Robert Barro on Paul Krugman

Harvard Economist Robert Barro wrote a piece recently in the Wall Street Journal that was highly critical of Wonderboy's economists' estimation of the "keynesian multiplier" for the stimulus bill of greater than 1.

Barro is a heavyweight economist with significant experience in macroeconomics, growth and deficits. The following is from a recent Wall Street Journal piece, "Notable & Quotable," focusing on Barro's comments concerning his nemesis and uber-liberal Democratic economist, Paul Krugman.

"Atlantic: And I take it from the Wall Street Journal piece you wrote last week . . . well, the piece is just specifically about measuring multipliers, but I take it that you are fairly skeptical in general that fiscal policy will boost aggregate demand.

Barro: Right. There's a big difference between tax rate changes and things that look just like throwing money at people. Tax rate changes have actual incentive effects. And we have some experience with those actually working.

Atlantic: What would you say is the best empirical evidence there?

Barro: Well, you know, it worked to expand GDP for example in '63 and '64 with the Kennedy/Johnson cuts. And then Reagan twice in '81 and '83 and then in '86. And then the Bush 2003 tax-cutting program. Those all worked in the sense of promoting economic growth in a short time frame.

I'm the middle of a study where I am trying to estimate this overall, going back to 1913 -- sort of constructing some measure of the overall effect of the tax rate at the margin, at the moment. I'm just looking at that now, actually . . .

Atlantic: You're talking about the multiplier on a dollar of . . .

Barro: Well both things, but here I'm talking about the tax rate stuff. Get some measure of the effect of marginal tax rate that comes from the government -- federal, state, local. And then you can see what it looks like going down or going up and how the economy responds. And then, in addition to that, the government might be spending more or less money on either military stuff or not on military stuff. And we can estimate that at the same time. With the government spending stuff, the clearest evidence is in wartime. It's not that it's the most pertinent, but it's the clearest in terms of evidence because it's the dominating evidence at those times, especially during the world wars.

Atlantic: Do you read Paul Krugman's blog?

Barro: Just when he writes nasty individual comments that people forward.

Atlantic: Oh, well he wrote a series of posts saying he thought the World War II spending evidence was not good, for a variety of reasons, but I guess . . .

Barro: He said elsewhere that it was good and that it was what got us out of the depression. He just says whatever is convenient for his political argument. He doesn't behave like an economist. And the guy has never done any work in Keynesian macroeconomics, which I actually did. He has never even done any work on that. His work is in trade stuff. He did excellent work, but it has nothing to do with what he's writing about."

Priceless. Barro executes a very succinct, relevant put down of Krugman's attempt at infallibility, just because he was awarded a Nobel for his trade-related economic work. It's important to understand this, because Krugman has a vicious hatred of George Bush, and is often cited by liberals wishing for a rubber stamp on whatever recent economic fallacy they are currently pushing.

Rick Santelli's "Chicago Tea Party"

If you didn't see this yesterday morning, live, on CNBC, here's Rick Santelli's take on Wonderboy's economic rescue packages....

Notice the CNBC anchor, Carl whats-his-name, threatening Santelli with the Chicago police. He's not smiling, either. Carl is pissed! Carl is also an ultra-liberal.

Comrade Bill (Bradley) Recommends Socialism To Cure Our Ills

Bill Bradley used to be a Democratic Senator from New Jersey. Way, way back when, during the Reagan era, he co-authored a bill to cut tax rates.

I now believe that may have been the single non-liberal act of his entire Senate career. Witness his "Five Ways to Restore Financial Trust" editorial in yesterday's Wall Street Journal.

Of the five ideas "Dollar Bill" expressed, three are socialist and one is just plain stupid.

Bradley recommends that the federal government insure delinquent mortgage loans for 60% of face value, thus providing a floor from which, Bill believes, all financial and economic activity may rebound.

Too bad about the US taxpayer subsidizing all those bad mortgages. But, for Comrade Bill, it's just another day in the Gulag.

Then Bill wants the federal government to make all adjustable rate mortgages become fixed rate, with...guess who?....paying the difference. Yep. Added to the cramdown costs of cutting mortgage principal and interest, taxpayers will also pay to make all home loans into fixed rate instruments.

Then Bradley advocates the US government buying half of any IPO. Not content with totally mucking up the housing market, Bill wants Uncle Sam to become an equal partner in the one thing our economy has managed to do well without government intervention- innovate.

If you think commercial banks rue taking TARP funds, wait until entrepreneurs are forced to give half of their new company to the government.

Can we spell t-a-k-i-n-g?

Along the way, Bradley concludes that, despite the TARP, the stimulus bill, his own mortgage-related giveaways, and IPO purchases, government needs to slim down.

So in addition to unspecified budget cuts- you know, the kind Wonderboy promised he'd deliver after spending nights with a fine-tooth comb going over the Federal budget- Bradley recommends raising taxes "in the next two to three years."

That's great, Bill. What isn't ruined already with your dumb economic ideas will surely collapse under the weight of new taxes. Then the Feds can move in and take over those businesses, too.

Comrade Bill sounds ready to go to work in the First Rookie's coming nationalized economy.

What I can't figure out is why the Journal published Bradley's ravings. Maybe they want to let him trash his reputation for common sense once and for all?

Congress Junkets While Restricting The Rest Of Us

Amidst all of the stimulus hoopla lately, the ongoing practice of Congressional junketeering has continued unchanged.

A recent Wall Street Journal piece noted that both parties' Congressional delegations went on their retreats to lush resorts, after publicly railing against, pillorying and punishing executives of companies such as AIG and/or Wells Fargo for the same actions.

Yes, the age-old practice of Congressional retreats, junkets overseas, etc., continues as in the past, despite any and all alleged lobbying reforms.

The latest ploy is one of the most cynical. Here's how it works.

Thanks to bribery and lobbying payoff scandals over the years, especially the fairly recent Jack Abramoff affair, lobbyists and interested corporations and other groups can't give expensive gifts or money directly to, say, Frisco Nan. But what they can, and now do, is this.

A group of interested organizations and/or individuals form an institute or other non-profit entity. They solicit donations from the founders, and other like-minded parties.

The institute then funds things like junkets, or sending Congressional aides to the party retreat at posh resorts like the Homestead or Greenbriar. They also name various Congressional members to honorary board posts at the institute, and hold dinners, by the institute, at the retreat. All of the institute's board members, of course, attend.

In spy novels, this is known as using a 'cutout.' The institute is the legal middleman that can give money to Congressional members and/or fund their trips and extravagant vacations. The actual interested entities merely fund the institute.

Congress, of course, chooses to call this legal, and not recognize the lavish gift-giving and bribing of your local Representative, or your state's Senator.

That's the low regard in which our Congressional delegations hold us voters. They cynically allow these thinly-veiled occasions to receive gifts, trips, etc., and pretend they are not lobbying.

This is why I would not have a problem with, in any given election cycle, every voter casting his/her vote for the non-incumbent candidate for the House and Senate. Having 435 new Representatives and 33 new Senators can't be a bad thing, can it?

Imagine the fresh perspectives on our country's troubles if Congress didn't consist of 535 stiffs owing each other favors, and constantly passing laws to help maintain all of their legislative careers, draw lavish Congressional pensions, and generally inflate their own importances?

Change Was Coming Anyway

One thing I found amazing about the recent Presidential election was the three candidates who seemed to be running.

I say three, because the Democratic candidate apparently convinced many Americans that George Bush was somehow running for a third term.

How else to explain the constant, mind-numbing call for "change?"

Boys and girls, we were getting a change anyway. Capice?

McCain, Obama. It almost didn't matter, in the sense that nobody running was as much a conservative as was our 44th President.

Even when he trained his sites on McCain, Obama constantly identified him as simply another term of George Bush's administration.

Yet conservatives know this would never have been true. Personally, I have never trusted McCain since his horrible co-sponsorship of the hated, laughably-ineffectual and ham-handed McCain-Fiengold campaign finance legislation over ten years ago.

I can vividly recall telling a colleague where I worked in 1998 that nobody dumb enough to co-author that bill had any business ever running for the Oval Office.

McCain was never my first choice among GOP candidates. Though unelectable to the Republican ticket, I preferred Romney or Giuliani. Either could likely have run a better campaign than McCain, scored decisive points in debates, and certainly lost by less, if not won the election.

But we were always due for substantive change after George Bush. McCain's lack of guiding principles, other than capping his public service career, would have resulted in more of the worst of George Bush's moderate moments as Presidents. The only saving grace would have been McCain's veto pen over Frisco Nan's and Harry Reid's worst social spending and entitlement atrocities. And the right to nominate a few Supreme Court judges.

I guess it's a testament to the gullibility of the average American voter that so many fell for a non-issue- change.

Change happens at least every four years, and no less than every eight.

In that, you can believe.

A Very Few Rare Words of Lucidity from Peggy Noonan

Despite my reservations about Peggy Noonan's lucidity in the past six months or so, she managed to write a few sentences of clarity this month.

Last weekend, she penned a mostly mawkish personal survey of economic malaise on the upper East side of New York City.

Buried near the end of her mostly-boring piece, however, were a few paragraphs starkly contrasting Chesley Sullenberger and Nadya Suleman, a/k/a "octomom."

Noonan slyly offered as a test of real national depression that people think America is becoming more represented by the Sulemans than the Sullenbergers. It's a clever backdoor approach to noting the current state of behaviors of some lower-income Americans, after decades of a calculated assault on prior American values by liberal Democrats.

The other noteworthy few sentences from Noonan occurred a weekend or two before this past one.

In a single column, she blasted the stimulus bill, Wonderboy and Frisco Nan. It was pretty good stuff, if very rare and, one suspects, almost accidental.

Noonan rightly painted Nan as just a hacked up pol from San Francisco who doesn't really understand the solemnity and importance of being Speaker of the House of Representatives.

She similarly chided Wonderboy for backing the very sloppy, pork-ridden bill Frisco Nan authored. Noonan believes Americans have had it with excess of all sorts, and that the current Democratic leaders in Congress and the White House are busy indulging themselves, at great risk to their political futures.

On this point too, I am agreement with Noonan.

Raise Your Hand If.....

Did you happen to see the Congressional committee which put on the show trial of banking CEOs last week in Washington? Because Barney Frank was in attendance and seemed to chair the follies, I'll assume it was a House committee.

It was pretty sad to see that the members couldn't even be bothered to read about the eight banks, the CEOs of which were in attendance. How hard could that be?

It sure made the Congressmen look silly when one finished chewing out one of the CEOs for credit card lending, only to learn it was not a consumer-oriented bank. Then began the hand raising.

No, seriously, if you didn't see it.

House members began to demand that the CEOs raise their hands if.....

"If" involved topics like what businesses their banks were in, did they do certain lending, etc.

Just sad, really.

CNBC's Joe Kernen hit the mark when he noted that some of these members might have been in a totally different line of work last year, and, now, having been elected to the House, wielded their newfound power foolishly and abusively.

Nevermind the truth that most of the banks had actually used TARP funds to lend, when customers applied for loans.

The members' desire to roast the CEOs didn't let details like that spoil their fun.

More change you can't be proud of. Nor really want.

House members so stupid and uninformed that they can't be bothered to know the businesses of the CEOs they require to attend, and then largely use the forum for their own grandstanding.

Joe Kennedy's Treasonous Behavior

Have you seen those stupid "Joe 4 Oil" commercials?

You know, the ones where Joe Kennedy's grandson, modern-day uber-liberal Joe, gives away Venezuelan oil to poor Americans?

Joe makes it clear that he thinks Venezuelan strongman and dictator Hugo Chavez cares more about Americans who can't afford heating oil than we do.

I guess treason is genetic. Joe's grandfather, while US ambassador to the Court of St. James, constantly agitated for Hitler and predicted the fall of Great Britain in the days after France's capitulation.

Now we have his grandson stumping for the younger version of South America's Castro.

It's enough to make you sick.