad healthcare law, why not repeal that bad law and shrink the size of the IRS? Even better, why not junk the entire tax code so we can replace the IRS with a system that is honest and fair?

And if these big steps are not immediately feasible, at least cut the IRS budget so that awful laws are enforced in a less destructive manner.

This Center for Freedom and Prosperity video has additional details about the national nightmare we call the IRS.

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My New Year’s Resolution was to stop making fun of the Transportation Security Administration. Not because I changed my mind about the bureaucracy and its level of (in)competence, but rather because I felt as if I was taking candy from a baby. Kicking the TSA is just too easy.

But I can’t resist low-hanging fruit. I recently mocked the TSA for repeatedly failing to catch an undercover agent who carried a gun through the porno-scan machines.

Now it’s time to abuse the bureaucrats for another world-class blunder. A man recently got on a flight with three of the weapons that were used to hijack planes on 9-11. According to the New York Post.

A passenger managed to waltz past JFK’s ramped-up security gantlet with three boxcutters in his carry-on luggage — easily boarding an international flight while carrying the weapon of choice of the 9/11 hijackers, sources told The Post yesterday. The stunning breach grounded the flight for three hours Saturday night and drew fury from Port Authority cops, who accused the Transportation Security Administration of being asleep on the job. “In case anyone has forgotten, the TSA was created because of a couple boxcutter incidents,” said one PAPD source, referring to the weapons used by al Qaeda operatives to commandeer the jets they later slammed into the World Trade Center and the Pentagon on 9/11.

In an unusual display of honesty, a TSA bureaucrat basically admitted that passengers were not in danger because of other factors. Which raises an obvious question of why we maintain an expensive bureaucracy that has no impact other than to inconvenience the traveling public?

The TSA spokeswoman Davis insisted that the traveling public was not at risk. “There have been a number of additional security layers that have been implemented on aircraft that would prevent someone from causing harm with boxcutters,” she insisted. “They include the possible presence of armed federal air marshals, hardened cockpit doors, flight crews trained in self-defense and a more vigilant traveling public who have demonstrated a willingness to intervene.”

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Yesterday was the 129th anniversary of Charles Ponzi’s birthday. Normal people don’t celebrate the birth of con artists, but a tediously left-wing columnist at the Washington Post, Eugene Robinson, must be a big admirer of Charles Ponzi, because he seems very happy that people don’t want to “cut” entitlements.

According to the NBC/Wall Street Journal poll, three-quarters of Americans would oppose significant cuts in Medicare or Social Security.

The poll was dishonest, of course, since it was based on the Washington’s dishonest definition of budget cuts. In reality, the reforms that are being proposed would reduce the growth of spending. And I suspect that voters, if asked whether it is reasonable to have Medicare grow 5 percent each year rather than 7 percent each year, would provide more rational answers.

Heck, we already have good polling data showing that people support Social Security reform.

But public opinion is not the key issue. The bigger topic is whether anybody should be celebrating a government program that is actuarially bankrupt, particularly when it hurts minorities, penalizes job creation, and discourages savings.

But that’s just what some politicians are doing.

I’ve already posted a very funny cartoon about Bernie Madoff and Social Security, but hopefully this video has more substantive arguments for reform.

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As I’ve noted on previous occasions, I’m not a fan of Ben Bernanke and his actions at the Federal Reserve, though it is possible that QE2 may be the right policy (albeit for different reasons than publicly stated by the Fed Chairman).

I’ve had several people say to me, however, that it doesn’t make sense for the government to engage in an inflationary monetary policy because that will worsen the fiscal situation. Why inflate, after all, if it results in higher cost-of-living adjustments for Social Security recipients and higher pay for government bureaucrats?

My first response is to say that long-run fiscal policy almost surely is not a big (or even little) factor in monetary policy decisions. Central Banks tend to behave poorly for short-run reasons such as financing deficits (a problem in the developing world) or manipulating interest rates in hopes of goosing growth (a problem is all nations).

It goes without saying, of course, that a series of bad short-run policy decisions translates into bad long-run policy, which is why the dollar has lost 95 percent of its value since the Federal Reserve was created.

My second response is to tell folks that we should hope that long-run fiscal policy is not a factor in monetary policy. Because they are right that inflation leads to higher expenditures, but the government reaps a big windfall from higher tax revenue.

But don’t believe me. You can find this information in Table 3.1 on page 23 of the Economic and Budget Analysis section of Obama’s budget.

Addendum: Welcome, Instapundit readers. Since this is a depressing topic, you can see some Federal Reserve humor here, here, and here.

And if you want to really understand what wrong with the Fed, this is the video to watch.

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