Archive for the ‘Obama’ Category

Several years ago, I shared some analysis suggesting that voting for Obamacare resulted in about 25 Democrats losing their congressional seats in 2010. And since more Democrats presumably lost seats in 2012 and 2014 because of that costly and misguided scheme, it surely seems that expanding government’s role in health care was a net negative for the Democratic Party.

Being a contrarian, however, I then suggested in my analysis that Obamacare nonetheless might be a net plus for Democrats, at least in the long run. Simply stated, as more and more people get ensnared in the quicksand of government dependency, that creates an ever-growing bloc of voters who may think that it is in their interest to support politicians who advocate for bigger government.

Let’s expand on that issue today.

Some of my Republican friends (I’m willing to associate with all sorts of disreputable people) have been making the point that President Obama has crippled the Democratic Party.

And they have a compelling case. If you compare the number of Democrats in the House and Senate when Obama took office with the amount that there are today, it’s clear that the President has been very bad news his party.

I suppose a defender of the President somehow might argue that the losses for congressional Democrats would have been more severe without Obama, but that would be a huge intellectual challenge.

Perhaps even more important, there’s been a giant loss of Democratic state legislators during Obama’s tenure, with more than 900 seats going from Democrat control to Republican control.

That’s resulted in a huge shift in the partisan control of state legislatures. Which, by the way, has very important implications for Congress because of the redistricting that takes place every 10 years.

So it seems like Republicans are in a good situation. They control Congress and they control most of the states.

And if GOPers pick up the White House in 2016, it surely seems like that would be the icing on the cake for those who say Obama was bad news for the Democrats.

But now let me give some encouraging news for my Democrat friends (like I said, I consort with shady people).

First, Republican control doesn’t necessarily mean a shift away from big government. Indeed, we saw just the opposite during the Bush years.

Second, even if small government-oriented Republicans controlled Washington after the 2016 election, that might not change the nation’s long-run trend toward more dependency.

These are some of the issues I explore in this CBN interview.

The most relevant point in the interview, in my humble opinion, was the discussion about one-third of the way through the interview. I talked about the “ratchet effect,” which occurs when the statists expand the size and scope of government a lot and good policy makers then get control and reduce it by only a small amount.

Stay in that pattern long enough and you eventually become Greece (which is why I emphasized in the interview the need to reverse this trend with big systemic changes such as genuine entitlement reform).

One final point. Pat gave me an opportunity to brag about the Cato Institute at the end of the interview. It is nice to work at a think tank that cares solely about policy and not about partisan labels. So we criticize big-government Republicans just as much as we criticize big-government Democrats.

No wonder we’ve been identified as America’s most effective think tank.

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I don’t necessarily blame President Obama for seeking to politicize tragic mass shootings. His actions may be a bit unseemly, but also understandable if he truly believes that disarming law-abiding people is the best way to reduce carnage.

That being said, this charitable interpretation only applies if the President sincerely pushes his preferred policies.

Yet Charles Krauthammer, writing for National Review, points out that there’s a remarkable disconnect. The President constantly talks about the need to enact “common-sense gun-safety laws,” but he never tells us what those laws would be.

Within hours, President Obama takes to the microphones to furiously denounce the NRA and its ilk for resisting “commonsense gun-safety laws.” His harangue is totally sincere, totally knee-jerk, and totally pointless. …Nor does Obama propose any legislation. He knows none would pass. But the deeper truth is that it would have made no difference. …notice, by the way, how “gun control” has been cleverly rechristened “commonsense gun-safety laws,” as if we’re talking about accident proofing.

I’m not someone can be simultaneously sincere and evasive, but let’s set that aside.

Dr. Krauthammer explains that Obama engages in empty rhetoric because his real goal is truly radical and impractical.

the only measure that might actually prevent mass killings has absolutely no chance of ever being enacted. …As for the only remotely plausible solution, Obama dare not speak its name. He made an oblique reference to Australia, never mentioning that its gun-control innovation was confiscation… Obama can very well say what he wants. If he believes in Australian-style confiscation — i.e., abolishing the Second Amendment — why not spell it out? Until he does, he should stop demonizing people for not doing what he won’t even propose.

So why doesn’t the President say what he believes?

Is it because he respects the Constitution? (it was hard to write that sentence without laughing)

Is it because he knows it is political poison? (a rather plausible answer)

Is it because he knows it will lead to massive civil disobedience? (if Obamacare is any indication, he doesn’t care whether laws actually work)

I’m not sure what motivates the President, but this very clever video from Reason TV shows what would be needed to confiscate guns.

As we’ve come to expect from the folks at Reason, an excellent job of combining humor and reality. Sort of a mix of this satirical video and this fact-based video.

By the way, since many statists think Australia is a role model for gun confiscation. let’s take a closer look at that issue.

Here are two charts from the guys at Powerline Blog. The first chart shows the big drop in murder rates in the United States during a period when gun ownership was increasing and citizens enjoyed greater freedoms such as concealed carry.

Now look at the data on the murder rate in Australia, with special attention to the change (actually lack of change) following the 1996 gun ban.

John Hinderaker helpfully explains what is shown in these charts.

Whatever Australia did, it was not as successful in reducing homicides as what we have done here in the U.S. This chart comes from the Australian government. Note that there was no apparent reduction in homicides after the gun confiscation/ban/buyback of 1996. Years later, the homicide rate declined slightly, as it did throughout the developed world… But nowhere near as sharply as the homicide rate has declined here in the United States since the mid-1990s. Whatever we have done in the U.S., whether or not you credit more liberal carry laws and more widespread ownership of handguns, it has worked far better than the approach to homicide that has been taken in Australia

There are lots of factors that determine gun violence, of course, so I’m not hopeful many statists will be convinced by John’s comparison.

But I do hope that this evidence, when combined with all the other research on gun ownership and crime, may lead more middle-of-the-road people to the right conclusions.

In the meantime, our leftist friends can rely on their version of social science research.

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As a libertarian, I sometimes make the moral argument for small government. If it’s wrong to steal other people’s income or property, then shouldn’t it also be wrong to use the coercive power of government to take their income or property?

Defenders of the welfare state respond by saying it’s “the will of the people,” but the libertarian counter-response is to point out that 51 percent of the people shouldn’t be allowed to pillage 49 percent of the people.

Indeed, as Walter Williams has cogently explained, that’s why America’s Founding Fathers were such strong opponents of what they viewed as “untrammeled majoritarianism.”

But since I realize that some people aren’t persuaded by philosophical arguments, much of my work focuses on the practical or utilitarian case for small government.

That’s why I repeatedly show how market-oriented jurisdictions out-perform statist nations.

I’ve even challenged my left-wing friends to come up with a single example of a successful big-government economy.

Needless to say, the only response is the sound of chirping crickets.

Now let’s add one more piece of evidence to our arsenal. I’ve already shared lots of data and information when making the case that Obama’s big-government policies have not worked, but, in the spirit of Mae West, there’s no such thing as too much proof that statism doesn’t work.

Especially when the evidence comes from the Obama Administration!

Here are two damning charts from a just-released Census Bureau report on income and poverty in the United States.

The first chart shows that median household income, adjusted for inflation, is nearly $1300 lower today than it was when Obama took office.

That’s a horrible outcome, particularly since the recession ended back in the summer of 2009.

By the way, I agree with critics who say that the household income data is a less-than-ideal measure of prosperity. That being said, it’s still a benchmark that allows us to see how well the economy does in some periods compared to others.

And if you look at the above chart, you clearly can see that households obviously did comparatively well during the market-oriented Reagan and Clinton eras.

Now let’s look at some data that should be very compelling for leftists who claim to be especially concerned about the less fortunate. Here are the latest Census Bureau numbers on the number of people living in poverty as well as the overall poverty rate.

As you can see, there’s been no progress during the Obama years, even if you absolve him of any blame for the deteriorating numbers caused by the recession.

By the way, I can’t resist pointing out that this chart shows how the poverty rate was declining until the so-called War on Poverty started in the mid-1960s.

And if you can click here to learn more about how bad government policies have trapped people in poverty. And if you’re interested in several hundred years of data on poverty and government policy, click here.

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One of the reasons I repeatedly compare market-oriented countries with statist nations is to show that even minor differences in growth, if sustained over time, can have enormous impact on living standards for ordinary people.

And that’s why we should be very worried that America’s economy is sputtering. During the 138 years between 1870 and 2008,  our economy expanded by an average of about 3 percent per year, but now it seems like 2 percent growth is the “new normal.”

That may not sound like a big difference, but it takes more than 35 years to double economic output if an economy grows 2 percent annually.

With 3 percent yearly growth, by contrast, GDP doubles in less than 25 years.

The Wall Street Journal understands that we should be worried about the recent slowdown. Citing new research from the Joint Economic Committee, the WSJ opines on the high cost of Obamanomics.

…the American economy has become a slow-growth machine. That’s the story underscored by the annual government revisions in historical GDP that accompanied the second-quarter report. The news, which most Americans have long felt in slow-growing wages, is that the worst expansion in 70 years has been even weaker than we thought. …Since the recession ended in June 2009, the economy has grown at an annual rate of about 2.1%. That’s 0.6-percentage points worse than even during the much-maligned George W. Bush expansion.

And it’s far below the economic performance America enjoyed during the more market-friendly policies of Ronald Reagan and Bill Clinton.

The WSJ compares Obama’s six-year “expansion” with the growth of the economy after six years of expansion in the 1980s and 1990s.

Real GDP growth averaged 4.6% in the first six years of the Reagan expansion, and more than 3.6% a year in the first six years of the George H.W. Bush-Bill Clinton expansion… Had the current expansion been as robust as the average expansion since 1960, GDP would be some $1.89 trillion larger today, according to Congress’s Joint Economic Committee.

Wow, nearly $1.9 trillion in foregone economic output.

No wonder median household income is lower than when Obama took office.

And no wonder employee compensation has been stagnant.

So why is the economy so moribund?

There’s no great mystery about why growth has been so slow. The natural dynamism of the U.S. economy has been swamped by waves of bad policies. Unprecedented new regulation has hamstrung finance, health care, the coal and power industries, for-profit education, and so much more. …Higher taxes—their anticipation and then the reality in 2013—slowed risk-taking and investment. Profits fell in the first quarter of 2013 thanks to the tax cliff, and growth for 2013 was a mere 1.5% after the latest revisions.

Amen. I’ve made this same point, over and over and over again.

Simply stated, prosperity and big government are not very compatible.

Now let’s close with a bit of optimism. Yes, the aggregate burden of government has increased in the United States in recent years. But we’re nonetheless the 12th-freest economy in the world. based on a comprehensive analysis of fiscal policy, regulatory policy, trade policy, monetary policy, and the rule of law.

Sure, that’s down from being the 7th-freest economy in 2008 and the 3rd-freest economy in 2001, yet we’re still ahead of Japan (#23), Sweden (#32), France (#58), Greece (#84), and China (#115).

And while the overall size and scope of government has increased in the past six years, we’ve actually enjoyed a small bit of progress in terms of reducing government spending relative to the economy’s productive sector.

So while I sometimes sound like a Cassandra about what’s been happening and where we’re heading, the good news is that we still have time to reverse course.

Our most pressing need is genuine entitlement reform, and there’s a non-trivial chance that may happen in 2017. So no need to abandon ship quite yet.

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I’m not a big fan of Obamanomics. We’re going through the weakest recovery since the Great Depression. Income and wages have been stagnant, particularly when compared to previous expansions. And while the unemployment rate has finally come down, that’s in part a consequence of people dropping out of the labor force.

The net result is that our nation’s output is far lower than it would be if economic performance had simply matched the average for previous business cycles. And that translates into foregone income for American households.

Yet the President seems to think that he deserves applause for his economic legacy. Here are some excerpts from an AP story in the Oregonian.

President Barack Obama is not shy about defining his achievements and casting them in the most positive light…on Monday Obama offered a rare glimpse at how he wants history to judge his presidency, letting the “L” word cross his lips as he touted the U.S. economic recovery… “Obviously there are things that I’ve been proud of,” he said. He first cited the economic crisis he faced upon assuming office in 2009. “It was hard, but we ended up avoiding a terrible depression,” he said.

You won’t be surprised to learn that I have a different perspective. I was on CNN earlier this week and expressed my disappointment with the President’s policies and their impact on the nation.

To be fair, I’m focusing in the interview on the strength (or lack thereof) of the recovery. Obama, by contrast, wants credit for the fact that the 2008 recession didn’t turn into a depression.

Needless to say, there aren’t alternative universes where we can see what would have happened if Obama didn’t get to the White House. And it probably wouldn’t matter even if there were alternative universes since neither McCain nor Romney had a substantially different vision anyhow.

But here’s why I think it’s absurd for Obama to take credit for avoiding a depression. Simply stated, it takes a lot of mistakes, on a sustained basis, to produce a depression.

And that’s precisely what we got from Presidents Hoover and Roosevelt. Thanks to protectionist policies, higher tax rates, a bigger burden of government spending, and massive intervention in markets, a normal downturn was magnified and extended to last an entire decade.

So I suppose we could give Obama credit for not being as bad as Hoover and Roosevelt, but that’s an extreme case of damning with faint praise. And even faint praise is probably unwarranted since Obama wanted more statism and was stopped by the 2010 election.

The bottom line is that Obama wants people – based on zero evidence – to believe a depression would have occurred naturally in the absence of his policies.

The more realistic assessment is that Obama’s policies have been a net negative for the economy. But as I remarked in the interview, I’m not making a partisan argument. Bush’s policies also were a net negative.

By comparison, you can look at Reagan and Clinton for examples of Presidents who increased economic freedom during their reigns.

P.S. Since today’s topic is the economy, here’s a grim reminder of one of the reasons why growth has been relatively anemic.

The folks at Mercatus have put together a pictograph on the regulatory burden.

Something to keep in mind when considering the degree to which red tape is constraining growth and entrepreneurship.

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President Obama recently took part in a poverty panel at Georgetown University. By D.C. standards, it was ideologically balanced since there were three statists against one conservative (I’ve dealt with that kind of “balance” when dealing with the media, as you can see here and here).

You won’t be surprised to learn that the President basically regurgitated the standard inside-the-beltway argument that caring for the poor means you have to support bigger government and more redistribution.

Many observers were unimpressed. Here’s some of what Bill McGurn wrote for the Wall Street Journal.

The unifying progressive contention here is the assertion that America isn’t “investing” enough in the poor—by which is meant the government isn’t spending enough. …President Obama…went on to declare it will be next to impossible to find “common ground” on poverty until his critics accept his spending argument.

I think this argument is nonsense. We’re spending record amounts of money on means-tested, anti-poverty programs, yet the poverty rate hasn’t come down since the “War on Poverty” started.

Indeed, you can make a very persuasive case that government intervention has backfired since the poverty rate was falling before the federal government got involved. Yet now that Washington is paying people to be poor, progress has ground to a halt.

In his column, though, McGurn pointed out that it’s also important to look at how money is spent.

…it’s simply false to say that Republicans won’t make the public “investments” needed to help the poor. In New York in the 1990s, for example, Republican Mayor Rudy Giuliani not only invested in the police but sent them into the areas where they were most needed—primarily poor and minority neighborhoods. In too many other Democratic cities, by contrast, mayors in effect cede whole neighborhoods to the thugs and gangs. Republicans are also willing to spend on education. What they are not willing to do is dump ever more dollars down the same rathole of big-city public school systems that function more as jobs programs for city bureaucrats and members of the teachers unions.

And he challenged the view of some GOPers that government spending will promote stable families.

…it would similarly be good for Republicans to address the hard implications of their own message. If, for example, broken families are indeed driving modern American poverty, is the only answer despair—or praying for some miracle? And if you believe the government can’t help but bungle something as basic as food stamps, shouldn’t you bring this same skepticism to a “conservative” program that enlists the government to, say, discourage divorce or promote chastity?

I certainly agree with that point. President Bush’s program to encourage marriage certainly wasn’t a success.

But let’s focus on the present. Here’s some of what Thomas Sowell said about Obama’s performance. As you can see, he was not impressed with the President’s abuse of the English language.

One of the ways of fighting poverty, [the President] proposed, was to “ask from society’s lottery winners” that they make a “modest investment” in government programs to help the poor. …But the federal government does not just “ask” for money. It takes the money it wants in taxes, usually before the people who have earned it see their paychecks. …It seizes what it wants by force. If you don’t pay up, it can take not only your paycheck, it can seize your bank account, put a lien on your home and/or put you in federal prison. So please don’t insult our intelligence by talking piously about “asking.”

And Sowell closes his column by raising the fundamental question of whether it makes sense to let government consume a greater share of economic output.

The fact that most of the rhetorical ploys used by Barack Obama and other redistributionists will not stand up under scrutiny means very little politically. After all, how many people who come out of our schools and colleges today are capable of critical scrutiny? When all else fails, redistributionists can say, as Obama did at Georgetown University, that “coldhearted, free-market capitalist types” are people who “pretty much have more than you’ll ever be able to use and your family will ever be able to use,” so they should let the government take that extra money to help the poor. …The real question is whether the investment of wealth is likely to be done better by those who created that wealth in the first place or by politicians. The track record of politicians hardly suggests that turning ever more of a nation’s wealth over to them is likely to turn out well.

Amen. The academic evidence is very strong that nations with large public sectors suffer from economic anemia.

And since the poor are most dependent on growth to get a good foothold on the economic ladder, Prof. Sowell surely is right when he states that it’s better to leave resources in the productive sector of the economy. Moreover, he’s explained in the past that the welfare state certainly doesn’t help the poor.

P.S. Since today’s column ended with a discussion about whether government should be bigger or smaller, it’s appropriate to share this bit of humor concocted by the Princess of the Levant.

If you’re a new reader and don’t get the joke, Richard is famous for the Rahn Curve, though I think he overstates the growth-maximizing size of government. As such, I argue that we need to impose my (not nearly as famous) Golden Rule of spending restraint.

P.P.S. Shifting back to the topic of poverty and redistribution, we should all be very concerned that the Obama White is trying to manipulate the definition of poverty in order to justify ever-larger amounts of redistribution and dependency. And you won’t be surprised to learn that the OECD supports this dishonest and misleading initiative.

P.P.P.S. Here’s an image that accurately summarizes the left’s misguided view of redistribution.

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Way back in 2010, I shared two very depressing numbers to illustrate how Obama’s policies were creating “regime uncertainty.”

I shared data on the cash reserves of companies and suggested it was bad news that those firms thought it made more sense to sit on money rather than invest it.

I also shared numbers on the excess reserves that banks were keeping at the Federal Reserve and speculated that this was because of a similarly dismal perspective about economic prospects.

At the time, I figured that those numbers eventually would get better. But I was wrong.

Companies are still sitting on the same about of cash and banks have actually increased the amount of money they have parked at the Federal Reserve.

Now let’s look at some more data that doesn’t reflect well on Obamanomics.

The Federal Reserve Bank of Cleveland has some very discouraging analysis about worker compensation.

…real wages have barely risen—real compensation per hour has risen only by 0.5 percent, much less than at this point in past recoveries. The lack of strong wage growth has been one factor that has held down the growth of income, consumer spending, and the recovery. …Some longer-term changes in the economy have likely played a larger role in depressing real wage growth. …Productivity growth in the nonfarm business sector has averaged only 1.46 percent since 2004 and 0.85 percent since 2010. As the growth of labor productivity is a key determinant of real wage growth in the long run, the slowdown of productivity has probably helped to depress wage growth.

And here’s a chart from the article.

The brown line at the bottom is what’s been happening under Obamanomics. As you can see, compensation has basically been unchanged for the past five years. In other words, living standards have stagnated.

The Cleveland Fed data shows dismal earnings and productivity data for all Americans. And it’s important to understand how those numbers are related.

Some folks in Washington think that companies should act like charities and give workers lots of money simply because that’s a nice way to behave.

In the real world, though, workers get paid on the basis of how much they produce. So when productivity numbers are weak, as the Cleveland Fed points out, you also get weak data for worker compensation.

But now let’s dig even deeper and ask what determines productivity numbers. There are many factors, of course, but saving and investment are very important. In other words, capital formation. Simply stated, you need people to set aside some of today’s income to finance tomorrow’s growth.

And growth, as measured by inflation-adjusted changes in output, is entirely a function of population growth and productivity growth.

So the bottom line is that workers will only earn more if they produce more. But they’ll only produce more if there’s more saving and investment.

And this is why Obama’s policies are so poisonous. His tax policy is very anti-saving and anti-investment. And the increases in the regulatory burden also make it less attractive for investors and entrepreneurs to put money at risk.

Obama thinks he’s punishing the “rich,” but the rest of us are paying the price.

Now let’s look specifically at American blacks.

Deroy Murdock explains in National Review that they should feel especially angry at the gap between Obama’s rhetoric and performance.

Republicans should ask black Americans for their votes from now through November 2016. They should do so by challenging blacks to ask themselves an honest question: “What, exactly, have you gained by handing Obama 95 percent of your votes in 2008 and 93 percent in 2012?”

Deroy then lists a bunch of depressing statistics on what’s happened since 2009.

Here are the numbers that I think are most persuasive.

U.S. labor force participation has declined during that same period, from 65.7 to 62.7 percent. For blacks in general, …dipping from 63.2 to 61.0 percent of available employees in the work pool. For black teenagers, however, this number deteriorated — from 29.6 to 25.7 percent. The percentage of Americans below the poverty line inched up, the latest available Census Bureau data found, from 14.3 to 14.5 percent overall — between 2009 and 2013. For black Americans, that climb was steeper: The 25.8 percent in poverty rose to 27.2 percent. Real median household incomes across America retreated across those years, from $54,059 to $51,939. …such finances also reversed for black Americans, from $35,387 to $34,598. …Home ownership slipped from 67.3 percent of Americans in the first quarter of 2009 to 64.0 in the fourth quarter of 2014. For blacks, that figure slid from 46.1 to 42.1 percent.

Here’s Deroy’s bottom line.

Obama has betrayed blacks as a community, failed Americans as a people, and enfeebled the United States as a nation.

To be sure, it’s not as if Obama wanted to hurt blacks. He just doesn’t understand or doesn’t care that statist policies undermine economic performance.

And when you hurt economic growth, the folks at the bottom rungs of the economic ladder generally suffer the most, and that’s why there are so many grim statistics about the economic health of black America.

The good news is that we know how to solve the problem. The bad news is that Obama is in the White House until January 2017.

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