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Posts Tagged ‘Obama’

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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After writing about such an emotionally charged issue yesterday, let’s change the topic and enjoy a bit of levity.

I’ve shared several examples of anti-libertarian humor, most of which are fairly clever because they seize on something that is sort of true and take it to the preposterous extreme.

Here’s something with a different flavor. It basically mocks libertarians for being naively idealistic youngsters who then “grow up” and stop being libertarian.

There’s enough truth to this that I laughed, though I think the trait of being overly idealistic probably applies to all politically minded young people.

I remember thinking “let’s abolish Social Security overnight” in my younger years, whereas now I think we need to transition to a system of personal retirement accounts.

Is this a sign that I’ve “grown up” and that I’m no longer libertarian, or is it simply a recognition that progress sometimes has to be incremental if we want to achieve libertarian goals?

I think the latter, so I don’t think the image is accurate. But it’s still funny.

Now let’s share some pro-libertarian humor, adding to an unfortunately small collection (here, here, and here).

Though I guess it’s only pro-libertarian by process of elimination because it describes what it’s like when people other than libertarians are in charge of government policy.

And since there’s plenty to criticize when looking at both Republicans and Democrats, you can see why this is appealing.

Now let’s close with some humor produced by libertarians. The always-clever crowd at Reason TV snagged an interview with President Obama. Sort of, keeping in mind that this video was released on April 1.

I especially like the jabs at Biden at the end.

And since I shared my collection of Obama jokes at the bottom of this recent post, let’s take this opportunity to recycle (and re-enjoy) these examples of Biden humor.

We have this caption contest, which led to a clever winning entry.

Here’s an amusing joke (with the naughty word redacted), and the late-night talk shows have produced some good one liners about the Veep hereherehere, and here.

And let’s not forget the laughs we all enjoyed when he asserted that paying higher taxes was patriotic.

Last but not least, Biden is (in)famous for his self-defense advice and he also featured in a few of these amusing posters.

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Earlier this year, President Obama proposed a budget that would impose new taxes and add a couple of trillion dollars to the burden of government spending over the next 10 years.

The Republican Chairmen of the House and Senate Budget Committees have now weighed in. You can read the details of the House proposal by clicking here and the Senate proposal by clicking here, but the two plans are broadly similar (though the Senate is a bit vaguer on how to implement spending restraint, as I wrote a couple of days ago).

So are any of these plans good, or at least acceptable? Do any of them satisfy my Golden Rule?

Here’s a chart showing what will happen to spending over the next 10 years, based on the House and Senate GOP plans, as well as the budget proposed by President Obama.

Keep in mind, as you look at these numbers, that economy is projected to expand, in nominal terms, by an average of about 4.3 percent annually.

The most relevant data is that the Republican Chairmen want spending to climb by about $1.4 trillion over the next decade (annual spending increases averaging about 3.3 percent per year), while Obama wants spending to jump by about $2.4 trillion over the same period (with annual spending climbing by an average of almost 5.1 percent per year).

At this point, some of you may be wondering how to reconcile this data with news stories you may have read about GOP budgets that supposedly include multi-trillion spending cuts?!?

The very fist sentence in a report from The Hill, for instance, asserted that the Senate budget would “cut spending by $5.1 trillion.” And USA Today had a story headlined, “House GOP budget cuts $5.5 trillion in spending.”

But these histrionic claims are based on dishonest math. The “cuts” only exist if you compare the GOP budget numbers to the “baseline,” which is basically an artificial estimate of how fast spending would grow if government was left on auto-pilot.

Which is sort of like a cad telling his wife that he reduced his misbehavior because he only added 4 new mistresses to his collection rather than the 5 that he wanted.

I explained this biased and deceptive budgetary scam in these John Stossel and Judge Napolitano interviews, and also nailed the New York Times for using this dishonest approach when reporting about sequestration.

Interestingly, the Senate plan tries to compensate for this budgetary bias by including a couple of charts that properly put the focus on year-to-year spending changes.

Here’s their chart on Obama’s profligate budget plan.

And here’s their chart looking at what happens to major spending categories based on the reforms in the Senate budget proposal.

So kudos to Chairman Enzi and his team for correctly trying to focus the discussion where it belongs.

By the way, in addition to a better use of rhetoric, the Senate GOP plan actually is more fiscally responsible than the House plan. Under Senator Enzi’s proposal, government spending would increase by an average of 3.25 percent per year over the next 10 years, which is better than Chairman Price’s plan, which would allow government spending to rise by an average of 3.36 percent annually.

Though both Chairman deserve applause for having more spending restraint than there was in the last two Ryan budgets.

But this doesn’t mean I’m entirely happy with the Republican fiscal plans.

Even though the two proposals satisfy my Golden Rule, that’s simply a minimum threshold. In reality, there’s far too much spending in both plans, and neither Chairman proposes to get rid of a single Department. Not HUD, not Education, not Transportation, and not Agriculture.

But the one thing that got me the most agitated is that the House and Senate proposals both indirectly embrace very bad economic analysis by the Congressional Budget Office.

Here’s some language that was included with the House plan (the Senate proposal has similar verbiage).

CBO’s analysis…estimates that reducing budget deficits, thereby bending the curve on debt levels, would be a net positive for economic growth. …The analysis concludes that deficit reduction creates long-term economic benefits because it increases the pool of national savings and boosts investment, thereby raising economic growth and job creation.

But here’s the giant problem. The CBO would say – and has said – the same thing about budget plans with giant tax increases.

To elaborate, CBO has a very bizarre view of how fiscal policy impacts the economy. The bureaucrats think that deficits are very important for long-run economic performance, while also believing that the overall burden of government spending and the punitive structure of the tax code are relatively unimportant.

And this leads them to make bizarre claims about tax increases being good for growth.

Moreover, the bureaucrats not only think deficits are the dominant driver of long-run growth, they also use Keynesian analysis when measuring the impact of fiscal policy on short-run growth. Just in case you think I’m exaggerating, or somehow mischaracterizing CBO’s position, check out page 12 of the Senate GOP plan and page 37 of the House GOP plan. You’ll see the “macroeconomic” effects of the plans cause higher deficits in 2016 and 2017, based on the silly theory that lower levels of government spending will harm short-run growth.

So hopefully you can understand why GOPers, for the sake of intellectual credibility, should not be citing bad analysis from the CBO.

But even more important, they should stop CBO from producing bad analysis is the future. The Republicans did recently replace a Democrat-appointed CBO Director, so it will be interesting to see whether their new appointee has a better understanding of how fiscal policy works.

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I’m not reflexively opposed to executive orders and other unilateral actions by the White House. A president and his appointees, after all, have a lot of regulatory authority.

This is because, for better or worse, many of the laws approved in Washington basically express a goal and identify some tools. It’s then up to the relevant agency or agencies to promulgate regulations to enforce and implement those tools in order to supposedly achieve those goals.

But here’s the catch. The executive branch has to make at least a semi-plausible case that any given action is consistent with the law.

And the problem with this White House is that it has been using regulations and executive orders to change laws, thwart laws, and ignore laws.

There have been several instances of the White House arbitrarily deciding to ignore or alter major parts of Obamacare.

The Obama Administration has decided a law giving the federal government authority over the “navigable waterways” of the United States also means the federal government can regulate ponds on private land.

President Obama’s Treasury Department not only used a regulation to force American banks to put foreign law above American law, it also dealt with the unworkability of FATCA by creating an intergovernmental agreement mechanism that isn’t even mentioned in the law.

And don’t forget, regardless of what you think about immigration, the President also unilaterally decided to grant amnesty to millions of illegal aliens.

And that issue served as a springboard for a discussion with Fox News about a possible White House scheme to unilaterally impose big tax hikes on the business sector.

I’m surprised that I didn’t splutter with outrage during the interview. You don’t need to be a constitutional scholar, or even a lawyer, to be able to read Article 1, Section 7, of the Constitution.

And while Obama may not have a problem with the notion of America becoming a banana republic, we actually have co-equal branches of government, each with specific roles and powers.

Here’s the relevant text from the Constitution, as contained in the official repository at the National Archives.

All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills. Every Bill which shall have passed the House of Representatives and the Senate, shall, before it become a Law, be presented to the President of the United States.

Maybe I’m not very careful reader, but I don’t see anything in that passage about “unless President Obama feels otherwise” or “with the exception of unilateral tax hikes on companies.”

Though I imagine Ruth Bader Ginsburg could rationalize that such hidden clauses actually exist.

For additional background, here’s some of what The Hill has reported.

The Obama administration is not ruling out using executive powers to also address the tax code. With Senate Democrats openly pushing the administration to take its own action on the tax front, the White House is not shooting down the idea. …Earnest noted that the president has told lawmakers what he is interested in on taxes — closing loopholes for the wealthy and corporations… Earnest said he was not “ruling anything in or out,” when it came to specific executive steps. “This is related to the president’s ability to use his executive authority to do what he thinks is the right thing for the country,” he said.

By the way, my opposition to unilateral changes is based on principle.

So I’d be opposed even if a pro-freedom President wanted to suspend bad parts of the tax code or use “prosecutorial discretion” to provide de facto amnesty to taxpayers who refused to comply with an immoral part of the tax code, such as the death tax.

Though you won’t be surprised to learn that Obama isn’t contemplating any good unilateral changes. Instead, the policies being examined would exacerbate double taxation and extend worldwide taxation.

So we may get the worst of all worlds. Unilateral action on taxes that makes a mockery of our Constitution and rule of law while also making an already terrible business tax system even worse.

P.S. The United States only ranks #19 in an international comparison of what nations do a good job of upholding the rule of law. Makes you wonder where we’ll rank by the time Obama leaves office.

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What does World War I have to do with Obamanomics?

There’s no real connection, of course, but it did give me an opportunity to present a good analogy. At a conference in London last week, I was discussing with some folks the state of the American economy and the role of public policy.

I was trying to explain what’s happened in the past few years, describing the avalanche of bad policy last decade, culminating with the faux stimulus in 2009 and the enactment of Obamacare in 2010.

I then said that Obama’s efforts to impose further statism have been largely stymied, particularly after the Tea Party election of 2010. There have been lots of skirmishes in recent years, to be sure, with Obama winning a few (such as the recent imposition of “net neutrality” regulations on the Internet) but also losing a few (such as spending restraint caused by policies like the sequester).

But the fact that Obama hasn’t been able to make additional “progress” is not really a victory. It’s simply a stalemate.

And that’s where the World War I analogy fits. As I was trying to get across my point, it occurred to me that it’s vaguely like World War I.

When the war started, the Germans gained considerable ground, overrunning much of Belgium and a lot of territory in northwestern France. That’s akin to Obama’s victories in 2009-2010.

But then the period of trench warfare began and neither side made much progress. And that’s a good description of what’s been happening in recent years in Washington.

This is a good news-bad news situation. To continue with my analogy, the good news is that Obama isn’t conquering more territory. The bad news is that we aren’t pushing Obama back into Germany and reclaiming territory.

And so long as we’re in this stalemate, it’s unlikely that we’ll enjoy robust economic growth. And that’s our topic for today.

In my actual speech, I dusted off my charts based on Minneapolis Fed data, and updated them to compare today’s weak recovery with what’s happened during previous business cycles. And I specifically focused on a comparison of the very strong growth of the Reagan years with the lackluster growth of the Obama years.

But it’s a pity that my speech wasn’t one week later, because I’ve just seen some really good contributions on the same topic from economists Robert Higgs and John Taylor.

Writing for the Independent Institute, Higgs looks at what’s been happening with a key measure of our prosperity.

Arguably the best single, currently available measure of the entire public’s payoff from economic activity is real disposable income per capita. This is the average amount per annum that Americans receive in exchange for the use of their labor and other input services, after taxes, corrected for changes in the purchasing power of the dollar. …this measure of economic well-being has scarcely increased at all since 2007.

Higgs also prepared a table to make it easier to compare performance of this important variable during various business cycles.

As you can see, the current “recovery” has been dismal compared to previous periods.

And here’s his analysis of why we’re suffering from sub-par growth.

These figures demonstrate that even though the rate of increase has varied substantially in the past, it has never remained so low as it has been in recent years. Even during the decade of so-called stagflation from the early 1970s to the early 1980s, real disposable income per capita grew more than twice as fast as it has grown in the past seven years. In the past, recessions were always followed by relatively brisk growth during the first several years of the ensuing recovery. Such has not been the case this time. Nor do forecasters anticipate any such surge of growth in the future. Might it be that the state’s burdens loaded onto the private producers of wealth—taxes, regulations, uncertainties, intrusions of all sorts, including demands for elaborate reports, asset seizures, and threats of felony prosecution for completely innocent and harmless actions—have finally become the “last straw” for these long-suffering camels? …the current situation is clear enough. The U.S. economy, though not yet completely stagnant, has made little headway for more than seven years, and there is little reason to foresee any great change in this regard.

Returning to my analogy, Higgs is basically saying that we’ll be mired in trench warfare for the foreseeable future.

Not exactly a rosy projection.

Now let’s look at the analysis of Professor John Taylor of Stanford University. He starts by walking through a timeline of the current “recovery.”

At the time of the first anniversary of current recovery in 2010, it showed clear signs of weakness compared to the recovery from the recessions in the early 1980s and from all other deep recessions in American history.  …By the recovery’s second anniversary in 2011, it was weak for long enough that I called it “a recovery in name only, so weak as to be nonexistent.” …By the recovery’s third anniversary in 2012, it was now the worst recovery from a deep recession in American history. …By the recovery’s fourth anniversary in 2013, few disputed any more that it was unusually weak and disappointing.  …By the recovery’s fifth anniversary, we were so far away from the recession that linking the terrible performance to the recession became increasing far-fetched.

Professor Taylor has a couple of charts of his own that bolster his argument.

Here’s a comparison of quarterly growth during the Obama recovery and Reagan recovery.

If you’re keeping score, Reagan’s economy out-performed Obama’s economy (often by a very wide margin) in 19 out of 22 quarters.

If this was a boxing match, it would have been stopped long ago.

Taylor also looks at the performance of the labor market during the Obama recovery and Reagan recovery.

Once again, there’s no comparison. During the Reagan years more people were working and adding to the productive capacity of the nation.

During the Obama years, by contrast, the most optimistic assessment is that we’re treading water.

Here’s more of his analysis about the ongoing stagnation.

With the recovery now approaching its sixth anniversary, there is more optimism that we are finally coming out the excruciating slow growth. There is also some wishful thinking that the drop of people out of the labor force—which has made the unemployment rate come down—is due to demographic factors not the slow growth itself. And we are not as bad as Europe. But as these charts show there is still not much in this recovery to write home about. Growth over the four quarters of 2014 looks to average only 2.2% compared with 4.4% in the corresponding quarters of the 1980s recovery. And as of January 2015 the employment-to-population ratio is still lower than at the start of the recovery.

So what’s the bottom line?

To be blunt, you can’t make America more like Europe and then be surprised that our economy isn’t firing on all cylinders.

Returning to our analogy, we need to defeat the enemy of statism and reclaim our lost territory.

But that won’t happen until 2017 at the earliest. And it’s possible it will never happen, particularly if we don’t implement genuine entitlement reform.

P.S. The bad news is that we’re becoming more like Europe. The good news is that we’re not there yet. Our overall burden of government has expanded, but we still have considerably more economic liberty than the average European nation. And that helps to explain why our recovery (even though anemic by American standards) is far more impressive than what’s been happening across the Atlantic.

P.P.S. Based on insightful analysis from Thomas Sowell, John Mackey, and Ronald Reagan, it may have been more accurate (albeit snarky and inappropriate) to have used a World War II example, with Obama’s first two years being akin to the Nazi blitzkrieg and the conquest of France, and recent years being akin to the period between the Battle of Britain and D-Day.

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While I normally focus on jaw-dropping examples of hypocrisy by politicians, I realize that our beloved leaders also can be absurdly brazen in their exaggerations, deceptions, and prevarications.

But sometimes you can’t help but be shocked by their chutzpah.

Sort of like the time back in 2010 that a Greek politician issued an ultimatum that his country should get a giant bailout without taking the necessary steps to rein in bureaucratic bloat.

But nothing compares with Obama’s recent claim that his opponents are trying to “bamboozle” voters.

President Obama, in a fiery speech to Democrats Friday, accused Republicans of trying to “bamboozle folks,” saying their policies on middle-class issues did not reflect their lofty talk about helping ordinary Americans. …Obama went on to lambast Republicans for their opposition to his healthcare law… “Their grand predictions of doom and gloom and death panels haven’t come true,” Obama told the roomful of Democrats. “The sky hasn’t fallen. Chicken Little is quiet.”

Given the ongoing series of Obamacare disasters, I think there’s a strong case to be made that the American people have suffered some doom and gloom.

But I’m more amazed that the President, while defending his health plan, actually had the gall to accuse others of trying to “bamboozle.”

This from the President who prevaricated when he said people could keep their doctor.

This from the President who dissembled when he said health policies would be $2500 cheaper.

This from the President who lied when he said people could keep their health plans.

This from the President who took liberties with the truth when asserting that a new entitlement would be fiscally responsible.

I could continue, but you get the point. Virtually every claim he made about Obamacare has turned out to be a falsehood, yet he wants to accuse others of bamboozling. Amazing.

Now let’s shift to another example of the Obama Administration doing something really amazing. I wouldn’t put this in the hypocrisy category of the chutzpah category.

I’m not sure if there are words that suffice, so let’s just look at this tweet from an official State Department twitter account. It’s criticizing ISIS for raising taxes on cell phone service.

I’m sure ISIS deserves lots of criticism for many things. And I certainly don’t object to nailing them for tax hikes.

But what’s astounding is that the Obama bureaucrats didn’t bother to do the slightest bit of research. Had they done their homework, they would have realized they were throwing boulders in a glass house.

As anyone with a cell phone bill knows, phone taxes in America are significantly higher than what ISIS is charging (1000 Syrian Pounds every two months breaks down to about $2.75 per month). In fact, cell phone taxes in America make up 17 percent of monthly bills on average, while in some states it totals as high as 34 percent—charges which can easily run ten times ISIS’ monthly fee.

Heck, let’s set aside the example of cell phone taxes and look at the big picture. The American people are pillaged by higher taxes over and over again and we also get crappy government in exchange.

So if paying taxes for “poor service” makes a government illegitimate, I guess that means the State Department thinks the President should resign.

Gee, who knew that there were rabid libertarians working for this Administration.

P.S. There have been other “libertarian moments from Obama and his people, however insincere.

We have a president who thinks the government shouldn’t confiscate more than 20 percent of a company’s income, but he only gives that advice when he’s in Ghana.

And the same president says it’s time to “let the market work on its own,” but he only says that when talking about China’s economy.

We have more evidence that the President understands the dangers of class-warfare taxation and burdensome government spending. At least when he’s not talking about American fiscal policy.

And the President even applauds foreign voters on occasion when they reject big government.

If only we could get him to have this attitude inside America’s borders.

 

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When I write about the “inbred corruption of Washington” or “Washington’s culture of corruption,” I’m not merely taking pot-shots at the political elite.

I’m trying to make a very serious point about the way in which big government enables immoral behavior by both elected officials and various interest groups.

Heck, in many ways, government has morphed into a racket designed to enrich the lobbyists, insiders, contractors, bureaucrats, and politicians.

They play, we pay.

Jay Cost of the Weekly Standard has an entire new book on this topic and he highlights how big government-enabled corruption harms the middle class in a column for National Review.

A comprehensive strategy to boost the middle class has to include an aggressive assault on political corruption. Every year, the government wastes an obscene amount of money through corrupt public policies.

He makes the key point that corruption isn’t just about illegal behavior in Washington.

If we think of corruption merely as illegal activity, we’re defining it too narrowly. …the better way to understand it is as James Madison might have. In Federalist 10, he worried about the “violence of faction,” which he defined as a group “united and actuated by some common impulse of passion, or of interest, adversed to the rights of other citizens, or to the permanent and aggregate interests of the community.” This is all too common in public policy. From farm subsidies to Medicare, regulatory policy to the tax code, and highway spending to corporate welfare, our government does violence to the public interest by rewarding the interest groups that lobby it aggressively.

Cost then explains that this corruption-fueled expansion of government is very damaging for the middle class.

…corruption is a loser for the middle class. Middle-class Americans do not have the money to pay for lobbyists to make sure they are getting a piece of the action. They don’t usually contribute to political candidates, and when they do, it is typically for a presidential candidate whose ideas they think are sound. They do not subsidize the otherwise obscure subcommittee chairman with oversight on a critical policy. And, of course, they cannot offer politicians seven-figure employment opportunities for post-government life. And yet the middle class foots the bill. Average Americans pay higher taxes to subsidize this misbehavior… But beyond  that, corruption distorts the economy and limits the nation’s potential for growth. For instance, any time Congress creates a tax loophole, it shifts the flow of capital from some otherwise productive outlet to the tax-preferred end. And this is true not just of tax policy; any dollar spent by the government corruptly is a dollar better spent somewhere else. There are, in other words, substantial opportunity costs to be paid, mostly by the middle class.

While I definitely agree with the thrust of Cost’s analysis, I might quibble with the last part of this excerpt.

To be sure, I agree that the middle class foots the majority of the overall bill, but I actually wonder whether the poor suffer the most. At least on an individual basis. After all, the people on the bottom rungs of the economic ladder presumably have the most to lose if growth is sluggish or non-existent.

Which also explains why I get so upset about Obama’s class-warfare policies. High tax rates facilitate corruption and it’s the less fortunate who wind up suffering.

But enough nit-picking and digressing.

Cost’s column is right on the mark, particularly his point about properly defining corruption to capture what’s immoral as well as what’s illegal.

That’s one of the main points I made in this video from the Center for Freedom and Prosperity.

Now let’s take this analysis, both from Cost’s article and my video, and apply it to Obama’s new budget.

Professor Jeffrey Dorfman, an economist at the University of Georgia, has a column for Real Clear Markets entitled, “Obama’s Budget Is All About Whom You Know.”

He starts by citing some examples of how Obama wants government to manipulate our choices.

President Obama wants to control everyone’s behavior using the federal government as both his carrot and stick. …the President is in favor of both parents working and either strangers or government employees raising children as much as possible. …The President proposed nothing to help people save for college or to make it more affordable in any manner other than a government handout. …All of these higher education policies suggest government is your friend and personal responsibility is a bad idea.

Dorfman doesn’t explicitly state that this micro-management by big government is corrupt, but what he’s describing fits in perfectly with Cost’s analysis about average people suffering as D.C. insiders keep expanding government and getting more power over our lives.

If you put this all together, the President is clearly stating that increasing government dependence is a priority. People are offered more financial assistance through the government so as to build support for larger government. …President Obama is only interested in helping some Americans, in rewarding the Americans who behave the way he thinks they should. He believes that the government, that he, should have the power to pick winners and losers. His vision is not one in which everyone wins, rather it is one where those he favors gain at the expense of those he seeks to punish for either their success or their actions. …government is now taking sides.

Needless to say, when government is taking sides and picking winners and losers, that is a process that inevitably and necessarily favors the politically well-connected insiders.

That’s good news for Washington parasite class (and their children), but it’s not good for America.

P.S. Some folks in Louisiana have a pretty good suggestion for dealing with political corruption.

P.P.S. By the way, you don’t solve the problem of government-facilitated corruption by restricting the 1st Amendment rights of people to petition their government and participate in the political process.

P.P.P.S. While this column focuses mostly on the immoral corruption of Washington rather than the illegal variety, there’s also plenty of the latter form of corruption in programs such as Medicare, Medicaid, welfare, job training, food stamps, disability, etc.

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