Economics Archives

A Scintillating Post on Budgets

Well, no, it won’t necessarily be, as there’s very little scintillating about that topic (unless you’re an economist, but maybe not even then). But I just wanted to weigh in on the big topic at hand in Washington; the battle over the budget.

Understand that this is the current year’s budget we’re talking about. When the Democrats held majorities in both houses of Congress, they couldn’t pass a budget. And now that the Republicans have been swept into the budgetary side of the legislature, it’s even more difficult. But the Dems have no one to blame but themselves for this situation. If they’d passed a budget, Republicans, and especially the Tea Partiers among them, would have little to say on real spending until the fall. But free-for-all spending without a budget is sort of liberal utopia in a nutshell, so being hoist on their own petard elicits some satisfying schadenfreude.

OK, enough clichés. Moving on.

Both sides say they want to be responsible with the budget, but the tsunami of red ink the Democrats have drowned us and our grandchildren in doesn’t speak to any real underlying principle of restraint. Things were bad when Republicans held Congress and the Oval Office, but, as predicted, the Democrats were orders of magnitude worse. The Tea Party was a response to both issues, and some of the Republican leadership sees this and is doing something about it. Not nearly enough, mind you, but a more concerted effort than we’ve seen in quite a long time.

Yet both sides have their sacrosanct programs. For Republicans, this is generally the military, and for Democrats, this is generally entitlements. Let’s start with the latter. A blogger I know from the Left asked an open question on how to cut $300 billion. His answer was, of course, stop the wars in Iraq and Afghanistan (though Libya went interestingly unmentioned; perhaps because that’s a "kinetic military action" and not a war) and cut military programs. Viola. He asked for other ideas, with one stipulation being that it shouldn’t be done "on the backs of the poor, sick, elderly and otherwise marginalized". That kind of phrasing generally means "entitlements are untouchable, and if you even look at them sideways, we have a demagogue script all ready to go." Thus, for liberals, entitlements can only ever go up, period. Yet that is the 800 pound gorilla in the room. Entitlements are eating up so much of the budget that much of the rest is just a case of nibbling around the edges. One suggestion I heard was to just take the 2008 budget and pass it. It would cut spending, including entitlements, and somehow, with that budget, we didn’t have rampant homelessness and the elderly starving to death. (And don’t talk to me about inflation; that was just 3 years ago.)

Which brings us to the Republicans. If entitlements are an 800 pound gorilla, the military is it’s 600 pound cousin. But here’s are the differences:

  • The military is a constitutionally-enumerated power of the government. Wealth redistribution is not.
  • While the rest of the world look down their collective noses at the size of our military and the money we spend on it, this is the same world that asks, "Where are the Americans?" anytime we don’t show up to an atrocity or a despot or any other international incident. Europe wouldn’t handle Kosovo. The Arab League wouldn’t handle Libya. Everyone sneers at our military, but wouldn’t know what to do if we didn’t have it.

Indeed, I would like to see some saving in military spending by, for starters, shutting down all those bases in Europe that were there to protect it from Soviet aggression. Turn them over to the locals and let them man the battle stations, or abandon them, whatever. But before you start cutting military spending on current hot spots, let’s get rid of the spending on spots that haven’t been hot for decades. There is money to be cut from the military if you’re willing to look. I’m sorry that manufacturing jobs may be lost, but if you’re keeping the jobs for the jobs’ sake and not for what’s being produced, how is that any different than socialist/communist make-work jobs?

The sacred cows need to be put on a diet. All of them

Friday Link Wrap-up

Six out of ten politicians in don’t think you know enough about the issues facing Washington to form a reasonable opinion. More telling to me is that, broken down by party, most Republicans trust you but way more Democrats don’t.

Another example of why it’s hard for government to cut spending (and why conservatives try to hard to hold back increases); Between 400,000 and 500,000 protest against government spending cuts in the UK.

Media Matters becomes a parody of itself, ignoring the media in general and concentrating solely on Fox News. James Taranto wonders:

Does a group that proclaims its purpose to be industrial sabotage qualify [for tax-exempt status]? It’s hard to imagine the answer is yes. Could, say, AT&T set up an organization to sabotage Sprint and do the whole thing free of taxes?

Did you know that opting out of Medicare (not asking for your tax money back, just not taking advantage of it and paying the tab yourself) will cause you to forfeit Social Security? Big, big government, anyone?

The European Union has an idea for clean air; ban all cars.

Irony Alert: President Obama accepted a transparency award from the open government community, in a closed, undisclosed meeting at the White House.

Barack Obama was against wars against brutal dictators that did not directly threaten the United State or its interests, before he was for them.

A salute to the men and women of Japan — the Fukushima 50 — who are putting their health and, indeed, lives on the line to bring the reactors under control.

Speaking tearfully through an interpreter by phone, the mother of a 32-year-old worker said: “My son and his colleagues have discussed it at length and they have committed themselves to die if necessary to save the nation.

“He told me they have accepted they will all probably die from radiation sickness in the short term or cancer in the long-term.

And finally, "regulating relationships". (Click for a larger image.)

Friday Link Wrap-up

The death panels have begun, deciding which newborn babies live or die. Don Surber says, "Under President Obama the purpose of the greatest medical system ever developed has been subverted from saving lives to saving money." To be fair, insurance companies could be accused of that as well. But they could compete on customer service. When the government tells them what they can and can’t do, and co-opts them into a national health system, the government then decides on what and will not be paid for. And there’s no competing with the government.

Eight years ago, the media was deeply concerned over whether Bush would go to war without Congressional approval. Today, when Obama actually does it, a collective yawn (with one small exception).

Running out of things to tax, politicians are now trying to push a toilet paper tax in Washington. No, really.

Hamas terrorists in Gaza broke a cease-fire to toss 50 rockets at Israel last Saturday, while the rest of the world’s gaze was diverted to Libya. Essay question: Did you hear about this in the media, and if not, why not?

And finally, speaking of the media covering for the President (click for a larger version):

"Where Are The Americans?"

Roger Kimball writing at Pajamas Media contrasts the big differences in the world’s response (and by "the world’s" he means "America’s") response to two earthquake/tsunami combinations; the 2004 Boxing Day one in Indonesia and the 2011 on in Japan. George Bush, who supposedly hated brown people, sprang into action, getting the US military (mostly the Navy, with its carriers that have huge desalination plants and bakeries, among other things) involved in the relief. Barack Obama sprang into action, on the golf course and at ESPN.  Kimball notes that, in this and other situations around the world, people everywhere are wondering, "Where are the Americans?"

Is this the kind of new diplomacy Obama said he would bring? Supposedly, we squandered all of the the goodwill we’d ever built up. And yet, now the world is wondering why were so aloof. To be sure, American relief organizations are helping out in full force, and that is one of the beauties of the American culture. We don’t expect the government to bear the full burden of charitable help, because frankly there are things the government just can’t do as efficiently.

But what government can do, and has done in the past, it’s not really doing that as much as it used to. Hope and change.

Friday Link Wrap-up

Civility Watch (combined with "Oh, that liberal media): If you missed the fact that Wisconsin Republicans were the target of death threats, you need to get your news from somewhere else.

Not taking this seriously were ABC, CBS, MSNBC, NBC, and NPR. LexisNexis and closed-caption dump searches of "Wisconsin and ‘death threat’" produced zero results for these so-called news outlets throughout the month of March.

Zero.

When you compare this to the hysterical coverage of last year’s Tea Party rallies and town hall protests, where conservatives were regularly depicted as either hostile or fomenting violence, one has to wonder how actual death threats against sitting politicians would not be considered newsworthy.

This seems particularly curious after all the talk about hostile rhetoric immediately following the shooting of Congresswoman Gabrielle Giffords (D-Ariz.) in January.

And more civility in DC:

Paul Craney, executive director of the D.C. Republican Committee, says that a shooter took out the windows at the GOP’s storefront office, near 13th and K streets NW, with a small-caliber projectile, possibly from an air gun.

Craney said he got a call from an alarm company early Wednesday morning but didn’t pick up the call. And when he showed up to work this morning the alarm was on. But he didn’t notice the fenestration damage until later in the day. “I was getting lunch, and noticed: Oh my god, our windows are all shot up.”

While on the phone with a reporter, Craney discovered an approximately BB-sized piece of shot on the ground outside the window.

Following 4 closed-door meetings, the President was to get an award for being so open to the press. Sensing the irony, that award got postponed.

And finally, to make up for the dearth of links this week, two political cartoons. (Can you tell I really like Chuck Asay?)

Friday Link Wrap-up

Hunter Baker, writing at "First Things", responds to Jim Wallis’ question "What Would Jesus Cut", referring to government spending. (Which begs the question, would Jesus borrow us into prosperity?)

Obama’s HHS Secretary, Kathleen Sebelius, admits to double counting some savings that ObamaCare™ would bring. Not really news, except for those who haven’t been paying attention.

Media Matters, an allegedly non-partisan press watchdog group, has a Transparency project that lists major donors to conservative and libertarian organizations. "The Agitator" notes that, while a number of those conservative organizations themselves already provide this transparency, Media Matters itself does not.

Who’s going to clean up this mess in Wisconsin?

It could cost as much as $7.5 million to repair damage protesters have done to the Capitol Building marble say officials in Madison. Fixing posters to the marble with tape and glue appears to have done the bulk of the damage.

During testimony Thursday, a representative from the Attorney General’s office said a contractor estimated it would cost $500,000 to remove all of the posters and garbage. He says it would cost $6 million to restore the marble inside of the Capitol building and another $1 million to touch up the marble outside of the building.

Guess who came to the rescue? The Tea Party. Liberals trashed it, conservatives will care for it.

Mark Steyn notes a very odd way to say, "Thank you.". A young Kosovar is who killed 2 US servicemen in a Frankfurt airport. I mean, we didn’t even wait for UN resolutions before helping Kosovo get its independence. That’s gratitude?

Remember how upset the Left was about indefinite detentions and military tribunals at Guantanamo, and how much the press covered it? Yeah, well, all that is back on again and now they’re rather quiet about it. Wonder what changed.

Michael Moore and Rachel Maddow say, no, we’re not broke as a nation. Reality begs to differ.

Bummer. A set-back for reprogrammed adult stem cells. Undisturbed adult stem cells continue to be extremely useful, but trying to reprogram them into what are essentially embryonic stem cells is having problems.

Look, if you’re going to be biased in what you say, I have no problem with that. Just be honest about it. NPR isn’t. James O’Keefe strikes again at the heart of liberal bias at the network. NPR tries some damage control, but Patterico calls their ombudsman on it. Predictably, liberals now deplore gotcha’ journalism. (Though calling up a governor and misrepresenting who you are is just fine. Wonder what changed.) And apparently O’Keefe isn’t done with the revelations.

The UK’s CEO of the national power grid is predicting that blackouts will be just a part of the new normal once wind turbines become more prominent and supplant other means of electricity generation. How long before paying to not get blacked out becomes popular, and the politization of energy begins?

Civility Watch: Credible death threats against the Palins.

And finally, the Society of Centurions is named after the Centurion who was at the cross when Jesus died, and ultimately admitted, "Surely he was the Son of God". It is an organization for former abortion providers. Changing one’s view on abortion is one thing. Considering it wrong after you’ve provided them is another thing entirely. Priests for Life admonishes, "Let’s pray for the Centurions, and may their numbers increase!" Amen.

Unemployment Get Better, Right On Cue

Back in October, I said this:

If jobs start getting created after big Republican wins in November, it’ll likely be because the "Party of No" will be there to curb this uncertainty.

And now?

Employers in February hired at the fastest pace in almost a year and the unemployment rate fell to 8.9 percent—a nearly two-year low.

The economy added 192,000 jobs last month, with factories, professional and business services, education and health care among those expanding employment. Retailers, however, trimmed jobs. State and local government, wrestling with budget shortfalls, slashed 30,000 jobs, the most since November.

The government’s report Friday bolstered hopes that employers will shift into a more aggressively hiring mode and allow the economic recovery to get on firmer footing.

The unemployment rate has been falling for three months, down from 9.8 percent in November.

I’m no economist, but this sort of clear cause-and-effect is rarely seen in politics. But indeed, taking the uncertainty out of economic policy has done what it should have done; allowed businesses to take a deep breath and jump back in to a hiring mode. The Obama administration’s policies were all over the map and were giving businesses heartburn trying to predict what new regulations would come out that afternoon. The "Party of No" has returned stability to the process, and now unemployment is going down.

Was that so hard to understand, really?

Why We’re In the Mess We’re In

So what’s the huge deal in Wisconsin? Why are teachers abandoning their posts (and students) to protest at the capitol. The Wall St. Journal explains.

Mr. Walker’s very modest proposal would take away the ability of most government employees to collectively bargain for benefits. They could still bargain for higher wages, but future wage increases would be capped at the federal Consumer Price Index, unless otherwise specified by a voter referendum. The bill would also require union members to contribute 5.8% of salary toward their pensions and chip in 12.6% of the cost of their health insurance premiums.

If those numbers don’t sound outrageous, you probably work in the private economy. The comparable nationwide employee health-care contribution is 20% for private industry, according to the Bureau of Labor Statistics. The average employee contribution from take-home pay for retirement was 7.5% in 2009, according to the Employee Benefits Research Institute.

Mr. Walker says he has no choice but to make these changes because unions refuse to negotiate any compensation changes, which is similar to the experience Chris Christie had upon taking office in New Jersey. Wisconsin is running a $137 million deficit this year and anticipates coming up another $3.6 billion short in the next two-year budget. Governor Walker’s office estimates the proposals would save the state $300 million over the next two years, and the alternative would be to lay off 5,500 public employees.

(Hat tip: Betsy Newmark, a teacher.)

In short:

  • The union refuses to be treated same as everyone else.
  • The union doesn’t care about the state’s financial problems; let someone else pay the price.
  • The union doesn’t want the governor to make the tough choices, at least if those tough choices affect the union.

This is what liberal politics has given us; teachers, and a union, that frankly don’t care about the fix we’re all in. If you want to complain that teachers aren’t paid as  much as those in the public sector, who’s fault is that? It’s the fault of those who insist on keeping their jobs, and their paychecks, in the hands of government.

Not all Wisconsin teachers approve of playing hooky for politics, nor are they all against this belt-tightening. But those that are, are doing their profession a disservice, and are exposing the problems with their union.

And here’s another entry for Civility Watch. If you thought the previous video of the lady with a Hitler sign was a one-off crackpot, check out those signs, including a very clear gun-violence message towards the governor.

For Perspective

Think of how big the US economy is; the sum total of all the goods and services produced in an entire year. That’s how deep our debt is.

President Obama‘s budget, released Monday, was conceived as a blueprint for future spending, but it also paints the bleakest picture yet of the current fiscal year, which is on track for a record federal deficit and will see the government’s overall debt surpass the size of the total U.S. economy.

Mr. Obama‘s budget projects that 2011 will see the biggest one-year debt jump in history, or nearly $2 trillion, to reach $15.476 trillion by Sept. 30, the end of the fiscal year. That would be 102.6 percent of GDP — the first time since World War II that dubious figure has been reached.

And the budget projects the government will run a deficit of $1.645 trillion this year, topping 2009’s previous record by more than $230 billion. By contrast, 2007’s deficit was just $160 billion altogether.

We do not need more tax increases. That has not solved the debt issue. Spending must be cut, substantially. That is one thing that has simply not been tried. The Tea Party exists because of this; the huge debt we are going to pass on to our great-grandchildren if we don’t do something about it now.

Friday Link Wrap-up

It’s not often (well, ever) that a Friday Link Wrap-up would have breaking news, but as I type this, Hosni Mubarak has stepped down as President and put the military in charge, not his recently-named VP. This is a historic day for Egypt, as it now has its first living ex-President. Barry Rubin runs down the "now what?" scenarios.

Some town in the US, including one suburb of Atlanta, have a law requiring each household to own a gun. These towns have much lower crime rates than their neighbors. But with the cases going through the courts on the constitutionality of the ObamaCare individual mandate to buy health insurance, and with South Dakota considering a bill requiring gun ownership, Glenn Reynolds goes over the major differences between the two.

Reaganomics vs Obamanomics and getting us out of a recession.

In his first speech as Britain’s prime minister, David Cameron argued that a shared national identity prevents extremism more so than multiculturalism, and indeed, the latter may encourage it. If you have no connection to your country, you have no problem burning it.

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