Feeds:
Posts
Comments

Posts Tagged ‘Obama’

When I get my daily email from the editorial page of the New York Times, I scroll through to see whether there’s anything on economic issues I should read.

As a general rule, I skip over Paul Krugman’s writings because he’s both predictable and partisan. But every so often, his column will grab my attention, usually because the headline will include an assertion that doesn’t make sense.

The bad news is that this is usually a waste of time since most of his columns are ideological rants. But the good news is that I periodically catch Krugman making grotesque errors when he engages in actual analysis. Here are a few examples:

  • Earlier this year, Krugman asserted that America was outperforming Europe because our fiscal policy was more Keynesian, yet the data showed that the United States had bigger spending reductions and less red ink.
  • Last year, he asserted that a supposed “California comeback” in jobs somehow proved my analysis of a tax hike was wrong, yet only four states at the time had a higher unemployment rate than California.
  • And here’s my favorite: In 2012, Krugman engaged in the policy version of time travel by blaming Estonia’s 2008 recession on spending cuts that took place in 2009.

And if you enjoyed those examples, you can find more of the same by clicking here, here, here, here, here, here, here, and here.

But perhaps he’s (sort of) learning from his mistakes. Today, we’re going to look at Paul Krugman’s latest numbers and I’ll be the first to say that they appear to be accurate.

But accurate numbers don’t necessarily lead to honest analysis. Krugman has a post featuring this chart, which is supposed to show us that GOP presidential candidates are wrong to pursue “Bushonomics.”

In looking at this chart and seeing how Krugman wants it to be interpreted, I can’t help but think of the famous zinger Reagan used in his debate with Jimmy Carter: “there you go again.”

Let’s consider why he’s wrong.

First, he asserts the chart is evidence that GOP candidates shouldn’t follow Bushonomics.

I actually agree. That’s because the burden of government spending jumped significantly during the Bush years and the regulatory state became more oppressive. All things considered, Bush was a statist.

Krugman, however, would like readers to believe that Bush was some sort of Reaganite. That’s where we disagree. And if you want to know which one of us is right, just check what happened to America’s rating in Economic Freedom of the World during the Bush years.

Second, Krugman would like readers to think that Presidents have total control over economic policy. Yet in America’s separation-of-powers system, that’s obviously wrong. You also need to consider what’s happening with the legislative branch.

So I added a couple of data points to Krugman’s chart. And, lo and behold, you can just as easily make an argument that partisan control of Congress is the relevant variable. As you can see, Republican control of Congress boosted job growth for Obama, whereas the Democratic takeover of Congress led to bad results during the Bush years.

By the way, I don’t actually think congressional control is all that matters. I’m simply making the point that it is misleading to assert that control of the White House is all that matters.

What is important, by contrast, are the policies that are being implemented (or, just as important, not being implemented).

And since the economic policies of Bush and Obama have been largely similar, the bottom line is that it’s disingenuous to compare job creation during their tenures and reach any intelligent conclusions.

Third, since Krugman wants us to pay attention to job creation during various administrations, we can play this game – and actually learn something – by adding another president to the mix.

Krugman doesn’t identify his data source, but I assume he used this BLS calculation of private employment (or something very similar).

So I asked that website to give me total private employment going back to the month Reagan was nominated.

And here’s what I found. As you can see, good private-sector job growth under Reagan and Clinton, but relatively tepid job growth this century.

Now let’s take a closer look at the total change in private employment for the first 81 months of the Reagan, Bush, and Obama Administrations. And you’ll see that Krugman was sort of right, at least in that Obama has done better than Bush.

And if there’s no recession before he leaves office, he’ll look even better than Bush than he does now. But Obama doesn’t fare well when compared against Reagan.

So does this mean Krugman will now argue GOP candidates should follow Reaganomics rather than Obamanomics or Bushonomics?

I’m not holding my breath waiting for him to make a correction. By the way, keep in mind what I said before. Presidents (along with members of Congress) don’t have magical job-creation powers. The best you can hope for is that the overall burden of government diminishes a bit during their tenure so that the private sector can flourish.

That’s what really enables job creation, and that’s the lesson that really matters.

But it’s not easy to find the truth if you put partisanship above analysis. Krugman erred by making a very simplistic Bush-Republican-bad/Obama-Democrat-good argument.

In reality, the past several decades show that it’s more important to look at policy rather than partisan labels. For instance, the fiscal policies of Ronald Reagan and Bill Clinton are relatively similar and are in distinct contrast to the more profligate fiscal policies of George W. Bush and Barack Obama.

P.S. Paul Krugman’s biggest whopper was about healthcare rather than fiscal policy. In 2009, he said “scare stories” about government-run healthcare in Great Britain “are false.” But you can find lots of scary stories here.

Read Full Post »

I almost feel sorry for the gun-control crowd.

They keep trying to convince themselves that people are on their side, but schemes to restrict the 2nd Amendment keep getting defeated on Capitol Hill.

And when a handful of state governments go against the trend and try to trample on constitutional rights to gun ownership, politicians get tossed out of office and gun owners engage in massive civil disobedience.

Now we get to the icing on the cake.

The New York Times just released polling data showing that a majority of Americans are against banning so-called assault weapons. Look at the bottom line and see how the numbers have dramatically moved in the right direction.

These results are especially remarkable because many non-gun owners probably think “assault weapon” refers to a machine gun.

In reality, the types of guns that some politicians want to ban operate the same as other rifles (one bullet fired when the trigger is pulled), and they’re actually less powerful than ordinary hunting rifles. I imagine if people had that information, support for these weapons would be even higher than what we see in the poll.

Another reason I almost feel sorry for our leftist friends is that they must be going crazy that terrorist attacks and mass shootings aren’t swaying public opinion in their direction.

But they’re underestimating the wisdom of the American people. Most Americans may not have strongly held philosophical views on gun issues, but they’re smart enough to realize that bad people almost certainly will be able to obtains guns, even if they have to do so illegally (as is the case in Europe).

So the net result of gun-free zones and gun control is more danger to the public since evil people will have greater confidence that victims will be disarmed. And that rubs people the wrong way because they’re smart enough to pass the IQ test that causes such angst for our left-wing friends.

Moreover, I think folks are getting tired of the dishonest propaganda from the White House.

Normally the establishment media is a willing co-conspirator with the Administration, but – as you can see from this footage from a White House press briefing (h/t: Michelle Malkin) – one reporter actually committed an act of journalism and the net result is that the White House’s spin doctor was forced to confess that 1) none of Obama’s proposed policies would have stopped a single mass shooter from getting weapons, and 2) not a single mass shooter is on the Administration’s no-fly list or terrorist watch list. Enjoy.

You can tell, by the way, that the White House has done some polling on how to sell its approach, referring over and over again to buzz phrases such as “common sense” and “gun safety.”

Yet if common sense actually guided policy,the Obama Administration would be trying to make it easier for law-abiding people to get guns.

Now let’s look at another video.

You may remember that I wrote last week about the White House’s attempt to deny 2nd-amendment rights to people who get unilaterally placed on the no-fly list without any due process legal rights.

Well, that topic came up at a hearing held by the House Committee on Oversight and Government Reform. Congressman Trey Gowdy took the opportunity to ask one of Obama’s appointees whether they intend to preemptively infringe on other freedoms in the Bill of Rights.

On one level, this video is very amusing. The Obama official is like a deer in the headlights and eventually confesses that she doesn’t have an answer.

But if you think about the issue more deeply, it’s really worrisome that we have a president and an administration that treat the Constitution and Bill of Rights as something that can be cavalierly discarded whenever there’s a conflicting short-term political objective.

Makes me think the humorous image I shared back in 2012 wasn’t a joke after all.

So let’s make something completely clear. The 5th Amendment constitutionally guarantees that American citizens can’t be deprived of their rights in the absence of some sort of legal process.

Which is precisely the point that Congressman Gowdy was making. The Obama Administration wants to preemptively curtail 2nd Amendment freedoms based on the arbitrary whims of bureaucrats.

Here’s the relevant language.

So the bottom line is that the White House is so ideologically rigid on guns that it is willing to run roughshod over the Constitution even though it admits that its gun control proposals would not have stopped a single mass shooter.

But I guess you have to give them credit for being consistent.

Though I guess this is where I confess to once again feeling sorry for statists. Imagine having to defend this approach!

Let’s close with some humor.

Here’s a very clever video featuring a burglar’s perspective on gun control.

P.S. Here’s my collection of other humorous videos mocking the gun grabbers.

P.P.S. Last but not least, I’ll share an amusing joke.

Participating in a gun buy-back program because you think that criminals have too many guns is like having yourself castrated because you think your neighbors have too many kids.

And if you want even more gun control humor, click here.

Read Full Post »

A couple of radical Islamists murdered a bunch of people in California and, even before any details were available, some politicians sought – once again – to exploit a tragedy.

Here’s a short excerpt from USA Today about Hillary Clinton’s response.

Democratic presidential front-runner Hillary Clinton took to Twitter on Wednesday to…call for stricter gun control measures.

And Huffington Post reports that President Obama also seized the opportunity to push his gun control agenda.

President Barack Obama commented Wednesday on the shooting in San Bernardino, California… “there’s some steps we could take, not to eliminate every one of these mass shootings, but to improve the odds that they don’t happen as frequently, common-sense gun safety laws, stronger background checks,”

This is nonsense. Terrorists obviously don’t care whether there are laws against guns.

Heck, just look at the evidence from Europe, where there are very restrictive laws, yet radical Islamists obviously are able to get weapons on the black market.

So the net effect of these laws is to make it just about impossible for law-abiding people to defend themselves. Even if they are being targeted by the terrorists!

Fortunately, there’s a growing recognition that it is absurd to disarm good people and make it easier for evil people to wreak havoc. And the government officials who are in charge of stopping mass shootings are among those who are now pushing for a common-sense approach.

The Detroit News reports that the city’s police chief has a very sensible attitude about how to discourage bad people.

The city’s police chief said he believes violent extremists would be reluctant to target Detroit, as they had Paris last month, for fear armed citizens would shoot back. “A lot of Detroiters have CPLs (concealed pistol licenses), and the same rules apply to terrorists as they do to some gun-toting thug,” Chief James Craig said. “If you’re a terrorist, or a carjacker, you want unarmed citizens.”

A local professor also has the same sensible viewpoint.

Oakland University criminal justice professor Daniel Kennedy agreed that terrorists would be reluctant to attack armed citizens.

I hope Prof. Kennedy already has tenure since he may get targeted by leftist students who might accuse him of common sense, which is a “microagression” that makes them feel “unsafe.”

In any event, terrorists surely would have an incentive (if they’re capable of passing my IQ test for criminals and liberals) to seek out a “gun-free zone” if launching an attack in Detroit.

More than 30,000 Detroit residents are legally armed, according to Michigan State Police. There were 6,974 concealed-pistol licenses issued to residents in 2013, more than double those in 2009, and 7,584 issued in 2012, the state police said. …Starting Tuesday, Michigan is making it easier for citizens to get concealed gun permits. …The National Rifle Association has said the new rules will eliminate licensing delays and arbitrary denials. Craig praised the new state law, and said they will help citizens fight back against criminals and terrorists. …“If you’re sitting in a restaurant, and you aren’t allowed to have a gun, what are you supposed to do if someone comes in there shooting at you? Throw a fork at them?”

Which, of course, is why gun-free zones are so foolish. The only people who obey are the law-abiding people. Yet those are precisely the people who could be helpful if some nutjob launched an attack.

After all, terrorists wouldn’t get the chance to do much damage if they tried to shoot up this neighborhood.

So kudos to Chief Craig.

But he’s not the only senior law-enforcement official who recognizes that it’s time to put aside empty political correctness.

Amazingly, the Chief of Police in Washington, DC, also has decided that common sense should triumph. Here’s some of what was reported by the Washington Post.

D.C. Police Chief Cathy L. Lanier is urging that civilians confronted by an active shooter in some cases try to stop the gunman before law enforcement authorities arrive, saying quick action could save lives. …“I always say if you can get out, getting out’s your first option, your best option. If you’re in a position to try and take the gunman down, to take the gunman out, it’s the best option for saving lives before police can get there.” …“For a major city police chief to say that is breaking new ground,” said Chuck Wexler, who runs the Police Executive Research Forum… “if you’re dealing with suicide bombers or terrorists, it’s a completely different dynamic,” Wexler said. “I think that because so much can happen in so few seconds, intervention by citizens can make a big difference.”

Remember, though, that an effective response by citizens is only possible if they’re armed.

So the top cop in DC is basically acknowledging that gun control empowers the bad guys.

The chief acknowledged that advising confrontation is “kind of counterintuitive to what cops always tell people.” Cooper said, “You’re telling them that now though?” Lanier answered: “We are.”

By the way, the Sheriff of Milwaukee County in Wisconsin also believes armed citizens are necessary and desirable.

And regular cops overwhelmingly agree that gun control doesn’t deter bad people.

For further information, I invite you to peruse some serious articles on gun control, featuring scholars such as John Lott and David Kopel, along with some very persuasive information from an actual firearms expert.

Most of all, though, I recommend you read what Jeffrey Goldberg and Justin Cronin wrote about guns. They’re both self-confessed leftists, but they also decided that rationality and common sense should take precedence over anti-2nd Amendment ideology.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

Read Full Post »

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.

 

Read Full Post »

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.

Read Full Post »

Back in 2013, I actually wrote something vaguely nice about HBO’s Bill Maher. Or at least I expressed approval for a point he made about the limits of class-warfare taxation.

It’s now time to compensate for that action.

Check out this interview. It’s about Obama’s new tax-and-spend budget, but pay particular attention at the 5:15 mark of the video and you’ll hear Maher asserting that “socialism” deserves the credit for the development of a thriving middle class in America.

Wow. Maher’s comments are astonishingly illiterate.

As I remarked in the interview, the United States (like other western nations) had a tiny public sector during the period when it transitioned from agricultural poverty to middle-class prosperity.

Federal spending averaged only about 3 percent of economic output, and overall government spending (including state and local governments) was only about 10 percent of GDP.

If that was socialism, then sign me up!

This isn’t to say we have laissez-faire paradise in the 1800s and early 1900s. Some of the so-called Robber Barons were cronyists who used government favoritism to line their pockets. Monetary policy oftentimes was a mess because of government regulation and control of banks. Tariffs were very onerous. And Jim Crow laws were an odious example of government power being used to oppress an entire class of citizens and hamper their ability to participate in the market economy.

But the one thing we didn’t have back then was socialism, whether you use the right definition (government ownership of the means of production) or the sloppy definition (a redistributive welfare state).

Sigh.

Enough on that topic. The bulk of the interview, of course, focused on Obama’s budget. I got in my main point, which is that we need to focus on restraining the growth of government spending.

So rather than recycle my thoughts, let’s cite comments by two wise observers.

Here’s how Dan Henninger of the Wall Street Journal described the President’s plan.

The president’s annual budget reminds the Beltway tribes of what they do—tax the country, distribute revenues to their allies, and euphemize it as a budget. With his 2015 budget, Barack Obama at last makes clear his presidency’s reason for being: to establish an empire of taxation. …In six years, the Obama Democrats have abandoned any belief in the idea that the private sector is the primary cause of American prosperity. Instead, they seem to see the private sector as a kind of tax sump-pump, a dumb machine whose only purpose is tax flow. …That is the empire of taxation. It is an isolated system, based in Washington, which allocates what it exacts from the private sector.

And here’s some of what George Will wrote about the poisonous spiral of more government leading to more stagnation leading to more demands for more government.

The progressive project of maximizing the number of people dependent on government is also aided by the acid of insecurity that grows rapidly when the economy does not. Anxious and disappointed people are susceptible to progressives’ blandishments about the political allocation of wealth and opportunity — “free” this and that. By making slow growth normal, iatrogenic government serves the progressive program of defining economic failure down.

I fully agree. Not only the points about the weakness of the Obama “recovery,” but also the concerns about more and more people being lured into government dependency, which sabotages American exceptionalism.

Jerry Holbert has a nice summary of the President’s worldview.

Hmmm…I think we’ve seen this bookstore before.

Though I’m surprised Obama is bothering to shop when he can just go to the library for his favorite books.

Read Full Post »

My Cato Institute colleague Michael Tanner has produced some first-rate substantive research on issues.

He produced a study showing that personal retirement accounts would have been a better deal than Social Security even for people who retired at the depth of the financial crisis and stock-market collapse.

He authored another study showing that overly generous welfare systems in most states make productive work relatively unattractive compared to government dependency.

And I’ve also cited his analysis and commentary on issues such as Obamacare and obesity.

Today, I want to cite him for the simple reason that I admire his cleverness.

For those of us who suffered through President Obama’s State of the Union address, you may recall that the President proposed a thawing of America’s relationship with Cuba on the basis that if something “doesn’t work for 50 years, it’s time to try something new.”

Since I’m not a foreign policy person, I didn’t pay close attention to that passage.

But perhaps I should have been more attentive. It turns out that Obama created a big opening.

Writing for National Review, Tanner decided to hoist Obama on his own petard.

During his State of the Union address last week, President Obama defended his Cuba policy by pointing out, “When what you’re doing doesn’t work for 50 years, it’s time to try something new.” As it happens, I agree with the president on Cuba. But it seems to me that his advice should be applied to a number of other issues as well

Mike starts with the ill-fated War on Poverty.

Lyndon Johnson declared war on poverty in January 1964, just three years after the start of the Cuban embargo. Since then we’ve spent more than $20 trillion fighting poverty. Last year alone, federal and state governments spent just under $1 trillion to fund 126 separate anti-poverty programs. Yet, using the conventional Census Bureau poverty measure, we’ve done nothing to reduce the poverty rate. …And, whatever success we’ve achieved in making material poverty less uncomfortable, we’ve done little to help the poor become independent and self-supporting.

He then points out the utter failure of the War on Drugs.

The War on Drugs has been going on even longer than the War on Poverty, with a similar lack of success. …in the last ten years alone we have spent some $500 billion fighting this “war,” and arrested more than 16 million Americans for drug offenses. The vast majority of arrests have been for simple possession, not sale or other drug crimes. While filling our prisons with nonviolent offenders, destabilizing countries like Mexico and Colombia, wrecking our own inner cities, and making the cartels rich, the drug war has failed to reduce either violence or drug use.

Mike also reminds us that we’ve had five decades-plus of government-run healthcare.

…we’ve suffered from government-run health care in this country for more than 50 years as well. Medicare and Medicaid started in 1965. Others would point out that we are still suffering the consequences of the IRS decision in 1953 to make employer-provided insurance tax-free, while individually purchased insurance has to be paid for with after-tax dollars. No matter how you want to measure the starting point, the government now pays for roughly 52 percent of U.S. health-care spending, and indirectly subsidizes another 37 percent. The result has been steadily rising health-care costs, a dysfunctional insurance market, and a growing shortage of physicians. …a study out of Oregon suggests that being on Medicaid provides no better health outcomes than being uninsured. Meanwhile, Medicare is running up more than $47.6 trillion in unfunded liabilities. And let us not forget the VA system and its problems.

And his article merely scratches the surface.

One could go on and on. Fannie and Freddie? Social Security and its almost $25 trillion in unfunded liabilities? Stimulus spending? Green energy? We won’t even mention the National Weather Service’s apparent inability to accurately predict snowstorms. If we are looking for lessons to learn from the last 50 years, here is one: Bigger government has not brought us more security, more freedom, or more prosperity. Yet, President Obama still sees the answer to every problem, no matter how small, as more government, no matter how big. …President Obama not only seems unable to learn from history, but apparently doesn’t even listen to his own speeches. If big government hasn’t worked for 50 years, 100 years, or for that matter pretty much the whole of human history, maybe it’s time to try something else.

The final sentence in that passage is not just a throw-away line.

I have my own two-question challenge for leftists, which is basically a request that they identify a nation – of any size and at any time – that has prospered with big government.

Mike does something similar. He basically points out that big government has an unbroken track record of failure, and not just for the past 50 years.

I suppose the question to ask is whether any big-government program can be considered a success? In other words, what has any government done well, once it goes beyond the provision of core public goods such as enforcing contracts, protecting property rights, and upholding the rule of law?

To be fair, there are some nations, such as Switzerland, that have enjoyed very long periods of monetary stability and peace. And jurisdictions such as Hong Kong and Singapore have experienced decades of prosperity and tranquility.

In all of those jurisdictions, I think government is too big, but they are considered small-government by modern-world standards.

In any event, the point I’m making is that some governments seem semi-competent, but there also seems to be a relationship between the size and scope of government and the failure of government.

It will be interesting to read the comments.

Read Full Post »

The President today released his budget for fiscal year 2016, a document that also shows what will happen to taxes, spending, and red ink over the next 10 years if the White House’s budget is adopted.

Here are the four things that deserve critical attention.

1. Obama proposes to have spending grow by an average of about 5.4 percent per year over the next five years and more than 5 percent annually over the next 10 years, well more than twice as fast as projected inflation.

Though it oftentimes doesn’t get sufficient attention, the change in government spending is the most important number (or set of numbers) in any budget. If the burden of spending is rising, regardless of whether that increase is financed by taxes or borrowing, more resources will be diverted from the economy’s productive sector.

In President Obama’s budget, he wants government spending in FY 2016 to be $3,999.5 billion, an astounding increase of 9.4 percent over the Congressional Budget Office’s estimate of $3,656 billion of spending in the current fiscal year (the President is proposing additional spending for FY 2015, so the annual increase between 2015-2016 in his budget is “only” 6.4 percent).

Even more troubling, he wants government spending to climb by more than twice as fast as inflation in future years. And most worrisome of all, he wants government to grow faster than the private sector, which means that the burden of government spending will climb as a share of GDP, both over the next five years and the next 10 years.

The challenge for the GOP: In part because spending rose so much in 2009, but also in part because Congress waged important fiscal battles over debt limits, shutdowns, and sequestration, there was a de facto spending freeze between 2009 and 2014. Unfortunately, spending is climbing by at least twice the rate of inflation in 2015, and Obama wants additional big increases in the future. It will be very revealing to see whether Republican control of both the House and Senate means policy moves back in the direction of spending restraint.

2. The President wants to renege on the 2011 debt limit agreement by busting the spending caps.

With great fanfare in 2011, the White House and Congress agreed to boost the debt limit, but only because both parties agreed on some modest caps to control the growth rate of discretionary spending.

But these spending caps don’t allow outlays to rise as fast as the President would prefer, so he is explicitly seeking to eviscerate the caps and allow bigger increases. These spending hikes would enable for defense spending and more domestic spending.

The challenge for the GOP: The spending caps and sequestration represent President Obama’s most stinging defeat on fiscal policy, so it’s hardly a surprise that he wants to gut any restraint on his ability to spend. This presumably should be a slam-dunk victory for Republicans since they can simply refuse to change the law. But there are some GOPers who want more defense spending, and even some who want more domestic spending. Indeed, the pro-spending caucus in the Republican Party was one of the reasons why the spending caps were already weakened two years ago.

3. The White House’s new budget wants a new tax on American companies competing in world markets.

The good news is that the President no longer is proposing to get rid of “deferral,” a policy from past budgets that would have resulted in a 35 percent tax on profits earned by American multinationals in other nations (and already subject to tax by the governments of those other nations). The bad news is that he instead wants to tax all previously accumulated foreign-source income at 14 percent and then tax all future foreign-source income at 19 percent.

To make matters worse, he wants to use this new pot of money to finance expanded federal involvement and interference in transportation and infrastructure.

The challenge for the GOP: Some Republicans favor more transportation spending from Washington and some companies may be tempted to acquiesce to some sort of deal, particularly if it only applies to accumulations of prior-year foreign-source income. Advocates of good policy in Congress should not enable a bigger federal role in transportation. Indeed, the only good policy is to phase out federal involvement and eliminate the federal gas tax.

4. President Obama wants class-warfare based increases in the death tax and the capital gains tax.

In addition to many other tax hikes in his budget, the President wants to boost the capital gains tax rate to 28 percent and he also wants to expand the impact of the death tax by eliminating a policy that acknowledges the actual value of assets when they are received by children and other heirs.

Since there shouldn’t be any double taxation of income that is saved and invested, both the death tax and capital gains tax should be abolished. Needless to say, increasing either tax would have a negative impact on the American economy.

The challenge for the GOP: Hopefully this policy will be deemed “dead on arrival.” Republicans presumably should be united in their opposition to class-warfare tax increases.

P.S. This Steve Breen cartoon is a pretty apt summary of the Obama budget (and one that will be added to my bloated government collection).

Particularly when augmented by this Jerry Holbert gem.

P.P.S. Here’s the fiscal policy we should emulate.

P.P.P.S. Here’s the fiscal policy mistake we should avoid.

Read Full Post »

There’s a lot of navel-gazing analysis in Washington about whether to expect some sort of bipartisanship over the next two years.

I find such discussions very irritating because they assume that you automatically get good results when Republicans and Democrats both agree on a policy. My reaction, to put it mildly, is “these people are f@*&#^@g crazy!!!”

Was it progress when Republicans and Democrats conspired to bail out their contributors on Wall Street with TARP?

Was it progress when Republicans and Democrats joined hands to impose Bush’s no-bureaucrat-left-behind education scheme?

Was it progress when the first President Bush broke his read-my-lips promise and sided with Democrats to boost taxes and spending in 1990?

So you can see why I instinctively like gridlock. Simply stated, it’s better to do nothing if the alternative is to have more bad laws that expand the burden of government.

But perhaps I’m being too cynical. After all, sometimes bipartisanship accidentally produces good policies. Like when we got the Budget Control Act as part of the 2011 debt limit fight, which then led to the sequester.

Though I’m not holding my breath expecting similar good results over the next two years.

Why? Because as I said in my first comments during last week’s John Stossel show, the President is simply too far to the left to expect any progress.

I do acknowledge in the interview that you have to give Obama credit for ideological consistency, but his agenda of bigger government and more dependency doesn’t lead me to think we’ll get any good policy in the near future.

Here are a few additional points from the interview that are worth highlighting.

*This is still a weak recovery, perhaps most compelling illustrated by comparing what happened under Reagan with what’s been happening under Obama.

*But things have improved in the past couple of years, in part because there’s been progress in restraining the burden of government spending.

*Ironically, the President bragged that America’s been creating more jobs than Europe even though he wants to copy European policies.

*It’s also galling that the President says he wants to make America more competitive even though he’s pushing class-warfare taxation.

*Republicans also deserve criticism since some of them are advocating for higher gas taxes rather than the federalist approach of decentralization.

*On tax reform, if you give politicians a new tax, it’s very likely they will use the money to finance bigger government instead of abolishing an existing tax.

*My final comment from the interview brings us back to the central point of today’s post. Simply stated, bipartisanship isn’t good if it means more government.

P.S. I goofed last week when I wrote that median household income fell every year under Obama, and I repeated that mistake in the Stossel interview, which took place before I discovered that there was a very small increase in 2013. Well, I also made another mistake in the interview. I said that Kate Upton was the daughter of Congressman Fred Upton. That’s wrong. She’s actually his niece. Alas, yet another sign that I’m clueless about popular culture. I guess that means Kate won’t date me after the PotL finds another boyfriend.

P.P.S. Since we’re still debating over the issues Obama raised in his speech, I may as well call attention once again to my contribution to the U.S. News and World Report online debate on whether the State of the Union is strong. I’m doing okay in the overall reader rankings, but (as I write these words) I do have the third-highest number of “down” votes, so I gather that some of our leftist friends must not like what I wrote. So feel free to go to the article and click on the “up” arrow if you want to help me out.

P.P.P.S. Shifting to a less narcissistic topic, I wrote in 2013 that the Ohio Governor should be known as John “Barack” Kasich because he chose to expand Obamacare in his state. Now, as explained by Philip Klein of the Washington Examiner, we have Mike “Barack” Pence from Indiana.

…on Tuesday, he betrayed taxpayers when he embraced an expansion of Medicaid through President Obama’s healthcare law. …Pence buckled under pressure from hospital lobbyists who are eager to receive more federal money… Myopic Republican governors think they can fool conservatives by gaining token concessions on what remains a government-run healthcare program and calling it “free market reform.” But the Obama administration is playing the long game, realizing that if it keeps adding beneficiaries to the books, big government liberalism wins.

How disappointing. Yes, GOP governors are getting pressured by in-state lobbyists because of the lure of “free” federal money, but that’s no excuse for adopting a policy that will hurt federal taxpayers in the short run and state taxpayers in the long run.

This is yet another reason why we need to replace the federal Medicaid entitlement with a block grant.

P.P.P.P.S. I don’t want to close on a dour note, so let’s shift to sequestration, which was one of the topics in the Stossel interview. That was not only an unambiguous victory over big government, but it also resulted in some great political humor. You can see some of my favorite cartoons on the topic by clicking herehere, here, here, here, and here.

Read Full Post »

Watching politicians give speeches, such as Obama’s State of the Union address, is an occupational hazard when you work at a think tank.

Which is why, in the past, I’ve heartily recommended the State-of-the-Union Bingo game developed by Americans for Tax Reform.

But I was in New York City for a television program about the President’s address, so I had to pretend I was an adult and pay attention to the speech.

That being said, the silver lining to that dark cloud is that the folks at U.S. News and World Report gave me an opportunity to add my two cents to an online debate on whether the President was correct to assert that the state of the union is strong.

In my contribution, I combined some dismal economic indicators and bad policy developments to argue that America could – and should – be doing much better.

Here are the bullet points from my article.

  • Economic growth has been anemic. Normally there are several years of above-average growth after a recession. These post-recession booms are very important since they help people recover lost income. But there’s been no boom during the supposed Obama recovery. We haven’t even climbed back up to the long-run average of 3 percent growth.
  • When the economy suffers from slow growth, it hurts the living standards of ordinary people. Probably the most damning statistic is that median household income has declined every year that Obama has been in the White House.
  • Another very grim piece of data is that America’s labor force participation rate has dropped to the lowest level in decades. Yes, it’s good news that the official unemployment rate has fallen, but it would be much better if it fell because of strong job creation instead of people giving up on finding work.
  • Since we’re talking about the unemployment rate, it’s worth noting that the jobless rate only started falling after the so-called stimulus ended and the burden of government spending began to decline. In other words, the good news was in spite of the president’s policies.
  • And since we mentioned government spending, let’s debunk one of the president’s big claims. He bragged about a falling deficit (not that a $400 billion-plus deficit is anything to brag about), but red ink has only declined because of policies that the president opposed, such as sequestration.

By the way, I need to make one correction. I didn’t realize the 2013 data on median household income had been released, and it turns out that there was a slight increase that year. So while the average household is more than $2000 poorer than when Obama took office, it’s not true that there’s been a decline every single year.

But that goof notwithstanding, I think my concluding remarks are spot on.

The bottom line is that the State of the Union is not strong. We’re suffering from anemic growth and income stagnation because of an ever-rising burden of taxes, spending and regulation. Yes, the president was right when he noted that we’ve created more jobs than Europe and Japan, but that’s hardly a big achievement since those nations have traveled even further in the wrong direction with statist policies.

In other words, what matters most, in terms of prosperity, is our long-run growth rate. And this is where Obama’s policies (like Bush’s policies) have hurt the country.

P.S. If you agree with my analysis, feel free to vote in the online debate and give me an “up arrow.” If you disagree with what I wrote, by contrast, I’m sure you have more important things to do than casting a vote.

P.P.S. I realize I’m being pedantic, but the two cartoons included in this post may be amusing, but they should have focused on the underlying disease of too much spending (particularly the problem of entitlement programs) rather than highlighting the symptom of red ink.

Read Full Post »

Shortly after Obamacare was enacted, I began to maintain a list of groups that were victimized by the law. But after listing kids, low-income workers, and retirees, I quickly realized this was a senseless exercise because virtually everyone in the country was going to be hurt by this expansion of government power and control.

So I then began to put together a different type of list. I call it the “least sympathetic victims” of Obamacare. These are groups that are being hurt by the law, but I think you’ll agree with me that they don’t deserve tears of support. At least not real ones.

Some politicians and staffers of Capitol Hill are very upset about the prospect of being subjected to the law that they inflicted on the rest of the country.

The bureaucrats at the IRS are agitated about the possibility of living under Obamacare, even though the IRS got new powers as a result of the law.

We now have a new group to add to the list. It appears that the faculty of Harvard University aren’t happy about some of the changes imposed by Obamacare. Even though many Harvard professors helped Obama design and promote the law!

Here are some passages from a New York Times report.

Members of the Faculty of Arts and Sciences, the heart of the 378-year-old university, voted overwhelmingly in November to oppose changes that would require them and thousands of other Harvard employees to pay more for health care. The university says the increases are in part a result of the Obama administration’s Affordable Care Act, which many Harvard professors championed. …“Harvard is a microcosm of what’s happening in health care in the country,” said David M. Cutler, a health economist at the university who was an adviser to President Obama’s 2008 campaign. …In Harvard’s health care enrollment guide for 2015, the university said it “must respond to the national trend of rising health care costs, including some driven by health care reform,” in the form of the Affordable Care Act. …Mary D. Lewis, a professor who specializes in the history of modern France and has led opposition to the benefit changes, said they were tantamount to a pay cut. …The president of Harvard, Drew Gilpin Faust, acknowledged in a letter to the faculty that the changes in health benefits — though based on recommendations from some of the university’s own health policy experts — were “causing distress” and had “generated anxiety” on campus.

Distress and anxiety on campus? Oh, the horrors.

I guess it’s perfectly acceptable to impose harm on the peasants in flyover country, but these Harvard elitists obviously don’t want to live under the policies that they recommend for the rest of us.

P.S. I gather Harvard and Massachusetts Institute of Technology view each other as rivals. Well, since Jonathan Gruber (the guy who was caught on tape admitting that Obamacare was based on lies) is a professor at M.I.T. and Harvard professors are the ones getting very agitated, maybe we should simply view Obamacare as a really clever school-against-school prank? It’s just unfortunate that the rest of the country is suffering collateral damage.

P.P.S. By the way, one of the reasons that Harvard professors are unhappy is because of the so-called Cadillac tax, which actually is one of the few parts of Obamacare that may have some positive effect since it’s designed to reduce over-insurance and mitigate the third-party payer problem.

P.P.P.S. Let’s close with some political humor.

This Michael Ramirez cartoon captures President Obama as a precocious school kid.

You can see why readers voted Ramirez as the best political cartoonist.

P.P.P.P.S. And here’s a very clever video about terrorists and the Transportation Security Administration.

For more TSA humor, see this, this, this, this, and this. And if you want more terrorist humor, click here, herehere, and here (at the end of the post).

Read Full Post »

Barack Obama and the rest of the class-warfare crowd act as if “tax the rich” is an appropriate answer to every question about fiscal policy.

I’m not joking. Here are some of the President’s main tax hikes that have been enacted or proposed.

Obama imposed higher income tax rates on upper-income taxpayers as part of the fiscal cliff deal.

Obama also succeeded in increasing the double-taxation of dividends and capital gains for successful taxpayers.

Obamacare was a budget-busting nightmare with lots of tax increases, but the biggest tax hike targeted rich taxpayers.

Obama’s proposed solution for Social Security’s huge unfunded liability is a large tax increase on taxpayers making more than $100,000 per year.

Obama also has proposed big tax hikes for American companies trying to compete in global markets.

This list could continue, but I think you get the point. American leftists are like malfunctioning Chatty Cathy Dolls. No matter how many times you pull the string, all that comes out is “tax the rich.”

Needless to say, that’s both tiresome and empty.

At some point, it would be nice for Obama and other statists to actually identify how much is enough.

  1. For instance, should any taxpayer ever have to give more than 40 percent of their income to government? More than 50 percent? Perhaps over 100 percent, like the 8,000 French household that had every penny of earnings confiscated in 2012?
  2. And what’s the “fair share” for the rich? Should they pay 40 percent of the tax burden? Or 50 percent? Or more?
  3. Heck, it might not be a bad idea to actually identify the rich. Is a household “rich” if annual income climbs above $200,000? Or do we simply define rich people as being anyone in the top 10 percent, or top 20 percent?

For what it’s worth, I don’t care about the answers to these questions because I favor a simple and fair flat tax that doesn’t punish people for contributing more to the economy’s output. I simply want the government to treat everyone equally and collect revenue in the least-destructive manner.

That being said, I imagine that Obama and other leftists would hem and haw if any reporters actually acted like journalists and asked tough questions. In their hearts, the class-warfare types probably want to go back to the 70 percent-plus top tax rates of the Jimmy Carter era. But they presumably wouldn’t want to openly confess those views.

Just in case Obama (or Pelosi, Reid, etc) ever are pressed to answer these questions, here are numbers that should help put their answers in context.

First, here’s a chart from the experts at the Tax Foundation and it reveals that the top-10 percent of taxpayers finance about 70 percent of the federal income tax.

The typical left-wing response to this kind of data is to complain that it doesn’t include the Social Security payroll tax and other levies.

That’s a semi-fair point, and it’s true that the so-called “FICA” tax (at least the part that goes to Social Security) is not “progressive.” Instead, it’s a flat-rate levy. Moreover, the portion of the payroll tax used to fund Social Security is only imposed on income up to $118,500, which leads many leftists to say the system is regressive.

That’s inaccurate for the simple reason that Social Security’s benefit formula is far more generous to lower-income taxpayers. It’s also worth pointing out that the program is supposed to be a form of social insurance, not a redistribution scheme (though it’s actually both).

And that point is a perfect segue for the next chart. Mark Perry of the American Enterprise Institute used numbers from the Congressional Budget Office to measure the net effect (taxes and spending) of fiscal policy for the five income quintiles.

As you can see, the bottom 60 percent are net recipients and the top 20 percent are basically pulling the wagon for everyone.

Remember, this chart doesn’t mean that the bottom 60 percent don’t pay any tax. It just means that they get more money from the government, on average, than they put into the system.

Now that I’ve shared some numbers, let’s close with some economic analysis.

Obama’s class-warfare agenda is wrong because it’s unfair and discriminatory. But it’s also terribly misguided because high tax rates are bad for growth and competitiveness.

Besides, there is a point at which high tax rates don’t generate much, if any, additional revenue. Simply stated, rich taxpayers have considerable control over the timing, level, and composition of their income. And that means they can reduce their taxable income when tax rates increase.

My video on class warfare has more information. Make sure to pay extra-close attention at the 4:35 mark.

P.S. If you don’t believe my argument about rich people having the ability to alter their taxable income, check out the IRS data from the 1980s.

P.P.S. Only a fool (or a malicious person) wants to be at the revenue-maximizing point of the Laffer Curve. The right goal is to set tax rates at the growth-maximizing level.

P.P.P.S. For what it’s worth, a poll in 2012 found that 75 percent of Americans think the top tax rate should be no higher than 30 percent. That can’t be very comforting data for the hate-and-envy crowd.

Read Full Post »

Four years ago, I put together some New Year’s Day Resolutions for the GOP.

Three years ago, I made some policy predictions for the new year.

But since I obviously don’t control Republicans and since I freely admit that economists are lousy forecasters, let’s do something more practical to start 2015.

Let’s simply look at three very important things that may happen this year and what they might mean.

1. Will the Republican Senate support genuine entitlement reform?

One of the best things to happen in recent years is that House Republicans embraced genuine entitlement reform. For the past four years, they have approved budget resolutions that assumed well-designed structural changes to both Medicare and Medicaid.

There were no real changes in policy, of course, because the Senate was controlled by Harry Reid. And I’m not expecting any meaningful reforms in 2015 or 2016 because Obama has a veto pen.

But if the Republican-controlled Senate later this year approves a budget resolution with the right kind of Medicare and Medicaid reform, that would send a very positive signal.

It would mean that they are willing to explicitly embrace the types of policies that are desperately needed to avert long-run fiscal crisis in America.

I don’t even care if the House and Senate have a conference committee and proceed with actual legislation. As I noted above, Obama would use his veto pen to block anything good from becoming law anyhow.

My bottom line is simple. If GOPers in both the House and Senate officially embrace the right kind of entitlement reform, then all that’s needed is a decent President after the 2016 elections (which, of course, presents an entirely different challenge).

2. Will there be another fiscal crisis in Greece (and perhaps elsewhere in Europe)?

The European fiscal crisis has not gone away. Yes, a few governments have actually been forced to cut spending, but they’ve also raised taxes and hindered the ability of the private sector to generate economic recovery.

And the spending cuts in most cases haven’t been sufficient to balance budgets, so debt continues to grow (in some cases, there have been dramatic increases in general government net liabilities).

Sounds like a recipe for further crisis, right? Yes and no.

Yes, there should be more crisis because debt levels today are higher than they were five years ago. But no, there hasn’t been more crisis because direct bailouts (by the IMF) and indirect bailouts (by the ECB) have propped up the fiscal regimes of various European nations.

At some point, though, won’t this house of cards collapse? Perhaps triggered by election victories for anti-establishment parties (such as Syriza in Greece or Podemos in Spain)?

While I’m leery of making predictions, at some point I assume there will be an implosion.

What happens after that will be very interesting. Will it trigger bad policies, such as centralized, European-wide fiscal decision-making? Or departures from the euro, which would enable nations to replace misguided debt-financed government spending with misguided monetary policy-financed government spending?

Or might turmoil lead to good policy, which both politicians and voters sobering up and realizing that there must be limits on the overall burden of government spending?

3. If the Supreme Court rules correctly in King v. Burwell, will federal and state lawmakers react correctly?

The Supreme Court has agreed to decide a very important case about whether Obamacare subsidies are available to people who get policies from a federal exchange.

Since the law explicitly states that subsidies are only available through state exchanges (as one of the law’s designers openly admitted), it seems like this should be a slam-dunk decision.

But given what happened back in 2012, when Chief Justice Roberts put politics above the Constitution, it’s anybody’s guess what will happen with King v Burwell.

Just for the sake of argument, however, let’s assume the Supreme Court decides the case correctly. That would mean a quick end to Obamacare subsidies in the dozens of states that refused to set up exchanges.

Sounds like a victory, right?

I surely hope so, but I’m worried that politicians in Washington might then decide to amend the law to officially extend subsidies to policies purchased through a federal exchange. Or politicians in state capitals may decide to set up exchanges so that their citizens can stay attached to the public teat.

In other words, a proper decision by the Supreme Court would only be a good outcome if national and state lawmakers used it as a springboard to push for repeal of the remaining parts of Obamacare.

If, on the other hand, a good decision leads to bad changes, then there will be zero progress. Indeed, it would be a big psychological defeat since it would represent a triumph of handouts over reform.

I guess I’m vaguely optimistic that good things will happen simply because we’ve already seen lots of states turn down “free” federal money to expand Medicaid.

P.S. Let’s close with some unexpected praise for Thomas Piketty. I’m generally not a fan of Monsieur Piketty since his policies would cripple growth (hurting poor people, along with everyone else).

But let’s now look at what France 24 is reporting.

France’s influential economist Thomas Piketty, author of “Capital in the 21st Century”, on Thursday refused to accept the country’s highest award, the Legion d’honneur… “I refuse this nomination because I do not think it is the government’s role to decide who is honourable,” Piketty told AFP.

It’s quite possible, perhaps even likely, that Piketty is merely posturing. But I heartily applaud his statement about the role of government.

Just as I applauded President Hollande when he did something right, even if it was only for political reasons.

But let’s not lose sight of the fact that Piketty is still a crank. His supposedly path-breaking research is based on a theory that is so nonsensical that it has the support of only about 3 percent of economists.

Read Full Post »

It’s time to puncture the myth that libertarians are congenitally dour and pessimistic.

We’re going to look at some fiscal data that must be very depressing for President Obama and other advocates of big government.

But that means this information must be very good news for American taxpayers!

Here’s a chart looking at annual federal spending since 2000. You’ll notice that spending skyrocketed from 2000-2009 (a time when libertarians were justifiably glum), but look at how the growth of government came to a screeching halt after 2009.

Here are some specific numbers culled from the OMB data and CBO data. In fiscal year 2009, the federal government spent about $3.52 trillion. In fiscal year 2014 (which ended on September 30), the federal government spent about $3.50 trillion.

In other words, there’s been no growth in nominal government spending over the past five years. It hasn’t received nearly as much attention as it deserves, but there’s been a spending freeze in Washington.

When I’ve argued in favor of an overall cap on government outlays in the past, my leftist friends always said this would produce catastrophic consequences. They had lots of rhetoric about “unmet needs” and “human costs,” so let’s contemplate societal outcomes since 2009:

Did children starve? Nope.

Did widows die in the snow? Nope.

Did planes fall from the sky? Nope.

Did poisoned food plague the country? Nope.

Did sick people get turned away from hospitals? Nope.

Did the North Koreans take over the world? Nope.

Gee, it appears that spending restraint doesn’t result in chaos. Not that we should be surprised, based on research on “public sector efficiency” from the European Central Bank.

So we can logically conclude that spending restraint doesn’t lead to societal disarray. Now let’s look at what does happen when government is put on a diet.

I’ve periodically discussed my Golden Rule, which says that good fiscal policy takes place when government spending grows slower than the private sector.

And even though we haven’t had impressive growth during the Obama years, there have been modest increases in both nominal GDP as well as inflation-adjusted (real) GDP.

In other words, the Golden Rule has been in effect since 2009. As a result, the burden of government spending, relative to the economy’s productive sector, has been declining.

Here’s another chart that will be very depressing for the President and other statists.

What’s really remarkable is that we’ve seen the biggest drop in the burden of government spending since the end of World War II.

Heck, the fiscal restraint over the past five years has resulted in a bigger drop in the relative size of government in America than what Switzerland achieved over the past ten years thanks to the “debt brake.”

At this point, some readers may be wondering who or what deserves credit for this positive development. I’ll offer a couple of explanations.

The first two points are about why we shouldn’t overstate what’s actually happened.

1. The good news is somewhat exaggerated because we had a huge spike in federal spending in 2009. To use an analogy, it’s easy to lose some weight if you first go on a big eating binge for a couple of years.

2. Some of the fiscal discipline is illusory because certain revenues that flow to the Treasury, such as TARP repayments from banks, actually count as negative spending. I explained this phenomenon when measuring which Presidents have been the biggest spenders.

But there also are some real reasons why we’ve seen genuine spending restraint.

3. The “Tea Party” election of 2010 resulted in a GOP-controlled House that was somewhat sincere about controlling federal outlays.

4. The spending caps adopted as part of the debt limit fight in 2011 have curtailed spending increases as part of the appropriations process.

5. In the biggest fiscal loss President Obama has suffered, we got a sequester that reduced the growth of federal spending.

6. Many states have refused to expand Medicaid, notwithstanding the lure of temporary free money from Uncle Sam.

7. Government shutdown fights may be messy, but they tend to produce a greater amount of fiscal restraint.

And there are surely other reasons to list, including the long-overdue end of seemingly permanent unemployment benefits and falling defense outlays as forces are withdrawn from Iraq and Afghanistan.

The bottom line is that the past five years have been a victory for advocates of limited government.

But now for the bad news. All this progress will be wiped out very quickly if there’s not genuine entitlement reform.

The long-run fiscal forecasts, whether from the Congressional Budget Office or from international bureaucracies such as the IMF, BIS, and OECD, show that America will become a European-style welfare state over the next couple of decades in the absence of reform.

So let’s enjoy our temporary victory but work even harder to avert a future fiscal crisis.

Read Full Post »

I generally don’t feel a special degree of animosity for the internal revenue service. After all, it’s the politicians who have created the 74,000-plus page monstrosity of a tax code. Blaming the IRS for enforcing that system is like blaming the police for the drug war.

This isn’t to say the IRS is blameless. Just as cops sometimes take misguided laws and enforce them is bad ways, the IRS periodically will go beyond its legal mandate because of an enforcement-über-alles mentality.

But what gets me most upset is when the IRS allows itself – either with glee or reluctance – to become politicized.

For instance, the Washington Times reveals that the IRS may have violated taxpayer privacy by giving confidential taxpayer data to the political operatives in the White House.

The Internal Revenue Service may have given thousands of confidential filings from private taxpayers to the White House to review, a lawsuit against the Treasury Department just revealed. …“[T]he Treasury Inspector General for Tax Administration informed Cause of Action that there exist nearly 2,500 potentially confidential documents relating to investigations of improper disclosures of confidential taxpayer information by the IRS to the White House,” Cause of Action told The Daily Caller.

One possible example deals with the Obama Administration’s attack on the Koch brothers. As the Washington Examiner reported, Obama’s top economist at the time was the subject of an investigation.

The investigation by the Treasury Department Inspector-General for Tax Administration was sparked by Goolsbee’s remarks during an Aug. 27, 2010, White House news briefing in which he appeared to possess confidential tax information on Koch Industries, the private conglomerate controlled by the Koch brothers, Charles and David. …It is illegal for government officials to make public confidential tax information. Goolsbee was chief White House economist at the time. …senators requested the IG probe to determine if confidential tax records of individuals viewed by Obama as enemies were being passed around among senior staffers in the White House. …neither the report itself nor a summary of its findings have ever been made public.

Never made public? Gee, that’s mighty convenient.

It’s worth noting, by the way, that this isn’t the first White House to get in trouble for using the IRS as a political weapon.

…Section 6103 of the Internal Revenue Commission’s criminal code, which Congress enacted following revelations of President Nixon’s abuse of private tax information during the Watergate scandal. The second article of impeachment against Nixon in the House Judiciary Committee was based on those abuses.

So the ghost of Richard Nixon may approve of Obama, as suggested by this cartoon.

But this isn’t the only IRS scandal we need to monitor. Remember Lois Lerner, who became infamous for targeting the President’s opponents and then apparently losing her emails?

Well, we have an update. The Wall Street Journal opines on the latest development in the IRS targeting scandal.

…the IRS never “lost” emails after all. …Treasury Department Inspector General Russell George recently informed Congress that his forensic investigation has turned up as many as 30,000 emails from the account of former IRS Exempt Organizations Director Lois Lerner—emails the IRS has insisted were destroyed. The emails cover the crucial period from January 2009 through June 2011 when the IRS was ramping up its targeting… We can only imagine Mr. Koskinen’s shock in September when the Treasury IG said it had found 760 tapes that might hold Lerner emails. Or his further surprise when it took only a few weeks to identify and extract the specific Lerner documents—out of 250 million backup emails. And we can only imagine Mr. Koskinen’s apology for his agency’s email failure—since he hasn’t given one.

What can we learn from this episode?

Either the IRS didn’t bother to investigate these tapes or, more alarming, it did and chose not to produce the results. The IG is turning over the emails to the IRS, which is supposed to redact sensitive tax information before sending them to Congress. Mr. Koskinen needs to end the IRS stonewalling and turn the records over with dispatch without covering up incriminating evidence.

Indeed. One can’t help but wonder whether the delay in finding the emails and now the delay in turning them over to investigators is simply to allow time for smoking guns to be hidden.

With all this rampant corruption and abuse, you would think the IRS is the lowest-ranked government bureaucracy.

But don’t forget there’s lots of competition for that honor. The Washington Post reports on polling data from Gallup regarding which agencies are perceived to be “good” or “excellent.” Both the Federal Reserve and the Veterans Administration rank below the IRS.

I guess I’m not surprised that the Veterans Administration is rated so poorly. After all, that bureaucracy created secret waiting lists and denied care to veterans (and then the bureaucrats awarded themselves bonuses!).

Though the Fed’s low rating surprises me, simply because I assumed many people wouldn’t be sufficiently familiar to give a grade, whether positive or negative.

And I’m baffled that the Postal Service has a high ranking. Have people never waited in line at a post office?!?

But let’s stick with the topic of the IRS. If we look at a comparison of 2013 and 2014 ranking, you can see that the IRS actually enjoyed a bump as the targeting scandal receded from the headlines.

By the way, I’m glad to see the EPA gets a relatively low score.

Let’s close with a good cartoon about the IRS, though it’s not terribly funny when you realize that many people in Washington actually have this perspective.

By the way, if you enjoy anti-IRS cartoons, click here, here, and here for more examples.

P.S. Just in case anybody thinks I was giving the IRS a free pass because of my comments that politicians deserve the lion’s share of the blame for the scandals, allow me to bolster my libertarian bona fides.

I’ve certainly done my part to explain why the IRS bureaucracy deserves scorn.

P.P.S. I don’t want to end on a sour note, so here’s more examples of IRS humor from my archives, including a new Obama 1040 form, a death tax cartoon, a list of tax day tips from David Letterman, a cartoon of how GPS would work if operated by the IRS, an IRS-designed pencil sharpener, two Obamacare/IRS cartoons (here and here), a sale on 1040-form toilet paper (a real product), a song about the tax agency, the IRS’s version of the quadratic formula, and (my favorite) a joke about a Rabbi and an IRS agent.

Read Full Post »

Wow, Barack Obama and the Democrats suffered a thermonuclear butt kicking. This was 1994 and 2010 put together.

When the dust settles after recounts and run-offs, it appears that the GOP will have picked up 9 Senate seats. That’s one more than I predicted, and I thought I was probably overstating the GOP wave.

The House results are equally remarkable. There are a handful of close races that haven’t yet been decided, but it seems that Republicans will control at least 246 seats and may even hit or exceed my prediction of 249 seats. And that estimate at the time was way too high, based on what almost all the experts were predicting.

So what lessons, if any, can we learn from these results (other than that I do a decent job of predicting mid-term elections)?

1. Obama has been a disaster for his party. At their high point in 2009, Democrats controlled 60 seats in the Senate and 257 seats in the House of Representatives. But thanks to unpopular and misguided policies such as Obamacare and the faux stimulus, the President created conditions for GOP landslides in 2010 and 2014. And don’t forget that Republicans also have made huge gains in state legislatures during Obama’s presidency. I already joked that libertarians were going to give the President a “man of the year” award for reawakening interest in the principles of liberty, but Republicans may want to give him an even bigger award and make it official rather than satirical.

2. Obamacare is still deeply unpopular. It appears that at least 17 Democratic Senators since 2010 have been replaced by anti-Obamacare Republicans. That’s a remarkably large number of casualties. And don’t forget what happened to House Democrats in 2010. Some advocates of government-run healthcare claim that voters are no longer agitated about Obamacare and that Republicans didn’t make it a big issue. But if that’s the case, why did Republicans dramatically increased their focus on Obamacare as the elections got closer?

If you want an example of whistling past the graveyard, considering this blurb from an article in The Hill last April.

White House senior adviser Dan Pfeiffer on Sunday rejected the suggestion that Republicans will take control of the Senate in the midterm elections, saying that the GOP argument to repeal ObamaCare is a “political loser.”

I wonder what he would say if asked about Obamacare today?

3. The government shutdown was almost certainly a net plus for the GOP. Back in 2011, I explained that Republicans could play hard ball, largely based on what really happened during the 1995 government shutdown. And in 2013, I again defended a shutdown, pointing out that voters probably wouldn’t even notice that some government offices were closed, but they would remember that the GOP was branding itself as the anti-Obamacare party. The establishment, by contrast, thought the shutdown was a disaster for Republicans. Here’s some of what one academic wrote last October.

…the shutdown leveled the House playing field in a rather unexpected manner. …in a Congressional election today, Democrats would retake the House with >90% probability and a 50-seat margin.

And remember that many establishment Republicans felt the same way, excoriating Senator Cruz and others who wanted a line-in-the-sand fight over government-run healthcare. The moral of the story isn’t that shutdowns necessarily are politically desirable, but rather that it’s very important for a political party to find visible ways of linking itself to popular causes (such as ending Obamacare, fighting big government, etc).

4. Voters still hate taxes. I’m stunned that Governor Brownback won reelection in Kansas, but I’m even more surprised that pro-tax Democrat gubernatorial candidates lost in deep-blue states such as Maryland, Illinois, and Massachusetts. The one common theme is that voters – when given a real option – generally prefer candidates who will let them keep more of their money. We also can learn something by reviewing the outcome of various ballot initiatives. By a 2-1 margin, Tennessee voters amended their constitution to prohibit an income tax from every being adopted. And by a 3-1 margin, Georgia voters made sure the top tax rate could never be raised. On the other hand, more than 60 percent of voters in Illinois voted for an advisory referendum that called for a class-warfare tax hike (even though they voted for a governor who will block that from happening).

A few other observations.

Scott Walker’s victory, along with the outcome of gubernatorial races in places such as Michigan and Illinois, suggests that unionized state bureaucrats no longer have carte blanche to pillage taxpayers. Or at least they no longer have the necessary political muscle to endlessly line their pockets at the expense of the overall electorate.

Rand Paul gets points for the most clever political satire of the evening, popularizing the #hillaryslosers hashtage along with some amusing images. Here’s the one for Kentucky.

Let’s close by reveling in some Schadenfreude. Here are some excerpts from a story in the Washington post in early 2013.

President Obama…is taking the most specific steps of his administration in an attempt to ensure the election of a Democratic­-controlled Congress in two years. …Obama, fresh off his November reelection, began almost at once executing plans to win back the House in 2014, which he and his advisers believe will be crucial to the outcome of his second term and to his legacy as president. …Obama has committed to raising money for fellow Democrats, agreed to help recruit viable candidates, and launched a political nonprofit group dedicated to furthering his agenda and that of his congressional allies. The goal is to flip the Republican-held House back to Democratic control, allowing Obama to push forward with a progressive agenda on gun control, immigration, climate change and the economy during his final two years in office… Obama has committed to eight fundraisers for the Democratic Congressional Campaign Committee this year… The president has also pledged to put his formidable campaign organization, now known as Organizing for Action, behind Democratic House candidates and to find ways to share its rich trove of voter data with the party’s campaign committee. …“If 2012 was a referendum on President Obama, then 2014 will be a referendum on the tea party Congress,” Israel said. “And the president and House Democrats are joined at the hip on this.”

Gee, things didn’t exactly turn out the way Obama hoped.

But Congressman Israel was right. Obama and the Democrats were joined at the hip.

Now the big question is whether voters will get a clear choice between big government and small government in 2016. If they do, this hypothetical poll shows the outcome.

But if it’s another Tweedle Dee vs Tweedle Dum election, then Washington’s ruling class will win regardless.

Read Full Post »

More than 100 years ago, George Santayana famously warned that, “Those who cannot remember the past are condemned to repeat it.”

At the time, he may have been gazing in a crystal ball and looking at what the Obama Administration is doing today.That’s because the White House wants to reinstate the types of housing subsidies that played a huge role in the financial crisis.

I’m not joking. Even though we just suffered through a housing bubble/collapse thanks to misguided government intervention (with all sorts of accompanying damage, such as corrupt bailouts for big financial firms), Obama’s people are pursuing the same policies today.

Including a bigger role for Fannie Mae and Freddie Mac, the two deeply corrupt government-created entities that played such a big role in the last crisis!

Here’s some of what the Wall Street Journal recently wrote about this crazy approach.

Federal Housing Finance Agency Director Mel Watt has one heck of a sense of humor. How else to explain his choice of a Las Vegas casino as the venue for his Monday announcement that he’s revving up Fannie Mae and Freddie Mac to enable more risky mortgage loans? History says the joke will be on taxpayers when this federal gamble ends the same way previous ones did. …unlike most of the players around a Mandalay Bay poker table, Mr. Watt is playing with other people’s money. He’s talking about mortgages that will be guaranteed by the same taxpayers who already had to stage a 2008 rescue of Fannie and Freddie that eventually added up to $188 billion. Less than a year into the job and a mere six years since Fan and Fred’s meltdown, has he already forgotten that housing prices that rise can also fall? …We almost can’t believe we have to return to Mortgage 101 lessons so soon after the crisis. …Come the next crisis, count on regulators to blame everyone outside of government.

These common-sense observations were echoed by Professor Jeffrey Dorfman of the University of Georgia, writing for Real Clear Markets.

The housing market meltdown that began in 2007 and helped trigger the recent recession was completely avoidable. The conditions that created the slow-growth rush into housing did not arise by accident or even neglect; rather, they were a direct result of the incentives in the industry and the involvement of the government. Proving that nothing was learned by housing market participants from the market meltdown, both lenders and government regulators appear intent on repeating their mistakes. …we have more or less completed a full regulatory circle and returned to the same lax standards and skewed incentives that produced the real estate bubble and meltdown. Apparently, nobody learned anything from the last time and we should prepare for a repeat of the same disaster we are still cleaning up. Research has shown that low or negative equity in a home is the best predictor of a loan default. When down payments were 20 percent, nobody wanted to walk away from the house and lose all that equity. With no equity, many people voluntarily went into foreclosure because their only real loss was the damage to their credit score. …The best way to a stable and healthy real estate market is buyers and lenders with skin in the game. Unfortunately, those in charge of these markets have reversed all the changes… The end result will be another big bill for taxpayers to clean up the mess. Failing to learn from one’s mistakes can be very expensive.

Though I should add that failure to learn is expensive for taxpayers.

The regulators, bureaucrats, agencies, and big banks doubtlessly will be protected from the fallout.

And I’ll also point out that this process has been underway for a while. It’s just that more and more folks are starting to notice.

Last but not least, if you want to enjoy some dark humor on this topic, I very much recommend this Chuck Asay cartoon on government-created bubbles and this Gary Varvel cartoon on playing blackjack with Fannie Mae and Freddie Mac.

P.S. Now for my final set of predictions for the mid-term elections.

On October 25, I guessed that Republicans would win control of the Senate by a 52-48 margin and retain control of the House by a 246-189 margin.

On October 31, I put forward a similar prediction, with GOPers still winning the Senate by 52-48 but getting two additional House seats for a 249-187 margin.

So what’s my final estimate, now that there’s no longer a chance to change my mind? Will I be prescient, like I was in 2010? Or mediocre, which is a charitable description of my 2012 prediction?

We won’t know until early Wednesday morning, but here’s my best guess. Senate races are getting most of the attention, so I’ll start by asserting that Republicans will now have a net gain of eight seats, which means a final margin of 53-47. Here are the seats that will change hands.

For the House, I’m also going to move the dial a bit toward the GOP. I now think Republicans will control that chamber by a 249-146 margin.

Some folks have asked why I haven’t made predictions about who will win various gubernatorial contests. Simply stated, I don’t have enough knowledge to make informed guesses. It would be like asking Obama about economic policy.

But I will suggest paying close attention to the races in Kansas and Wisconsin, where pro-reform Republican Governors are facing difficult reelection fights.

And you should also pay attention to what happens in Illinois, Connecticut, Maryland, and Massachusetts, all of which are traditionally left-wing states yet could elect Republican governors because of voter dissatisfaction with tax hikes.

Last but not least, there will be interesting ballot initiatives in a number of states. Americans for Tax Reform has a list of tax-related contests. I’m particularly interested in the outcomes in Georgia, Illinois, and Tennessee.

There’s also a gun-control initiative on the ballot in Washington. And it has big-money support, so it will be interesting if deep pockets are enough to sway voters to cede some of their 2nd Amendment rights.

Returning to the main focus of the elections, what does it mean if the GOP takes the Senate? Well, not much as Veronique de Rugy explains in a column for the Daily Beast.

Republicans are projected to gain control of Congress this time around, worrying some Democrats that major shifts in policies, cutbacks in spending, and reductions in the size and scope of government are right around the corner. I wish! Rest assured, tax-and-spend Democrats have little to fear. Despite airy Republican rhetoric, they are bona fide big spenders and heavy-handed regulators…. Republicans may complain about bloated government and red tape restrictions when they’re benched on the sidelines, but their track record of policies while in power tells a whole different story—and reveals their true colors. …When in power, Republicans are also more than willing to increase government intervention in many aspects of our lives. They gave us No Child Left Behind, protectionist steel and lumber tariffs, Medicare Part D, the war in Iraq, the Department of Homeland Security and its intrusive and inefficient Transportation Security Administration, massive earmarking, increased food stamp eligibility, and expanded cronyism at levels never seen before. The massive automobile and bank bailouts were the cherries on top.

Veronique is right, though I would point out that there’s a huge difference between statist Republicans like Bush, who have dominated the national GOP in recent decades, and freedom-oriented Republicans such as Reagan.

We’ll perhaps learn more about what GOPers really think in 2016.

In the meantime, policy isn’t going to change for the next two years. Remember what I wrote last week: Even assuming they want to do the right thing, Republicans won’t have the votes to override presidential vetoes. So there won’t be any tax reform and there won’t be any entitlement reform.

Read Full Post »

I shared a chart back in February that shows how long it takes to double GDP based on different growth rates.

For instance, if the economy grows only 1 percent per year, it takes 70 years before the economy doubles. Think Italy or some other decrepit European welfare state.

But if the economy grows 4 percent annually, the economy doubles in less than 20 years. I’d point to Hong Kong and Singapore as examples, but they grow even faster.

The key point is that long-run growth is the key to a more prosperous society.

And that’s why the relatively weak growth of the Bush-Obama years is so troubling. Moreover, CNBC reports that some policy makers fret that the economy could be facing a period of prolonged stagnation.

Is there something seriously wrong with the economy? It’s a scary prospect, and a concern that’s gotten louder and louder over the past year. In economic circles, it goes by the alliterative name of “secular stagnation.” And it’s a phrase that Fed watchers are likely to hear more and more in the months ahead. Recent comments by the vice chairman of the Federal Reserve, Stanley Fischer, indicate questions within the central bank about whether the slow growth that has followed the recent recession could reflect, or at least could potentially morph into, longer-term issues within the economy. …The theory of secular stagnation was first developed by Alvin Hansen, who wondered in the midst of the Great Depression whether diminishing investment opportunities in a maturing economy would stunt economic growth and permanently prevent full employment—at least in the absence of robust government intervention… These theories have found a new life in the aftermath of the so-called Great Recession, as the U.S. is experiencing (albeit to a much less dramatic degree) slow growth over a relatively long time period.

I agree and disagree.

I agree that something is wrong with the economy.

But I disagree with the Keynesian interpretation that the economy’s weakness is because of some mysterious malady that requires government intervention.

Indeed, the problems exist because politicians are doing too much. If we want faster growth and more jobs, we need government to get out of the way.

This Michael Ramirez cartoon is one way of thinking about the issue.

But if you want more substance, Larry Kudlow and Steve Moore have some very sound analysis, which has been reprinted at Townhall.com.

They start by looking at the present-day Keynesian view.

…today many leading economists are throwing up their arms in frustration and assuring us that 2 percent growth is really the best we can do. Barack Obama’s former chief economist Larry Summers began this chant of “secular stagnation.” It’s a pessimistic message, and it’s now being echoed by Federal Reserve vice chair, Stanley Fischer. He agrees with Summers that slow growth in “labor supply, capital investment, and productivity” is the new normal that’s “holding down growth.” …Americans seem to be buying into this dreary assessment. A new Wall Street Journal poll finds that three out of four Americans think the next generation will be worse off than this generation. So long, American Dream.

But the problem isn’t the economy. Or it wouldn’t be if it wasn’t for all the meddling.

Larry and Steve explain that the crowd in Washington deserves blame for the economy’s sub-par performance.

…secular stagnation is all wrong. It’s a cover up for mistaken economic policies that began in the Bush years and intensified during the Obama administration. It would be hard to conceive of a worse set of policy prescriptions than the ones Larry Summers and his Keynesian collaborators have conjured up. We’ve had bailouts, massive spending-stimulus plans, tax increases on “the rich,” Obamacare, rudderless monetary policy that has collapsed the dollar, the Dodd-Frank bill, anti-carbon policies, a vast expansion of the welfare state, and on and on. …The blame falls on the White House and the Fed, and the discredited Keynesian model that government spending, debt, and cheap money are the way to restore growth. …the architects of this colossal policy failure are the same people who promised they would rebuild the U.S. economy “for the long term,” as Barack Obama put it in 2009. But they’re now blaming the stagnant economy on structural problems beyond their control.

Amen.

Just look at the data from the Minneapolis Fed to see how weak the economy is today compared to previous business cycles.

Fortunately, it’s not that difficult to restore growth.

We learned in the 1960s and 1980s how fast the economy can get back on its feet when policy mistakes are reversed. …The secular-stagnation argument is just an excuse for liberal policy failures. Keynesianism should now be recognized as snake oil.

By the way, I’d add the 1990s to that list.

There were some good reasons to dislike President Clinton, but America enjoyed more economic freedom as a result of the policies implemented during his presidency.

As a fiscal policy wonk, I’m especially happy about the spending restraint of the Clinton years.

P.S. Here are some good cartoons about Obamanomics.

Read Full Post »

Have you ever wondered why, in a hypothetical match-up, the American people would elect Ronald Reagan over Barack Obama in a landslide?

And have you ever wondered why Americans rate Reagan as the best post-WWII President and put Obama in last place?

There are probably a couple of reasons for these polling numbers, but I suspect one reason for the gap is that Reaganomics generated much better results than Obamanomics.

I’ve already made this point using data from the Minneapolis Federal Reserve Bank, but today we’re going to look at some updated information from Tom Blumer, who put together a strong indictment of Obama’s record for PJ Media.

He points out that both Reagan and Obama inherited very weak economies. But that’s where the similarity ends. Reagan pushed an agenda of free markets and small government while Obama doubled down on Bush’s statism.

The results, he explains, confirm that big government is the problem rather than solution.

Obama’s economic policy, with the help of a pliant Federal Reserve, has been built on the notion that massive deficit spending and easy money would bring the economy roaring back and “stimulate” job growth.  The former strategy was tried during the 1930s. It only succeeded in lengthening the Great Depression, as the nation’s unemployment rate never fell below 12 percent. The fact that Team Obama insisted on making the same mistakes, while at the same time unleashing the federal government’s regulatory apparatus to harass the economy’s productive participants, is enough to make reasonable people question whether this president and his administration have ever truly wanted to see a genuine recovery occur. On the other hand, five years of strong, solid and uninterrupted economic performance following a serious recession is how you create a positive economic legacy. Ronald Reagan’s post-recession economy — an economy which faced arguably greater challenges when he took office, particularly double-digit inflation and a prime interest rate of 20 percent — did just that.

Those are strong words, but I think the accompanying graphics are even more persuasive.

Here’s a chart comparing post-recession growth for both Presidents.

And here’s the data on jobs, including breakdown of private-sector employment gains.

And here are the numbers for median household income. Once again, Obama is presiding over dismal numbers, particularly when compared to the Gipper.

What’s especially ironic, as I explained back in March, is that rich people are the only ones who have experienced income gains during the Obama years.

So Obama claims that his class-warfare policy is designed to hurt the wealthy, but the rest of us are the ones actually paying the price.

Let’s look at one final chart.

These poverty numbers weren’t included in the article, but I think they’re worth sharing because you can see that both the poverty rate and the number of Americans in poverty fell once Reagan’s policies took effect in the early 1980s. Under Obama, by contrast, the best we can say is that the numbers aren’t getting worse.

One final point, I imagine that some leftists will argue that Mr. Blumer is being unfair by looking only at Reagan’s post-1982-recession numbers.

That’s a fair point…but only if you think that the recession was caused by Reagan’s policies. Like most economists, I disagree with that accusation. The recession almost certainly was an unavoidable consequences of inflationary monetary policy in the 1970s.

Indeed, Reagan deserves special praise for his willingness to endure short-term pain in order to address that problem and set the stage for future prosperity. Obama, by contrast, wants continued money printing by the Fed in hopes that easy money can cure problems caused by easy money.

As you might imagine, I’m skeptical about that approach.

P.S. Here’s some snarky humor comparing the Gipper with Obama. And if you liked the story of what happens when you try socialism in the classroom, you’ll also enjoy this video of Reagan schooling Obama.

Read Full Post »

« Newer Posts - Older Posts »

%d bloggers like this: