The more you know about government finances, the harder it is to take the budget theater in Washington seriously. The president boasts that non-defense discretionary spending is at “its lowest level as a share of the economy since the Eisenhower administration,” but that measure ignores about 81 cents out of every dollar Washington spends.
The tiny reductions in spending growth imposed by the sequester have been for the most part shrugged off by the people, though they have produced a great deal of angst and wailing in Washington — not only from the politicians, but also from such private-sector beneficiaries as defense contractors.
This is an almost entirely meaningless debate. The total fiscal overhang of our federal, state, and local governments — their combined debt and unfunded liabilities — is around $140 trillion, and growing. That is about twice the annual economic output of human civilization, and nearly the value of all the financial assets in the world. It is something close to a mathematical certainty that those debts and obligations will not be made good on at their present value.
The real debate for the next 30 years is not how we go about paying our bills, but how we go about not paying them. What is most likely is a much smaller and more modest government, something closer to what Robert Nozick called the “nightwatchman state.” The reason for that is the fact that we have good substitutes for Social Security and the Department of Education but not for the army or the courts.
This all sounds painful and disruptive, and it surely will be, though exactly how painful and how disruptive will be in part a question of luck and in part a matter of how prudently and intelligently our policymakers proceed while we get from where we are to an economically sane position.
Difficult, yes. But it is also going to be great. There is cause for short-term pessimism, but there also is cause for long-term optimism.
Despite the best efforts of Washington (and Albany, Sacramento, Austin, etc.) the United States is a very, very rich country. Fantastically rich. Absurdly rich. We have a great deal of wealth, extraordinarily productive and creative people and stable institutions.
Our key economic failings are in education, health care and retirements — three sectors dominated by political rather than economic action: the K-12 monopoly model of education, Social Security and other retirement entitlements and a hodge-podge of medical programs which meant that even before the enactment of ObamaCare about half of all health-care spending was government spending, a fact that Republicans foolishly ignored when they protested that we had “the best health-care system in the world.” (Note to Republicans: We have great medicine and medical technology; we have a terrible system of paying for health care, and it was terrible before ObamaCare, too.)
These government-dominated systems are inherently defective. Not because the people who run them aren’t smart and well-intentioned — though they are by no means universally smart and well-intentioned — but because it is the nature of political institutions to be insulated from the information-feedback that characterizes marketplace activity.
Simply put, when Coca-Cola introduces New Coke or McDonald’s introduces (more…)
My very liberal close friend regularly rails about “obscene” gaps in income in the USA. I always ask:
- What income ratio (poor vs. rich) defines obscene?
- Is it published or is it something you just know in your gut?
- Is this ratio confined geographically? Because a poor American is rich by comparison in many Third World countries. Is their relative wealth also obscene?
He always shifts the debate. I argue that in dynamic economies, a huge income gap is a sign of health.
One month into the second term of the Obama administration, the economic prognosis looks mixed at best. On growth, the U.S. Department of Commerce reports the last quarter of 2012 produced a small decline in gross domestic product, without any prospects for a quick reversal. On income inequality, the most recent statistics (which only go through 2011) focus on the top 1 percent.
“Incomes Flat in Recovery, But Not for the 1%” reports Annie Lawrey of the New York Times. Relying on a recent report prepared by the well-known economist Professor Emmanuel Saez, who is the director for the Center of Equitable Growth at Berkeley, Lawrey reports that the income of the top 1 percent has increased by 11.2 percent, while the overall income of the rest of the population has decreased slightly by 0.4 percent.
Growth vs. Equality
What should we make of these numbers? One approach is to stress the increase in wealth inequality, deploring the gains of the top 1 percent while lamenting the decline in the income of the remainder of the population. But this approach is only half right. We should be uneasy about any and all income declines, period. But, by the same token, we should collectively be pleased by increases in income at the top, so long as they were not caused by taking, whether through taxation or regulation, from individuals at the bottom.
This conclusion rests on the notion of a Pareto improvement, which favors any changes in overall utility or wealth that make at least one person better off without making anyone else worse off. By that measure, there would be an unambiguous social improvement if the income of the wealthy went up by 100 percent so long as the income of those at the bottom end did not, as a consequence, go down. That same measure would, of course, applaud gains in the income of the 99 percent so long as the income of the top 1 percent did not fall either.
This line of thought is quite alien to thinkers like Saez, who view the excessive concentration of income as a harm even if it results from a Pareto improvement. Any center for “equitable growth” has to pay as much attention to the first constraint as it does to the second. Under Saez’s view of equity, it is better to narrow the gap between the top and the bottom than to increase the overall wealth….
Clinton’s DOJ went after Microsoft for anti-trust violations, egged on by jealous competitors. Recently Google had the same trouble, this time with Microsoft egging on the DOJ.
As the WSJ’s L. Gordon Crovitz writes, Milton Freedman saw the tech industry committing suicide.
In 1999, economist Milton Friedman issued a warning to technology executives at a Cato Institute conference: “Is it really in the self-interest of Silicon Valley to set the government on Microsoft? Your industry, the computer industry, moves so much more rapidly than the legal process that by the time this suit is over, who knows what the shape of the industry will be? Never mind the fact that the human energy and the money that will be spent in hiring my fellow economists, as well as in other ways, would be much more productively employed in improving your products. It’s a waste!”
He predicted: “You will rue the day when you called in the government. From now on, the computer industry, which has been very fortunate in that it has been relatively free of government intrusion, will experience a continuous increase in government regulation. Antitrust very quickly becomes regulation. Here again is a case that seems to me to illustrate the suicide impulse of the business community.”
Picking through his inaugural speech…
“We do not believe that in this country freedom is reserved for the lucky, or happiness for the few. The commitments we make to each other through Medicare and Medicaid and Social Security, these things do not sap our initiative, they strengthen us. They do not make us a nation of takers; they free us to take the risks that make this country great.”
Obama seems to equate freedom — which I define as my right to make my own choices without government intrusion, my right to rise and fall on my own — with financial security.
Obama implies that insuring financial security is a duty of government.
This is fundamentally contradictory: if the government must guarantee me a living, then government must have some authority over how I behave.
The government, after all, is funded by other people. If live recklessly or am lazy, should others be compelled to pay my way? Does that not infringe their freedom to keep what they earn?
As a compassionate nation, we do provide for the unlucky. No one suggests we stop, regardless of what Obama likes to imply.
Over the past five years, Gutfeld has parlayed his unique brand of off-the-wall political humor into a position of prominence. Some conservatives believe that Gutfeld is our answer to Jon Stewart. But I don’t see much similarity between Stewart’s heavily written, heavily produced corporate comedy and the free-flowing, unforced humor that springs organically from “Red Eye.” Stewart is the stodgy establishment to Gutfeld’s subversive counterculture. Gutfeld is loose, Stewart tightly wound. Stewart is hugely talented and very smart, but not as smart as he thinks he is. Gutfeld, on the other hand, is clearly smarter than the character he often plays on TV. Beneath his clown mask, Gutfeld is quite an insightful commentator who, in my biased conservative opinion, grasps the inherent contradictions of modern liberalism in a way that Stewart can’t.
But the comparison with Stewart is valid in one respect: Stewart has become an important player in the liberal movement, and I believe that Gutfeld is on his way to becoming an important player in the conservative movement. Gutfeld speaks to the dissonance of conservatives, especially young ones, who are avid fans of a popular culture shaped by people who despise conservatives. (That’s why the spectacle of Chris Christie pining after Bruce Springsteen, as pathetic as it is, is also poignant.) Gutfeld, who is as hip to pop culture as they come, uses his hipness and humor as weapons to fight back on our behalf. He turns the comedic tables on the intolerant bullies of the left, helping us laugh at them just as hard as they laugh at us. No one is better at skewering the overfed egos and undernourished intellects of liberal celebrities. In eschewing “coolness” as it’s defined by the guardians of our popular culture, Gutfeld makes it cool to be conservative.
But while Gutfeld has strong appeal with conservatives, his greatest upside lies in his potential to cross over. His irreverent style is pitch-perfect for a younger audience, combining a righteous judgmentalism about people’s hypocrisy with a refreshing lack of judgmentalism about their lifestyles. It’s a style that can resonate not only with (more…)
…Creative destruction continues in the digital age. After 244 years – it began publication five years before the 1773 Boston Tea Party – the Encyclopaedia Britannica will henceforth be available only in digital form as it tries to catch up to reference Web sites such as Google and Wikipedia. Another digital casualty forgot it was selling the preservation of memories, a.k.a. “Kodak moments,” not film.
America now is divided between those who find this social churning unnerving and those who find it exhilarating. What Virginia Postrel postulated in 1998 in “The Future and Its Enemies: The Growing Conflict Over Creativity, Enterprise and Progress” – the best book for rescuing the country from a ruinous itch for tidiness – is even more true now. Today’s primary political and cultural conflict is, Postrel says, between people, mislabeled “progressives,” who crave social stasis, and those, paradoxically called conservatives, who welcome the perpetual churning of society by dynamism.
Stasists see Borders succumb to e-books (and Amazon) and lament the passing of familiar things. Dynamists say: Relax, reading is thriving. In 2001, the iPod appeared, and soon stores such as Tower Records disappeared. Who misses them?
Theodore Roosevelt, America’s first progressive president, thought it was government’s duty to “look ahead and plan out the right kind of civilization.” TR looked ahead and saw a “timber famine” caused by railroads’ ravenous appetites for crossties that rotted. He did not foresee creosote, which preserves crossties. Imagine all the things government planners cannot anticipate when, in their defining hubris, they try to impose their static dream of the “right kind” of future.
As long as America is itself, it will welcome the messy chaos that is not really disorder but, rather, what Postrel calls “an order that is unpredictable, spontaneous, and ever shifting, a pattern created by millions of uncoordinated, independent decisions.” Professional coordinators, a.k.a. bureaucracies, are dismayed. Good.
Now that Mitt Romney is likely to be the Republican nominee, we can expect new attacks on his “vulture capitalism.” That’s how Rick Perry characterized his private equity work. Newt Gingrich’s supporters ran an ad about Romney’s firm, Bain Capital, that said, “Their greed was only matched by their willingness to do anything to make millions in profits.”
Give me a break.
“Greed” means you want more for yourself. Fine. If you obtain it legally, without force or privilege—say, by buying a business and making it more efficient, or shifting resources to where consumers prefer them—that is a good thing. “Creative destruction” makes America richer.
Shifting resources does mean some people lose their jobs. That is sad for those who are fired.
But on balance, it’s a good thing. Intuition tells us that it would be better if no one ever lost a job and that capitalists who close businesses are evil. But America would not be better off today if elevator operators and factory workers who made typewriters had their jobs preserved by a “compassionate” government.
America is richer today because those workers lost their jobs, because money once paid them is put to better use. In addition, most of those workers found new jobs where their skills better served consumers. Some even say they were glad that they were fired, because now they are more productive, and being productive makes people happy.
But we in the media almost never tell that story. That’s because we only report what we see.
We can see, and interview, the sad people who get fired. We take pictures as they leave their jobs on that last day when the factory closes. We interview them about the hardship to their families. It’s a sad and moving story. We tell it well. But we never tell the flip side, the creative part of creative destruction. That’s because we don’t see it. We don’t see the better things that are done with capital that once went into the factory. We don’t see what many of the workers do next.
None of us covered the first few weeks of Apple or Google or Staples or Domino’s Pizza. We had no clue that those companies were about to produce cool new things, thousands of jobs and billions of dollars in value. Staples and Domino’s, by the way, were funded by Bain Capital…
Michael Moore says, “Capitalism has no moral core.”
Is that right? Since the word “capitalism” is ambiguous, the answer depends on what we mean. If it’s crony capitalism — well, yeah. It stinks. Handouts to Solyndra and special deals for Goldman Sachs and GM are not capitalism. That’s “crapitalism.”
Many people hate banks, private-equity firms and mortgage brokers. In light of the last few years, this isn’t totally unjustified. I resent the bankers who got rich by taking foolish risks and then, when they failed, got bailed out with our tax money.
I guess I shouldn’t blame bankers. I should blame the politicians. They gave our tax money away. If someone offered me money to cover my losses, I’d take it, too.
The real evil bankers are the government cronies, like those at Fannie Mae and Freddie Mac. They took our money by force, our taxes, then paid themselves fat salaries and promised us that none of our money was at risk. And then they squandered more than $100 billion, betting that housing prices would always rise and few people would default.
I resent them and their backers in government.
But in a real free market—no government privileges or barriers to competition—capitalism is great. It’s the only system with a moral core because it’s based on freedom, not force.
You’re a well-known libertarian but had a communist phase . . .
To say I had a communist stage would put me at the level of intellectual seriousness of, say, Christopher Hitchens. I had a confused early hippie phase, which was like a cafeteria tray of sloppy, semi-Marxist thoughts, absorbed second-hand. Have you ever actually tried to read that crap? I was a communist but I would spell that with a small “k”.
Do you have a serious side?
I do, but I try to keep it under control.
Are there any topics that are beyond satire?
As I get older, all sorts of things become less funny. Once one has children, any cruelty involving children becomes far less amusing than when one was at the mercy of one’s friends’ and relatives’ children.
What do you think of the likes of The Daily Show and the Onion?
The quality of the jokes is extraordinary. We could have gone months, back in the Seventies, without generating that many good jokes.
Is satire a tool for bringing about change, or a way of blowing off steam?
The latter. Satire doesn’t effect change. The most brilliant satire of all time was A Modest Proposal by Jonathan Swift. You’ll notice how everything got straightened out in Ireland within days of that coming out.
Does Washington have any redeeming factors?
We need a government, alas, because of the nature of humans. We [also] need the rule of law. Politics is a necessary evil, or a necessary annoyance, a necessary conundrum. [But] we need to turn as few things as possible over to it.
Are there any politicians that you like? (more…)
It used to be so cool to be wealthy—an elite education, exclusive mobile communications, a private screening room, a table at Annabel’s on London’s Berkeley Square. Now it’s hard to swing a cat without hitting yet another diatribe against income inequality. People sleep in tents to protest that others are too damn wealthy.
Yes, some people have more than others. Yet as far as millionaires and billionaires are concerned, they’re experiencing a horrifying revolution: consumption equality. For the most part, the wealthy bust their tail, work 60-80 hour weeks building some game-changing product for the mass market, but at the end of the day they can’t enjoy much that the middle class doesn’t also enjoy. Where’s the fairness? What does Google founder Larry Page have that you don’t have?
Luxury suite at the Super Bowl? Why bother? You can recline at home in your massaging lounger and flip on the ultra-thin, high-def, 55-inch LCD TV you got for $700—and not only have a better view from two dozen cameras plus Skycam and fun commercials, but you can hit the pause button to take a nature break. Or you can stream the game to your four-ounce Android phone while mixing up some chip dip. Media technology has advanced to the point that things worth watching only make economic sense when broadcast to millions, not to 80,000 or just a handful of the rich.
The greedy tycoon played by Michael Douglas had a two-pound, $3,995 Motorola phone in the original “Wall Street” movie. Mobile phones for the elite—how 1987. Now 8-year-olds have cellphones to arrange play dates.
In 1991, a megabyte of memory was $50, amazing at the time. Given its memory, today’s 32-gigabyte smartphone would have cost $1 million back then, certainly an exclusive item for the wealthy. Heck, even 10 years ago, 32 gig cost 10 grand. But no one could build it—volume (more…)
In freedom lies the risk of failure. But in statism lies the certainty of stagnation.
Congressman Paul Ryan recently coined a smart phrase to describe the core concept of economic freedom: “The right to rise.”
Think about it. We talk about the right to free speech, the right to bear arms, the right to assembly. The right to rise doesn’t seem like something we should have to protect.
But we do. We have to make it easier for people to do the things that allow them to rise. We have to let them compete. We need to let people fight for business. We need to let people take risks. We need to let people fail. We need to let people suffer the consequences of bad decisions. And we need to let people enjoy the fruits of good decisions, even good luck.
That is what economic freedom looks like. Freedom to succeed as well as to fail, freedom to do something or nothing. People understand this. Freedom of speech, for example, means that we put up with a lot of verbal and visual garbage in order to make sure that individuals have the right to say what needs to be said, even when it is inconvenient or unpopular. We forgive the sacrifices of free speech because we value its blessings.
But when it comes to economic freedom, we are less forgiving of the cycles of growth and loss, of trial and error, and of failure and success that are part of the realities of the marketplace and life itself.
Increasingly, we have let our elected officials abridge our own economic freedoms through the annual passage of thousands of laws and their associated regulations. We see human tragedy and we demand a regulation to prevent it. We see a criminal fraud and (more…)
Joe Biden praises Jon Corzine. He “literally” called Corzine, as opposed to figuratively calling him. And why? Because Corzine knows about world markets. Uh huh.
And why would they consider calling a bank holiday. There was no run on banks. TARP was already working for months. Is Biden confusing Obama’s situation with that facing FDR in 1933? Whew.
For several weeks now, the Occupy Wall Street protestors in New York City and around the country have been demanding “economic justice,” which includes a mishmash of leftist goals including universal health care, forgiveness of student loan debt, and higher taxes on the wealthy. To the extent the OWS protestors have a unifying theme, it’s that capitalism is bad and that redistributing wealth to reduce “inequality” is good.
The Irish socialist playwright George Bernard Shaw once wrote, “A government that robs Peter to pay Paul can always depend on the support of Paul.” The Occupy Wall Street protestors demanding government redistribution of wealth from the richest Americans (“the 1%”) to themselves (“the 99%”) would certainly agree. But as some of them are starting to learn, if their ideas were actually put into practice they’d end up being the Peters, not the Pauls.
Already, some of the OWS protestors are finding their ideas coming back to bite them. Recently, OWS kitchen staff staged a mini-revolt because they were tired of working 18-hour days to prepare meals for “freeloaders.” Another OWS protestor was upset that someone had stolen her $5500 Macintosh computer. Redistributing wealth suddenly became a lot less appealing when one was the victim of the “redistribution,” rather than the recipient.
The OWS protestors are learning first hand about something that novelist Ayn Rand discussed more than 50 years ago in Atlas Shrugged, in her vignette about the Twentieth Century Motor Company. In the novel, the new owners of the factory decided to run the company according to the supposedly noble precept of “From each according to his ability, to each according to his need.” Workers would be assigned duties based according to their expected ability — but paid according to how much money they needed, rather than how much they produced.
In theory, this would result in a more equitable distribution of wealth. But in practice, it meant the men of greater ability worked longer hours without hope of reward. Hence, the more competent workers either left or deliberately underperformed. In contrast, the more irresponsible workers received more money because of their “need” — regardless of how hard they worked. Of course, eventually the company went bankrupt.
But Rand’s lesson was not merely that such a model was economically unsustainable. She also made a deeper moral point about the motivations of the workers who supported this scheme. As one of the characters in the story said:
There wasn’t a man rich and smart enough but that he didn’t think that somebody was richer and smarter, and this plan would give him a share of his better’s wealth and brain. But while he was thinking that he’d get unearned benefits from the men above, he forgot about the men below who’d get unearned benefits, too. He forgot about all his inferiors who’d rush to drain him just as he hoped to drain his superiors. The worker who liked the idea that his need entitled him to a limousine like his boss’s, forgot that every bum and beggar on earth would come howling that their need entitled them to an icebox like his own.
This is precisely the lesson that the OWS kitchen staff (or the woman with the laptop) have learned the hard way. Most people who advocate robbing Peter to pay Paul always imagine themselves as Paul — never as Peter. But when their desired forced redistribution is applied at a national level, the result is the near-universal misery and squalor of socialist countries like Cuba and North Korea. Except for a few political elites, everyone is equal — but poor.
In a free society, the economic inequality that the OWS protestors oppose is not something to be condemned, but something to be celebrated. A fully capitalist society allows people to rise as far as their ability and efforts allow. Because people differ in their talents, work ethic, and personal priorities, the natural result would be unequal levels of wealth…
President Obama says government will have to build the nation out of the economic trough.
“We’re the country that built the intercontinental railroad,” Obama says. “So how can we now sit back and let China build the best railroads?”
(“Intercontinental” railroad is another Obama gaffe, which he repeated twice, as he did with Marine “Corpse.”)
Ironic that he mentions the Chinese. Progressives used to complain that to build the railroad, bosses abused Chinese workers — called them “coolies” and treated them badly. Now this is big success?
I guess Obama doesn’t know that the Transcontinental Railroad was a Solyndra-like Big Government scandal. The railroad didn’t make economic sense at the time, so the government subsidized construction and gave the companies huge quantities of the best land on the continent.
As we should expect, without market discipline — profit and loss — contractors ripped off the taxpayers. After all, if you get paid by the amount of track you lay, you’ll lay more track than necessary.
Credit Mobilier, the first rail construction company, made enormous profits by overcharging for its work. To keep the subsidies flowing, it made big contributions to congressmen.
Where have we heard that recently?
The transcontinental railroad lost tons of money. The government never covered its costs, and most rail lines that used the tracks went bankrupt or continued to be subsidized by taxpayers.
The Union Pacific and Northern Pacific — all those rail lines we learned about in history class — milked the taxpayer and then went broke.
One line worked. The Great Northern never went bankrupt. It was the railroad that got no subsidies.
We need infrastructure, but the beauty of leaving most of these things to the private sector — without subsidies, bailouts and other privileges — is that they would have to be justified by the profit-and-loss test.
In a truly free market, when private companies make bad choices, investors lose their own money. This tends to make them careful.
By contrast, when government loses money, it just spends more and raises your taxes, or borrows more, or inflates. Building giant government projects is no way to create jobs.
When government spends on infrastructure, it takes money away from projects that consumers might think are more important.
When government isn’t killing jobs by sucking money out of the private sector, it kills jobs by smothering the private sector with regulation. I talked to Peter Schiff about all this.
Schiff is a good authority because he was one of the few people to warn of the housing bust. Now he’s had a run-in with the federal government over job creation.
Schiff, who operates a brokerage firm with 150 employees, recently complained to Congress that “regulations are running up the cost of doing business, and a lot of companies never even get started because they can’t overcome that regulatory hurdle.”
Schiff claims he would have hired a thousand more people but for regulations.
“I had a huge plan to expand. I wanted to open up a lot of offices. I had some capital to do it. I had investors lined up. My business was doing really well. But unfortunately, because of the regulations in the security industry, I was not able to hire.”
So if he wants to hire an analyst, he can’t just hire him? “I had to get permission to publish their research, which I didn’t get for years. And so I can’t pay analysts if I can’t sell their research.
People don’t appreciate the number of regulations entrepreneurs face. Schiff pays 10 people just to try to figure out if his company is obeying the rules.
“You can’t just act very quickly, because everything has to be done through this maze of compliance. Even my brokers … find out that maybe 20 percent, 30 percent of their day is involved in compliance-related activity, activity that is inhibiting their productivity. … All around the country, people are complying with regulations instead of producing, instead of investing and growing the economy. They’re trying to survive the regulations.”
This is no way to create jobs or wealth. Keynesian pundits and politicians can’t understand why businesses sit on cash rather than invest and hire unemployed workers. It’s really no mystery. Government is in the way.
Both are wrong about economic policy.
Richard Epstein at the Hoover Institution:
The terrible economic news from both Europe and the United States has led to much soul-searching on both sides of the Atlantic. How did we get here, and how can we get out of this jam?
In my past columns for Hoover’s Defining Ideas, I have insisted that both economies will be able to extricate themselves from their deep slumps only by promptly reversing those policies that have brought them to the brink. A successful and sustainable political order requires stable legal and economic policies that reward innovation, spur growth, and maximize the ability of rich and poor alike to enter into voluntary arrangements. Limited government, low rates of taxation, and strong property rights are the guiding principles.
Unfortunately, many spiritual and economic leaders are working overtime to push social policy in the exact opposite direction. At the top of the list are two prominent figures: Pope Benedict XVI and financier Warren Buffett.
The Pope was on his way to recession-torn Spain—to lead the Roman Catholic Church’s weeklong celebration of World Youth Day—when he denounced those nameless persons who put “profits before people.” He told journalists, “The economy cannot be measured by the maximum profit but by the common good. The economy cannot function only with mercantile self-regulation but needs an ethical reason in order to work for man.” Standing alone, these words mirror the refrains of countless Spanish socialists, whose relations with the Pope have soured in recent years. Their shared premises help explain why Spain finds itself in such a sorry state.
Denouncing those who put ‘profits before people’ may stir the masses, but it is a wickedly deformed foundation for social policy. Profits, like losses, do not exist in the abstract. Corporations, as such, do not experience gains or losses. Those gains and losses are passed on to real people, like shareholders, consumers, workers, and suppliers. It is possible to imagine a world without profits. Yet the disappearance of profits means that investors will be unable to realize a return on either their capital or labor.
Structure a system that puts people before profits, and both capital and labor will dry up. The scarcity of private investment capital will force the public sector to first raise and allocate capital and labor, though it has no idea how these resources should be deployed to help the people, writ large. A set of ill-conceived public investments will not provide useful goods and services for consumers (who are, after all, people), nor will it provide sustainable wages for workers (who are also people). Poor investment decisions will lead to a massive constriction in social output that harms all people equally…
Washington is Fantasy Land.
Only in this corrupt city can you turn increases into cuts merely by increasing spending by less than previously planned. And almost every politician magically knows how to transform “spending” into “investment.”
So I’m used to Orwellian word games. But sometimes even I’m shocked, and this excerpt from a Washington Post story is a good (or perhaps bad) example.
The Senate approved another stopgap budget bill Thursday that would keep the federal government open until April 8. The measure, which had already passed the House, is expected to be signed by President Obama on Friday. The bill would cut $6 billion in federal spending. That makes twice this month that lawmakers from both parties have agreed to slash billions from the budget.
Let me see if I understand correctly. Federal spending has soared by more than $2,000,000,000,000 during the Bush-Obama years, pushing the burden of government up to $3,800,000,000,000, yet the reporters who put together this story said that an agreement to trim a trivially tiny slice of 2011 spending would “slash the budget.”
As Charlie Brown would say, good grief. This is the budgetary equivalent of going on a diet by leaving a couple of french fries in the bottom of the bag after binging on three Big Mac meals at McDonald’s.
You probably won’t be surprised to know that sauce for the budget-cutting goose is not sauce for the government-expanding gander.
When Obama wanted to spend about $1 trillion on a failed “stimulus,” did the Washington Post write that he wanted to “bloat” or “explode” the budget? I certainly don’t remember such language…
Years of tremendous overspending by federal, state and local governments have brought us face-to-face with an economic crisis. Federal spending will total at least $3.8 trillion this year—double what it was 10 years ago. And unlike in 2001, when there was a small federal surplus, this year’s projected budget deficit is more than $1.6 trillion.
Several trillions more in debt have been accumulated by state and local governments. States are looking at a combined total of more than $130 billion in budget shortfalls this year. Next year, they will be in even worse shape as most so-called stimulus payments end.
For many years, I, my family and our company have contributed to a variety of intellectual and political causes working to solve these problems. Because of our activism, we’ve been vilified by various groups. Despite this criticism, we’re determined to keep contributing and standing up for those politicians, like Wisconsin Gov. Scott Walker, who are taking these challenges seriously.
Both Democrats and Republicans have done a poor job of managing our finances. They’ve raised debt ceilings, floated bond issues, and delayed tough decisions.
In spite of looming bankruptcy, President Obama and many in Congress have tiptoed around the issue of overspending by suggesting relatively minor cuts in mostly discretionary items. There have been few serious proposals for necessary cuts in military and entitlement programs, even though these account for about three-fourths of all federal spending.
Yes, some House leaders have suggested cutting spending to 2008 levels. But getting back to a balanced budget would mean a return to at least 2003 spending levels—and would still leave us with the problem of paying off our enormous debts. (more…)
The Democrat palace guard of America’s dying monodailies are doing a grand job in reporting the current stand-off in Wisconsin. A headline in The New York Times sums up the media’s bizarre enthusiasm for sacrificing what remains of their reputations in order to protect the cause:
Billionaire Brothers’ Money Plays Role in Wisconsin Dispute
The dogged John Hinderaker of Powerline is endeavoring to get some answers from the shy and retiring Eric Lipton as to the basis for certain aspects of his story. [UPDATE: New York Times "fact"-checking in action.] But I find the headline alone so perverse you wonder how, even at the Times, it could have wafted up through six layers of editors without someone saying, “Oh, come on…” What’s happening in Wisconsin is all about money: budgets, shortfalls, obligations, perks, pensions, privileges – and the burdens of the beleaguered productive class that pays for it. In a story awash with money, the Koch brothers are the least of it. They’re certainly billionaires, and that’s a lot of dough. Of it, what they inject into the political process is little more than a rounding error. As David Harsanyi puts it:
The libertarian Kochs are super rich and gave less than $2 million to Republicans in the last election cycle, which mathematically speaking amounts to nothing. In fact, Timothy Carney of the Washington Examiner dispatched Krugman’s claim that unions were a “counterweight to the political power of big money” by pointing out that “every one of the top ten industries contributing to the 2010 elections gave more money to Democrats.”
If some public union rollbacks are a harbinger of rebirth of the robber barons, why is it that the Service Employees International Union boss — who represents a sliver of the American workforce — has been the most frequent guest at the White House after he handed Barack Obama $28 million and used tens of million more to campaign for him and his policies?
So Big Business and Big Unions both favor Big Government – and for the same reason: it drives out their competition. Why isn’t SEIU honcho Mary Kay Henry (born in that monument to union muscle, Detroit) as famous as the sinister Koch siblings? Ms Henry is a fascinating figure: A lesbian advisor to the Conference of Catholic Bishops whose partner is a bigshot with the Teamsters, she is an advocate for “health care” for “working families” and for same-sex marriage, and on both those issues the President’s views seem to be swinging ever more into happy alignment with her money. Wouldn’t that be worth an in-depth analysis from the Eric Liptons of the world? Instead the Koch brothers, waging their lonely battle for small government, are being lined up as this decade’s Halliburton.
I doubt it will work. The media’s perverse priorities might be just about tenable if they weren’t also making themselves look ever more ridiculous by their willingness to airbrush the truth about the ugly union bruisers out on the streets of Madison.
Read it all.
The Koch brothers have been around a long time in business, politics and philanthropy.
Last fall, a New Yorker profile launched the meme that these two were secret puppet masters intent on pulling off a right-wing coup via political donations. Ever since “with it” lefties have been citing the Koch at every turn.
But their politics is libertarian, which can flummox certain simple minds.
…the Kochs will happily put their money behind candidates and intellectuals who agree with their economic agenda but disagree with their social agenda. They will never put their money behind candidates or intellectuals of whom the reverse is true.
In the same post, Chait runs off a series of sums the Kochs have spent over the years on various right-wing causes. Curiously missing, however, is the $20 million donation the Kochs made to the ACLU to fight the Bush administration over the PATRIOT Act.
Browsing various accounts of the Kochs political spending over the years, that $20 million appears to be substantially more than the Kochs have contributed to all political candidates combined for at least the last 15 years. (Their gifts to the arts and other non-political charities exceeds what they’ve spent on politics many times over.)
Now maybe we shouldn’t fault Chait for overlooking the ACLU donation. The Kochs don’t appear to have gone out of their way to publicize it. (Though, curiously, when they don’t publicize their contributions to free market causes, it tends to be interpreted as stealthy or manipulative.) It’s also not nearly as prominently reported on the web as the gifts they’ve made to free market organizations. There’s another mention on the Faces of Philanthropy site, which appears to be down right now. But here’s a cached version. I suspect the mere possibility that the Kochs could make such a gift didn’t enter the minds of most people who have written about all of this. It wasn’t mentioned in Jane Mayer’s much-hyped New Yorker expose, either. I should note that both the linked sources above are secondhand, and I’m waiting to hear back from the ACLU for confirmation.
The Kochs’ contributions to political candidates are often touted as the true indicator of what the family and their company really stand for. I’m not particularly fond of most of the politicians the Kochs have supported over the years, but it seems to me that this is precisely backwards. It’s not only significant that the Kochs’ contributions to actual politicians are dwarfed by gifts like the one they made to the ACLU, their spending to found and fund think tanks, and their contributions to non-political causes like the arts and medical research—this is precisely the point.