You have to laugh.
After spending the year impeding any sort of adult activity in Congress to cut spending, Wonderboy was rejoicing over the failure of the so-called SuperCommittee to deliver $1.5T+ spending cut deal.
The other day, he solemnly intoned, like some harsh school teacher, that he would veto any attempt by Congress to set aside the sequesters on spending in the wake of the failure of the special 12-member panel.
'There will be no off ramp' the First Rookie exclaimed.
Really? Sounds kind of like a dictator, doesn't he?
In reality, all Congress needs to do is decide, by veto-proof majorities, to simply repeal those provisions of the debt limit increase bill which created the SuperCommittee.
And, by the way, even if Congress doesn't, it's unclear that Wonderboy will even have the job would allow him to block any changes. It's quite likely that by January of 2013, the year in which the sequesters occur, Republicans will hold the House, the Oval Office, and perhaps the Senate. Or have enough clout to co-opt sufficient Democratic Senators to simply tear up the debt-ceiling increase bill and start over with a much tougher-minded GOP President at the helm.
Wonderboy's blowing smoke up everyone's ass on this one. He doesn't have a leg to stand on, and he knows it. He's just trying to energize every liberal, youth and minority he thinks will vote for him next year.
Showing posts with label Spending. Show all posts
Showing posts with label Spending. Show all posts
Wednesday, November 23, 2011
Friday, August 12, 2011
More Spending Ideas From Two Liberal Women Senators
Liberal Democratic Senators Mary Landrieu (LA) and Patty Murray (WA) wrote an editorial in Wednesday's edition of the Wall Street Journal entitled How to Close the Skills Gap.
It's a study in how liberals see a failure of an existing system as a reason for government to spend billions more elsewhere.
The hapless duo begin with,
"According to the Bureau of Labor Statistics, the U.S. currently has approximately three million job openings, all waiting to be filled. With so many Americans out of work, what is the delay? Workers want to work, and so many businesses want to hire—but there is a widening "skills gap" that prevents many Americans from filling the jobs of the 21st century economy. If we want to get our economy back on track and get workers back on the job, we will have to address this issue in a better way.
Consider this: According to a report by the National Commission on Adult Literacy, 90 million adults have literacy skills so low that success in postsecondary education and training is becoming more and more challenging. Anthony Carnevale of Georgetown University, using Bureau of Labor Statistics (BLS) data, reports that of the nearly 50 million new jobs the BLS projects to be created by 2018, 30 million will require recognized postsecondary credentials. However, there will be three million too few workers with these credentials. Meanwhile, high-school graduation rates are falling—1.2 million students in America drop out of school every year, and young adults are now less educated than their parents' generation was.
A recent report on this issue from the perspective of CEOs and college presidents found that more than half of the companies surveyed reported a challenge in finding candidates with the right skills. Of the smaller businesses, 67% said finding skilled workers was difficult. A Wells Fargo/Gallup Small Business Index Survey reveals that while half of small-business owners hired new workers in 2010, 42% of these hired "fewer" [employees] than needed." Sixty-two percent of that group said this was because it was "hard to find qualified employees for [the] positions available." "
Now, to most sensible observers and readers, this information would lead one to conclude that Landrieu and Murray are going to, or should be, advocating fixing US education. You know, some NEA or AFT union-busting, endorsing the privatization of primary and high school education. The sort of thing that would focus teachers and schools on students' education, instead of teachers' administrators' and union officials' compensation and careers. Because the obvious problem isn't a lack of skills among US residents, so much as, according to the above information, a failure of the existing education system to provide said skills.
They continue,
"Adding to the urgency of the situation is the reality that the U.S. competes in a global economy, and businesses today take stock of assets around the globe when they make investment decisions. The sad fact is that we spend considerably less than other developed countries on labor-market policies, including work-force training and job-search programs. At the individual level, the U.S. invested only $908 per labor-market participant—$84 dollars, or 9.2%, less than the average amount spent by other member countries of the Organization for Economic Cooperation and Development (OECD).
We believe that the skills gap is a consequence of our failure to seriously invest in the education of America's work force. Without an educated pool of workers from which to hire, small businesses are bearing the financial burden of teaching these skills."
Wow. Color me hopeful here. Could these two liberal Democratic stalwarts actually be about to take on entrenched unionized educators and their union bosses? Let's see.....they proceed to write,
"John Russo, the president of Scientific Analytical Solutions in North Kingston, R.I., recently talked to the AP about the problem his small business faces: "It's very difficult to find the right person, and there's all walks of life trying to find jobs. I honestly think there's a large swath of unemployable. They don't have any skills at all."
The Small Business Administration (SBA) hears the same sentiments from those on the front lines in its field offices across the country. At a recent roundtable organized by the Senate Small Business Entrepreneurship Committee, SBA district directors repeatedly cited the alarming, widening skills gap in the nation as preventing small businesses from expanding.
As we work to create jobs and get our economy back on track, closing this skills gap needs to be a top priority. A critical first step: reauthorizing and reforming the Workforce Investment Act, our nation's foundational federal work-force development policy. We also need to expand innovative approaches that have produced results, such as career pathways programs that provide labor-market information to students and job seekers about in-demand jobs, and the skills and education necessary to get them.
Other important elements of tackling this problem include integrating education and work-based learning, and supporting strategies that allow learners to work while receiving training (also known as "earn and learn" strategies). We should also support public–private partnerships that draw on the expertise of successful members of the business community to help provide assistance and job-preparation advice to our work force.
Building a bigger and more highly skilled work force will help our small businesses step up to global competition. There's no excuse to delay getting to work on the problem any longer."
Sadly, no, they don't. In fact, they veer sharply away from discussing current schooling, opting, instead, to advocate creating more post-education federal programs on which to spend billions more. With no basis, in effect employing a non sequitor. A (public education) is flawed, so let's create B (more federal training programs for adults), rather than bother discussing A, because A is a liberal pet campaign funding honeypot.
Here's a newsflash- people like me were actually able to find white-collar employment and advancement solely on the basis of our primary, secondary, college and, in some cases, graduate educations. For which either public taxes, our parents, or we paid.
Why do we need successive layers of new training and education programs to try to correct the flaws of the existing systems?
Let's just rip the current, failed US public schooling systems apart and let towns and districts contract with private firms to provide teachers and administrators to work at public-owned facilities.
However, let's avoid Landrieu's and Murray's baseless suggestions to create yet another adult training program in order to avoid addressing yet another liberal failure- US public schooling.
It's a study in how liberals see a failure of an existing system as a reason for government to spend billions more elsewhere.
The hapless duo begin with,
"According to the Bureau of Labor Statistics, the U.S. currently has approximately three million job openings, all waiting to be filled. With so many Americans out of work, what is the delay? Workers want to work, and so many businesses want to hire—but there is a widening "skills gap" that prevents many Americans from filling the jobs of the 21st century economy. If we want to get our economy back on track and get workers back on the job, we will have to address this issue in a better way.
Consider this: According to a report by the National Commission on Adult Literacy, 90 million adults have literacy skills so low that success in postsecondary education and training is becoming more and more challenging. Anthony Carnevale of Georgetown University, using Bureau of Labor Statistics (BLS) data, reports that of the nearly 50 million new jobs the BLS projects to be created by 2018, 30 million will require recognized postsecondary credentials. However, there will be three million too few workers with these credentials. Meanwhile, high-school graduation rates are falling—1.2 million students in America drop out of school every year, and young adults are now less educated than their parents' generation was.
A recent report on this issue from the perspective of CEOs and college presidents found that more than half of the companies surveyed reported a challenge in finding candidates with the right skills. Of the smaller businesses, 67% said finding skilled workers was difficult. A Wells Fargo/Gallup Small Business Index Survey reveals that while half of small-business owners hired new workers in 2010, 42% of these hired "fewer" [employees] than needed." Sixty-two percent of that group said this was because it was "hard to find qualified employees for [the] positions available." "
Now, to most sensible observers and readers, this information would lead one to conclude that Landrieu and Murray are going to, or should be, advocating fixing US education. You know, some NEA or AFT union-busting, endorsing the privatization of primary and high school education. The sort of thing that would focus teachers and schools on students' education, instead of teachers' administrators' and union officials' compensation and careers. Because the obvious problem isn't a lack of skills among US residents, so much as, according to the above information, a failure of the existing education system to provide said skills.
They continue,
"Adding to the urgency of the situation is the reality that the U.S. competes in a global economy, and businesses today take stock of assets around the globe when they make investment decisions. The sad fact is that we spend considerably less than other developed countries on labor-market policies, including work-force training and job-search programs. At the individual level, the U.S. invested only $908 per labor-market participant—$84 dollars, or 9.2%, less than the average amount spent by other member countries of the Organization for Economic Cooperation and Development (OECD).
We believe that the skills gap is a consequence of our failure to seriously invest in the education of America's work force. Without an educated pool of workers from which to hire, small businesses are bearing the financial burden of teaching these skills."
Wow. Color me hopeful here. Could these two liberal Democratic stalwarts actually be about to take on entrenched unionized educators and their union bosses? Let's see.....they proceed to write,
"John Russo, the president of Scientific Analytical Solutions in North Kingston, R.I., recently talked to the AP about the problem his small business faces: "It's very difficult to find the right person, and there's all walks of life trying to find jobs. I honestly think there's a large swath of unemployable. They don't have any skills at all."
The Small Business Administration (SBA) hears the same sentiments from those on the front lines in its field offices across the country. At a recent roundtable organized by the Senate Small Business Entrepreneurship Committee, SBA district directors repeatedly cited the alarming, widening skills gap in the nation as preventing small businesses from expanding.
As we work to create jobs and get our economy back on track, closing this skills gap needs to be a top priority. A critical first step: reauthorizing and reforming the Workforce Investment Act, our nation's foundational federal work-force development policy. We also need to expand innovative approaches that have produced results, such as career pathways programs that provide labor-market information to students and job seekers about in-demand jobs, and the skills and education necessary to get them.
Other important elements of tackling this problem include integrating education and work-based learning, and supporting strategies that allow learners to work while receiving training (also known as "earn and learn" strategies). We should also support public–private partnerships that draw on the expertise of successful members of the business community to help provide assistance and job-preparation advice to our work force.
Building a bigger and more highly skilled work force will help our small businesses step up to global competition. There's no excuse to delay getting to work on the problem any longer."
Sadly, no, they don't. In fact, they veer sharply away from discussing current schooling, opting, instead, to advocate creating more post-education federal programs on which to spend billions more. With no basis, in effect employing a non sequitor. A (public education) is flawed, so let's create B (more federal training programs for adults), rather than bother discussing A, because A is a liberal pet campaign funding honeypot.
Here's a newsflash- people like me were actually able to find white-collar employment and advancement solely on the basis of our primary, secondary, college and, in some cases, graduate educations. For which either public taxes, our parents, or we paid.
Why do we need successive layers of new training and education programs to try to correct the flaws of the existing systems?
Let's just rip the current, failed US public schooling systems apart and let towns and districts contract with private firms to provide teachers and administrators to work at public-owned facilities.
However, let's avoid Landrieu's and Murray's baseless suggestions to create yet another adult training program in order to avoid addressing yet another liberal failure- US public schooling.
Wednesday, August 10, 2011
Like a Broken Record.....
Let's see...S&P downgraded US debt to AA+ last Friday. The most recent GDP numbers were dismal. Unemployment remains stubbornly high while net new jobs are pathetically low. Europe's own debt crisis is now so bad that the ECB is pledging to buy Italy's and Spain's sovereign debt, if necessary.
In the midst of this global economic and financial sluggishness, what do Wonderboy and his minions do?
Why, call for more spending, of course!
One of the Democrat's more liberal Representatives was on a cable news network calling for more stimulus spending. Wonderboy himself spent a good part of his Monday afternoon speech regarding the downgrade pleading for higher spending and taxes.
These people must be living on a different planet. The entire developed economic world is grappling with excessive public debt, pension and healthcare spending while their GDP growth rates have slowed.
There's insufficient private wealth being generated by business activity to pay for more government spending.
That's part of what S&P's downgrade was about- future fiscal budgets which strained credulity.
Apparently liberal Democrats really can only sing one tune- tax and spend. No matter what the context.
In the midst of this global economic and financial sluggishness, what do Wonderboy and his minions do?
Why, call for more spending, of course!
One of the Democrat's more liberal Representatives was on a cable news network calling for more stimulus spending. Wonderboy himself spent a good part of his Monday afternoon speech regarding the downgrade pleading for higher spending and taxes.
These people must be living on a different planet. The entire developed economic world is grappling with excessive public debt, pension and healthcare spending while their GDP growth rates have slowed.
There's insufficient private wealth being generated by business activity to pay for more government spending.
That's part of what S&P's downgrade was about- future fiscal budgets which strained credulity.
Apparently liberal Democrats really can only sing one tune- tax and spend. No matter what the context.
Monday, August 8, 2011
The S&P Credit Downgrade As A Check On Wonderboy's Spending Spree
As I wrote here on my companion business blog late last month, a lot of the flap about Friday's after-hours credit downgrade of the US government by S&P from AAA to AA+ is actually a non-event.
Media coverage would have you believe otherwise. But let's consider several aspects of the downgrade.
Wonderboy's people are calling it a politically-motivated mistake by S&P. They mention and arithmetic error in a pre-release draft in the amount of several trillion dollars. That's nonsense. The US has been increasing its deficits for decades, but never so quickly as in the past 2 1/2 years.
As Kaminsky, and others, have attested, the true risk of US debt has already been 'baked into' rates. In that sense, this is a non-event.
Of course, the Democratic retort is to blame the messenger. Ceaselessly citing the bogus ratings by S&P, and other agencies, of mortgage-backed bonds, Barney Frank, Wonderboy, Treasury and every other Democrat in Washington with an ego has now decided that ratings agencies are not to be trusted in the first place.
Actually, as Doug Dachille has pointed out in the past on CNBC, at least for municipal, state and many other ratings, that's true. It's just that now is an awfully suspect time for the federal government to declare it.
However, in terms of the black eye suffered by Wonderboy's administration by allowing itself to be put in the position of being unable to fulfill S&P's quite public $4T spending cut requirements, it's a real event. It provides the ammunition that the GOP needs to fend off further spending. The continuing sluggish US economy provides the bookend of not justifying large-scale, significant tax increases.
So, as I wrote in that linked post,
"Well, American voters need only look in the mirror for whom to blame. They consciously elected and re-elected generally inept spendthrifts since 1932, then wonder why the country has amassed so much net external debt.
It's time for Americans to wake up to the consequences of their poor political choices for the last eight decades.
And when the rating downgrade happens, the resulting increased funding costs will help put a stop to excessive spending and bad tax policies, only from outside, uncontrollable forces, rather than internal, political ones."
For all we know, on a relative basis, global demand may now be lower, at every rate, for US Treasuries. The new constraint on boundless US debt growth is, if it exists, now uncontrollable and external.
To me, that's a good thing. Eight decades of inept fiscal policy in Washington has led us to this point. I'm quite content with markets spanking the federal government and putting limits on what the federal officials whom US voters have mistakenly allowed to spend us into the poorhouse can now spend and borrow.
Media coverage would have you believe otherwise. But let's consider several aspects of the downgrade.
Wonderboy's people are calling it a politically-motivated mistake by S&P. They mention and arithmetic error in a pre-release draft in the amount of several trillion dollars. That's nonsense. The US has been increasing its deficits for decades, but never so quickly as in the past 2 1/2 years.
As Kaminsky, and others, have attested, the true risk of US debt has already been 'baked into' rates. In that sense, this is a non-event.
Of course, the Democratic retort is to blame the messenger. Ceaselessly citing the bogus ratings by S&P, and other agencies, of mortgage-backed bonds, Barney Frank, Wonderboy, Treasury and every other Democrat in Washington with an ego has now decided that ratings agencies are not to be trusted in the first place.
Actually, as Doug Dachille has pointed out in the past on CNBC, at least for municipal, state and many other ratings, that's true. It's just that now is an awfully suspect time for the federal government to declare it.
However, in terms of the black eye suffered by Wonderboy's administration by allowing itself to be put in the position of being unable to fulfill S&P's quite public $4T spending cut requirements, it's a real event. It provides the ammunition that the GOP needs to fend off further spending. The continuing sluggish US economy provides the bookend of not justifying large-scale, significant tax increases.
So, as I wrote in that linked post,
"Well, American voters need only look in the mirror for whom to blame. They consciously elected and re-elected generally inept spendthrifts since 1932, then wonder why the country has amassed so much net external debt.
It's time for Americans to wake up to the consequences of their poor political choices for the last eight decades.
And when the rating downgrade happens, the resulting increased funding costs will help put a stop to excessive spending and bad tax policies, only from outside, uncontrollable forces, rather than internal, political ones."
For all we know, on a relative basis, global demand may now be lower, at every rate, for US Treasuries. The new constraint on boundless US debt growth is, if it exists, now uncontrollable and external.
To me, that's a good thing. Eight decades of inept fiscal policy in Washington has led us to this point. I'm quite content with markets spanking the federal government and putting limits on what the federal officials whom US voters have mistakenly allowed to spend us into the poorhouse can now spend and borrow.
Tuesday, August 2, 2011
When Compromise Becomes A Virtue
Isn't it funny that when Democrats can't get what they want by ramming bills through Congress with majorities in both houses, they suddenly discover compromise?
Remember how, in early 2010, after Scott Brown of Massachusetts became the 41st Republican Senator in a special election, the Democrats, far from working to compromise on ObamaCare, contorted the process of passing the bill in order to avoid any compromise with Republicans, instead, ramming the bill through as a spending bill, rather than a policy-focused health care bill?
Now, during the current debt limit increase process, because Harry Reid and Wonderboy can't get what they want, they brand the newly-elected Republican Representatives and Senators who bring with them a new voter preference for fiscal rectitude and lower spending as terrorists, while they now preach compromise.
They trot out that old Washington refrain,
'The voters want us to work together to get something done. They don't understand all this partisan extremism and bickering.'
Actually, they do. And we know for a fact that voters in at least 87 House districts, the ones which elected freshmen GOP members, and a handful of states which elected Senators like Marco Rubio, Rand Paul, and other Tea Party-inclined GOP freshmen Senators, don't care about bi-partisanship which allows the free-spending liberal Democrats to continue their usual Washington ways.
What I believe we are seeing is not a new emphasis on bi-partisanship, but a fleeting moment of collaboration to do the minimum necessary to operate the federal government, until the 2012 elections sweep Democrats from their control of the Senate and, probably, the Oval Office.
Then compromise won't be required anymore- again. Only then, the GOP will be able to cut spending, borrowing, entitlements, and enact meaningful tax reform with fewer preference items and lower rates.
All without compromise.
That's when you won't hear the word compromise from House and Senate minority leaders anymore.
But I agree with Charles Krauthammer, who contended recently on Fox News that Americans need a serious, knock-down, drag-out debate about the nation's direction at least once every generation.
That's what is occurring now. The recent debt limit debates and so-called (faux) crisis is merely the opening shot in that battle.
If you can objectively observe the trends of the past four years, it's pretty clear that the election of an inexperienced, spendthrift Senator from Illinois to the presidency, along with majorities in both houses of Congress, was the breaking point.
Now momentum has moved back the other way.
As I write this at 4PM on Monday afternoon, Boehner and his leadership team has just finished their press conference. They didn't get all they wanted. The debt limit bill isn't a conservative's dream. But it at least has, as Paul Ryan asserted, changed the direction in spending at the federal level for the first time in decades.
The real heavy lifting will occur after 2012. Until then, it'll be a holding action as the GOP prevents wild spending in reaction to recent weak economic data. But the stage appears to be set now for a longer term move toward conservative values on federal spending, debt and taxes.
Remember how, in early 2010, after Scott Brown of Massachusetts became the 41st Republican Senator in a special election, the Democrats, far from working to compromise on ObamaCare, contorted the process of passing the bill in order to avoid any compromise with Republicans, instead, ramming the bill through as a spending bill, rather than a policy-focused health care bill?
Now, during the current debt limit increase process, because Harry Reid and Wonderboy can't get what they want, they brand the newly-elected Republican Representatives and Senators who bring with them a new voter preference for fiscal rectitude and lower spending as terrorists, while they now preach compromise.
They trot out that old Washington refrain,
'The voters want us to work together to get something done. They don't understand all this partisan extremism and bickering.'
Actually, they do. And we know for a fact that voters in at least 87 House districts, the ones which elected freshmen GOP members, and a handful of states which elected Senators like Marco Rubio, Rand Paul, and other Tea Party-inclined GOP freshmen Senators, don't care about bi-partisanship which allows the free-spending liberal Democrats to continue their usual Washington ways.
What I believe we are seeing is not a new emphasis on bi-partisanship, but a fleeting moment of collaboration to do the minimum necessary to operate the federal government, until the 2012 elections sweep Democrats from their control of the Senate and, probably, the Oval Office.
Then compromise won't be required anymore- again. Only then, the GOP will be able to cut spending, borrowing, entitlements, and enact meaningful tax reform with fewer preference items and lower rates.
All without compromise.
That's when you won't hear the word compromise from House and Senate minority leaders anymore.
But I agree with Charles Krauthammer, who contended recently on Fox News that Americans need a serious, knock-down, drag-out debate about the nation's direction at least once every generation.
That's what is occurring now. The recent debt limit debates and so-called (faux) crisis is merely the opening shot in that battle.
If you can objectively observe the trends of the past four years, it's pretty clear that the election of an inexperienced, spendthrift Senator from Illinois to the presidency, along with majorities in both houses of Congress, was the breaking point.
Now momentum has moved back the other way.
As I write this at 4PM on Monday afternoon, Boehner and his leadership team has just finished their press conference. They didn't get all they wanted. The debt limit bill isn't a conservative's dream. But it at least has, as Paul Ryan asserted, changed the direction in spending at the federal level for the first time in decades.
The real heavy lifting will occur after 2012. Until then, it'll be a holding action as the GOP prevents wild spending in reaction to recent weak economic data. But the stage appears to be set now for a longer term move toward conservative values on federal spending, debt and taxes.
Monday, August 1, 2011
A Rant Without Evidence- Socialist Senator Bernie Sander's WSJ Editorial
Bernie Sanders, the independent- read 'socialist'- Senator from Vermont, is a member of the Senate Budget Committee and author of a detail-less rant in Friday's Wall Street Journal.
"The rich are getting richer. Their effective tax rate, in recent years, has been reduced to the lowest in modern history. Nurses, teachers and firemen actually pay a higher tax rate than some billionaires. It's no wonder the American people are angry."
Where's Bernie's evidence? Actually Stephen Moore recently wrote a Journal editorial last Thursday in which he debunked the myth of "the rich" paying lower tax rates than lower income filers. Moore wrote,
"During Monday night's national address, President Obama recited the Buffet line that millionaires and billionaires pay lower tax rates than their secretaries. Democrats in Congress routinely cite Mr. Buffett's tax confessions as irrefutable evidence that tax rates on the very rich are too low and the system is unfair. And the system would be unfair, if Mr. Buffett's tax facts were the whole truth. But they aren't.
I don't know the details of Warren Buffet's personal taxes, and he hasn't made them public. But the IRS does provide reliable data on effective tax rates—the overall share of their income that various groups pay in federal income taxes (not including state or local taxes) after accounting for all deductions and exemptions. These are different than marginal tax rates, which are paid on the next dollar of income and now peak at 35% for individuals.
IRS data for 2008, for example, show that households in the top 10% of earners (above about $114,000) paid 19% of their income to the feds. Those in the top 1% (above $380,000) paid 23.3%. The top 0.1% of earners, with incomes of $2 million or more, end up paying a slightly lower tax of 22.7%, because they get more of their income from investments (more about this below).
So what about the rest of us? According to IRS data, a median-income household ($35,000) in 2008 paid about 4% of its income in federal income tax.
Mr. Buffett may have been referring to all federal taxes, not just income taxes, when he said the rich pay less than others. His secretary and most workers in America do pay a lot in Social Security and Medicare payroll taxes, but even accounting for them the federal system is highly progressive.
According to the Congressional Budget Office (CBO), middle-class families in 2007 (earning between $34,000 and $50,000) paid an effective 14.3% of their income in all federal taxes. The top 5% of income earners paid 27.9% and the top 1% paid 29.5%. And what about the highest earners? Americans with annual incomes above $2 million paid an average 32% of their income in federal taxes in 2005 (the most recent year for which data are available).
So how does Mr. Buffett arrive at such a low personal tax rate? He may have been referring to a 2010 IRS study of the 400 richest American taxpayers, a list he's probably on. It showed those people paid an effective federal income tax of 18.1% in 2008.
Yet that study crucially omits the corporate income tax, which is mostly borne by the owners of companies.
Mr. Buffett owns about one-quarter of his investment company Berkshire Hathaway, and his shares are worth about $38 billion. This wealth is mostly stored in what are technically called "unrealized capital gains." Eventually when those gains are converted into income, he will pay a capital gains tax. Even so, in 2008 Berkshire paid $3 billion in corporate taxes. And since Mr. Buffett is the principal owner, he shoulders a big share of that tax.
The reason for the light capital gains and dividend tax is that corporations pay up to a 35% tax on their profits before a dime of it is passed on to shareholders. The real tax rate on corporate income paid to individuals through capital gains and dividends is not 15%. It is closer to 45% once you count the tax on corporate profits. If the dividend tax rises to 20% next year from 15% today, then the total tax on dividends paid to shareholders would be closer to 50%, and that doesn't include state and local taxes.
Overall, though, Warren Buffett is wrong on taxes. The tax system is already far too reliant on the wealthy to pay the government's bills. Taxes on millionaires and billionaires are already near a record high in terms of the share of all income taxes paid. And the effective tax rate on this group is much higher, not lower, than any other income category. The best way to balance the budget is for the economy to produce a lot more American success stories like Warren Buffett."
So, on his first point, score Bernie Sanders a liar.
Then the Senator continues,
"Many corporations, including General Electric and Exxon-Mobil, have made billions in profits while using loopholes to avoid paying any federal income taxes. We lose $100 billion every year in federal revenue from companies and individuals who stash their wealth in tax havens off-shore like the Cayman Islands and Bermuda. The sum of all the revenue collected by the Treasury today totals just 14.8% of our gross domestic product, the lowest in about 50 years.
In the midst of this, Republicans in Congress have been fanatically determined to protect the interests of the wealthy and large multinational corporations so that they do not contribute a single penny toward deficit reduction."
Corporate tax preference items are frequently cited by Democrats interested in class warfare over tax policy. I don't know the source of GE's tax preference items, but Exxon-Mobil makes use of oil depletion accounting which Congress granted decades ago to encourage American oil exploration and production. The company is simply using what Congress granted because Congress wanted more oil production. What's wrong with that?
Does Sanders want less US oil production? Further, American business wouldn't have these tax preference items if members of Congress like Sanders, and their staffs, didn't sell their power to write tax law for various favors- campaign contributions, for example- now and in the future. Think senior executive posts and/or board seats.
If Congress now wants fewer tax preference items with lower, simpler, fewer rates, by all means they should reform the tax code. But Republicans aren't necessarily defending the tax codes, and the companies Sanders mentioned aren't doing anything illegal.
Sanders then turns to entitlements with these passages,
"If the Republicans have their way, the entire burden of deficit reduction will be placed on the elderly, the sick, children and working families. In the midst of a horrendous recession that is already causing severe pain for average Americans, this approach is morally grotesque. It's also bad economic policy.
President Obama and the Democrats have been extremely weak in opposing these right-wing extremist proposals. Although the United States now has the most unequal distribution of wealth and income of any major industrialized country, Democrats have not succeeded in getting any new revenue from those at the top of the economic ladder to reduce the deficit.
Instead, they've handed the wealthy even more tax breaks. In December, the House and the Senate extended President George W. Bush's tax cuts for the rich and lowered estate tax rates for the wealthiest Americans. In April, to avoid the Republican effort to shut down the government, they allowed $38.5 billion in cuts to vitally important programs for working-class and middle-class Americans.
The Reid plan is bad. The constantly shifting plan by House Speaker John Boehner is much worse. His $1.2 trillion plan calls for no cuts in the wars in Afghanistan and Iraq, and it requires a congressional committee to come up with another $1.8 trillion in cuts within six months of passage.
Those cuts would mean drastic reductions in Social Security, Medicare and Medicaid. What's more, Mr. Boehner's plan would reopen the debate over the debt ceiling, which is now paralyzing Congress, just six months from now.
While all of this is going on in Washington, the American people have consistently stated, in poll after poll, that they want wealthy individuals and large corporations to pay their fair share of taxes. They also want bedrock social programs like Social Security, Medicare and Medicaid to be protected. For example, a July 14-17 Washington Post/ABC News poll found that 72% of Americans believe that Americans earning more than $250,000 a year should pay more in taxes."
I wrote these two posts- here and here- recently on my business blog, building upon this July 4th post, America's Porkiest Generation. The theme of those posts is that the US Congress and various administrations of both parties have misled the American public into believing that three existing and one newly-created, poorly-designed, common-pool, defined-benefit social welfare programs- Social Security, Medicare, Medicaid and ObamaCare- were and are affordable, sustainable and constitute valid, binding promises by future generations to pay for pensions and healthcare of prior ones.
Sanders includes some numbers in those passages from his editorial, but not ones that matter to the point at hand- whether the four programs are, in reality, unenforceable Ponzi schemes whose promises were never valid. It's no surprise that a socialist would cherry pick from many polls, though he does not enumerate the "poll after poll," to claim that "the American people have consistently stated that they want wealthy individuals and large corporations to pay their fair share of taxes." Of course, not only do we not know the sample compositions, sizes, etc., of those alleged many polls to which Sanders refers, but we also do not know whether those polled believed that "wealthy individuals and large corporations" already "pay their fair share of taxes," do we? Further, as I wrote in those prior linked posts, who is to say what is fair?
Bernie Sanders? The Democratic party? I think not.
As I cited in this recent post, AEI head Arthur Brooks noted that,
"Between 1986 and 2009, the percentage of Americans who pay zero or negative federal income taxes has increased to 51% from 18.5%. And all this is accompanied by an increase in our national debt to 100% of GDP today from 42% in 1980."
So it should come as no surprise, when 51% of Americans pay no federal tax, that, in some survey whose provenance is unknown, an alleged 72% want Americans earning over $250,000/year, hardly a 'wealthy' income for a family anymore, to pay more in taxes.
Having failed to clearly justify any of his points thus far, Sanders concludes his rant by asserting,
"In other words, Congress is now on a path to do exactly what the American people don't want. Americans want shared sacrifice in deficit reduction. Congress is on track to give them the exact opposite: major cuts in the most important programs that the middle class needs and wants, and no sacrifice from the wealthy and the powerful.
Is it any wonder, therefore, that the American people are so angry with what's going on in Washington? I am too."
I want "shared sacrifice" in spending reductions, not merely deficit reductions. The former are real spending cuts, whereas the latter is the difference between tax receipts and spending. A significant matter over which Sanders silently glides. In my view, that shared sacrifice means cutting the unearned, unaffordable, unfunded, larded-up defined-benefits to various groups from the four entitlement programs which are bankrupting our nation.
That would be true shared sacrifice- for every federal largess recipient to experience the same effects of inflation, higher taxes, average wage change and overall US GDP growth each year as the average working, tax-paying American.
How about Bernie? Want to go there in the name of fairness and shared sacrifice?
"The rich are getting richer. Their effective tax rate, in recent years, has been reduced to the lowest in modern history. Nurses, teachers and firemen actually pay a higher tax rate than some billionaires. It's no wonder the American people are angry."
Where's Bernie's evidence? Actually Stephen Moore recently wrote a Journal editorial last Thursday in which he debunked the myth of "the rich" paying lower tax rates than lower income filers. Moore wrote,
"During Monday night's national address, President Obama recited the Buffet line that millionaires and billionaires pay lower tax rates than their secretaries. Democrats in Congress routinely cite Mr. Buffett's tax confessions as irrefutable evidence that tax rates on the very rich are too low and the system is unfair. And the system would be unfair, if Mr. Buffett's tax facts were the whole truth. But they aren't.
I don't know the details of Warren Buffet's personal taxes, and he hasn't made them public. But the IRS does provide reliable data on effective tax rates—the overall share of their income that various groups pay in federal income taxes (not including state or local taxes) after accounting for all deductions and exemptions. These are different than marginal tax rates, which are paid on the next dollar of income and now peak at 35% for individuals.
IRS data for 2008, for example, show that households in the top 10% of earners (above about $114,000) paid 19% of their income to the feds. Those in the top 1% (above $380,000) paid 23.3%. The top 0.1% of earners, with incomes of $2 million or more, end up paying a slightly lower tax of 22.7%, because they get more of their income from investments (more about this below).
So what about the rest of us? According to IRS data, a median-income household ($35,000) in 2008 paid about 4% of its income in federal income tax.
Mr. Buffett may have been referring to all federal taxes, not just income taxes, when he said the rich pay less than others. His secretary and most workers in America do pay a lot in Social Security and Medicare payroll taxes, but even accounting for them the federal system is highly progressive.
According to the Congressional Budget Office (CBO), middle-class families in 2007 (earning between $34,000 and $50,000) paid an effective 14.3% of their income in all federal taxes. The top 5% of income earners paid 27.9% and the top 1% paid 29.5%. And what about the highest earners? Americans with annual incomes above $2 million paid an average 32% of their income in federal taxes in 2005 (the most recent year for which data are available).
So how does Mr. Buffett arrive at such a low personal tax rate? He may have been referring to a 2010 IRS study of the 400 richest American taxpayers, a list he's probably on. It showed those people paid an effective federal income tax of 18.1% in 2008.
Yet that study crucially omits the corporate income tax, which is mostly borne by the owners of companies.
Mr. Buffett owns about one-quarter of his investment company Berkshire Hathaway, and his shares are worth about $38 billion. This wealth is mostly stored in what are technically called "unrealized capital gains." Eventually when those gains are converted into income, he will pay a capital gains tax. Even so, in 2008 Berkshire paid $3 billion in corporate taxes. And since Mr. Buffett is the principal owner, he shoulders a big share of that tax.
The reason for the light capital gains and dividend tax is that corporations pay up to a 35% tax on their profits before a dime of it is passed on to shareholders. The real tax rate on corporate income paid to individuals through capital gains and dividends is not 15%. It is closer to 45% once you count the tax on corporate profits. If the dividend tax rises to 20% next year from 15% today, then the total tax on dividends paid to shareholders would be closer to 50%, and that doesn't include state and local taxes.
Overall, though, Warren Buffett is wrong on taxes. The tax system is already far too reliant on the wealthy to pay the government's bills. Taxes on millionaires and billionaires are already near a record high in terms of the share of all income taxes paid. And the effective tax rate on this group is much higher, not lower, than any other income category. The best way to balance the budget is for the economy to produce a lot more American success stories like Warren Buffett."
So, on his first point, score Bernie Sanders a liar.
Then the Senator continues,
"Many corporations, including General Electric and Exxon-Mobil, have made billions in profits while using loopholes to avoid paying any federal income taxes. We lose $100 billion every year in federal revenue from companies and individuals who stash their wealth in tax havens off-shore like the Cayman Islands and Bermuda. The sum of all the revenue collected by the Treasury today totals just 14.8% of our gross domestic product, the lowest in about 50 years.
In the midst of this, Republicans in Congress have been fanatically determined to protect the interests of the wealthy and large multinational corporations so that they do not contribute a single penny toward deficit reduction."
Corporate tax preference items are frequently cited by Democrats interested in class warfare over tax policy. I don't know the source of GE's tax preference items, but Exxon-Mobil makes use of oil depletion accounting which Congress granted decades ago to encourage American oil exploration and production. The company is simply using what Congress granted because Congress wanted more oil production. What's wrong with that?
Does Sanders want less US oil production? Further, American business wouldn't have these tax preference items if members of Congress like Sanders, and their staffs, didn't sell their power to write tax law for various favors- campaign contributions, for example- now and in the future. Think senior executive posts and/or board seats.
If Congress now wants fewer tax preference items with lower, simpler, fewer rates, by all means they should reform the tax code. But Republicans aren't necessarily defending the tax codes, and the companies Sanders mentioned aren't doing anything illegal.
Sanders then turns to entitlements with these passages,
"If the Republicans have their way, the entire burden of deficit reduction will be placed on the elderly, the sick, children and working families. In the midst of a horrendous recession that is already causing severe pain for average Americans, this approach is morally grotesque. It's also bad economic policy.
President Obama and the Democrats have been extremely weak in opposing these right-wing extremist proposals. Although the United States now has the most unequal distribution of wealth and income of any major industrialized country, Democrats have not succeeded in getting any new revenue from those at the top of the economic ladder to reduce the deficit.
Instead, they've handed the wealthy even more tax breaks. In December, the House and the Senate extended President George W. Bush's tax cuts for the rich and lowered estate tax rates for the wealthiest Americans. In April, to avoid the Republican effort to shut down the government, they allowed $38.5 billion in cuts to vitally important programs for working-class and middle-class Americans.
The Reid plan is bad. The constantly shifting plan by House Speaker John Boehner is much worse. His $1.2 trillion plan calls for no cuts in the wars in Afghanistan and Iraq, and it requires a congressional committee to come up with another $1.8 trillion in cuts within six months of passage.
Those cuts would mean drastic reductions in Social Security, Medicare and Medicaid. What's more, Mr. Boehner's plan would reopen the debate over the debt ceiling, which is now paralyzing Congress, just six months from now.
While all of this is going on in Washington, the American people have consistently stated, in poll after poll, that they want wealthy individuals and large corporations to pay their fair share of taxes. They also want bedrock social programs like Social Security, Medicare and Medicaid to be protected. For example, a July 14-17 Washington Post/ABC News poll found that 72% of Americans believe that Americans earning more than $250,000 a year should pay more in taxes."
I wrote these two posts- here and here- recently on my business blog, building upon this July 4th post, America's Porkiest Generation. The theme of those posts is that the US Congress and various administrations of both parties have misled the American public into believing that three existing and one newly-created, poorly-designed, common-pool, defined-benefit social welfare programs- Social Security, Medicare, Medicaid and ObamaCare- were and are affordable, sustainable and constitute valid, binding promises by future generations to pay for pensions and healthcare of prior ones.
Sanders includes some numbers in those passages from his editorial, but not ones that matter to the point at hand- whether the four programs are, in reality, unenforceable Ponzi schemes whose promises were never valid. It's no surprise that a socialist would cherry pick from many polls, though he does not enumerate the "poll after poll," to claim that "the American people have consistently stated that they want wealthy individuals and large corporations to pay their fair share of taxes." Of course, not only do we not know the sample compositions, sizes, etc., of those alleged many polls to which Sanders refers, but we also do not know whether those polled believed that "wealthy individuals and large corporations" already "pay their fair share of taxes," do we? Further, as I wrote in those prior linked posts, who is to say what is fair?
Bernie Sanders? The Democratic party? I think not.
As I cited in this recent post, AEI head Arthur Brooks noted that,
"Between 1986 and 2009, the percentage of Americans who pay zero or negative federal income taxes has increased to 51% from 18.5%. And all this is accompanied by an increase in our national debt to 100% of GDP today from 42% in 1980."
So it should come as no surprise, when 51% of Americans pay no federal tax, that, in some survey whose provenance is unknown, an alleged 72% want Americans earning over $250,000/year, hardly a 'wealthy' income for a family anymore, to pay more in taxes.
Having failed to clearly justify any of his points thus far, Sanders concludes his rant by asserting,
"In other words, Congress is now on a path to do exactly what the American people don't want. Americans want shared sacrifice in deficit reduction. Congress is on track to give them the exact opposite: major cuts in the most important programs that the middle class needs and wants, and no sacrifice from the wealthy and the powerful.
Is it any wonder, therefore, that the American people are so angry with what's going on in Washington? I am too."
I want "shared sacrifice" in spending reductions, not merely deficit reductions. The former are real spending cuts, whereas the latter is the difference between tax receipts and spending. A significant matter over which Sanders silently glides. In my view, that shared sacrifice means cutting the unearned, unaffordable, unfunded, larded-up defined-benefits to various groups from the four entitlement programs which are bankrupting our nation.
That would be true shared sacrifice- for every federal largess recipient to experience the same effects of inflation, higher taxes, average wage change and overall US GDP growth each year as the average working, tax-paying American.
How about Bernie? Want to go there in the name of fairness and shared sacrifice?
Saturday, July 30, 2011
You Know They're Scared When Democrats Declare GOP Bills DOA
Isn't it funny how something as reciprocal as compromise is taken hostage by one party to use against the/another?
Boehner's debt limit bill hadn't even passed in the House yet yesterday, but Wonderboy, Harry Reid, Dick Durbin and Chuckie Schumer all pronounced it DOA- Dead On Arrival.
And yet, in doing so, none of those Democrats thought or worried they would look recalcitrant, intractable or unreasonable. All of which they are.
When in a process that will probably require compromise, who is to say whose ideas are unacceptable or DOA?
What if Boehner had come out earlier and declared that anything but his House bill would be DOA when it came back for reconciliation in that chamber? How would Wonderboy and Harry have reacted to that?
What's worse is, all that Boehner and his colleagues have done is reacted to the 2010 election results and the public's disgust with decades of overspending. The House GOP has sensibly paired a debt limit increase with spending cuts and, while questionable, the understandable appeal to write and pass a Constitutional amendment for a balanced budget.
I laughed and turned the channel when I heard Dick Durbin sputtering about how unnatural and unreasonable it was for the House to attach a BBA demand to a debt limit increase.
Here's another perspective on the whole process. One which esteemed conservative pundit and Fox News contributor Charles Krauthammer echoed on Friday evening on Brett Baier's program, in contrast to a liberal kiss-up, whiny guest on the panel at the program's end.
Essentially, what we are witnessing is a seismic political shift begun by the election of a core of about 87 Tea Party House members and a handful of Tea Party Senators from the GOP last November. They are sufficiently numerous to affect House bills. If 100 Senators had been up for re-election last year, instead of only 32 or 33, it's quite possible that the GOP, with its Tea Party component, would have taken control of that chamber, as well.
But, as it is, a new political wind is blowing through Congress. Dick Durbin's astonishment notwithstanding, the new House members represent the public's awakening to the unwanted actions of its Congresses of the past several decades.
As Krauthahammer intoned, and I heartily agree, screw bipartisanship. You need a good partisan battle over the nation's direction at the federal level at least once every generation. This is that moment, in the post-Reagan era.
It's pretty clear that, based on his last three years of behavior, Wonderboy couldn't be re-elected today if it was a strictly 'yes/no' vote. The Senate will probably go Republican next year.
For Democrats to simply scream that it's outrageous to attach spending cuts to a debt limit increase, and try to curb spending both now and in the future, tells you they are scared. Scared to death that they've finally maxed out the nation's federal credit card and lines, and won't be able to continue with their lavish social programs.
In fact, despite their cries that Republicans want to preserve tax cuts for "the rich" while cutting Social Security, Medicare and Medicaid, that's precisely what's going to happen, more or less. With time, tax rates will fall, special deductions and tax preferences will disappear, and overall tax receipts will rise as the economy recovers. But the bases for determining social spending will have to be shifted toward current defined contributions. There's simply no other way for such promised benefits to be sustained into the future.
That Wonderboy and his Senate and House minions are screaming 'DOA' to Boehner and his plan simply telegraphs how truly scared they now are, having seen the inevitable handwriting on the wall.
Boehner's debt limit bill hadn't even passed in the House yet yesterday, but Wonderboy, Harry Reid, Dick Durbin and Chuckie Schumer all pronounced it DOA- Dead On Arrival.
And yet, in doing so, none of those Democrats thought or worried they would look recalcitrant, intractable or unreasonable. All of which they are.
When in a process that will probably require compromise, who is to say whose ideas are unacceptable or DOA?
What if Boehner had come out earlier and declared that anything but his House bill would be DOA when it came back for reconciliation in that chamber? How would Wonderboy and Harry have reacted to that?
What's worse is, all that Boehner and his colleagues have done is reacted to the 2010 election results and the public's disgust with decades of overspending. The House GOP has sensibly paired a debt limit increase with spending cuts and, while questionable, the understandable appeal to write and pass a Constitutional amendment for a balanced budget.
I laughed and turned the channel when I heard Dick Durbin sputtering about how unnatural and unreasonable it was for the House to attach a BBA demand to a debt limit increase.
Here's another perspective on the whole process. One which esteemed conservative pundit and Fox News contributor Charles Krauthammer echoed on Friday evening on Brett Baier's program, in contrast to a liberal kiss-up, whiny guest on the panel at the program's end.
Essentially, what we are witnessing is a seismic political shift begun by the election of a core of about 87 Tea Party House members and a handful of Tea Party Senators from the GOP last November. They are sufficiently numerous to affect House bills. If 100 Senators had been up for re-election last year, instead of only 32 or 33, it's quite possible that the GOP, with its Tea Party component, would have taken control of that chamber, as well.
But, as it is, a new political wind is blowing through Congress. Dick Durbin's astonishment notwithstanding, the new House members represent the public's awakening to the unwanted actions of its Congresses of the past several decades.
As Krauthahammer intoned, and I heartily agree, screw bipartisanship. You need a good partisan battle over the nation's direction at the federal level at least once every generation. This is that moment, in the post-Reagan era.
It's pretty clear that, based on his last three years of behavior, Wonderboy couldn't be re-elected today if it was a strictly 'yes/no' vote. The Senate will probably go Republican next year.
For Democrats to simply scream that it's outrageous to attach spending cuts to a debt limit increase, and try to curb spending both now and in the future, tells you they are scared. Scared to death that they've finally maxed out the nation's federal credit card and lines, and won't be able to continue with their lavish social programs.
In fact, despite their cries that Republicans want to preserve tax cuts for "the rich" while cutting Social Security, Medicare and Medicaid, that's precisely what's going to happen, more or less. With time, tax rates will fall, special deductions and tax preferences will disappear, and overall tax receipts will rise as the economy recovers. But the bases for determining social spending will have to be shifted toward current defined contributions. There's simply no other way for such promised benefits to be sustained into the future.
That Wonderboy and his Senate and House minions are screaming 'DOA' to Boehner and his plan simply telegraphs how truly scared they now are, having seen the inevitable handwriting on the wall.
Thursday, July 28, 2011
Alarming American Government Fiscal Trends
Arthur Brooks, head of the American Enterprise Institute, wrote an editorial in a recent edition of the Wall Street Journal arguing that the current debt limit fight is more critically about the moral values of our Republic than it is merely about economics. His empirical evidence of America's 50-year descent into socialism is chilling,
"But before they succumb to too much caution, budget reformers need to remember three things. First, this is not a political fight between Republicans and Democrats; it is a fight against 50-year trends toward statism. Second, it is a moral fight, not an economic one. Third, this is not a fight that anyone can win in the 15 months from now to the presidential election. It will take hard work for at least a decade.
Consider a few facts. The Bureau of Economic Analysis tells us that total government spending at all levels has risen to 37% of gross domestic product today from 27% in 1960—and is set to reach 50% by 2038. The Tax Foundation reports that between 1986 and 2008, the share of federal income taxes paid by the top 5% of earners has risen to 59% from 43%. Between 1986 and 2009, the percentage of Americans who pay zero or negative federal income taxes has increased to 51% from 18.5%. And all this is accompanied by an increase in our national debt to 100% of GDP today from 42% in 1980.
Where will it all lead? Some despairing souls have concluded there are really only two scenarios. In one, we finally hit a tipping point where so few people actually pay for their share of the growing government that a majority become completely invested in the social welfare state, which stabilizes at some very high level of taxation and government social spending. (Think Sweden.)
In the other scenario, our welfare state slowly collapses under its weight, and we get some kind of permanent austerity after the rest of the world finally comprehends the depth of our national spending disorder and stops lending us money at low interest rates. (Think Greece.)
In other words: Heads, the statists win; tails, we all lose.
Anyone who seeks to provide serious national political leadership today—those elected in 2010 or who seek national office in 2012—owe Americans a plan to escape having to make this choice. We need tectonic changes, not minor fiddling."
He's right that it will take more than a few months to reverse the awful fiscal changes in America over the past 50 years.
"But before they succumb to too much caution, budget reformers need to remember three things. First, this is not a political fight between Republicans and Democrats; it is a fight against 50-year trends toward statism. Second, it is a moral fight, not an economic one. Third, this is not a fight that anyone can win in the 15 months from now to the presidential election. It will take hard work for at least a decade.
Consider a few facts. The Bureau of Economic Analysis tells us that total government spending at all levels has risen to 37% of gross domestic product today from 27% in 1960—and is set to reach 50% by 2038. The Tax Foundation reports that between 1986 and 2008, the share of federal income taxes paid by the top 5% of earners has risen to 59% from 43%. Between 1986 and 2009, the percentage of Americans who pay zero or negative federal income taxes has increased to 51% from 18.5%. And all this is accompanied by an increase in our national debt to 100% of GDP today from 42% in 1980.
Where will it all lead? Some despairing souls have concluded there are really only two scenarios. In one, we finally hit a tipping point where so few people actually pay for their share of the growing government that a majority become completely invested in the social welfare state, which stabilizes at some very high level of taxation and government social spending. (Think Sweden.)
In the other scenario, our welfare state slowly collapses under its weight, and we get some kind of permanent austerity after the rest of the world finally comprehends the depth of our national spending disorder and stops lending us money at low interest rates. (Think Greece.)
In other words: Heads, the statists win; tails, we all lose.
Anyone who seeks to provide serious national political leadership today—those elected in 2010 or who seek national office in 2012—owe Americans a plan to escape having to make this choice. We need tectonic changes, not minor fiddling."
He's right that it will take more than a few months to reverse the awful fiscal changes in America over the past 50 years.
Tuesday, July 19, 2011
The Economics of Mainstreaming Handicapped Children
A friend of mine has been involved with Special Education this summer.
Asked by another school district if he were interested in teaching a handful of students for about half the summer, he has found himself, along with several assistants, essentially providing child care from 8-12 for half a dozen special needs children.
The tab for this state-provided daycare is astounding. There's my friend's compensation, several thousand dollars, plus that of his aides.
What's astounding is how little of value, other than warehousing, is going on in this taxpayer-funded half-day summer camp masquerading as school.
Of the children attending, several are autistic, several are heavily-medicated, and another is a foster child whose guardian's objective seems to be to place the child somewhere all day, every day. Since 'school' is free, whereas camps cost money, all of these children are in summer school.
Despite my friend's best efforts, his explanation of what takes place each day makes clear what a waste of society's money calling it 'school' is.
We talked about the larger issue of mainstreaming these children during the conventional school year. As one might expect, our viewpoints differed. He claimed that, if he were involved in Special Ed full time, then, over time, he could get a few of these children to learn something useful. That's the opinion of an affected, involved teacher who pretty much has to believe that his efforts make a difference.
What I see is something much different.
Before mainstreaming and Special Ed, most of these children weren't allowed anywhere near conventional K-8 or high schools. That's because the cost of attempting to educate them was so high, due to labor intensity, and the method of instructions so different from the mainstream, that it made no sense. As it is this summer, the teacher:student ratio approaches 2:3.
But nonsense is what we now have. What is being taught isn't remotely near normal education. None of these children, from my friend's description, are ever likely to be independent, productive adult members of society.
During a far-ranging discussion on the subject, I reminded my friend that by mainstreaming handicapped children into conventional schools, a capital spending burden was added to the ongoing operational expenses of each school.
From a strictly societal, economic view of education, it's almost impossible to justify mainstreaming. Public education, as we have it in the US, for better or for worse, is meant to educate the broad population of children to become economically productive adults. In a globally-competitive world, money spent on this function has to be as productive as other nations which do a good job of it, or our nation's resources are being comparatively wasted.
Thus, as heartless as it may seem, for all taxpayers to be saddled with the effort of making believe that behaviorally, emotionally and/or mentally handicapped children can be mainstreamed with no adverse effects on teachers, other students, the school systems, and costs/pupil, is unfair. Because, unlike most students, who can leave school able to be functioning adults capable of independently making their way in society, those handicapped students cannot do so.
The attempt to mainstream such children reflects our nation's, and my state's apparent disregard for the reality of limited economic resources, including tax dollars.
I'm fine with a state or the nation setting up defined-contribution plans for children with non-physical handicaps which prevent them from benefiting from the conventional school experience. But to subject entire school systems to costs and changes in order to benefit a few who won't actually attain the desired goals of such systems is simply unaffordable.
People like Tom Freston did our society no favor when, as a former Viacom senior executive, he fought New York to force the state to pay for private schooling for his autistic child which he could easily afford.
Every parent or teacher of an autistic or otherwise-handicapped child wants, perhaps needs, to believe that that child, with enough special, individualized attention, can become a functioning, independent adult. But the truth is, the chances are not very good of that being true. Thus, it's unfair to make the rest of society pay for every handicapped child's parents and teachers' hopes.
Liberals like to claim that the worth or measure of a society is how it treats its least-fortunate members. And, in a vacuum of real economics and global competition, that could be true.
But that's not the world in which we live, and if we continue to spend money at the rate I'm seeing through my friend's brush with "teaching" handicapped children this summer, I question whether our American society will be capable of maintaining its competitive edge among other nations for another generation.
At which point everyone's educational performance and our society's ability to afford what we now take for granted will be at risk.
Asked by another school district if he were interested in teaching a handful of students for about half the summer, he has found himself, along with several assistants, essentially providing child care from 8-12 for half a dozen special needs children.
The tab for this state-provided daycare is astounding. There's my friend's compensation, several thousand dollars, plus that of his aides.
What's astounding is how little of value, other than warehousing, is going on in this taxpayer-funded half-day summer camp masquerading as school.
Of the children attending, several are autistic, several are heavily-medicated, and another is a foster child whose guardian's objective seems to be to place the child somewhere all day, every day. Since 'school' is free, whereas camps cost money, all of these children are in summer school.
Despite my friend's best efforts, his explanation of what takes place each day makes clear what a waste of society's money calling it 'school' is.
We talked about the larger issue of mainstreaming these children during the conventional school year. As one might expect, our viewpoints differed. He claimed that, if he were involved in Special Ed full time, then, over time, he could get a few of these children to learn something useful. That's the opinion of an affected, involved teacher who pretty much has to believe that his efforts make a difference.
What I see is something much different.
Before mainstreaming and Special Ed, most of these children weren't allowed anywhere near conventional K-8 or high schools. That's because the cost of attempting to educate them was so high, due to labor intensity, and the method of instructions so different from the mainstream, that it made no sense. As it is this summer, the teacher:student ratio approaches 2:3.
But nonsense is what we now have. What is being taught isn't remotely near normal education. None of these children, from my friend's description, are ever likely to be independent, productive adult members of society.
During a far-ranging discussion on the subject, I reminded my friend that by mainstreaming handicapped children into conventional schools, a capital spending burden was added to the ongoing operational expenses of each school.
From a strictly societal, economic view of education, it's almost impossible to justify mainstreaming. Public education, as we have it in the US, for better or for worse, is meant to educate the broad population of children to become economically productive adults. In a globally-competitive world, money spent on this function has to be as productive as other nations which do a good job of it, or our nation's resources are being comparatively wasted.
Thus, as heartless as it may seem, for all taxpayers to be saddled with the effort of making believe that behaviorally, emotionally and/or mentally handicapped children can be mainstreamed with no adverse effects on teachers, other students, the school systems, and costs/pupil, is unfair. Because, unlike most students, who can leave school able to be functioning adults capable of independently making their way in society, those handicapped students cannot do so.
The attempt to mainstream such children reflects our nation's, and my state's apparent disregard for the reality of limited economic resources, including tax dollars.
I'm fine with a state or the nation setting up defined-contribution plans for children with non-physical handicaps which prevent them from benefiting from the conventional school experience. But to subject entire school systems to costs and changes in order to benefit a few who won't actually attain the desired goals of such systems is simply unaffordable.
People like Tom Freston did our society no favor when, as a former Viacom senior executive, he fought New York to force the state to pay for private schooling for his autistic child which he could easily afford.
Every parent or teacher of an autistic or otherwise-handicapped child wants, perhaps needs, to believe that that child, with enough special, individualized attention, can become a functioning, independent adult. But the truth is, the chances are not very good of that being true. Thus, it's unfair to make the rest of society pay for every handicapped child's parents and teachers' hopes.
Liberals like to claim that the worth or measure of a society is how it treats its least-fortunate members. And, in a vacuum of real economics and global competition, that could be true.
But that's not the world in which we live, and if we continue to spend money at the rate I'm seeing through my friend's brush with "teaching" handicapped children this summer, I question whether our American society will be capable of maintaining its competitive edge among other nations for another generation.
At which point everyone's educational performance and our society's ability to afford what we now take for granted will be at risk.
Wednesday, July 13, 2011
How Liberal News Anchors Slant Terms of the Debt Limit/Spending Debate
As I was writing this post yesterday morning, I happened to be listening to Dick Armey, former GOP House Majority Leader, guest-hosting on CNBC's morning program for an hour.
He and the co-anchors were discussing the very subject of my post- the debt limit talks.
Armey had just finished explaining why taxes should not be raised and spending should be cut when network co-anchor and liberal Becky Quick began to cut in with,
".....but if spending is cut then the economy will....."
Her remark's end was lost amidst Armey's continuing comments and her realization that her words weren't getting any attention.
But notice what Quick's baseline hypothesis is. The elevated levels of federal spending under Wonderboy, up to 24% of GDP, are now to be considered sacrosanct by such liberal apologists as CNBC's liberal anchors.
Any attempt to cut the bloated spending is criticized as what Quick was trying to say- causing economic contraction because spending is removed from the economy.
Of course, last I read, the Keynesian 'C+I+G' equation still obtained, meaning that if government spending is decreased, then that money can be used by consumers to either spend, or save, in which case it can be used for investment.
Just because government doesn't spend money doesn't mean it disappears. Granted, deficit spending is spending that may not occur otherwise. But, then, perhaps it shouldn't.
But it's noteworthy that Quick and her ilk no longer recognize freeing up government spending for other uses as legitimate or appropriate but, rather, risky. So much for investing for growth. Instead, these media Keynesians are for more government spending now and forever, but calling it investment. That way, cutting it will seem bad- either because demand is lessened, or, heaven forbid, government investment in key technologies and projects has been eliminated.
They no longer see any room for non-government economic activity.
He and the co-anchors were discussing the very subject of my post- the debt limit talks.
Armey had just finished explaining why taxes should not be raised and spending should be cut when network co-anchor and liberal Becky Quick began to cut in with,
".....but if spending is cut then the economy will....."
Her remark's end was lost amidst Armey's continuing comments and her realization that her words weren't getting any attention.
But notice what Quick's baseline hypothesis is. The elevated levels of federal spending under Wonderboy, up to 24% of GDP, are now to be considered sacrosanct by such liberal apologists as CNBC's liberal anchors.
Any attempt to cut the bloated spending is criticized as what Quick was trying to say- causing economic contraction because spending is removed from the economy.
Of course, last I read, the Keynesian 'C+I+G' equation still obtained, meaning that if government spending is decreased, then that money can be used by consumers to either spend, or save, in which case it can be used for investment.
Just because government doesn't spend money doesn't mean it disappears. Granted, deficit spending is spending that may not occur otherwise. But, then, perhaps it shouldn't.
But it's noteworthy that Quick and her ilk no longer recognize freeing up government spending for other uses as legitimate or appropriate but, rather, risky. So much for investing for growth. Instead, these media Keynesians are for more government spending now and forever, but calling it investment. That way, cutting it will seem bad- either because demand is lessened, or, heaven forbid, government investment in key technologies and projects has been eliminated.
They no longer see any room for non-government economic activity.
Tuesday, July 12, 2011
Wonderboy's True Colors
If you happened to see Wonderboy's press conference yesterday, or clips of it, later, you probably saw/heard him say something which was perhaps an unconsciously naked, unvarnished expression of his true political desires. After complaining about having to handle the debt limit crisis, which he ignored until the 11th hour, he went on to say he would,
"....want to be talkin' about things everybody wants....like new programs!"
Thank you Mr. Obama, for revealing your raw, unspun view of the role of government.
To create new programs.
Further, Wonderboy doesn't get the message of Tea Partiers and the independents who joined them to shrink the Democrats' Senate majority and hand the House to the GOP last November, i.e., "everybody wants" these new, undefined programs.
This is why there hasn't been a simple compromise on spending and the debt limit as Pat Toomey described recently. In the First Rookie's mind, anything that derails the creation of new federal programs isn't to be seriously considered.
That's why this president will never oversee federal government behavior which reverses losses of personal liberty and freedom, not to mention shrinking federal spending and intrusion into the economy.
People often accidentally engage in candor beyond what they would normally allow when speaking extemporaneously, and Wonderboy, gifted orator that he is said to be, is apparently no different.
"....want to be talkin' about things everybody wants....like new programs!"
Thank you Mr. Obama, for revealing your raw, unspun view of the role of government.
To create new programs.
Further, Wonderboy doesn't get the message of Tea Partiers and the independents who joined them to shrink the Democrats' Senate majority and hand the House to the GOP last November, i.e., "everybody wants" these new, undefined programs.
This is why there hasn't been a simple compromise on spending and the debt limit as Pat Toomey described recently. In the First Rookie's mind, anything that derails the creation of new federal programs isn't to be seriously considered.
That's why this president will never oversee federal government behavior which reverses losses of personal liberty and freedom, not to mention shrinking federal spending and intrusion into the economy.
People often accidentally engage in candor beyond what they would normally allow when speaking extemporaneously, and Wonderboy, gifted orator that he is said to be, is apparently no different.
Wednesday, July 6, 2011
More Debt Limit Propaganda from Wonderboy
Following on this recent post, and this one, regarding the summer's main political drama, the US debt limit, it seems timely to write about it again.
After one press conference and an address yesterday afternoon that I skipped, Wonderboy has attempted to cast the issue as GOP Congressional members refusing to raise taxes on the rich.
However, yesterday morning on CNBC, I saw/heard Senator Pat Toomey (R-PA) correctly frame it this way. To paraphrase, he said,
'I've got a list of spending cuts in mind. The Democrats have a list. Compromise would be to agree on some mix of the two lists. Not to suddenly add raising taxes to the discussion. That's not compromise.'
It's a fair point. Further, the responsibility for this mess is Wonderboy's. He's the president. It's his job to get Congress to vote on things he wants, or to get them to vote on what works.
The GOP has an argument which I haven't yet heard them use. To wit, the First Rookie won election almost three years ago, then wasted over a trillion dollars on useless so-called 'stimulus' spending, while ramming through trillions more in longer term spending under the guise of nationalized health care.
The GOP House majority was elected less than a year ago, as were its new Senators. They are the product of voters' more current concerns with spending and size of federal government.
If you go through the recent history of House and Senate votes on various budgets, you'll see that even Democrats in Congress no longer will vote for higher spending or higher taxes, straight up. They know those are not issues on which they'll be re-elected for supporting.
If the president wants to reform the tax code, that's great! The GOP should certainly sit at that table. But as Toomey points out, that's not the same table as the spending-cut table at which the debt limit is being discussed.
It's a testament to Wonderboy's lack of governing or legislative experience that he's decrying smaller total spending cuts which could be achieved to pass a debt limit increase, in favor of some larger targets which are unlikely to be met if they require tax increases or a massive tax code rewrite.
After one press conference and an address yesterday afternoon that I skipped, Wonderboy has attempted to cast the issue as GOP Congressional members refusing to raise taxes on the rich.
However, yesterday morning on CNBC, I saw/heard Senator Pat Toomey (R-PA) correctly frame it this way. To paraphrase, he said,
'I've got a list of spending cuts in mind. The Democrats have a list. Compromise would be to agree on some mix of the two lists. Not to suddenly add raising taxes to the discussion. That's not compromise.'
It's a fair point. Further, the responsibility for this mess is Wonderboy's. He's the president. It's his job to get Congress to vote on things he wants, or to get them to vote on what works.
The GOP has an argument which I haven't yet heard them use. To wit, the First Rookie won election almost three years ago, then wasted over a trillion dollars on useless so-called 'stimulus' spending, while ramming through trillions more in longer term spending under the guise of nationalized health care.
The GOP House majority was elected less than a year ago, as were its new Senators. They are the product of voters' more current concerns with spending and size of federal government.
If you go through the recent history of House and Senate votes on various budgets, you'll see that even Democrats in Congress no longer will vote for higher spending or higher taxes, straight up. They know those are not issues on which they'll be re-elected for supporting.
If the president wants to reform the tax code, that's great! The GOP should certainly sit at that table. But as Toomey points out, that's not the same table as the spending-cut table at which the debt limit is being discussed.
It's a testament to Wonderboy's lack of governing or legislative experience that he's decrying smaller total spending cuts which could be achieved to pass a debt limit increase, in favor of some larger targets which are unlikely to be met if they require tax increases or a massive tax code rewrite.
Monday, June 6, 2011
Tom Daschle- Stupid or Naive?
Former Democratic Senate Majority Leader Tom Daschle, another Washington political hack who has trouble doing his taxes, as we discovered when he was nominated for a czar post in Wonderboy's administration, wrote an editorial in the weekend edition of the Wall Street Journal concerning a balanced budget amendment.
It's tough to say whether Daschle is stupid, or merely naive. He wrote,
"The proposed Republican amendment would limit total federal outlays to 18% of our economy- a level of spending last witnessed in 1966. There is no justification for this arbitrary cap. In fact, it would be dangerous given the enormous size and complexity of our economy today, and the demographic realities we face as our population ages."
Who is Daschle kidding? Doesn't he read the very pages in which he chose to publish his disingenuous little piece? Consider these posts, here and here, detailing several important recent tax-related editorials in the Journal, the second by real economists.
That 18% is hardly arbitrary. It's the portion of GDP that, over the long run, the federal government has collected in taxes. No matter what the rates, that's what it gets. Spending more than that over time means growing deficits. Period.
Either Daschle is naive and missed these important economic findings, or is stupid and simply ignores them.
His derisive remark about 1966 shows his true colors, though. It was LBJ's guns and butter spending in the 60's that kicked off a decade of inflation and the basis for the 1970s stagflation while he reinvigorated FDR's welfare state with The Great Society spending programs.
No wonder Daschle recoils in horror with a return to the fiscal rectitude last seen before LBJ opened the deficit spigots.
The former Senator goes on to complain that such a balanced budget amendment strips Congress of its Constitutional duty to make spending decisions, failing to acknowledge that the decisions Congress has made since 1933 is always simply "more."
That's why we need an amendment. And even then it's almost certain to contain at least one war-related loophole, which should make you cringe at how craven some future president will be, in conjunction with Congress, to excuse higher deficits.
Can't you just imagine us declaring war on Lichtenstein in order to run yet another annual budget deficit?
I'm sorry to say, I can. That's how bad the untrustworthiness of the average Congressman and Senator has become.
It's tough to say whether Daschle is stupid, or merely naive. He wrote,
"The proposed Republican amendment would limit total federal outlays to 18% of our economy- a level of spending last witnessed in 1966. There is no justification for this arbitrary cap. In fact, it would be dangerous given the enormous size and complexity of our economy today, and the demographic realities we face as our population ages."
Who is Daschle kidding? Doesn't he read the very pages in which he chose to publish his disingenuous little piece? Consider these posts, here and here, detailing several important recent tax-related editorials in the Journal, the second by real economists.
That 18% is hardly arbitrary. It's the portion of GDP that, over the long run, the federal government has collected in taxes. No matter what the rates, that's what it gets. Spending more than that over time means growing deficits. Period.
Either Daschle is naive and missed these important economic findings, or is stupid and simply ignores them.
His derisive remark about 1966 shows his true colors, though. It was LBJ's guns and butter spending in the 60's that kicked off a decade of inflation and the basis for the 1970s stagflation while he reinvigorated FDR's welfare state with The Great Society spending programs.
No wonder Daschle recoils in horror with a return to the fiscal rectitude last seen before LBJ opened the deficit spigots.
The former Senator goes on to complain that such a balanced budget amendment strips Congress of its Constitutional duty to make spending decisions, failing to acknowledge that the decisions Congress has made since 1933 is always simply "more."
That's why we need an amendment. And even then it's almost certain to contain at least one war-related loophole, which should make you cringe at how craven some future president will be, in conjunction with Congress, to excuse higher deficits.
Can't you just imagine us declaring war on Lichtenstein in order to run yet another annual budget deficit?
I'm sorry to say, I can. That's how bad the untrustworthiness of the average Congressman and Senator has become.
Friday, June 3, 2011
Chris Christie- Not Yet Ready For Prime Time
Only yesterday I wrote this post concerning some Iowa GOP donors visiting New Jersey governor Christie, allegedly to induce him to enter his party's presidential contest.
Yet, only a day later, Christie stumbled badly as detailed here. In a move that simply defies explanation, Christie and his wife used a state helicopter to fly from Trenton to Montvale, in the northern part of the state, to several innings of their son's baseball game. The article rubs some salt in the wound by noting that, upon landing, the Christies couldn't bother to walk, but, were driven the hundred yards or so from the landing site to the bleachers.
As you'd expect, state Democratic legislators are having a field day. And why not?
At the least, Christie should have smart enough to have either scheduled some official business in Montvale or another nearby locale, or at least publicly state that he was reimbursing the state for the $2,500/hour expense of the helicopter.
But even that second option would have displayed incredibly poor instincts on the governor's part.
With what is going on in New Jersey in terms of spending cuts, Christie would be foolish to suggest that, on his publicly-funded salary, he could afford such an expensive luxury as a state-owned helicopter ride to watch only part of his son's ball game.
It may seem like a minor gaffe, but I have a feeling this could become a serious liability for Christie. Much as was former North Carolina governor Mark Sanford's admission not only of marital infidelity, but perjury on his state expense reports for his trips to South America to visit his mistress.
Before that fall from grace, Sanford was, like Christie is now, a beacon of presidential hopes among the nation's GOP governors.
How could Christie have been so insensitive and blind as to not comprehend the impression he has made by using a state helicopter for a personal visit?
Yet, only a day later, Christie stumbled badly as detailed here. In a move that simply defies explanation, Christie and his wife used a state helicopter to fly from Trenton to Montvale, in the northern part of the state, to several innings of their son's baseball game. The article rubs some salt in the wound by noting that, upon landing, the Christies couldn't bother to walk, but, were driven the hundred yards or so from the landing site to the bleachers.
As you'd expect, state Democratic legislators are having a field day. And why not?
At the least, Christie should have smart enough to have either scheduled some official business in Montvale or another nearby locale, or at least publicly state that he was reimbursing the state for the $2,500/hour expense of the helicopter.
But even that second option would have displayed incredibly poor instincts on the governor's part.
With what is going on in New Jersey in terms of spending cuts, Christie would be foolish to suggest that, on his publicly-funded salary, he could afford such an expensive luxury as a state-owned helicopter ride to watch only part of his son's ball game.
It may seem like a minor gaffe, but I have a feeling this could become a serious liability for Christie. Much as was former North Carolina governor Mark Sanford's admission not only of marital infidelity, but perjury on his state expense reports for his trips to South America to visit his mistress.
Before that fall from grace, Sanford was, like Christie is now, a beacon of presidential hopes among the nation's GOP governors.
How could Christie have been so insensitive and blind as to not comprehend the impression he has made by using a state helicopter for a personal visit?
Tuesday, April 26, 2011
Alan Blinder's Smear of Paul Ryan & His 2012 Budget Proposal
Last week, the Wall Street Journal published a political editorial by Princeton's Alan Blinder entitled Paul Ryan's Reverse Robin Hood Budget. The piece was notable because Blinder is an economist, yet the bulk of the article is unsubstantiated political attacks on Ryan and his 2012 budget proposal.
Here's how Blinder began his screed,
"Why do I oppose Rep. Pauly Ryan's plan for reducing the federal budget deficit, the one House Republicans approved overwhelmingly last week? Let me count the ways. Actually, since there is not enough space on this page to count them all, let me just hit the highlights."
He does, however, understand the key issue, when he writes,
"The no-so-hidden agenda is clear: to shrink the government drastically."
Blinder describes Wonderboy's second, reaction budget, as "another huge improvement over the Ryan plan."
Unlike an economically-oriented piece by, say, John B. Taylor, Alan Reynolds or Brian Wesbury, Blinder simply goes political, with a few selected statistics to support whatever he is ranting over in a particular paragraph.
That's odd, since Blinder is usually given space on the Journal's editorial pages for economics pieces.
Since he didn't bother to ground his editorial in economics, Blinder may be fairly judged on simply the politics and logic of his arguments.
Looking back over the past few weeks of posts, including this one concerning irrational expectations for social spending programs, as well as posts discussing Journal editorials by Taylor, Reynolds and Phil Gramm, it's easy to see that Blinder is one of those liberals living in a dream world.
Specifically, he has fallen into the Democratic party's deception that has been underway since 1935, when Social Security began. Simply put, unsustainable social welfare promises were made by some half-witted members of Congress, to be implemented in one of the nation's, if not the world's worst-designed systems.
Once these promises had been in place for 30 years, they became immutable social compacts. Sacred promises from a federal government newly-empowered in the 1930s and by WWII.
The trouble is, Social Security, Medicare and Medicaid, as designed, were never sustainable or affordable. At best, they should have been designed as current-year funded social spending in the manner of proportional contribution, not defined benefits.
Further, they should have been billed as good-faith attempts by the federal government to help the least fortunate in the country, to the ability that the rest of the citizens could afford, modified going forward by best ideas.
Instead, we got a set-in-cement, common-pool, defined benefit approach for the ages.
Someone of Blinder's intellect and education should know better than to demagogue Ryan's plan as unfair and mean-spirited. The truth is, Ryan is right when he says that if we don't radically alter these programs now, they'll never survive another 25 years without bankrupting the US.
It's pointless to compare an existing plan which recognizes reality with 50 year old promises grounded in ignorance and false assumptions.
Here's how Blinder began his screed,
"Why do I oppose Rep. Pauly Ryan's plan for reducing the federal budget deficit, the one House Republicans approved overwhelmingly last week? Let me count the ways. Actually, since there is not enough space on this page to count them all, let me just hit the highlights."
He does, however, understand the key issue, when he writes,
"The no-so-hidden agenda is clear: to shrink the government drastically."
Blinder describes Wonderboy's second, reaction budget, as "another huge improvement over the Ryan plan."
Unlike an economically-oriented piece by, say, John B. Taylor, Alan Reynolds or Brian Wesbury, Blinder simply goes political, with a few selected statistics to support whatever he is ranting over in a particular paragraph.
That's odd, since Blinder is usually given space on the Journal's editorial pages for economics pieces.
Since he didn't bother to ground his editorial in economics, Blinder may be fairly judged on simply the politics and logic of his arguments.
Looking back over the past few weeks of posts, including this one concerning irrational expectations for social spending programs, as well as posts discussing Journal editorials by Taylor, Reynolds and Phil Gramm, it's easy to see that Blinder is one of those liberals living in a dream world.
Specifically, he has fallen into the Democratic party's deception that has been underway since 1935, when Social Security began. Simply put, unsustainable social welfare promises were made by some half-witted members of Congress, to be implemented in one of the nation's, if not the world's worst-designed systems.
Once these promises had been in place for 30 years, they became immutable social compacts. Sacred promises from a federal government newly-empowered in the 1930s and by WWII.
The trouble is, Social Security, Medicare and Medicaid, as designed, were never sustainable or affordable. At best, they should have been designed as current-year funded social spending in the manner of proportional contribution, not defined benefits.
Further, they should have been billed as good-faith attempts by the federal government to help the least fortunate in the country, to the ability that the rest of the citizens could afford, modified going forward by best ideas.
Instead, we got a set-in-cement, common-pool, defined benefit approach for the ages.
Someone of Blinder's intellect and education should know better than to demagogue Ryan's plan as unfair and mean-spirited. The truth is, Ryan is right when he says that if we don't radically alter these programs now, they'll never survive another 25 years without bankrupting the US.
It's pointless to compare an existing plan which recognizes reality with 50 year old promises grounded in ignorance and false assumptions.
Monday, April 25, 2011
John Taylor's Simple Spending/GDP Chart
Economist John B. Taylor wrote an editorial in this weekend's edition in which he simply focused on how federal spending has exploded under Wonderboy from its much lower prior levels, as expressed as a percentage of GDP.
Here's the chart he produced.
Scary, isn't it?
Taylor asks why we can't simply return to federal spending levels, as a percent of GDP, that we experienced prior to 2009? Otherwise, as Taylor's chart demonstrates, Wonderboy plans to lock in new, higher levels of spending which are unusual and, ultimately, unsustainable.
Good question.
Scary, isn't it?
Taylor asks why we can't simply return to federal spending levels, as a percent of GDP, that we experienced prior to 2009? Otherwise, as Taylor's chart demonstrates, Wonderboy plans to lock in new, higher levels of spending which are unusual and, ultimately, unsustainable.
Good question.
Thursday, April 21, 2011
Wonderboy's Budget Solution- Another Unelected Panel
Somewhere within Wonderboy's budget speech last week, given in reaction to Paul Ryan's 2012 budget, was the inclusion of yet another unelected governmental body to handle what our elected Congress should do.
Essentially, in order to be able to have taxes raised without Congressional action, he wants a special panel established that will take measures to close budget deficits. You can bet that, if a Democrat is in the White House, the measures will rely more on tax increases than on spending cuts.
This, to me, is the most insidious and egregious element of the First Rookie's budget. Hasn't it been enough to have some 15 unelected 'czars' in this administration? I don't approve of them in any administration of either party.
But this latest invention is without question the most harmful to our Constitution? How on earth can a president propose an unelected panel to do what Congress is elected to do? If Congress doesn't have the will or ability to pass fully-funded budgets, so be it. Then voters will elect one that does.
But there's absolutely no place in our federal system for an unelected, appointed panel to suddenly become the last word on tax and spending policies. I can't even believe it's Constitutional, but shame on Wonderboy for even suggesting it.
If you doubted his desire to damage our country, look no further than this invention of his. It's completely antithetical to our form of government.
Essentially, in order to be able to have taxes raised without Congressional action, he wants a special panel established that will take measures to close budget deficits. You can bet that, if a Democrat is in the White House, the measures will rely more on tax increases than on spending cuts.
This, to me, is the most insidious and egregious element of the First Rookie's budget. Hasn't it been enough to have some 15 unelected 'czars' in this administration? I don't approve of them in any administration of either party.
But this latest invention is without question the most harmful to our Constitution? How on earth can a president propose an unelected panel to do what Congress is elected to do? If Congress doesn't have the will or ability to pass fully-funded budgets, so be it. Then voters will elect one that does.
But there's absolutely no place in our federal system for an unelected, appointed panel to suddenly become the last word on tax and spending policies. I can't even believe it's Constitutional, but shame on Wonderboy for even suggesting it.
If you doubted his desire to damage our country, look no further than this invention of his. It's completely antithetical to our form of government.
Friday, April 15, 2011
Irrational Expectations Concerning Medicare
Since Paul Ryan's budget was released, liberal Democrats have been howling that it will impoverish seniors while giving more tax breaks to the wealthy.
I cannot help but see this as a case in which liberals have chosen to ignore something which is quite obvious, i.e., since the 1930s, Congress has enacted three similarly- and badly-designed social welfare programs- Social Security, Medicare and Medicaid- which have largely accounted for the large, uncontrollable federal spending increases which have resulted in unsustainable, unaffordable federal deficits and net externally-held debt.
Over the past week, I've heard various liberal pundits, journalists and Congress members bemoan how Ryan's plan 'will make seniors pay more for health care,' without acknowledging that the promises which have been made via the various welfare programs were always unaffordable in the long term.
For example, Social Security was intended as a safety net program for the few seniors left without private savings to fund their old age. However, once people knew of the existence of the program- surprise- they began to save less, substituting consumption for savings. Thus, a safety net was turned into an entitlement on which most seniors began to depend for old age pension income, rather than saving for it themselves.
Eighty-some years on, America has finally come to the end of the road in terms of continuing to borrow from the rest of the world to fund its social program spending.
In the meantime, I have just viewed, for the second time in a year, a 2009 program detailing the corroding infrastructure of the US. People in the program ask, rhetorically, how and why the US has let its roads, bridges, water and sewer systems become so decrepit.
That's easy.
Social Security. Medicare. Medicaid.
The fall off in large-scale civil engineering projects, except for the interstate highway system, dates, more or less, from after WWII. By the end of the 1960s, the federal government had expanded its scope, staff and spending to encompass ever more social programs, while tangible infrastructure became less important.
It's my contention that our nation has, in effect, whether explicitly or implicitly, chosen to consume its early-mid-twentieth century infrastructure, by not re-investing in it, while using the money not spent on that to fund lavish retirement and health care programs.
Medicare was never sustainable nor affordable as designed. It's a false choice to suggest that Ryan's replacement of the current open-ended, general-fund-based defined benefit approach by a defined contribution, insurance payment subsidy approach, represents an unfair or unnecessary cut in benefits to the affected.
The choice, as Ryan contends, and his Democratic collaborator, Alice Rivlin, agrees, is between this change, and the end of the program within a decade or so.
To continue to complain that Republicans are cutting benefits for seniors, the ill or poor, misses the point.
Having legislated and then promised citizens levels of social spending which were never sustainable forever, it's not realistic for liberals to voice this complaint.
To return to our Framers' views, what these three programs have done is what Jefferson believed to be the worst thing a generation could do to a following one- bequeath it a debt for money spent. In this case, it wasn't spent on infrastructure, but intangible, fleeting lifestyle expenses for several generations of Americans. Money which can't be recouped and will leave no lasting tangible trace.
I cannot help but see this as a case in which liberals have chosen to ignore something which is quite obvious, i.e., since the 1930s, Congress has enacted three similarly- and badly-designed social welfare programs- Social Security, Medicare and Medicaid- which have largely accounted for the large, uncontrollable federal spending increases which have resulted in unsustainable, unaffordable federal deficits and net externally-held debt.
Over the past week, I've heard various liberal pundits, journalists and Congress members bemoan how Ryan's plan 'will make seniors pay more for health care,' without acknowledging that the promises which have been made via the various welfare programs were always unaffordable in the long term.
For example, Social Security was intended as a safety net program for the few seniors left without private savings to fund their old age. However, once people knew of the existence of the program- surprise- they began to save less, substituting consumption for savings. Thus, a safety net was turned into an entitlement on which most seniors began to depend for old age pension income, rather than saving for it themselves.
Eighty-some years on, America has finally come to the end of the road in terms of continuing to borrow from the rest of the world to fund its social program spending.
In the meantime, I have just viewed, for the second time in a year, a 2009 program detailing the corroding infrastructure of the US. People in the program ask, rhetorically, how and why the US has let its roads, bridges, water and sewer systems become so decrepit.
That's easy.
Social Security. Medicare. Medicaid.
The fall off in large-scale civil engineering projects, except for the interstate highway system, dates, more or less, from after WWII. By the end of the 1960s, the federal government had expanded its scope, staff and spending to encompass ever more social programs, while tangible infrastructure became less important.
It's my contention that our nation has, in effect, whether explicitly or implicitly, chosen to consume its early-mid-twentieth century infrastructure, by not re-investing in it, while using the money not spent on that to fund lavish retirement and health care programs.
Medicare was never sustainable nor affordable as designed. It's a false choice to suggest that Ryan's replacement of the current open-ended, general-fund-based defined benefit approach by a defined contribution, insurance payment subsidy approach, represents an unfair or unnecessary cut in benefits to the affected.
The choice, as Ryan contends, and his Democratic collaborator, Alice Rivlin, agrees, is between this change, and the end of the program within a decade or so.
To continue to complain that Republicans are cutting benefits for seniors, the ill or poor, misses the point.
Having legislated and then promised citizens levels of social spending which were never sustainable forever, it's not realistic for liberals to voice this complaint.
To return to our Framers' views, what these three programs have done is what Jefferson believed to be the worst thing a generation could do to a following one- bequeath it a debt for money spent. In this case, it wasn't spent on infrastructure, but intangible, fleeting lifestyle expenses for several generations of Americans. Money which can't be recouped and will leave no lasting tangible trace.
Thursday, April 14, 2011
More Blatant Liberal Bias On CNBC
As I write this, Wonderboy is probably beginning his budget speech which has been reshaped by Paul Ryan's Path To Prosperity budget.
CNBC's flaming socialist political reporter, 'Red' John Harwood, assured one and all that, just like Clinton won the budget debate of his term by planning to reach targets over 10 years, rather than the GOP's 7 years, so, too, will Wonderboy win this time by taking 12 years, instead of Ryan's 10, to reach his budget targets.
Windbag and generally empty-headed, uncredentialed economics reporter Steve Liesman then chimed in that 'the bond market just wants to see a plan,' so Wonderboy's plan will win, and it won't matter that it takes longer to cut deficits.
For the record, we'll see how the bond market reacts to prospects of continuing extravagant spending on social programs while, according to reports, defense spending gets the axe. Doesn't sound like something markets will feel all the comfortable with, but time will tell.
According to pre-speech leaks, the First Rookie will eschew Ryan's move to a defined-contribution approach to Medicare, in which the government will subsidize the purchase of private insurance, rather than be the ultimate 3rd party payer. This morning, also on CNBC, Democratic Senator Kent Conrad, who took payoffs in the form of sweetheart mortgages from Angelo Mozillo's Countrywide Finance, while chairing the Senate committee that regulated the firm, contended that all Medicare needs is a little spending restraint that some panel can provide. He declared that Ryan's approach is unnecessary, and that seniors won't really have to feel any pain at all.
Conrad then recalled Clinton forming some panel to do this, and assured viewers that it would work this time, too.
Of course, nearly 20 years ago, federal spending and deficits were mere fractions of what they are today. Ratios such as spending/GDP and debt/GDP were significantly lower, too.
It goes to show how arrogant Wonderboy and his handlers are that they think nobody will recall that, just a week ago, he was still calling for higher spending and more 'stimulus.'
One pundit quoted an administration source as saying that 'a week from now, nobody will remember that Ryan's budget plan came first.'
That's pretty cynical, isn't it?
But with media buddies like those on CNBC, I guess Wonderboy's staff figures they can lie all they want and the public will be fooled for at least another eighteen months.
CNBC's flaming socialist political reporter, 'Red' John Harwood, assured one and all that, just like Clinton won the budget debate of his term by planning to reach targets over 10 years, rather than the GOP's 7 years, so, too, will Wonderboy win this time by taking 12 years, instead of Ryan's 10, to reach his budget targets.
Windbag and generally empty-headed, uncredentialed economics reporter Steve Liesman then chimed in that 'the bond market just wants to see a plan,' so Wonderboy's plan will win, and it won't matter that it takes longer to cut deficits.
For the record, we'll see how the bond market reacts to prospects of continuing extravagant spending on social programs while, according to reports, defense spending gets the axe. Doesn't sound like something markets will feel all the comfortable with, but time will tell.
According to pre-speech leaks, the First Rookie will eschew Ryan's move to a defined-contribution approach to Medicare, in which the government will subsidize the purchase of private insurance, rather than be the ultimate 3rd party payer. This morning, also on CNBC, Democratic Senator Kent Conrad, who took payoffs in the form of sweetheart mortgages from Angelo Mozillo's Countrywide Finance, while chairing the Senate committee that regulated the firm, contended that all Medicare needs is a little spending restraint that some panel can provide. He declared that Ryan's approach is unnecessary, and that seniors won't really have to feel any pain at all.
Conrad then recalled Clinton forming some panel to do this, and assured viewers that it would work this time, too.
Of course, nearly 20 years ago, federal spending and deficits were mere fractions of what they are today. Ratios such as spending/GDP and debt/GDP were significantly lower, too.
It goes to show how arrogant Wonderboy and his handlers are that they think nobody will recall that, just a week ago, he was still calling for higher spending and more 'stimulus.'
One pundit quoted an administration source as saying that 'a week from now, nobody will remember that Ryan's budget plan came first.'
That's pretty cynical, isn't it?
But with media buddies like those on CNBC, I guess Wonderboy's staff figures they can lie all they want and the public will be fooled for at least another eighteen months.
Wednesday, April 13, 2011
The 2011 Budget Brawl
With last week's game of government 'shutdown' in the rear view mirror, conservatives are still complaining about John Boehner caving in and accepting only $31B of spending cuts and relaxing terms such as ending Planned Parenthood funding.
It was instructive to hear Wonderboy's various public statements in the days leading up to Friday's budget deal. I don't when I've heard a president tell so many lies in one week. As do his colleagues, the First Rookie conveniently skips over the fact that his own party didn't bother to pass this budget last year, at the appropriate time, when they had a majority. I actually heard one Democratic Representative shamelessly lie, declaring 'we didn't have the votes' at the time last year.
Is it really possible these Democrats think voters are so stupid they'll accept these lies?
Another lie involves just what would have occurred, should the budget deal not have been reached. Democrats keep calling it a 'government shutdown,' while Republicans referred to it as a 'government slowdown.' The difference, of course, involves how the funding shortfall is treated. Republicans intended, and apparently intend for the upcoming debt limit vote, to prioritize spending in the event of an impasse.
Thus, debt and interest payments would be made, and military personnel would be paid. But other discretionary programs would probably see a cessation of activity.
This is where rock ribbed conservatives like Sean Hannity part company with some independents. Like it or not, who will be blamed for a funding shortfall is far from clear. And, despite my own feelings, I think I agree that it's risky for Boehner's Republicans to be seen as childish or short-sighted by blocking a budget over something like Planned Parenthood spending.
That said, again, liberals are lying about this program. Especially Wonderboy. To hear him and his minions tell it, Republicans want to 'kill women' by ending funding for the program. They attempt a diversion by alleging that what's really being cut are mammograms and women's choice. Fox News' Bill O'Reilly rather cleverly provided a counterpoint to a clutch of Hollywood actresses bemoaning the program's cuts by noting that if women really wanted to exercise control over their lives and reproductive choices, they wouldn't be relying on government funding in the first place.
To understand the real underlying ugliness of PP, watch Glenn Beck's programs detailing founder Margaret Sanger's and Woodrow Wilson's views on the subject. The program was devised to sterilize the poor and mentally deficient. It's a program designed to usurp reproductive choice, now clothed in seemingly-benign medical services.
That said, it may be enough for now that liberals had a warning shot across their bow regarding this program, and the coming ethos concerning what spending is really necessary by the federal government. O'Reilly suggested this is a program that should be funded by private contributions, not the federal purse.
Stepping back, though, there's no denying that liberal Democrats are, at last, solidly on the defensive. They realize that independents have left them. Even Wonderboy and his acolytes are trying to appear tougher on spending, anticipating another shock wave to hit Democrats in the 2012 elections. But they are still determined to insist that taxes are not yet high enough. That concepts like mortgage interest deductions or IRAs are 'tax expenditures,' as if they belong to the IRS unless and until Congress benevolently chooses to give it back to taxpayers.
Great. With Paul Ryan's 2012 budget unveiling, about which I'll write in another post, government philosophies and values have once again been fused together with spending choices. Failure to acknowledge that slow job growth, flat average wage growth, and rising gasoline and food prices are combining to cause real pain to America's lower and middle socioeconomic classes is probably going to result in a Republican Senate in 2013, and perhaps a new president, as well.
It was instructive to hear Wonderboy's various public statements in the days leading up to Friday's budget deal. I don't when I've heard a president tell so many lies in one week. As do his colleagues, the First Rookie conveniently skips over the fact that his own party didn't bother to pass this budget last year, at the appropriate time, when they had a majority. I actually heard one Democratic Representative shamelessly lie, declaring 'we didn't have the votes' at the time last year.
Is it really possible these Democrats think voters are so stupid they'll accept these lies?
Another lie involves just what would have occurred, should the budget deal not have been reached. Democrats keep calling it a 'government shutdown,' while Republicans referred to it as a 'government slowdown.' The difference, of course, involves how the funding shortfall is treated. Republicans intended, and apparently intend for the upcoming debt limit vote, to prioritize spending in the event of an impasse.
Thus, debt and interest payments would be made, and military personnel would be paid. But other discretionary programs would probably see a cessation of activity.
This is where rock ribbed conservatives like Sean Hannity part company with some independents. Like it or not, who will be blamed for a funding shortfall is far from clear. And, despite my own feelings, I think I agree that it's risky for Boehner's Republicans to be seen as childish or short-sighted by blocking a budget over something like Planned Parenthood spending.
That said, again, liberals are lying about this program. Especially Wonderboy. To hear him and his minions tell it, Republicans want to 'kill women' by ending funding for the program. They attempt a diversion by alleging that what's really being cut are mammograms and women's choice. Fox News' Bill O'Reilly rather cleverly provided a counterpoint to a clutch of Hollywood actresses bemoaning the program's cuts by noting that if women really wanted to exercise control over their lives and reproductive choices, they wouldn't be relying on government funding in the first place.
To understand the real underlying ugliness of PP, watch Glenn Beck's programs detailing founder Margaret Sanger's and Woodrow Wilson's views on the subject. The program was devised to sterilize the poor and mentally deficient. It's a program designed to usurp reproductive choice, now clothed in seemingly-benign medical services.
That said, it may be enough for now that liberals had a warning shot across their bow regarding this program, and the coming ethos concerning what spending is really necessary by the federal government. O'Reilly suggested this is a program that should be funded by private contributions, not the federal purse.
Stepping back, though, there's no denying that liberal Democrats are, at last, solidly on the defensive. They realize that independents have left them. Even Wonderboy and his acolytes are trying to appear tougher on spending, anticipating another shock wave to hit Democrats in the 2012 elections. But they are still determined to insist that taxes are not yet high enough. That concepts like mortgage interest deductions or IRAs are 'tax expenditures,' as if they belong to the IRS unless and until Congress benevolently chooses to give it back to taxpayers.
Great. With Paul Ryan's 2012 budget unveiling, about which I'll write in another post, government philosophies and values have once again been fused together with spending choices. Failure to acknowledge that slow job growth, flat average wage growth, and rising gasoline and food prices are combining to cause real pain to America's lower and middle socioeconomic classes is probably going to result in a Republican Senate in 2013, and perhaps a new president, as well.
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