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“Our practical choice is not between a tax-cut deficit and budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy; or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve . . . a budget surplus.” John F. Kennedy

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Dec 10 2012

“The Age of the Unserious”

C.M. Phippen

Our president claims that he is making an honest effort to negotiate with Republicans to avoid the fiscal cliff. He wants us to believe that they are the ones who simply won’t budge on their positions and won’t allow him to fix the horrific fiscal issues we face.

This is the president whom Tim Geithner claims is willing to go off the fiscal cliff if the Republicans don’t agree to his plan to raise taxes on the richest 2% because, in Geithner’s words, “remember, it’s only the top two percent.” Doesn’t unequal treatment under the law become a civil rights issue at some point!? Anyway . . .

This is the same president who has had his past two budgets shot down in Senate votes of 99-0 and 97-0, one of which looked an awful lot like Obama’s current proposal from which he is negotiating. He apparently expects Republicans to support the plan that his Democrat allies in the Senate refused to support?

In addition to major entitlement spending cuts, the greatest priority our government should have is that of allowing/encouraging/stimulating economic growth, which will in and of itself lead to the President’s desired revenue increases.

In fact, Bill Whittle recently made the point that “if you destroyed the entire government, burned every [public] building, fired every government worker, sank every aircraft carrier, even with no government to pay for – none – we’d still pay the same taxes that we’re paying today and still have to borrow or print money just to pay for entitlements.”

I would argue that if we do indeed have a shortage of money for schools, teachers, police and other government services, it is entitlement spending that is draining those resources, not tax cuts or wars.

Even Austin Goolsbee, former president of Obama’s Council on Economic Advisers, recently stated that any solution to America’s economic ills “cuts on discretionary and entitlement spending.”

In addition, Peter Orszag, former OMB director, recently came out urging his fellow Democrats to support reforming entitlements and putting “crucial programs on a sounder footing.”

I must assume that our president is well aware of the fact that nothing in his rejected budget plans or spending priorities will stimulate growth. And he has made it very clear that, despite his repeated declarations to the contrary, he is never going to cut any real spending.

Thus, his only plan to decrease the rate of growth of our historically unprecedented federal deficit seems to be an increase in revenue coming from the already over-burdened taxpayer. Unfortunately, the proposal on which he is willing to risk our entire economy, that of increased taxes on the top 2%, leads to enough revenue to cover expenses for about eight days! Brilliant!

Even the Obama-touted Buffet Rule, if implemented, would pay for about 28 hours of government spending. If you want to close the deficit through increased taxes on the two highest tax brackets – 33% ($178,650 – $388,350) and 35% (over $388,350) – it would be necessary to hike those rates to 159% and 166% respectively. I’m assuming most liberals would tell us that such rates would have absolutely no impact on economic growth or the willingness of those individuals to work!

AEI economists recently looked at the effect of tax increases v. entitlement reforms on fiscal crises management over the nearly three-decade period of 1970-2007. They found that countries that were able to successfully reform did so mainly with spending cuts; in fact, on average 85% of their budget gaps were closed this way. On the other hand, those with failed reforms were the countries that, on average, relied at least 50% on tax increases.

Just ask Jim Sinegal, co-founder of Costco, if those tax increases will most likely lead to greater or reduced revenue next year. He’s a supporter of Obama who preached the moral imperative of Obama’s tax plan, and of businesses large and small all “following the same set of rules . . .” while risking Costco’s credit rating to take on an additional $3.5 billion in debt in order to pay out dividends this year before Obama’s tax hikes kick in. Oh, and he is apparently the biggest beneficiary of this move.

Or ask Great Britain how a plan of tax increases worked for them last year when they raised rates on those making over £1 million (about $1.6 million) to 50%. The result was that they saw a £7 billion treasury loss as nearly two-thirds of the high earners were suddenly missing from the country or finding ways to shelter income.

Funny though, that even after the manifestation of the result of such policies, political supporters of the increased tax are now calling any reduction a “tax cut for millionaires,” as though resentment toward the wealthy is more important than the amount of money the government actually has for programs which benefit the less well-off.

Yes, Mr. Whittle, I think you’re right; this truly is “The Age of the Unserious.”


Nov 16 2012

Obama and the “Balanced Approach”

C.M. Phippen

Within days of his razor thin re-election, President Obama chose to inform us that he now has a mandate for his deficit reduction policies that include a “balanced approach.” In this case, balanced means he wants the wealthy to pay for the overspending of politicians in Washington; if the rich will just pay more, then the politicians will find the discipline to reduce their overspending by a tiny fraction.

Never mind that it wasn’t a “balanced approach” of irresponsibility that got us here – it was fully a result of Washington not living within its means. The increase in revenue from those taxpayers would amount to $82.3 billion annually, the equivalent of about eight days of spending.

According to a recent study by Ernst & Young, just allowing tax rates to go up on those making over $250,000 a year could cause a loss over the long-term of 700,000 jobs.

Are we really willing to exchange eight days of spending for 700,000 jobs in an economy that is barely making it? Does this make sense to anyone who’s not a community organizer?

Our economy needs to grow at about a 3 percent annual rate in order to just keep up with new workers entering the work force; under Obama we’ve experienced a GDP growth rate average of about 2 percent.

Even Thinkprogress.org, while denying that these increased tax rates will have any real effect on economic prosperity, has admitted that the US economy would take a .25 percent hit in growth if these taxes increase. Even if that is the worst of the economic consequences from such a policy of anything but “equal protection under the law,” are we really willing to take a 1/4 percent hit year after year just to cover eight days of expenses during each of those years, especially when the record under this president has been growth below what is necessary just to keep the currently high rates of unemployment stable?

Interestingly enough, when looking at the exit polling done on election day, only 33 percent of voters said they think taxes should be raised to deal with the deficit. A full 63 percent of voters responded “No” to the question of whether or not taxes ought to be raised to help cut the budget deficit.

Of course, no surprise that many of the people who probably voted for Obama were completely unaware of his plans. That would be because he didn’t run on his plans. He ran on demonizing Mitt Romney for being successful and rich, as evidenced by his 85.5 percent of negative ads in this campaign; ads that were mainly aimed at Romney personally rather than being aimed at his actions and principles, by the way. Translation – nearly all of his sizeable war chest was spent demonizing the most successful guy in the room.

There’s no better time in America to be a loser – we love the guy whose every promised outcome was a flop and who, at every turn, had an excuse handy as to why he just couldn’t accomplish what he wanted and why it was everyone’s fault but his own. The reason the stimulus didn’t work, according to the Obama administration, was that the recession was much worse than they’d realized; turns out it wasn’t as bad as we thought – 4.7 percent decline rather than 5.7 percent.

He truly is the president of the participation trophy generation. I guess though, that if the successful aren’t responsible for building their own success, it follows that the losers aren’t responsible for their own failures.


Jul 26 2012

Obama’s Plan Worked?

C.M. Phippen

What plan was it that “worked”?

The plan where the debt held by the US government increased by an amount greater than the debt accumulated from George Washington’s presidency all the way to Bill Clinton’s?

The plan where US competitiveness fell from 1st to 5th?

The plan where unemployment went up as rapidly as the federal deficit and 700,000 more workers lost their jobs during the Obama recovery (I’d certainly hate to see an Obama recession)?

The plan where already unaffordable worker health insurance costs increased 23 percent?

The plan where the number of Americans in poverty rose by 6.4 million, to the highest level since the start of the war on poverty in 1965; and that is with the safety nets in place that were created by that war?

The plan where the number of Americans on food stamps increased 44%, to the highest rate EVER, all while the government runs ads touting dependence on food stamps to help you “look amazing“?

The results of the plan which lead Henry Waxman to declare this?


Jul 16 2012

Economic Reality and Government

C.M. Phippen

“There is only one difference between a bad economist and a good one: the bad economist confines himself to the visible effect; the good economist takes into account both the effect that can be seen and those effects that must be foreseen.” Frederic Bastiat

The newly upheld healthcare bill, passed by a president who can’t get anything right and always has someone else to blame for his failures, is supposed to add 30 million Americans (or non-Americans) to the “insured” category while at the same time not hampering accessibility or quality, and decreasing costs.

In fact, just after the Supreme Court ruling declaring the mandate unconstitutional but upholding the ability of the federal government to tax non-participation in the US insurance industry, every interview I heard with a supporter of the bill still claimed that it would save the federal government $100 million, even though every recent indication is to quite the contrary.

China is having some government v. free enterprise conflict of its own. In order to continue to grow the Chinese economy without causing inflation, which would be devastating to the 150 million Chinese living in poverty, the government has mandated that utility prices remain below market rates. Of course, we all know that if the government says something must be, then it simply must be.

The result is that private companies in China, refusing to operate at a loss, have been supplying power for fewer hours and have shut down record numbers of power plants for maintenance during the hot summer months. In some areas, power plants have stopped providing power for days at a time, leaving citizens without air conditioning, refrigeration or running water.

The chairwoman of China Power International has warned that if the government continues to enforce price controls, one-fifth of China’s 436 coal-fired power plants could face bankruptcy.

The fact is, there is a cost for goods and services, and a price below which no one will willingly produce or provide them. China’s largest electric utility, Huaneng, says that prices charged to customers should have been 13 percent higher last year to remain in line with the increase in coal prices; this year, spot prices for coal are up 20 percent because of various world events. All the while, the government is mandating almost no increase in the rate that utility providers can charge.

In order to deal with the lack of dependable power, some businesses have their workers come in at night or during odd hours when there are fewer blackouts, some restaurants have resorted to cooking over coals and hauling water by hand from wells. Additionally, the government has put pressure on the mines to sell coal at below-market rates, causing the best and purest coal to be exported while selling high-sulfer, high-polluting coal to Chinese companies.

At the end of May, at least six cargo ships carrying loads of coal from abroad were affected by deferrals or defaults on contracts by Chinese buyers as those ships remained full and waiting in ports with no one to pay. Of course, why would they when the government won’t allow utility companies to be adequately reimbursed for providing the electricity generated by that coal to consumers?

The Chinese economy is experiencing rapid deceleration and its potential growth is being hindered by bureaucrats who claim to honestly believe that their issuance of an edict will cause economic forces to fall into line behind their stated desires.

In the US, 83 percent of doctors who responded to a survey performed by a group opposed to Obamacare have considered leaving the medical profession as a result of “current changes in the medical system,” with 65 percent of those individuals pointing to government involvement as the main culprit.

We can look to Massachusetts to see that since the passage of state healthcare reform, there has been basically no difference in the usage of emergency rooms, doctor shortages abound and premiums shot up above the national average within two years and have only recently started growing at a slower rate.

In order to combat a nearly 50 percent cost overrun encountered with the implementation of the law, the state reduced costs by kicking almost 40,000 legal immigrants off of state health coverage and implementing free market principles which grant tiered health care plans to individuals based on, yes, their ability to pay. Free market principles are what finally brought down the rise in the cost of care in Massachusetts.

As for the rest of us, our president promised that with the passage of Obamacare we would see lower premiums, less federal spending and no additional federal debt, no taxes for anyone making under $250,000 a year, the ability to keep any current health plan if one were to so choose and greater access to health coverage.

Too bad saying it just doesn’t make it so.


Jun 2 2012

Get the Job Done or Get Out

C.M. Phippen

Last week I wrote about the fact that President Obama seems to want to make excuses for everything that he deems as getting in the way of him delivering his promised hope and change. Nothing works out quite like he believes it will, and yet he behaves as though there are no other options.

It was interesting then, to hear him criticizing Romney’s experience with Bain Capital. While Romney has a proven track record of turning around companies that are suffering from adverse circumstances brought on by world events, prior poor management, bad luck, structural changes in the economy, etc. Obama looks at these very same types of challenges, throws up his hands and says he can’t.

A friend recently shared with me her husband’s experience working for Bain & Co. many years ago. His job was to turn around companies and make them profitable in under six months, to take them from losing money to earning profits. Of course, as we all know, companies making money tend to hire and/or retain workers; companies losing money tend to lay off workers. And mind you, in under six months.

Admittedly, the US economy is a much larger, more complicated beast, but the principles for success and sustainability are still the same. “If I don’t have this done [the economy fixed] in three years, then this is going to be a one-term proposition.” Apparently, he felt that giving him 500 percent more time than a business consultant would get was adequate to prove the effectiveness of his strategies.

Not only did Bain Capital (the investment firm), under Romney, have a 78 percent save rate with regard to companies that were headed toward bankruptcy before Bain stepped in, but when Bain & Co. (the consulting firm) itself was headed for trouble in the early 90s, Mitt Romney was the person called in to turn around that company. Within a year under Romney’s leadership, Bain & Co. was again profitable and able to grow throughout the 90s at a rate of 25 percent per year, more than doubling the number of offices and increasing the number of employees.

On the other hand, the Obama administration handed out large amounts of money to various failing companies that have continued to fail even after receiving grants and loan guarantees from us, the taxpayers. Marc A. Thiessen had a piece in the Washington Post that outlined Obama’s record of public equity failures. These included:

Abound Solar, Inc. received a $400 million guarantee, drew on $70 million before halting production and laying off 180 workers.

Beacon Power received a $43 million taxpayer loan guarantee and filed for bankruptcy in fall 2011. We can assume loss of jobs for 100% of the workforce.

ECOtality received $126.2 million in taxpayer money. The company has sustained $45 million in losses and claim to have no foreseeable profits anywhere in the future.

First Solar received $3 billion in loan guarantees, yet the company’s trading price fell to record lows this month due to “$401 million in restructuring costs tied to firing 30 percent of its workforce.”

Nevada Geothermal Power (NGP) was given a $98.5 million loan guarantee in 2010. As of October 2011, its own auditor concluded that there was “significant doubt about the company’s ability to continue as a going concern.”

Raser Technologies was given a $33 million grant and filed for bankruptcy protection this year. The plant for which the money was used has fewer than 10 employees and owes $1.5 million in back taxes.

SunPower received a $1.2 billion loan guarantee and now owes more than it’s worth.

Many of the companies this administration chose to invest in were rated as junk bonds. Maybe that’s because “71 percent of the Obama Energy Department’s grants and loans went to ‘individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.’” And maybe that’s why over 100 investigations have been launched relating to the Department of Energy’s green energy programs.

If this is what Obama calls capitalism, no wonder he thinks it doesn’t work.

The very things Romney was able to overcome at Bain are the very things Obama claims are outside of his control. Could it be that our president is right, that he just isn’t capable of working through the roadblocks in his way? If so, then I guess it’s time to elect someone who is.


May 26 2012

What Is It that Our President Actually Does Know?

C.M. Phippen

The greatest economy the world has ever seen, the one responsible for the majority of the medical and technological innovation of the past century and for leading the way in eradicating 80 percent of the world’s worst poverty in the past 40 years, is being run by a man who claims himself a victim at every turn.

With each succeeding policy failure, President Obama can’t help but claim he just didn’t understand or for some reason he just had no power to overcome the obstacles in his way.

While holding the most powerful office in the world, he is paralyzed by events outside of his control. He blames Pres. Bush, natural disasters, Pres. Bush, Arab Spring, Pres. Bush, bad luck, Pres. Bush. In one of his most astounding excuses yet, he blamed a lack of job creation on greater efficiency (“structural issues”) in the economy.

The difficulties faced by our president are simply a part of the realities of life. Does Obama truly believe that no man before him has ever dealt with a financial crisis, a predecessor whose policies he didn’t agree with, bad luck, a shifting labor market or natural disasters? What if every man before him chose to make the same excuses or to walk away from the real solutions because they weren’t a part of his political strategy?

In every past recession over the previous 100 years, entrepreneurship has led us out and placed us back on the path to greater prosperity. For the first time ever, this is not occurring. Does President Obama even stop to ask why?

Over 4,000 new federal regulations are in the pipeline and “pending major regulations – those costing the economy $100 million or more – have increased 60 percent since 2005.” Recently, “20 percent of small-business owners said ‘government regulations and red tape’ was the single most important problem facing their business,” ranking ahead of anything else, including poor sales.

According to President Obama, because of these structural changes, “. . . what we have to do now . . . is identify[ing] where the jobs for the future are going to be; how do we make sure that there’s a match between what people are getting trained for and the jobs that exist; how do we make sure that capital is flowing into those places with the greatest opportunity.”

Entrepreneurs just figure those things out on their own. They don’t need a government program so that a bureaucrat who’s never run a company, met a payroll or put his life’s savings on the line to start a company can make decisions as to the proper allocation of resources within the economy; let alone rely on that individual to determine where those resources will be most needed at some point in the future. In a dynamic economy, where growth is encouraged, someone will always step up and take a risk as long as that risk has the potential for a commensurate reward in the end.

When has a centrally planned economy, or any variation of it, actually worked?

Here’s a guy who’s admitted that when he entered office his administration had no idea how bad this downturn was, despite the fact that he claimed it was the worst economic crisis since the Great Depression and called it a crisis of historic proportions. Yet he wants us to trust that he and his administration have the expertise to know how to allocate the various resources administered through the federal government in order to adequately train the unemployed to be prepared for the jobs of the future? He doesn’t even understand what the jobs and businesses of the future are.

This is the guy who told us that Solyndra was a model for economic growth, one of those companies of the future. As I wrote in an earlier post, while Obama was touting the “ingenuity and dynamism” of Solyndra, T.J. Rodgers, founder of Cypress Semiconductor, former Chairman of Sunpower and a man who apparently knows what real ingenuity and job creation look like, had a very different take. He has said that on the day of President Obama’s visit to Solyndra in 2010 a secretary asked him what it meant that the President was there, visiting their competitor. His response apparently was, “Set your watch. That company will be out of business in one year.” So much for Obama’s ability to judge the future.

This is the same guy who told us that if his massive stimulus of nearly $1 trillion were passed, we wouldn’t see unemployment rise above 8 percent. What we haven’t seen is it actually come down below 8 percent at any point since.

This is the man who told us that recovery summer was two years ago. Most of us are still waiting, as are the many businesses that are choosing to sit on the sidelines with record amounts of cash and not hire new workers in such an uncertain environment. Those threats to tax the rich and blame corporations may actually have a downside.

This is the same guy who said that the healthcare bill “will help reduce our deficit by as much as $1.3 trillion in the coming decades, making it the largest deficit-reduction plan in over a decade.” Updated CBO estimates now project cost increases over 10 years from $938 billion to $1.76 trillion, and that’s before we’ve had to actually start paying. If history is any indication, the cost is likely to be many times greater than even the new estimates.

Yes, still the same guy, the one who said that with his new healthcare bill, “Families will save on their premiums.” Unfortunately, though the CBO initially projected per family premium savings of over $2,500, more recent studies show increases of over $1,500 above what premiums would have been without the legislation.

Exactly what is it this guy actually does know? Maybe this, “We can’t doom another generation of Americans to soaring costs . . . and exploding deficits.” Yep, same guy.


May 12 2012

The One-Way Street of (In)Tolerance

C.M. Phippen

The furor over the legal definition of marriage as between one man and one woman has escalated this week with the passage of a constitutional amendment to that effect in North Carolina, even as our President came out in support of states being allowed to define it as such or not, while personally supporting such a change in the historical definition. Huh?

I just have one question: Just when is tolerance and acceptance going to become a two-way street?

One of the primary drivers of resistance to changing the definition of marriage, and therefore offering government endorsement of any variation on marriage a person may prefer, is that under federal civil rights legislation, the rest of us have already become obligated to change our behavior and speech in order to suit the whims of those who reject societal norms. At what point will our freedoms be protected – freedom of association, freedom of speech, freedom to live our religion without government interference?

I find it fascinating that when a state passes civil rights protection legislation based on sexual orientation, there must be exemptions put into these laws for churches. Without such exemptions, churches could (and most definitely would) be sued for refusing to perform same-sex marriages or unions. Oh no, already happened, even with those legislature-granted exemptions.

Based on President Obama’s recent pronouncement declaring that religious organizations must provide contraceptive coverage in their insurance plans, despite the fact that religious exemptions were promised during the passage of the Obama healthcare law (seriously, you believed a politician?), the maxim that what government has the power to give, government certainly has the power to take away could not have been proven more true. Our founders declared that those rights came from God. And no, Barack, they didn’t mean you.

So if a law must have exemptions for churches written into it, doesn’t that tell us that the law itself is probably already overstepping its bounds with regard to our individual freedoms? While “Congress shall make no law respecting an establishment of religion” probably has to do with the operation of the churches themselves, the part about “or prohibiting the free exercise thereof” certainly applies to us as individuals exercising our own rights to apply the principles of our religion in our daily lives as we see fit.

That personal application of religion could include, for some, not being willing to participate in activities or ceremonies that they find offensive or blasphemous. Who could balk at that in this great nation of diversity? Oh, the same people pushing for you to accept and celebrate everything about their lives while at the same time attempting to undermine and disparage anything they don’t agree with or like about yours.

A few cases in point:

EHarmony was sued for not providing gay dating services. According to a settlement, EHarmony will need to “do more to welcome gays and lesbians to its site.” Just makes you feel so good, doesn’t it? An entirely new company was formed under the settlement, just to accomodate gays.

Ever think of starting your own company if the businesses out there aren’t meeting your needs or desires? That’s what many of the rest of us would do, but no, not the open-minded, non-judgmental crowd. According to them, you not only have to accomodate whatever they want, but you ought to be required by law to provide it personally, and on a silver platter, thank you very much. Oh, and by the way, $500,000 was set aside in the settlement for those who were harmed by EHarmony not providing this service prior to the settlement. I’m wondering if I can sue because they weren’t providing services at all before I was married, and I wasted a lot of time dating and getting to know people on my own!

A Methodist church that refused to allow same-sex weddings in its religious buildings (they had offered use of their property, just not buildings where religious meetings were held), lost its case when a lesbian couple sued them and lost their tax exempt status on the building in question. All because this couple wanted use of these privately-owned facilities and it mattered not to them what the owners of the facility wanted. Yeah, it’s all about compromise. (Is legal coercion while one side stomps its feet and throws a fit, then gets its way thanks to nanny-state courts, the same as compromise? If so, then yes, this is compromise.)

A photographer was sued by a lesbian couple whose wedding she didn’t want to shoot. The photographer was found to have violated the Human Rights Act and fined $7,000. One of the women who sued her was actually an EEO Compliance Representative with the Office of Equal Opportunity and a member of the Diversity Committee at the University of New Mexico. Apparently diversity means that you accept me and my feelings while I reject you and yours.

As a Mormon, I wouldn’t really want an anti-Mormon who didn’t have respect for the sanctity of my marriage taking pictures at my wedding; just might affect the quality. Do you think they really wanted this photographer that badly, or they just wanted to “re-educate” her? Hmmm, I could swear I’ve seen this somewhere before . . . maybe somewhere where “freedom” wasn’t much of a priority?

A Christian baker who politely informed a lesbian couple she wouldn’t feel comfortable making their wedding cake is not only facing a boycott and harassment, but could potentially be facing a civil rights suit.

So hey, I’m all for you doing your thing, just wondering when you all are going to come out in support of me doing mine?


Aug 31 2011

Krugman and Irene

C.M. Phippen

Two weeks ago, Paul Krugman was calling for a fake alien invasion to stimulate our economy. I think he’s almost gotten his wish.

Estimates of damage from Hurricane Irene range anywhere from $13 billion to $45 billion. Think of all the jobs that will need to be filled. Better yet, much of the work that needs to be done will be paid for with borrowed government funds – it’s a Keynesian’s dream.

Rebuilding should keep people busy for a little while, and when they’re done up North they can head down to Mississippi and help the rebuilding effort still going on down there, six short years after Hurricane Katrina.

Of course, this is the same Paul Krugman who suggested that in order to replace the Nasdaq bubble of the late 1990s, “Alan Greenspan needs to create a housing bubble.” He saw this as the solution to the lack of corporate spending; “soaring household spending” was, to him, the answer. In other words, moving money around in the economy by creating artificial growth.

In fact, the White House is now defending the idea that government transfers through extended unemployment insurance actually lead to growth. The assumption is that without those transfers, no money would be spent by unemployed individuals and with the transfers, no incentives for less productive behavior are taking place. If both of those things were true, the Obama economic policy might be preferable to nothing. Unfortunately for Team Obama, they’re not.

According to Alan Krueger, Obama’s newly-appointed economic advisor, extended unemployment benefits (wealth transfers) increase length of unemployment and can lead to more layoffs. Studies have shown that the closer one is to the cut-off point for benefits, the longer time spent actually looking for a job.

As far as the White House’s claim that each dollar in unemployment benefits spending leads to $1.73 in short-term economic growth, false assumptions are made which equate each dollar in benefits with one dollar spent. For every dollar in additional unemployment benefits, only $.55 actually makes it into the economy because individuals tend to reduce their reliance on their own savings if the government will pay them and for married individuals, spouses tend to reduce hours worked when benefits are increased.

The past three years have shown us Paul Krugman and the left’s version of economic growth – government jobs, government “investment” and government wealth transfers with weak economic growth and stubbornly high unemployment (but hey, we’ll all have that “free” healthcare soon!). Forget business investment, product development, innovation, increased efficiency; no, this moving money around thing is just working so well.


Aug 31 2011

President Obama’s Bank of China

See my article about the national debt published in August 2011′s edition of Smart Girl Nation, entitled President Obama’s Bank of China.


May 23 2011

The Debt Ceiling and Fiscal Responsibility

What is with the hysteria surrounding the debt limit? Why are the Democrats refusing to have a discussion regarding the issues surrounding the debt ceiling and fiscal austerity?

It is a fact that all things being equal, a growing economy brings in more taxes than a stagnant or shrinking one. It is a fact that reducing tax rates stimulates growth and leads to greater tax receipts (courtesy John F. Kennedy). It is a fact that we cannot continue on the current path of fiscal irresponsibility (courtesy Barack Obama).

If we want our federal government to have access to more money (I’m not sure I do), then reducing taxes to a point where optimum growth will occur is the best way to achieve that goal, not raising the debt ceiling so we can borrow more every time we max out the national credit card. I concur with John F. Kennedy,

Our practical choice is not between a tax-cut deficit and budgetary surplus. It is between two kinds of deficits: a chronic deficit of inertia, as the unwanted result of inadequate revenues and a restricted economy; or a temporary deficit of transition, resulting from a tax cut designed to boost the economy, increase tax revenues, and achieve . . . a budget surplus.

The next step would be to get spending in line. We all know that no matter how much money the treasury has, it spends more. Tax rates could be raised to 90%, 100% even, and not only would our federal government spend every dime of it, but they would certainly borrow against it to finance even more great projects to buy votes . . . ah, rather, to serve the people. I recently wrote about the idiocy of such a plan, entitled The Rich, Taxes, and Government Debt.

The most powerful tool of the politician has become our tax dollars. Our money, taken by the force of law, is spent to buy votes and power, and often in ways that work against the interests of those paying the bill. It only seems fair (the President’s ears should perk right up now) that those who are going to be on the line for this new spending (taxpayers) have the right to require some fiscal responsibility from those doing the spending.

President Barack Obama, in May of 2009, warned that the current level of deficit spending was unsustainable and would lead to skyrocketing interest rates for Americans and have a “dampening effect on our economy.” Of course, that was when it was George Bush’s spending.

Thank goodness we (or some of you, rather) elected a fiscally responsible president; one who did more deficit spending in his first three years in office than all presidents before him combined; one whose budget proposals will not only double our national debt within the next decade, but quadruple the net interest costs of carrying that debt (as a result of those increased interest rates, coupled with increased debt); one whose tax and spend philosophy will cause us to spend more money on interest payments than on “education, roads and all other nondefense discretionary spending combined” within eight years. Yet each year in office he has preached the virtues and necessity of decreased federal spending – 2009, 2010, and again in 2011 – and despite the soothing words, reality bears out a less than soothing picture.

According to budget analysis, “90 percent of the rising long-term budget deficits are driven by rising spending, and just 10 percent of the rising deficits are caused by falling revenues” and our President has admitted that our federal government has a spending problem, yet he is asking Congress for an increased ability to borrow without any limitations on their (and his) ability to continue spending recklessly.

How about this:

In the 1980s and 1990s, Washington consistently spent $21,000 per household (adjusted for inflation). Simply returning to that level would balance the budget by 2012 without any tax hikes. Alternatively, returning to the $25,000 per household level (adjusted for inflation) that Washington spent before the current recession would likely balance the budget by 2019 without any tax hikes.

Simple, really, and the easy part is the President claims to already agree with me.