I chanced upon an acquaintance recently who is a local elected municipal official. Not having seen him since November, I asked him, a Republican, if he were pleased with the GOP House majority?
He sort of wrinkled his nose, and said words to this effect,
'Do you mean the Tea Partiers? No.'
I quickly mentioned my attendance at two Capitol Hill Tea Party events, which quieted him. Then I cautioned him that failure to listen to and satisfy active, angry voters like me would make the GOP a minority party once more.
As we discussed the root causes of political ineffectiveness, I opined, as in some of my prior posts, that much would be accomplished with a single Constitutional amendment limiting terms for Congress and all federal judiciary, adding that health care and pensions should be revoked for Congress. He quickly attempted to disabuse me of this, citing certain corruption by said officials to top up their desired compensation.
Is this not the height of arrogance and insensitivity? A record number of House seats were lost by Democrats, not to mention the larger tide of state legislative seats, and an old-style Republican local pol lectures me on paying Congress appropriately, or they'll steal the rest from us under the table!
Worse, this local official sees the Tea Party as one of those undesired, uncontrolled forces of voter passion which spoil his quiet world of largely anonymous labors with little oversight.
This is why we need to all, regardless of our partisan leanings, become more engaged in the political process and collaborate to more closely examine what is done by elected and appointed officials in our names, with our tax dollars.
Local elected officials like my acquaintance feel, I am sure, that they are doing us all a favor. But not when they deride a movement which simply seeks a return to Constitutional limits and more accountability for spending.
Wednesday, January 5, 2011
Tuesday, January 4, 2011
Rick Scott Aims To Govern Florida As A Business
Stephen Moore wrote an interesting piece in the Wall Street Journal on December 31 regarding Rick Scott's aims as the new governor of Florida.
I tend to be suspect of governors who swear they will run their state "like a business." Which Scott does. Regardless of how wrong-headed or wasteful you believe a governmental unit such as a large state or the federal government to be, it's not a business. The government is a structure meant to effect certain necessary social and political duties of and for a group of citizens.
What is positive about Scott's focus is on job creation. His campaign had as its centerpiece the replacement of some 700,000 jobs lost in Florida since the start of the recession.
But when you read Moore's piece, the bulk of Scott's cost-cutting is pension- and health benefit-related. Sounds familiar to anyone from New Jersey.
Oddly, what Moore's interview with Scott demonstrated for me, along with familiarity with New Jersey's Chris Christie, is a reinforcement of my observation in this recent post,
"If you think about it, aren't our wealth-transfer payment programs the ones which are deemed 'non-discretionary' and breaking our budgets? Social Security, Medicare, Medicaid, and related transfers, enacted with no global or macro budgetary conditionality? As communal, unlimited spending pots, the withdrawals from which are on individual eligibility bases, not apportioned and pro-rated based upon budgetary limitations?
It's ridiculous! Thanks to Congressional idiocy in the 1930s and 1960s, we've elevated the poor and destitute ahead of every other need of our Republic. They never are required to share in the economies and belt-tightening shared by our other national governmental spending and taxation realities."
Now we see two large state governors struggling with budget issues which are overwhelmingly driven by state and municipal union compensation and benefits.
I find myself wondering why state workers, as well as government transfer payment recipients, should not be exposed to the vagaries of the fortunes of the taxpayers who ultimately fund their claims. Why are there no pro-rata, or normalizing conditions on any of those taxpayer-fund recipients?
It's as if those who actually create the value which is taxed are subject to risks and uncertainty, but those feeding from those tax revenues are immune.
It's completely wrong.
I tend to be suspect of governors who swear they will run their state "like a business." Which Scott does. Regardless of how wrong-headed or wasteful you believe a governmental unit such as a large state or the federal government to be, it's not a business. The government is a structure meant to effect certain necessary social and political duties of and for a group of citizens.
What is positive about Scott's focus is on job creation. His campaign had as its centerpiece the replacement of some 700,000 jobs lost in Florida since the start of the recession.
But when you read Moore's piece, the bulk of Scott's cost-cutting is pension- and health benefit-related. Sounds familiar to anyone from New Jersey.
Oddly, what Moore's interview with Scott demonstrated for me, along with familiarity with New Jersey's Chris Christie, is a reinforcement of my observation in this recent post,
"If you think about it, aren't our wealth-transfer payment programs the ones which are deemed 'non-discretionary' and breaking our budgets? Social Security, Medicare, Medicaid, and related transfers, enacted with no global or macro budgetary conditionality? As communal, unlimited spending pots, the withdrawals from which are on individual eligibility bases, not apportioned and pro-rated based upon budgetary limitations?
It's ridiculous! Thanks to Congressional idiocy in the 1930s and 1960s, we've elevated the poor and destitute ahead of every other need of our Republic. They never are required to share in the economies and belt-tightening shared by our other national governmental spending and taxation realities."
Now we see two large state governors struggling with budget issues which are overwhelmingly driven by state and municipal union compensation and benefits.
I find myself wondering why state workers, as well as government transfer payment recipients, should not be exposed to the vagaries of the fortunes of the taxpayers who ultimately fund their claims. Why are there no pro-rata, or normalizing conditions on any of those taxpayer-fund recipients?
It's as if those who actually create the value which is taxed are subject to risks and uncertainty, but those feeding from those tax revenues are immune.
It's completely wrong.
Monday, January 3, 2011
Austin Goolsbee's Debt Ceiling Lies
I happened to catch the perennially wan-looking administration chief economic hack, Austin Goolsbee, on CNBC this morning. Or at least some recently-recorded remarks by him.
The topic was the House Republicans' threat to maintain the US debt level ceiling, rather than, as is typically done, automatically vote to raise it.
Doing so is much like your credit card issuer routinely raising your account limit every time you come within a few dollars of exceeding it, no questions asked.
To illustrate how surreal administrations, particularly this one, have become, Goolsbee claimed that failing to increase the debt ceiling would cause a US default.
Isn't it interesting that Goolsbee chose not to argue for drastic federal budget slashing, in order to fit spending within the existing debt ceiling by cutting new borrowing?
The administration's culture is simply out of touch with America's current fiscal reality. We indifferently run continuing annual deficits and ever-increasing external debt, while continuing to fund overly-generous transfer payment programs which are unlinked to the national economic health.
I hope Congress does hold firm on the debt ceiling, citing fiscal prudence. Then the administration will be forced to come to terms with its lavish spending and begin to live within the existing debt levels.
Let the spending rollback begin!
The topic was the House Republicans' threat to maintain the US debt level ceiling, rather than, as is typically done, automatically vote to raise it.
Doing so is much like your credit card issuer routinely raising your account limit every time you come within a few dollars of exceeding it, no questions asked.
To illustrate how surreal administrations, particularly this one, have become, Goolsbee claimed that failing to increase the debt ceiling would cause a US default.
Isn't it interesting that Goolsbee chose not to argue for drastic federal budget slashing, in order to fit spending within the existing debt ceiling by cutting new borrowing?
The administration's culture is simply out of touch with America's current fiscal reality. We indifferently run continuing annual deficits and ever-increasing external debt, while continuing to fund overly-generous transfer payment programs which are unlinked to the national economic health.
I hope Congress does hold firm on the debt ceiling, citing fiscal prudence. Then the administration will be forced to come to terms with its lavish spending and begin to live within the existing debt levels.
Let the spending rollback begin!
Friday, December 31, 2010
Wonderboy's Curious & Selective Sense of History
Tuesday's Wall Street Journal included an interesting piece by Fouad Ajami, director of Middle East Studies at The Johns Hopkins School of Advanced International Studies, entitled Obama's Presidency Joins the Fray.
Mr. Ajami provided an very insightful view into Wonderboy's warped and biased use of history while president. For example, the First Rookie dismissed parallels between Afghanistan and Vietnam, because he declared himself to be young enough not to have 'baggage' from the latter US involvement.
The current US president then selectively took the comparisons to JFK and FDR which he likes, but eschewed JFK's combat experience and tough-minded attitudes on defense and anti-communism.
Ajami reminds us of Wonderboy's self-description, in Cairo, "as a student of history," thus making his selective attention to it the more troubling. One suspects the only history in which the president is interested is his own, so expansively detailed in his many autobiographies.
How does one write so much about a life devoid of real accomplishment, outside of, with a nod to that other Illinois resident who became president, 'fooling some of the people some of the time?'
Mr. Ajami writes,
"our president would have known that a command economy is alien to the American temperament, that unfettered government spending was bound to arouse the antagonism of the American people...."
He concludes by contending that "the real Obama presidency has just begun."
Many believe Wonderboy will now tack to the center and effect a self-rescue. No less an esteemed conservative pundit than Charles Krauthammer seems to believe this.
Personally, I don't see it like that. I just don't think Wonderboy has it in him to be another Clinton. Clinton was never an ideologue, whereas that's all Wonderboy really seems to be. And a self-involved, self-referential, egotist, at that.
But, as Mr. Ajami suggests, we'll have the next two years to find out if the current Oval Office occupant really understand history, or cares.
Mr. Ajami provided an very insightful view into Wonderboy's warped and biased use of history while president. For example, the First Rookie dismissed parallels between Afghanistan and Vietnam, because he declared himself to be young enough not to have 'baggage' from the latter US involvement.
The current US president then selectively took the comparisons to JFK and FDR which he likes, but eschewed JFK's combat experience and tough-minded attitudes on defense and anti-communism.
Ajami reminds us of Wonderboy's self-description, in Cairo, "as a student of history," thus making his selective attention to it the more troubling. One suspects the only history in which the president is interested is his own, so expansively detailed in his many autobiographies.
How does one write so much about a life devoid of real accomplishment, outside of, with a nod to that other Illinois resident who became president, 'fooling some of the people some of the time?'
Mr. Ajami writes,
"our president would have known that a command economy is alien to the American temperament, that unfettered government spending was bound to arouse the antagonism of the American people...."
He concludes by contending that "the real Obama presidency has just begun."
Many believe Wonderboy will now tack to the center and effect a self-rescue. No less an esteemed conservative pundit than Charles Krauthammer seems to believe this.
Personally, I don't see it like that. I just don't think Wonderboy has it in him to be another Clinton. Clinton was never an ideologue, whereas that's all Wonderboy really seems to be. And a self-involved, self-referential, egotist, at that.
But, as Mr. Ajami suggests, we'll have the next two years to find out if the current Oval Office occupant really understand history, or cares.
Thursday, December 30, 2010
Biggs, Hassett & Jensen On Budget Balancing
Three people from the American Enterprise Institute wrote an impressive piece in yesterday's Wall Street Journal entitled The Right Way to Balance the Budget.
As I noted in yesterday's post concerning Howard Dean's recent delusional rant on CNBC, it's not simply a matter of tax hikes or spending cuts being apparently arithmetically equal. The authors begin,
"In new research that builds on the pioneering work of Harvard economists Alberto Alesina and Silvia Ardagna, we analyzed the history of fiscal consolidations in 21 countries of the Organization for Economic Cooperation and Development over 37 years. Some of those nations repaired their fiscal problems; many did not. Our goal was to establish a detailed recipe for success. If the United States were to copy past consolidations that succeeded, what would it do?
The data also clearly indicate that successful attempts to balance budgets rely almost entirely on reduced government expenditures, while unsuccessful ones rely heavily on tax increases. On average, the typical unsuccessful consolidation consisted of 53% tax increases and 47% spending cuts.
By contrast, the typical successful fiscal consolidation consisted, on average, of 85% spending cuts. While tax increases play little role in successful efforts to balance budgets, there are some cases where governments reduced spending by more than was needed to lower the budget deficit, and then went on to cut taxes. Finland's consolidation in the late 1990s consisted of 108% spending cuts, accompanied by modest tax cuts."
That's pretty riveting. No qualitative arguments about income redistribution philosophy. Instead, it's black and white. Raise taxes and you'll fail to regain fiscal integrity. Cut spending, and you may. They continue,
"Consistent with other studies, we found that successful consolidations focused on reducing social transfers, which in the American context means entitlements, and also on cuts to the size and pay of the government work force. A 1996 International Monetary Fund study concluded that "fiscal consolidation that concentrates on the expenditure side, and especially on transfers and government wages, is more likely to succeed in reducing the public debt ratio than tax-based consolidation." For example, in the U.K's 1997 consolidation, cuts to transfers made up 32% of expenditure cuts, and cuts to government wages made up 21%.
Likewise, a 1996 research paper by Columbia University economist Roberto Perotti concluded that "the more persistent adjustments are the ones that reduce the deficit mainly by cutting two specific types of outlays: social expenditure and the wage component of government consumption. Adjustments that do not last, by contrast, rely primarily on labor-tax increases and on capital-spending cuts."
The numbers are striking. Our research shows that the typical successful consolidation allocates 38% of the spending cuts to entitlements and 25% to reductions in government salaries. The residual comes from areas such as subsidies, infrastructure and defense."
Again, very deterministic evidence. And sensible. Cutting recurring government spending, e.g., salaries/jobs, is a recurring benefit to fiscal rectitude. Cutting entitlements gets at the heart of why, as I argued in yesterday's post, we arrived here in the first place. Spending on promises that never should have been made in the flawed manner that they were, with no contingent limits.
The editorial's authors conclude,
"Why is reducing entitlements and government pay so important? One explanation is that lower social transfers spur people to work and save. Reducing the government work force shifts resources to the more productive private sector.
Another reason is credibility. Governments that take on entrenched, politically sensitive spending show citizens and financial markets they are serious about fiscal responsibility.
While tax hikes slow revenue growth, policies that credibly reduce government spending in the long run boost economic growth by more than their simple effects on deficits might imply. Any attempt to address the federal government's budget shortfall that relies on less than 85% spending cuts runs too large a risk of failure. The experience of so many other countries shows that it's crucial for the U.S. to get this right."
That's another hard datapoint. The federal government needs to be cutting spending to the tune of 85% of the gap needed to be closed. That leaves precious little for tax increases.
Perhaps the new GOP House is up to the task. Let's hope so. We may not have a second chance at this.
As I noted in yesterday's post concerning Howard Dean's recent delusional rant on CNBC, it's not simply a matter of tax hikes or spending cuts being apparently arithmetically equal. The authors begin,
"In new research that builds on the pioneering work of Harvard economists Alberto Alesina and Silvia Ardagna, we analyzed the history of fiscal consolidations in 21 countries of the Organization for Economic Cooperation and Development over 37 years. Some of those nations repaired their fiscal problems; many did not. Our goal was to establish a detailed recipe for success. If the United States were to copy past consolidations that succeeded, what would it do?
The data also clearly indicate that successful attempts to balance budgets rely almost entirely on reduced government expenditures, while unsuccessful ones rely heavily on tax increases. On average, the typical unsuccessful consolidation consisted of 53% tax increases and 47% spending cuts.
By contrast, the typical successful fiscal consolidation consisted, on average, of 85% spending cuts. While tax increases play little role in successful efforts to balance budgets, there are some cases where governments reduced spending by more than was needed to lower the budget deficit, and then went on to cut taxes. Finland's consolidation in the late 1990s consisted of 108% spending cuts, accompanied by modest tax cuts."
That's pretty riveting. No qualitative arguments about income redistribution philosophy. Instead, it's black and white. Raise taxes and you'll fail to regain fiscal integrity. Cut spending, and you may. They continue,
"Consistent with other studies, we found that successful consolidations focused on reducing social transfers, which in the American context means entitlements, and also on cuts to the size and pay of the government work force. A 1996 International Monetary Fund study concluded that "fiscal consolidation that concentrates on the expenditure side, and especially on transfers and government wages, is more likely to succeed in reducing the public debt ratio than tax-based consolidation." For example, in the U.K's 1997 consolidation, cuts to transfers made up 32% of expenditure cuts, and cuts to government wages made up 21%.
Likewise, a 1996 research paper by Columbia University economist Roberto Perotti concluded that "the more persistent adjustments are the ones that reduce the deficit mainly by cutting two specific types of outlays: social expenditure and the wage component of government consumption. Adjustments that do not last, by contrast, rely primarily on labor-tax increases and on capital-spending cuts."
The numbers are striking. Our research shows that the typical successful consolidation allocates 38% of the spending cuts to entitlements and 25% to reductions in government salaries. The residual comes from areas such as subsidies, infrastructure and defense."
Again, very deterministic evidence. And sensible. Cutting recurring government spending, e.g., salaries/jobs, is a recurring benefit to fiscal rectitude. Cutting entitlements gets at the heart of why, as I argued in yesterday's post, we arrived here in the first place. Spending on promises that never should have been made in the flawed manner that they were, with no contingent limits.
The editorial's authors conclude,
"Why is reducing entitlements and government pay so important? One explanation is that lower social transfers spur people to work and save. Reducing the government work force shifts resources to the more productive private sector.
Another reason is credibility. Governments that take on entrenched, politically sensitive spending show citizens and financial markets they are serious about fiscal responsibility.
While tax hikes slow revenue growth, policies that credibly reduce government spending in the long run boost economic growth by more than their simple effects on deficits might imply. Any attempt to address the federal government's budget shortfall that relies on less than 85% spending cuts runs too large a risk of failure. The experience of so many other countries shows that it's crucial for the U.S. to get this right."
That's another hard datapoint. The federal government needs to be cutting spending to the tune of 85% of the gap needed to be closed. That leaves precious little for tax increases.
Perhaps the new GOP House is up to the task. Let's hope so. We may not have a second chance at this.
Wednesday, December 29, 2010
Howard Dean's Taxation Delusions On CNBC
I happened to view an exchange this morning on CNBC between former CBO head Douglas Holz-Eakins and former Vermont governor and DNC chair Howard Dean. It was most illuminating.
In a discussion regarding fiscal responsibility and tax policies, Dean railed against 'giving tax cuts to the rich' while borrowing the money for them from China.
It was truly laughable that Dean didn't see the warped perspectives embedded in his comments. To wit, Dean, being an uber-liberal, naturally assumes all of your income is, in reality, the government's. Letting you keep any of it is a gift for which you should be on bended knee, kissing the feet of your political masters.
Thus, letting you keep any more of your income than you already do, while liberals- and conservatives- spend more than the government collects in taxes, and cover the difference by borrowing from our enemies, like China, is considered folly by said uber-liberals, Dean included.
When confronted by co-anchor Joe Kernen and Holz-Eakins with the reality that soaking the income of the upper percentiles of income-earners still only generates about $94B, assuming no changes by said wealthy in declared income, against the trillions in deficits, Dean only continued to wail that we were borrowing from the Chinese to 'give tax breaks to the rich.'
Standard far-left stuff, but ludicrous when contrasted with the fact that all of the incomes of the wealthy still won't make a dent in the spending binge on which our liberal Democratic Congress and Wonderboy have been.
If you think about it, aren't our wealth-transfer payment programs the ones which are deemed 'non-discretionary' and breaking our budgets? Social Security, Medicare, Medicaid, and related transfers, enacted with no global or macro budgetary conditionality? As communal, unlimited spending pots, the withdrawals from which are on individual eligibility bases, not apportioned and pro-rated based upon budgetary limitations?
It's ridiculous! Thanks to Congressional idiocy in the 1930s and 1960s, we've elevated the poor and destitute ahead of every other need of our Republic. They never are required to share in the economies and belt-tightening shared by our other national governmental spending and taxation realities.
I don't think I've ever seen so clear a picture of the nonsensical liberal ethos and belief system than in Howard Dean's hysterically comical attitude and comments this morning on CNBC. It was straight out of Socialism 101.
'All income belongs to the people. The government is the people. The poor receive first consideration for spending by the government, on behalf of the people, i.e., the government.'
The actual value-producing income-earners are simply presumed to be fatted cattle to be milked and, in time, through death taxes, slaughtered for the benefits of the non-working and/or poor.
In a discussion regarding fiscal responsibility and tax policies, Dean railed against 'giving tax cuts to the rich' while borrowing the money for them from China.
It was truly laughable that Dean didn't see the warped perspectives embedded in his comments. To wit, Dean, being an uber-liberal, naturally assumes all of your income is, in reality, the government's. Letting you keep any of it is a gift for which you should be on bended knee, kissing the feet of your political masters.
Thus, letting you keep any more of your income than you already do, while liberals- and conservatives- spend more than the government collects in taxes, and cover the difference by borrowing from our enemies, like China, is considered folly by said uber-liberals, Dean included.
When confronted by co-anchor Joe Kernen and Holz-Eakins with the reality that soaking the income of the upper percentiles of income-earners still only generates about $94B, assuming no changes by said wealthy in declared income, against the trillions in deficits, Dean only continued to wail that we were borrowing from the Chinese to 'give tax breaks to the rich.'
Standard far-left stuff, but ludicrous when contrasted with the fact that all of the incomes of the wealthy still won't make a dent in the spending binge on which our liberal Democratic Congress and Wonderboy have been.
If you think about it, aren't our wealth-transfer payment programs the ones which are deemed 'non-discretionary' and breaking our budgets? Social Security, Medicare, Medicaid, and related transfers, enacted with no global or macro budgetary conditionality? As communal, unlimited spending pots, the withdrawals from which are on individual eligibility bases, not apportioned and pro-rated based upon budgetary limitations?
It's ridiculous! Thanks to Congressional idiocy in the 1930s and 1960s, we've elevated the poor and destitute ahead of every other need of our Republic. They never are required to share in the economies and belt-tightening shared by our other national governmental spending and taxation realities.
I don't think I've ever seen so clear a picture of the nonsensical liberal ethos and belief system than in Howard Dean's hysterically comical attitude and comments this morning on CNBC. It was straight out of Socialism 101.
'All income belongs to the people. The government is the people. The poor receive first consideration for spending by the government, on behalf of the people, i.e., the government.'
The actual value-producing income-earners are simply presumed to be fatted cattle to be milked and, in time, through death taxes, slaughtered for the benefits of the non-working and/or poor.
Monday, December 27, 2010
More Horrific State Budget Games
The Manhattan Institute's Steven Malanga wrote a chilling editorial in last Friday's Wall Street Journal entitled State House Shell Games.
In it, he detailed the budgetary games US states have played to fool voters while continuing to spend beyond their means. For example, apparently federal funds for upgrading 911 emergency systems is a fairly common source for misallocation of resources. These funds are used for other purposes with seeming impunity.
Then there are cases of states like Arizona mortgaging its government buildings in such a way as to effect a 'sale' which escapes constitutional strictures. Then there's New York State, where, according to Malanga, one-third of the bridge and highway trust fund is being used to pay state debt service.
Essentially, writes Malanga, states are using elaborate shell games to shift funds inappropriately among various special purposes and their general funds, the better to obscure the true indebtedness of said states.
California's Schwarzeneggar promised that $10.9B in deficit bonds issued early in his governorship would be the ticket to his state's budget woes. Instead, the legislature and governor simply went on spending, leaving the state with a current $25B budget shortfall over the next year and a half.
Voters are beginning to notice. Even my liberal Democratic squash partner voiced alarm after seeing Meredith Whitney's recent appearance on CBS' '60 Minutes.' For a guy who never saw a spending program he didn't like, he's truly fearful that some states, like ours, won't be able to fund all of their liabilities.
Seems like the endgame on state budget tricks and deficits, in defiance of notional balanced budget rules, is coming soon.
In it, he detailed the budgetary games US states have played to fool voters while continuing to spend beyond their means. For example, apparently federal funds for upgrading 911 emergency systems is a fairly common source for misallocation of resources. These funds are used for other purposes with seeming impunity.
Then there are cases of states like Arizona mortgaging its government buildings in such a way as to effect a 'sale' which escapes constitutional strictures. Then there's New York State, where, according to Malanga, one-third of the bridge and highway trust fund is being used to pay state debt service.
Essentially, writes Malanga, states are using elaborate shell games to shift funds inappropriately among various special purposes and their general funds, the better to obscure the true indebtedness of said states.
California's Schwarzeneggar promised that $10.9B in deficit bonds issued early in his governorship would be the ticket to his state's budget woes. Instead, the legislature and governor simply went on spending, leaving the state with a current $25B budget shortfall over the next year and a half.
Voters are beginning to notice. Even my liberal Democratic squash partner voiced alarm after seeing Meredith Whitney's recent appearance on CBS' '60 Minutes.' For a guy who never saw a spending program he didn't like, he's truly fearful that some states, like ours, won't be able to fund all of their liabilities.
Seems like the endgame on state budget tricks and deficits, in defiance of notional balanced budget rules, is coming soon.
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