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In its attempt to implement it’s healthcare reform bill, better known as Obamacare, the Obama Administration has tied itself in political and rhetorical knots.

When Democrats were attempting to sell the bill to the public they insisted that the individual mandate (the requirement that everyone must either obtain health insurance or pay a penalty) was not a tax. In a 2009 interview with George Stephanopoulos, Obama attempted to refute the argument that this portion of the bill violated his promise not to raise taxes on anyone making less than $250,000.

“For us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase,” Obama said in the interview.  “You just can’t make up that language and call it a tax increase. . .  I absolutely reject that notion.”

But after it passed the Obama Administration began to change its tune. Realizing that it was going to face a constitutional challenge the Obama team felt they would be on safer legal ground if they admitted it was a tax increase rather tan attempt to defend it based on the power to regulate interstate commerce.

Constitutionally speaking, this is a smart strategy. The Commerce Clause provides sweeping authority, allowing the government to regulate interstate commerce, a term of art that has come to mean it can regulate any economic activity. But this line of reasoning runs into problems because in the case of Obamacare there is no activity. It’s attempting to punish inactivity by punishing those who choose not to buy health care.

Democrats have sought to get around this problem by arguing that the collective decision not to purchase insurance has impacts that ripple into the economy. Numerous courts have pointed out that by this justification the government could regulate anything. “The government’s struggle to articulate cognizable, judicially administrable limiting principles only reiterates the conclusion we reach today: there are none,” the 11th Circuit Court of Appeals wrote in its decision on the case

The potential for failure has led the Obama legal team to take the much safer approach – argue that Obamacare is a tax, which Congress can exercise to provide for the “general welfare” – even broader language than the Commerce Clause.

The Justice Department has latched on to this argument, pointing out to the court that the individual mandate penalty would raise substantial revenue ($4 billion). It is also collected under the Internal Revenue Code and must be reported on tax returns “as an addition to income tax liability.” Therefore, despite the language of the bill calling it a “penalty” (a word chosen precisely because the Administration didn’t want it labeled a tax), if it walks like a tax and talks like a tax, it’s a tax.

(Of course, this too faces problems. As HotAir’s Allahpundit writes, “If Congress can use its taxing power to steer your money directly to private insurers, then in theory it could force you to fork your money over to any number of congressionally-favored private-sector businesses for not-so-public purposes.”)

But as the Obama Administration is keenly aware, enacting a new tax on the middle class in an election year is not sound political strategy, regardless of the legal merits. That’s why in public they continue to argue that Obamacare’s individual mandate should not be construed of as a tax.

The most recent example came in a hearing on Friday when Office of Management and Budget Director Jeffrey Zients said Obamacare is not a task.

When asked by Rep. Scott Garrett whether or not the individual mandate penalty is a tax that undermines the Obama Administration’s claim that it is not raising taxes for any families under $250,000, Zients seems confused, before eventually saying that the penalty is not a tax.

Zients confusion is understandable. With the Obama Administration completing changing its argument depending on the day and who is listening, it’s tough to keep your story straight. Of course this rhetorical knot could all be saved if Obama would just start being honest with the American people.

Today the Congressional Budget Office released its annual “baseline” budget projections. The good news is that the deficit is projected to fall to the lowest it has been since the beginning of the so-called “Great Recession.” The bad news is that number is still $1.1 trillion – making it higher than any deficit between 1947 and 2008.

The estimate pretty much put the final nail in the coffin for President Obama’s “pledge to cut the deficit in half by the end of my first term in office.” Yea, he said that. We can’t fully explain it, but the two best theories that the office could come up with were (1) his speechwriter was playing a Anchorman-esque practical joke on him, (2) his teleprompter malfunctioned, he got nervous, and gave a black out speech reminiscent of Will Ferrell in Old School. Admittedly, neither are great theories. And apparently we watch too many Will Ferrell movies.

But the point is, not only did he fail to live up to the pledge, he completely ignored it. When Obama came into office the prior year’s deficit was $458 billion. The next four years were $1.4 trillion, $1.3 trillion, $1.6 trillion, and now, a projected $1.1 trillion. Obama didn’t halve the deficit, he occasionally tripled it, and always at least doubled it.

Fortunately, the report isn’t all terrible news. The numbers show that the Republican-held House of Representatives has begun to turn the ship around…slowly. Using levers like the debt ceiling debate and the omnibus appropriations bill Republicans have been able to achieve a remarkable amount of fiscal discipline despite controlling only the House while Democrats have the Senate and the White House.

The CBO’s projections show that federal government spending will actually remain flat over the next two years.

“In fiscal year 2011, total discretionary spending authority – authority provided in appropriations acts to incur financial obligations that will result in immediate or future outlays – dropped by $42 billion; that authority has declined by another $24 billion in 2012,” writes the CBO. “As a result, outlays decreased by 0.1 percent layer year – the first time since 1996 that discretionary outlays had fallen.”

Not exactly reason to throw a party. Especially when you still have Democrats in the House like Rep. Rahall who say stuff like this, “In two years, who knows, we may find a pot of gold at the end of the rainbow.” Gosh, why didn’t we think of that sooner! We could have totally solved our deficit if only we hadn’t wasted so much time tracking bin Laden and focused on finding the Lucky Charms guy!

Despite the utter lack of help that Republicans should expect from Democrats who believe magical creatures are the answers to our deficit problems, there is still much to be done.

Namely, we have to look beyond the discretionary budget to other “mandatory” spending such as Social Security, Medicare, and Medicaid. Yes, we know talking about entitlements is about as popular as former Obama Chief of Staff Bill Daley was with Harry Reid. Hahaha! Too insider? Ok, how about…as popular as Anthony Weiner at a Clinton family barbecue. That’s funny because Weiner’s wife Huma Abedin is good friends with…Hilary…oh never mind.

The fact is we have to reform these programs if we want to achieve fiscal sustainability. The CBO finds that mandatory spending will rise from $2.1 trillion to $3.5 trillion annually in the next decade. Although some of that will be covered by higher revenues as a result in economic growth, we still need to find a way to cut cost or else face a crippling debt crisis.

Fortunately, this isn’t as impossible as it sounds. As Dan Mitchell of the Cato Institute has been yelling about for years now – Washington can let spending rise by 2 percent each year (roughly the amount of inflation) and we would have a balanced budget in about 10 years. That’s hard, but not impossible.

What would make it even easier, as American for Tax Reform’s Ryan Ellis points out, is if Washington would implement policies focused on economic growth. “If real GDP growth was 1 percentage point higher over this window,” Ellis writes, “tax revenues generated would be equal to an additional $2.8 trillion.

So take the good news and bad news in today’s CBO report. But most importantly, keep in mind that we must continue to press for more fiscal responsibility out of Washington if we truly want to avert disaster.

“It’s morning again in America.” That was the signature line from President Ronald Reagan’s famous campaign ad during his 1984 reelection bid. The message was perfect in its simplicity – that Reagan’s conservative policies had brought American out of the darkest depths of a recession and into the light of a new day.

The fact is, the strength of the economy is generally the first thing a president will cite in his reelection bid. Which brings us to a curious situation. Friday’s job numbers seemed to be the strongest evidence yet that the economy is gaining steam. And yet, President Obama largely withheld his excitement.

“We have made real progress,” Obama said Friday after the employment numbers were released. “Now is not the time to stop.”

Doesn’t exactly sound like the triumphant president, who is ready to point to his economic accomplishments come next November does it? It’s not even the calm reassurance of Reagan’s ‘morning in America.’

And with good reason. Wading below the positive jobs report, which showed 200,000 jobs were created in December, is a current of data that could wash away any positivity. The biggest problem is that people continue to drop out of the labor force, making the unemployment rate look much better than it truly is.

Economics blog Zero Hedge explains:

“One does not need to be a rocket scientist to grasp the fudging the BLS [Bureau of Labor Statistics] has been doing every month of years now in order to bring the unemployment rate lower: the BLS constantly lowers the labor force participation rate as more and more people “drop out” of the labor force for one reason or another.

. . . In order to back out of this fudge we are redoing an analysis we did first back in August 2010, which shows what the real unemployment rate would be using a realistic labor force participation rate. . . It won’t surprise anyone that as of December, the real implied unemployment rate was 11.4 percent – basically where it has been ever since 2009 – and at 2.9 percent delta to reported, represents the widest divergence to reported data since the early 1980s.”

In other words, the unemployment rate hasn’t changed, what’s changed is the historic amount of “fudging” that the BLS is doing to make things look rosy. And although it’s unlikely that there is anything nefarious going on, Zero Hedge finds an interesting point: “Extending this lunacy, America will officially have no unemployed, when the Labor Force Participation rate hits 58.5 percent, which should be just before the presidential election.”

Sadly, even the more accurate 11.4 percent figure doesn’t truly encapsulate the problem. To truly gauge our continued economic problems we must look at the U-6 rate, which takes into account part-time workers that would rather be working full time but have been forced to settle. Using this figure, unemployment stands at a whopping 15.2 percent.

Oh, and one other thing, courtesy of AEI’s Jim Pethokoukis:

“Then there is that 200,000 number. As Goldman Sachs points out:

Part of the strong gain reflected a 42k increase in employment for “couriers and messengers”, which likely reflects temporary employment for holiday gift delivery persons. As similar spike occurred last December and was reversed the following month. . .”

Obama was right to be reserved. The numbers are undoubtedly better, but they are also undoubtedly a flawed representation of the true unemployment picture. No doubt the Obama campaign team knew that standing behind them would be a risky strategy.

If Obama truly wants a “Morning in America” moment, with America positioned for long-term growth and prosperity, he’ll have to do more. Namely, he’ll have to get Washington out of the way.

We can all breathe a sigh of relief. Our representatives in Washington are home for the holidays until late January, giving Americans a brief respite from the comedy of horrors perpetuated by the government’s incessant tinkering and spending.

Fortunately or unfortunately, they’ll be back in town. The question is, what should they do when they get back?

I can hear you screaming through your screen: “NOTHING.” And I agree. With Democrats in the Senate and the White House, “doing” usually means “spending,” and even then, all that money rarely does much lasting good for the economy.

Nevertheless, the people do demand action. A new Rasmussen poll reveals that 50 percent of Americans worry that the government will not do enough to fix the nation’s economic problems. The sentiment is quite different than the one felt by Americans immediately following the housing crisis and subsequent financial meltdown. As Rasmussen analyzes:

“At that time, 63 percent of voters worried more that the government would do too much. In recent months, a plurality has expressed a fear that the government will do too little in response to the economic troubles gripping the nation. Earlier this month, for the first time ever, the number worried that the government would do too little reached 50 percent.”

Big government liberals everywhere are cheering the news. Finally, they say, the public is catching on to the fact that we need more government spending.

Not so fast. Let’s take a deeper look into just what sorts of actions voters want the government to take. As it turns out, the fears that Washington won’t do enough, have nothing to do with spending and everything to do with cutting.

Rasmussen finds that 77 percent want the government to cut deficits, 71 percent think the government should cut spending, and 59 percent want the government to cut taxes. The idea that the government should reduce rather than increase spending is one that stretches across almost every demographic. Even a significant plurality of Democrats (47/33) agree!

When it comes to cutting there is no shortage of work.

In the latest testament to a government gone out of control, the Government Accountability Office (GAO) issued a press release stating their inability to issue a financial report on the U.S. government. In their words:

“The U.S. Government Accountability Office (GAO) cannot render an opinion on the 2011 consolidated financial statements of the federal government, because of widespread material internal control weaknesses, significant uncertainties, and other limitations.

As was the case in 2010, the main obstacles to a GAO opinion on the accrual- based consolidated financial statements were: (1) serious financial management problems at the Department of Defense (DOD) that made its financial statements unauditable, (2) the federal government’s inability to adequately account for and reconcile intragovernmental activity and balances between federal agencies, and (3) the federal government’s ineffective process for preparing the consolidated financial statements.”

You know things have gotten bad when the agency responsible for keeping the government accountable just throws up its hands and says “forget it.” The government’s books are such a mess that they don’t even know where to start.

The inevitable creep towards insolvency poses troubling questions. For too long Washington has been able to promise more benefits without any concordant increases in taxes. Now the dynamic has shifted, likely permanently, forcing Congress to cut spending or raise taxes. Fortunately, the latest Rasmussen poll reveals the people’s presence. Will Washington listen when they get back to town?

President Obama is known for being generous (with other people’s money). It’s little wonder then that he went all out on a gift for Europe. No doubt, it was a struggle to pick something out. After all, what do you get for a continent that needs everything? A bottle of wine? No, they’re pretty good at making that on their own. A Starbucks gift card? Meh, too generic. Oh I know, how about a $100 billion bailout!

Although very little was heard about it at the time, Rep. Barney Frank slipped a provision into a war supplemental bill that gave the International Monetary Fund a $100 billion line of credit that they could use at any time. And the way the law is written, the funds are fully authorized, meaning that the Obama Administration can send the IMF a bailout without Congressional approval.

That’s not the end of America’s deep financial involvement with the IMF. Although very few Americans are aware of it, the IMF receives most of it’s funding through a member-quota system, in which member states contribute to the fund based on their size relative to the world economy.

Despite President Obama’s best efforts to the contrary, the U.S. remains the world’s largest economy, meaning we carry the biggest burden within the IMF. In fact, our member quota is 17.7 percent of the entire fund, while Japan, the next largest contributor pays 6.5 percent of total contributions. As if all of that wasn’t enough of a burden on US taxpayers, the IMF’s Board of Governors approved a package last year doubling member dues.

And guess who’s now being asked to act as the “lender of last resort” as Europe spirals deeper into trouble? That’s right…the IMF. As the Washington Post reports,

“So far, European leaders have set up the European Financial Stability Fund for that purpose [to act as a lender of last resort], especially since Germany doesn’t want Europe’s central bank to start printing euros and doling them out left and right. But . . . the EFSF has only raised about €440 billion — and nearly half of that is already committed to Ireland, Portugal, Greece, and (possibly) some troubled banks. . . Now, enter the IMF.”

So the IMF, which the Pelosi-led Congress authorized $100 billion in funds on top of our status as the largest dues-payer, may now be stepping in to fill the void in Europe.

Even with all of our financial help, the $390 billion IMF fund still isn’t big enough to keep huge economies like Italy, Spain, and (gasp) France afloat. So who’s going to fill the gap. But what they do have is 187 members (including the US) that they can milk for more money.

And sadly, President Obama seeks to be fine with being Europe’s cash cow. Although White House spokesman Tim Carney has said, “We do not in any way believe that additional resources are required from the United States and from taxpayers,” Obama seemed to contradict these words. Following a meeting with European Council President Herman Van Rompuy, Obama said “The United States stands ready to do our part to help them resolve this issue,” adding, “We’ve got a stake in their success.”

Republicans are doing their best to protect taxpayers from being on the hook for bailing out the fiscal mistakes of other nations. After all, it makes little sense to give profligate European countries hundreds of billions of dollars when many in the United States are suffering and we have a little bit of a debt problem ourselves.

Rep. Cathy McMorris Rodgers (R-WA) and Sen. Jim DeMint (R-SC) have introduced a bill that would prevent taxpayer money from being used in a possible IMF bailout of the eurozone. Senator Coburn, one of the Senate’s leaders in rooting out waste, has also backed the measure. “We’re throwing good money after bad down a hole that I think is not a solvable problem,” Coburn said. “Europe is going to default eventually, so why would you socialize their profligate spending?”’

It’s a good question. One we can’t figure out the answer to. Unless that is, Obama just wanted to give Europe a huge taxpayer-funded Christmas present.

President Obama took the stage last Wednesday to offer this year’s Thanksgiving turkey pardon. And with a mere wave of his hand, Obama gave two turkeys, named Liberty and Courage, a reprieve from sitting next to the mashed potatoes and cranberry sauce on someone’s Thanksgiving dinner plate.

It will take more than a hand gesture to save President Obama’s signature accomplishment – the health care reform bill better known as Obamacare. In fact, it will take a majority of the sitting Justices of the Supreme Court, which recently agreed to take up the case following several conflicting decisions by federal courts.

The question that will be decided extends well beyond the bounds of the constitutionality of Obamacare. At its core, the decision will decide the limits of Washington’s power under the Commerce Clause to compel certain activities.

The Commerce Clause is already one of the broadest instruments of Congressional power. It is the foundational text that has allowed Washington to regulate anything impacting interstate commerce. But the case of the individual mandate is wholly different from past applications in that it Congress attempting to regulate the absence of commerce.

That is to say, Obamacare claims it can require you to buy health insurance because the uninsured may, at some undetermined point, impose costs on the wider economy. But this power would know no bounds. If this theory is found to be constitutional, Washington could require Americans to purchase certain services or perform certain actions since the failure to do so would “impact commerce.” Or as one circuit court said, “The government’s struggle to articulate cognizable, judicially administrable limiting principles only reiterates the conclusion we reach today: there are none.”

For instance, Congress could compel you to join a gym, or eat broccoli at every meal, because doing so would presumably make you healthier and reduce the national cost of health care. It could force you to buy an electric car to reduce the demand, and therefore the costs, of oil. It could (like China) limit the number of children you can have with the understanding that they will put a strain on the federal government’s entitlement programs. In essence, they can do anything. This is truly opening Pandora’s Box.

The importance of this decision means a lot of power rests in the hands of the Supreme Court Justices. Now, questions are arising as to whether Justice Elena Kagan, President Obama’s most recent appointee, should recuse herself because of a conflict of interest.

Federal law requires recusal from a case if a judicial officer of the United States “has served in governmental employment and in such capacity participated as counsel, adviser, or material witness concerning the proceeding or expressed an opinion concerning the merits of the particular case or controversy.” In addition, a federal judge must disqualify herself if her “impartiality might reasonably be questioned.”

As the Solicitor General during the Obama Administration’s defense of the health care law, does Kagan’s history disqualify her from hearing the case?

Emails uncovered by Judicial Watch, suggest, if nothing else, that she strongly supported Obamacare’s passage.

A March email from Kagan to then-Senior Counselor Laurence Tribe said, “I hear they have the votes Larry!! Simply amazing…” On the day Obamacare passed, then-Deputy Solicitor General Neal Katyal forwarded Kagan an email about a meeting with “the health care policy team tomorrow at 4 to help us prepare for litigation.”

These statements call into question not only her role as adviser on the potential litigation over Obamacare, but her impartiality over the law. And it is not as her recusal would be unprecedented. Indeed, Justice Kagan has stepped aside on 29 of the 82 Supreme Court cases heard during her term because of her previous work as Solicitor General.

The Obamacare decision will be one of the most important Supreme Court rulings of our lifetime. And while Obama may, with a flick of his hand, pardon a turkey, this case requires a measured and impartial study of the law as it relates to precedent. Can Elana Kagan provide that? Her past suggests not.

On a cool January morning a man named James Marshall was taking a walk along the banks of the American River in the foothills of the Sierra Nevada. As he looked down he noticed something sparkling in the water, bent down, and scooped up some tiny, yellowish nuggets. Gold.

The rest is history. Word eventually leaked out and the then-sleepy town of San Francisco was inundated with hundreds of thousands of people hoping to strike it rich. Many of them did. In the beginning, the valuable mineral was so prevalent that you could just pick gold nuggets up off the ground.

The California Gold Rush has long been over, but the green-energy gold rush is just beginning. Like gold, taxpayer-funded subsidies are there for the taking. Although Solyndra is the most well-known, the $535 million federal loan guarantee was one of 18 such projects that generated $9.5 billion in clean energy investment, with an addition $9.3 billion in the works.

Washington’s decision to spend such vast sums of cash has drawn struggling green-energy companies like a moth to a flame. Free cash has a tendency to do that.

NRG, a cleverly-named power company, has been one of the main beneficiaries of the Obama Administration’s green energy pipedream. The company, along with its partners, have received $5.2 billion in federal loan guarantees as well of hundreds of millions in other government subsidies for other solar-energy projects.

The New York Times reported that NRG’s chief executive, David W. Crane, told Wall Street Analysts that “the government’s largess was a once-in-a-generation opportunity, and ‘we intend to do as much of this business as we can get our hands on.’”

“I have never seen anything that I have had to do in my 20 years in the power industry that involved less risk than these projects,” the New York Times story quoted him as saying. “It is just filling the desert with panels.”

Not only is the federal government paying them to lay the solar panels, but it is mandating that consumers buy the energy. “These projects, in almost all cases, benefit from legislation that has been passed in about 30 states that pushes local utility companies to buy a significant share of their power from renewable sources, like wind and power,” explains the New York Times.

One green energy CEO joked that “it is like building a hotel, where you know in advance you are going to have 100 percent room occupancy for 25 years.

As if providing them with start-up money wasn’t enough, governments are now in the business of guaranteeing success by mandating a market. I guess that’s one way to ensure that you don’t have to deal with a Solyndra-style debacle anymore.

Like the 49ers before them, it was like picking gold nuggets up off the ground. It is as close to free money as you’ll find. Except it’s not free.

The money, being tossed around like it belongs in a Monopoly game, comes out of every taxpayers’ pocket. Not only is our money being spent on questionable green energy investments but it is completely distorting the energy marketplace, driving out competition and driving up costs.

But there are other, more hidden, costs as well. First, by guaranteeing success, the government is destroying the profit motive that keeps businesses searching for the next technology, the next innovation. Second, by giving green-energy, which is currently vastly more inefficient than traditional energy sources, a tremendous leg-up in the marketplace, it diverts investment from more lucrative societal endeavors. Finally, it snuffs out the potential for a completely new and potentially better technology to emerge. Why gamble on something different if the government is handing you a sure winner?

The green-energy rush is in many ways similar to the gold-rush that fundamentally transformed the west and made a lot of people rich. But there’s a key difference. Namely, the green-energy gold is mined from our pockets, not God’s green earth.

The 1980 election between Jimmy Carter and Ronald Reagan was a turning point for American conservatives. Under Carter, Iranian radicals had held hostages in the American Embassy for just under a year. The economy was struggling and inflation was running rampant. Following the Iranian Revolution, gas prices were skyrocketing and there were mile-long lines at every filling station.

It was against this backdrop that Ronald Reagan asked Carter an all-important question. Just one week before the election in the final broadcast debate, Reagan asked the crowd “Are you better off now than you were four years ago?”

This past week a Minnesota reporter asked Obama essentially the same question – “Are we better off now than we were four years ago?”

“Well, you know, I think we are better off now than we would have been if I hadn’t taken all the steps that we took,” a hesitant Obama said.  “[W]e’ve made steady progress, we just need to make more.”

The ridiculous statement brought out some classic responses. “Are you kidding me?!? asked House Speaker John Boehner after hearing Obama’s answer. “Why don’t you go ask the 14 million Americans who are out of work whether they’re better than they were four years ago.”

Conservative columnist Jim Geraghty’s response was perhaps better: “Define ‘Better.”’

Something tells me Obama’s definition of “better” could be almost as confusing as Bill Clinton’s attempt to define “is.” Remember this gem? When asked if he was having an affair with Monica Lewinsky, Clinton told a grand jury, “It depends on what the meaning of the word ‘is’ is. If the – if he – if ‘is’ means is and never has been, that is not – that is one thing. If it means there is non, that was a completely true statement.”

To which we say, huh?

The word “is” has one meaning and the word “better” has one meaning. Just as Clinton looked ridiculous trying to dance around the issue of an illicit affair, President Obama can’t skirt the fact that things are patently worse than they were four years ago.

Are we further in debt than we’ve ever been? Yes. Are our entitlement programs growing increasingly unsustainable? Yes. Do we have fewer jobs? Yes. Have health care costs continued to increase? Yes. Do we have higher unemployment? Yes.

The list could go on, but let’s focus on the last one. On Friday, new jobs numbers were released, showing yet another month of dismal growth. The Washington Post reports:

“Another month, another dreary jobs report from the Labor Department. The U.S. economy added just 80,000 jobs in October, which isn’t enough to keep up with population growth, let alone get us back to full employment. Indeed, this marks the seventh straight month that the jobless rate hasn’t nudged below 9 percent. (it was 9.1 percent last month.”

Put another way, at our current rate of job growth, the economy wouldn’t get back to 6 percent unemployment (even then not ideal) until after 2023 – more than a decade away. By then an entire generation of young adults could be left behind, muddling through low wage jobs that permanently sap their long-term income potential.

America needs jobs, young adults need jobs, and this White House has shown an inability to get that done. There are currently 18 jobs-related bills that have passed through the House and are sitting in the Senate. There would be more if it wasn’t abundantly clear that Harry Reid has no plans on acting on any of them.

Unfortunately, it appears the only way to change our economic situation is to vote smart come November. And to vote smart, ask yourself one question: Are you better off now than you were four years ago?

A mysterious virus spread across Washington DC today. An unexplained outbreak that seemed to target our elected officials.

Don’t worry, there’s no need to alert the CDC, it doesn’t appear contagious, or even particularly harmful. But it is good for a laugh, or at least a resigned sigh of “how did we elect these clowns.”

It was just the latest flare-up of foot-in-mouth disease. Typical symptoms include the inability to form coherent thoughts, make cogent arguments, or an increased likelihood to offend everyone around you.

Elizabeth Warren, former adviser to President Obama and current candidate for the U.S. Senate, was the first indication we have have an outbreak on our hands. “I’m going for the hick vote here,” Warren said in a liberal podcast. “I just want you to know. Maybe we could start wearing stickers that say ‘Hicks for Elizabeth’ – could we do that?”

On any other day that would have dominated the headlines. But today – a five-alarm, perfect storm, of publicists’ nightmares – it barely made news. And rightly so compared to the utter nonsense that was coming from the President’s mouth.

“I guarantee it’s going to be a close election because the economy is not where it wants to be and, even though I believe all the choices we’ve made have been the right ones, we’re still going through difficult circumstances,” President Obama said in an interview with ABC today.

You could almost see Jay Carney, the White House’s chief spokesman, having an aneurism. He knew this would require more clean up than a frat house after a kegger and it couldn’t have come at a worse time.

Talk about hubris? The American economy is essentially collapsing (for a second time!) all around him and he wouldn’t change anything?

He wouldn’t make any changes to Obamacare despite the subsequent reports that it is actually causing higher premiums? He wouldn’t leave the CLASS Act, which he just had to admit was financially unsustainable, out of the health care bill? He wouldn’t have saved the $800 billion in taxpayer cash that he dumped into the stimulus? Or even say “my bad” on labeling last summer the “Recovery Summer?”

He wouldn’t make it a point to study Solyndra a little more before signing off on the loan and then making it a point to campaign at their factories? He wouldn’t act quicker to clean up the Gulf oil spill? Or check with Eric Holder to make sure that “Fast and Furious” wasn’t in fact another movie sequel?

I mean, at the very least wouldn’t you think he’d question the wisdom of vacationing in Martha’s Vineyard when the United States was standing at the edge of default and seriously contemplating jumping rather than cut our deficit?

Ok, then. Good luck in November!

But the coup de grâce, which is of course French for “dumbest thing ever uttered,” was Mr. Foot in Mouth himself – Harry Reid.

“It’s very clear that private-sector jobs have been doing just fine,” Reid said on the Senate floor, “it’s the public-sector jobs where we’ve lost huge numbers. . .”

Take a moment to pick your jaw off the floor. No really, I’ll wait. . .

Back? Good. The fact is that the private sector is far from fine. Since the recession began in 2007, the private sector has lost 6.3 million jobs. By contrast, government pay rolls have fallen by 392,000. Moreover, only 4.7 percent of government employees are unemployed – by far the lowest of any industry or class according to the Bureau of Labor Statistics, and about half the national unemployment rate. But even those numbers are misleadingly low because the number of involuntary part-time workers (they’d like to work full-time) is now at 9.3 million and 6.2 million workers have been out of work for 26 weeks are quickly becoming unemployable.

Unfortunately, there is no known cure for foot-in-mouth disease. But that doesn’t mean there is nothing we can do to eradicate it from Washington. Namely, we have to elect some people who know what the heck they’re talking about.

Another day, another scandal for the Obama Administration. On the heels of news that the Obama White House was prepared to give the failing Solyndra a second taxpayer-funded loan, comes disturbing new evidence from the botched Operation Fast and Furious.

Although it may sound like just another bad Vin Diesel sequel, this Operation Fast and Furious was meant as a sting operation run by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) to help track down Mexican criminal organizations involved in the escalating drug war just across our border.

The concept was built around the knowledge that many Mexican drug cartels come to the United States to illegally purchase weapons. The ATF’s brilliant plan was to encourage these sales, but rather than arrest the purchasers on the spot, as in a traditional sting operation, agents were ordered to let them go.

Surely, you say, those smart guys at the ATF would have some way to track those guns! We wouldn’t just let them go, right? Right?

Well…

Wrong. According to testimony given by Special Agent John Dodson, one of the undercover agents who made the sale to the Mexican runners and then later turned into a whistleblower on the failed program, the ATF’s tracking plan was, shall we say, not exactly high-tech.

“I can tell you that after a trip to Radio Shack with ATF funds, I myself manufactured a GPS tracking device that could fit inside the handle of an AK variant rifle. The problem with it was the limited battery life,” said Dodson in House testimony.

Jon Stewart of The Daily Show sums it up this way: “The ATF plan to prevent American guns from being used in Mexican gun violence is to provide Mexican gangs with American guns, to use, according to our plans…for Mexican violence.”

Yep.

And we’re not just talking a few guns or a little violence. We’re talking an arsenal of more than 2,000 semi-automatic weapons for which the gangs spent more than $1.25 million. Whats worse, these guns were initially bought using taxpayer dollars. Moreover, using eTrace, the ATF’s electronic tracing program, those guns have been linked to more than 180 crime scenes. Two of those murders were US Border Patrol Agent Brian Terry and US Immigration & Customs Enforcement Special Agent Jaime Zapata.

The Justice Department, which overseas the ATF, has attempted to distance itself from this disaster. Attorney General Eric Holder even went as far as to testify on May 3rd, “I probably heard about Fast and Frious the last few weeks,” signifying that he was not briefed and had no knowledge of the operation.

But as CBS News later reported, “internal Justice Department documents show that at least ten months before that hearing, Holder began receiving frequent memos discussing Fast and Furious.” In fact, Holder received at least five memos beginning in July 2010 about the program.

The Justice Department then tried to do some damage control, telling CBS News that Holder misunderstood the question and did know about Fast and Furious – just not the details.

A quick glance at the memos reveal otherwise. They specifically state, among other details, that the buyers were “responsible for the purchase of 1500 firearms that were then supplied to Mexican drug trafficking cartels.”

Sadly, this case should be one of the biggest stories of the year. Using taxpayer money to buy and sell guns to violent criminals, which were later used in the murder of American citizens, is not just a bad or botched plan, it brings up fundamental questions about our democracy. And yet it has received scant news coverage. CBS News is the only major outlet covering the story, and even then, the chief reporter, Sharyl Attkisson has been literally yelled at by the Department of Justice and the White House for pursuing the story.

So much for this new “era of transparency.” So much for hope and change.

Health care reform takes political courage.

Anytime you propose fundamentally changing something that is so important to so many peoples’ lives, there is a certain risk. But the alternative, doing nothing, is simply not an option. In the United States today our government spends about one-forth of its entire budget on health care programs. The Congressional Budget Office suggests that amount will quickly grow out of control, reaching 45 percent of the budget as our generation reaches adulthood.

Republicans understood the risk when they offered a plan to save health care earlier this year entitled a “Path to Prosperity.” Leading that charge was Rep. Paul Ryan (R-WI) who has set aside political self-interest to systematically save each of our failing entitlement programs.

Of course, every attempt to save is demagogued by Democrats as an attempt to eliminate. Political opportunism knows no bounds in today’s Washington. In a now famous attack-ad, a liberal group showed a Paul Ryan lookalike wheeling an elderly woman in a wheelchair off of a cliff.

This is what we’re up against. But in a speech today at the Hoover Institution, Rep. Ryan argued that conservatives cannot be deterred by these scare tactics.

“Fear and demagoguery are the last refuses of an intellectually bankrupt party,” Ryan said, “and the moment calls for leaders who are not afraid to be honest with people about how they would solve the problems we face.”

But Ryan does not wish martyrdom for intellectually honest Republicans. He does not foresee anyone dying on the hill of health care reform. Instead, his is a vision of hope in which Republicans “summon the courage and the ability to offer Americans a true choice of two futures on health care, which is a choice they deserve.”

Ryan’s feels optimistic, as all of those who believe in reform should, because conservatives have presented a workable vision that would fix the fundamental flaws in the current badly designed government system.

The biggest problem, Ryan explained, was that “the health care sector lacks most of the basic building blocks of a functioning market.” First, the true prices of care are hidden beneath government or insurance company bureaucracy. Second, consumers are insulated from marginal costs despite the fact that we’re paying higher premiums and taxes.

Rather than open the health care system up and allow free market principles to do their work – increase transparency, lower costs, increase supply, and add choices – Obamacare did the exact opposite. The bill pushes health insurance further out of the hands of consumers and closer to the grasp of government bureaucrats.

Similar approaches were introduced or expanded in Medicare and Medicaid, the two biggest drivers of government debt for the foreseeable future.

In Medicare, the President proposed using an Independent Payment Advisory Board (IPAB aka: 15 unelected government bureaucrats) to hold the cost of Medicare to a particular level. But as Ryan points out, IPAB’s chief tool is price controls for providers, which would do nothing but drive Medicare doctors “out of business, resulting in harsh disruptions and denied care for seniors.”

The Medicaid problem is equally bad. A faulty “matching formula” in which the federal government reimburses a portion of states’ Medicaid costs is ripping apart state budgets and incentivizing waste. To add insult to injury, Obamacare included a provision that prevents states from altering the program’s eligibility requirements, essentially handcuffing states’ ability to deal with one of their largest budgetary problems.

Republicans have a plan to fix each of these problems, not by adding more layers of government in the hopes of papering over these issues, but of introducing market forces. “Under a reformed approach, the government would make a defined contribution to the health-care security of every American, rather than continue to offer open-ended, well intentioned, but ultimately empty promises,” Ryan explained.

And that is the difficult part. Republicans are fighting against incredible sounding, but ultimately unsustainable promises. But we are armed with are facts, truth, and our integrity.

This will not be an easy debate. Every solution Republican’s introduce will be met with claims that we are destroying America’s entitlement system. What we must make people realize is that reform is the only way to save it, not just for this generation, but for all future generations.

Rep. Ryan is already leading the charge, we should all be brave courageous enough to get behind him.

Those obstructionists! Those partisan blowhards! Holding up jobs legislation for their own political gain, it’s simply unbelievable.

As if the White House didn’t have enough to do, they’re having to take time out of their schedule to try and convince opponents of the jobs bill to get behind it.

It’s a story we’ve heard before. In fact, it’s a story Democrats like to tell with just about every idea they’ve had over the past two years. Except this time, much to the chagrin of the Obama Administration, the obstructionists are the Democrats.

That’s right…the Democrats don’t even like Obama’s latest “jobs” (read: stimulus) bill.

The Hill reports from the Senate side,

“Senior administration officials met with Senate Democrats for an hour and a half on Thursday to answer their complaints about President Obama’s jobs bill.

Democratic lawmakers voiced objections to several of the president’s proposals to pay for the $447 billion stimulus package, including an elimination of tax breaks for the oil-and-gas industry.”

David Plouffe, a senior adviser to the president, acknowledged after a marathon meeting in the Senate’s Mansfield Room that not all Democrats are sold on the plan.”

But Obama’s troubles aren’t limited to the Senate, where Democrats have a majority, and are thus much more politically careful. No, his bill’s unpopularity extends to the House, where Democrats often use their minority status to truly “speak their mind.”

From Roll Call,

“President Barack Obama’s plans to pay for his jobs legislation are facing a cool reception from some House Democrats who wonder how the proposals – which went nowhere in the 111th Congress, when Democrats held majorities in both chambers – can attract support now.”

I’ve been wondering the same thing as well. Unfortunately, there is little indication the President Obama ever intends to address that.

From the very beginning it has been clear that this is less an attempt at creating good policy than a brazen attempt to score political points. In other words, this isn’t meant as legislation to actually help the millions of Americans who are unemployed, this is a bill to help him stay employed as President of the United States.

Except that plan isn’t working out to well either. Tough to convince Americans to vote for you when you can’t even convince your fellow Democrats in Congress to go along with your plan. In fact, on MSNBC’s Morning Joe, host Joe Scarborough went as far as to say that Democrats “are the ones that are in open revolt.”

And that isn’t hyperbole. Take Senator Jim Webb (D-VA) who, when asked about the President’s plan to pay for the bill said it was, “Terrible.” Sen, Mark Begich (D-AK) called it “frustrating,” that the bill would “singl[e] out certain industries” for tax hikes.” And Sen. Joe Manchin (D-WV) said he has “serious questions about the level of spending . . . as well as the afctual effectiveness some of these policies will have.”

That’s not to say that the plan is all bad. Immediately after presenting the jobs bill Republicans, led by Majority Leader Eric Cantor (R-VA) and Speaker John Boehner, (R-OH) signaled openness to portions of the plan. Democrats are now following their lead, suggesting that we “cherry pick” the good parts and nix the bad.

Sadly, White House spokesman David Axelrod already said they not accept an “a la carte menu” approach to the Presidents jobs bill.

With all the negativity swirling around Democrats it’s not much clearer why the President had to beg students at a North Carolina campaign stop, “If you love me, you gotta help me pass this bill.” With his party in revolt he’s gonna need all help he can get.

Tonight, football arises from the ashes of an offseason filled with college scandals and a pro-lockout to once again soar to the forefront of Americans’ minds. Football is a sport built on rivalries. Michigan v. Ohio State, Oklahoma v. Texas. Alabama v. Auburn, and of course, Army v. Navy.

Americans simultaneously love the rivalry, hate the other team, and respect the tradition behind the game to form an odd, but incredibly potent cocktail that quenches our thirst every fall weekend.

But perhaps the biggest rivalry today crosses over from the world of sports, of football, and of fun. It is a rivalry not based in respect, but one of power. I’m talking about that relationship that exists between Democrats and Republicans.

At a time when our parties should be working together to overcome the incredible difficulties that Americans are facing every day – persistent unemployment, a slumping economy, and a staggering debt – Democrats’ continue to pick childish fights more reminiscent of Pop Warner than NFL. Americans deserve political pros, willing to put aside ego for the good of the country, but we’re getting rank amateurs.

That divide became all the more clear this week when President Obama decided to hold a so-called jobs speech (yes, another one) on the same day as an important Republican presidential debate.

Such obvious pettiness should be enough to pop even the most optimistic view that an action-oriented, more bipartisan Washington was going to prevail after the summer recess. Nope, before our Representatives even return to the nation’s capital, President Obama has shot a volley right across the bow.

Moreover, he’s committed to not admitting it. In a moment we can only describe as surreal, Jay Carney, the White House’s chief spokesman had the audacity to say that Obama’s upcoming speech would be aimed at healing the party divide.

“He will make the case to the American people…that politics is broken,” said Carney “And that politics is getting in the way of the very necessary things we need to do. Now he hopes…that members of Congress will come back from their recess with a new sense of urgency . . . There’s nothing that’s preventing us from doing these things – both to grow the economy and to create jobs, AND to get our fiscal house in order – except politics.”

Exactly. Hit the nail on the head. But the President’s decision to hold a jobs speech over top of the Republican debate can be described as nothing but the worst of politics.

Even Democratic strategist James Carville, who led Bill Clinton’s reelection campaign, had a negative reaction to the maneuver. “I do think this is a really big debate and I think the White House was out of bounds…in trying to schedule a speech during a debate,” Carvilles said on Good Morning America.

But we understand campaign politics. It’s a game so rough and a rivalry so deep that it makes Michigan-Auburn look like an intra-squad game of two-hand touch. We also understand that Obama’s speech isn’t all that important. As HotAir blogger AllahPundit wrote, “It’s not that his jobs plan [will] do much to help, or that everyone – everyone – knows that this speech will reek, filled as it’ll surely be with the usual tired bromides from the “adult in the room” about how mean Congress is.” After all, we know that anything President Obama lays out next week (which will surely consist of some tired, ill-thought-out stimulus plan described as “investment”) actually has a chance of passing.

What we don’t understand, or simply refuse to understand, is why the President insists on campaigning at this critical juncture in our economic recovery. As investment analytics expert, James Rickards wrote, “There’s a time for politics and a time for policy. A time for running and a time for governing. This White House has shown repeatedly that they are either incapable of making the distinction or reflexively go for politics every time.”

And with politics and campaigning consuming and manipulating every decision being made by our President, an economic recovery moves further into the distance. Granted, Obama’s team actually made the decision to back down from the original date (which prompted jeers from the liberals who are already starting the “He caved again” theme), but the damage has already been done. Obama has tipped his hand and it’s not pretty. It’s another 14 months of campaign maneuvering at a time when every waking moment should be trying to guide this once-proud nation towards recovery.

Democrats v. Republicans. It is a rivalry for the ages. The winner may not play for some novelty trophy, like the Jeweled Shillelagh of USC and Notre Dame rivalry; nor does it have an interesting name, like the “World’s Largest Outdoor Cocktail Party” of Florida and Georgia fame. No, the stakes are much higher and the game much more serious for this particular rivalry. It is sad that one team seems so intent on tarnishing it.

Burger King announced today that it is dropping its “King” mascot – the giant-headed, quasi-creepy, baron of the burger.

The edgy ad campaign received a lot of attention from the media and won rave reviews from critics, the trouble is, it just wasn’t selling nearly as many hamburgers as McDonalds. “This discrepancy in performance is not the result of McDonald’s having more “creative” advertising or a hipper mascot (Ronald McDonald is many things – hip he’s not),” writes Marc Babej in Forbes. “But while Burger King was trying to sell consumer an edgy brand image, McDonalds focused on something much more mundane: selling burgers.”

So obvious, and yet so rare. We’re used to being sold on edgy, flashy gimmicks, not actual substance. President Obama tried to do the same thing with his jobs agenda. His administration made no attempt to focus on what America is good at, has seemingly forgotten where our comparative advantages lie, and has refused to let free markets decide. Instead, in a misguided effort to push a ‘hope and change’ agenda, the government has decided what the future of our economy should look like.

One of the main ideas they’ve settled on is “green jobs.” Obama campaigned on the promise of plentiful green jobs – 5 million of them to be exact. He was so convinced that he included $2.3 billion in tax credits for the clean energy-manufacturing sector in the stimulus bill – $500 million of which were for job training programs. Of course, if you believe his 2008 campaign, that $2.3 billion was merely meant as a down payment. “We’ll invest $15 billion a year over the next decade in renewable energy,” Obama said in the fall of 2008.

Those jobs proved to be an illusion.

The New York Times recently reported,

“A study released in July by the non-partisan Brookings Institution found clean-technology jobs accounted for just 2 percent of employment nationwide and only slightly more – 2.2 percent – in Silicon Valley. Rather than adding jobs, the study found, the sector actually lost 491 positions from 2003 to 2010 in the South Bay, where the unemployment rate in June was 10.5 percent.

Federal and state efforts to stimulate creation of green jobs have largely failed, government records show.”

So it goes when Washington attempts to thwart the most basic principles of Econ 101 in some ill-fated quest to create jobs. “It is well understood, among economists, that governments do not “create jobs,” writes American Enterprise Scholar Kenneth Green. “The willingness of entrepreneurs to invest their capital, paired with consumer demand for goods and services, does that. All the government can do is subsidize some industries while jacking up costs for others. In the green case, it is destroying jobs in the conventional energy sector…through taxes and subsidies to green companies that will use taxpayer dollars to undercut the competition.”

Even some Democrats are ready to give up the ghost of green jobs and admit that simple economics rules the day. “Of course, we want to be part of the new innovation and the green jobs,” said Rep. Maxine Waters in a recent MSNBC interview. “But you know, the green jobs have been about a lot of talk and not a lot has been happening on that. All of this talk about the green jobs never materialized.”

The only person not ready to admit defeat is President Obama. He has already announced that he will be presenting another job creation “plan” in September and speculation abounds that it will include yet more money for green jobs. Before doing so we encourage him to read this Investors Business Daily report detailing some of the colossal failures from his first attempt at stimulus, including examples such as Evergreen Solar – a company that just cut 800 jobs despite receiving tons of taxpayer cash.

Promoting green jobs is flashy. For Obama, they were a way to sell people on an entirely new sector of the economy, one that was both earth-friendly and hugely profitable. But like “the King,” who was edgy, but couldn’t sell hamburgers, the promise of a “green economy,” is a lot of hype with no real results.

Burger King is dropping the marketing gimmicks and getting back to what they are good at – selling a decent burger. It’s time for President Obama to let America do the same. It’s time to drop the green jobs charade and let our economy grow naturally.

The summer movie season is winding down which means super heroes and teenage wizards head for the exits while vampires and other nasties make their debut. The horror genre isn’t exactly known for their groundbreaking plots. I mean, at this point everyone should know that a house built on a cemetery is a bad idea, you never split up to “cover more ground,” and that the monster is never, ever, really dead.

Unfortunately, the horror genre has carried over to Washington, where the biggest villain – the stimulus – is back from the dead. Yep, just when you thought you had heard the end of the ill-fated testament to government excess, it’s baaa-aack. It’s the policy that conservative (and sane economics) just can’t seem to kill.

Word comes today that President Obama is considering asking the Deficit Reduction Committee (created as part of the debt-ceiling deal) to pass new stimulus measures. The question a sane person would ask is, “Why should a committee focused on reducing the deficit be asked to also pass measures that would increase the deficit.” The answer, of course, is pure politics.

Obama has long attempted to get Congress back on the stimulus bandwagon by talking up ideas like an “infrastructure bank.” Neither Chamber of Congress (and by extension, neither party) has even so much as listened to Obama’s nattering for more cash and thus his plan has failed to gain the necessary traction. But the Deficit Reduction Committee operates under an entirely different set of rules that could make it easier for Obama to get his ideas passed.

The final plan that the Committee creates will enjoy expedited floor consideration that limits the amount of debate time, eliminates the opportunity to offer amendments, and guts minority party defense mechanisms like the Senate filibuster. As Zeke Miller wrote in Business Insider, “Using the Super Committee would lower the threshold to pass a more substantial bill, because the group’s recommendations are required to be taken up for a straight majority vote before December 23.”

This breaking news confirms reports from earlier in the week that a rift had been developing among President Obama’s top economic staffers. On the one hand were advisers who felt that the debt ceiling had “weakened Republicans and created an opening for bigger ideas,” like additional stimulus measures. On the other, were confidantes that were “skeptical about the merits of stimulus spending,” and instead want to focus on deficit reduction measures.

If the latest reports are true, it appears that those who favored additional stimulus measures may have won out.

Republicans are already taking a stand. “We must put an end to the policy uncertainty constantly being driven by this Administration,” said House Majority Leader Eric Cantor. “That means stopping the discussions of new stimulus spending with money that we simply do not have.”

The fact that Republicans have to once again beat back a stimulus idea long presumed dead shows how out of touch the President really is. It’s as if Obama is panicking. His big-government plans haven’t panned out, the job market remains stagnant, his leadership is being called into question, and his job numbers are tanking. With his back against the wall he’s going back to his old bag of tricks.

But the stimulus was an expensive failure the first time around. Early evidence suggested that the program cost about $400,000 per job – proving the government is extremely efficient at spending taxpayer money, and extremely inefficient at creating jobs.

And yet President Obama wants to try this again, and use a committee created for the sole purpose of reducing our deficit to do it no less? Pardon our naïveté but we figured the Deficit Committee would actually be reducing spending, not adding to it.

But then again, perhaps we underestimated the horror movie that is Washington DC. How silly for us to assume that just because the stimulus was dead and buried beneath the weight of its own failure that it wouldn’t rise again. Monsters always come back. And this figures to be one high-budgeted frightfest.

What if America was no longer the greatest nation on earth? What if we lost our spot as the world’s economic powerhouse, the nation where companies and entrepreneurs flocked to be close to the consumers who would be purchasing their products? What if American exceptionalism faded to something more resembling American averageness?

Would we except our fate as a declining superpower the way, say, Great Britain has? Do we fall into a comfortable malaise, with a high standard of living but no real prospect for growth, such as France?

Ok, enough with the rhetorical questions, but sadly they are ones we may be facing in the very near future. The LA Times reports:

“[A]s the [the United States’] economy stalls and personal incomes stagnate, they see consumers in Asia and Latin America as offering brighter prospects for future sales and profits.

In effect, as many corporate executives look ahead, the United States has a diminishing place in their thinking.

The nation’s tax laws reinforce the pattern. American companies have piled up mountains of profits overseas, but they must pay very high taxes if they bring the money home. So instead of investing back home, they are more apt to put the money into overseas expansion, adding jobs there.

The shifting focus is one reason new job growth here has slowed to a trickle in recent months.”

America’s is slowly fading as the world’s economic bright-spot and Washington is the one standing by the dimmer switch.

American businesses are earning more overseas. That shouldn’t be viewed as a bad thing; as the world’s economy grows it serves as a rising tide that lifts all boats – the U.S. included. But bad policy decisions have prevented the U.S. from benefiting from the increased sales.

Rather than bring their investment back home, which could be spent on more workers, new machines, or researching the next generation of products, they’re parking it overseas. And who can blame them?

Legendary entrepreneur (and Democrat) Steve Wynn explained several of the reasons in a recent quarterly conference call. “This administration is the greatest wet blanket to business, and progress and job creation in my lifetime,” said Wynn. “And I can prove it and I could spend the next 3 hours giving you examples of all of us in the marketplace that are frightened to death a bout all the new regulations, our healthcare costs escalate . . . A President that keeps on using that word, “redistribution.”

Wynn’s sentiment seems to be shared by many business owners. In fact, a recent survey conducted by the U.S. Chamber of Commerce found that 64 percent of business owners will not hire anyone next year, giving taxation, regulation, and the threat of new legislation, as the top reasons why.

If American businesses are discouraged from investing their domestic profits, their practically punished for attempting to invest their foreign profits. A large factor in that decisions is our broken tax system. Not only do we have the highest corporate tax rate in the world (35 percent) but we are the only developed nation to use a territorial system to collect it.

What does that mean? Most nations only collect taxes on income earned on their shores. We on the other hand, collect taxes on anything a U.S. based company earns anywhere in the world. This opens up companies to double taxation. Of course, Washington has tried to alleviate the problem by granting tax credits on foreign income tax paid, but since we have the highest rate, it still makes sense for foreign earnings to be kept abroad.

America cannot continue to be great if its’ businesses are being incentivized to invest elsewhere. We are quickly becoming obsolete in a world economy that is constantly changing. Unless Washington acts to remove the barriers to investment (namely through fundamental tax reform) we’ll soon be relegated to the dustbin of past powerhouses – swept away by warnings we refused to heed.

Barack Obama is already the first president to preside over a downgrade from our ‘AAA’ status, at the current rate he may also be the reason for losing our spot atop the world economy.

Downgrade? How could we be downgraded, we’re the United States of America! This just shows how stupid S&P is. I mean, they were the real reason we are even in a recession. If they hadn’t scored junk bonds as ‘AAA’ then everything would be humming along smoothly. And those Tea Partiers and fiscal conservatives, they’re the real villains in this whole mess. Going around demanding that we cut spending in order to raise the debt limit. Preposterous. It makes them, uh…terrorists. Yes, they’re terrorists!

Ladies and gentlemen, welcome to your hope and change.

Rather than stand up, take ownership of the crisis, and say “Dammit, we may have been part of the problem, but now we’re going to come up with some solutions,” we get a Washington-style round of pass the blame.

Tellingly, in their frantic quest to find someone (anyone) to pin the downgrade on, liberal commentators can’t even get their stories straight.

First, you have Democrats trying to cover their rear by saying that the downgrade was the result of shoddy work from a questionable company. “Apparently we’re supposed to care what some idiots at some corrupt organization think about anything,” wrote Eschaton, a widely-read liberal blog.

Though cloaked in softer verbiage the Obama Administration has taken much the same line. Knowing that they can do little to change the message, they’re doing their best to discredit the messenger. “I think the S&P has shown really terrible judgment and they’ve handled themselves very poorly and they’ve shown stunning lack of knowledge about basic U.S. fiscal budget math,” said Treasury Secretary Tim Geithner. “And I think they drew exactly the wrong conclusion.”

Now, to be fair, the S&P and other credit rating agencies aren’t the be-all-end-all of the world economy. In fact, we’ll be the first to admit that they’ve made a lot of mistakes in doling out their ratings. But as former College Republican Chairman Zach Howell tweeted on Monday, “Something to consider as Obama and the Treasury attack S&P: The problem has been that they’ve given too many ‘AAAs’, not taken too many away.”

Bill Gross, managing director of investment giant PIMCO, agrees. In a recent Investment Outlook, Gross wrote, “[Credit rating agency] warnings were more than tardy when it came to the Enrons and Worldcoms of 10 years past, and most recently their blind faith in sovereign solvency has led to egregious excess in Greece and their southern neighbors. The result has been the foisting of AAA ratings on an unsuspecting investment public who bought the rating-service Kool-Aid that housing prices could never really go down or that countries don’t go bankrupt.”

Given their loose standards it should be all the more shocking that S&P has downgraded our credit score. An agency that has given out ‘AAAs’ like candy couldn’t bring itself to allow the U.S. to keep theirs. Our underlying budget issues are that bad.

Of course, the fact that liberals are saying the credit rating is a sham hasn’t stopped them from blaming the (fake) downgrade on the Tea Party. As blogger Jim Treacher sarcastically quipped, “This isn’t happening…and it’s all your fault!”

Take, for instance, this smattering of quotes from some Democratic luminaries:

• “I believe this is, without question, the Tea Party downgrade.” – Senator John Kerry
• “I think this is a tea-party problem. I think they are totally unreasonable and doctrinaire and not founded in reality. I think they’ve been smoking some of that tea, not just drinking it.” – Howard Dean
• “The fact of the matter is that this is essentially a Tea Party downgrade. The Tea Party brought us to the brink of default.” – David Axelrod

Blaming fiscal conservatives or the Tea Party is not only absurd, it is a boldfaced lie. After all, their entire raison d’etre is to reduce the size and scope of government, and thereby eliminate our debt and deficit.

Fiscal conservatives weren’t the reason for the small deal that ultimately led S&P to question our ‘AAA’ rating. In case you’ve forgotten, fiscal conservatives had passed a budget that would reform our entitlement programs and reduce our deficit, had passed the “Cut, Cap, and Balance” plan that would have created the structural reforms to permanently eliminate our debt, and had proposed myriad other bills including Sen. Coburn’s plan to cut $9 trillion. And Democrats are saying we’re to blame?

All the yelling and finger pointing among the Left just goes to show how ideologically bankrupt they really are. Seeing that their big-government plans and cradle-to-the-grave welfare state are fiscally unsustainable, they are simply out of ideas. Rather than admit their mistakes and work together towards sustainability, they’re content to find a scapegoat. Sadly, they can’t even do that right, having created two narratives that simply don’t fit together.

This isn’t the fault of S&P and this isn’t a Tea Party downgrade. No, if liberals are looking for someone to blame, they should start by looking in the mirror.

“You unlock this door with the key of imagination. Beyond it is another dimension – a dimension of sound, a dimension of sight, a dimension of mind. You’re moving into a land of both shadow and substance, of things and ideas. You’ve just crossed over into…the Twilight Zone.” – Twilight Zone theme

Reading the news over the past few days one would have thought we had been transported into the Twilight Zone. It is a dimension in which America’s debt problems are the result of the Tea Party and of fiscal conservatives. It is a world in which Democrats are the sole protectors of America’s credit rating. It is a time in which conservatives are labeled “terrorists” and “hostage takers.”  In short, it is a bunch of baloney.

Take these quotes from liberal commentators, all of which have come in just the last two days:

• “Since the Republicans were threatening to go nuclear in unprecedented fashion, why didn’t the president at least threaten to use his unprecedented nuclear option to stop them?” – Kurt Andersen, New York Times
• “A Congress dominated by mindless cannibals is now feasting on a supine president. But surely even he now realizes there’s no middle ground with antagonists whose only interest is in seeing him humiliated.” – Jacob Weisberg, Slate
• “The GOP’s House tea party members abruptly hijacked a fairly routine congressional vote and threatened to send the United States into first-time default in order to fight a proxy war over their singular agenda of shrinking the federal government.” – Michael Hirsh, National Journal

What a sad irony it is that fiscal conservatives, the ones who are determined to save Washington from its own largesse, are being labeled its destroyers.

The Reality: Six months ago President Obama was demanding a “clean” increase to the debt ceiling. As The Hill reported at the time, “The administration has maintained for months that Congress should not attach other provisions to a vote to increase the $14.3. trillion debt ceiling.”

House Republicans fought back against that notion, realizing that unless something was done, and soon, America’s debt would soon become unmanageable. Having offered multiple plans, including a Balanced Budget Amendment supported by 80 percent of Americans, and even agreeing to $800 billion in new revenue (which Obama later moved the goalposts on), Democrats continued to fight against cuts.

Ultimately, Democratic intransigence led to a package of cuts that was not large enough to avoid a ding to our credit rating. To make matters worse, Democrats have already staked out the position that changes to entitlements are already off the table in future debt discussions.

The Twilight Zone: President Obama mishandled this situation from the very beginning by demonstrating a willingness to deal with Republicans and accede to spending cuts.

The problem is not really one of spending, but how broken Washington is. Our investors aren’t worried about our $1 trillion deficits, our $14 trillion debt, or our exploding entitlement system; no, what they are really concerned about is the “extremist” Republicans who want to cut government spending.

This is a world in which the Senate Majority Leader has called Social security “the most successful social program in the history of the world” and has said that reforms are “off the table.” Where Nancy Pelosi has called the current Medicare program “a value, an ethic, a pillar,” “a flag we’ve planted that we will protect and defend.” Where a Senate Democrats have rejected out of hand Republican hopes of reforming Medicaid. And where even the most modest cuts to discretionary spending are demagogued as “draconian.”

This fantasyland leaves us very few options. In fact, as far as we can tell it leaves us two: (1) raise taxes to levels unseen in American history, and/or (2) slash defense spending. Neither option nets you enough deficit reduction to put even a dent in our projected debt, much less qualify as an actual solution.

Despite their lack of answers, these are supposed to be the heroes of this story? Are we really supposed to believe that Tea Pariers and other fiscal conservatives who have at least offered plans to ensure these programs survive for future generations are the villains? Apparently we really have crossed over…to the Twilight Zone.

I will miss very few things about the debt limit debate. Between having to listen to President Obama give self-righteous speeches seemingly every day, watching as the House passed plan after plan only to see them go down in flames in the Senate, and having to keep up with Congress at all hours of the night and weekend, it has been a grueling few months.

But there is one thing that I will miss – the utterly ridiculous things that politicians said throughout the debt-limit debate. So without further ado here are the Top 5 Hilarious Quotes from the debt limit debate:

(1) “This deal is a sugar-coated Satan sandwich. If you lift the bun, you will not like what you see.” – Rep. Emanuel Cleaver (D-MO). Apparently unsatisfied, Nancy Pelosi took it one step further saying it was a “Satan sandwich with Satan fries on the side.”

What in the devil is a satan sandwich? Fortunately, a 2004 entry from Urban Dictionary tells us that a “satan sandwich” as: “The chiefest of hell’s dark delights, it is said that just one bite of it arouses and unspeakable lust of terrific potency.” Given the definition I can only think that sugar coating it would make it that much more devious (albeit tasty).

Given that Rep. Cleaver is a United Methodist pastor you’d think he’d be a little more careful than to label something satanic. Interestingly, a Pew report finds that “more than other Americans, evangelicals are prepared to cut deeply and forcefully when chopping the deficit.” In other words, Americans believe the enormous debt we are leaving to future generations is immoral, not the attempts to fix it.

(2) What we’re trying to do is save the world from the Republican budget. We’re trying to save life on this planet as we know it today.” – Nancy Pelosi (D-CA)

There are really two ways I could take this: (1) Accept that Nancy Pelosi actually meant what she was saying, in which case she’s defending the unsustainable debt and deficits or the status quo; or (2) Take this as yet another example of Pelosi’s penchant for drama.

Regardless of whether this was the result of a passing moment of senility, a carefully thought out response, or just your average, everyday brain fart, it was stunningly stupid. Without dramatic reductions in spending and reforms to government, our debt-to-GDP ratio will soon approach Greek levels. Of course when that happens, the Medicaid, Medicare, and Social Security which Democrats love will go the way of the dodo. In other words, the best way to save life on this planet as we know it today, is to change the spending habits of Democrats.

(3) “The idea seems to be that if the House GOP refuses to raise the debt ceiling…then Democrats would have no choice but to pass a balanced-budget amendment and reform entitlements, and the Tea Party Hobbits could return to Middle Earth having defeated Mordor.” – Wall Street Journal

Senator Rand Paul (R-KY) easily had the best retort for this stunning statement: “I think in reading the books, the hobbits were the heroes.” Bingo.

Say what you will about the Tea Partiers, but they, more than any other group, were responsible for achieving the best deal possible. Some may chide them for living in a political fantasyland, but the reality they strive for – one in which the government doesn’t spend more than it takes in – is far more grounded in the reality of economics than the spend-happy status quo.

(4) “They have acted like terrorists.” – Vice President Joe Biden

Even for a guy that has a chronic case of foot-in-mouth disease, this was a new low. No matter how upset Democrats are that they lost the debate on spending or were unable to strike the deal that they wanted, an argument over policy should never be equated with murdering innocent people. And yet these are the same people who just a few months ago lamented that the increasingly hostile rhetoric of Washington was to blame for Rep. Gabrielle Giffords shooting.

Beyond the sheer foolishness of the metaphor, since when is fiscal responsibility defined as terrorism? I can’t imagine we would have devoted a decade in time and treasure to finding bin Laden if his only act of terrorism was advocating for a balanced budget. Then again, this is the bizarro world of Washington.

(5) “Let’s pass a bill to cover the moon with yogurt” – Representative Paul Ryan.

As ridiculous as the statement sounds, Rep. Ryan’s entire point was to highlight how utterly inane Democrats’ deficit reduction plans were.

This quote was aimed squarely at Sen. Harry Reid whose debt limit plan including a phantom $1 trillion in savings from Iraq and Afghanistan. As we’ve written about previously, this is nothing but Washington gimmickry. Since the CBO is required to use current law in its projections, it’s 10-year forecast included surge level funding for our two wars. But that funding was never going to happen, it was merely a product of the CBO’s budgeting rules. So when Harry Reid proposed to “save” that cash, it was akin to writing a $5 trillion plan to cover the moon with yogurt and then writing a plan to cancel that bill and then saying it saves $5 trillion.

Yea, it’s a complicated concept, but damn if it wasn’t a hilarious metaphor.

Honorable Mention: After Rep. Gabrielle Giffords made a surprising return to the House floor for her first vote since being shot in the head by a crazed gunman, Vice President Biden said she is “now a member of the cracked head club like me.” There are no words for such stupidity.

Did we miss anything? Feel free to use the comments section below to tell us your favorites or add to the list!

Battered, beaten, and bruised, Republicans nevertheless appear to have emerged from the debt limit fight as the clear winner. It was a political fight akin to the famed “Rumble in the Jungle” boxing match when challenger Muhammad Ali knocked out George Foreman to regain the heavyweight title.

The Rumble was not your average fight. Ali had just been suspended for boxing for three and a half years for his refusal to enter the Army during the Vietnam war. Foreman had catapulted from his gold medal in the 1968 Olympics to become the most feared fighter in the world.

Foreman was the overwhelming favorite and through the first eight rounds it showed. Knowing he couldn’t beat the bigger, stronger Foreman in a straight punching contest, Ali began leaning on the ropes and inviting Foreman to punch him on the arms and body. This strategy, which Ali dubbed “rope-a-dope,” eventually tired Foreman out, leaving him open to a series of punishing hooks that led to the historic Ali win.

At many times throughout the debate many Republicans had to feel like Ali – against the ropes, getting pounded with body blows, and wondering if Democrats would ever tire. For each punch that Foreman through it seems like Republicans offered a plan. First it was Paul Ryan, then Cut, Cap and Balance, then Boehner 1.0 and 2.0, all of which either glanced off the Democrats, or were thrown back in our faces.

Throughout it all you could feel Democrats’ resolve beginning to crack. There demand for a so-called “clean” debt limit increase without any spending cuts was quickly tossed aside. From then on, small demands began to fall away. For instance, President Obama began to express a willingness to deal with entitlements, including some changes to the Social Security benefit formula.

Gradually, Democrats ceded more. A turning point came two weeks ago when Senate Majority Leader Harry Reid offered a plan that included no new revenues, a step which President Obama wasn’t even willing to take. Finally, Democrats gave in on their demand to have an increase large enough to get them through the next election cycle without being forced to take another vote.

Slowly but surely Republicans rope-a-dope strategy was paying dividends. Every time we offered a plan, the Senate voted it down, but what appeared to the world a serious body-blow allowed Republicans to inch the debate in the right direction.

Tonight it appears as if the sides have finally reached an agreement on a deal. And although many conservatives will oppose it for not going far enough, it is hard to interpret it as anything but a solid win for Republicans.

The tentative deal reached is about as confusing a deal as you could imagine (what do you expect from the same Washington that brought you the 2,000 page health care bill?). Essentially, the framework as described in a slideshow distributed by Speaker Boehner’s office includes four key parts:

1. It would cut and cap discretionary spending immediately in order to save $917 billion over the first 10 years and in return would raise the debt ceiling by $900 billion – enough to take us to approximately February.
2. A Joint Committee would be created to create a plan that would reduce the deficit by at least $1.5 trillion over 10 years.
3. The President could only receive a second $1.5 trillion debt increase if (1) the Joint Committee’s proposal is enacted OR (2) a Balanced Budget Amendment is sent to the states
4. If either of those two processes fails then automatic, across-the-board spending cuts go into effect and the President may request another $1.2 trillion – which would not get him through the election.

Got all that? It’s certainly not perfect. Among the things we would have liked to seen are bigger cuts in immediate expenditures, spending caps that were not limited to discretionary spending, and a more thorough consideration of a Balanced Budget Amendment. But it’s also tremendous progress. Not only have did Republicans change the entire complexion of the government spending debate, they were able to achieve a solution that does not include revenues.

With a majority in only one-chamber, Republicans, like Ali, appeared to be overmatched and on the ropes throughout much of this debate. But after a long bout of rope-a-dope, Republicans, and more importantly, our principles, were left standing. It may be no Rumble in the Jungle, but maybe we can call it a Brawl in the Beltway.  Either way, it should go down in history as a solid win for Republicans.

A House leadership aide explained the current debt limit situation as the closest Washington gets to a Wild West showdown.

On one side of the corral you’ve got Speaker of the House John Boehner and on the other, Senate Majority Leader Harry Reid. Earlier today it appeared to be a question of who would be the quicker draw, who could get their shot off first. Both men had competing plans and a clear goal – get their plan introduced and passed through their chamber before the other.

The advantages of doing so were clear. One, the plan that passed would dominate the media coverage, sucking all the air out of the room before the other got a chance to breathe. Two, a significant portion of the public is antsy for a deal, any deal, and whomever seemed to have a viable plan first would capture this group of Americans. And three, as the clock ticks toward August 2nd, there will be increasing pressure to push whatever has already made it through one chamber of Congress.

Who was the real gunslinger? Well it turned out it didn’t matter. You’ve heard the expression ‘never bring a knife to a gunfight’? Well, Reid didn’t even bother to bring a knife, he brought a pop-gun. Sure, it may have been a realistic-looking pop-gun, but when it came time to fire, Reid’s plan was nothing but a tethered cork.

Reid unveiled a $2.7 trillion deficit-reduction plan that the Obama Administration was quick to support. “Senator Reid has put forward a responsible compromise that cuts spending in a way that protects critical investments and does not harm the economic recovery,” read a statement from the White House.

Eeek. Whenever Democrats say “protects critical investments,” I immediately know they did nothing to change the unsustainable course of our entitlement programs. To make things worse, when they say “does not harm the economic recovery,” I know that is code for “it enacts fake cuts in later years which can’t be enforced.”

As it turns out, my parsing of the Dem-speak proved correct.

House Budget Committee chairman Paul Ryan breaks down the supposed $2.7 trillion in cuts on his website, and let’s just say the results aren’t pretty.

The first, and most blatant, of the gimmick’s Reid uses to puff up his deficit reduction number is $1 trillion for winding down the wars in Iraq and Afghanistan. The key to seeing how this trick unfolds is to understand how the Congressional Budget Office works. As former CBO Director Douglas Holtz-Eakin explains, “The way the CBO constructs the baseline is it extrapolates current law, and the current law is that we are funding the wars in Iraq and Afghanistan.”

In its latest estimate, the CBO was not allowed under its rules to score President Obama’s decision to withdraw troops and wind-down operations. Thus, it’s budgetary baseline assumed that we would continue to fund those wars at surge levels, for a grand total of $1.67 through 2021.

But obviously it is not going to be nearly that expensive so Reid merely lopped $1 trillion off of this figure and called it savings. In other words, he’s taking credit for something that was already happening. That’s not a plan to save any money…that’s a gimmick.

Second, the plan’s other big “cut” is $400 billion in interest savings. These savings build on the foundation laid by the first gimmick in that if we “cut” $1 trillion in war costs, we also won’t have to pay interest on that debt. This allows Reid to count a fake spending reduction, not once, but twice!

Then again, these savings only become real if the interest rate on our debt stays at its current, historically low level. If recent reports are any indication this appears to be increasingly unlikely, deal or no deal. “While we see very little chance of a default and massive U.S. sovereign downgrade – we see a better than 50 percent chance that the deal to increase the debt ceiling is not strong enough to prevent a downgrade to double-A in 2011, wrote Citigroup’s head of interest rate strategy.

Third, Reid’s plan promises to cut $100 billion in mandatory spending, including $40 billion in “program integrity savings.” At worst, since none of these cuts are outlined they will quickly be forgotten; at best, they will come from one of the oldest political gimmicks – eliminating waste, fraud and abuse.

So once you clear away all that gimmickry you’re left with $1.2 trillion in spending cuts over the next decade. Granted, I’m skeptical that even these will be put into place given that Reid’s plan doesn’t put any measures in place to bind future Congress’ to his cuts. But even if we assume the best, those $1.2 trillion in cuts are the approximate equivalent of the deficit for just 2012! That leaves nine years worth of deficits to make up for.

Harry Reid’s plan (and calling it that is being generous) is nothing but a dud. The showdown at the Capitol Corral between Boehner and Reid’s dueling plans ended with a whimper, not a bang

I know he’s considered part of the unholy triumvirate of liberal depravity, but I sometimes can’t help but smile when I listen to Harry Reid.

Sure he has a tendency to put his foot in his mouth, such as when remarked, in seeming amazement, that Barack Obama could be the first black president because he was “light skinned” and had “no Negro dialect.”

But other than that, he has a quasi-lovable Mr. Magoo way about him that simultaneously makes you want to giggle and throw things. That is, he seems to meander through his job, with little to no clue of what is happening around him, and yet by uncanny luck, situations always seem to work out.

The perfect example came today when Reid said that the Senate has a “path forward” to raise the debt ceiling, but he was waiting on Speaker Boehner to act.

“I’m at a point where I’m saying we need to hear from the House of Representatives,” said Reid. “We have a plan to go forward over here. But until we hear from the House of Representatives, all of our work here would be for naught.”

It was a total Magoo moment. Just 12 hours prior to that statement, the House of Representatives passed a “path forward” in the form of Cut, Cap and Balance. It was a comprehensive plan that would immediately raise the debt ceiling in return for some modest spending cuts and key budget-process reforms. But somehow, Reid apparently seemed to miss all of that.

Republican Study Committee Chairman Jim Jordan (R-OH) quickly picked up on Reid’s head-in-the-sand moment. “In case Senator Reid didn’t notice, a bipartisan ‘Gang of 234’ just sent him the way forward. It’s called Cut, Cap and Balance,” said Jordan. “This is the only plan that can fundamentally solve our debt problem, and it is waiting for Senator Reid to bring up on the Senate floor for an up-or-down vote.”

What made Reid’s statement seem all the more clueless was the fact that he thought the Senate actually had their own “path forward.” That’s rich. The closest thing they have to a plan is a collection of random ideas thrown together in a bullet-pointed list. The “plan,” so little resembles a plan, that one of its authors, Senator Dick Durbin (D-IL) said that it can’t really be included in a deal to raise the debt limit.

“The Gang of Six plan has not been drafted nor has it been scored by the CBO – it’s not ready for prime time,” Durbin told The Hill. “But as a concept, I think we have the starting concepts together, and that’s what we presented today.”

He “thinks” he has the “starting concepts” together. And Harry Reid is saying he has a path forward?

Or maybe Reid was referring to the McConnell plan. Ya know, the one that when asked about its prospects one House Republican said, “If there is a state or condition worse than death, that’s what it is. I can’t think of one, so we’ll just go with death for now.”

Or even more damning, the one that bond-rating firm Moody’s said would still likely need to a downgrade of our credit rating. “The numbers that are being discussed in terms of any possible deficit reduction coming out of this [McConnell] plan don’t seem to very large,” said Moody’s analyst Steven Hess. “Therefore, this plan might result in a negative outlook on the rating.”

So here we have the Senate Majority Leader who is stumbling along, clueless to the fact that House Republicans have presented a plan to raise the debt ceiling and that his own chamber have offered nothing but a bunch of bullet points and a do-nothing gimmick.

Yet, somehow, this affable addlebrain stands to win. Unless conservative activists LIKE YOU get fired up in support of the House-passed Cut, Cap and Balance plan, one of Reid’s lame-brained ideas that do nothing to solve Washington’s spending problems stands to cruise to victory.

Unless something is done to counter Reid, America will either have to gut the entitlement programs he purports to defend, or default on its debt. Such devotion to the status-quo highlights Reid’s most Magoo-ish trait of all – his short sightedness.

Negotiations, especially those dealing with something as important as the debt ceiling, should be done with a cool head and a clear mind. Impulse and impertinence have no room at the bargaining table. And yet that is exactly what we saw out of Democratic leaders involved in the negotiation process, leaving many to wonder if a deal could be reached in time.

Earlier in the day Senate Majority Leader Harry Reid was facing calls from his members to have a vote on the Cut, Cap and Balance plan. This commonsense measure would make immediate cuts to spending and then install expenditure caps and a Balanced Budget Amendment to ensure a permanent end to reckless deficits.

Harry Reid hates the bill. In fact, he used his time on the Senate floor to call it “one of the worst pieces of legislation ever brought to the floor of the Senate.” In fiery tones he also called it “weak,” senseless,” and an “anathema,” all of which are better descriptors of Reid himself than Cut, Cap and Balance.

I guess this is the time to remind Reid of the stance he took on raising the debt limit in 2006, when he said,

“[Republicans] should explain why they think more debt is good for our economy. How can the Republican majority in this Congress explain to their constituents that trillions of dollars in new debt is good for our economy. How can they explain that they think it is fair to force our children, our grandchildren and our great grandchildren to finance this debt through higher taxes?”

Now, Washington is spending at rates that make 2006 look like a model of fiscal discipline. Republicans have realized that this can’t go on, so have sought to use the negotiations to enact much-needed reforms to reduce spending. Now, Harry Reid is balking. Rather than end his tax, spend, and borrow ways, he is urging Washington to pile up more debt on the nation’s credit card, understanding full well that it will be paid off by the children and grandchildren that he said he wanted to protect.

Statements such as that make you realize that Harry Reid is not a serious representative of the people, he’s a business as usual politician. So when he said on Friday that the “bill was a waste of the Senate’s time,” I have to wonder what he plans to do with that time? This do-nothing Senate hasn’t come up with a plan to reduce the debt; hell, they haven’t even met their legal obligation to write a budget!

Sadly, Reid is not the only Democratic “leader” who has taken to bloviating rather than legislating. Yesterday, after talks over a “grand bargain” to raise the debt limit broke down due to Obama’s demands for $400 billion more in taxes, the President became furious.

He immediately called a press conference to publicly chide and denounce Republicans.

“I think that one of the questions that the Republican Party is going to have to ask itself is can they say yes to anything,” Obama said. “I mean, keeping in mind it’s the Republican Party has said that the single most important thing facing our country is deficits and debts.”

You needn’t remind us Mr. President. In fact, that is why Republicans have put forward several plans that would cure the underlying disease of our deficit – government spending. Republicans not only passed a budget, Paul Ryan’s Path to Prosperity, but we passed Cut, Cap and Balance. Either of those proposals would send a strong signal to creditors that we are taking the necessary steps to solve our deficit.

And make no mistake, time is running out. Standard and Poors credit rating agency said today that they may not wait until August 2nd to downgrade the United States “AAA” rating. Unless there are indicators that a plan will be agreed to that not only raises the debt ceiling in the short-term, but fundamentally alters our deficit trajectory in the long-term, they could downgrade our debt as early as this week.

Time is of the essence. Any moment used to point fingers is a moment that is not used to hash out a plan. But Obama seems unable to help himself. “If Congress – and in particular, the House Republicans – are not willing to make sure that we avoid default, then I think it’s fair to say that they would have to take responsibility for whatever problems arise,” the President said Friday.

Temper tantrums, finger pointing, and blame games are what Democratic leaders have to offer so far. Republicans are the only ones with a plan. So when President Obama wrapped up his press conference by saying “At some point, I think if you want to be a leader, then you have got to lead,” all we can say is “Amen.” Now, if he would only heed his own advice.

Everyone is telling us just how catastrophic it will be if Washington fails to raise the debt ceiling. But the media is conveniently leaving out the second part of the equation – the utter calamity that will ensue if the deal is not up to snuff.

Federal Reserve Chairman Ben Bernanke said it would lead to a “calamitous outcome. Treasury Secretary Tim Geithner said that failure to have a deal in place by the end of this week could lead to “catastrophic damage.”

Now, the ratings agencies, like Moody’s and Standard & Poor’s are adding to the pile. Each of them have released statements in the past week saying that they will review and downgrade America’s credit rating if a deal isn’t reached. In his analysis of these statements blogger Ezra Klein wrote, “They’re telling us, slowly, clearly and with terrifying detail, what they will do if we don’t raise the debt ceiling.”

Once again, the media has let us down. All of the news coverage focused on what the credit rating agencies will do if Republicans and Democrats can’t come to an agreement and America defaults. But that is only one-half of the story.

Moody’s and S&P’s reports included another extremely important caveat, one that is unsurprisingly receiving little coverage from the left-leaning media. The reports not only said that a deal needs to be in place, but it must be a deal that makes substantial headway against Washington’s overspending problem.

For instance, Moody’s said “If the debt limit is raised and default avoided, the AAA rating will be maintained. However, the rating outlook will depend on the outcome of negotiations on deficit reduction.”

Moody’s goes on to state that these debt limit negotations are “a real near-term opportunity for agreement on a plan” to reduce the deficit. Moreover, it may be our last, best chance. Given the political realities, Moody’s argues that if Washington wastes this opportunity, “the likelihood of anything significant being accomplished before the next presidential election is reduced.” In other words, this is your shot to right the ship, don’t blow it.

S&P’s warning was even more heavily focused on the need for long-term deficit reduction as part of a deal to raise the debt limit.

“Congress and the Administration might . . . agree on a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio,” said S&P. This situation they warned, may be “inconsistent with a “AAA” sovereign rating, given the expected government debt trajectory.”

Now that we have the full picture, we can amend Klein’s statement. It should read “they’re telling us, slowly, clearly and with terrifying detail, what they will do if we don’t raise the debt ceiling (as part of a deal that would substantially reduce near-term deficits and long-term debt).” There, that’s better.

This complete understanding also allows us to begin having a real debate over what we must accomplish in the coming weeks.  Saving our credit rating and preventing bond markets from collapsing is not as simple (contrary to what many Democrats have told us) as merely raising the debt limit. That may save us from an immediate downgrade, but with very little deficit cutting likely to happen between now and the presidential election, a long-term downgrade could become an inevitability.

Instead, we must, as Moody’s said, make “meaningful progress toward substantial and credible long-term deficit reduction.” To the careful reader, this provides an important clue into the type of deal the credit-rating agencies would like to see.

Spending cuts are nothing but promises. If Congress says it is going to cut $2 billion over 10-years, it’s not actually cutting much of anything, it’s just saying – we really, really promise to change our ways and cut spending…for real this time. But they can’t actually bind future Congress to anything. So if Democrats take back the house in the next decade do you really trust them to live up to cuts they made years ago? Ha.

The only way then to truly achieve the “long-term deficit reduction” they seek is through spending caps, which can bind Congress unless negated by another bill, or a Balanced Budget Amendment, which is as permanent as they come.

Whether or not the final compromise will contain either of these two options is yet to be seen. Regardless, Washington would be wise to remember that the bond markets’ demand is not as simple as raising the debt limit, it also has to come with spending restraints.

Remember when we called last Friday “potentially the most important political moment since the November elections”?

Well, we weren’t wrong. Friday’s events set the board for an incredibly complex game of debt ceiling chess that is playing out before our very eyes. Today, some interesting moves were made that could possibly result in a checkmate. We’ll break it down for you here, in sections of The Good, The Bad, and The Ugly:

The Good

The House of Representatives passed the Cut, Cap and Balance Act! In many ways, this bill is the conservative’s holy grail. Not only would it make immediate cuts of $111 billion, in order to reassure our bond investors that we have our act together, but it would enact much needed procedural reforms to ensure Washington doesn’t go soft. Fortunately, Sen. Harry Reid (D-NV) has said “We on this side of the aisle realize we have some problems with spending and we have to do something about it.”

The first important change would be statutory spending caps that gradually reduce government expenditures to near-historical levels. Currently, Washington is blowing through taxpayer cash at break-neck speed. All-told, federal spending is equal to 23.9 percent of GDP, a level which is rapidly pushing our nation to the brink of default. The Republican bill would impose caps that work that level down to a still high, but much more manageable, 19.9 percent. Predictably, some liberals are throwing a tantrum about this, despite the fact that even those reduced levels get us nowhere near the average of tax revenues, which is around 18.5 percent.  But a few Senate Democrats have been supportive. Among them, Sen. Amy Klobuchar who said, “I have supported caps in the past. That’s got to be a part of this.”

And that’s where the Balanced Budget Amendment comes in. Even using the most lenient of measures, Washington has had deficits 50 out of the last 54 years! That is a testament to the utter lack of leadership displayed by our purported “representatives.” Unless we want to continue mortgaging our future, it is absolutely imperative that we achieve balanced budgets, and if you’ve been disappointed by Washington long enough, you realize the only way to do that is through an amendment to the Constitution. Once again, Democrats have been incredibly supportive. For instance, Mark Udall (D-CO) has said, “I’ve long gone by the saying, if you find yourself in a hole, stop digging. By restoring healthy and responsible spending through a reasonable Balanced Budget Amendment, we can begin filling in that hole.”

Funny that Democrats seem to agree with each of the components in the abstract, but call Republicans crazy for wanting to actually, you know, follow through with them.

The Bad

Democrats pulled a Dr. Frankenstein and resurrected a monster we all thought was long-dead. The so-called “Gang of Six” released the outline of a plan that they say has the ability to be a game-changer in the debate. The “plan” if you can call it that would make unspecified spending cuts and unspecified tax hikes to reduce the deficit. Then they “promise” to enact a law with all sorts of goodies like a drop in the individual tax rate, elimination of the Alternative Minimum Tax, and oh yea…a $3.4 trillion tax increase.

But here’s the kicker – the plan won’t be ready by August 2, the supposed drop-dead date for the debt ceiling. In fact, Sen. Durbin (D-IL), said “The Gang of Six plan has not been drafted nor has it been scored by the CBO – it’s not ready for prime time.”

So why introduce it today? Easy, to take away the spotlight from the Cut, Cap and Balance vote. Sneaky? Yes. Business as usual? Definitely. A clever move in this high-stakes chess game? We’re forced to admit…Yes.

The Ugly

President Obama reiterated that he will veto Cut, Cap and balance if it passes. The White House released an official statement saying, among other things, that we must stop pursuing “unrealistic policy goals.” Oh, and it also argues that a Balanced Budget Amendment would “leave the nation unable to meet its core commitment of ensuring dignity in retirement.”

So wait, let me get this straight. The President released a statement saying that reducing spending to historic levels (that would still have deficits, mind you) is unrealistic? Further, he is prepared to say that America is incapable of simultaneously having a balanced budget and maintaining the dignity of older Americans? If anything, that just goes to show how deep of a hole he has dug for us!

Beyond the seemingly remarkable admissions of his big-government philosophy, doesn’t this just show how unserious President Obama is? After all, isn’t this the same guy who said that failure to raise the debt ceiling would “plunge the world economy back into a recession”? And now, in the name of politics, he’s prepared to say that if he were presented with a plan to raise the debt ceiling, in exchange for cuts to return us to solvency, he would veto it?

Now, who is the one risking default?

Today, President Obama told Congress that it’s time to “Pull off the band-aid. Eat our peas,” and pass the debt limit.

Once you dig through Obama’s attempt to play the wise father figure presiding over a bunch of spoiled kids in Congress, you come to realize he’s the spoiled kid. Essentially Republicans want to take away his toys, or more accurately, his ability to buy new toys with other people’s money. In response, he’s throwing a hissy fit.

Pulling off a band-aid and eating your peas are bad enough as they are. Nobody likes doing these things, but on some level we recognize that we’ll be better off because of them in the long run. Does anyone get that sense about raising the debt limit by more than $2 trillion without enacting any kind of reforms to ensure we’re not right back here in two years having the same debate?

But as unpleasant as those things are, President Obama wants to make them worse. He wants to pull the band-aid off really slow and maybe add some brussels sprouts  to our helping of peas. Because not only does President Obama want to raise the debt limit, he’s demanding that tax increases be a part of any package.

One has to wonder if the current version of President Obama would even recognize the man who occupied the White House or the Senate just a few short years ago. Because that President Obama said that “the last thing you want to do is raise taxes in the middle of a recession because that would just suck up – take more demand out of the economy and put businesses in a further hole.”

Not only was the earlier Obama model against raising taxes in a recession, he was against raising the debt ceiling altogether.  Let’s not forget that in 2006 then-Senator Obama said that,

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure. It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our government’s reckless fiscal policy . . . Leadership means that ‘the buck stops here. Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt problem and a failure of leadership.”

Forget ripping off a band-aid, that’s gotta hurt!

While Obama is flailing, trying to figure out whether to trust his own gut and follow his past or listen to the liberals who will guide his future, Republicans, led by Speaker John Boehner are sticking to their guns. “The American people will not accept, and the house cannot pass a bill that raises taxes on job creators,” said Speaker Boehner at a press conference today.

What the House can pass is “a bill that includes spending cuts larger than the hike in the limit, as well as real restraints on future spending. [We] feel we should enact a balanced budget amendment to keep the federal government from spending us into the same situation again. I think we also need real reductions in spending right now and spending caps to ensure that progress we make is not undone in the future.”

In other words, a three step strategy: (1) immediate spending cuts to reduce the deficit, (2) spending caps to prevent the government from going back to its old spend-happy ways, and (3) a Balanced Budget Amendment to permanently protect Americans from debt.

That is a three-step solution to our spending problem. Notice it has nothing to do with taxes, which would only be in order if we had a revenue problem. In fact, higher taxes would only serve to further encourage the profligacy of the federal government. Studies conducted by economists Stephen Moore and Richard Vedder have conducted a series of studies finding that “every new dollar of taxes led to more than one dollar of new spending.” Just how much more? Anywhere from $1.58 to $1.17 in new spending.

You don’t feed the habits of a junkie. Nobody would give a chocolate cake to someone in need of a diet. Why should we give a government with a spending problem more of our money? So when President Obama says Washington needs to “eat its peas,” he shouldn’t be talking about the debt limit, he should be talking about how the government needs to go on a diet.

Republicans are insistent that tax increases not be part of any deal to raise the debt limit. History has taught our party that in any deal involving a mix of spending cuts and tax increases, the government keeps on spending and Americans are left with the higher taxes.

For the millions of Americans looking for work, the Labor Department’s most recent report offers no consolation. While economists anticipated that 110,000 jobs would be created in June, their expectations proved to be far too optimistic. According to the report, the economy generated only 18,000 jobs in June—a sharp decline from the meager 25,000 newly created jobs in May. In response to the devastating employment results, President Obama stated the obvious: “We still have a long way to go, and a lot of work to do to give people the security they deserve.”

To keep up with population growth, the United States’ economy needs to create about 125,000 jobs each month. At least twice that many jobs are needed to bring down the unemployment rate. Job creation in June fell short by more than 100,000 jobs, and came nowhere near the necessary levels to begin reducing unemployment. As a result, the unemployment rate soared to a year high of 9.2 percent. Policy makers and economists alike anticipate the situation to worsen, and therefore are lowering their forecasts for economic growth in the second half of the year.

The results of a late-June survey conducted by the U.S. Chamber of Commerce are in full agreement with the pessimistic policy makers and economists. Even two years after the recession officially ended, companies continue to add fewer employees to their workforce. Among those surveyed, 64 percent of small business executives say that they do not expect to add to their payrolls in the next year, whereas only 19 percent anticipate expanding their workforce. 12 percent of small business executives actually plan to cut more jobs next year.

According to the Wall Street Journal, “More than half of the surveyed small business executives cited economic uncertainty as the main reason for holding back on hiring.” House Speaker John Boehner said it best: “[The] report is more evidence that the misguided 'stimulus' spending binge, excessive regulations, and an overwhelming national debt continue to hold back private-sector job creation in our country.” Until the government stops restraining private-sector job growth, conditions are not likely to change.

By: Blair Hart Newman

I had a friend write on my Facebook wall today that five-time Nathan’s International Hot Dog Eating Contest champion, Joey Chestnut, stands for “all that is right with America.”

I’m not exactly sure what he was trying to tell me. Perhaps it was the fact that people can make a living by stuffing food into their face signals how far our nation has come. Perhaps he was looking at how Chestnut, an American, now dominates the competitive food-eating scene, having dethroned Japan’s Takeru Kobayashi. Or perhaps he just really likes hot dogs?

Whatever the explanation, I don’t look upon Joey Chestnut’s ability to down 62 hot dogs in 10 minutes as any sort of metaphor on America’s greatness; instead, I tend to view it as a metaphor for what ails Washington. Namely, a penchant for excess.

If you’re not familiar with Nathan’s annual hotdog eating contest, it really is a sight to behold. A bunch of men standing on a platform in the middle of Coney Island in New York with huge plates of hotdogs and buns sitting in front of them. Once the gluttony begins, most competitors dip the dogs into the water (apparently to lubricate things on the way down) and stuff it down, often with as few as three bites per dog.

Chestnut, who is ranked first in the world by the International Federal of Competitive Eating (yes, sadly, there is such a thing), was this years’ winner. He downed 62 hot dogs, or about one per 10 seconds, the equivalent of about 19,158 calories.

A hot dog in 10 seconds sounds impressive, but pales in comparison to the utter fiscal gluttony of our government. This year, our government will spend $580,000, more than half a million dollars, every 10 seconds. That means in a 10-second span Washington spends enough to buy around 116,000 eight packs of hot-dogs.

Such voracious spending is pushing us towards the brink of default. Without substantial changes to our spending habits, including reforms to entitlement programs, there is no doubt we will face a fate similar to Greece.

One of the worst decisions made by spend-happy Washington was the economic stimulus program. At a cost of nearly $1 billion and few results to show for it, there is no doubt that it, like hotdogs, were chocked full of empty calories.

A new report, compiled by the White House’s Council of Economic Advisers, reveals just how little impact the stimulus had. The council reported that using “mainstream estimates of economic multipliers for the effects of fiscal stimulus,” the program added or saved just about 2.4 million jobs. A bit of quick math and you’ll see that each job costs taxpayers around $278,000 each! Each!

As Jeffrey Anderson writes in the Weekly Standard, “the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the stimulus,” and taxpayers would have come out $427 billion ahead.”

Conservatives recognized all along that there were myriad problems with the concept of stimulus – There was no method to efficiently dole it out. It would simply replace state’s welfare funding rather than create consumer demand. To the extent the money would make its way into the private sector it would perpetuate sectoral imbalances in the economy. Regardless of its effectiveness in the short term, it would come at great cost to the long term in tax increases. Etc, etc.

So now we are left, having gorged ourselves on deficit financed dollars, and have nothing but a serious bellyache to show for it. The economy remains in the dumps, unemployment is higher today than when the stimulus passed, and the housing market shows no signs of life. On top of all that, we have been left with an impossibly large bill for a bunch of rag-tag solutions that didn’t work.

Joey Chestnut may be all that is right with America, but the bacchanalian gluttony on which he makes his living, provides a sad metaphor for Washington’s spending habits. The eating, like the spending, may not be too terribly pleasant, but the displeasure pales in comparison to the hangover you’ll feel the next day.

I admit, I spent most of my Saturday watching a marathon of Hoarders. For those of you lucky enough not to have been sucked into this show, it is a documentary series about people suffering from compulsive hoarding and an attempt to clean their homes. When they say “hoarding” they don’t mean that a person has collected every Prescious Moments figurine or every comic book action figure – these people save everything. Their homes are piled from floor to ceiling with what anyone else would describe as trash.

Inevitably, as part of every Hoarding episode is the ultimatum – when the family gathers around the person and says, “unless you get help, we’re not going to come visit anymore.”

Generally, ultimatums carry negative connotations. And to be honest, they often do more to add to the tension than dissipate it. But sometimes, when there is no other hope to spur change, you’ve just got to put your foot down.

It’s ultimatum time in America.

Washington is a hoarder of the first degree. Their addiction to programs, and offices, and initiatives has left our government a cluttered mess of overlapping garbage that is in desperate need of a deep clean. But beyond a thorough scrub, Washington needs a change in attitude. They have to take inventory of the mounds of programs and bureaucracy they’ve already accumulated and make a decision to stop collecting more.

Sadly, Washington has continually failed to seek treatment on its own; choosing instead to tax and spend and push the day of reckoning off until another day. In other words, it’s that time in the Hoarder’s episode when we call a family conference, express our concerns, and if all else fails, make an ultimatum.

And that’s about where we find ourselves now. Republicans, led by Speaker of the House John Boehner, have said that they will only raise the debt limit if (1) it is met by spending cuts, (2) if the size of the spending cuts agreed to exceed the level of the increase to the debt limit, and (3) that the package not include any tax increases.

That’s akin to telling a hoarder that they have to get rid of some stuff, that anything they into the house has to be matched by something going out, and that we’re not going to support your habits by giving you money to go out and buy more stuff. An ultimatum, yes, but all imminently reasonable demands given the depth and severity of the problem.

Of course, Democrats acted like most people without the gift of self-realization do. Namely, they threw a tantrum. They yelled that Republicans weren’t serious in negotiations, they crowed that Republican demands were pushing us toward default, and insisted that tax hikes must be part of any deal.

They were so proud of this last point that they too decided to issue an ultimatum based upon it – either we increase taxes or there will be no deal on the debt limit. Highlighting just how deluded Democrats have become about their own position, right after stating that they’ll only support a deal that “reduces spending in the tax code” (liberal code words to make tax hikes sound nicer) Obama had the audacity to say, “I hope everyone leaves ultimatums and political rhetoric at the door.”

Somehow, Democrats believe this is a winning argument. They believe that voters will see that a solution involving a mix of tax increases and spending cuts is a balanced approach that shows just how serious they are. But when out of control spending is almost entirely to blame for our current and future deficit I fail to see why taxes must be part of the answer.

It is akin to a Hoarder saying, yes, I have a problem, but part of the solution must be allowing me to get a bigger house to put all my stuff in.

No, that’s not how it works. Buying a bigger house will only feed the addiction even more. In the same way, giving the government more revenue will only feed its voracious desire to grow. The government will not make the needed changes to grow smaller, the deficit won’t shrink, the only outcome will be a Washington emboldened to spend more.

It’s time to break Washington’s spending addiction. And it begins with owning up to the problem in the debt limit debate.

Republicans and Democrats remain divided over the budget, even after last month’s negotiations. This morning, President Obama met with Speaker of the House, John Boehner to seek a possible compromise between the two parties—something for which the Speaker has recently expressed a new desire. In the meantime, Obama is trying to work out a deal that would raise the federal debt ceiling and increase the $2 trillion of savings from previous negotiations, receiving double the revenue over the next decade.

However, CNN explains that the meeting today between Boehner and Obama does not say much for the future of the budget:

“there has been no offer, no deal and this is just a discussion between the President and Speaker, and does not expect any agreement to come out of talks today.”

Recently it surfaced that Democrats were willing to cut a large amount of the Medicare and Medicaid entitlements. According to CBS News:

“What's needed is fundamental entitlement reform, and most especially a reform of Medicare and Medicaid that moves away from government micromanagement and toward a market-based system with cost-conscious consumers. Most Republicans understand this, which is why the House passed a budget plan that included far-reaching reforms of the Medicare and Medicaid programs.”

Just as Democrats are willing make scarifies for the sake of the deficit, so are the Republicans.  Eric Cantor of Virginia, second-ranking Republican in the House of Representatives, states that in order to decrease the deficit, “‘both sides can come together’… ‘It is about finding areas where we can agree and set aside the differences, and hopefully that will be the spirit of the meeting today at the White House.’”

Although Republicans firmly oppose raising taxes, Boehner has been working on negotiations and has explained that he is open to $1 trillion or more in revenue. He stated that this could be taken from taxes such as breaks for the oil and gas industry, eliminating ethanol subsidies, and ending preferential treatment of corporate jets, already brought up in discussions. The Speaker explained that there are currently no tax cuts being discussed nor had he agreed to have any of the tax cuts expirations.

However, Democrats are still not trusting of Republicans and are skeptical that their sacrifices will be one sided. They stated that this approach could bring about future taxes and budget changes that might be struck down by Republicans after all is said and done. This paranoia on behalf of the Democrat Party is mainly what has caused the budget decisions to be held up.

Despite the need for both parties to make scarifies, Republicans are taking a solid stance for the people not to raise taxes. Cantor states,

“We have said all along that preferences in the code are not something that helps economic growth over all.  But, listen, we are not for any proposal that increases taxes. Any type of discussion should be coupled with offsetting tax cuts somewhere else … we are united as Republicans to say now is not the time to raise taxes.”

If the two parties are unable to come to an agreement, it could bring about “unpredictable and unfavorable economic and political consequences.” CNN questions whether or not it is even possible for these two parties to come to an agreement in the next few weeks. And according to CNN, this may not be possible due to length of time that tax reform would take.  “[I]f Democrats and Republicans don’t come to a deal in the time specified, then the Treasury Department would have the authority to intervene in such a way that it is distasteful to both Democrats and Republicans, enough to incentivize them to strike a deal.”

By: Judy Frankel

Grilling out, watching The Sandlot, gathering with family and friends, watching fireworks, and a backyard game of baseball. That pretty much sums of my Fourth of July. And to be quite honest that’s not too far off from the celebration that the forefathers expected.

As John Adams wrote of the day,

“[This] will be the most memorable epoch in the history of America. I am apt to believe that it will be celebrated by succeeding generations as the great anniversary festival. It ought to be commemorated as the day of deliverance by solemn acts of devotion to Gold Almighty. It ought to be solemnized with pomp and charade, with shows, games, sports, guns, bells, bonfires and illuminations, from one end of the continent to another, from this time forward forever more.”

But beyond the Fourth of July and its attendant celebrations, it is worth remembering the day by its other name – Independence Day. The day we as Americans celebrate the adoption of the Declaration of Independence, when we achieved freedom from Great Britain in 1776.

Although we surely remain independent, having achieved the undoubted status as the most powerful nation on earth, that should not be confused with freedom. We are certainly a free nation, but we must remain ever-vigilant that we remain so. To be clear, the threat is not so much from without, although there are many foreign nations who would no doubt cheer our downfall, but from within, through the slow creep of government.

Now, I don’t mean to portray some left-wing conspiracy to imperceptibly erode our capitalist foundations, only to replace it with some form of socialism. In fact, I tend to believe that their intentions are quite noble; that in many senses liberals and conservatives share common goals – the ability of every American to have the opportunity to achieve their dreams.

But that also doesn’t mean that we can let down our guard. As F.A. Hayek wrote in the foreword to the 1956 edition of The Road to Serfdom,

“Though hot socialism is probably a thing of the past . . .If few people in the Western world now want to remake society from the bottom according to some ideal blueprint, a great many still believe in measures which, though not designed completely to remodel the economy, in their aggregate effect may well unintentionally produce this result.”

What remodeling was Hayek speaking of? “That hodgepodge of ill-assembled and often inconsistent ideals which under the name of the Welfare Sate has largely replaced socialism as the goal of the reformers needs very careful sorting out if its results are not to be very similar to those of full-fledged socialism.

America would never think of itself as a welfare state. For some reason we reserve that title for Europe, continuing to overlook our incredible steps toward, and in some cases beyond, the European cradle-to-the-grave approach to governance. We tend to cast a wary eye on big government and yet look comfortably toward the biggest of the big government programs – Medicaid, Medicare, and Social Security.

These programs have grown, if only imperceptibly, with the passing of each successive governing generation. Voters are appeased (whether they asked for it or not), politicians are reelected, government is grown, and freedom is eroded.

And when it is all said and done will be have moved one step closer to de Tocqueville’s prediction that,

“Having thus successfully taken each member of the community in its powerful graps, and fashioned him at will, the supreme power then extends its arm over the whole community. It covers the surface of society with a network of small complicated rules, minute and uniform, through which the most original minds and the most energetic characters cannon penetrate to rise above the crowd. The will of man is not shattered but softened, bent and guided; men are seldom forced by it to act, but they are constantly restrained from acting. Such a power does not destroy, but it prevents existence; it does not tyrannize, but it compresses, enervates, extinguishes, and stupefies a people, till each nation is reduced to be nothing better than a flock of timid and industrial animals, of which government is the shepherd.”

As we celebrate this Fourth of July, we must realize that we are not yet the flock of timid animals that de Tocqueville spoke of. But that doesn’t mean we can’t become them. So today, celebrate freedom, and in the days that follow make sure to keep a close eye on its preservation. For as Ronald Reagan said, “Freedom is never more than one generation away from extinction.” Let us not be the generation that ushers it into nonexistence.

Vandalism, riot police, teargas, and mass protest; this sounds like a war zone, but it is the current situation in Greece. Citizens are protesting the colossal debt that currently wreaks havoc on the Greek economy, which in turn is dragging down the world’s financial markets. Greece’s debt built up from decades of a poorly managed economy. Greece was warned that it could not continue on the same path without falling into bankruptcy, but officials did not take the situation seriously. And despite additional warnings that the private sector was too large to maintain, the government just did not listen. This too, will be America’s future unless we take immediate action to control spending and reduce the debt. “The deadline for dealing with the national debt ceiling has to create a deeper sense of urgency than we see in Washington. Watch Greece. Watch closely,”according to a Chicago Tribune editorial.

Greece landed in its current situation because the government spent uncontrollably, paying for cushy social programs and employing a massive public sector workforce. Here in the United States, benefit programs like Social Security and Medicare contribute largely to our long-term debt. Unfortunately, the Democratic Party refuses to acknowledge the consequences these entitlements are going to have. On the Republican side, Congressman Paul Ryan’s plan is a realistic vision of the future of Social Security and Medicare. Although, the Democrats do not have a plan of their own, they are not willing to accept the Republican solution.

When economic disaster struck in Greece, the European Union was forced to bail them out. But here in the United States, we do not have the E.U. to rescue us. As Americans we value our independence—it’s what we fight for and we do not want to rely on others to bail us out. This time let’s fight for our financial freedom, reign in our debt and control spending, then we will truly have our independence.

By: Bronwyn Haltom

It sure seems like Sweden has a lot going for it these days. Best known for their attractive blondes, the Swedes, have now come to dominate the all-important arenas of crime novels and stylish yet affordable home furnishings. Okay, so The Girl Who Kicked the Hornet’s Nest and Ikea may still not be enough to make up for a 67 degree average high temperature in July or the fact that they barely see daylight in the winter, but at least their economy is humming!

As the Washington Post writes today,

“This Scandinavian nation of 9 million people has accomplished what the United States, Britain and Japan can only dream of: Growing rapidly, creating jobs and gaining a competitive edge. The banks are lending, the housing market booming. The budget is balanced.”

It’s tough to draw too many conclusions from the land of ABBA. After all, Sweden is small both geographically and in population, is ethnically and culturally homogeneous, and has almost no military presence. All of those serve as serious confounding factors that should prohibit us from glancing quickly at their success and wondering aloud, “Why don’t we just copy them?”

Nevertheless, I was intrigued by the Washington Post’s story, “Five economic lessons from Sweden, the rock star of the recovery.” I mean, who doesn’t wanna be a rock star (even if the closest thing Sweden has actually had to a rock star is, um, well…Ace of Base)?

I, the intrepid reader, read on, expecting to find a snide rebuke of our capitalist ways and urging the United States to adopt a Scandinavian-style welfare system as the only way to solve our problems. This was the Washington Post after all, a paper known for its left-wing bent. So consider me shocked when I read these five lessons:

1. Keep your fiscal house in order when times are good, so you will have more room to maneuver when things are bad.
2. Fiscal stimulus can be more effective when it is automatic
3. Use monetary policy aggressively
4. Keep the value of your currency flexible
5. Bankers will always make blunders; just make sure they don’t doom the economy

Remarkably Republican sounding! In fact, with the exception of numbers two (which still is at its core a rebuke of one-off infusions of government cash) and four (which is just impossible given the dollars status as the world’s reserve currency) it reads like a conservatives playbook for the economy.

I’d like to take a moment to focus on two of these recommendations, numbers 1 and 5, in the hopes of shedding some light on the power of Republican arguments.

As the Washington Post points out, in 2007, the U.S. ran a deficit equal to 3 percent of its economy while Sweden had a 3.6 percent surplus. This allowed them to spend modestly without ever being threatened by default.

Sadly, Republicans in the United States can’t even get Democrats to agree to cut our budget deficit in half, much less actually run a surplus. And yet think of the freedom that this would provide us. In good times it would minimize the market-distorting impact of government deficits and give private businesses the certainty and cash needed to invest up to their full potential. In down times it would (although I still disagree with the principle of stimulus) provide flexibility to pass stimulus-style measures without pushing the harmful effects of debt to future generations.

As for lesson 5, the Swedish banking system shows the power of free-markets if they are allowed to truly work. The Washington Post writes,

“Swedish financial officals don’t point to any single magic bullet in their regulatory approach. Rather, the Swedish banking system seems to have held up okay because the pain of the early 1990s was severe enough as to scar both bank executive and regulators, leaving them with little temptation to go into risky real estate lending.”

In other words, let private companies take their lumps and learn from their mistakes. We did the exact opposite. Through TARP, the US government bailed out the banking system, ensuring that no lesson was learned other than that there really is such a thing as “too big to fail.” More top-down bureaucracy is not a substitution for capitalism – a lesson we’d be wise to learn.

Who would have thought we’d be learning conservative economic lessons from a welfare state. I guess that goes to show just how far to the left we’ve moved.

There is a growing orthodoxy amongst Democrats that the Bush-era tax cuts are the entire reason for our budgetary troubles. The goal behind this growing chorus is simple – to make it seem like the answer to solving all of our problems is as easy as getting rid of the Bush-era tax cuts.

But is this correct? Could it really be that simple.

Well, no. For proof we look to the Congressional Budget Office’s just-released Long-Term Budget Outlook. The CBO uses something called the “Extended-Baseline Scenario” in which they examine the budget outlook using policies closely adhering to current law.

It sounds simple, but the actualities are much more complicated. First, off it would meant that the Bush-era tax cuts are not extended. Second, it would mean that the Alternative Minimum Tax, which was designed to ensure that upper class households could not dramatically reduce their tax liabilities by taking advantage of exemptions and deductions, would gradually hit more middle class homes since it is not indexed to inflation. Third, it would mean that the Obamacare tax on premium health insurance plans would increase revenues.

Together, the CBO predicts that if these three things are allowed to occur, “by the 2020s, [revenues] would reach higher levels relative to the size of the economy than ever recorded in the nation’s history.” They predict that tax revenues would jump to about 19 percent of gross domestic product in 2013 and would reach 23 percent by 2035. For comparisons sake, remember that since WWII, federal revenues have averaged slightly more than 18 percent.

Of course, percentage of GDP is kind of a hard measure to truly understand. Let’s try and personalize it.

The economy of the United States was the world’s largest in 2010, with GDP estimated to be around $14.7 trillion. Using historic averages, government revenue would have equaled about $2.6 trillion. But if we look at the levels that many Democrats would like them to be at – 23 percent by 2035 – then revenues would reach $3.4 trillion. That’s an $800 billion difference! That increased tax burden, spread equally across every taxpayer, equals about $7,140.

As you can see, that 5 percent of GDP makes a huge difference when it comes to individual tax burdens.

But according to the CBO, not even that will be enough to solve our underlying problem.

“Even with revenues rising to those projected levels, however, the federal government would still experience substantial budgetary shortfalls. By 2035, the deficit (including interests costs) would equal about 4 percent of GDP, and federal debt held by the public would equal 84 percent of GDP.”

In other words, even if the federal government manages to collect the most taxes that it has in the history of the United States, our budget still will not be on a sustainable path. And sadly, that debt figure is optimistic because the CBO doesn’t take into account a number of likely events on the spending side – such as continued use of the Medicare doc-fix.

So no matter how much Democrats fantasize about tax increases, remember, it’s not enough! There simply is no way around it, government spending must be reduced and entitlements must be reformed.

With a continued streak of low job approval, President Obama used his weekly address to unveil his administration’s new $500 million partnership, and it couldn’t come at a worse time! Dubbed the “Advanced Manufacturing Partnership,” the new program will work to “renew the promise of American manufacturing” in attempt to promote job-creation and stay competitive in the global marketplace. Among the projected undertakings is the National Robotics Initiative—a $70 million project to create robots and fund other robotics developments.

While Republicans have proposed reducing regulations, expanding domestic energy production, and requiring the government to consider the effect of federal rules on hiring, President Obama has a different idea of what is good for our economy. Following his visit to RedZone Robotics, a company that built a robot to explore water and sewer pipes, Obama held that: “We can’t simply cut our way to prosperity.” Alright, then what do you propose—spending our way to prosperity? It sure seems that way. Now, despite our ever-growing national debt, America is taking on a new endeavor: backing robotics research (clearly our #1 priority for fixing the economy).

Funding for the National Robotics Initiative will come from several government organizations, including the National Science Foundation (NSF), the National Aeronautics and Space Administration (NASA), the Department of Agriculture and the National Institutes of Health (NIH)—many of which could not exist without taxpayer money. These expensive, low-priority robotics projects need to be supported by entrepreneurs and the private sector—not the taxpayers! And in order for private investors to cover the costs of robotics innovations, the government will need to lessen its regulations and restrictions—just as the Republicans have proposed. It is clear that too much government involvement only prevents Americans from making these investments.

Instead, President Obama said: “We need to do what’s necessary to grow our economy, create good, middle-class jobs and make it possible for all Americans to pursue their dreams.” But do Americans truly believe that building robots (that will ultimately replace many employees) can somehow save our economy, or better yet, create more jobs? Perhaps one day, investing in the manufacturing of robots will be a good idea—maybe it will even create more jobs. But for now, our nation certainly cannot fund these projects, let alone at the taxpayer’s expense.

By: Blair Hart Newman

“We’re running out of time,” said Ben Cardin, a Democratic Senator from Maryland. Finally! A Senate Democrat who understands how the average person feels, who gets the fact that people are already stretched to the breaking point and can’t afford not to work. A guy demanding action.

Oh wait, he wasn’t talking about the average American? According to Politico, the “we” Senator Cardin was referring to were his Democratic colleagues, not your average struggling American.

“Senate Democrats are beginning to fear that the country’s increasingly dim economic outlook will cost them their seats in 2012 and are trying to craft a new agenda aimed at spurring job creation,” reports Politico.

What the bleep! The last time I checked, the recession started in 2007, it’s now 2011, and Senate Democrats are just now trying to cobble together a jobs agenda? And even then only because they’re afraid a woeful economy will negatively impact their reelection chances. They couldn’t be more out of touch if they moved to rural America and only had AT&T cell phone.

But don’t you worry, they say. They’ve caught on to the problem. We’ve been lurching from bill to bill without a broader strategy to address the economy, said Sen. Mark Begich (D-AK). But now, that they’ve finally caught on to this pesky unemployment problem they’ve got a plan to fix it. Well kinda…

According to Politico, “While there is no shortage of ideas of what a plan could include – from a payroll tax holiday to increased infrastructure spending – Democrats haven’t settled on the details.”

“There’s no easy answer to this,” said Sen. Joe Lieberman (I-CT).

You can almost hear them doing an impression of a five year old, whining “this is haaard.” No one is saying it is easy, but c’mon, you’re not even trying. The only thing the Senate has done in the past six months that may even remotely create a job is a patent reform bill. And unless it’s going to spur inventors to patent ways to double the intelligence of these Senate buffoons, consider me skeptical.

Among the details Democrats are noodling over is whether to “craft one large package or push through a series of narrow measures” and “how to sell their plans to the public.” Really guys? You’re arguing over the logistical details of a plan you haven’t even created yet for a problem that has been around for nearly four years! Only in the Senate ladies and gents.

Of course we’ve heard all of this before. This time last year we were enjoying a hiring renaissance known as the “Recovery Summer.” When David Axelrod proclaimed that “this summer will be the most active Recovery Act season yet, with thousands of highly-visible road, bridge, water and other infrastructure projects breaking ground across the country, giving the American people a first-hand look at the Recovery Act in their own backyards…”

Yea, we got a first hand look. Except it looked a lot less like a recovery and a lot more like a load of horse crap. And even then the so-called “Recovery Summer” entailed no real plans, instead choosing to repackage and reheat the stimulus bill that was passed more than a year earlier.

Fortunately, for their sakes (and my sanity), Democrats have chosen (thus far) to eschew giving this summer an official title. But if I was going to give it a name it would have to be the “We’re Going to Look Into This Summer.” So far the President has convened a “Jobs and Competitiveness Council” (whose initial results were met with “a big yawn” from Carnegie Mellon professor Allan Meltzter), Senate Democrats plan to meet for a policy lunch to talk strategy, and Senator Begich “has initiated a series of meetings with business groups to communicate ideas…on how to foster job growth.”

At some point you have to step out from behind the “we’re looking into it” excuse and actually do something. Senate Democrats have had more than three years to figure out the problem, come up with a plan to fix it, and put it into action.

Sen. Cardin was wrong. Senate Democrats aren’t running out of time, it’s already run out.

Every once in a while I come across a news story that makes me question whether it was intended as satire. I often get confused, as if somehow my Washington Post had been transmuted into The Onion.

That happened today in a story about an online dating service called BeautifulPeople.com being attacked by a virus. Not just any virus mind you. One that allowed (gasp) ugly people to join.

If you haven’t heard of BeautifulPeople.com, it is an online dating site that only accepts applicants its members deem attractive. Hilariously, the site was hit last month by something dubbed “the Shrek Virus,” which allowed 30,000 “unattractive” people to join its dating rolls. The company has since revoked those memberships and told The Guardian newspaper, and I’m not making this up,

“We have to stick to our founding principles of only accepting beautiful people – that’s what our members paid for. We can’t just sweep 30,000 ugly people under the carpet.”

It would be funny if it weren’t such a damning indictment of humanity.

The lesson is (or at least should be) to not judge a book by its cover. Well, a similar rule applies to legislation. The ideas was best elucidated by famed economist Milton Friedman who said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

That principle is what made the debate over Obamacare so infuriating. From the very start of the debate, it was clear that the media was so enthralled by the idea of reforming an obviously broken health care system that they completely failed to actually study what the bill did.

Then again, I shouldn’t lay the blame solely at the feet of the media. They weren’t the only ones who didn’t really have a fundamental grasp of what was in the monstrosity of a bill. In fact, the chief architect of the plan, Sen. Max Baucus (D-VT) told his constituents, “I don’t think you want me to waste my time to read every page of the health care bill.”

And then, as if in competition for who can say the most profoundly out of touch thing, Nancy Pelosi (D-CA) said Congress “[has] to pass the bill so you can find out what’s in it.”

Never mind all those details, they told us, they’re not really important; the key thing is, we’re reforming health care! Well as it turns out those details are crucially important. And as with any 2,000 page bill there’s gonna be a lot of details.

The latest of these hidden aspect of the bill, is an enormous Medicaid glitch that will allow more than 3 million middle-class Americans to qualify for Medicaid.  It is a problem that Medicare’s chief actuary Richard Foster says “keeps him up at night.”

I don’t generally comment on the pros or cons of policy,” said Foster, “but that just doesn’t make any sense. This is a situation that go not attention at all . . . And even now, as I raise the issue with various policymakers, people are not rushing to say . . . we need to do something about this.”

Sadly, this is merely the latest in a long line of unintended consequences, glitches, and oversights that have arisen as the details of Obamacare come to light. Among the many problems have been a 1099 reporting requirement that would have cost small businesses a fortune had it not been repealed, a finding that most businesses will drop employee coverage which will raise the law’s cost, handing out thousands of waivers to employers because they couldn’t meet the law’s burdensome requirements, and a study showing that one of Obamacare’s chief savings ideas, Accountable Care Organizations, actually don’t work.

Of course, it was impossible to have known any of this before the bill was passed. It was rushed through a secretive process and subject to a quick vote. Neither lawmakers nor citizens had any real clue what was in it but we were told to love it anyway.

In hindsight they were telling us to judge a book by its cover. Sadly, the cover read “savings” while the plot read “costs continue to skyrocket.” It may not have been as egregious a violation of decency as BeautifulPeople.com, nevertheless, I wish I could just sweep those 2,000 pages under the carpet.

Last Friday marked the one-year anniversary of President Obama’s announcement that our nation was entering “Recovery Summer.” A six-week attempt to promote the $787 billion American Recovery and Reinvestment Act (a.k.a. the “stimulus”), “Recovery Summer” was projected to create new jobs and restore the state of the economy. Yet the efforts last summer were a bust. “Recovery Summer” provided a mere snapshot of the failures that would continue to arise as a result of the stimulus project: 300,000 jobs were lost last summer—a fifth of the 1.5 million jobs lost since the “stimulus” was signed in 2009.

But enough is enough, Obama! Looking back on the past year, “Recovery Summer” was only the beginning of a terrible path toward big spending and even bigger government. Employment levels have come nowhere near those promised by the administration from the start, and we have seen very little job creation. Thus, the one-year mark from the “Recovery Summer” is a strong reminder to Americans that real recovery has yet to take place. According to House Speaker John Boehner:

“The anniversary of President Obama’s “Recovery Summer” publicity stunt is a good reminder that families and small business in Ohio and across the country can’t afford more spending and more debt – they need more jobs. And Republicans are listening.”

Fortunately, House Republicans have a plan to dig our nation out of this big mess—and that’s more than we can say for the Dems! The House Republican Plan for America’s Job Creators is a pro-growth agenda that encourages job creation and economic growth, and NOT at the taxpayer’s expense: “It will address our economic challenges, foster innovation and investment, and help job creators without raising taxes on working families and small business owners.” Most of all, the plan makes clear the efforts and successes of House Republicans over the last year, all of which have brought our nation closer toward liberating the economy from the “shackles of debt and big government.”

The plan addresses several key issues, five of which are listed below:

1. Reducing regulations to ease the hiring process for small businesses,

2. Reforming tax codes to foster competition and enable Americans to pay lower rates,

3. Paying back our national debt, while simultaneously stopping Washington from spending,

4. Expanding energy production and lowering the cost of gas for Americans,

5. Opening new markets for American-made goods.

While our economy needs more than lessened regulations and expanded energy production to get back on the right track, the plan is at its very least, a strong step in the right direction. If we want to create jobs, what better way than to empower job creators? And as Rep. Fred Upton put it, “Last year’s Recovery Summer fizzled, but with the right policies, our economy can begin to sizzle once again.”

By: Blair Hart Newman

Washington just can’t help itself. Like a man who just has to have that new big screen TV or a woman who wants, no needs, a new pair of shoes, Congress just likes to spend money.

Given that fact, it wasn’t all that surprising to read former Senate Majority Leader Tom Daschle’s column in the Wall Street Journal which he bashes the idea of a balanced budget amendment (BBA) to the Constitution. The fact is, a requirement to balance the budget scares the dickens out of Democrats because it puts a stopper on the flow of taxpayer cash that they just love to spend.

The fear is almost palpable in Daschle’s article. “The proposed Republican amendment would limit total federal outlays to 18% of our economy,” he whines, “a level of spending last witnessed in 1966.”

Is that really supposed to be an argument against the BBA? What Daschle doesn’t mention is that average tax revenues have averaged around 18% since the end of World War II. The very fact that spending hasn’t been at that level is the entire reason we’ve had deficits 44 out of the last 50 years! It’s the entire reason Washington is faced with a $14.2 trillion deficit and finds itself on the edge of default.

But then again, I wouldn’t expect Mr. Daschle to know too much about the revenue side of things; after all, it was just last year he had to withdraw his nomination for Health and Human Services Secretary for failing to pay income taxes. Whoops.

“Tying the hands of lawmakers” would be a “disaster” writes Daschle, seeming to indicate that leaving them to spend money hand over fist has been something wonderful. But in reality it is anything but wonderful, it is ruining the American Dream for our generation.

Young Americans future grows darker by the day, blotted out by the growing shadow of government and the dimming chances that the social welfare programs will be around for us to enjoy. Washington has provided little hope. In 2011, our budget is more than twice as large as in 2011 and our $1.6 trillion deficit is about the size of the entire federal budget of 1982.

It is not as if spending is some newfangled problem; a fad, or passing trend, that Congress’ will soon reign in. No, Washington’s addiction may be reaching fatal levels, but its substance abuse began long ago. After all, it was Mr. Daschle himself who said,

“In 1993, we made a decision. No more living beyond our means. No more borrow-and-spend and piling up mountains of debts to leave to our children and grandchildren. From that point on, we decided, everything we did had to fit into a new framework of fiscal discipline.”

Nearly 20 years later little has changed other than to have gotten worse. And yet Daschle now says that a BBA would be “an unprecedented abdication” of authority.

No, Mr. Daschle, the real abdication of authority has been Washington’s fiscal malfeasance, its constant desire to promise voters more and neglecting to find ways to pay for it. It has been the willingness of Congress to throw money at problems rather than truly attempting to fix them. Washington has already abdicated its responsibilities to the taxpayers, and now something must be done to reign them in.

Senator’s Jim DeMint and Mike Lee have argued as much, writing that “the only ‘difficult choice’ Congress ever makes is how much more to spend. A balanced budget amendment would ‘tie the hands’ of Republicans and Democrats to finally force them to prioritize spending and stop the debt.”

The only thing I can agree with in Sen. Daschle’s entire piece is that “all of our elected leaders [must] demonstrate genuine fidelity to the Constitution, to the American people, and to future generations.” Unfortunately, the last 50 years has proven Washington incapable of accomplishing those three things. That’s exactly why we must have a balanced budget

Liberals are very touchy about their health care plans. Mumble anything about “rationing,” “death panels, or “socialism” and watch in awe as their heads explode in indignation.

Paul Krugman has labeled these concepts “zombie lies” – false beliefs that “just keep coming back, no matter how many times they’re killed by evidence.” Kind of like, well…Paul Krugman.

One of these so-called “zombies” is the notion that it would be an infringement on our freedom of choice if the government restricts what procedures it will pay for. Krugman argues,

“But nobody is proposing that the government deny you the right to have whatever medical care you want at your own expense. We’re only talking about what medical care will be paid by the government And right-wingers, of all people, shouldn’t believe that everyone has the right to have whatever they want, at taxpayers’ expense. The Declaration of Independence did not declare that we have the right to life, liberty, and the all expenses paid pursuit of happiness.”

Besides being an incredible bit of word acrobatics (he manages to actually sound like a fiscal conservative!) Krugman happens to be dead wrong.

As brilliant economist Greg Mankiw points out on his blog, the Center for American Progress (CAP) has introduced a health care plan that would do just that.

The CAP plan was introduced as part of “The Solutions Initiative,” a project by the Peter G. Peterson Foundation, which invited six ideological heavyweights from across the political spectrum to introduce plans to solve the budget deficit. Although there were many good ideas and a few terrible ideas, one part of the CAP plan was downright frightening.

The Center for American Progress’ plan to lower health care costs is simple to the point of being simplistic – they will “aggressively implement” Obamacare. Of course no one really believes that Obamacare will actually lower costs. As we wrote about last week, one of its key cost saving innovations – Accountable Care Organizations – have proven ineffective at bending the cost curve. Likewise, a brand new study suggests that employers will push more of their workers into government-run health care exchanges than previously thought, upping the price tag considerably. The point is, Obamacare was so big, so new, and so risky that it was hard to predict what the results would be. But simple economics, backed up by early results, suggest that it may increase rather than decrease the cost of health care.

Which makes the next part of CAP’s plan that much more terrifying:

“Our failsafe would be triggered if, starting in 2020, total economywide health care expenditures grow at a faster rate than the economy. Should that happen, we would empower the IPAB to extend successful reforms in Medicare and other public programs to insurance plans offered in the health care exchanges and then potentially to all health care plans, such that the target is met. This will ensure that costs are constrained across the health care sector, preventing cost shifting and maintaining access for all.”

Did you catch that italicized bit? If health care costs keep rising under Obamacare then the government, through an unelected panel of bureaucrats, would be granted the power to stop people from purchasing the plan of their choice. It’s like saying that if car companies can’t manage to raise fuel standards then nobody will be allowed to purchase an SUV, regardless of whether or not you can afford the gas.

Not to mention they throw in some phony argument about “successful reforms in Medicare.” In fact, inflation-adjusted Medicare spending per beneficiary has risen more than 400 percent over the last 40 years. It may be better than the private sector, but it sure isn’t deserving of the title “successful.”

Nevertheless, this should scare you. The Center for American Progress, of which Time magazine stated “not since the Heritage Foundation helped guide Ronald Reagan’s transition in 1981 has a single outside group held so much sway,” is actively advocating taking away patient’s ability to choose.

The notion that the government is intruding into our health care decisions is not some “zombie lie” as Krugman would have you believe. Zombies aside, it is still terrifying.

In the Eleventh Circuit Court of Appeals, a three-judge panel heard nearly 2 ½ hours of arguments regarding the Patient Protection and Affordable Care Act. Yesterday, the twenty-six states that brought about massive lawsuits appeared before the Court in Atlanta to challenge the constitutionality of the Obama-backed health care reform. The three judges, two Clinton appointees and a single Bush 43 appointee, all openly expressed concerns with the reform. Now, people are asking: Can the health care reform law survive the vast constitutional scrutiny?

The only precedent that attorneys defending the law have been able to use is Wickard v. Filburn. The federal government had set limits on wheat production and Filburn was growing more wheat than was allowed by law, even though he argued it was for his own personal use and would not be sold on the market. The Supreme Court however, ruled against Filburn and essentially gave the government the power to regulate economic activity. Unlike the Wickard case, which granted government the power to regulate activity, levying fines on individuals who do not purchase health insurance is regulating inactivity. That is exactly where the judges disagree with the defenders of this law, that the government cannot regulate this inactivity.

Among the twenty-six states arguing that “the requirement that states expand Medicaid coverage amounts to compulsion and coercion of the states, in violation of the 10th Amendment to the Constitution,” Florida’s personal case shocked Americans most as it revealed Obama’s intention to raise taxes to fund his program. In Florida v. U.S. Department of Health and Human Services, a lawyer for the Obama Administration revealed that the bill increases taxes—a complete contradiction to what Obama previously maintained. With approximately 450 components comprising ObamaCare, it really does not come as a surprise that the President would try to slip new taxes into the bill. But come on Obama, did you really think we wouldn’t notice?

If we truly live in a free country, why is the government allowed to mandate that we purchase unwanted healthcare? Bush appointee, Judge Joel Dubina, questioned: “If we uphold the individual mandate in this case, are there any limits on congressional power?” The two Clinton appointees, Judges Frank Hull and Stanley Marcus, also expressed concerns: “The law went too far in mandating that states expand various Medicare health coverage requirements.”

Let’s all remember, a judge in Florida ruled the entire bill unconstitutional because, according to him, the bill could not stand without the healthcare mandate. The Democrats were so caught up in all the backroom deals that helped create this law that they failed to include a proper severability clause so that if the mandate is declared unconstitutional, the rest of the law can still stand. If the Democrats can’t even follow that simple procedure, do we really trust them to take over our healthcare?

By: Bronwyn Haltom, Matthew Hurt, Blair Hart Newman

While our parents’ generation believed their financial futures were secure when they gave away a percentage of their weekly paychecks, that same sense of security no longer comforts our generation. As young Americans see money taken from their paychecks to fund entitlements, they understand the disappointing truth: they will probably never see that money again. In the years to come, Social Security faces a big problem as baby boomers leave the workforce. Our generation will have to provide for this surplus of retirees. According to Federal Reserve Chair, Ben Bernanke:

“To avoid large and unsustainable budget deficits… the nation must choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above.”

Although economists warned politicians that by 2024 Social Security would default into bankruptcy, there are disagreements over how to prevent this. Many leading Democrats argue that initiating a tax increase is the solution, but history shows that raising taxes for Social Security will greatly damage the economy. According to Bloomberg,after the Great Depression the economy was steadily growing. That is, until new taxes were instated to fund Social Security.

In 1937, leading economist George Soule, stated: "Certainly it is unjust to make workers pay for their future security against unemployment and old age by losing their jobs now.  And that is precisely the result that the present social-security (sic) program is bringing about." Even a key White House advisor to President Franklin Delano Roosevelt, Randolph Paul, agreed that increasing taxes harmed the economy by taking away money that otherwise would have likely been privately invested into the economy. Now, Democrats continue to argue for an even greater tax increase to meet the needs of Social Security—a proposition that will drastically slow economic growth. As College Republicans, we certainly do not want to put even more money into a fund from which we will be unable collect in our later years.

Aside from instituting a new tax on wages above $106,800, (currently exempt from additional Social Security taxes) the Democrats have yet to put forth a comprehensive plan to fix the government’s ever-expanding deficit. This includes failing to introduce a plan to save Social Security. Granted, the Democrats had complete control of Congress and the White House for two years and couldn’t even pass a budget, so we can’t expect much out of them. One fact still remains: they may have called the Republicans “the party of no,” but the Democrats are “the party of we don’t know.”

            Despite Democratic inability to propose a solution to Social Security, Republicans have already made great strides in developing successful and more efficient ways to manage the crisis. On Friday, House Republicans proposed a new Social Security reform. The bill, introduced by Congressman Pete Sessions (R-TX), would allow employees to transfer 6.2 percent of their earnings into a personal account- referred to as Savings Account for Every American (SAFE). Further, workers would be able to make tax-free deposits into their personal SAFE funds for later usage during retirement. On the other hand, the bill also allows employees to continue with the existing Social Security program, should they so desire.

Critics of this legislation assert that if such a program were implemented, Social Security funds might run dry as workers could pick and choose where their post- retirement funds are stashed. However, Rep. Sessions’s bill provides for both the current Social Security system and the revamped SAFE account. Under Sessions’s plan, employers would make contributions to Social Security that would match those distributed to an individual employee’s SAFE account. Only after 15 years could an employer deposit solely to a private SAFE fund.

Consider this: A hallmark of the American Dream is economic freedom. Rep. Sessions’s proposal would give us more control over our earnings and financial future. Under this reform, we would be saving and spending our own money rather than simply subsidizing the retirement of others. As employees, we have a right to the money we earn and should be able to spend and invest it as we see fit.

Nevertheless, Republicans are walking a potentially dangerous political route by trying to reform Social Security, as it is often unpopular among the American public. However, we should take responsibility for our financial future now, instead of when it is too late. We would not want to pass up an opportunity to reform the program and later regret it when the time comes for us to collect our benefits. If we save Social Security, our generation might actually have a future return on its modern investment.

By: Bronwyn Haltom, Matthew Hurt, Blair Hart Newman, Lisa Rafdal

It’s been a rough week for the economy. We’re talkin’ rough. Take a look at just some of the stories that came across my newsfeed today:

• “Reports Wednesday on manufacturing and company hiring were so weak that many economists immediately downgraded their forecasts for Friday’s jobs report” – ABC News
• “Stocks were slugging on Thursday’s opening after tumbling hard Wednesday with the Dow Jones industrial average dropping at its sharpest pace since June and the Standard & Poor’s 500 index showing its steepest decline since August” – Washington Post
• “The prices of single-family homes have dropped to their lowest level since 2009, creating a “double dip” as values fell below where they were when the housing market collapsed” – Washington Post
• “Private businesses added 38,000 jobs in May, a sign that job growth may have hit a sluggish patch” – The Hill

A lot of this isn’t Washington’s fault. All of Obama’s hot air still would have never been enough to stop the hurricanes, tornadoes, and floods that has had a serious economic impact. Nobody could have predicted the tsunami that put Japan under more water than the average American homeowner. And it’s nobody’s fault that investors are getting some serious jitters over Greece’s looming default. After all, those clowns’ debt was enough to make even the leftiest of liberals blush.

Nevertheless, Obama is catching a lot of the blame. And just like LeBron James needs to win the NBA Championship to shake his “villain” persona, Obama needs to do something to shake voters’ brewing antipathy. Many liberals at this point are throwing up their hands and saying “What do you want him to do?!? You Republicans won’t let him spend anymore money!”

Darn right we won’t. We’ve tried that. It turns that stimulus is about as good at fixing the economy as Jim Tressel is at cheating.

The fact is, our government doesn’t need to spend any more of our money in order to pull us out of the recession, they just need to clear a path for more money to be made. How you ask? By passing the three pending free trade agreements with Colombia, Panama, and South Korea.

Now before you scoff at the thought that these relatively small countries hold the keys to our economic recovery, hear me out. Over the past 25 years, the United States has entered into free trade agreements with 17 countries, which in total represent just 7.5 percent of global GDP. But free trade can make big markets out of small economies. In fact, those 17 countries bought 40 percent of U.S. exports in 2009!

Still not buying it huh? Alright, well consider that the U.S. International Trade Commission estimated that passage of a free trade agreement with South Korea alone would increase GDP by $11 billion annually and add 70,000 U.S. jobs. The Colombia deal is expected to add another $4 billion to GDP, not to mention put an end to the $3.5 billion in tariffs collected by Colombia since the agreement was signed. And it never hurts to have great trade ties with Panama, you know, with their canal and all (which I hear is a great way to get to the Chinese market).

Will passing these deals immediately cause our problems to recede faster than Prince William’s hairline? No. This is not a magic bullet, a cure-all, or philosopher’s stone (and no, Harry Potter fans, I’m talking in the alchemical sense). But it is something. And something is something we haven’t had very much of lately. The closest things to a jobs bill that has made it through the Democrat-held Senate is, well, nothing.

These agreements have already been negotiated and approved – some of them years ago – but can’t be acted upon until Obama sends them to Congress. So c’mon Mr. President. Do us all a solid. Stop playing politics with jobs and economic growth. Stop demanding concessions for labor unions in return for sending the free trade agreements to Congress. If you don’t want to see more weeks like this one, with headlines filled with economic doom and gloom, it’s time we do something about it.

For sports fans the prospect of an NFL lockout is maddening. It just seems absurd that as millions of Americans struggle paycheck to paycheck in order to make ends meet, that we can’t even watch a football game because millionaires and billionaires can’t decide on how to split up the vast pool of cash.

That’s a union battle where both sides are winners no matter what the outcome. But across the country, the fight between public-sector employee unions and the average taxpayers are continuing to boil over. Wisconsin may have dominated the headlines, but it appears the next front is going to be in Ohio, where organized labor is spending $25 million in an effort to repeal a state law that reconfigured union benefits.

Ohio, like many states, is in a world of financial trouble. The state is facing an $8 billion budget gap over the next two years with not much hope of a turnaround on the horizon. One of the prime long-term problems is the severe underfunding of state and local employees’ pensions. A recent study by the Pew Center on the States found that Ohio’s pension system is the fifth most underfunded, with $20 billion in looming debt. With such huge budget gaps looming large, state legislators were searching for savings wherever they could. Given that government employee pensions and wages had grown dramatically over the preceding decade, far outpacing the private sector, that seemed to be a good place to start.

In a rust-belt state that topped out at 11 percent unemployment, the number of government employees earning more than $100,000 continued its steep rise. As the chart below shows, in 2001 there were less than 300 public employees who made more than $100,000, today there are more than 1,800 – a 600 percent increase in 6 years!

Moreover, the sky-high salaries haven’t been concentrated at the top. The nonpartisan Buckeye Institute has calculated that the median government worker in Ohio earns 24.6 percent more than his or her private sector counterparty. The gap is further exacerbated through a lush compensation package in which they only have to pay 17 percent of their health care costs (versus 23 percent in the private sector) and the government chips in 14 percent of pension costs (versus 5 percent in the private sector. Simply amending these benefit levels to reflect the private sector would save the state of Ohio more than $330 million annually!

While organized labor is marshalling their ranks and raising millions of dollars in an effort to maintain their lavish pensions, average taxpayers must continue to highlight the benefits of a right-to-work economy. The facts are laid bare in a 2008 Wall Street Journal editorial comparing Ohio, a heavily unionized state, with Texas, the preeminent right to work state. The results are astounding.

In the decade prior to the recession, Texas gained more than 1.6 million jobs while Ohio lost more than 10,000. Partially as a result, Texas gained 667,000 in state population while Ohio lost 362,000. Texas residents also saw enormous per capita income growth of 55 percent, while Ohio rose at a slower 43 percent.

Texas is not the only beneficiary of right-to-work laws. Check out these statistics courtesy of Senator Jim DeMint:

• From 1993-2009 private sector employment increased 37.9 percent in right-to-work states but only 19.6 percent in forced-union states
• Individual income grew 39.5 percent in right-to-work states compared to 35.7 percent in others
• Right to work states experienced a net increase of 497,041 new private sector businesses – 46 percent more than the 339,834 businesses in forced-union states

The economic case is open and shut. State governments should do whatever they can to model themselves on right-to-work states, not only as a means of reducing their budget deficit but for kick-starting a sagging economy. The only thing crazier than the NFL unions arguing how best to divvy up billions of dollars is state governments failing to reap the rewards of right-to-work laws.

75 Congressional Republican freshmen signed U.S. Representative Diane Black’s (R-TN) letter to President Obama, asking him to "stop the political rhetoric" in an attempt to find real solutions to our pending debt crisis. The letter, a response to a sit-down with the Treasury Secretary held with the House freshmen in the Capitol last week, requests a specific plan to reduce debt and reform entitlements before the debt ceiling negotiation deadline of August 2.

The question of the debt ceiling has plagued policymakers since the inauguration of the 112th congress.  According to the US Treasury, the debt limit must be raised by August, otherwise the government will have to suspend about 40 percent of all payments. Last week Senator Harry Reid (D-NV) forced a vote to reject House Republicans’ 2012 budget, defeating it 57-40 in the Senate. However, Senate Democrats have yet to introduce a budget of their own. Refusal to introduce a “plan b” is a source of contention with GOP freshman. Many feel President Obama is sitting “in the backseat” of the debate, unwilling to provide a better alternative plan.

“After meeting with both President Obama and Treasury Secretary Geithner this week, I and my colleagues are not confident that the administration has a credible plan to reduce our debt, so it’s time to demand one,” Black said in a statement accompanying the letter.

“In light of now multiple credit ratings agencies threatening to downgrade American bonds without significant long-term steps toward deficit reduction, it is time for the president to stop sitting on the sidelines of this debate.”

The letter notes the President's remarks at the Republican Retreat last year, where he said, "At what point can we have a serious conversation about budget and debt in which we're not simply trying to position ourselves politically?"

It is clear that the meeting has left the GOP freshman, who campaigned on the promises of fiscal stability and not raising the debt ceiling, frustrated. Many complained that Secretary Geithner argued for revenue increases in the form of tax hikes. Earlier that week, the GOP conference met with President Obama, and also voted overwhelmingly to reject a clean debt ceiling hike.

Whether President Obama will listen or continue to play political theatre until August 2, remains to be seen.

By: Kelsey Callahan

President Obama’s plan for economic recovery celebrates its two-year anniversary this month, leaving individuals across the nation to determine for themselves how, if at all, the national economy has improved since the administration’s reforms first took off. All across the nation, Americans are asking the question: “Are we really better off than we were two years ago?” The general consensus is NO.

In February 2009, Obama ensured the American public that his $830 billion stimulus plan would spark “a new wave of innovation, activity and construction” and also “ignite spending by business and consumers.” If left with any doubts of Obama’s ability to turn the economy around, his continuous promises about the growing state of the economy most certainly should have alleviated concerns of the skeptical. In June 2010, President Obama informed Americans that the plan was “well under way” and that it was “getting stronger by the day.” It is now June 2011 and reportedly, many Americans have not felt the effects of Obama’s economic recovery.

Why? Putting the stock market and corporate profits aside, few places have shown much improvement. In terms of employment, the number of people with jobs has shown only a slight change since June 2009: +0.4%. While the rate of unemployment has declined slightly, the number of long-term unemployed Americans (defined as individuals who have been unemployed for 15 or more consecutive weeks) has jumped up a third, and the currentaverage length of unemployment is 38 weeks! In addition, while house prices have fallen (reaching their lowest level this March since April 2009) CNN reports that “weak sales continue to plague the housing market.” Put simply, while many homes are being offered at staggeringly low prices, high unemployment combined with stricter lending standards has made it harder, if not impossible, for some families to purchase homes. Based on data from the National Association of Realtors, Bloomberg reports:

“Sales of previously owned homes, based on closings, fell 0.8 percent in April to a 5.05 million rate, with demand for distressed properties accounting for 37 percent of the total.”

With high unemployment and a housing market still in disarray, it’s no wonder that Americans fail to see the meager effects of Obama’s economic recovery plan! Now, after 24 months, little improvement can be seen outside of the stock market and corporate profits. But even so, while the Dow Jones Industrial Average is now at its highest level in three years, Americans have not felt the growing wealth of stock as they face an extraordinarily tough job market! According to CNN, the market’s rally was simply based on an assumption that the economic recovery would gain momentum in 2011 and boost jobs (which it has yet to do). And while corporate profits have soared, companies have increased their layoffs to please shareholders, which in turn, contributed a great deal to the unemployment problem.

The failure of the Obama Administration to grow and recover the economy will certainly play a role in the 2012 election. It will offer the Republicans an opportunity to propose more efficient, effective and realistic plans for restoration and growth. We’ll just have to wait and see how the Grand Old Party tackles this issue next November!

By: Blair Hart Newman

Like almost everyone, I ponied up the $10 to see Hangover II over the weekend. As with so many summer movies, I went with lowered expectations, hoping for just pure schlock entertainment, and yet still left the theater feeling less than satisfied.

I get it. The summer is not Oscar season. Nobody is gaining or losing tons of weight for a role. There are no plots examining gender identity, drug abuse, or growing up in a broken home. The closest thing you get to a period piece is Pirates of the Caribbean and the only wars you are likely to see will involve robots or aliens. It’s pure dumbed-down entertainment, and I know that going in, but I still can’t help feeling let down.

It was much the same emotion as when I saw the recently released economic numbers. I knew they were not going to be good, but dang, did they have to be this bad?

According to the Commerce Department, gross domestic product (GDP) grew at an annual rate of 1.8 percent in the first quarter. Not only is that well below the 3.1 percent pace from the last three months of 2010, that’s considerably less than the 2.2 percent growth that many experts expected.

Now I learn that even that measly figure, the movie equivalent of say, Transformers 3: Dark Side of the Moon (don’t even try and argue with me that this will be good), is actually more like Freddie Got Fingered (possibly the worst movie evah). Business Insider explains the reason for the hearty downgrade:

The way the government calculates real GDP is to start with nominal GDP–the actual change in the output of the economy as measured by adding up all the actual sales prices (“nominal”)–and then “deflating” this number by subtracting an estimated inflation rate. Thus, the government backs into the real GDP growth number, starting with nominal prices and then adjusting for inflation.

Well, the “GDP deflater” the government is using right now–the estimated rate of inflation–is only 1.9%. As anyone who has been to a supermarket of gas station recently can attest, this assumption is preposterously low.

The government’s actual estimate of quarter one inflation was 5.7 percent, not 1.9 percent. According to Business Insider’s calculations, using this inflation number you see that first quarter GDP “growth” was actually -1.82 percent.

Negative! This is a recovery for goodness sakes! We’re supposed to be seeing economic growth numbers north of 5 percent, certainly nothing less than that, and in the name of all things holy, not negative. That just seems downright impossible. It’s like bringing Steven Spielberg, George Lucas, and Harrison Ford back to make Indiana Jones 4 and finding a way to screw it up. Oh wait, that’s not impossible, it already happened.

For comparison’s sake let’s take a look at another director, Ronald Reagan, aka the Scorcese of economic recoveries. After the end of the 1981-82 recession economic growth shot to as high as 9.3 percent, spent the next few quarters hovering around 8 percent, and then settled back into a normal rhythm of around 4 percent annual growth. By contrast Obama – aka the Michael Bay of presidents (loud, flashy, often pretty, but always terrible) – has eked out one quarter of 5 percent growth, and then averaged around 2.5 percent growth.

Different results are matched by contrasting strategies. Reagan pushed spending restraint, Obama massively increaesed spending; Reagan deregulated entire industries, Obama has overseen massive regulatory expansions; and Reagan focused on free markets, while Obama continues to sit on three pending free trade agreements.

Fortunately, the House Republicans just released a jobs plan, including great ideas like lowering the corporate tax rate and reducing government regulations. But it will take the White House and the Senate Democrats to really achieve the policies we need for lasting growth.

Otherwise our economy will be stuck in a disappointing hangover, one that might even overshadow my disappointment in the Hangover.

When the government hit its debt limit earlier this month, the Treasury Department warned of the desperate need for a vote to increase the debt ceiling by mid-August. Leaders on both sides have speculated that without the vote, the U.S. would likely default on its debts, triggering a massive financial crisis and causing widespread panic among global markets.

Today, the House is expected to reject the administration’s request to lift the $14.3 trillion national debt ceiling. The voting will take place well after Wall Street closes for the day, according to Fox News, and will begin no earlier than 4:45 pm ET. This late afternoon/early evening voting is a precautionary measure to avoid impacting the market as the House did in September 2008 when it failed to approve the TARP/bailout bill and more than $1.2 trillion in market capitalization washed away.

The GOP House majority has brought up a “clean” bill, under which there would be an increase to the limits on government borrowing, without also making large cuts to federal spending. According to CNN, “The bill would ensure Washington’s ability to keep paying its bills through the end of 2012.” This “free-of-spending-cuts” proposal seems to be exactly what many Democrats have called for, so why would the Republicans provide them with the opportunity to vote on it? The reality is far more strategic than it appears! According to USA Today:

“No Republicans are expected to vote for the “clean” debt limit increase and Democrats, with 192 members, don’t have enough votes to pass the measure by Rep. Dave Camp, R-Mich. In addition, the GOP leadership has structured the vote so that it would require a two-thirds majority to pass.”

The vote is intended to expose fault lines within the Democratic caucus, and Republicans are depending on a large number of Democrats to vote with them tonight. Despite the fact that House Democratic leaders have long advocated for the conditions presented in the “clean” debt limit increase, their support of the proposal is expected to fall short in tonight’s vote. According to CNN:

“The vote was scheduled by GOP leaders to show that any attempt to divorce an increase in the debt ceiling from deficit-reduction efforts — a move initially favored by the Obama White House — is a political non-starter.”

GOP leaders believe the failure of the debt limit vote to pass will send a clear message to the White House about the unity of the Republican caucus– and just in time for their meeting with President Obama! Tomorrow, Obama plans to speak with Republican House members about the administration’s ongoing budget negotiations, which include the debt-ceiling. Perhaps the GOP will successfully demonstrate their unity and determination in dealing with budget crises and impress even Obama himself? If only!

By: Blair Hart Newman

“We can’t play under two sets of rules . . . I don’t think this is healthy. But it is the system we have. And you can’t expect one side to operate under one set of rules and the other side to operate under another.” – David Axelrod, Senior Communications Adviser to the President

Axelrod was talking about the emergence of Democratic organizations designed to pump millions in anonymous contributions to candidates in the upcoming elections. If Republicans were going to do it and get away with it, then screw the moral high-ground, Democrats were going to do it to.

And that pretty much sums up how I’m feeling about the Medicare debate right about now. Republicans have tried to have an adult conversation on how to reform our broken entitlement system. We’ve tried to speak honestly and responsibly about the need to get government spending under control.

Where has it gotten us? Nowhere.  For God’s sake just this past week Democrats released an ad portraying Paul Ryan as literally throwing an elderly woman out of her wheelchair and off a cliff. How can you expect to have a genuine debate when that is what you’re up against?

So screw it. I’m pulling a Tony Montana from Scarface. “You wanna play rough? Okay. I play rough. Say hello to my little friend!”

Maintaining the status quo wouldn’t just push grandma over a cliff, it would pile the entire family, children and all, into the car and jam on the gas. We’re going out Thelma and Louise style.

But don’t take my word for it. In a Wall Street Journal op-ed, former Medicare Trustee, Thomas Saving, and president of the National Center for Policy Analysis, John Goodman, explain just how Obamacare will kill Medicare.

“Almost no one familiar with the numbers thinks that the planned brute-force cuts in Medicare spending are politically feasible . . .

But suppose the law is implemented just as written. In that case, according to Medicare Trustees, Medicare’s long-term unfunded liability fell by $53 trillion on the day Obamacare was signed.

But at what cost to the elderly? . . . In terms of sheer dollars involved, the law’s reduction in future Medicare payments is the equivalent of raising the eligibitliy age for Medicare to age 68 for today’s 65 year-olds, to age 71 for 55-year-olds and to age 73 for 45-year olds. But rather than keep the system as is and raise the age of eligibility, the reform law instead tries to achieve equivalent savings by paying less to the providers of care.”

It’s such an important piece that I urge you to read it in it’s entirety (HERE), but hopefully that snippet gave you a since of the sheer idiocy that Democrats are attempting to pass off as saving Medicare.

All Obamacare did was wave a magic wand and essentially mandate that costs be lower. That’s not reform, that’s madness. For Democrats to achieve any of the savings that they propose, doctors and hospitals would see enormous cuts in the amount of money they receive for accepting Medicare patients. At best, elderly patients would receive reduced quality of care or fewer treatment options; at worst, doctors will refuse to accept Medicare patients at all.

This is the reality that Republicans have been fighting tooth and nail to try and avoid. We’ve offered a plan that would fundamentally stabilize Medicare’s finances, using market forces and the freedom of choice to keep health care costs in check. Is it a perfect proposal? No. Is it the only proposal out there? Yes, because Democrats are more happy to demagogue any proposed solution rather than present their own. Is it akin to pushing grandma off a cliff? Hell no.

But maintaining the status quo is. The precious present, which Democrats seem to be fighting to hard to keep will inevitably push America into default. It would make the recent recession look like childs play. Trillions of dollars in wealth would likely be lost, our debt interest payments would skyrocket by untold billions, and millions of people would be unemployed. You wanna talk about scary. Beat that.

Solving the Medicare quandary has transfixed Washington for years. Sadly, Democrats have got nothing. No ideas, no plans, no guesses, nada. When asked what their plan was to fix the fiscally broken program, House Minority Leader Nancy Pelosi said, “It is a flag we’ve planted that we will have to protect and defend. We have a plan. It’s called Medicare.”

It’s a very interesting strategy. Democrats plan to fix Medicare, is, well, Medicare. Don’t worry it doesn’t make sense to us either.

Such stunning closed-mindedness is reminiscent of an story from ancient Rome. Master craftsman Filippo Brunelleschi was bidding for a commission to build what would have been the largest domed structure in the world – the Duomo of Florence. At a meeting with the other artisans trying for the job, they became furious with his mysterious design that seemed to rely on nothing for support.

After continual pestering, Brunelleschi finally pulled out an egg and challenged them all to stand the egg on its end. They looked at him as if he was either insane, or a genius who had figured out how to accomplish the impossible. Each of them tried and failed repeatedly to get the egg to stand up. Finally, in exasperation, Brunelleschi grabbed the egg and tapped it firmly on the table, cracking the bottom, and getting it to stand upright. The others protested saying that had they known that’s how he intended to it, they could have easily accomplished the same thing. Brunelleschi retorted that they also would know how to create the enormous dome if they were just allowed to view his plans.

Republicans, are the Brunelleschi of Medicare. Just as Brunelleschi had meticulously figured out a way to support a ceiling with no visible supports, Republicans have figured out how to fix Medicare without raising taxes. They’ve discovered a plan to make it solvent not only for this generation, but for the foreseeable future, without bankrupting the Treasury.

This has only made Democrats more incredulous. Like the competing sculptors from the story, obviously piqued that they lacked the creativity to come up with an answer to the problem, Democrats are pointing fingers and claiming that rules were broken.

“It would end Medicare as we know it,” has become the consistent refrain. Yes, and Brunelleschi had to change the egg “as he knew it” in order to get to stand on its end. There was just no other way to solve the problem.

Medicare is much the same quandary. No matter how much you search for little tweaks that would, as if by magic, right the otherwise sinking ship, Medicare continues to drown in its debts. So what it needs is a firm hand and a brilliant mind. It needs to be broken, if only a little, to get it to stand up straight without rolling over.

That firm hand is Paul Ryan’s reform plan. Ryan would transition Medicare into a premium support system that provided generous payments to seniors, allowing them to purchase health care services on their own. To allay any fears about the size of the payments, seniors would receive just as much as today’s Medicare beneficiaries indexed to inflation.

Although Democrats are vociferously opposing this much-needed change, the term “premium support” was actually coined by two Democratic economists. In fact, a similar proposal was the chief recommendation made by the Commission on Medicare reform, chaired by Democratic Senator John Breaux. The liberal think-tank Brookings Institute has even extolled the numerous benefits of a premium-support system,

Why would premium support produce better care for Medicare beneficiaries at more sustainable rates of growth? First, with competition among the plans on the Exchange and improving information about plan outcomes, seniors can be expected to migrate to lower cost and higher quality plans. Second, capping the subsidy’s growth at a sustainable rate would make the government’s contribution predictable and incent movement to more efficient health care delivery.

With their Medicare plan, Republicans are trying to build something momentous and beautiful. Something that will stand the test of time and be rivaled by other nations. Something like the Duomo! Sadly, the other “architects” have consistently failed to think outside the box. All the while, our Medicare program has begun to crumble to the point where economists have already foretold its inevitable collapse.

They just don’t understand that sometimes you have to break a few eggs…

Congressional Democrats and the online Left have found the One Graph to rule them all

The graph shows that the Bush-era tax cuts and the Iraq and Afghanistan wars account for a hefty chunk of the debt in 2019. Influential liberal blogger Ezra Klein writes, “In other words, cut the financial crisis and the major initiatives from the Bush-era out of the picture, and we’d be in pretty good shape. In fact, we’d be in great shape.” There are several things wrong with this analysis that I’d like to deal with in turn:

1. The graph hides the truth of what would have happened if the Bush tax cuts had not have been passed,
2. It misleads the reader as to Democrats stance on the Bush-era tax policies
3. It provides a favorable snapshot that fails to tell the underlying story of our problems, and
4. Just stop with the “Bush-era tax cuts” name game

Hiding the Truth

Since World War II tax revenues have averaged around 18 percent of GDP. The CBO predicts that if the Bush tax cuts are not continued, tax revenues will jump to 23 percent of GDP by 2035. In CBO’s words, “the tax system would be quite different from what it is today. Households at all points in the income scale would pay a higher share of their income in taxes than similar households pay today.” In fact, without tax relieft, taxation would have increased by more than 30 percent as a share of the economy! By contrast, passing and extending the Bush tax cuts put tax revenues much more in line with their historical norm. In fact, the CBO predicts that even with a permanent extension of the Bush-era tax policies, “revenues as a share of GDP after 2020 are roughly 1 percentage point higher under . . . than the average share observed over the past 40 years. So when the graph hints at the notion that the Bush-era tax policies are a main contributor to our deficit, they are comparing that to a reality in which never-before-seen tax burdens would have been thrust upon Americans.

Democrats Support the Bush Tax Cuts Too

The graph points to the Bush-era tax cuts as the main offender in causing our current fiscal woes. If only we’d have got rid of them last August we’d be on our way towards a balanced budget. That’s pure revisionist history. Neither party was advocating for getting rid of all of the tax cuts. Sure, Republicans wanted to keep all of them in place, realizing that the more money taxpayers got to keep in their pockets, the better it would be for the economy, but Democrats wanted to keep the vast majority of them in place. The problem is that when people hear “Bush tax cuts” their mind automatically drifts to the wealthy, when in fact, most of the cuts went to the middle class. According to the Treasury, extending the Bush tax cuts for everyone costs the federal government $3.8 trillion over the next 10 years. Only $680 billion of that is for the wealthy, $3.1 trillion of that is for the middle class. The graph touts a supposed cure, but it’s important to remember that its one Democrats never pushed for.

Misleading Snapshot

Let’s remember that the graph only looks through 2019. This happens to conveniently be just prior to the explosion in entitlement costs as the Baby Boom quickly falls into retirement. When Ezra Klein says “we’d be in great shape” if we took the Bush-era policies out of the picture, he’s completely off-base. A correct statement would be “our nation’s balance sheet may look a little better for a few years, in large part because everyone is paying enormously higher taxes, but soon Medicare and Medicaid costs will push us towards default.”

Stop with the Language Tricks

As Keith Hennessey has tried his best to hammer home, “At some point a policy flips from extending a tax cut to preventing a tax increase. The top marginal income tax rate has been 35% for almost ten years . . . Most DC Democrats try to have it both ways; they talk about preventing tax increases on the middle class but oppose extending tax cuts for the rich. This rhetorical inconsistency masks a parallel situation in law and policy. Either they’re both extending tax cuts, or they’re both preventing tax increases.” But why stop with Bush? Liberal icon John Kennedy cut the top tax rates from 91 percent to 70 percent. Why don’t we have a graph looking at how much those increased the deficit? Something tells me it has a lot more to do with demonizing a Republican president than serving as a sensible dividing line.

Americans are dot connecters. We like to take disparate elements of any given situation and attempt to round them into a cohesive whole. The reason, I believe is an innate desire to have things make sense. This often allows us to see a larger picture that we would have otherwise missed, but sometimes it can do the opposite, create an image of something where nothing should exist.

As a very clear example of this tendency toward dot-connecting is steroids in baseball. In an interesting article in yesterdays Sports Illustrated, writer Joe Posnaski takes a look at the amazing statistical drop following the post-steroid era. From 1994-2010 hitters in April batted .264, had an on-base percentage (OBP) of .345, and slugged .421 (total bases divided by at-bats). By comparison, this April players are hitting .249 (down 15 points), have an OBP of  .319 (down 26 points), and a slugging percentage of .382 (down nearly 40 points).

Those appear to be huge statistical regressions. Players just aren’t peeling the cover off the baseball like they did in the late-nineties, early aughts. But this simple comparison doesn’t tell the whole story. To get a full picture you have to go back to before the steroid-era, where you’ll find that today’s numbers are almost exactly in line with those prior to 1994. Posnanski lays it out:

To remind you, this year’s core numbers: .249/.319/.382 From 1981 through 1993: .252/.322/.378

In that context today’s players do not look so statistically challenged. As it turns out we’ve simply regressed back to the comfortable place baseball existed for decades prior to the most pervasive cheating scandal in sports history.

Similar context is needed to provide voters with the entirety of the budget situation. Sadly they are only getting part of the story.

Recently, spending and deficits have been mired in a steroid era. As recently, as 2007 our budget deficit was $160 billion – still not balanced, but a figure that we would literally laugh off as insignificant today. From 1982 through 2007 our deficit ranged from a 69.3 billion surplus to a $412 billion deficit and mostly hovered in the mid $200s. As I said, by no means comfortable, or even sustainable, but at least consistent and sane.

By comparison, our 2009 deficit was $1.4 trillion, our 2010 deficit was $1.3 trillion, and our 2011 deficit was $1.6 trillion. All astounding sums.

Now, Republicans have introduced plans to make significant cuts to our current budgetary baseline. The reforms they have proposed would reduce spending in the order of trillions, not billions. Democrats have demagogued these reforms as an “extreme” attempt to cut services and fundamentally change the role of government in our lives.

This argument works, at least if you begin with the notion that $1.4 trillion deficits or $3.5 trillion in spending is the norm. But as you have hopefully seen through a comparison of the earlier numbers, recent deficits and spending are anything but the norm. They, like statistics in the steroid era, are the outliers, swelled like Barry Bonds head by ego, hubris, and the misbegotten desire to please their constituents.

To fight against the wrong-headed notion that Republicans attempt to cut the budget is in some way, abnormal, we must redraw the picture. We must realize that there is a whole host of dots that we have failed to include. And when you connect the true dots of Democrats plan, I think you’ll find that the picture is not one of prosperity, but of inevitable decline.

It doesn’t take a genius to figure out we haven’t been fans of President Obama’s economic stimulus package. We’ve long called it a wasteful, inefficient, waste of taxpayer money that did next to nothing to create jobs or put us back on the road to recovery. Well as it turns out we were too nice. New research from economists Timothy Conley and Bill Dupor finds that not only did the stimulus not create jobs, it actively destroyed them.

According to the authors,

“Our benchmark results suggest that the [stimulus] created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. . . The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services.”

Since the paper largely made its way through the interwebs during the weekend, I can only imagine liberal bloggers are itching to get into the office to eviscerate these findings. I can almost imagine Paul Krugman sitting in a leather chair, sipping a glass of red-wine, and laughing maniacally at this new opportunity to talk down to anyone who disagrees with his vision of the world.

And I know just what they’ll say. But, but, but, they’ll whine, there is just no way that the stimulus could have destroyed jobs! Interest rates remain too low for any crowding out effects to have occurred.

Okay, I may have lost a few of you there with that last sentence, so I’ll back up. The debate over the effectiveness of fiscal stimulus generally centers around the concepts of “crowding out.” That happens when the government borrows money by issuing bonds. Those bonds create a more competitive market for credit, thus putting upward pressure on interest rates. Still with me? When interest rates go up, demand for goods and services go down. In effect, government spending has crowded out the market for private capital

Using this argument, if interest rates are low, crowding out could not have happened. You can almost hear them say, “So there!’ Or if they were in a less childish, and more hob-nobbish mood, “Put that in your pipe and smoke it!”

The problem is, this is a liberals attempt to eliminate their perception of the world and instead squeeze economics into equations. It’s the old, “if it’s not in a textbook, it’s not worth knowing” line of thinking that has so hampered the growth of macroeconomics. Such an elitist view, holds that central policymakers following carefully thought out models know better than the masses and the market. What they once attempted to only measure, they now believe that they can control.

To truly understand, we must look to what John Meynard Keynes labeled “animal spirits.” One of the more “newly discovered” of these is “patterns of sustainable specialization and trade.” Though complicated in name, it’s a simple enough theory. We essentially do what we’re good at and like to do. For instance, a brain surgeon may pay someone to mow their lawn or even clean their house, providing them more free time to do what they want. In modern society this has become so vastly intricate – with literally millions of different distinct jobs – that it has become increasingly impossible for government to align the natural order of things.

In other words, the government has tried to squeeze a square peg through a round hole, and the more they try, the bigger the peg becomes. The stimulus created much the same effect, attempting to channel money to very specific purposes, which did not especially align with the needs or desires of our complex society. The result was very highly trained people flocking to the public, rather than private sector which could have resulted in more products being created.

Regardless of whether this theory is correct, the bottom line remains the same – the stimulus has been an utter failure. In fact, it has been so bad, that merely saying that it was ineffective is incorrect. As Conley and Dupor’s new study shows, it was actively harmful to our recovery

Most of the sitcoms I grew up with had that annoying character that always showed up at inopportune times and never went away. Kimmy Gibbler on Full House, Screech on Saved by the Bell, Steve Urkel on Family Matters, and Kramer on Seinfeld. They would always run into a generally harmonious scene and wreak havoc for all the characters involved.

Mortgage giants Fannie Mae and Freddie Mac are the Kramer’s of the Washington sitcom (a more apt genre may be horror). They have no visible means of support, they often rely on the charity of those around them, and they leave a trail of destruction in their path. Funny if you’re a sitcom, terrifying if you’re a taxpayer.

That’s right, Fannie Mae and Freddie Mac, the government sponsored entities that exist in the ethereal netherworld between the private sector and the federal government are back asking for yet another bailout. These two mortgage giants used their federal guarantee to dominate the market. Their implicit taxpayer backing allowed them to pay fewer taxes, borrow at below market rates, and operate under more lax standards. They gambled on the subprime mortgage market knowing that if they won, their shareholders would reap the rewards, and if they lost, taxpayers would make up the difference.

As it turns out, they lost…big time. But rather than admit any wrongdoing, they threw up their hands, and in their best nasally Urkel voice shouted, “Did I do thaaaat?” Sadly, they’ve popping through the taxpayer door every so often asking for more and more taxpayer cash in order to pay their bills.

This month’s quarterly “earnings” report is no different (is it still called an earnings report if you consistently lose billions of dollars?). Fannie Mae showed losses of $6.5 billion – the result of $11 billion in credit losses on their mortgage portfolio. They’re asking taxpayers for $8.5 billion, the extra $2 billion being owed to the Treasury for past loans.

If this month’s dramatic fall in housing prices is any indication, Fannie and Freddie will be back next quarter asking for more. According to the Association of Realtors the U.S. median home price fell 4.6 percent from the previous year. In fact, “we’re seeing prices dropping faster than they did in 2010,” said analyst Pat Newport of IHS Global Insight. Furthermore, 28.4 percent of homeowners were in negative equity, that is, they owed more on their mortgage than their home was worth.

The doom and gloom carried over to Fannie Mae’s quarterly report in which they implicitly say the mortgage giant will never be able to pay back its debt.

“It will increase to $99.7 billion upon the receipt of funds from Treasury to eliminate the company’s first quarter 2011 net worth deficit, which will require an annualized dividend payment of $10.0 billion. This amount exceeds the company’s reported annual net income for each year since its inception.”

In other words, the amount they’ll owe each year to the Treasury is greater than the amount they’ll ever earn. That’s an awful thought when you consider that we, the taxpayers, are the ones ultimately on the hook for the Treasury’s promises.

Fannie Mae and Freddie Mac are little more than leeches, bleeding money from the government to pay for its own bad bets. Fortunately, Republicans have taken on the challenge of getting rid of these annoying characters once and for all.

Representative Jeb Hensarling (R-TX) has introduced a comprehensive reform bill that would gradually wind down Fannie and Freddie to ensure that they no longer pose a threat to taxpayers. With the understanding that there is little appetite for comprehensive legislation, House Republicans have also introduced eight bite-size bills which would do everything from eliminate Fannie’s “fair housing goals” that encouraged giving loans to unqualified borrowers, to demanding the mortgage giants steadily decrease the size of their loan portfolio.

Sadly, these bills will likely never see the light of day in the Democrat-held Senate, meaning we’re likely to see Fannie and Freddie continue to pop-up, with their hands out, wreaking havoc on taxpayers. I’m sure the Seinfeld writers could somehow make a funny episode out of all of this, but in reality it seems downright maddening.

Much of the debate between conservatives and liberals centers around the idea of wealth redistribution. Liberals tend to look at the growing wage gap and say that the government must step in to equalize the results. Conservatives tend to look at the enormous reduction in the inequality of personal well-being which has derived, in large part, because societies’ producers are incentivized to succeed. Economist Greg Mankiw clarifies exactly what I mean by “equality of well-being”,

“Bill Gates is much, much richer than I am, yet it is not obvious that he is much happier if, indeed, he is happier at all. I have access to penicillin, air travel, good cheap food, the Internet and virtually all of the technical innovations that Gates does. Like the vast majority of Americans, I have access to some important new pharmaceuticals, such as statins to protect against heart disease. To be sure, Gates receives the very best care from the world’s top doctors, but our health outcomes are in the same ballpark. I don’t have a private jet or take luxury vacations, and—I think it is fair to say—my house is much smaller than his. I can’t meet with the world’s elite on demand. Still, by broad historical standards, what I share with Bill Gates is far more significant than what I don’t share with him.

This is as important a debate as exists in our current political discourse. In fact, it is so woven into the fabric of our political ideologies that it colors almost everything.  It has become an especially important discussion in the debate over the future of our government. Whether we choose to follow the path President Obama has begun to lead us down; that is, to a redistributive welfare state that, to one degree or another, attempts to equalize results. Or whether we choose to walk the road of Representative Paul Ryan whose plan trims the size of our entitlement programs to ensure we remain an opportunity society.

Each side is vying for the title of “fair.” Liberals say it is only fair that those who earn more should greatly subsidize everyone else. Conservatives say that there can be nothing fair about taking what someone has earned and giving it to someone else.

Their quest has led them to some interesting theoretical debates. The newest, and perhaps most entertaining, is an attempt to highlight the utter absurdity of redistribution in other settings.

For instance, Robin Hanson, asked the question, if we can redistribute wealth, why not apply the same principle to grades?

First, a little bit about Mr. Hanson. He first received a B.S. in physics from the University of California Irvine, then went on to earn an M.S. in physics and an M.A. in Conceptual Foundations of Science from the University of Chicago, then a Ph.D. in social science from Caltech, and then a Ph.D in artificial intelligence, Bayesian statistics, and hypertext at Caltech. All that is to say…this guy knows a little bit. He’s also been through the educational ringer enough to understand the parallels between earning grades and earning money.

Hanson argues,

Most people believe that redistributing money within a nation is good, but that redistributing GPA within a school is bad, and if asked why these should be treated differently, have little to say. My point isn’t to say one can’t come up with reasons to treat these differently.  One could, for example, argue that we prefer differing school signals to help employers sort people into jobs, to achieve higher productivity so that the pie is bigger when we redistribute money. My point is that most people can’t think of such reasons, making it pretty unlikely that such reasons are the cause of their opinions.

It’s a pretty powerful point. There are a lot of similarities between grades and income. Presumably they are both reflective of merit, having been earned by labor or intelligence. They serve as important signals, money incentivizes work, grades incentivize study. And they are the product of value judgments on behalf of the earner, that is, we can sacrifice grades or income to pursue other interests.

The comparison also provides a useful tool for college students, who often haven’t earned wages, to engage in the debate over the desirability of distributive systems on something more than an academic level. And it should come as little surprise that few liked the idea of shaving points off their 4.0 to provide some GPA help to their less academically successful classmates.

This led blogger Megan McCardle to conclude that “most of us want to redistribute income because, well, we wanna…not because we have any particularly good reason.” Shouldn’t redistributing someone’s earned money require a better reason than “we wanna”?

They’re at it again! Those damn corporations are making money again. The nerve! And it’s at a time when the unemployment rate remains at 9 percent. Have they no heart? Have they no shame?

Well, no and no. Corporations aren’t people. They don’t have a heart and thus aren’t created to act altruistically. They’re created to make as much money as possible in a legal and socially responsible way. They also have no shame, at least not when it comes to the American voters. That’s simply not who they answer to, they’re responsible to their owners, the people who have invested money in the hopes of a return.

That may rub you the wrong way, but it’s the truth. And such as system has done more to bring prosperity to the world than any system otherwise devised by man. Nevertheless, liberals have taken the chance to jump on the bad optics of the situation, pointing to very good profits for businesses while American workers continue to struggle.

And to be quite honest, it does look pretty bad. Blogger Ezra Klein points to an especially telling statistic from the Fortune 500 press release: “The combined profits of the Fortune 500 increased by 81% – $318 billion – this year, the third largest percentage gain in history.” High profits at a time of such dramatic unemployment?

Of course, he does leave out some facts that would otherwise take away from the argument he’s trying to make – businesses are succeeding while people are suffering. For instance, Klein fails to note that the “Fortune 100 employers have at least 350 openings each, totaling more than 96,000 jobs,” so it’s not as if they’ve stopped hiring. The argument also ignores other economic realities such as the fact that hiring tends to lag behind profit growth and that supposed “record corporate profits” are in actuality an illusion.

Nevertheless, even if we buy into the big-bad companies and their dastardly profits storyline, shouldn’t we be asking why? It seems a far more productive course to ask, why companies aren’t hiring given that they’re reeling in big bucks, rather than vilify them for doing so.

I get the feeling liberals aren’t asking mostly because they’re scared of the answer. But I’m more than happy to give it to them: profits are translating into jobs, just not here.

A significant portion of those reported “profits” are due to what are called “rest of world” profits – money made by U.S. based corporations overseas. Of course, since we have the highest corporate tax rate in the developed world, corporations are none too keen on bringing those foreign profits back onto our shores or back into our economy.

The world economy is becoming increasingly globalized. Technology, most notably the internet, has essentially broken down the barriers which previously stood between nations. Businesses no longer have to be adjacent to the biggest markets, they can make location decisions based on the affordability of labor and the friendliness of their tax code.

And on those points, the United States and other Western nations are falling behind. A lot of that has to do with our growing government. Over the past several decades many traditional economic powers have developed intricate, and expensive, social safety nets. Now the bill for those gaudy purchases is coming due in the form of higher taxes.

Developing nations like India and China aren’t dealing with those fiscal concerns and are free to attract businesses with low labor costs and low tax burdens.

It’s not too late to reverse course. The disconnect between corporate profits and domestic job growth is one of the clearest examples we have of our failing economic policies. That evidence is being ignored. Instead, it’s being used to further paint corporations as villains who deserve higher taxes. Such wrongheaded rhetoric threatens to further alienate corporations from the United States. Instead of saying “damn those corporations are at it again,” why don’t we say “damn, why haven’t we done anything to fix it?

The federal government is now trying to tell a company where it can and cannot locate. The National Labor Relations Board (NLRB) has filed a complaint against Boeing for its decision to build a plant in South Carolina rather than in Washington. The idea that the government could wield such power would be absolutely terrifying if it weren’t so downright absurd.

The problems started in 2008 when unionized Boeing workers in Washington went on strike over because the union wanted, among other things, a seat on Boeing’s board. This was not the first time Boeing had to deal with lost production due to worker strikes. In the past 20 years, Boeing union workers have gone on strike four times, the longest being 69 days. As you can imagine, when your workforce doesn’t show up, it can really impact your bottom line. Analysts estimated that the 2008 strike cost Boeing as much as $120 million per day and could have soared higher if orders for their popular plane, the 787 Dreamliner, were canceled.

Unless you worked at Enron or Wall Street you probably recognize that losing billions of dollars is not the soundest of business strategies. The goal of any business is to minimize risk and maximize profits. Of course, the near-constant strikes in Washington were doing the exact opposite. They were forcing Boeing throw money down the drain faster than our spend-happy lawmakers in the nation’s capitol.

Forced to use every ounce of their college education, business acumen, and God-given wisdom the head-honchos at Boeing had an idea – why don’t we build a plant somewhere that we don’t have to stop work every five years. So they did. After looking into some business friendly locales they decided on South Carolina whose right-to-work laws ensured that their plant could actually operate uninterrupted.

More than one thousand jobs and $2 bilion in investment later, the NLRB decided that this simple business decision was in fact a nefarious plot to screw workers and they filed a complaint.

In so doing our government is essentially testing its ability to strong-arm companies into staying in union states. In reality, all they’re doing is making companies’ decision to move investment and jobs overseas that much easier. The outcomes of such a decision would ripple throughout the economy. Business owners will not only be hostages to the demands of their workforce, they’ll be servants of the government. Since their movement will be restricted, businesses ability to “vote with their feet” will be diminished, giving state and local governments the ability to raise tax rates without fear of companies leaving. Prices will rise, businesses ability to compete in the global economy will be diminished, and companies will no doubt flee to less repressive international regimes.

Not even big labor’s most vehement proponents can seem to muster the bluster necessary to defend the NLRB. I laughed out loud after reading a New York Times editorial which began,

“It may be a difficult case to prove, but the complaint filed last month by the NLRB against Boeing is a welcome effort to defend workers’ right to collective bargaining.”

But then the author begins to actually break down the facts. First, he admits that “the company can [legally] decide to locate production in South Carolina because it makes business sense and may include “production stability” as a factor in its decision.” Translated, that means, “even though we really, really want to bend the law to make companies stay in unionized states, it’s gonna be hard to get a judge to buy the turd of an argument we’re trying to sell.

Next, he explains that proving Boeing acted with the necessary “retaliatory” intent may be hard to prove. “Further complicating the NLRB’s case,” the author writes, “Boeing says opening the line in South Carolina will not lead to layoffs in Washington, where it is adding jobs, too.” In fact, it’s adding a lot of jobs. The New York Times reports that Boeing has increased its unionized employment by 2,000 workers since its decision to expand in South Carolina.

Whoa. Back up. Boeing continues to add jobs in the Puget Sound? And the Obama Administration still saw fit to file a complaint? What, are we the United States of the Puget Sound now? Are we going to demand every job created must be created in Washington state. Gimme a break.

In fact, the best argument the proponents of the case can muster is based on a statement made by Boeing officials that supposedly clearly show their decision to locate their new plant in South Carolina was retaliatory. The damning statement –  “We cannot afford to have a work stoppage, you know, every three years,” said a Boeing executive.

That’s it! That’s all you got? That’s not retaliation, that’s a business official with a pulse and a brain in his head! And frankly, those are two qualities I’m not sure apply to the Obama Administration and the NLRB. Obama’s appointments were made with a clear intend of transforming the NLRB into a more liberal, pro-union entity, but presumably they would follow the rule of law. Now, not even that appears a certainty.

Two roads diverged in a wood, and I –

I took the one less traveled by,

And that has made all the difference

-   Robert Frost

No, you’re not back in high school English class. We won’t be studying its use of metaphor, breaking down its meter, or even looking studying its deeper meaning. America is faced with a profound choice, a choice of two destinies, and there has been perhaps no more eloquent description of that than in Frost’s “The Road Not Taken.”

America, like the traveler, did not take the one with the “better claim.” We chose to forge our own path, distinct from the most successful nations on earth at the time. Alexis de Tocqueville marveled at American exceptionalism during his travels throughout our nation in the early 1800s, during which he wrote the seminal “Democracy in America.” Tocqueville wrote, “The position of the Americans is therefore quite exceptional, and it may be believed that no democratic people will ever be placed in a similar one.”

What made us exceptional, he found, was our free market ethic, where the individual pursuit of wealth created an egalitarian society where anyone could succeed. Our dignity was tied to our individual success in making our way in the world, not land, titles or even class. There were no such things as commoners or elites except insofar as someone had earned them. Little was given, much was earned, and everyone seemed to be the happier for it.

But are we still exceptional? Recently Paul Ryan asked the same question another way, “Do we still want our traditional American free enterprise system, or do we prefer a European-style social democracy?”

Our nation is older. More mature in more ways than one. And perhaps those Europeans had it right after all. A cradle to the grave welfare state that equalizes economic rewards is the best choice after all.

A recent study compiled by USA Today seems to confirm that American exceptionalism is fading into just another big, wealthy, western nation. They find that,

“A record 18.3% of the nation’s total personal income was a payment from the government for Social Security, Medicare, food stamps, unemployment benefits and other programs in 2010. . . Americans got an average of $7,427 in benefits each in 2010, up from an inflation-adjusted $4,763 in 2000 and $3,868 in 1990.”

Now don’t take any of that as a lecture. This is in no way any individuals’ fault. Politicians were all too happy to expand existing entitlements, create new programs, and increase benefits in the name of appeasing their constituents, but in reality to gain more votes. Who can blame Americans for now holding Washington to its word?

The question is, is this the society that we want? America is the world’s most powerful nation, it’s freest democracy, and biggest economy in no small party because past generations would have answered that question in the negative. As investor and economics blogger Jeff Harding wrote recently,

“Today it is acceptable to rely on government to solve our problems instead of taking responsibility for solving them ourselves. We borrow more, spend more, save less, and rely on government to bail us out in old age. We want government to “take care of us” when it comes to medical care. We have become a culture of entitlement. And our rhetoric is more about victimhood and entitlement than initiative and self-reliance.”

Maybe that is the society we want. But I hope not. It means the death of an exceptional America. Just as it will equalize economic results in society, it will equalize us among other nations. Unwilling to take the chances provided in an opportunity economy, we will slide into a blissful malaise, where we are all happy to be where we are, if only because we never knew what we could become.

Two roads diverged in a wood, and we are now at the moment of choosing. One path is well worn and well marked, the other is overgrown and twisting. I hope we take the one less traveled by, for as our own history shows, that makes all the difference.

President Obama should look older. A few average years in the White House is generally enough to make a President appear to age faster than the villain at the end of Indiana Jones and the Last Crusade. And this presidency has been anything but average. A recession unlike anything we’ve seen since the Great Depression, a health care debate that was enough to give Bill Clinton PTSD flashbacks, two wars, countless natural disasters, an oil spill, spiking gas prices, the list goes on and on.

Now I’m not saying the President couldn’t softened the impact of a lot of those blows, but c’mon he’s been through a lot. And all we get is a few gray hairs. Either he spends every second in between meetings doing yoga or he’s a pretty cool customer, but either way it’s impressive. In fact, I’d put him right at the top of the career lead in “Ratio of Wrinkles and Gray Hairs to Crisis Level Events Managed.”

His latest headache may be the straw that breaks Obama’s back. I’m speaking about the looming vote on the debt limit.

Obama was doomed from the start on this. His entire strategy was built around three simple steps: (1) Make it sound like a failure to raise the debt limit would equal a world directed by Michael Bay – an Armageddon-ish, end of civilization scenario with lots of explosions and no direction, (2) whenever possible use a hostage taking metaphor, and (3) paint any attempt by Republicans to cut the deficit as a clear and unequivocal attempt to shoot that hostage. Of course that whole plan kind of went down the crapper when it was discovered that President Obama voted against raising the debt limit just five years ago. At the time Obama said,

“The fact that we are here today to debate raising America’s debt limit is a sign of a leadership failure . . . Leadership means that the ‘buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren . . . Americans deserve better.”

Yea, pretty tough to recover from that. The only response Obama could come up with was to send his Press Secretary Jay Carney out to say, “He now believes it was a mistake.” He couldn’t even say it himself! That’s right next to “I didn’t inhale and never tried it again” and “It depends on what the meaning of the word ‘is’ is” (both by Bill Clinton) in the “Lamest Excuse or Attempt to Deflect Blame Without Actually Addressing the Issue” Award.

Now the President is being put in the even more awkward position of having to tell Senators that they absolutely must vote to raise the deficit (and while they’re at it they shouldn’t do anything to reduce spending). Good luck with that Jedi Mind Trick: Yes, I voted against the debt limit for much the same reason you are, but that isn’t the history you’re looking for. This time is different. It could be Armageddon. Did I mention it’s like uh, a hostage situation…

To nobody’s great surprise, some levelheaded Democrats are immune to Obama’s wiles.  The Washington Post reports,

Sens. Kent Conrad (D-N.D.), chairman of the Senate Budget Committee, and Joe Manchin (D-W.Va.), a freshman who is running for reelection next year. Sen. Mark Pryor (D-Ark.) told constituents during the Easter recess that he would not vote to lift the debt limit without a “real and meaningful commitment to debt reduction.”

They’re not alone. Senator Amy Klobuchar (D-MN) a faithful White House ally is now saying she’s “hopeful” a debt ceiling vote will come with a plan to cut the deficit. Given that she says almost everything with a smile (oh those Midwesterners!), that’s pretty much the equivalent of yelling “Hey, Obama! Get your butt in gear and do something about this!”

Senator Mark Udall (D-CO) has been a little less cryptic in his criticism. “As catastrophic as it would be to fail to raise our debt ceiling, it’s even more irresponsible to not take this opportunity to own up to our unsustainable spending path,” said Sen. Udall, “If we don’t take action to reduce our deficit spending, Congress will be facing this same debt ceiling vote in the near term – still with no end to our deficits in sight.”

Somewhere Obama is buying a “Touch of Grey” by the caseload and praying that something, anything would go right for him. Of course, he could make this easy on himself and simply own up to the fact that we absolutely must have a workable plan to reduce the deficit. Given that seems unlikely, our President will have to live with the stress that he’s governing to the far left of even his own party. But hey, at least the “birther” thing is behind him.

In hindsight the collapse of the housing bubble should have been very easy to see. The price of homes was skyrocketing year after year. The seemingly endless growth led politicians to push policies encouraging homeownership as the pathway to wealth and led lenders to feel complacent about giving homes to people they would have laughed out of their office 20 years before. Or, as Oprah would say, “you get a house, you get a house, you get a house, everybody gets a house!”

But then it all fell apart. As it turns out not everyone can afford a $400,000 house. Who knew! The result were numerous foreclosures as people figured out that their home was worth immensely less than they were going to have to pay for it. Banks, who had purchased and bundled all of these bad loans into “mortgage backed securities” either went under or were bailed out by taxpayers. The economy tanked, unemployment soared, and an entire generation of Americans may never recover.

Given that it’s pretty hard to imagine how the past three years could have gone any worse, one would think we would be keeping a close eye for any other bubbles in our midst. But as the immortal Harry Dunne from Dumb and Dumber said, “Just when I thought you couldn’t possibly be any dumber, you go and do something like this . . . and totally redeem yourself.” Of course, that “something like this” was trading a van for a small scooter when they had to travel from Nebraska to Colorado.

It’s hard to feel that we’ve done any better. We’re on the brink of trading one crisis for another. I’m talking about student loans.

Malcolm Harris analyzes the eerie similarities between the two situations in the fledgling political magazine N+1. He finds, that “since 1978, the price of tuition at US colleges has increased over 900 percent, 650 points above inflation.” That makes the housing bubble, in which home prices only increased 50 points above inflation, seem relatively benign by comparison. Perhaps that would be sustainable if the wages of college graduates was at least doing something to keep pace. But alas, salaries have largely stagnating, which has helped make student loans the single largest source of debt.

Nevertheless, just as the Department of Housing and Urban Development pushed Fannie Mae and Freddie Mac to lend to more low-income buyers in the name of meeting “affordable housing goals,” the Obama Administration is pushing more at-risk students into expensive colleges. And not just a few more; he has set a goal of adding 11 million more college graduates by 2020. Although that may sound like a laudable goal, so to did providing homes for the poor, the problem is that in both cases we may end up pushing people into debt burdens they simply can’t afford

The parallels don’t end there. Harris explains:

“During the expansion of the housing bubble, lenders felt protected because they could repackage risky loans as mortgage-backed securities . . . [to] theoretically spread the risk of default . . . But since this wouldn’t be America if you couldn’t monetize your children’s futures, the education sector still has its equivalent: the Student Loan Asset-Backed Security.”

With default rates rising, this situation will eventually turn disastrous. The default rate has gone up every year since 2005. We can’t provide true default numbers because statistics aren’t even kept for loans that default after the first two years of payment. To hide just how bad things have gotten, lenders have been handing out deferments and forbearances quicker than Democrats can spend money. In fact, a mere 40 percent of student loans are in active repayment. A new study by the Higher Education Policy, finds that 41 percent of recent borrowers are either delinquent or in default on their payments.

So what needs to be done? Sadly, there’s so much that it goes beyond the scope of this blog, but here are a few quick suggestions to get things back on the right track:

• Eliminate the bureaucracy: In his article (this guys good!) Harris points to a Department of Education estimate that by 2014 there will be more administrators than instructors at four year colleges. If you’re wondering why tuition is skyrocketing, thereby driving up student loan debt, there’s a big chunk of your answer.
• Get government out of the student loan business: In 1993, Congress established a “public option” for students in an attempt to achieve lower rates for students. By 2007, Congress was back to tinkering, mandating that lenders maintain interest rates so low they couldn’t make a profit. To compensate the federal government began purchasing loans and never looked back. Now, with the passage of the student loan reform as part of the healthcare bill, the Department of Education is the exclusive originator of student loans, meaning that if the market collapses a bailout is in store. But risk-free loans could provide further incentive for colleges to continue to jack up the rates, knowing that Uncle Sam won’t shut off the tap to meet its education goals
• Utilize the free markets: A college degree used to give you a leg up in the job market. Now, with diplomas as ubiquitous as the Kardashians, a grad degree is the supposed ticket to success. This one-size fits all approach to education has to end. Some career paths need not include a college degree, much less four more years of graduate school. We need to encourage things like trade schools, apprenticeship programs, and community colleges so that young adults can truly shop for an educational opportunity that best suits their wallets and their career goals.

The looming student loan crisis is easy to see. Then again, so was the housing bubble. The question is, are we as a society ready to set aside our blind altruism and greed in the name of avoiding it.

For something called “The People’s Budget” I’m finding very few people actually have any idea what it is. I’m endeavoring to change that. Mind you, that’s not because it is particularly good, but because for something that we, the people, have apparently given our endorsement to, it is terrible.

The inaptly named “People’s Budget” is a product of the Congressional Progressive Caucus, i.e. the left wing’s left wing. These people are so liberal, Lyndon B. Johnson rolls over in his grave at the mere mention of them.

That said, their budget rests on a positive premise – the elimination of the deficit – but accomplishes that task by completely ignoring Medicare, Medicaid, and Social Security and relying almost exclusively on tax hikes. And boy, are we talking tax hikes! Although the Progressives tell us that their budget “eliminates the deficit in a way that does not devastate what Americans want preserved,” they apparently don’t believe worker’s income should fall into that category. They allow the Bush-tax cuts to expire, the majority of which lowered middle-class taxes; introduce a millionaire tax rates in which they add tax rates up to 49 percent; increase taxes on capital gains; drastically increase the death tax, with a top rate of 65 percent; dramatically raise payroll taxes to pay for Social Security; and introduce a rash of new taxes on businesses including higher rates, a “financial crisis responsibility fee” and a “speculation tax.”

Of course it is difficult to understand just radical that last paragraph is because although the tax hikes are clear enough, their effect on the average person’s wallet is less discernable. Unfortunately, it appears the authors of “The People’s Budget” intended it that way

In fact, the authors talk about taking “millionaires and billionaires” but completely ignore the effect their budget will have on the middle class. Could they possibly pull this off? Can they expand the welfare state (they add the public option to an already-broken Obamacare), increase spending by around $1.5 trillion over the next decade, and still maintain taxes for the middle class? Unless they can work miracles, then no, this is patently absurd.

But lo and behold they can work miracles! If you take a look in the budget’s appendix you find an assumption that the plan’s net effect on economic growth would be a positive .3 percent! As brilliant economist Tyler Cowen writes on his blog Marginal Revolution, the idea that a 70 percent income tax rate and a 50 percent capital gains rate could lead to economic growth is just, well, silly.

There have been some good criticisms of the funny assumptions behind the Ryan plan, but actually this budget isn’t better, either in terms of its final conclusions, its adherence to best scientific practices, or its transparency in getting to its results.  Should we not apply equally high standards to both the Ryan budget and this?  There are plenty of good arguments that taxes have to go up, but this particular proposal isn’t one of them.

Although Cowen doesn’t exactly spell it out, instead choosing to poke fun at the assumptions, the dramatically higher taxes in “The People’s Budget” would spell doom for the economy.  Chief among the plan’s problems, especially for the middle class, is dramatically higher payroll taxes. These are among the most economically harmful taxes imaginable because they make it directly more expensive for businesses to hire new workers. Unemployment would necessarily skyrocket and jobs would flock overseas.

A higher capital gains rate would contribute to the problem.  By taxing investment and capital formation we diminish economic growth, reduce the incentive to save, and hurt productivity growth. Of course, that’s if businesses for some unknown reason decide to stay in the United States under this senseless budget plan. In fact, following the people’s budget would give us the highest capital gains tax rate in the world, higher than Denmark (45%), Sweden (30%), the UK (18%) and economic powers like Germany, India, Hong Kong, and Singapore, all of which have a zero percent rate.

Liberal economist Paul Krugman, who drools like a toddler at the thought of raising taxes, obviously loves this plan. Although his adoration is obviously misplaced, he does ask a good question: “Why does this plan get no attention, while the cruel fantasies of the right get headlines?” I don’t know the answer, but I’m happy to do my part to share this merciless plan of the Progressives with the rest of the world. Only then will people understand just how sane Paul Ryan’s Path to Prosperity really is.

It’s springtime in America, which means baseball is back in full swing. Whether you love or hate it, hard-ball is a national pastime, as American as apple pie. In fact, baseball has been a part of our DNA as early as the 1850s and has reflected, and often led cultural shifts in the United States.

During its centuries-long tenure as one of America’s most popular sports, it has undergone its fair share of problems. From the Black Sox, to Pete Rose, to the cancellation of the ’94 World Series, baseball has often had to regain the trust of America. But among these problems the Steroid Era may pose the biggest threat. It’s easy to see why steroids became popular among players and ignored among management. Scoring jumped, salaries soared, and records fell, and, as the saying went “chicks dig the long ball.” But it was a short-lived high, followed by scandal, legal trouble, and declining attendance. It was the ultimate black-eye for America’s game.

Our government faces much the same problem. Deficits are their steroids. For years Washington has been spending, and spending, and spending in a desperate attempts to buy voter interest. It has largely worked. Voters, like the MLB, has largely been willing to turn a blind-eye from our representatives spending habits in return for more and bigger government benefit programs. But just as Mark McGwire, Barry Bonds, and Sammy Sosa’s demolition of Roger Maris’ home run record was an illusion, so too was the notion that Washington could give us something for nothing.

Now that fantasy is coming crashing down. Our deficits, brought on by an addiction to big-government spending now threatens everything America has built. The latest sign of our imminent decline came today when prominent credit rating agency Standard & Poor lowered its outlook on US bonds. In a statement, S&P said,

“Because the U.S. has, relative to its “AAA” peers, what we consider to be very large budget deficits and rising government indebtedness and the path to addressing these is not clear to us, we have revised our outlook over the long-term rating to negative from stable.”

Perhaps more alarming was the White House’s response. “We simply believe that the prospects are better,” said Jay Carney, the President’s chief spokesman. That would be like baseball commissioner Bud Selig getting up in the middle of 2005 and saying, “Rather than consider these steroid allegations, we choose to believe that player’s are simply eating better and working out harder.” But just as Americans saw Barry Bonds’ head grow to the size of a watermelon, we can see that Washington has an enormous spending problem.

The impacts of our fiscal hubris are already coming to fruition. Brazil, Russia, India, China, and South Africa, the so-called “BRICS” nation, just concluded a meeting to discuss the inadequacies of the current monetary order – namely, one dominated by the dollar.

Leaders of the BRICS nation cited Washington’s neglect over its global monetary responsibilities as necessitating a global shake up. In a statement they argued a “broad-based international reserve currency system providing stability and certainty” was needed given new realities. Essentially, the BRICS are worried that our enormous deficit is going to debase the dollar, hurting not only us, but disrupting the world economy.

Losing our status as the world’s reserve currency, as the BRICS nations hope, would be economically disastrous for the United States. Since the dollar is universally accepted, there is a far larger market for dollar-denominated debt than with other currencies. Effectively, that means we are able to sell our debt with lower interest rates. If that ends, and interest rates on our $14.2 trillion debt skyrocket, not only will we immediately have to curtail our spending habits (not a bad thing) but we’d have to pay hundreds of billions more dollars annually in interest payments. That’s our tax dollars we’re talking about.

So if we’re sticking with the baseball analogy it losing our status as the reserve currency because of our deficit would be as if sports-fans decided that they had had enough of the steroids and betting scandals in baseball and were going to change allegiances to football. Oh wait. That actually happened. Baseball hasn’t completely faded from the American psyche. It’s still raking in money. But it has lost its place as the American game.

Much the same thing is happening to the United States. Unless something drastic happens, we’ll always be a world power, our economy is just too big for that to change. But our place at the top is not assured. Deficits, like the steroid controversy, has the ability to gradually erode support in the world. The question is, will Obama be like Commissioner Bud Selig, stick his head in the sand, and act as if all is well with the world? Sadly, that appears to be the case.

Imagine spending one-sixth of your annual income on something and then walking out of the store without asking for a receipt. Actually, you walk away less informed than that. You walk away without even knowing what it was you purchased at all.

That would seem to be an insane proposition. After all, nobody, regardless of the state of the economy is prepared to spend that kind of cash without knowing what they were getting. Yet that’s what we do every single year with our taxes. We get our paycheck, enjoy a fleeting sense of pleasure that we now have money in our bank accounted, which quickly switches to a moment of shock and awe about how much of the federal government took as its share, and then we go about our daily lives.

That’s a fairly incomplete chain of thought when you think about it. After all, we have no clue indicating how we should feel about where our tax dollars are going. Should we be utterly pissed that the government is frittering away more money than they should on certain programs. Or should we be pleased that the government’s priorities fall fairly in line with our own. We aren’t given enough information to make these judgments. Instead, in truly paternalistic fashion the IRS does the bureaucratic equivalent of patting us on the head, telling us everything is OK, and sending us back to bed so the grownups can talk.

I’m pleased to say that bipartisan legislation in the House and Senate seeks to pull back the curtain and reveal what the government is doing back there. The idea is for a taxpayer receipt – an itemized breakdown of exactly where your tax dollars of going. A picture is worth a thousand words in this case, so here’s an example of a receipt for someone making around $35,000:

This is a great idea. The only sad thing is, the only reason it is getting any action in Congress is that both sides believe it will benefit them. Democrats believe two things: (1) If we break down the larger deficit picture into bite-size pieces, to show exactly what we spend money on, then Americans will be much more loathe to cut and (2) That it will make Republican attempts to cut smaller things like the EPA seem more trivial, and thus more difficult. Republicans believe the exact opposite, that Americans in general have no idea just how big a portion of their paycheck goes to paying for our largest programs. It will also allow them a powerful visual to show just how much taxes must be increased to pay for the operating deficits in all of these programs.

It’s tough to tell who is right, though if I had to bet, I’d say it would benefit Republicans more. Regardless, this initiative should be supported no matter which party it helps or hurts. A more open process is not a partisan issues, it’s a matter of providing accurate information about how the government spends our money. And with Washington spending more and more of it, racking up tens of trillions of debt in the process, the need for transparency will grow increasingly important.

In the beginning I asked you if you would ever make a thousand dollar purchase without asking for a receipt in return. Now that it appears taxpayers are finally on the verge of being treated as intelligent consumers, perhaps its time they start demanding a return policy. After all, there’s little doubt that Washington is broken.

Given the critical success of The King’s Speech you know Hollywood producers are searching President Obama’s past for some speech impediment. You’d not only get one movie, you’d get a series that would make the James Bond franchise look like the model of brevity. If there is a problem you can’t count on Obama to act, but you can take it to the bank that he’s gonna give a speech.

And so it goes with the deficit. On the past week’s Sunday shows, White House adviser David Plouffe announced that President Obama would be making a speech in the near future about deficit reduction and laying out the groundwork for Medicaid and Medicare reform. Someone should tell him he’s a little late to the party on these issues, the GOP has been talking about them for more than a year now, and won back the House based on a promise to reduce spending.

Nevermind any of that, when Obama talks people listen. But Obama’s team appears to be relying on more than just that fact, they’re also hoping you’ve developed a selective memory. That you’ll forget everything he’s done in the past and focus solely on what he’s saying now.

This, of course, requires a lot of forgetting. Forget that he just sent in a $3.7 trillion budget proposal with the highest annual deficit in the nation’s history. Forget that we’ve set record deficits in each year of his presidency. Forget that rather than reform entitlements, he created an entirely new one with Obamacare. Forget that his reckless spending is one of the main reasons he’s now having to give a speech about the need for fiscal responsibility.

So why the sudden about face? Because this man is not change, he’s the consummate politician, consumed not with the idea of bringing a breath to fresh air to Washington, but with ensuring that his brand of stale politician stays around for four more years.

He’s a used car salesman to the core. After all, he’s spent the past four weeks attempting to lead his party’s charge against the modest budget cuts proposed in the Republican’s continuing resolution. Now, after narrowly averting a government shutdown by unwillingly giving in to Republican cuts, Obama turned right around and attempted to sell it as his own! This guy has no shame.

In his weekly radio address, Obama sold the compromise as “an agreement to invest in our country’s future while making the largest annual spending cut in our history.” He also argued that “beginning to live within our means is the only way to protect the investments that will help America compete for new jobs.”

Who is this guy? It certainly doesn’t sound like the same man who has racked up more debt than any President in history. Oh that’s right! It sounds like a guy who is up for reelection in less than two years and is running scared at the thought of running on his record.

We could criticize him for this very clear attempt to play to voter’s concern, nay, fear over our looming debt crisis. You simply don’t spend the way he has over the past three years if you are truly concerned about the impact the growing debt will have on future generations. He simply senses a political opportunity and is ready to exploit it to its fullest. We could nail him for it, but fortunately our job has already been done for us.

Liberals have picked up on Obama’s change in tone and are wondering where oh where their fearless leader went. New York Times columnist Paul Krugman asks, “What happened to the inspirational figure his supporters thought they elected? Who is this bland, timid guy who doesn’t seem to stand for anything in particular?” The Washington Post’s Greg Sargent wonders, “How much are Dems going to be asked to trade away in core liberal priorities in the execution of [Obama’s political] strategy.” And The New Republic’s Jonathan Chait questions, “Why didn’t President Obama at least fight the Republicans to a draw? Why, if he had to move in their direction, did he wind up adopting deeper cuts than even John Boehner originally proposed?”

The answer is: Obama senses that he’s been too liberal for the past two years and now must course correct. It’s probably the smart political thing to do given voters obvious concern with his lurch to the left. It’s definitely the economically correct thing to do given our looming debt crisis.  So despite his questionable motives, and all-too-obvious switcheroo, we’re still happy to have him engage in the deficit conversation.

Representative Paul Ryan’s daring plan to solve America’s debt problem has arrived, bringing with it a rash of criticism from the left.

• “A path to poverty for America’s seniors and children” – Minority Leader Nancy Pelosi
• “Pulling the rug out from under seniors” – Sen. Debbie Stabenow (D-MI)
• “Waging a war on American workers” – Rep. Xavier Becerra (D-CA)

And in reality, those were the nicest things they had to say. I couldn’t find anything written on the liberal blogs that was family friendly enough to post here. As you can see, Democrats are working the political angles to the best of their ability. Their criticisms will inevitably focus on three groups – children, seniors, and the poor (and when they have time left in their soundbite, the middle class).

It all makes for very good politics, but if you peel back the righteous indignation you’re left with a very clear picture – these guys are scared out of their minds.

Why? Because they literally have no substantive response. Nothing. Zip. Nada. They can boo-hoo all they want about how bad the Ryan plan is, but as of now the only plan I’ve seen from Democrats is to spend more money and hope things work themselves out. That’s not a plan, it’s a death wish. We may as well all become Druids and start practicing child sacrifice, it would arguably do less damage to future generations than ignoring the debt burden today’s government is leaving them.

Now don’t get me wrong. Paul Ryan’s budget is tough medicine. It means Americans get less from their government with the understanding that they will be able to provide more for themselves. It fundamentally changes popular programs – a politically tricky exercise, even in this unique fiscal climate.

It transforms Medicare from a defined benefit plan, to provide premium support payments to all beneficiaries. That is, seniors will receive a check equal to what current Medicare beneficiaries receive plus inflation that they can then use in the marketplace to make their own healthcare decisions. Medicaid would also get a facelift, changing the current system to one, which provides states with block grants to cover the costs of health coverage for the poor.

All of that is political dynamite. Don’t handle it properly and you’re liable to blow you and your party’s future straight into oblivion. But use it correctly and you can begin the process of clearing the rubble from our broken entitlement system so we can get to work on laying a new foundation. Regardless, it’s going to be hard, mostly because Democrats will make sure it’s as painful as possible.

But it’s also necessary. That is the key point that we must not lose sight of. The criticisms of the plan will be hard to hear and some of them (OK, probably only a few of them) may make us question whether this is a good idea after all. But when that doubt arises, ask yourself, what is the alternative? If we don’t reform these programs now, our debt won’t allow them to exist in their current state for much longer. The status quo is no longer an option. We either begin the process of negotiating real reforms, or we watch our crumbling entitlement programs collapse. And who benefits from that? Surely not the poor, the elderly, or the children, whom the left are using as human shields to defend their big-government agenda. Years of free-spending have pushed us into a situation where waiting and hoping are no longer options. The times demand action.

Democrats should also be afraid because it puts an end to the notion that tax increases are absolutely necessary in order to balance the budget. Democrats were very clever about their desire for tax increases. They would never say it directly. In that, they learned from the foibles of George Bush Sr. and his “Read my lips” moment. But the fact is they were content to watch government and deficits grow to the point that it would be impossible to disagree with the notion of raising taxes.

But as Ryan’s budget makes clear, not only do we not need to raise taxes in order to balance the budget, we can functionally cut taxes and still achieve a fiscally responsible outcome. That’s right, the plan includes no tax hikes, and yet despite all the warnings by the chicken little’s on the Left, the sky doesn’t fall. Instead it averts a debt crisis, eliminates our deficits, and lowers our debt-to-GDP ratios to below historic levels.

So the next time you hear anyone say, we’re going to need to raise taxes to solve this problem, don’t say a word, just kindly point them to the Republican’s 2012 budget.

The next few days, weeks, and months will be filled with political attacks over this ambitious plan to solve our debt crisis. But like those who vigorously defended the idea that the Earth was flat or violently fought the notion that the sun was the center of the solar system, these debt-deniers will eventually fade into intellectual oblivion. Everyone deep down understands that our government has a spending problem, it just so happens we now have a plan to fix it.

It’s time. The biggest political battle, potentially of our lifetimes, begins today with the release of Republicans 2012 budget proposal. Now, I’m not one for pep-talks, inspirational speeches, or stirring monologues, but I could this would be the time to bust one out.

This will not be an easy argument to win. Republicans have met the problem head on – taking on not one, but a million, political third rails. Medicaid, Medicare, defense spending, if there is a special interest group with money to spend, you can bet the Republicans’ budget will have offended it. And that’s where we come in.

We are the general interest. The many, but often the silent, who recognize that we’re likely going to have to give a little in order to prevent losing a lot. Unfortunately, the loud minorities will try and drown out our reason. They will say we’re hurting the poor, the elderly, children, the middle class – damn near everyone except the rich.

Influential liberal thinker and writer E.J. Dionne fired his opening salvo yesterday, a clear attempt to get a head start on bashing the budget proposal before it has even been unveiled.

“This is all extreme and irresponsible stuff,” Dionne writes. “The president knows it. The coming week will test who he is. When Ryan releases his budget, will the president finally engage?”

“’This is our time,’ Obama liked to say during the 2008 campaign. This most certainly is his time to stand up for the vision of a practical, progressive government that he once advanced so eloquently.”

What liberals won’t admit is that they haven’t advanced a vision of practical, progressive government. In fact, they’ve done the exact opposite. The Congressional Budget Office’s latest “Long Term Budget Outlook” showed just how impractical big-government progressivism is. According to the CBO, if current trends continue, “the growing imbalance between revenues and noninterest spending, combined with spiraling interest payments, would swiftly push debt to unsustainable levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2012 and would reach 185 percent in 2035.”

Except it wouldn’t. Global investors would never let it reach that point. A debt crisis would ensue, our economy would tumble, and we would enter a recession that would make this one look like a period of prosperity.

The reason for our deficits is not hard to see. Beyond the ridiculous one-time payments for things like the bailouts of Fannie and Freddie and the stimulus, the main drivers are Medicaid and Medicare. Don’t believe me. The CBO says, “all of the projected growth in primary outlays as a share of GDP in coming years stems from increases in mandatory spending, particularly in spending for the government’s major health care programs: Medicare, Medicaid, the Children’s Health Insurance Program, and insurance subsidies.”

We must reform these programs if we ever want to get a handle on a deficit problem that is quickly spiraling out of control. This is exactly what Republicans will propose today. Yet it is exactly the thing that will cause liberals to heap scorn upon them. It is this that will pose the biggest threat to our party’s political chances in 2012.

To be honest the Republican’s plan is a difficult sell. It asks for fundamental changes to programs that Americans have become very comfortable with. But it is a fact, not an opinion, not a preference, a fact, that these programs cannot continue in their current form. Maintaining them would require doubling the historic level of tax revenue in United States history. It has often been tried, mostly by tinkering with the top tax rate, but it has never succeeded. Tax revenues always hover around 18 percent.

So if the status quo is demonstrably unsustainable, and Democrats are ready to bash the every living daylights out of the conservative vision for reform, the question becomes…what’s their plan? Higher taxes won’t work. If cutting Medicare is an unpopular proposition, just wait until you offer to double tax rates. There is not enough defense cuts a liberal could make to come close to balancing the budget. Entitlements must be dealt with. They cannot just imagine them away with cute phrases like “we must stand for the vision of a practical, progressive government.”

If Democrats really want to engage in this debate, and not just undermine Republican attempts at true change, then we demand a plan. Conservatives are prepared to present their vision for a better, more sustainable future. We should be prepared to defend it from the baseless attacks it is sure to be confronted with.

Entitlement programs are usually thought of as Social Security and Medicare not to mention a host of others.  However there is one entitlement program soaring under the radar: U.S. interest payments to foreign governments to finance out $14 trillion national debt.

For a short recap, every time government expenditures exceed its’ income, a deficit is created.  In order to allow for the government to continue spending, the Treasury Department must give the go ahead for the use of Treasury securities.  However, the use of Treasury securities flips the switch and turns our deficit into debt.  Not to mention that if the U.S. were to forego payment on interest, the economic results would be disastrous.

The government is continually charging its’ spending to our plastic and only paying off the minimum balance on the bill each month.  That leaves all Americans, yes children are included, to pay a $2,500 lump sum a piece just to pay off the current interest due.  Just a reminder that the $2,500 would not take an ax at the deficit, it would only cover the costs the debt is accruing yearly!  And the interest payments for the national debt are rising.  “According to the President’s budget, interest payments for the national debt will quadruple from $186.9 billion in 2009 to $768.2 billion in 2020.”

Instead of continuing to add to our national debt and pay off the minimum balance each month, let’s revert back to the simple yet powerful economic policies that were enacted during the Reagan administration.  These ideas included a “free market unencumbered by barriers, government regulation and taxation that created the most growth-friendly economic environment.  As well as supply-side economics: lower taxes, less regulation, and less government spending, as well as a monetary policy focused on ridding us of the seemingly incurable disease of ever-rising inflation.”  These economic ideas allowed the U.S. to ricochet out of recession and spring into an economic boom.

Reagan’s simple economic policies were able to pull America out of a greater recession than we are in currently.  “Higher unemployment, catastrophic interest rates (18% for mortgages) and a stock market that in real terms had fallen 60% from its mid-1960’s levels.”  It is necessary that we revert back to these economic policies so Americans do not drown in debt.  Mr. Obama needs to take a lesson from his predecessor and stop the exponential grown of the U.S. government.  In this case less is really more.

By: Christine Sawyer

“Many people are in denial around here,” said Senator McCaskill as she addressed her colleagues. “Any plan to tackle our fiscal crisis must make a material difference in reducing the deficit,” said Senator Bennett. What do these two Senators have in common? They are both Democrats who voted against their party’s spending bill. They know that the unsustainable spending that has plagued Washington is no longer acceptable and that it must stop.

So why is it that other members of the Democratic party cannot get the point that their fellow members are trying to get across- the spending blitz in Washington needs to end.

Yesterday, Democrats in the Senate blocked a Republican backed spending bill that would have reduced spending for the remainder of the fiscal year by $57 billion dollars. Senate Majority Leader Harry Reid described the GOP bill as “one of the worst pieces of legislation in the history of Congress.” Why is it then that his bill failed by a worse ratio that the Republican alternative?

Democrats countered the GOP offer by trying to pass a spending bill that cut the annual appropriations by a measly $6 billion from President Obama’s budget. Lets not forget that every day the U.S. government adds on $4 billion to our national debt. So in the grand scheme of things, $6 billion dollars worth of cuts is an absolutely ridiculous figure, especially when compared next to the $1.6 trillion deficit that the U.S. is expected to rack up this year.

What we can expect to see over the next month is a compromise between competing spending bills that target cuts in specific areas that President Obama has allowed for. However, the areas that Obama has targeted are still very small and do not put a dent in our debt. Time and time again, they have failed to fix the three cash cows of the American government, Social Security, Medicare, and Medicaid.

It is obvious that the Democratic leadership in the Senate has failed to take the lead on this issue, and we still don’t know if President Obama will either. But given his track record it is unlikely that he will hunker down to make the real tough decisions. We must keep our hope up and give support to the members of Congress who will actually fix what has often been called the ‘third rail’ of politics, the Entitlement Programs. If no one in Washington takes these issues seriously, the debt burden will only grow and be left solely on the taxpayer’s shoulders.

By: Peter Benton-Sullivan

This White House just can’t get it right.

Earlier this year President Obama’s team was lambasted for their slow and uncoordinated response to the oil spill in the Gulf of Mexico. Now, they are being taken to task for how quickly and forcefully they jumped in to stop Wisconsin’s attempt to solve their budget deficit. It’s a sad indictment of a broken Washington when a President is quicker to try and stop deficit reduction than to stop oil from spilling onto our shores.

Nevertheless, the President has held nothing back, deploying his powerful political operation in an effort to thwart Governor Scott Walker’s proposed legislation, which would reduce the state’s debt burden by lowering union benefits. As we detailed on Friday, under Gov. Walker’s bill Wisconsin public employees would still contribute less of their salary to healthcare and pension benefits than the average government worker, much less private sector employee.

Facts unfortunately matter little to Democrats, who see an opportunity to cement the support of a key contributor of both votes and money in the lead up to the crucial 2012 presidential race. Politico reported that, “Organizing for America, Obama’s 2008 grassroots campaign effort posted a statement on its website late Thursday, announcing it “is mobilizing on the ground in Wisconsin to defend the rights of public employees from an attempt by the governor to take away their right to organize.”

Obama himself didn’t hold back from criticizing the legislation, saying “they’re just making it harder for public employees to collectively bargain generally, seem like more of an assault on unions.”

Nevermind, the fact that public employees in Wisconsin must either join the union or pay dues; somehow that fact always gets left out in the discussion over the “right to organize.” And despite President Obama’s attempt to make this an issue of “us versus them” battle, this is not a fight with unions, it’s a fight to fix the deficit.

To his credit, Gov. Walker has avoided attempts to reduce an honest debate to partisan yelling. He told Fox News that, “I’ve said repeatedly [that] good, decent people work for the government. But they shouldn’t be excluded from what everybody else in society is going through in these tough economic times – we’ve all got to be in it together.”

“I think we’re focused on balancing our budget,” Walker said. “It would be wise for the president and others in Washington to focus on balancing their budget, which they are a long ways from doing.”

Sigh. Our President just released a budget that completely ignores the fact that we have an enormous debt crisis, instead adding $7.6 trillion to our debt over the next 10 years. Now, he directs the resources of the Democratic National Committee and his outsized political clout in an attempt to demonize states that are attempting to deal with their own budget concerns. What’s wrong with this picture?

It’s as if Obama’s ego is getting in the way, saying if I can’t reduce the deficit, than nobody can. Sadly, his thought process is not likely so juvenile. Instead, it’s a political play with very high stakes for the American taxpayer. On the one side you have big-government lackeys who create or foster dependence on government programs. They hope is that once people have had their first taste of government spending they will fight tooth and nail to ensure that it’s not removed. On the other side you have the average taxpayer, the one who works hard, creates his own success and pays his taxes.

Over the past few decades the first group has grown in relation to the second. Government and the amount it spends has continued to skyrocket upwards. Now the bill is coming true and so too is the first real test of “progressive” (read: big-government policies).

Gov. Christie in New Jersey has already fought this battle, winning concessions from teachers unions in order to balance his budget without raising taxes. Gov. Walker is now facing the same struggle. But Democratic power players like President Obama weren’t caught off guard this time. They now understand that their worldview is coming under attack by the forces of budgetary prudence and plain old common sense.

Simple concepts like, we can’t spend more than we take in, and, government workers should be paid in line with the private sector, are finally taking root.

The ideological argument to follow will be heated; so it goes when a party’s foundation is threatened. But it is an argument the Wisconsin’s citizens deserve to have because their future is literally at stake. Their state budget is an unmitigated disaster and the status quo is unacceptable. In order to have the adult conversation necessary, Obama and his team of operatives need to turn their attention to Washington, and get to work solving our nation’s problems.

by Brandon Greife, Political Director

Crossposted: http://speakout.crnc.org/blog/2011/02/20/obama-must-address-national-deficit-leave-wisconsin-to-address-theirs/

Looks like President Obama’s deficit commission may not have been a complete waste after all. Sure, Obama himself attempted to pretend it didn’t happen, completely ignoring their recommendations in his recently released budget.

But a bipartisan group, being named the “Gang of Six,” is apparently working behind closed doors to come up with a deficit reduction package that hews closely to the recommendations of the deficit committee. Wait, haven’t we already used “Gang of Six” this year. Weren’t they the Max Baucus-led group of Senators who worked on a compromise for the healthcare bill?

Apparently politicians who form in groups of six must be titled a “gang.” Much like a gaggle of geese and a school of whales, six congressmen is a “gang.” Seems like we could come up for a better name for this. Maybe the “Six Squad.” No, sounds like an early 90s hip-hop group. The “Syndicate of Six”? No, sounds like they’re about to put someone in cement shoes and put them in the bottom of the Potomac, not negotiate a deficit reduction deal. The “Cutters Clique.” No. Alright, I’ll stop there.

But I digress, Budget Chairman Kent Conrad (D-ND), Majority Whip Dick Durbin (D-IL), Tom Coburn (R-OK), Mike Crapo (R-ID), Mark Warner (D-VA) and Saxby Chambliss (R-GA), have come together to hopefully kickstart the discussion on getting our debt under control.

The Washington Post reports,

The group hopes to advance the commission’s recommendations, which would reduce deficits by $4 trillion over the next decade. Doing so would require lawmakers to embrace some politically perilous policies, however, including raising the retirement age to 69, charging wealthy seniors more for Medicare and ending some cherished but expensive tax breaks.

Taking the commission’s report as its template, the group is drafting legislation that would direct congressional committees to find a way to put it into effect. On taxes, for example, the legislation would have tax-writing panels in the House and Senate develop a tax overhaul that would raise hundreds of billions of dollars in additional revenue and lower the top tax rate, which stands at 35 percent.

While the group’s tax treatment requires a closer look to ensure that it is revenue neutral, their forward-thinking approach to entitlements deserves praise. One of the best recommendations is setting explicit annual limits on discretionary and mandatory spending, and if Congress was unable to meet the limits, the White House budget office would be forced to make across the board cuts.

Such a plan exemplifies that the Gang of Six understands the problem – even if difficult decisions are made, future Congress’ may not have the guts to abide by them. The plan would take the pressure off, or should I say, force the hand, of future Congress’ to abide by the deficit reduction measures.

When it comes to the debt we can’t put our hope in future Congress’ or have patience with our current leaders to act. The problem only grows bigger by the day, let’s take the steps to solve it now.

http://speakout.crnc.org/blog/2011/02/18/bipartisan-gang-of-six-taking-lead-on-deficit-reduction/

The “change” Obama talked about in his campaign turns out to just be chump change.

President Obama’s false hope, best exemplified by a State of the Union speech in which he spoke of how we were going to out-innovate, out-educate, and out-build the world, but provided no plans on how we were going to pay for it, was matched yesterday by Chris Christie’s new brand of hope.

Whereas Obama’s vision is built on more spending, which he carefully labels investment, Christie’s hope is built on his unwavering faith in individuals. The Governor addressed what The President and so many others on Capitol Hill are afraid to: our deficit, driven by unsustainable entitlements, and ignored under President Obama’s budget proposal.

Of course, these issues have been discussed ad nauseum, but the President has refused to solve them. If his words were worth a dollar our entitlements would be running a surplus. Sadly, they’re not; so while Obama keeps on yapping, our entitlement crisis keeps on growing.

That is not hope. Sure, I may be inspired by the words, but I am ever-more discouraged when they do not translate into action. I’m left with a feeling that Obama has no intention to do what he says, but rather than he is content to sit back and wait for someone else to make the politically difficult decision to reform popular programs like Social Security. But as Christie said yesterday, “My children’s future and your children’s future are more important than some political strategy. You’re going to have to raise the retirement age for Social Security. Whoa, I just said it, and I’m still standing here. I did not vaporize!”

Chris Christie can talk, because he’s done it. In his first two years in office he’s tackled problems head-on, refusing to blink in stare-downs with powerful political interests like teachers’ unions.

“Leadership today in America has to be about doing the big things and being courageous,” we have to bring a new approach and a new discipline to this.”

The leadership he is referring to is one that remains to be seen with the current administration. Obama is playing an elaborate shell game with the American people, doing everything he can to draw American’s eyes away from the big problems we face. It comes off as hopeful, after all, who doesn’t want to have a Sputnik-like moment, but when you realize the sleight of hand, it comes off as cynical.

He says the big things are high speed rail, the big things are high speed internet access for almost 80% of America or something by some date. One million electric cars on the road by some date. Ladies and gentlemen, that is the candy of American politics. Those are not the big things. Because let me guarantee you something, if we don’t fix the real big things there are going to be no electric cars on the road. There is going to be no high speed internet access or if there is you’re not going to be able to afford to get on it. We are not going to be able to care about the niceties of life-the investments that Washington wants to continue to make.

The big things Obama needs to be talking about are the budget, the deficit, and how we are going to preserve the American Dream for the next generation. He won’t talk about these things because it’s not a sound strategy according to the political playbook he’s been reading out of for the past two years. It teaches the time-tested principles for politicians – wait, wait, and when pushed, obfuscate.

Well it’s time to toss that thing out the window. We need real leadership and real solutions. So when Obama took to the lectern yesterday and preached patience, call him out on it. He said, “part of the challenge here is that this tow – let’s face it, you guys are pretty impatient. If something doesn’t happen today, then the assumption is it’s just not going to happen. Right?”

Right!

As Christie explained,

“What that means in Trenton and what I suspect it means in Washington also is this. It means we are going to drag our feet for as long as we can until we hope it dies a natural death because God knows we don’t want our fingerprints on it for murdering it, but we also don’t have the guts to do it.”

With a deficit of $1.6 trillion we can’t afford to be patient. With a Social Security system that is going to be insolven in the next 30 years we can’t afford patience. With a broken Medicare system that will run out of money within the next decade we can’t afford to be patient. Patience is part and parcel of the old playbook, we want action.

We’re just the generation to demand it. Leaders like Chris Christie are just the people to see it through.

by Brandon Greife and Jordan Hicks

Crossposted: http://speakout.crnc.org/blog/2011/02/17/christies-speech-gives-obama-a-lesson-in-leadership/

Ever wonder how you can square peg fits into a round hole?  Answer: You can’t.  Ever wonder how you can reduce the deficit while enrolling millions into Medicaid?  Answer: Obamacare!  Oh wait… you can’t.  As it turns out, trying to reduce the deficit with a bill that does nothing to reform the drivers of higher healthcare costs is like trying to slam a square peg into a round hole. It just doesn’t make sense.

Governors across the nation are attempting to rectify this engineering flaw by whittling away at the edges of the Obamacare peg.

In the words of our man Mitch Daniels, Indiana’s Governor, “The president’s health-care reform law is a massive mistake.  It will amplify all the big drivers of overconsumption and excessive pricing… [And] add trillions to the deficit.”

Daniels knows a little something about addressing deficits. When Daniels took office in 2004, Indiana had a long-standing deficit of $600 million deficit and hadn’t balanced the budget in seven years. He balanced the budget in just his first year. After four years he had paid off all of the states’ outstanding debt and had a surplus of $1.3 billion in the bank.

The results have been remarkable. Today, Indiana has a AAA credit rating (the first in state history), which it has maintained despite the economic downturn. Because he used budget cuts and efficiencies rather than tax increases to address the deficit, Indiana has also become a friend to businesses. The Weekly Standard writes,

No other state in the Midwest—all of them, like Indiana, dependent on a declining manufacturing sector—can match this record. Venture capital investment in Indiana had lagged at $39 million annually in the first years of this decade. By 2009 it was averaging $94 million. Even now the state has continued to add jobs—7 percent of new U.S. employment has been in Indiana this year, a state with 2 percent of the country’s population. For the first time in 40 years more people are moving into the state than leaving it.

It is no wonder that CNBC named Indiana the Most Improved State for Business in the country and the state is now near the top of every national ranking of business attractiveness.

Obamacare threatens to undue all of Daniel’s hard work. The healthcare bill will require states to add 15 million more citizens to the Medicaid rolls. Daniels estimates that the “price to [Indiana’s] taxpayers at $2.6 billion to $3 billion over the next 10 years.”

The additional Medicaid burden is not even the worst part in Daniels eyes.

Perhaps worse, the law expects to conscript the states as its agents in its takeover of health care. It assumes that we will set up and operate its new insurance “exchanges” for it, using our current welfare apparatuses to do the numbingly complex work of figuring out who is eligible for its subsidies, how much each person or family is eligible for, redetermining this eligibility regularly, and more. Then, we are supposed to oversee all the insurance plans in the exchanges for compliance with Washington’s dictates about terms and prices.

Not only does Obamacare force states to pick up a chunk of the tab for the enrollment increases, it passes off a huge chunk of the bureaucratic burden as well. It should go without saying that this is probably not the best time to be adding things to state budgets.  State revenues have been hit especially hard by the recession and many are scrambling to find places to cut, often being forced to cut basic governmental services in order to afford their public pensions. Increased healthcare costs could be the straw that breaks the camel’s back.

That’s why forward-thinking governors like Daniels are attempting to get out ahead of the budget-busting Obamacare bill, thinking of ways to introduce free-market principles in what will otherwise lead to a “government takeover of health care.”

Among his proposals are:

• Waiving all the mandates that force citizens to buy healthcare benefits that they don’t need
• Eliminating any provisions discriminating against consumer driven plans such as health savings accounts
• The ability to make changes to Medicaid so that millions of people aren’t simply shuttled into a broken system

Fortunately, governors like Daniels have some leverage. If the federal government needs states to run their exchanges, states have a powerful bargaining chip to force Washington to accede to some demands.

If the federal government is hell-bent on forcing a square peg into a round hole, let’s at least whittle off the sharp edges. It is admittedly not a perfect solution. That could only be achieved by implementing true free market reforms into the healthcare marketplace. Nevertheless, it is a huge step in the right direction and we can only hope more governors follow Daniels’ lead.

by Brandon Greife and Peter Mao

Crossposted: http://speakout.crnc.org/blog/2011/02/08/gov-daniels-demands-changes-to-broken-obamacare-bill/

College students are pros at procrastination. We have mastered the art of waiting until the very last minute possible to get something done on time. Sure, it may mean pulling an all-nighter in the dorm study lounge or a couple of late nights in a library study carrel, but inevitably, we get it done.

President Obama on the other hand hasn’t quite mastered the fine art of procrastination. To be sure, he’s got the delaying part down pat. The prez can put off hard decisions better than just about anyone. If delaying were an art form he’d be Picasso. Unfortunately, he doesn’t quite grasp the second, necessary, part of procrastination – get it done.

His new budget, which will be sent to Congress today, may have been one of his last best chances to present a plan to deal with our entitlements. Instead, he punted…again.

Sure, Obama’s budget trims a bit here and there. It calls for spending cuts and tax hikes that total about 14 percent of the $8 trillion in projected deficits over the next decade. But it’s tinkering with a problem that requires a complete overhaul.

Think of it this way, the budget deficit in 2008, just a few short years ago, was $407 billion. This year’s deficit will be $1.2 trillion more than that. President Obama likes to ignore this year, arguing that next year the deficit will fall to $1.1 trillion. Progress, they argue. Jack Lew, director of the Office of Management and Budget, had the audacity to say that “this budget has a lot of pain. . . This is a tough budget.”

If this is tough, I can’t imagine what words he would have described the budgets in the 2000s. I mean, does he seriously believe that spending triple the amount we were in 2008 is progress? Did I somehow miss 300% inflation that happened over the last four years, because if not, I think we’re being sold some snake oil here.

The trouble is the president’s unwillingness to focus on the main driver of our deficit problems: entitlements. The Wall Street Journal reports that Social Security, Medicare, Medicaid, and other entitlements will consume 60 percent of all federal spending next year, or $2 trillion. In the next decade the cost of these programs will continue to skyrocket, jumping by more than one-third to $3.3 trillion.

Not only has President Obama scorned Republicans’ attempts at addressing our entitlement problem, he has ignored members of the bipartisan deficit commission that he put together. The Washington Post reported today,

Some who worked on Obama’s fiscal panel were also disappointed by his decision not to endorse any of the major elements of their deficit-reduction plan, which calls for raising the Social Security retirement age, charging wealthy seniors more for Medicare and limiting popular tax breaks such as the mortgage interest deduction. The plan has attracted support from key members of both parties and is the focus of an effort in the Senate to develop a bipartisan spending plan.

“I would have preferred to see the administration get out front on addressing the entitlements and the tax reform that we need to reduce long-run deficits,” said Alice Rivlin, a commission member who served as budget director in the Clinton White House.

Obama’s refusal to adopt any of the commission’s recommendations shows that there may be some growing cracks in the Democratic ranks. Late last week, before the White House Budget had been released, Steny Hoyer, the second-ranking House Democrat, argued that entitlement reform is a must if we want to reduce our deficit.

“I have said and continue to believe that the president . . . need[s] to sit down and come to grips with how we deal with entitlements, defense spending, and discretionary spending, because the deficit is, in fact, a crisis,” said Hoyer. When asked whether the President should take the lead, Hoyer argued that “the president took the lead when he appointed the commission that has reported, the Bowles- Simpson commission. I think the recommendations they made are very useful recommendations. That doesn’t mean I agree with every one of them. But we’ve got to follow a formula similar to the recommendation of not only that commission, but of Domenici-Rivlin commission.”

Hoyer’s faith in President Obama’s leadership was not rewarded. Not only was the deficit commission’s formula not followed, it appears to have been ignored in its entirety.

Under Obama’s budget our entitlements will continue on, as broken as ever, pushing America nearer to a fiscal collapse. Simply put, the stakes are too high to procrastinate any longer. The tipping point on our debt is quickly approaching. If students procrastinate too long, we may fail a class. If President Obama waits too long to deal with our deficit, the world’s largest economy may begin to fail.

by Brandon Greife, Political Director

Crossposted:  http://speakout.crnc.org/blog/2011/02/14/obamas-procrastination-on-entitlement-reform-threatening-our-future/

Warning: Economic wonkishness ahead.

This blog has looked extensively at the debt crises that are plaguing many European states.  Greece and Ireland have already received an IMF bailout, Portugal appears to be on the ropes, and Spain could be next in line. The main fear driving each of these nation’s to bailout was the so-called threat of “contagion.”

The question is, what on earth does that mean? We really haven’t had an answer and we were happy to know that the economists were equally stumped. TaxVox, a blog by the Centre for Economic Policy Research, said that “Contagion is one of the more elusive concepts in the current debate about the financial crisis. Indeed, the logic behind it is often unclear.”

When you think of debt, you don’t think of a 28 Days Later style plague that turns government budgets into bloodthirsty zombies. So what gives? Is a debt crisis contagious?

The short answer is yes. The long answer is yes but the Eurozone may have overreacted to the potential bond market crash of small economies like Greece and Portugal.

The contagion effect occurs because when bond markets crash, investors are forced to sell off other assets in their portfolio to meet the demands of their creditors. This leads to a “fire sale” effect in which pain in one type of asset class (bonds) can cause pain in others (non-financial stocks). After research TaxVox found that the most “exposed” stocks, ones that are lumped into equity funds with stocks that suffered big losses in the financial crisis, suffered huge losses. In other words, the poor performance of one type of investment in a mutual fund could have a seriously adverse consequences on other types of investments. Or, in the preferred verbiage of our times, bad investment can be contagious.

In TaxVox nerd-speak,

“For each [equity] fund, we calculate fund exposure to financial stocks as the losses induced by financial sector positions in the initial phase of the financial crisis. . . To capture this selling pressure on non-financial stocks, we define stock exposure as the average fund exposure of all funds owning the stock weighted by the fund ownership shares in the stock. Thus, non-financial stocks held mostly by funds with large fund exposure are considered highly exposed stocks.

. . . The contagion effect is measured as the (cumulative) stock return difference between exposed and non-exposed stocks in the same industry and country.

. . . Exposed stocks are indeed those that suffer the largest stock price drawdown during the financial crisis. The stock price for the 15% most exposed stocks worldwide underperformed relative to non-exposed peers in the same country and industry by 17% at the peak of the stock market downturn.”

So what does this mean for Europe? It means that if a European investment fund had a lot of Greek, Portugeuese, or Irish bonds and the country went belly-up, the crisis could spread to other types of assets, and thus to other nations.

The bigger the nation, the bigger the risk. Greece and Portugal accounted for only 4.7% and 2.1% of all Eurozone debt and thus may have been unable to “trigger large fund redemption calls” that would have spread to other nations.

With Spain, Europe’s fifth largest economy, teetering on the brink of collapse, the threat of asset contagion could become reality.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/02/07/7604/

U.S. Federal Reserve Chairman Ben Bernanke did not mince words in a speech yesterday to the National Press Club: We’re on an unsustainable path.

His speech was odd, focusing most of his scorn on fiscal policy rather than monetary policy which is typically the purview of the Fed. In fact, Bernanke was laudatory of his work at the Fed, arguing that the controversial program of “quantitative easing” has staved off deflation and raised yields on long term Treasuries securities. Bernanke said, “A wide range of market indicators supports the view that the Federal Reserve’s securities purchases have been effective at easing financial conditions.”

Bernanke was not quite so admiring when it came to fiscal policy. “Even after economic and financial conditions have returned to normal, the federal budget will remain on an unsustainable path, with the budget gap becoming increasingly large over time, unless the Congress enacts significant changes in fiscal programs,” Bernanke said. This unsustainable path would eventually “drain funds away from private investment and increase our debt to foreigners, with adverse long-run effects on U.S. output, incomes, and standards of living.”

He also argued that declining confidence in our ability to get our debt under control would “lead to sharply rising interest rates on government debt and, potentially, to broader financial turmoil.”

So what exactly is pushing America onto the brink of this clear disaster? Our broken entitlement system. In that regard, Bernanke leaves no stone unturned.

He says the cost of our healthcare system – including Medicare and Medicaid – “will roughly double as a percentage of GDP over the next 25 years.” Then, seemingly forgetting that this was the supposed goal of Obamacare, argued that “the ability to control healthcare costs. . . will be critical to bringing the federal budget onto a sustainable path.”

I can read that as nothing other than a slap in the face of Congressional Democrats. Pointing out that healthcare continues to be on an unsustainable path despite, or possibly because of, Obamacare, points to the utter failure of the bill to live up to its promises. So much for “bending the cost-curve”?

Social Security also didn’t escape Bernanke’s wrath. “The retirement of the baby-boom generation will also strain Social Security, as the number of workers paying taxes into the system rises more slowly than the number of people receiving benefits,” Bernanke said.

Such warnings should serve as a direct repudiation of deficit deniers like Senate Majority Leader Harry Reid who said last month, “One of the things that always troubles me is, when we start talking about the debt, the first thing people do is run to Social Security. Social Security is a program that works, and it’s going to be – it’s fully funded for the next 40 years. Stop picking on Social Security.”

These problems will soon pose a threat to our nation’s financial stability. “One way or the other, fiscal adjustments sufficient to stabilize the federal budget must occur,” Bernanke said, the question is, will we do it deliberatively by a careful debate of our options, or will external investors demand changes in response to a crisis.

While President Obama continues to spout the need for more government spending, doing nothing but paying lip service to our rising deficit problem, the times demand more immediate change. Bernanke said, “acting now to develop a credible program to reduce future deficits” is needed to enhance economic growth in the long run. Sadly, there is very little evidence to suggest that Democrats in Washington are ready to begin the difficult process to trim the budget.

Such fiscal chiding is surprising coming from the Federal Reserve chairman, but it highlights the enormity of the challenges we face and Democrats lack of action to solve them.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/02/04/bernankes-speech-says-washington-must-act-to-preserve-our-future/

We’ve said it before, Democrats are proving it again: fiscal conservatism is not a policy preference it is a real-world necessity.

In the past Democrats have talked about all the good things government could do, ignoring completely that it would take taxpayer money to do so. The results were cushy pensions for their public employee friends, uncompetitive wages for union allies, and continual growth in the size of the government bureaucracy. As it turns out, government programs cost money. Lots of it. More money than Democrats were willing to ask citizens to pay.

The results have been disastrous. Our federal government is facing record deficits for the third straight year and our debt is causing bond markets to shudder. Our states are in possibly worse shape since they don’t have the luxury of printing their own money.

The result of all this money mischief is that Democrats are beginning to sound a lot like fiscal conservatives. The latest example comes from the deep blue state of New York where Democratic Governor Andrew Cuomo has presented a balanced budget.

As the Wall Street Journal reported today,

The budget that Mr. Cuomo unveiled this week closes a gaping deficit with major budget reductions, calling for spending cuts in state hiring, education, health care, aid to universities and payments to cities. The plan would balance the Empire State’s $135 billion budget without a dime of new taxes or borrowing. Remarkably, if his budget passed, the state would spend $3.5 billion less than it did last year.

Education cuts? Has this Democrat gone crazy? Doesn’t he know that the DCCC is running ads against Republicans in New York, criticizing them for making cuts to education!

Pushing for cuts to liberal’s once-sacred programs is just the start of Cuomo’s plan to put New York’s budget on a sustainable path.  In an op-ed Cuomo wrote in the New York Post yesterday,

In Albany speak, “deficit” means the amount needed to fund the 13 percent increase (as opposed to a normal rate of increase). For example, if one assumed these programs would increase at the rate of inflation (instead of 13 percent) the $10 billion deficit is really a $1 billion deficit.

A “cut” is then defined as anything less than a 13 percent increase. By forcing the debate to start with such a large hike, the final budget ends up spending much more than the year before — even after the Governor attempts “cuts.”

. . . We need fundamental reform in the budget system that allows us to recalibrate spending this year to a sustainable level and replace “the special interest protection program” of automatic, unrealistic increases.

If you thought that sounds exactly like what Congressional Republicans have been arguing for the past few years, you’d be exactly right. In fact, it might as well have been said by Republican budget-hawk Paul Ryan. Oh wait, it has. In his plan to solve the national deficit Ryan has said,

The current budget process uses a “baseline” to measure the budgetary impact of legislation that instills an upward bias in mandatory spending. For example, the baseline projects the automatic growth in entitlement spending that will occur under current-law formulas, regardless of whether the government has the means to finance this spending. If legislation slows the growth of spending for a program relative to the baseline, it is considered a “cut in spending.”

So what is causing Governor Cuomo to talk and act like a Republican? Is it because he no longer shares liberal’s fondness for a hearty welfare state, Keynesian economic theory, and an active government? Most likely no. The real answer is that he has realized that there is no choice involved. That style of governance led the state of New York into the debt problems it currently faces – only by reducing the role of government will they be able to escape it.

Zach Howell, chairman of the College Republicans said it best, “The facts are utterly indifferent to the hopes of leftist-utopians who think ever-larger government programs can be paid for with humanitarian zeal. Fiscal conservatism isn’t an option – it’s a necessity.”

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/02/03/gov-cuomo-shows-fiscal-conservatism-is-not-an-option-its-a-necessity/

In what is possibly the worst idea since green ketchup, Democrats are attempting to leverage the spending debate in their favor.

Earlier this week Washington Post blogger Greg Sargent wrote,

“There are increasing signs that Democrats are adopting a surprisingly aggressive and unapologetic posture in the looming political battle with Republicans over government spending. . . Rather than running from the issue . . . they are treating this as an argument that can be turned to their advantage, if it’s framed in the right way.”

One of those “increasing signs” Sargent was referring to was the Democratic Congressional Campaign Committee’s decision to launch an ad campaign in 19 congressional districts targeting Republicans for wanting to cut spending.

I’m not Karl Rove, but it doesn’t exactly take a skilled political operative to figure out that doubling down on spending is probably not a sound long-term political strategy. The CBO just released a report that the deficit would top $1.5 trillion this year and CNN found that even in the most optimistic scenario we’ll be paying $5.5 trillion in interest on our debt over the next decade. In other words, not exactly the time to be arguing we need to spend more.

The conservative group Crossroads GPS, who played a crucial role in the huge Republican victories in last year’s midterm elections, is now firing back. As reported by the Washington Post’s Aaron Blake, Crossroads is going up in the same 19 districts to highlight the stupidity (there’s just no other word) of criticizing Republicans’ attempts to fix our deficit. Blake reports,

“A week after President Obama called on Congress to work together, Pelosi’s gang launched negative ads attacking Sean Duffy for doing the hard work of trying to fix the budget mess she created,” says one ad.

The fact that Democrats would attempt to push public support away from deficit reduction shows the lengths they will go to put politics over principle. It is an unmistakable fact that our nation’s finances are on an unsustainable course. Just last year President Obama said that reducing our deficit “is going to require people of both parties to come together and take a hard look at the growing gap between what government spends and what the government raises in revenue. And it will require that we put politics aside, that we think more about the next generation than the next election.”

That sentiment sure didn’t last long. No sooner had Republicans’ begun offering solutions to our deficit, which will necessarily entail hard choices, than Democrats saw a chance to score some political points. Addressing our spending addiction will not be easy, but it will be made impossible if Democrats continue to play politics. What we need is an adult conversation, not childish finger pointing and misleading ads. What we need is for Democrats to live up to their word – to put the next generation before the next election. Unfortunately, their latest partisan games show they are, as yet, unwilling to do that.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/02/03/dccc-ads-show-democrats-putting-next-election-ahead-of-the-next-generation/

WTF! Those were the words President Obama said almost a week ago in his State of the Union. No seriously, he said WTF. Okay, it wasn’t in the sense your probably thinking. After all, we’re talking about Barack Obama, not Joe Biden. This was still “a big f’ing deal.” Obama’s WTF moment was “winning the future.”

In his State of the Union, Obama issued a four part plan to “win the future.” They run the gamut from encouraging innovation, improving education, to rebuilding our roads. But the final “critical step” in Obama’s WTF plan is “to make sure we aren’t buried under a mountain of debt.” Which leads me to say…WTF (in the traditional meaning of the acronym).

If President Obama was truly concerned about addressing our debt you’d think he’d do something about our unsustainable entitlement structure. Instead, he’s going to extreme lengths to make them worse.

Medicaid is perhaps his worse offense. The difference between word and deed is astounding. In his State of the Union, Obama said we must further reduce health care costs “including programs like Medicare and Medicaid, which are the single biggest contributor to our long-term deficit.”

His actions have sent a completely different message. Approximately half of Obamacare’s much-hyped expansion in coverage is simply the result of expanding Medicaid’s eligibility.

The federal government isn’t the only one’s whose budget is going to get beat up by Medicaid expansion. Medicaid is jointly funded by state and federal governments, so any expansions in Medicaid means enormous costs for state governments. For its part, Obamacare will alleviate some of the budgetary tension by specifying that the federal government will pick up 100% of the costs of the expansion. That’s only until 2020 when states will then be required to pay 10% of the tab.

Nevertheless, states are finding it exceedingly difficult to pay their existing share of the Medicaid tab, much less face any expansions. As Kaiser Health News reported yesterday,

“Financially strapped governors, Congress and the Obama administration could be headed for a showdown over the Medicaid health care program that covers 48 million poor, disabled and elderly people nationwide.

Arizona’s governor has already asked for permission to drop people from the joint federal-state program, which states say is eating up huge portions of their budgets. But to do so, they need the green light either from Congress or the Obama administration.

If they don’t get one? States warn they may need to slash payments to doctors and hospitals and make deep cuts in other programs such as education. They could even thumb their nose at the law and cut eligibility, which would force the Obama administration to decide whether to cut all federal Medicaid funding to those states.”

The problem is that Obamacare eliminates state’s ability to maneuver out of the financial impacts of the Medicaid expansion. A provision of Obamacare mandates that a state will lose its federal share of Medicaid funding if it restricts eligibility. In other words, it’s Obama’s way or the highway on this one.

Obamacare is legislating states into debt. But we’ve already seen how this story ends. When states have difficulty paying their share of the Medicaid tab, the federal government swoops in to help the unsustainable program save face. For an example look no further than the stimulus bill. Among other healthcare spending, the $787 billion package gave $87 billion to the states to help them pay Medicaid costs.

So when states find themselves unable to pay for the increased Medicaid eligibility but the bill doesn’t allow them to fix their bottom lines, who do you think is going to come to the rescue? The federal government. And how will the federal government pay for the increase in the deficit? Inevitably through higher taxes.

Simply pushing states, and ultimately taxpayers, into a broken system is not reform. Expanding costs to the point where states are threatening to drop Medicaid is not the way to increase coverage. This is not the way to win the future. Although it does make me say, WTF.

http://speakout.crnc.org/blog/2011/02/01/medicaid-expansioning-threatening-state-budgets/

Judge Vinson just placed himself in the upper echelons of liberal’s shit list. Apparently liberal ideologues just can’t imagine that anyone could find a flaw in their greatest of achievements – Obamacare.

“There’s something thoroughly odd and unconventional about the analysis,” said one White House official. Really? The best critique you can come up with is “odd” and “unconventional”? This guy is clearly a legal scholar. I mean c’mon. Attack the precedent its based on, go after the logic used, argue that its interpretation of the Commerce Clause is way off, but if all you can say is essentially that it is weird, do me a favor and shut your yap. All that tells me is that you really, really, really want to find something wrong with the opinion, but can’t think of one darn thing that you is worthy of criticism.

Sadly, calling it “odd and unconventional” seems to be the best liberals could muster. Ezra Klein decided to compare it to Bush v. Gore for the simple, if idiotic, reason that it’s another case that liberals hate. Jonathan Cohn went on a search for clues to some sort of conspiracy theory and came up with a veiled reference to Tea Party groups. Look, look, it’s right there on page 42! Judge Vinson was trying to make the point that it seems ridiculous our founders would rebel against a tax on tea if they were then going to create a government that could mandate its purchase. Cohn loses all nuance, essentially pointing and shouting “He said tea! He said tea!” This he says is an obvious “shout out to the Tea Party.” To my knowledge liberals have been unable to find any hidden references or codes about Sarah Palin or Glenn Beck.

Finally, unable to come up with any of their own critiques, they decided to steal one of conservatives lines of attack – judicial activism. Stephanie Cutter of the White House Blog writes a post entitled “Judicial Activism and the Affordable Care Act” in which she argues, “Today’s ruling – issued by Judge Vinson in the Northern District of Florida – is a plain case of judicial overreaching. “ Jonathan Cohn echoes the argument,

“If judicial restraint means anything, it means deferring to the Congress on matters of policy preference–like, for example, whether it’s better to run a national health insurance system with a system of regulated private insurance rather than via a single-payer, government-run plan”

What liberals like Cohn and Cutter fail to understand is that the measuring stick for judicial activism is not Congress, it’s the Constitution. Obamacare runs so far afoul of the Constitution, by broadening its Commerce powers to the point where Congress could do almost anything, that only judicial activism could interpret it any other way.

So why is Judge Vinson’s ruling getting liberal’s undies in a wad? After all, he isn’t the first judge to rule that Obamacare is unconstitutional. Ah, but he is the first judge to strike the law down in its entirety.  Whereas the previous court found that the individual mandate (perhaps the most Constitutionally odious portion of the bill) could be taken out of the bill without harm, Vinson ruled otherwise.

On this issue, liberals shot themselves in the foot. As Vinson writes in his opinion,

I note that the defendants have acknowledged that the individual mandate and the Act’s health insurance reforms, including the guaranteed issue and community rating, will rise or fall together as these reforms “cannot be severed from the [individual mandate].” See, e.g., Def. Opp. at 40. As explained in my order on the motion to dismiss: “the defendants concede that [the individual mandate] is absolutely necessary for the Act’s insurance market reforms to work as intended. In fact, they refer to it as an ‘essential’ part of the Act at least fourteen times in their motion to dismiss.”

Congress knew that the individual mandate was essential to keeping healthcare costs low. By mandating younger, healthier individuals purchase more comprehensive healthcare than they want, or likely need, the bill could effectively subsidize their planned coverage expansion. Congress even said in the Act that,

[I]f there were no [individual mandate], many individuals would wait to purchase health insurance until they needed care . . . The [individual mandate] is essential to creating effective health insurance markets in which improved health insurance products that are guaranteed issue and do not exclude coverage of pre-existing conditions can be sold.

Now that liberals have spent the better part of the last two days trying, and dismally failing, to argue with Vinson on the merits, the fun part will be watching Democrats argue against themselves. Vinson’s agreement with Democratic legislators on the issue of severability essentially means that their lawyers will have to use their appeal to argue that the individual mandate was not necessary after all. As if their house of cards won’t tumble down when you remove the aces that prop up the entire thing.

Democrats greatest achievement of Obama’s term may also end up being their most spectacular failure. If they can’t do any better than call the decision “odd,” that result seems inevitable.

by Brandon Greife, Political Director

Crossposted: http://speakout.crnc.org/blog/2011/02/02/obamacare-ruling-has-tied-democrats-in-rhetorical-knots/

Ronald Reagan famously said, “The trouble with our liberal friends is not that they’re ignorant, but that they know so much that isn’t so.”

President Obama’s State of the Union address seemed to prove Ronald Reagan’s point. Throughout his speech Obama made reference to our growing debt and deficit. He made it clear that he understands that there is a problem that will require a solution.

The bad news is, he honestly (we hope) believes that Obamacare actually helps to alleviate the threat of ever-increasing healthcare spending. In his speech Obama argued,

“[Tackling our deficit] means further reducing health care costs, including programs like Medicare and Medicaid, which are the biggest contributor to our long-term deficit. The health insurance law we passed last year will slow these rising costs . . .”

That simply “isn’t so.” But don’t take our word for it. In testimony before the House Budget Committee yesterday, the Chief Medicare Actuary, Richard Foster, said that the law wouldn’t hold costs down. As the Associated Press reported,

Foster was asked by Rep. Tom McClintock, R-Calif., for a simple true or false response on two of the main assertions made by supporters of the law: that it will bring down unsustainable medical costs and will let people keep their current health insurance if they like it.

On the costs issue, “I would say false, more so than true,” Foster responded.

As for people getting to keep their coverage, “not true in all cases.”

This is not the first time Foster has rebutted the President’s rosy claims about the impact of Obamacare. In his State of the Union Obama once again made the claim if we are going to make cuts “let’s make sure that we’re not doing it on the backs of our most vulnerable citizens. And let’s make sure that what we’re cutting is really excess weight.”

Apparently Obama forgot that the cuts Obamacare made to Medicare may end up hurting “our most vulnerable citizens.” As Richard Foster argued last April,

“A sustained reduction in payment updates…would cause Medicare payment rates to grow more slowly than…providers costs of furnishing services to beneficiaries. Thus, providers for whom Medicare constitutes a substantive portion of their business could find it difficult to remain profitable.”

This, Foster argues, could end up “jeopardizing access to care” for seniors.

President Obama may not be ignorant, but he sure knows a lot that just isn’t so. His healthcare reform bill doesn’t reduce the costs of Medicare and Medicaid, it potentially makes them worse. Obamacare doesn’t “strengthen” Medicare, it makes unrealistic cuts that will hurt seniors. This isn’t reform, this is regression.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/01/27/medicare-actuary-highlights-obamacares-flaws/

“We can no longer afford to leave the hard choices for the next budget, the next administration, or the next generation.” That is what President Obama said when he unveiled his budget two years ago. Sadly, we’ve been pushing off those hard choices ever since. Yesterday’s State of the Union address was no different. It was Obama’s chance to finally address the unsustainable path we currently find ourselves on. Instead, we got a lecture in American exceptionalism.

It’s not that it was a bad speech. He, better than anyone, knows how to make Americans feel better about the present and downright optimistic about the future. But America didn’t need a doting father who is proud of what we have accomplished and sure we’ll make something out of ourselves. What we needed was a wake-up call.

As the Washington Post editorialized today,  “President Obama entered office promising to be a different kind of politician – one who would speak honestly with the American people about the hard choices they face and who would help make those hard calls.” In that sense, yesterday’s State of the Union can be labeled nothing more than a disappointment.

Instead we’re left with lots of mention of the “investments” our government must make to ensure that our economy continues to grow. What he really means is that he plans on continuing his failed attempt to spend our way into prosperity. But we can’t afford it.

In fact, we can afford nothing less than immediate action to begin addressing our deficit. As Rep. Paul Ryan said in the Republican Response,

“A few years ago, reducing spending was important. Today, it’s imperative.

. . . We face a crushing burden of debt. The debt will soon eclipse our entire economy, and grow to catastrophic levels in the years ahead.

On this current path, when my three children – who are now 6, 7, and 8 years old – are raising their own children, the federal government will double in size, and so will the taxes they pay.

No Economy can sustain such high levels of debt and taxation.”

This is the reality we face and it is the reality President Obama went to great lengths to avoid. Instead, he chose to pay lip service to our debt, promising a five year domestic spending freeze, that would do little but “freeze” our unsustainable deficits in place. He briefly mentioned Medicare and Medicaid, even going so far as to call them the “single biggest contributors to our long-term deficits.” But he provided no solutions, no leadership, other than to plug Obamacare and say he’s “willing to look at other ideas.” He also wants to “find” solutions to Social Security, then categorically rules out everything but tax increases to close the program’s financial gap.

In a Washington where “search” means nothing but “stall,” we are quickly running out of time. We must begin to make the hard choices necessary to confront our deficits before it is too late. This was President Obama’s chance to take the lead and truly pivot to fiscal reform. Instead, Obama has chosen to go the same route he did with the bipartisan fiscal commission. Endorse the search for solutions and then refuse to endorse them if they prove to politically difficult.

Fortunately, Republicans are attempting to fill the leadership vacuum in dealing with America’s fiscal peril. Just last week the Republican Study Committee did what President Obama has consistently refused to – private detailed cuts to our federal budget. Their plan, entitled the Spending Reduction Act, is a package containing $2.5 trillion in spending cuts over the next decade. The bulk of the savings come by returning discretionary spending to 2006 levels and implementing a hard freeze through 2021.

President Obama alluded to the RSC’s plan last night saying, “I recognize that some in this chamber have already proposed deeper cuts, and I’m willing to eliminate whatever we can honestly do without.”

If you’re willing Mr. President, we’re ready. It is time you live up to your promises to be a different kind of politician. It’s time to stop putting off the hard choices for the next administration or the next generation. Last night we didn’t need a pep-talk, we needed leadership. If you’re not willing to provide it, Republicans will be.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/01/26/state-of-the-union-a-missed-opportunity-for-leadership/

With the unemployment rate standing stagnate at above 9% over the last twenty months, most would agree that something needs to be enacted to reverse the current situation.  As much as the public would like to believe that Obama and his advisors are on the hunt for a solution to the unemployment crisis, the messy deliberations and relationships between his advisors have created a blockade that is prohibiting anything from getting accomplished.  This argument in solidified in the article “The White House Looks for Work” by Peter Baker.  In the article Baker interviews most of the White House’s main figures and describes their relations with each other.  He states, “..it was like picking through the wreckage of a messy divorce.”  Literally the advisors could be the stars in a new hit high school drama on the CW.

For example, Larry Summers, Former Director of the National Economic Council, during his time at the White House, was more concerned with receiving a car promised by Rahm Emanuel and arguing with Romer over the meetings that he was not invited to instead of the current economic crisis.  “He’s much better at telling you why you’re stupid than creating a system that can produce usable policy solutions,” said one Obama adviser, who, like others, did not want to be named criticizing Summers.  Is this high school drama at its finest or what?

In a further meeting between Austan Goolsbee, Summer, and President Obama, Goolsbee opposed the rescuing of Chrysler and warned Obama that rescuing auto supplies would also lead to the rescuing of auto makers.  Because of the statement to Obama, Summer exploded at Goolsbee because he was “re-litigating in front of the President”.  While Summer, Goolsbee and Romer were combatting invitations and statements made towards the President, Paul Volcker was the lone wolf in the situation; feeling ignored.  Volcker finally got his boost of self-confidence when the President endorsed his suggestion, dubbed the “Volcker Rule”, to lead the new Presidential Economic Recovery Advisory Board.

Peter Orszag also was involved in petty fights with Transportation Secretary, La Hood.  The apparent root of the debate between advisors was what to do about the deficit.  Orszag saw the deficit as the number one priority while others stated, “Yes, the deficit’s important, but not this year”, said one official.  Orszag did not want to cut the deficit too soon or too drastically but he did want to “start planning ahead.” Unfortunately, none of Obama’s other advisers gave much credence to Orszag’s suggestions. It is apparent they never listened to Thomas Jefferson’s advice: “don’t put off ‘til tomorrow what you can do today.”

The story paints a picture of a team whose relationships were more defined by pettiness than production. “Unfortunately,” said Orszag, “I think the environment often brought out the worst in people instead of the best in people. And I’d include myself in that.”  Romer goes on to state, “There’s no question there were strong personalities all around, and at times we were not as united as the president would have liked.”

After reading the testy interactions of the group it is clear their egos got in the way of creating positive policy. It seems they missed the day in elementary school where you were taught to play well with others. Sharing is caring, as they say. But neither sharing nor collaboration seemed to interest any of Obama’s economic team. The group-dynamic was more me-first, give me the credit, I want my name on that. In the selfish struggle to promote their own ideas, the wellbeing of the American people was somehow forgotten. Creating jobs became an academic pursuit, not an empathetic response. In that sense, it was a messaging, and policy failure.

That is one of the unspoken downsides of Obama’s leadership style. He surrounded himself with academics. No one disputed their obvious intelligence, but none of them had ever business experience. We originally criticized him because we thought they didn’t have the private sector experience necessary to know exactly what it takes to create jobs. In hindsight it appears that the problem was more that they had never worked as a team to advance a unified solution. They needed more boardroom arguments than classroom theories.  Without such experience they were left without the capacity to solve problems as a team. The end result was the backbiting, infighting, and political wrangling that churned out individual ideas, but never a cohesive plan.

As the relationship between Obama’s advisers fractured, is it any wonder that they couldn’t mend our broken economy?

by Christine Sawyer

http://speakout.crnc.org/blog/2011/01/25/as-obamas-economic-team-fractured-economy-continued-to-fall-apart/

Attempting to decipher the results of the economic stimulus package is about as complicated as understanding the Pittsburgh Steeler’s blitz packages (non-sports fan translation: it’s hard).

Some economists called it a smashing success. Other economists said that the models used to deem the stimulus effective were based upon a flawed model that judges all government spending effective. Most people without an economics degree didn’t care one bit what economists thought and were simply concerned about an unemployment rate that seemed stubbornly high.

To complicate the analysis further, the stimulus wasn’t one big money dump. We didn’t just throw a trillion dollars in the air and say go to town! (Although that would have arguably been more effective) The money was spent in a variety of ways that make it very difficult to judge the stimulus as a whole.

Fortunately, Stanford economists John Cogan and Shirley Ely, have done it for us in a new article for Commentary magazine.

They break it down this way:

Keynesian stimulus packages come in three basic types. In the first type, the federal government puts money directly into the hands of consumers. The hope is that consumers will use the money to increase their purchases of goods and services. In the second type, the federal government directly purchases goods and services, including infrastructure projects, equipment, software, law enforcement, and education. In the third type, the federal government sends grants to state and local governments in the hope that those governments will use the funds to purchase goods and services.

So how did each type of stimulus fare? About as well as Jay Cutler did against the Green Bay Packers yesterday. That is to say….poorly.

The first type, getting money into the hands of consumers, was accomplished by sending one-time checks to households in the hopes that it would boost consumer spending. The researchers find that it didn’t. Instead, people did the smart thing – they either used the money to pay down their existing debt or they saved the money for fear that the economy wouldn’t recover for a while. In other words, families made the economic decisions that the federal government should have made all along – live within your means.

The second type, government purchases, was meant to jumpstart the economy by injecting demand for more goods and services. One of the primary purchases was going to be “shovel-ready” projects to update our “crumbling” infrastructure. Fast-forward two years and President Obama was singing a much different tune. In an interview with the New York Times Obama said, he realized too late that “there’s no such thing as shovel-ready projects.”

Spending on infrastructure and construction takes time because you must first identify worthwhile projects, then plan the project, then make sure it meets laws and requirements, then get the governmental “okay” to proceed, and then take bids from contractors. It’s a process that takes months and often years. What was meant to be a flood of blue-collar jobs, ended up little more than a trickle.

Finally, federal grants to state and local governments, was supposed to function much like the above. The hope was that federal grant money would be used by state governments to purchase goods and services to benefit their state and create jobs. The results were different.

As it turns out, states were more in debt than individual consumers, meaning much of the money was used to pay for existing liabilities. What wasn’t spent was saved to avoid layoffs, pay pensions, or meet healthcare costs. The researchers found that, “Nearly half of all stimulus-program grants to states have been funds for Medicaid, the primary state-government health-care program for low-income families.” In other words, the federal government was paying money to the states in the stimulus, and the state government was turning around and paying it to the federal government to pay for its share of Medicaid costs. Of course, taxpayers had to fund the bureaucracy along the way.

All of this ridiculousness, led to state and local revenues jumping 10 percent, but state and local purchases remained at 2007 levels. It accomplished nothing.

The stimulus was a grab-bag of ideas which shared a similar goal – boost consumer spending. But as you can see when you break it down into manageable parts, it didn’t achieve its goal. On the bright side, it did give economists lots to do.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/01/24/stimulus-varied-paths-all-lead-to-one-place-failure/

Everyone agrees that our current fiscal path is unsustainable. A recent poll found that 98 percent of Republicans and 94 percent of Democrats said that the US must act soon to address the nation’s long-term finances. Differences begin to arise when we talk about what we must do to raise the deficit.

Over the past year Democrats have attempted to hammer home the point that their preferred solution is to maintain (or even increase) government services to be paid for by tax increases. A few more moderate Democrats believe that the solutions is a mixture of tax increases and spending cuts. But almost everyone of the liberal persuasion agrees that one-way or another the federal government must increase revenues.

Republicans believe this is a false premise. We have a spending problem, not a revenue problem, they often say.

Regardless of which side your on, we’ve been led to believe that coming up with a plan to actually find places to save money was going to be an intellectually difficult, if not impossible task. On Wednesday the Republican Study Committee (RSC) threw that idea out the window completely.

Chairman of the RSC, Rep. Jim Jordan said that, “The national debt has grown from $8.6 trillion four years ago to more than $14 trillion today. This mountain of debt, nearly the size or our entire economy, threatens to create a whole new financial crisis. Every day we refuse to change course and instill some fiscal responsibility, the problem grows even larger. Unless Washington acts soon to cut spending, massive tax hikes, economic stagnation and national bankruptcy will rob our children of the opportunity to reach for the American Dream.”

To help preserve our generation’s future, the RSC has put together a plan entitled the Spending Reduction Act, which shows just how possible, it is to cut $2.5 trillion out of the federal budget over the next 10 years. And they make it look easy!

The main tenet of the plan is to “eliminate automatic increases for inflation from CBO baseline projections for future discretionary appropriations” and impose discretionary spending limits at 2006 levels. This alone will save $2.3 trillion!

The bill also begins the process of spring-cleaning the federal bureaucracy. Government programs, subsidies, and agencies have proliferated over time to the point where it is almost impossible to know exactly what we’re paying for. There is so much redundancy, overlap and waste, that a careful performance review can yield some enormous savings. The RSC plan does just that, cutting more than 100 specific programs that Americans no longer need, or the government can no longer afford. For instance, the bill would:

• Save $15 billion by selling off federal properties the government doesn’t use
• Stop Mohair subsidies which were put in place to ensure soldiers during World War II had wool
• Eliminate duplicative education programs which would save $1.3 billion annually

Taken together the provisions of the bill would have an enormous impact on our deficit. However, this represents just one side of the equation. In addition to dealing with our exploding levels of discretionary spending, we must put forth ideas on how to solve our mandatory spending problems. That means solving our entitlement problem in which the growing costs of Social Security, Medicare, Medicaid, and now, Obamacare, will quickly bankrupt this nation.

The Republican Study Committee’s plan is further evidence that House Republicans are serious about getting our budget under control. We can only hope that their sincerity in dealing with our deficit problem is matched by President Obama and Democrats. Sadly, we have our doubts.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/01/21/rscs-deficit-reduction-act-shows-republicans-serious-about-spending-cuts/

This week we started a new series called “Liberal Mythbusters.” The idea is to get you, the readers, involved by asking them to find some myths that have been promulgated in the media. We’ll then do the research and do our best to debunk the flawed liberal logic.

This week, Richie Salata asked the question: “We constantly talk about increasing our national debt when we’re already trillions of dollars in debt. Why do we care if it gets bigger?” His concern that “we really don’t have options. Either we spend ourselves into a deeper hole with democrats or we have the economy collapse on itself with Republicans.”

First, there are significant reasons to care about the size of our national debt. The worry is not so much about the debt itself, but about investor confidence in the ability to pay back our debt.

Congress cannot simply create money out of thin air. Well, it can, but not without significant harm to our currency. Instead, to finance our spending, they offer bonds. These bonds are sold to a wide variety of people, the primary investors being mutual funds, banks, and foreign governments. The government is able to sell these bonds with very low interest rates, which is solely a reflection of the risk of the investment.

If bond-buyers perceive that the US debt is threatening the government’s ability to pay back these bonds, they will begin to ask for higher interest rates to offset the increase in risk. Mind you, that investors aren’t merely looking at our current spending. They are closely looking at our unfunded liabilities, which are promises that have already been made by our government about money that will be spent in the future. This goes for things like Medicare, Social Security, and public sector pensions, that will face an enormous budget gap in the future unless taxes rise enormously.

To understand just how big a worry this is to investors consider that the National Bureau of Economic Research estimated that as of this year we have approximately $79.4 trillion in unfunded liabilities. Credit rating agencies, who are significant players in determining our borrowing costs, recently warned that,

“[The US and other debt-plagued nations face] dramatic increases under their existing policy commitments arising from ageing related pension and healthcare subsidies. These future costs must be brought under control if these countries are to maintain long-term stability in their debt burden credit metrics.

So the reason we care about the debt getting bigger is because bond markets are becoming increasingly more afraid. There is no specific tipping point that we can point to. It is not a situation in which once we hit a magical ceiling, the entire house of cards starts to fall. Rather, it’s a question of confidence. As the Congressional Budget Office explained recently,

“Growing budget deficits will cause debt to rise to unsupportable levels … there is no identifiable tipping point of debt relative to GDP indicating that a crisis is likely or imminent. But all else being equal, the higher the debt, the greater the risk of such a crisis.”

In other words, let’s not press our luck, because if and when the crisis comes, it will be hard to stop.

As to Salata’s second concern, we do have options. Or perhaps it would be more correct to say, we have one option. We must begin to pay down our debt before the threat of defaulting on our obligations becomes really.

Fortunately, paying down our debt does not mean the economy collapses as Salata suggests. Instead, it is just the opposite. As the CBO wrote in its Long Term Budget Outlook,

“If spending grew as projected and revenues did not rise at a corresponding rate, annual deficits would climb and federal debt would grow significantly. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investments, which in turn would depress income growth in the United States. Over time, the accumulation of debt would seriously harm the economy.”

A paper by economists Carmen Reinhart and Kenneth Rogoff confirm the CBO’s assessment. They found that in nations where the debt-to-GDP ratio exceeded 90 percent, economic growth fell by one percent. That may not sound like a lot, but the cumulative impact can be enormous. Consider this fact from economist Tyler Cowen – “had America grown one percentage point less per year between 1870 and 1990, the America of 1990 would be no richer than the Mexico of 1990.” Now you see why growth is so important! But the private sector can grow, only if government debt doesn’t snuff it out.

In sum, our current deficits coupled with our inability to solve our long-run spending, is creating the conditions for a crisis. Fortunately, this is not a situation where we are cutting off our nose to spite our face. Quite the contrary, getting our spending and debt under control will help stimulate investment and growth in our economy.

We hope this answered your question Richie! Over the next week, be sure to stay on the lookout for any liberal myth’s that need busting!

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/01/20/liberal-mythbusters-our-debt-is-too-important-to-ignore/

“The real tension [in the debt limit debate] won’t be between Republicans and Democrats. It’ll be between Republicans and Republicans.”

That was the prescient prediction of Stan Collender, a former staffer for the House and Senate Budget committees and founder of the blog Capital Gains and Games.

Indeed, an intra-party debate is already forming about the wisdom of once-again raising the debt limit. It is lamentable that this has happened.

The reason we are facing the prospect of crashing through yet another debt ceiling is years of fiscal ineptitude from both the President and Congress. We’ve promised well beyond what we can deliver and we’ve spent well more than we can afford.

This spending irresponsibility has put the new Republican majority in the unenviable position of being forced to vote to raise the debt limit, or vote against it and risk defaulting on the national debt.

Some conservative commentators have taken to the blogosphere to ask, well, is a default really that bad? After all, it would absolutely force us to get our books in order.

But to be intellectually honest, it is a terrible idea. When the United States borrows money it uses a variety of debt instruments (for the sake of ease I will generalize all of these instruments by the term “bond”). In general, three types of entities purchase these bonds. On a small scale, individuals own the bonds because they are a safe way to spread out the risk of their investment portfolio or mutual fund. If the federal government doesn’t increase its debt limit, and thus defaults, these government bonds would be worthless. People’s savings, hedge funds, and retirements would be flushed down the drain. Americans, who sense themselves to be immeasurably poorer than they were before a default would immediately save rather than spend. A fall in consumer demand of this scale would make our current economic issues look downright juvenile.

More importantly, in terms of scale, banks and other corporations are the largest investor in government bonds. A default would mean the loss of life insurance policies, pension funds, for workers, and a destabilization of the asset base of many corporations and all banks.

The United States financial markets wouldn’t be the only to suffer. Trillions of dollars in debt is owned by foreign governments. Foreign nations would soon be looking to us to recoup, one way or another, the billions in losses they face from a political decision not to live up to our debts. Of course, as we saw with the recent financial crisis, a United States problem, quickly grows into a world problem. Global financial markets would be rocked and a worldwide credit crunch could take hold.

Our nation must get its fiscal books in order, but as I hope I’ve shown, defaulting on our debt is too high of a cost.

So rather than fighting amongst ourselves over whether we should vote on a debt limit increase we should explain why we must vote for the debt increase – because Democrats’ wasteful spending is essentially holding a gun to our head.

Instead of infighting we should use the debate as a public relations lever to achieve the spending cuts that are necessary to reduce our debt over the medium-term. New Speaker of the House John Boehner has already staked his claim on this position saying,

“The American people will not stand for such an increase unless it is accompanied by meaningful action by the president and Congress to cut spending and end the job-killing spending binge in Washington. While America cannot default on its debt, we also cannot continue to borrow recklessly, dig ourselves deeper into this hole, and mortgage the future of our children and grandchildren.”

We cannot default, but that doesn’t mean we can’t change our spending habits. In fact, that is exactly what we must do. The vote on the debt limit has put Republicans in a very difficult spot, but it also affords them a wonderful opportunity. We can hold Democrats feet to the fire on spending, but only if we stop arguing amongst ourselves.

by Brandon Greife, Political Director

The national debt is on an insane trajectory. Since June, a short seven months ago, the debt has soared $1 trillion dollars to just a hair over $14 trillion (when I say “hair” I mean a measly $25.2 billion). That means the debt is inching perilously close to the statutory debt limit of $14.29 trillion.

Congress will have to vote to raise the debt ceiling, an odious but necessary task if we want to avoid national default. As Republicans talk about the need to use the debt limit vote as a lever to reduce government spending, White House economic adviser Austan Goolsbee is taking a much different, and much louder, tact.

Goolsbee accused Republicans of “playing chicken” with the “full faith and credit of the United States.” “This is not a game. The debt ceiling is not something to toy with,” said Goolsbee, instead saying it “would be the first default in history caused purely by insanity.”

The problem with throwing around such heated rhetoric is that it often backfires. And oh boy is it backfiring. As economics blog e21 first reported, as it turns out both President Obama and Vice President Biden voted against raising the debt ceiling when they were Senators in 2006:

Then Senator Obama called a vote to increase the debt ceiling “a sign of leadership failure” and that “rising debt is a hidden domestic enemy, robbing our cities and states of critical investments… Increasing America’s debt weakens us domestically and internationally.” Biden went even further in making hyperbolic claims.

“Because this massive accumulation of debt was predicted, because it was foreseeable, because it was unnecessary, because it was the result of willful and reckless disregard for the warnings that were given and for the fundamentals of economic management, I am voting against the debt limit increase,” Biden said.

In fact, every single Senate Democrat voted against the debt limit vote in 2006.

Sadly, those same reasons why Obama and Biden voted against the increase in 2006 ring even more true today. We’re robbing our states, not to mention future generations. The accumulation of our debt was unnecessary and ran against the “fundamentals of economic management.” It is certainly weird to hear two of the current managers of our fiscal ineptitude, leaders who have presided over the largest increase in debt over the course of our nation’s history, chide anyone else’s fiscal record.

But while Senate Democrats “insanity” over the debt limit vote apparently knew no bounds, today’s Senate Republicans are taking a much more logical path. As leading conservative voice, Senator Lindsey Graham said, “To not raise the debt ceiling could be a default of the United State on bond and Treasury obligations…But this is an opportunity to make sure the government is changing its spending ways.”

Ah…reason.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/01/04/biden-and-obama-take-hypocritical-stance-on-debt-limit/

The New Year’s celebrations have come and gone. The confetti has been swept off Times Square sidewalks, the party hats and noisemakers have found their way to the trash, and all but the worst of hangovers has been slept off. As we wave goodbye to 2010, we usher in several new provisions of the Affordable Care Act, better known as Obamacare.

Chief among the new provisions is a requirement that commercial insurers spend at least 85 cents of every premium dollar on medical costs. This minimum “medical-loss ratio” was created with the intention of forcing insurers to spend money on policyholders rather than administrative costs or profits. But as economist Milton Friedman once said, “One of the great mistakes is to judge policies and programs by their intentions rather than their results.”

The results of Obamacare’s mandated medical-loss ratio are potentially disastrous. This is because the mandate prescribes only one possible explanation for lower medical loss ratios. Liberal policymakers behind the provisions have incorrectly argued that the ratio is a measure of service. That is to say, a lower ratio must be tied to a reduction in the quality of care for patients. This isn’t the only interpretation. In fact, James C. Robinson a researcher for Health Affairs, argues that this understanding is “politically the most volatile and analytically the least valid use of the statistic.”

In fact, lower ratios may actually indicate that health insurers are succeeding in one of Obamacare’s primary stated goals – bending the cost curve. To understand why we must first understand that the medical-loss ratio is a fraction where medical expenditures are the numerator and insurance premiums are the denominator. To “improve” the ratio to fit the mandate, I can influence either of the numbers. In other words, one method of meeting Obamacare’s new guidelines is to let the cost of medical care rise, regardless of whether it improves health outcomes.

This cost creep is avoided in a free market system. In such a system, insurance companies will attempt to maximize profits. One of their prime tools to accomplish this is to keep premium inflation down over time. The more insurers hold healthcare providers’ feet to the fire over cost increases, the more profit they earn. Consumers will likewise benefit because insurers will increasingly have to compete in the marketplace through lower priced plans.

Sadly, Obamacare’s medical-loss ratio mandates destroy this competitive incentive toward lower rates. By establishing a minimum that insurers must spend on healthcare, we are essentially incentivizing cost increases. We’re bending the much-ballyhooed cost-curve upwards!

Obamacare is the latest in string of government policies with the best of intentions but the worst of results. To blindly assume that all medical expenditures are good and all other costs are bad is to simplify into oblivion the workings of a free market. So as the bureaucrats sit behind their desk and tinker with their flawed ratios, know that it is you, the consumer, who may suffer. Sure, your New Years’ hangover may be gone, but don’t put away the Advil just yet; unless something is done soon, the Obamacare hangover looks to be a doozy.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2011/01/03/obamacares-new-years-hangover-is-a-doozy/

Millennials are running out of hope. The economic crash and the government spending binge which followed it has left us with diminished income opportunities and a sizeable debt to payoff. All-in-all the federal government under the Democrats seemed to forget about us young adults.

So argues a new article by Joseph Lawler in the American Spectator entitled “Millennials and Hope.” Lawler argues that,

“TRAGICALLY, the laws that Obama and the Democrats have passed to counteract the supposed decline of the middle class, such as the health care bill and parts of the stimulus, are at odds with what future generations need to continue moving up the income ladder as Americans have been doing. In other words, to appeal to the middle class, which is not in trouble, the Democrats in power are waging a war on the young workers of tomorrow, who are.

Specifically, the Democrats are committed to serving the interests of public sector workers, and especially teachers’ unions. And this affiliation is just one of many ways in which Democrats support enormous present and structural federal budget deficits.

The Democrats’ neglect of youth-friendly reforms together with their commitment to deficits amounts to what liberal budget expert Isabel Sawhill called a “double whammy” for the younger generations. “On the one hand, the programs they need are not going to be there, and on the other hand they’re going to be stuck paying the bills for the elderly population and for the deficits that we’re creating.”

Rather than a focus on teachers unions, what we need is drastic changes in our education system. Rather than adding a healthcare plan, what we need is entitlement reform. Rather than piling up deficits in the false hope that it will help the economy today, what we need is a dose of concern over future generations.

In short, what we need is a Washington who truly cares about future generations. What we need, is something to be hopeful about. Sadly, Democrats haven’t provided us with much of that.

Find Lawler’s argument intriguing? I encourage you to read the entirety of his argument: http://spectator.org/archives/2010/12/27/millennials-and-hope/

I’m not sure Toby Keith or Hank Williams Jr. were thinking politics when they sang, “a little less talk and a lot more action,” but it pretty much sums of the mood of the electorate in 2010. People were tired of Washington paying lip service to our biggest problems while in practice following their own agenda.

The clearest example came from the economy. The economic collapse had led to sky-high unemployment and persistent joblessness for many Americans. Nevertheless, Democrats had their blinders on, focusing like a laser on healthcare reform while the economy continued to decline. Of course, that’s what Democrats were doing, not what they were saying.

Throughout the year Democrats consistently said they were focusing on jobs. In President Obama’s state of the union he said that high unemployment “is why jobs must be our number one focus in 2010.” But as of June, the only plan Democrats had come up with was the so-called “Recovery Summer” that was meant to highlight the success of the stimulus bill. That began a trend for Democrats. Rather than put forth any ideas on how to jump-start the economy, they simply relabeled and repackaged existing ideas into jobs bills. Nancy Pelosi said a cap-and-trade energy bill is all about “jobs, jobs, jobs, jobs.” She also said that passing Obamacare would lead to the creation of four million jobs (almost half of the total jobs lost during the recession.)

Americans grew tired of Democrats’ talk. They wanted results. Frankly, they wanted a party that would live up to its promises. And Republicans made big promises. They promised a smaller, less spend-happy government, a promise that is short in words but long in deed. As new Speaker of the House John Boehner explained it, “it’s pretty clear the American people want us to do something about cutting spending here in Washington and helping to create and environment where we’ll get jobs back.”

So now it is the Republicans’ chance to live up to their words.

They’re off to a fast start. In the month since the elections the Republicans have already:

• Stopped the omnibus spending bill,
• Repealed the “Gephardt Rule” which provides automatic increases in the debt limit upon the adoption of a new budget resolution,
• Changed the pay-go rules so that bills must be offset in longer windows than just 10-years

But one recently unveiled change in the House rules may be their biggest step yet towards reining in our unruly deficit. The rule creates a “lock box” for any money saved through spending cuts passed through the House. The idea is to ensure that the money is put toward deficit reduction rather than simply spent elsewhere. Currently, the House rules and budget process encourage any “savings” in the form of spending cuts to merely be plowed into other government programs. The result is that spending cuts never lead to a smaller government, only to a reorganization of the same big government.

Brenan Buck, spokesman for the House GOP transition team said that,

“The reforms included in this package provide the House with new tools to achieve the goal of reining in out of control spending in Washington. The new spending reduction account allows members to explicitly dedicate savings from an amendment to spending reduction – something that under current House rules can only be done rhetorically.”

Republicans are done with rhetoric. They understand that it’s time we start to get things done. In other words, it’s time for a little less talk, and a lot more action.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/12/27/republicans-spending-lock-box-will-reduce-deficit/

After days of Democratic hissy fits and tantrums over President Obama’s agreement with Republicans, a tax deal appears likely to pass. White House adviser David Axelrod said over the weekend, “We have a framework, we have an agreement, and I don’t anticipate that it’s going to change greatly. I think we’re going to get strong support on both sides of the aisle.”

The first hurdle appears to be cleared. The Senate will hold a key test vote today, but Senate Majority Whip Dick Durbin (D-IL) said on Sunday that “Harry Reid and I have been on the phone over the weekend and I can say that we have a good cross-section of the Senate Democratic caucus, from left to right, who are prepared to accept this.”

Even as Democrats appear prepared to accept the deal, many conservatives remain leery. After all, this is a package that well-respected conservative columnist Charles Krauthammer called “the biggest stimulus in American history, larger than his $814 billion 2009 stimulus package.”

To be intellectually honest, he’s right. Overall the federal government will lose around $800 billion in revenue because of the package of tax cuts and credits. Some of those credits go towards extending admittedly bad programs from the stimulus, like windmill subsidies. No, you didn’t misread that. Windmill subsidies. But a majority of the cost is going to keeping more money in the pockets of middle class Americans.

However, we must understand that lost revenue isn’t the same as spending. When the government loses revenue through lower taxes, it means Americans get to keep more of their own money. When the government spends, it means they are allocating your money for their priorities. As Paul Ryan recently said, “keeping tax rates where they are and preventing them from going up is not spending because that is people’s money in the first place.”

They do, however, have the same impact on the deficit – a fact that makes conservatives anxious.

But incoming House Budget Committee Chairman Paul Ryan also had something to say about that.  In a recent interview with the Wall Street Journal, Ryan attempted to allay some of conservatives’ deficit concerns in urging them to support the tax cut deal

“You can’t get the deficit down, get the debt in the right direction, without economic growth, without job creation, and you will stifle job creation – make no two ways about it – if you raise tax rates in January…What we do know is, you will damage the economy if these tax rates occur…For my money pro-growth tax policy combined with spending cuts and entitlement reform are the necessary conditions to get this thing going in the right direction.”

Fortunately, the pro-growth tax agreement between President Obama and Republicans is a good first step towards economic growth. Upon news that the tax cut package was likely to pass, Bank of America boosted its 2011 GDP forecast from 2.3 to 2.8%.

As we wrote last week, Gross Domestic Product, not tax rates, is the true indicator of tax revenues. By boosting GDP, the tax deal has the ability to get the economy going again without a large decline in tax revenues.

So conservatives take heart. Republicans spoken concerns about the deficit weren’t an election year trick. They haven’t forgotten about the long-term threat that our debt poses. Quite the contrary, they understand that addressing our deficit requires a dynamic and competitive economy. Now that it appears we have taken the steps to initiate some pro-growth tax measures, we can begin to solve the other parts of the puzzle – government spending and a broken social safety net.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/12/13/despite-deficit-tax-deal-fits-conservative-economic-model/

Don’t let anyone tell you differently, solving our national debt will be an epic struggle. It is not as simple as making a few cuts or changing a few taxes. Solving the problem will require a fundamental change in what citizens have come to expect from our government.

Year after year Americans are ranked as some of the most generous people in the world. A recent report by the Charities Aid Foundation studied the percentage of people who donate time or money to others and found that the United States tied for fifth. Sixty percent of Americans donate to organizations while close to 40 percent volunteer. As of 2005 Americans donated around $250 billion to charity – more than 2 percent of annual GDP.

And yet when it comes to giving up government benefits in the name of fiscal sanity we say “no thank you.” In a brilliant new article Washington Post, columnist Robert Samuelson calls this “ a new morality.” “Government benefits, once conferred, cannot be revoked.”

The problem is that our government has over promised on what taxpayers can deliver. Notice what I said there. The government isn’t promising what it can deliver. It doesn’t earn anything. Instead, the government is simply an intermediary between what taxpayers promise unto themselves. And in that regard it has failed terribly.

In the hope of getting reelected or to win over interest groups, the government has sold us on the notion that through some bit of budgetary magic, you’ll be able to receive more government benefits than you paid in.

Take Social Security for instance. The problem is that the government indexed the Social Security payment structure to wages rather than inflation. In the long term, wages tend to grow about 1 percent per year faster than inflation. This leads to some crazy results. As the American Enterprise Institute discovered, “a typical worker retiring in 2050 has been promised 47 percent more than today’s retirees, and one retiring in 2080 has been promised more than double today’s benefits.”

Despite knowing that we receive more than previous generations, we nevertheless feel entitled to the higher benefits. As Samuelson explained,

“People expect them and consider them property rights. Just as government cannot randomly confiscate property, it cannot withdraw benefits without violating a moral code. The old-fashioned idea that government policies should serve the “national interest” has given way to inertia and squatters’ rights.”

Solving the debt problem, which can only be done by addressing the fundamentally flawed entitlement system, will require Americans to change this belief.  We have to detach ourselves from the fantasy world that politicians have created for us. Samuelson argues that this task should have been the duty of the deficit commission. He argues that their proposal should have been a tool to “discredit this self-serving morality.” Instead they “ducked this challenge” and instead “performed an accounting exercise to shrink the deficit without trying to define what the government should do and why.” But I believe the responsibility primarily relies with us.

Our politicians are too politically afraid. The fact that there is a deficit commission at all is an example of that fact. President Obama wanted a bipartisan, non-political cover to come up with recommendations so that he could quickly divorce himself from them should something go awry.

Washington’s unwillingness to take a stand is somewhat understandable. They are stuck in the middle between a society that on the one hand professes its love for entitlement programs, but on the other hand despises big government. We must provide them a clear path. We must show them that we understand the perils of a large deficit and are willing to adjust our benefits to fix it.

It will require giving up something that we were wrongfully promised. A difficult, if not impossible task. But I would rather place my bets with the American people than with Washington.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/12/06/to-solve-deficit-americans-must-end-self-serving-morality/

“Wonkish, crotchety, and mostly bald, the co-chairs of President Obama’s National Commission on Fiscal Responsibility and Reform want you to care about the deficit the way cable television wants you to care about pedophiles.”

So begins Annie Lowrey’s latest column for Slate. The point, once you wade through the metaphor-a-minute muck (and the diss to bald people), is that the deficit commission is attempting to scare you into caring.

This is apparently much different and much more unacceptable than the liberal philosophy of scaring you into not caring.

So while Lowrey uses her column to chide deficit commission co-chair Erskine Bowles for using crazy rhetoric like calling the national debt “dangerous” (gasp!) liberal commentators have stepped up the scare-tactics.

Take for instance AFSCME president Gerald McEntee who said that his organization “will not rest until we defeat these unnecessary and dangerous proposals.” Apparently Bowles isn’t the only one to toss around the word “dangerous” willy nilly. As it turns out, both the problem and the solution are dangerous. Talk about a Catch-22.

But McEntee wasn’t alone in conjuring up the potential disaster that lies in store for America if the commission’s proposals are passed. Upon hearing the commission’s recommendations Nancy Pelosi said that seniors are “going to [be forced to] work to 70, no matter what, so we can give a tax cut to the richest people in America.” Forced? You’d think we’re returning to slavery with that kind of talk. So before you start worrying about spending your retirement in a labor camp rather than on your couch watching The Price is Right let’s understand some context.

First, the commission doesn’t mandate that you work until your 70. You can, at your discretion, still retire whenever you darn well please. What Pelosi was referring to was the commission’s recommendation to index the retirement ago for Social Security to increases in longevity. People are living longer and retiring later, Social Security should be amended to mirror that fact. Second, it doesn’t happen at the drop of a hat. The plan is to increase the retirement age by one month every two years. Under the plan the retirement ago would reach 68 in about 2050. It would reach 69 in 2075. Third, the commission factored in a hardship provision so that if you can’t toil in the supposed salt mines beyond the age of 62, you can still receive Social Security.

The scare tactics didn’t end there. After seeing the proposal one Democratic source said, “What a crazy proposal, what a crazy proposal.” The Huffington Post’s Ryan Grim called it an “assault on Social Security.” And finally, the pièce de résistance, Senator Dick Durbin said there were “some things [in the proposal] that I hate like the devil hates holy water.” Tell us how you really feel Dick.

So when Annie Lowrey chides the fiscal commission for “just want[ing] to talk numbers and to scare the living bejesus out of you about debt” I wonder if she has read her party’s response. The truth is the level of debt is something to be worried about. President Obama said as much on Monday while announcing a pay freeze for federal workers. In his speech he said that, “The hard truth is that getting this deficit under control is going to require broad sacrifice. Going forward, we’re going to have to make some additional very tough decisions that this town has put off for a very long time.”

We face tough decisions because we’re dealing with a real problem. Those scaremongers over at the Congressional Budget Office recently said that,

“A growing level of federal debt would also increase the probability of a sudden fiscal crisis, during which investors would lose confidence in the government’s ability to manage its budget and the government would thereby lose its ability to borrow at affordable rates.”

Pretty doom and gloom. But that’s just the thing. Our fiscal future, fueled by rising deficits, an aging population, and an unsustainable entitlement system, is something to be worried about. Lowrey laments that we have to use scary words when speaking of the problem, but as the CBO makes clear, our deficit necessitates the use of some scary words.

Scare tactics aren’t scare tactics if they are used to describe a very real threat. Falsely yell fire in a crowded room and you’re liable to get people killed, but if there really is a fire, then you may be saving lives. The same situation applies here. By ginning up concern over a real danger, the fiscal commission is protecting our future. The CBO says that if a fiscal crisis occurs, “policymakers would probably need to enact spending cuts or tax increases more drastic and painful than those that would have been necessary had the adjustments come sooner.”

That “sooner” that they speak of is now. So while Lowrey and others are worried about the tone of the warning, forgive the rest of us while we heed it.

by Brandon Greife

http://speakout.crnc.org/blog/2010/12/01/democrats-trying-to-scare-americans-into-ignoring-deficit-woes/

Yesterday morning, President Obama made his first move towards addressing our deficit by calling for a two-year freeze on federal worker salaries. Some have called the move “symbolic,” a showing that Washington is willing to make sacrifices at a time when many Americans are being forced to do the same.

As President Obama said,

Small businesses and families are tightening their belts.  Their government should, too.  And that’s why . . . today I’m proposing a two-year pay freeze for all civilian federal workers.  This would save $2 billion over the rest of this fiscal year and $28 billion in cumulative savings over the next five years.

Rather than symbolic, I view the freeze as necessary. A symbol implies that the action has no inherent value other than as a token representation of President Obama’s belief that the government is willing to mirror the sacrifice of the private sector. President Obama’s deficit commission, which first recommended the freeze, didn’t find it merely symbolic. Quite the contrary the commission argued that,

“During the Great Recession, most private sector employees have seen their wages frozen, and some have even watched wages decline. In contrast, federal workers have seen their wages increase due to automatic formulas in law that provide them with step-in-grade and cost-of-living adjustments.”

More than a symbol, these cuts were necessary reductions to realign government salaries with the market for their services. And even then it is only a first step. According to recent analyses by USA Today, total compensation for federal government workers has risen 37 percent over the rate of inflation during the past decade while private worker compensation has risen 8.8 percent in the same timeframe.

In fact President Obama’s proposed cuts don’t even live up to the three year freeze that was proposed by the President’s own deficit commission. More importantly, it fails to follow the commission’s recommendation for a partial hiring freeze that would cut the size of the federal workforce by 10 percent. The growth in the size of the federal government, just as much as the size of their paychecks, is a problem that the President should have addressed. According to research done by the Wall Street Journal, the federal workforce has grown by 17 percent since 2007 to its largest level since 1992 when the government shrunk following the end of the Cold War.

Fortunately, yesterday was merely the beginning of a much longer conversation over the disastrous state of our nation’s finances. President Obama said himself that Going forward, we’re going to have to make some additional very tough decisions that this town has put off for a very long time.  And that’s what this upcoming week is really about.  My hope is that, starting today, we can begin a bipartisan conversation about our future, because we face challenges that will require [cooperation].”

He’s absolutely right on all counts. Using the politics of avoidance Washington has neglected the difficult decisions that must be made to put our nation on a sustainable path. But that leads me to two questions. First, if the President truly understands the stakes why didn’t he follow through with the deficit commission’s recommendations in full. Second, if he truly hopes for a bipartisan conversation then why didn’t the White House use the announcement to reach across the aisle?

Bipartisanship on this issue wouldn’t have been difficult. The GOP pushed the idea for a non-military pay freeze in May of this year. Despite the obvious agreement, President Obama made no mention of the Republican origin of the freeze during his announcement. Instead, the White House blog took the opportunity to play typical blame-game politics with the issue. Writing for the White House, Jack Lew, was pointing the finger at anyone but the current administration for the financial hole our government now finds itself in. Lew said that “[b]ecause of the irresponsibility of the past decade, the President inherited a $1.3 trillion projected deficit” and “we need to turn our attention to addressing the massive deficits we inherited.” Apparently he’s willing to ignore the historic levels of spending and deficits of the Obama administration.

Nevertheless, the two-year pay-freeze is a positive opening salvo in what is sure to be a hard fought debate over the size and role of government in our lives. Small victories must not distract us from the enormous task that lay ahead. The pay freeze is a start, but we must be careful to remember that it is just that – a start.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/11/30/obamas-pay-freeze-is-just-the-start-of-government-belt-tightening/

Washington Post columnist Robert Samuelson recently asked an interesting question: “How much will we let programs for the elderly displace other government functions — national defense, education, transportation and many others – and raise tax levels that would, almost certainly, reduce economic growth.”

On its face it appears to be an easy question. It is essentially asking whether we want to support one demographic group at the expense of all the others? In reality it is a much more nuanced problem. Older generations rightly feel entitled to a certain level of benefits after paying in to them all these years. They also carry significant heft at the ballot box, meaning politicians are careful not to upset them.

Although the answer to such a question will certainly not come easily, it represents a good starting place for a debate that Americans must have. If nothing else, answering, or even debating the question, ends the “politics of avoidance” which Samuelson laments.

While pondering the answer to Samuelson’s initial question I was forced to answer some of my own.

Q: What does America value?

America was founded based on a completely different set of principles than other western nations. Our belief in individual liberty and limited government would be the traditional answers. But at their core, almost all of the oft-cited American values, focus on the idea that the individual is responsible for himself. On the one hand that means that the central government should not be an oppressive force in your life, but on the other it means that it is primarily the responsibility of the individual to succeed.

Q: Are these the values still dominant?

Simply because we were founded on the idea of individual responsibility, it does not necessarily mean that we still hold this as a core belief. America has certainly changed. Have the minds of its citizens likewise changed? Do we still want the traditional American free enterprise system, which allows everyone to grasp success and the risk that some will not, or do we prefer a European-style social democracy with a more limited range of economic outcomes.

The former choice encourages a small central government with few entitlement programs. The latter requires a bigger government, with higher taxes, to pay for a comprehensive welfare state. What we certainly cannot have is our current unsustainable path in which we want most things the government has to offer, we just don’t want the bill to pay for it.

Q: If we prefer a free enterprise system are we willing to give up our sense of entitlements regarding entitlements?

As Paul Ryan and David Brooks recently wrote, “While 70% of Americans told pollsters at the Pew Research Center in 2009 they agreed that “people are better off in a free market economy, even though there may be severe ups and downs from time to time,” large majorities favor keeping our social insurance programs intact.”

We are being pulled in two separate directions. On the one hand it is clear that Americans by and large wish to preserve our heritage of limited government intervention in individual outcomes. On the other, it is clear that Americans, once they get their hands on the benefits of a particular entitlement program, are loath to let it go. Now the push is coming to the shove. We can no longer afford our current entitlement system without either making drastic modifications to it or severely raising tax rates.

There is no middle ground. Regardless of the words of some soothsayers, our present system is collapsing under its own weight. We can no longer skate by, enjoying ever-higher benefit levels without attendant tax hikes.

Q: Will Washington muster the political courage to address our spending?

Changing the existing entitlement structure has been considered the third rail of politics. Those who desire to change Social Security or Medicaid have been swept aside by those accusing them of wanting to take away granny’s retirement. In fact, President Obama’s appointed deficit commission was labeled by some on the Left as the “Cat Food Commission” because any changes to entitlements would supposedly reduce our elderly to eating Fancy Feast.

That is the difficulty reformers face. Will the political will of the population ever rise to the level that Washington must listen. Politicians are opportunistic creatures who, for the most part, will vote in a way that allows them to win. Will they have the courage to face their constituents and sell them on the idea that for future generations to have the same opportunities we had to make our entitlement programs sustainable? Which leads back to Samuelson’s question:

Q: Will older generations agree to consider changes to our entitlement structure?

If we continue on our current path, spending on programs created mainly to benefit older generations will double, while al other spending remains stagnant.

If tax revenues remain 18.2, this graph obviously becomes quickly unsustainable, especially when you consider that our net interest will soar upwards. Young adults do not have the political momentum to address this on their own. A broad coalition of voters must be willing to understand that sacrifices will be have to be made by everyone if anyone is to benefit from government programs. It is a difficult thing, to agree to concede something you feel you have earned so that someone else may benefit. I hope, for my generation’s sake that voters will remind Washington that they are willing to make that sacrifice.

by Brandon Greife

http://speakout.crnc.org/blog/2010/11/29/americans-face-tough-question-over-our-financial-future/

A battle is currently raging in Washington. To address our budget deficit should we raise taxes or cut spending. It is assumed that these are two sides of the same coin. Raising one dollar in taxes is the equivalent of cutting one dollar of spending. But is that true?

Although the math may seem clear, history tells us that the two actions produce two different results. The reason is that the government cannot contain itself. Any dollar it takes in burns a hole in its pocket, it just can’t wait to spend it. The problem is, the government can’t stop itself with that dollar. Instead, it takes your tax dollar and then spends $1.58. The result is ever-higher spending levels and unsustainable debt. Higher taxes only work to encourage it.

I didn’t just pull the $1.58 number out of thin air. A 1987 study done by Ohio University economics Richard Vedder, Lowell Gallaway, and Christopher Frenze found that for every one dollar of additional tax revenue the government turns around and spends $1.58.

The reason for the disconnect between revenues and spending is the result of a careful balance made by legislators. On the one hand Congressmen increase federal spending because of its “marginal political benefits” – the concept that voters like what Congress is buying. Any added spending must eventually be financed by taxation and borrowing which impose “marginal political costs” since voters don’t particularly enjoy paying higher taxes. Congress has been willing to cheat the balance, reaping the political reward for spending on preferred projects while delaying (or ignoring) the costs imposed via higher taxes.

In 2007, Richard Vedder and Jonathan Leirer, updated the study. They found many of the same results, namely that the federal government continues to spend more than every new dollar it raises in taxes. The study also contained a very prophetic pronouncement about the current state of politics. They argued that,

“Attempts to reduce the budget deficit will be futile until the “rules of the game” change in a manner that alters the political incentive structure, raising the political costs of deficits, lowering the political benefits of spending, lowering the political costs of taxation, or a combination of the three.”

As the recent election results show, the rules of the game have changed. The political pendulum swung heavily towards conservative candidates who promised to put a stop to the spending habits of Washington and argued for a smaller role for the federal government. In other words, voters’ concern over the deficit (and its impact on the private sector) trumped voters’ desire for the products of government spending.

Today, Richard Vedder is back with yet another update on his groundbreaking research. Using new variable and taking new historical information into account he finds that “over the entire post World War II era through 2009 each dollar of new tax revenue was associated with $1.17 of new spending. Politicians spend the money as fast as it comes in—and a little bit more.”

Given the current debate over higher taxes versus lower spending as a means of curing our budget deficit, these results are more important than ever. They argue that the Democratic argument that tax increases be “put on the table” before they agree to cuts to entitlement programs is nothing but a “sucker play.” That’s because new tax revenues are almost invariably followed by spending increases, not entitlement cuts.

So as we go forth into the debate over how to conquer our deficit we must go armed with the knowledge that higher taxes more often lead to higher spending and not deficit reduction. As the Nobel winning economist Milton Friedman argued, “The only effective way I think to hold [government spending] down, is to hold down the amount of income the government has. The way to do that is to cut taxes.” As the newest studies show, one way that certainly does not lead to holding down government spending is giving them more money to play with.

by Brandon Greife, Political Director

Last Saturday the NY Times released a handy tool that allows the common man to SOLVE THE DEFICIT CRISIS.  Ok, not really solve it, unless you have some incredible sway with the President that we don’t know about. But it does provide a useful device to highlight the difficult choices that must be made to get our nation’s spending back on a sustainable path.

It provides users with the option to increase some taxes and cut some government spending in order to create a balanced budget. The options range from raising Social Security eligibility to 70 ($247 billion in savings) to eliminating earmarks ($14 billion saved).  However you chose to calculate your cuts and taxes, though, it all adds up to sacrifice, and we all know what sacrifice equals – someone is going to be left less than happy.

The NY Times headlines this calculator as a tool that makes even the most mathematically illiterate Political Science student into economists (no, I am not talking about myself):

Today, you’re in charge of the nation’s finances. Some of your options have more short-term savings and some have more long-term savings. When you have closed the budget gaps for both 2015 and 2030, you are done. Make your own plan, then share it online.

So what is the answer? There are an infinite numbers of ways to balance the budget but they all have one thing in common – they involve difficult choices. Sacred cows will have to be slaughtered, favored programs will have to be cut, and no doubt, whatever route you choose, people will be left upset.

As I went through the budget calculator two things stuck out. First, how much easier it is to fix the $418 billion shortfall in 2015 compared with the $1.3 trillion shortfall in 2030. The problem is that our current problems are going to continue to grow. Our major entitlement programs, Medicare, Medicaid, Obamacare, and Social Security, will continue to grow much faster than the economy. This means that tinkering on the edges may be able to solve the short-term problem, but will put barely put a dent in our long-term issue. So yes, we should eliminate earmarks, slash the size of the federal bureaucracy, and make some cuts or our military spending, but we cannot let this distract us from our primary problem – government entitlements.

Second, I found it much simpler than many pundits would have you believe to make substantial improvements to the deficit via spending cuts rather than tax increases. The fact is, it is really quite simple to solve the deficit problem by increasing revenue. All ya gotta do is jack up taxes. But here is the trick that no debt calculator can tell you – increasing tax rates is not the equivalent of increasing tax revenue. Higher taxes create more incentives for people to hide, divert, or loophole their way out of taxes. Higher taxes also create disincentives for businesses to incorporate and earn profit in the United States. In other words, increasing tax rates often leads to a shrinking of the taxable base. The trick is finding the revenue maximizing tax rate – something that is far more complex than simply hiking taxes and hoping, in vain, that it will translate into a reduced deficit.

On the other hand, finding places to cut spending to reduce our budget deficit is like finding sand in a desert. The federal government mirrors our tax code. Every once in a while it requires a spring cleaning. That is because year after year, Congress after Congress, the federal government grows. New programs are formed, new agencies are creates, new czars are hired, and old programs grow. Sadly, much of this growth happens regardless of performance. Once created, an old administration’s programs remain intact and a new administration, with new plans and ideas, creates its own. The result is a bloated government whose hallmarks are inefficiency and redundancy.

So it’s time to clean it out. Fortunately, this presents an opportunity to find a lot of places to cut and a lot of potential money that can be saved. The debt calculator highlights many of these cuts, including updating, streamlining, and spring-cleaning our entitlement programs, but it is by no means a comprehensive list.

Nevertheless, the calculator is a worthwhile exercise that takes the concept of cutting our debt out of the abstract and into the specific. I encourage you to check it out, play around, and come up with your own plan on how to solve one of the fundamental problems facing our generation. If nothing else it may allow you to appreciate the difficult choices we face as we attempt to tackle our budget deficit.

by Brandon Greife, Political Director

Wealth redistribution is somehow becoming a vogue topic amongst the intellectuals of this country. Granted only President Obama is brave enough to say it, it hasn’t stopped liberals from veiled discussions of how best to spread the wealth. It comes in the context of raising capital gains taxes, hiking taxes on the upper classes, expanding Medicaid, refusing to reform Social Security, eliminating the estate tax, etc. Now you may look at those and think how well intentioned each of them is. After all, it is simply the government’s attempt to help those who have, for one reason or another, been unlucky enough to secure a middle-class lifestyle. To which I say, the road to hell is paved with good intentions.

Now that sounds a little harsh. To be honest, I share the intentions of President Obama and many liberal thinkers. I want the government to promote policies that will secure the brightest future for the greatest amount of people. But as the brilliant economist Milton Friedman once said,

“One of the great mistakes is to judge policies and programs by their intentions rather than their results.

Almost all government programs are started with good intentions, but when you look at what they actually achieve, there is a general rule. Almost every such program has results that are the opposite of the intentions of the well-meaning people who originally backed it.”

As well intentioned as “wealth redistribution” may be I can’t shake the fact that it feels wrong. At its bottom it requires taking money from someone and no amount of “good outcomes” can scrub it of that fact.

Apparently some people do not share my concern. A recent article in the Los Angeles Times argues that wealth redistribution is quickly becoming a moral imperative in our society. Their argument stems from the belief that the “gap between the wealthiest Americans and the poorest is bigger than at any time since the 1920s.” I say “belief” and not fact because the reality is actually in dispute (see here, here, and here).

Nevertheless, the writer uses the widening income gap to argue that there is a need for wealth redistribution. As evidence for this need, the writer provides the results of a study that show that Americans drastically underestimate the current gap between the very rich and the poor. The study also found that when asked what the ideal distribution of wealth was Americans said that they wanted the top 20% to own just over 30% of the wealth, and the bottom 40% to own about 25%. This contrasts with an analysis (again, disputed) that shows that the top 20% of individuals own 85% of the wealth.

Now, let me be the first to say that that doesn’t seem right.  And as the writer points out, in doing so, I join the majority of Americans who want to achieve a more equitable distribution of wealth. The question is, how do we fix it. The easy thought is to use the federal government as a lever to shift wealth from the upper classes to the poor.

In my mind there are a number of things wrong with the welfare state philosophy of “doing good with other people’s money.” The first, as Friedman mentioned is the fact that welfare programs almost always do the opposite of what they were intended to do. One of the primary examples is the minimum wage. The idea sounds great in theory because it, in theory, assures a living wage for people. In practice it has much more pernicious, if unintentional, results. Increasing the minimum wage ends with the unfortunate result that if a workers skills are not worth in the marketplace what employers are forced to pay then they will go unemployed.

Second, as Friedman pointed out, “very few people spend other people’s money as carefully as they spend their own.” This reality is made worse by the fact that when taken people’s money is wrung through two other spenders. The federal government must take the money through taxes. It then decides the best way to spend the money to decide what will do the most “good.” Some portion of this money is then given to those in need through various redistributive programs of the welfare state. Once again, having been given this money rather than having earned it, the recipients of the money are much more likely to spend the money in less economically productive ways. They are incentivized to save little, invest little, and waste much. Even worse, it creates a cycle of dependency that is very hard to break because it destroys the individual will to succeed on their own accord.

(Writer’s note: This is an argument against a redistributive system in the abstract it should not be interpreted as a diatribe against those unemployed during the recession.)

Third, and in my view most important, Friedman argues that “the only way in which you can effectively distribute the wealth is by destroying the incentives to have wealth.” In general, the amount an individual earns is directly in relation to the value of the goods or services he creates.  That is, people are incentivized to increase their skills, improve their products, or improve their efficiency because they know it will contribute to their wealth creation. Arbitrarily taking away the profits of an individual’s work through redistribution eliminates, to some degree, the desire to maximize their wealth creation.

There is no doubt that “redistributionalists” have good intentions. They perceive a problem and believe they have a way to fix it. Unfortunately, a closer examination of the specifics of such a plan reveals that it may have the opposite effect as that intended. In your attempts to shift wealth from the upper to the lower classes, you inevitably end up hurting those you meant to help. Rather than increase the role of government and welfare, we must increase the role of freedom and capitalism. As Milton Friedman concluded, “a society that puts equality before freedom will get neither. A society that puts freedom before equality will get a high degree of both.”

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/11/10/wealth-redistribution-is-not-the-solution-to-inequality/

The left coast broke for the Left last Tuesday. After the elections, California exists as one of the true havens for Democrats over the next two years. California reelected Barbara Boxer as senator, changed their governor’s seat from RINO to Democrat, only one incumbent Democrat lost their seat in Congress, and the state elected Democrats to be their Lieutenant Governor, Attorney General, Secretary of State, Treasurer, and Comptroller. The state’s liberal tilt was reaffirmed by votes on a series of Propositions that, on the one hand demonstrate the state’s dedication to liberalism, but on the other doom it to further fiscal trouble.

Proposition 23 was a measure that would suspend air pollution laws until unemployment dropped. Under the proposition, California’s greenhouse gas emission targets would be suspended until unemployment, currently around 12%, dropped to 5.5% and remained at that level for a year.  Prior to the election analysts warned that the increase cost of cleaning for refineries would raise the cost of refining to a level that would make the California more susceptible to importing refined products for Asia. This would lead to a drop in Californian revenues from the refining and could lead to job outsourcing.

The vote came mere weeks after a report was issued revealing how the state of California grossly miscalculated pollution levels in a scientific analysis used to determine the state’s clean air standards. The state’s pollution estimate was off by 340%. Independent researchers found that the state’s methods of calculating the pollution was due to both flawed work and a faulty method by the Air Resources Board. The Board claims that the discrepancy is due to calculating the emissions before the economy went into a recession.

The debate over environmental protection is very tricky. On one side, it is clear that we have a responsibility to protect the environment. To that end, finding a balance between protecting the environment and protecting jobs should be the end-goal of government policy. The economic recession has shifted that balance temporarily. There is a dire need to create a policy setting that fosters job creation because we have a moral imperative to help the jobless. Raising California’s greenhouse emissions targets until a return to reasonable levels of employment isn’t a jab at the environment, it’s a stab at trying to stem job losses.

Sadly the measure didn’t pass, forcing businesses to potentially choose between meeting carbon regulations and hiring employees. Moreover, in a state with record levels of public debt and is on the brink of bankruptcy, the loss of extra tax revenues spells potential disaster.

A second ballot measure, Proposition 25, was passed. The Proposition reduces the majority needed to pass legislative acts such as budgets. Previously, the California legislature was divided between Republicans and Democrats in such a way that it took some degree of bipartisan agreement to pass. This meant that the tax-and-spend Democratic majority had a check on their ability to pass a progressive agenda with very little means to pay for it. Proposition 25 will eliminate this check by lowering the requirement for legislation to pass to a point at which the Republican minority is essentially non-consequential.

The results of the elections and the Proposition votes show that California, like many liberals, continue to be deluded into believing that their way is working. The state is facing a $20 billion budget gap. According to Blooomberg, market indices show that worldwide investors believe that California is more likely to default on its debt that Kazakhstan. Hey Democrats, Borat says hi. This is not a sustainable situation and last Tuesday showed that while the rest of the nation is painfully self-aware of its troubles, California continues to exist in its own budgetary fantasyland. I realize that being a contrarian is the cool thing to do in California, but c’mon, we’re talking about the financial future of an entire state.

Across the country, with the notable exception of California, Americans elected officials that get the idea that the government doesn’t always know better and it almost never spends better than private citizens. California may have doomed itself to another two years of more debt, higher taxes and fewer jobs, but should it find a way to remain solvent, we conservatives will be here waiting in 2012.

by Justin Williams

http://speakout.crnc.org/blog/2010/11/08/tax-and-spend-please-california-bucks-conservative-trend/

Pundits are lining up to tell President Obama what he should do after his party suffered a major defeat in Tuesday’s elections.

Some, like Salon’s Robert Reich, suggest that Obama must not “move to the center” but rather “push even harder for what you believe in.” Others suggest that the fundamental change needed is not substance, but delivery. The USA Today argued that he must ditch the “stiff, defensive and clinical” Obama and return to his campaign trail persona which emphasized a “human connection and a common touch.” Still others suggest Obama fundamentally alter his approach and make a sharp move to the center. Former Clinton adviser Doug Schoen best espouses this position, arguing that for Obama “to secure his political future, he need to change his approach in the way that Bill Clinton did halfway through his first term” through a strategy called triangulation.

But his electoral success may center around policy more than approach. As Schoen explained, Obama like Clinton, must turn “around his administration’s reputation: from one of big-spending liberalism to one of fiscal discipline and growth.”

At this point Americans don’t seem to care whether you are a Republican or a Democrat, they are willing to flip back and forth until one of the party’s finally addresses their concern about the size and spending habits of Washington. In that sense, appearing partisan or bipartisan, progressive or conservative, is much less important than appearing concerned about the deficit.

Fortunately, the first press conference President Obama gave following Tuesday’s election results signals that Obama is ready to address the level of spending in Washington.  Although he still does not appear ready to address deficits in the short term he does emphasize the need to sit down and figure out “what kinds of budget cuts we can make that are intelligent, that are smart, that won’t be undermining our recovery but, in fact, will be encouraging job growth.”

That represents a fundamental change in position from our President and many of his advisers. Obama has previously suggested that maintaining the flow of government money is necessary to grease the wheels of this economy. Just one year ago Obama was making the push for a new government stimulus, saying that the nation must continue to “spend our way out of this recession.”

His recent comments at least represent a step forward by demonstrating an understanding that a certain (if unspecified) level of government spending can actually undermine growth by taking money out of the hands of the private sector.  In that regard he suggested that we “arrive at some consensus on some areas where we can eliminate programs that don’t work, cut back on government spending that is inefficient, can streamline government, but isn’t cutting into the core investments that are going to make sure that we are a competitive economy that is growing and providing opportunity for years to come.”

Although the statement leaves much room for conservatives to worry exactly what Obama and Democrats consider “core investments,” it is another positive step. If nothing else it signals a willingness to cut back on the government bureaucracy that has ballooned under his watch. Moreover, it tacitly admits that some government expenditures are inefficient, apparently ditching the Keynesian approach in which the efficiency of spending is secondary, if not inconsequential, in judging desirability.

Finally, President Obama admitted to becoming lax on the enforcement of one of his earlier promises – stopping the tide of earmarks. He acknowledged that “in the rush to get things done” he had to sign “a bunch of bills” containing earmarks despite this being “contrary to what I had talked about.” In fact he claims that he is  “a strong believer that the earmarking process in Congress isn’t what the American people  really want to see when it comes to making tough decisions about how taxpayer dollars are spent.” Admitting a mistake is a rare show of humility for President Obama and a positive sign that business as usual may actually change now that a Republican majority can hold his feet to the fire.

There is still a long way to go until 2012. Nevertheless, with the midterms now in the past, voters will be keenly focused on how the President responds to the historic rebuke he received in these elections. Will he kowtow or will be press on? Obama’s future is still yet to be determined; nevertheless, his first step into a divided government was promising.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/11/04/post-election-obama-shows-willingness-to-compromise-on-spending/

As you walk into the voting booth on Tuesday there are a few numbers you need to remember.

• 3.03 trillion – the increase in the national debt since President Obama took office
• 14.2 trillion – the projected national debt in 2019 under President Obama’s budget
• 1.3 trillion – the average annual deficit run in the last two years under Democrats’ leadership
• 7.9 million- the number of private sector jobs that have been lost despite this spending spree
• 9.6% – the unemployment rate

The midterms are two days away. Let me repeat, two days. So as you go to vote, in what could be one of the most important elections of our lifetimes, remember those numbers above. Remember, because they are more than just numbers on a page. They are the result, in terms of dollars spent, jobs lost, and people unemployed, of Democratic leadership in Washington.

America continues to struggle, begging for help, while Obama continues to say “hold on” the recovery is surely coming. But Americans are past the point of blind faith. It’s time we see results. The only results to be found are those that show a non-existent recovery, a far cry from President Obama’s promise that better days were just right around the corner. As Politico explained,

Home prices, the Achilles heel of the economy, are falling again.  Consumer confidence remains at levels usually associated with recession.  And on Friday, the government is expected to announce that economic growth was around 2 percent in July, August and September, less than half of what is normal in a modest recovery.

Did you catch that? We are not even growing at half the rate for a modest recovery. We can add that 2% growth in GDP to the expanding list of numbers showing the debilitating effects of the Democrats’ policies.

In the final 48 hours before Election Day Democrats will attempt to minimize the impact of these numbers. These snake oil salesman will have you believe that they’ve done their best to fix a problem they inherited. They will make the argument that they need more time. They will ask you if you are ready to hand back the keys to a party who drove us into a ditch, ignoring the fact that they’ve worked for the past two years to dig the ditch deeper. And as a study by the Wesleyan Media Project shows, they will use personal attacks against Republicans in a last minute attempt to sway voters.

Americans, whose most sensitive organ is not the heart or the brain, but their wallet, won’t be fooled. We are hurting. Our wallets are on life support, drained of money, that element of vitality that keeps our families fed, sheltered, and clothed. We are a patient in an emergency room waiting for an infusion and yet Obama is telling us to be patient. There is no more time for patience. Our economy continues to wither, our families continue to struggle, and our futures look bleaker by the day. It’s time for a change.

http://speakout.crnc.org/blog/2010/10/31/economy-continues-to-falter-in-lead-up-to-election-day/

I finally got around to seeing the Social Network last night. The movie, a highly dramatized history of the creation of Facebook also functioned as a nuanced morality tale about the success of Mark Zuckerberg. The movie presents a story in which a petulant Zuckerberg got the idea for forming Facebook after being dumped by his girlfriend. In one scene he rails against her on his blog, leading to a rift between the two that spans the length of the movie.

Zuckerberg, shown to be a socially inept genius, never truly understands why his ex won’t simply accept his apology. Fed up she answers, “the internet’s not written in pencil, Mark. It’s written in ink.”

Yes, to the lament of politicians everywhere, the internet is written in ink. This fact has been especially vexing for Speaker of the House Nancy Pelosi who has a very difficult time stating the truth. Take for instance, an interview with Rolling Stone that Pelosi did after President Obama signed the stimulus law.

“We will be accountable. We will answer for this legislation one year from now…We won’t say, ‘Well, that’s just the economy’s fault. No, we will be accountable for the decisions that we make.”

Accountable? That is perhaps the last word that comes to mind after watching the Democrats final push towards Election Day.

Tbe strategy for many Democrats is nothing but a comprehensive cop-out. They’ve taken to saying that the economy and the nation in general was in a deeper hole than they could have ever predicted. They argue that if voters can’t appreciate the Democrats’ accomplishments, it’s just not their problem. In short, it’s the “many great geniuses were unappreciated in their lifetimes” approach.

This strategy was perfectly dissected by New York Times writer Robert Brooks in yesterday’s column in which he explained Democrats’ blame-game technique.

Always remember, many great geniuses were unappreciated in their lifetimes. Democrats are lagging this year because the country appears incapable of appreciating the grandeur of their accomplishments. That’s because, as several commentators have argued over the past few weeks, many Americans are nearsighted and ill-informed. Or, as President Obama himself noted last week, they get scared, and when Americans get scared they stop listening to facts and reason. They get all these crazy ideas in their heads, like not wanting to re-elect Blanche Lincoln.

Blaming the voters for being stupid, especially when they are the same people who carried you into office in 2006 and 2008, seems like an especially poor strategy. It is not voters who are nearsighted and ill-informed, it is Democrats who were willing to spend away our future in a vain attempt to save their political fortunes. Forgive us if we aren’t impressed. As to Obama’s point, we are scared, but it is because the “facts” remain so bleak despite your party’s best efforts.

It’s enough to make you wonder exactly what Speaker Pelosi was talking about after the State of the Union. She said that her party would answer for her legislation when elections rolled around. So consider my surprise when President Obama took to “The Daily Show” last night and said that,

“When we promised during the campaign ‘change you can believe in,’ it wasn’t change you can believe in — in 18 months. It was ‘change you can believe it’ – but you’re gonna have to work for it.”

Vice President Biden has been echoing the message, saying recently that “[t]here was a misreading about just how bad an economy we inherited.”

When you distill the rhetoric the Administration is simply saying that they are not yet willing to answer to voters for their legislation. Well sorry Mr. President, as Speaker Pelosi said, it’s time that Democrats be accountable for the decisions that they made. Those decisions imperiled the financial future of young adults, dug our nation into a fiscal hole that will require enormous changes to escape from, and has arguably made the very things you promised to improve – healthcare, the economy, and the financial sector – worse. Regardless of time, that is not change I want to believe in.

The internet is not written in pencil, it is written in ink. If Speaker Pelosi is going to demand that voters hold her party accountable, forgive me if I ignore Democrats more recent attempts to wriggle free of that pronouncement.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/10/28/democrats-lack-of-accountability-not-wooing-any-voters/

In every entry-level economics classroom you will almost always encounter the same scene. The front row will be dominated by opinionated and vocal liberals who feel it is their moral duty to set the class straight on the failings of American capitalism. The middle rows will be a nice blend of both conservative and liberal students who are trying their best to earn an A and perhaps learn a thing or two along the way. In the back there is the kid in the headphones with his legs stretched across another chair, obviously not caring one way or the other.

Those in the front rows, their hands perpetually raised, hoping for an opportunity to lash out at the oppressive capitalist system in which we live, have a laudable goal. Only those at the very top of the economic hierarchy are capable of overlooking the class divide in the United States. Nobody with a halfway functioning moral compass is happy that so many suffer through poverty while some enjoy the benefits of wealth.

Whether or not the middle class is shrinking, or wealth inequality is growing, is up for debate. Many liberals point to the fact that the income disparity in the United States is growing, with the top 10% of earners making 50% of the national income – up 15% in the last 30 years. Many conservative economists argue that when we adjust for things like regional costs of living differences “the rise in American inequality has been exaggerated both in magnitude and timing.” Moreover, if we use after-tax rather than pre-tax income Cato Institute economist Alan Reynolds finds that there has been no change in income inequality over the past several decades.

Regardless of the truthfulness of the claim, we can all agree that in theory any increase in the size of income inequality is a bad thing. The rich should not be getting richer if the poor are getting poorer.

The front-row liberals have a clear answer to solve this clear injustice – we have to drive down the incomes of the wealthy. We must level the playing field by redistributing the wealth and taxing the well-to-do also known as the lucky.

Sadly, our government is being run by people who sat in the front row and now have much more powerful tools at their disposal than simply an economics class rant. Take for instance, James Galbraith, a former director of the Joint Economic Committee. In regards to President Obama’s hope to increase taxes on higher income workers he said, “putting income in the hands of people who need it, and not in the hands of people who don’t, is the right economic policy.” Sounds eerily like Karl Marx idea: “from each according to his means, to each according to his needs.” Actually no, it sounds exactly like that.

Barack Obama feels similarly. He has remained consistent in his plan to eliminate the Bush-era tax cuts for the upper classes. As President Obama said on the campaign trail, “It’s not that I want to punish your success; I just… think when you spread the wealth around, it’s good for everybody.” He’s made similar comments about raising taxes on capital gains, arguing that it should be done, regardless if it lowers tax income “for purposes of fairness.”

The goal of such policies appears clear – we are going to create inequality by pushing the top down. That’s one way to do it I guess, but it seems to make more sense to do just the opposite. Couldn’t we also lower the income gap by promoting policies that pulling the top up?

The reason that this isn’t done is because it is more abstract. It is easy to visibly “punish” the top earners. Simply tax them. It is much more difficult, absent direct subsidy, to have such a direct or clear impact on “helping” the lower classes. Pulling up the lower classes requires things such as K-12 education reform, improving community colleges, and encouraging independence by trimming the social safety net. Such policies take time to see results and their effects are spread out. That doesn’t mean that this shouldn’t be the approach we take, it simply means that we must be more patient when searching for results.

Moreover, these ideas are being promoted by those who occupied the middle rows of your economics class – the ones who have studied the problem and have the right answer – but aren’t necessarily shouting their answers to the world. As they say, the squeaky wheel gets the grease. That adage is no more true than in Washington.

So in this election season, as Democrats spout concepts of fairness, ask yourself whether it is more fair to focus on bringing down the upper class, or focus on attempting to bring up the bottom classes. Hurting one group, especially the ones that happen to be the primary job creators, in return for questionable benefits on the middle and lower classes seems like a poor policy choice. Perhaps a smaller income gap would make them feel better, but that is much different than actually being better off. Instead, let’s pursue policies that are capable of building up one social class without attempting to tear down another. Only then will we truly be able to conquer any wage gap in society. Only then will those loudmouths in the front row sit down and shut up.

by Brandon Greife, Political Director

Here’s the narrative you hear everywhere: President Obama has presided over a huge expansion of government, but unemployment has remained high. And this proves that government spending can’t create jobs

This excerpt is out of Paul Krugman’s recently published New York Times article entitled, “Hey, Small Spender”. I’ve never agreed more with anything the controversial liberal economist has ever written. The federal government under president Obama has grown at historic levels, even as private sector employment continues to contract. Unemployment has indeed remained high. In fact, that is an understatement. Following September’s job report, the unemployment rate has now topped 9.5 percent for 14 straight months – the longest stretch since the 1930s. This is all despite nearly $1 trillion in taxpayer-funded stimulus, trillions more in buying up risky mortgages, and the Fed doing everything in its power to spur the economy. If that doesn’t prove government spending can’t create jobs then what does?

Unfortunately, Krugman didn’t stop there. You didn’t really expect him to take a conservative (or even rational) viewpoint did you?

He continued, by saying, “Here’s what you need to know: The whole story is a myth.”

Normally when you make that strong of statement, saying the entire theme of the upcoming is bunk, you at least have some evidence to back it up. So let’s see what kind of evidence Krugman’s got.

He begins his argument against the government expansion “myth” by asking a question. “What major new federal programs have started up since Mr. Obama took office?” asks Krugman. Well, first there is healthcare reform, the largest government program since Medicare. Implementing it will cause the IRS to hire as many as an additional 16,500 additional auditors to investigate and collect the new taxes. That is in addition to the thousands of new government workers who will go to staff the 159 new government agencies, bureaucracies, and boards mandated by the new health law.

Krugman dismisses all of this with one line. Healthcare reform hasn’t kicked in yet.

Having ignored that elephant in the room he asks another question, “are there giant infrastructure projects under way? No.”

Well, we’re not building any Bridges to Nowhere, but when viewed as an entire package, yes there are giant projects underway! The stimulus directed $300 billion towards states and cities for spending on infrastructure projects like roads and bridges. For more context consider that more than 100,000 projects to upgrade schools, airports, subways, schools, roads, railways, etc. are being funded by the stimulus. None of that includes nearly one-sixth of stimulus dollars that TIME Magazine describes as “an all-out effort to exploit the crisis to make green energy, green building and green transportation real.”

So yes, Mr. Krugman, there are giant infrastructure projects underway that are boosting the size and scope of the federal government.

Ignoring these facts, Krugman lobs up his final question, “are there huge new benefits for low-income workers or the poor? No.”

Once again, the facts are in conflict with his simple dismissal. Unemployment insurance benefits have been extended multiple times to accommodate for the enormous numbers of unemployed. Enrollment in Medicaid, the healthcare program for the poor, “showed the sharpest annual rise last year since the late 1960s.” Enrollment in the food stamp program has also skyrocketed – with 41.3 million people receiving the stamps, up 45 percent from 2008. As the Wall Street Journal summed up the situation,

As recently as the early 1980s, about 30% of Americans lived in households in which an individual was receiving Social Security, subsidized housing, jobless benefits or other government-provided benefits. By the third quarter of 2008, 44% were, according to the most recent Census Bureau data.

Krugman conveniently ignores all of these facts in making his assertions. He only addresses the enormous increases in government programs by saying Medicaid, Social Security, etc. don’t really count as big government. The reason, he says is that when people denounce big government they’re talking about “big bureaucracies and major new programs.” Somehow he doesn’t notice that these programs are big bureaucracies. When facts don’t match his argument, Krugman is content to change the facts.

His final argument, the supposed nail in the big government coffin, is that “the total number of government workers in America has been falling, not rising, under Mr. Obama.”

Perhaps he’d like to take this up with the Bureau of Labor Statistics who reported growth in all sectors of government in 2010.

But that is not my main quarrel with his argument. By talking about the total number of government workers and then saying “under Obama,” Krugman gives the impression that the President controls state and local government hiring. That is simply not the case. So when we focus on what the President does have control of, the size of the federal government, we find that the government has gained 198,100 jobs. Growth in government, regardless of whether it is big or small should be considered unacceptable against a backdrop in which the private sector has lost 7,837,000.

Despite the lack of facts, Krugman finishes his argument with the smug statement, “[s]o as I said, the big government expansion everyone talks about never happened.”

Well, as I said, Krugman should have stopped after his first paragraph. If he had, it may have been his most honest and informative column he’s ever written.

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/10/13/debunking-the-krugman-claim-that-government-expansion-is-a-myth/

Taxpayers of America rejoice! Tired of the nearly endless stream of reports showing the mind-nubbingly dumb ways in which their stimulus project was spending taxpayer money, the Obama administration decided to fight back. Their report, entitled, 100 Recovery Act Projects That Are Changing America, was intended as a direct response to several reports issues by Sens. John McCain and Tom Coburn highlighting the 100 Most Wasteful Stimulus Projects.

So does the Obama report allow taxpayers to rest easy knowing that their tax money was spent on worthwhile projects? No.

Just take a look at some of the projects that the report, supposedly the best-of-the best, highlights:

• A $299 million grant to build a battery manufacturing facility in Michigan for a company that was considering Asian locations. The project created or saved at least 100 jobs.
• $8.3 million in grants to Toledo to allow them to re-hire 31 police officers.
• $114 million for ECOtality, a manufacturer of electric vehicles, to help them produce 8,500 electric drive vehicles. The company reported the stimulus helped support 50 jobs.
• $3 million for the Malden Redevelopment Authority to help remove lead paint and other safety hazards. They company reports it was able to retain 5 employees that would otherwise be laid off.

There are two distinct problems with even these cream-of-the-crop proposals. First, none of these projects deliver a respectable cost-to-jobs ratio. Second, they artificially diverts capital away from other worthwhile projects.

The government is notoriously inefficient. Or to take Reagan’s preferred metaphor, “Government is like a baby: An alimentary canal with a big appetite at one end and no sense of responsibility at the other.” In this case the taxpayers were forced to feed the giant baby a whopping $862 billion to fund the economic stimulus plan. Coming out the other end it looks a lot like what you would expect.

Even after having passed the largest stimulus in our nation’s history the unemployment rate continues to tick upwards. Moreover, things are not on track to improve anytime soon. Recently economists predicted that over the next year the unemployment rate will rise above 10 percent before finally starting to fall. Why didn’t the stimulus stimulate? One big reason is that the money was not used efficiently. It went towards things like seeing how monkeys react under the influence of cocaine, improving the freezing process of rat sperm, and improving African genital hygiene.

You may argue that these projects are cherry-picked and not indicative of the whole. But even when you look at the administration picked as its best projects you see a whole lot of money spent and very few jobs created.  For instance, their #1 project used $100 million stimulus dollars and has created 230 jobs so far. That’s approximately $430,000 per job. The second and third projects don’t get much better – $153 million to save 150 research positions and $49 million to create 100 jobs. Each of these projects arguably does worthwhile things, providing housing for wounded soldiers or cancer research, but we weren’t sold on the plan because it was worthwhile. We were sold on the plan because it was supposed to create jobs. And judging by that metric, the only one that matters, the stimulus is a miserable failure.

Second, the stimulus projects are being championed by the administration using a myopic train of thought. Nobel Prize winning economist Henry Hazlitt wrote in his seminal book, Economics in One Lesson, that,

The bad economist sees only what immediately strikes the eye; the good economist also look beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks at the longer and indirect consequences. The bad economists sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.

Using this definition we can tell that the White House is chock full of bad economists. The short-term, long-term dichotomy has become thoroughly engrained in today’s politics. Democrats cried that we needed an enormous injection of funds to get the economy going, Republicans countered that the national debt that would be created would be a long term drag on the economy that it would actually hinder growth.

But the argument, or as Hazlitt would say “fallacy,” that I want to discuss is that Democrat’s are too focused on the good of one particular group without looking at the broader picture. We know that every dollar of government spending must eventually be pad for through future taxes. So when a government creates a stimulus project with the idea of increasing employment it is not a free bridge, future taxpayers must pay for it. But, you may say, it created jobs. Yes, it created jobs for the construction workers necessary to build the bridge. But it is also true that the cost of the bridge, say $5,000,000, is directly taken from money that would have been spread around to other jobs. That $5 million would have been spread around the economy purchasing things like televisions, computers, and cars, each of which take people to build. So the stimulus project didn’t so much create jobs as it did divert jobs.

The problem is that we can see the construction worker get hired. We can mark him on our tally of “jobs saved or created.” On the contrary the “other” jobs are spread throughout the economy and thus imminently less visible, and thus, less politically valuable. And political value is the name of the game in Washington where creating jobs is only a means to an end, namely, reelection.

President Obama is hyping the success of the stimulus in his new report 100 Stimulus Projects That are Changing America. But is this clear waste and redistribution really the kind of change they should be touting?

by Brandon Greife, Political Director

http://speakout.crnc.org/blog/2010/09/21/100-recovery-act-projects-that-are-changing-america-for-the-worse/

All politics is local. That is the phrase Democrats have been bandying about as their savior for the midterm elections. They know most of the country doesn’t like Nancy Pelosi, Congressional Democrats, or even Barack Obama, but if you can just keep the issues local then they have a chance to win some seats and retain the majority. The problem with this theory is that the crushing burden of debt extends well beyond the federal government; it reaches deep into the wallets of our cities and municipalities. Though we’ve made a point to talk about Greece and the Spain, about California and Illinois, and about all things Washington, but left out of the discussion so far have been places like Harriburg, Virginia or Los Angeles. But these places, though certainly less flashy to talk are also on the verge of bankruptcy.

The problem stems from the same spending addiction that plagues Washington. Cities and states are facing an enormous money crunch. With so many people out of a job, tax revenues have fallen through the floor. Adding insult to injury, cash-strapped people have been unable to afford their homes, forcing property values, along with property taxes to drop. Unfortunately, you would never be able to tell that municipalities faced a revenue problem if all you saw was the amount of money they have been spending. An report by the Bureau of Economic Analysis found that despite some deep program cuts, total spending by state and local governments actually increased by .1 percent in 2009.

It should come as no surprise then that as of the first quarter of 2010, state and local governments had $2.8 trillion in outstanding debt. Even worse, this astounding figure doesn’t include the number one problem facing states – their unfunded pension liabilities that may be as much as $2 trillion in and of itself.

A significant amount of the debt comes from long-term municipal bonds. These bonds are popular because of their perceived low risk, short-term yields, and tax-free returns. Unfortunately, the idea of a low risk investment is flying out the window.

Although only eight municipalities have declared bankruptcy in the last five years, the writing on the wall appears to signal a looming problem. Take the 1930s as an example. In those days total municipal debt was around $250 billion in today’s dollars, less than 10 percent of the debt currently held by our state and local governments. Then the Great Depression hit, drying up tax revenues and highlighting the reckless spending of previous generations. By the time the dust had settled, 4,500 municipalities had defaulted.

We now face a similar problem. Cities and states, like the federal government, haven’t been great stewards of our money. Many have used the funds to finance everything from low cost housing to stadium projects. They then borrowed even more money in an attempt to cover up the huge deficits such spending caused.

Harrisburg, PA is the first domino to fall. The city’s 2010 budget completely omitted debt payments, signaling that they may intentionally default on the debt obligations. The immediate cause will be a missed interest payment on an incinerator, but the long-term problem is structural deficits. Beyond the losses to the Harrisburg citizens who invested in their city, the major weight of the default will lie on third party investors. To politicians this seems like an almost too good to be true scenario. Few citizens will lose money, their debts get taken off the books, and they accomplished it all without having to raise taxes or reduce spending.

Of course, this too, has its problems. Cities rely on outside parties, including large corporations, to purchase their debt. Strategic defaults such as this one in Harrisburg may send a signal that municipalities are willing to default rather than do the politically risky thing of raising taxes. As Dave Anderson wrote,

Default is attractive when the options are firing half the police force, closing all the pools and not paving any streets for the next three years to pay off a large debt, or keeping most public services and public employment working while screwing those SOBs on Wall Street.

But as cities default their credit ratings will face downgrade. This in turn will make capital much more difficult to come by now, and especially in the future as banks return to being more liquid. Defaulting now may mean that cities will no longer be able to afford necessary infrastructure projects down the road.

A possibly larger problem is the worried investors holding billions of dollars in short term municipal debt who are now scared to death that their investment will be worth nothing. Companies, small businesses, retirees, and anyone else with an investment portfolio that includes these typically safe bonds may face enormous losses. Such a loss of wealth will only hinder recovery as job creators attempt to get their balance sheets back in alignment by cutting costs and consumers buying power is reduced.

All politics may be local, but as our municipalities’ balance sheets show, the spending problem exists far beyond Washington.

by Brandon Greife, Political Director (hat tip Reiley Hooper)

http://speakout.crnc.org/blog/2010/09/20/6819/

With elections just weeks away, the Administration is doing everything it can to finesse Obamacare into looking as good as possible. But, like the old saying goes, you can’t put lipstick on a pig.

Recent calculations as to the health plan’s cost have been less than rosy. Both the CBO and the Center for Medicaid and Medicare Services have shown that the Democrats’ healthcare bill will do little to keep federal costs down.

The latest report, compiled by the Government Accountability Office (GAO) shows that not only has the bill failed to live up to promises. The promises themselves are misleading. Even worse, the government is using taxpayer money to pay for their misleading information campaign.

In order to convince the American people what a great piece of legislation Obamacare really was, the Administration sent a mailer to seniors. Among the promises the mailer contained were:

• “The Affordable Care Act passed by Congress…will provide you and your family greater savings and increased quality of care.”
• “Your Medicare benefits won’t change”
• “Your choice of doctors will be preserved”

But after examining the pamphlet the GAO states that “the brochure overstates some of [the Democrats’ health overhaul’s] benefits.”

“In our view, the brochure presents a picture of [the healthcare bill] that is not universally shared. For example, two government analyses have determined that [the Democrats’ legislation] reductions in funding for Medicare Advantage may decrease enrollment and result in less generous benefit packages,” and “significant increases in premiums for some beneficiaries may be necessary.”

The fact that such misinformation was spread using taxpayer dollars is absurd in and of itself. What’s worse, while promoting their own views, Democrats are snuffing out any who disagree.

The latest assault comes from Health and Human Services Secretary Kathleen Sebelius who wrote to Karen Ignagni, president of America’s Health Insurance Plans, demanding insurers stop using “misinformation and scare tactics.”  There will be “zero tolerance for this type of misinformation” she continues.

Sebelius is responding to a number of health insurers who have asked for rate increases between 1 percent and 9 percent for 2011. What she fails to grasp is that the increase is required to pay for extra benefits required under the Democrats’ healthcare plan.

So why does she threaten the insurers attempt to break even? Because, as she says, “according to our analysis and those of some industry and academic experts, any potential premium impact…will be minimal.” The troubling word there is “some.” Some industry experts believe that the costs of compliance will be small. This implies that others believe there will be substantial compliance costs that would then be passed on to the consumer. After all it doesn’t take a genius to realize that increased benefits lead to additional costs which would drive up the cost of plans.

That word, “some,” has frightening implications. As Eugene Volokh, UCLA professor of law,wrote on his blog,

If the Administration is threatening to use its considerable regulatory power to retaliate against insurance companies that, in the Administration’s view, are conveying “misinformation” — for instance, because their financial analyses disagree with the Administration’s financial analyses — that strikes me as quite troubling. . .

[E]ven if such action would be constitutionally permissible, it would be quite troubling, as would threats that seem to hint as such action: It would involve the Administration’s deliberately trying to suppress criticism of its policies, under a “misinformation” standard that sounds highly subjective and politically contestable.

What it sounds like Sebelius is trying to say is that there will be “zero tolerance” for dissent. I understand why Democrats would be afraid of differing views. We were all led to believe that our premiums and the federal government’s total outlays would be lowered by the Democrats’ plan. Sadly, those realities are not going to come true. Rather than own up to the law’s failings, Democrats are stifling criticism and using taxpayer money to promote a rosier picture of the bill. That is something that I, and voters, should have zero tolerance for.

by Brandon Greife, Political Director