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Does Donald Trump have a consistent and coherent set of economic policies?

He sometimes says things indicating that he understands Washington is a cesspool of waste. But on other occasions, he seems to be singing off the same song sheet as Bernie Sanders.

Which is why, when I recently tried to dissect Trumponomics, I admitted to being clueless.

The honest answer is that I don’t know. He has put forth a giant tax cut that is reasonably well designed, so that implies more prosperity, but is he serious about the plan? And does he have a plan for the concomitant spending reforms needed to make his tax proposal viable? He also has lots of protectionist rhetoric, including a proposal for a 45 percent tax on Chinese products, which implies harmful dislocation to the American economy. Is he actually serious about risking a global trade war, or is his saber rattling just a negotiating tool, as some of his defenders claim?

For what it’s worth, I’m getting more skeptical that Trump would try to restrain and limit the federal government if he got elected.

And I have three recent news reports to underscore my concern.

Here’s a very disturbing example. Trump actually criticized Governor Scott Walker of Wisconsin for not raising taxes. Here’s an excerpt from a report in the U.K.-based Guardian.

Donald Trump attacked Wisconsin governor Scott Walker for failing to raise taxes in order to properly fund schools and roads on Tuesday, in a startling new break from rightwing orthodoxy… “There’s a $2.2bn deficit and the schools were going begging and everything was going begging because he didn’t want to raise taxes ’cause he was going to run for president,” said Trump. “So instead of raising taxes, he cut back on schools, he cut back on highways, he cut back on a lot of things.”

To dig deeper into the issue, Governor Walker had just endorsed Ted Cruz, so I can understand why Trump would try to take a few shots at someone who is supporting a rival for the GOP nomination.

But attacking the Wisconsin governor for successfully balancing his state’s budget without a tax hike? Sounds more like something Hillary would say. Maybe it’s time to induct Trump into the Charlie Brown Club.

Trump also doesn’t like federalism. Assuming he even knows what it is. In his column for the Washington Post, Professor Jonathan Adler shares some Q&A from a recent CNN interview with Trump.

QUESTION:  In your opinion, what are the top three functions of the United States government?

TRUMP:  Well, the greatest function of all by far is security for our nation.  I would also say health care, I would also say education.

This doesn’t sound like a candidate who wants to reduce the federal government’s footprint.

Here’s more of the interview.

COOPER:  So in terms of federal government role, you’re saying security, but you also say health care and education should be provided by the federal government?

TRUMP:  Well, those are two of the things.  Yes, sure.  I mean, there are obviously many things, housing, providing great neighborhoods…

Huh, providing “great neighborhoods” is now a legitimate function of the federal government?!? I guess if Washington gets to be involved with underwear, neighborhood policy is just fine.

And why is he talking about education when the goal should be to eliminate the Department of Education?

To be fair, Trump also said in the interview that he wants to get rid of Common Core.  So it’s unclear what he actually envisions.

His answer on healthcare is similarly hazy.

COOPER:  And federal health care run by the federal government?

TRUMP:  Health care – we need health care for our people.  We need a good – Obamacare is a disaster.  It’s proven to be…

COOPER:  But is that something the federal government should be doing?

TRUMP:  The government can lead it.

So he wants the federal government involved, but he also thinks Obamacare is a “disaster.” I certainly agree about the Obamacare part, but once again we’re left with no idea whether a President Trump would make good reforms of bad reforms (i.e., would he move the “health care freedom meter” in the right direction or wrong direction?).

One thing that is clear, however, is that Trump doesn’t seem to have any core principles about the size and scope of the federal government.

He may not even realize that federalism is a key issue for advocates of limited and constitutional government.

Last but not least, Trump criticized Senator Cruz for the partial government shutdown fight that occurred in 2013. Here are some passages from a report by Byron York in the Washington Examiner.

When Trump did get around to Cruz, his critique focused…on the 2013 partial government shutdown. …He goes and he stands on the floor of the Senate for a day and a half and he filibusters …. To stand there and to rant and rave for two days and to show people you can filibuster — and in the meantime, nothing was accomplished.

I guess this isn’t an issue of underlying principles, but it does give us some idea of whether a President Trump would be willing to fight the Washington establishment.

Moreover, his assessment of the shutdown fight is completely wrong. By reminding voters that Republicans were opposed to Obamacare, the GOP won a landslide victory in 2014.

But you don’t have to believe me. Even an ultra-establishment, anti-Cruz figure like Trent Lott (former senator and now lobbyist) grudgingly admits that the shutdown was a success.

Cruz views the shutdown as a victory because the Affordable Care Act remains unpopular and Republicans swept to victory in 2014. Lott said…“That was their strategy, and it worked, so maybe they’re right and I’m wrong.”

The bottom line is that America is heading in the wrong direction, with Washington projected to consume ever-larger amounts of the economy’s output. This is a recipe for continued economic weakness in the short run and economic crisis in the long run.

Turning policy in the right direction requires a principled President who is fully committed to overcoming resistance from the special interests that dominate Washington’s culture.

I still don’t pretend to know where Donald Trump is on the big issues, but I’m not holding my breath for good results if he somehow gets elected.

P.S. Though I do expect more examples of clever political humor the longer he’s in the public eye.

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At this stage, it’s quite likely that Donald Trump will be the Republican presidential nominee. Conventional wisdom suggests that this means Democrats will win in November. On the other hand, conventional wisdom also told us that Trump would never get this far.  So it’s unclear what will happen in the general election, particularly given the ethical cloud surrounding the presumptive Democratic nominee.

So let’s contemplate what a potential Trump Administration would mean for economic liberty and American prosperity. Would the United States become more like Hong Kong, with a smaller burden of government and less intervention? Or more like France, with higher taxes and spending, along with additional cronyism and red tape?

The honest answer is that I don’t know. He has put forth a giant tax cut that is reasonably well designed, so that implies more prosperity, but is he serious about the plan? And does he have a plan for the concomitant spending reforms needed to make his tax proposal viable?

He also has lots of protectionist rhetoric, including a proposal for a 45 percent tax on Chinese products, which implies harmful dislocation to the American economy. Is he actually serious about risking a global trade war, or is his saber rattling just a negotiating tool, as some of his defenders claim?

And what about entitlement programs, which arguably represent the greatest long-term threat to America’s economy? Trump certainly gives the impression that he thinks Social Security, Medicare, and Medicaid don’t need to be reformed. Is he really serious when he makes this claim?

If we take what he says seriously, Trump is more statist than every Republican who sought the GOP nomination but less statist than both Hillary Clinton and Bernie Sanders.

Though I confess I’m basing that opinion solely on whether I agreed with the candidates, as measured by the I-Side-With political quiz.

So let’s see what others have to say.

My colleague David Boaz, writing for National Review, is not impressed.

Without even getting into his past support for a massive wealth tax and single-payer health care, his know-nothing protectionism, or his passionate defense of eminent domain, I think we can say that this is a Republican campaign that would have appalled Buckley, Goldwater, and Reagan.

Speaking of National Review, Kevin Williamson argues that Trump represents the worst of cronyism.

The Tea Party’s fundamental complaint, which was the same complaint put forward by Occupy Wall Street minus the Maoist daydreaming, is that there exists a corrosive and distasteful relationship between certain politically connected businesses and the politicians who are both their patrons and their clients. Donald Trump is the face of that insalubrious relationship, a lifelong crony capitalist who brags about buying political favors.

Last but not least, my former UGA economics professor Paul Rubin (now at Emory), in a column for the Wall Street Journal, explains that Trump (and Sanders) incorrectly thinks the economy is a fixed pie.

Messrs. Trump and Sanders have been led astray by zero-sum thinking, or the assumption that economic magnitudes are fixed when they are in fact variable. If the world is zero-sum, then the number of jobs is fixed, as is gross domestic product. In Mr. Trump’s mind, if there are more Mexican workers in the U.S., then American workers must lose their jobs. In the real, positive-sum world where Mr. Trump doesn’t live, Mexican workers also consume, thus increasing GDP and creating new jobs. …Similar arguments apply to Mr. Trump’s analysis of Chinese imports. In a world of fixed GDP and prices, imports of goods from China merely replace goods that otherwise would have been produced by American workers. In the real world, imports reduce prices and increase GDP, so workers, who are also consumers, benefit from imports of lower-cost goods and increase their consumption of other goods. …Zero-sum thinking persists because it is superficially appealing. Mr. Trump’s policies would in theory benefit Americans and increase jobs. …In the actual, positive-sum world we live in, their policies…would, if adopted, lead to an economic depression that would make the 1930s look prosperous.

I actually think Prof. Rubin overstates his conclusion. It took a lot of truly awful policies by Herbert Hoover and Franklin Roosevelt to produce the Great Depression.

Barack Obama didn’t come close to Hoover and Roosevelt with his bad policies and I suspect even the bad version of Donald Trump would (thankfully) fall short as well.

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James Pethokoukis of the American Enterprise Institute has an intriguing idea. Instead of a regular debate, he would like presidential candidates to respond to a handful of charts from the recent Economic Report of the President that supposedly highlight very important issues.

We’d quickly find out — I hope — who has real deep knowledge on key economic issues and challenges facing America.

I don’t always agree with Pethokoukis’ views (see here, here, and here), but he has a very good idea. He may not have picked the charts I would rank as most important, but I think 5 of the 6 charts he shared are worthy of discussion (I’m not persuaded that the one about government R&D spending has much meaning).

Let’s look at them and elaborate on why they are important.

We’ll start with the chart of labor productivity growth, which has been declining over time.

I think this is a very important chart since productivity growth is a good proxy for the growth in living standards (workers, especially in the long run, get paid on the basis of what they produce).

So what should we think about the depressing trend of declining productivity numbers?

First, some of it is unavoidable. The United States has an advanced economy and we don’t have a lot of “low-hanging fruit” to exploit. Simply stated, it’s much easier to boost labor productivity in a poor country.

Second, to the degree we want to boost labor productivity, more investment is the best option. That’s why I’m so critical of class-warfare policies that penalize capital formation. When politicians go after the “evil” and “bad” rich people who save and invest, workers wind up being victimized because there’s less saving and investment.

But this isn’t just an issue of machines, equipment, and technology. We also should consider human capital, which is why it is a horrible scandal that America spends more on education – on a per-capita basis – than any other nation, yet we get very mediocre results because of a government monopoly school system that – at least in practice – seems designed to protect the privileges of teacher unions.

The next chart looks at the number of companies entering and exiting the economy. As you can see, the number of businesses that are disappearing is relatively stable, but there’s been a disturbing decline in the rate of new-company formation.

As with the first chart, some of this may simply be an inevitable trend. In a mature economy, perhaps the rate of entrepreneurship declines?

But that’s not intuitively obvious, and I certainly haven’t seen any evidence to suggest why that should be the case.

So this chart presumably isn’t good news.

Some of the bad news is probably because of bad government policy (capital gains taxes, regulatory barriers, licensing mandates, etc) and some of it may reflect undesirable cultural trends (less entrepreneurship, more risk-aversion, more dependency).

Speaking of which, the next chart looks at the share of the workforce that is regulated by licensing laws.

This is a very disturbing trend.

Licensing rules basically act as government-created barriers to entry and they are especially harmful to poor people who often lack the time and money to jump through the hoops necessary to get some sort of government-mandated certification.

By the way, this is one area where the federal government is not the problem. These are mostly restrictions imposed by state governments.

The next chart looks at how much money is earned by the rich in each country.

I think this chart is very important, but only in the sense that any intelligent candidate should know enough to say that it’s almost completely irrelevant and misleading.

The economy is not a fixed pie. Income earned by the “rich” is not at the expense of the rest of us (assuming honest markets rather than government cronyism). It doesn’t matter if the rich are earning more money. What matters is whether there’s growth and mobility for people on the lower rungs of the economic ladder.

A good candidate should say the chart should be replaced by far more important variables, such as what’s happening to median household income.

Lastly, here’s a chart comparing construction costs with housing prices.

This data is important because you might expect there to be a close link between construction costs and home prices, yet that hasn’t been the case in recent years.

There may be perfectly reasonable explanations for the lack of a link (increased demand and/or changing demographics, for instance).

But in all likelihood, there may be some undesirable reasons for this data, such as Fannie-Freddie subsidies and restrictionist zoning policies.

As with the licensing chart, this is an area where the federal government doesn’t deserve all the blame. Bad zoning policies exist because local governments are catering to the desires of existing property owners.

By the way, while I think Pethokoukis shared some worthwhile charts, I would have augmented his list with charts on the rising burden of government spending, the tax code’s discrimination against income that is saved and invested, declining labor-force participation, changes in economic freedom, and the ever-expanding regulatory burden.

If candidates didn’t understand those charts and/or didn’t offer good solutions, they would be disqualifying themselves (at least for voters who want a better future).

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If pessimism was an Olympic event, I used to think I might be favored to win a medal. After all, growing levels of dependency outside of Washington and rampant corruption inside of Washington sometimes lead me to conclude that America is doomed to a Greek fiscal future.

But compared to some people, maybe I’m just an amateur Cassandra. Or even a Pollyanna.

Holman Jenkins of the Wall Street Journal has an ultra-pessimistic column today arguing that “many of us believe the entitlement programs need to be reformed” but worrying about “Republicans who pose as ‘conservative’ defenders of Social Security and Medicare.”

And part of his column is rather convincing since he points out that Donald Trump has criticized Republicans who favor reform.

…the meaning of Trumpism…goes like this: “…Every Republican wants to do a big number on Social Security, they want to do it on Medicare, they want to do it on Medicaid. And we can’t do that. And it’s not fair to the people that have been paying in for years and now all of the sudden they want [it] to be cut.” Mr. Trump is a political harbinger here of a new strand of populist Republicanism.

To be fair, Trump’s comments aren’t necessarily anti-reform. One could argue that he’s simply saying that benefits for existing retirees and older workers shouldn’t be adversely impacted.

But since “The Donald” hasn’t expressed any support for reforms that would create better and more viable options for younger workers, Jenkins is probably right to be pessimistic.

But he also argues that Tea Party-type Republicans are opposed to reform.

The tea party animus toward ObamaCare is…means-tested new entitlements…are viewed as a threat to the traditional, universal, “earned,” middle-class retirement programs of Social Security and Medicare. …The unspoken tea party stance of defending the good old-fashioned entitlements of “real” Americans is increasingly, in dog-whistle terms, what differentiates one Republican from another.

While it’s almost certainly true that there’s more animosity to redistribution-oriented programs such as Obamacare than there is to so-called earned entitlements, I think Holman misreads the Tea Party crowd.

Based on my speeches to – and other interactions with – these activists, I have never detected any measurable hostility to Social Security reform and Medicare reform. Fixing those programs may not be at the top of their agenda, but they’re not on the wrong side.

Moreover, I work closely with folks on Capitol Hill and I almost never hear about any meaningful opposition from Tea Partiers. And since House GOPers have approved budgets with genuine entitlement reform for five consecutive years, there’s been plenty of time for opposition to materialize.

Jenkins also is glum because Governor Christie, who has openly expressed support for reform, hasn’t fared well. And he notes that Senator Rubio has rejected reforms that would harm current seniors.

Chris Christie, who went nowhere in Iowa, did himself no favor by dragging Social Security and Medicare into every debate, however much those programs need to be addressed. Marco Rubio was just as quick to modify any implication that Republicans therefore are entitlement reformers: “We are talking about reforms for future generations. Nothing has to change for current beneficiaries. My mother is on Medicare and Social Security. I’m against anything that’s bad for my mother.”

I’m not a political expert, so I won’t pretend to know why Chris Christie didn’t get many votes in Iowa, but I don’t think it’s right to label Marco Rubio as an opponent. He’s been very upfront about supporting much-needed structural reform of Medicare and Medicaid. He simply doesn’t want to change the rules for existing retirees and older workers.

You can argue that such a condition makes it harder to save money in the short run, but I’m more concerned about dealing with the long-run fiscal challenge (as seen in these IMF, BIS, and OECD numbers). So Rubio’s position doesn’t strike me as a problem. Indeed, I think he’s pushed the envelope in the right direction, particularly since he comes from a state with so many seniors.

And since Ted Cruz also has said similar things about entitlement reform, that means both top-tier GOP candidates (other than Trump) are willing to do the right thing to restore fiscal sanity.

To be sure, maybe I am being naively optimistic. Perhaps Rubio or Cruz will win and will decide to kick the can down the road, even with a GOP Congress that might be primed for reform.

If that happens and we miss what may be a once-in-a-lifetime opportunity for genuine entitlement reform, I’ll be very unhappy and Holman Jenkins will have demonstrated that pessimism is a much smarter assumption when contemplating the actions of politicians.

In which case my already-low opinion of politicians would drop to a record depth. And it also might be time to escape to a country that still has some sensible people and is less likely to suffer fiscal collapse.

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What’s the link between government employees and the Iowa Republican Caucus?

You’re probably thinking there’s little or no connection. After all, bureaucrats presumably would more likely be interested in the choice on the other side between the two peas in the statist pod, right?

That’s true, but bear with me. To understand the link I’m going to make, start by reading Kevin Williamson’s scathing column posted at National Review. Here are my favorite passages.

Veterans Affairs hospitals had, through their negligence and stupidity, killed more of our servicemen than died during any year of the Iraq war, and then engaged in a massive criminal cover-up. Legislation was introduced to make it easier to fire people for — let’s focus here — killing veterans through their negligence and stupidity. But government employees are the single most important Democratic interest group, and the president and his congressional allies complained that the bill was too harsh on public servants who were killing veterans through their negligence and stupidity. And so the bill died in the Senate… In the Treasury Department, the EPA, and the FCC, employees have been found to routinely spend the equivalent of a full workday every week watching pornography on their office computers. Most of those crank-yanking bureaucrats are still on your payroll. At the Commerce Department, paralegals spent their days shopping online and trolling dating sites because they were assigned no work — their supervisors were afraid giving their employees work would “antagonize the labor union.” …The IRS and the AFT are routinely used as political weapons. …Beyond spending on (overwhelmingly Democratic) political campaigns, government workers and their unions also show up to vote, to knock on doors, and to bully, harass, and threaten nonconformists. They are the backbone of the Democratic party — and they are thieving, lazy, grasping, thieving, dishonest, thieving, pervy, thieving, detestable, despicable, thieving, thieving thieves… We are ruled by criminals.

Wow, I thought I sometimes employed a bit of sarcasm when writing about overpaid scroungers in the bureaucracy. Heck, I even created a Bureaucrat Hall of Fame to mock our paper-pushing overseers. But Kevin doesn’t mince words.

At this point, you’re probably wondering what this has to do with the GOP contest in Iowa.

Well, I think “The Donald” had a great opportunity to exploit this issue. He’s the guy who’s famous for “You’re fired” and he could have used that reputation to argue he would clean house in the federal bureaucracy.

Best of all, he wouldn’t even have to try very hard.

According to Government Executive, a non-trivial number of federal workers would retire or quit if Donald Trump is elected.

One in four federal workers would consider leaving their jobs if Trump were elected president, according to a new survey conducted by the Government Business Council, Government Executive Media Group’s research arm. About 14 percent of respondents said they would definitely consider leaving federal service under President Trump, while an additional 11 percent said they might. The findings indicate those leaving government would come from agencies’ top ranks… Among Democrats, 42 percent said they would consider leaving, while 48 percent would not.

Imagine what would have happened if Trump’s people had run commercials with this information, or handed out copies of the article at the Caucus.

Just think of all the taxpayers who might have been convinced that there was finally a candidate who would get rid of some of the over-compensated dead wood in Washington.

Definitely a missed opportunity for The Donald.

By the way, I should take this opportunity to point out that bureaucrats aren’t necessarily bad people. I realize it’s a trite phrase, but some of my best friends work for the government.

Nor are they all leftists.

The article reports that a majority would have been embarrassed with Trump in the White House, but there was also widespread disdain for Hillary. And Rubio actually did better than either Democrat.

…a majority — about six in 10 — would be “embarrassed” to have him as their boss. About half of respondents said the same of Hillary Clinton, compared to 45 percent for Sen. Ted Cruz, R-Texas, and 37 percent for Sen. Bernie Sanders, I-Vt. Just one in five said the same of Sen. Marco Rubio, R-Fla.

I have two additional observations about Iowa.

First, it was great to see that the corrupt and sleazy ethanol industry failed in its all-out effort to defeat Cruz. Hopefully this will be interpreted as a sign that politicians no longer have to kneel at the altar of King Corn.

Second, I find it remarkable that Rubio is now being portrayed as the “establishment” candidate. This is a guy who was part of the Tea Party revolt. A guy who defeated the establishment-endorsed governor to win his Senate seat. A guy who has one of the most pro-market voting records in the Senate. A guy from a state filled with old people who is openly pro-entitlement reform. So if he’s the “establishment,” that’s a major victory.

By the way, the first observation doesn’t mean you should vote for Cruz and the second observation doesn’t mean you should vote for Rubio. I’m simply making two points that should be encouraging for advocates of good policy.

Actually, let me add a third observation. In my prediction yesterday, I guessed Cruz would come in first with 28 percent, and…drum roll, please…he came in first with 28 percent. And I said he would be followed by Trump, Rubio, Carson, Paul, and Bush, all of which was true. And I predicted Hillary would beat Bernie.

Sure, some of my percentages were off, but I’ll take this as a partial victory.

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Because I don’t like their plans for a value-added tax, some people seem to think that I am politically opposed to Rand Paul and Ted Cruz.

That’s not true. Both Senators are generally strong proponents of free markets and limited government, so the fact that they have one bad policy position shouldn’t a disqualifying characteristic.

But since I’m a policy wonk (and because I work at a non-profit think tank), it’s not my role to tell people how to vote anyhow. Instead, my niche in life is to analyze policy proposals. And if that means I say something nice about a politician who is normally bad, or something critical of a politician who is normally good, so be it.

In other words, nothing I write is because I want readers to vote for or vote against particular candidates. I write to educate and inform.

With all those caveats out of the way, let’s look at the federal government’s odious handouts for the ethanol industry, a very important issue where Rand Paul and Ted Cruz unambiguously are on the side of the angels.

My colleague Doug Bandow summarizes the issue nicely in a column for Newsweek.

Senator Ted Cruz has broken ranks to criticize farmers’ welfare. …Senator Rand Paul also rejects the conventional wisdom…the Renewable Fuel Standard, which requires blending ethanol with gasoline, operates as a huge industry subsidy. Robert Bryce of the Manhattan Institute figured the requirement cost drivers more than $10 billion since 2007. …Ethanol has only about two-thirds of the energy content of gasoline. Given the energy necessary to produce ethanol—fuel tractors, make fertilizer and distill alcohol, for instance—ethanol actually may consume more in fossil fuels than the energy it yields. The ethanol lobby claims using this inferior fuel nevertheless promotes “energy independence.” However, …the price of this energy “insurance” is wildly excessive. …”By creating an artificial energy demand for corn—40 percent of the existing supply goes for ethanol—Uncle Sam also is raising food prices. This obviously makes it harder for poor people to feed themselves, and raises costs for those seeking to help them.” Nor does ethanol welfare yield an environmental benefit, as claimed. In fact, ethanol is bad for the planet. …Ethanol is a bad deal by any standard. Whomever Iowans support for president, King Ethanol deserves a bout of regicide.

Here’s some of the Wall Street Journal’s editorial on the topic.

Mr. Cruz does deserve support in Iowa for…his…lonely opposition to the renewable fuel standard that mandates ethanol use and enriches producers in the Hawkeye State. The Senator refused to bow before King Ethanol last year, and he’s mostly held fast even though Iowa is where anti-subsidy Republicans typically go to repent. …the Texan is right that ethanol is one of America’s worst corporate-welfare cases. The mandate flows in higher profits to a handful of ethanol producers and keeps the price of corn artificially high, all other demand being equal. This raises the price of food. Al Gore and the greens once supported ethanol but gave up on it when studies showed it did nothing for the environment because of the energy expended in its production. So for those of you keeping track of this outsider feud on your establishment scorecards, mark ethanol as one for Mr. Cruz. In this case he’s standing on principle.

Not only does it raise the price of food, Washington’s mandate for ethanol use (the “renewable fuels standard”) means higher prices for motorists.

Here are the key findings on the topic from the Congressional Budget Office.

While Senators Cruz and Paul are fighting on the right side, Donald Trump is cravenly bowing to the special interests that want continued ethanol handouts. Jillian Kay Melchior explains for National Review.

One of the most destructive environmental subsidies in the United States has found an enthusiastic supporter in Donald Trump. “The EPA should ensure that biofuel . . . blend levels match the statutory level set by Congress,” he said yesterday in Iowa, adding that he was “there with you 100 percent” on continuing federal support for ethanol. …federal support for ethanol is a bum deal for Americans. Under the 2007 Independence and Security Act, Congress mandated that the United States use 36 billion gallons of biofuels, including corn ethanol and cellulosic biofuel, by 2022. And the federal government not only requires the use of ethanol; it also subsides it. Tax credits between 1978 and 2012 cost the Treasury as much as $40 billion. Moreover, numerous other federal programs, spanning multiple agencies, allot billions of dollars to ethanol in the form of grants, loan guarantees, tax credits, and other subsidies. …Ethanol-intensive fuel blends can wreak havoc on car, lawnmower, and boat engines. In fact, many vehicle manufacturers will no longer offer warranties when ethanol comprises 10 percent or more of fuel; engine erosion simply becomes too common. …perhaps it’s not surprising that Trump likes federal support of ethanol. After all, the real-estate mogul’s business model has historically hinged on using tax abatements and other subsidies to make his building projects profitable. …Trump’s support for ethanol belies his populist Main Street rhetoric. In reality, he’s just another rich, East Coast politician who would prop up special interests at the expense of the taxpayer.

The bottom line is that ethanol handouts are one of the most notoriously corrupt subsidies that are dispensed by Washington.

They also violate my Bleeding-Heart Rule by imposing costs on lower- and middle-income people to reward politically connected fat cats with deep pockets.

Policy makers who oppose ethanol deserve praise, especially when they are willing to say and do the right thing in a state (like Iowa) that has a lot of recipients of this execrable form of corporate welfare.

P.S. I will get really excited if a candidate goes to Iowa and explains that we should get rid of the entire Department of Agriculture.

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I wouldn’t be completely distraught to have Clinton in the White House in 2017. But before concluding that I’ve lost my mind, I’m thinking of Bill Clinton, not his far more statist (though similarly dodgy) spouse.

You’ll see what I mean below.

In a column for National Review, Deroy Murdock has some fun by pointing out that Bill Clinton just unintentionally attacked Barack Obama.

Bill Clinton…unsealed an indictment against Obama’s economy. …Hillary’s “secret weapon” told Granite State voters Monday, “I think this election is about restoring broadly shared prosperity, rebuilding the middle class, giving kids the American Dream back.”

Why is this an attack against Obama?

For the simple reason that we haven’t had “broadly shared prosperity” during the Obama years.

…a far-left Democrat has been president for the past seven years. The economic stagnation that Clinton critiqued is Obama’s. In Obama’s first or second year, Clinton might have managed to blame Baby Bush’s massive spending, red tape, and nationalizations for America’s economic woes and middle-class anxieties. But in Obama’s seventh year, this excuse has rusted. Obamanomics has narrowed prosperity, dismantled the middle class, and snatched the American Dream from America’s kids.

Deroy then compared the economic recovery America enjoyed under Reagan with the far-less-robust recovery taking place today.

In the 25 quarters since the Great Recession, Obama’s average, inflation-adjusted annual Gross Domestic Product growth has limped ahead at 2.2 percent. During Ronald Reagan’s equivalent interval, which began in the fourth quarter of 1982, such GDP growth galloped at 4.8 percent. …The total-output gap between Reagan and Obama is a whopping $10.6 trillion. …Under Reagan, private-sector jobs expanded 23.6 percent, versus the average recovery’s 17.0 percent, and 11.6 percent under Obama — less than half of Reagan’s performance. If Obama had equaled Reagan, America would enjoy some 12.9 million additional private-sector jobs. …Under Reagan, real after-tax income per person grew 3.1 percent, compared with 2.5 percent growth in an average recovery, and 1.2 percent under Obama. Had Obama delivered like Reagan, every American would have accumulated an extra $21,306 since June 2009.

All of this analysis is music to my ears and echoes some of the points I’ve made when comparing Reagan and Obama.

But I want to augment this analysis by adding Bill Clinton to the mix.

And I want to make this addition because there’s a very strong case to be made that we actually had fairly good policy during his tenure. Economic freedom increased because the one significantly bad piece of policy (the failed 1993 tax hike) was more than offset by lots of good policy.

Here’s a chart I put together showing the pro-market policies that were adopted during the Clinton years along with the one bad policy. Seems like a slam dunk.

At this point, I should acknowledge that none of this means that Bill Clinton deserves credit for the good policies. Most of the good reforms – such as 1990s spending restraint – were adopted in spite of what he wanted.

But at least he allowed those policies to go through. Unlike Obama, he was willing to be practical.

In any event, what matters is that we had better policy under Clinton than under Obama. And that’s why it’s useful to compare economic performance during those periods.

The Minneapolis Federal Reserve has a very interesting and useful webpage (at least to wonks) that allows users to compare various recoveries on the basis of GDP growth and job creation.

I’ve used this data to compare Reagan and Obama, so now let’s add the Clinton years to the mix. The following two charts from the Minneapolis Fed show the post-1981 recovery in blue, the post-1990 recovery in yellow, and the post-2007 recovery in red.

These numbers don’t match up exactly with when presidents took office, but it’s nonetheless apparent that we got the best performance under Reagan, and also that Clinton was much better than Obama.

Here’s the chart with the job numbers.

And here are the numbers for gross domestic product.

Here’s the bottom line.

Party labels don’t matter. Policy is what counts.

When the burden of government expands, like we saw with Jimmy Carter and Barack Obama on the Democrat side, but also with Richard Nixon, George H.W. Bush, and George W. Bush on the Republican side, the economy under-performs.

Similarly, when the burden of government is reduced, like we saw under Bill Clinton and Ronald Reagan, the economy enjoys relative prosperity.

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