Category: national politics & policies

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national politics & policies

It’s So Simple, If You Forget

“We cannot be complacent,” Federal Reserve Bank President Charles Evans said yesterday. He was most distressed by any lingering notion that the economy would remain undamaged were “no action” taken.

He wants more money flushed into the system. “If we continue to take only modest, cautious, safe policy actions,” he argued, “we risk suffering a lost decade similar to that which Japan experienced in the 1990s.”

Ah, and I was going to use the long Japanese recession as an example of what can happen when too much monetary and bailout hanky-panky is allowed.

Evans apparently thinks that mid-September’s unleashing of quantitative easing — or QE, the currently fashionable banker’s version of crony capitalism — with the Fed promising monthly $40 billion purchases of mortgage-backed securities, is tantamount to “no action” and “doing nothing.”

Or else he’s worried that Bernanke’s critics might have some sway.

Relying on the old (by-the-textbook but long-discredited) Phillips Curve story of inflationary money leading inexorably to increased employment, cheap money maven Evans told reporters that “the economy” would “need 200,000 to 250,000 job gains per month” before the Fed could dare rethink its current policy.

He’s apparently forgotten that stagflation is possible. I don’t know why: He’s just a few years older than me, and I remember when the Phillips Curve’s simple trade-off between inflationary monetary policy and unemployment rates hit the trash bin of history, as both inflation and unemployment soared in the 1970s.

When our leaders forget history, are we doomed to repeat it?

Stagflation may be the best we can hope for from current QE.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies tax policy

Tax Reductions Ahead?

As the president yammers on about making the rich “pay their fair share,” behind the scenes his administration has suggested reducing corporate tax rates by seven points. Meanwhile, Obama’s main challenger, Mitt Romney, promised a full ten point rate cut, if elected.

Why? By international standards, American corporate taxes are obviously way too high.

The U.S. effective tax rate on new corporate investment sits at 35.6 percent today, which, write Duanjie Chen and Jack Mintz for the Cato Institute, “is almost twice the average rate for the 90 countries” the duo studied, in “Corporate Tax Competitiveness Rankings for 2012.”

The U.S. has higher corporate tax rates than France.

And India, Colombia, Brazil, Japan, Venezuela, Korea, Russia, Costa Rica, you name it. This is not something we want to be No. 1 at.

Well, at least Argentina, Chad and Uzbekistan tax at even higher rates.

There’s no consolation in others’ folly, though.

The authors look northward, to Canada, which, since 2000, made some huge adjustments downward on tax rates affecting businesses: 15 percent cuts in federal statutory tax rates, eliminating most capital taxes, removing sales taxes on capital goods, and scaling back on special preferences that tend to make taxation such a mess there as well as here. And all the while revenues from these taxes have remained stable per GDP.

Could we get lower corporate taxes, here? Well, this is not an area where those on the left can enviously eye their beloved European social democracies to make their usual, tedious case for higher taxes. Norway’s rates are ten percent lower than ours, and Sweden’s, Denmark’s and Finland’s are lower yet.

This is Common Sense. I’m Paul Jacob.

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ideological culture national politics & policies political challengers too much government

Bite the Hand

I’m not sure there’s much percentage in talking about percentages.

Divvying folks into groups, and then relying on people to “stay” within their group — behaving according to one’s specifications — seems . . . kind of creepy.

Last year’s “Occupy” movement, with its relentless pitching of the “99 percent,” demonstrated that creepy/icky factor pretty well.

But Mitt Romney had to horn in on the action. “There are 47 percent of the people who will vote for the president no matter what,” he said. These wards of the state, he went on to say, believe that

  • they are victims
  • government has a responsibility to care for them
  • they are entitled to health care, to food, to housing, to you-name-it

Furthermore, “these are people who pay no income tax,” Romney stated. “I’ll never convince them they should take personal responsibility and care for their lives.”

Well, not all folks who are somehow “dependent on government” — a group ranging from Social Security retirees and the non-working poor to federal employees and agribusinesses and Solyndras feeding at the federal trough — necessarily want to increase their own ranks. Not a few are savvy enough to notice that the system that feeds them would, if larded up with more recipients, be made less capable of feeding them.

As for the logic of “not biting the hand that feeds you,” the advice of the late Thomas Szasz is pertinent: “maybe you should, if it prevents you from feeding yourself.”

After all, many of the people who may qualify, technically, as being “dependent on government” would rather not be. And might like the option of being less encumbered by government “help.”

Mitt, I wouldn’t write them off yet.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets national politics & policies

The Bernanke Stretch

Last week, the Federal Reserve announced it was going ahead with “quantitative easing.” Chairman Ben Bernanke said that he’d be buying $40 billion dollars of mortgage-backed securities every month, no end in sight.

Now, the traditional way that the Federal Reserve influenced the money supply, economist Randall Holcombe explains, was via “open market operations by buying and selling government securities.” But this changed in 2008 with the $85 billion AIG bailout: “Since then it has engaged in continual bailouts of financial firms and purchases of non-government securities. . . .

The Fed has moved from engaging in monetary policy in a way that was neutral toward various businesses and industries in the economy to one in which monetary policy is targeted toward specific firms and industries. This current foray, specifically targeted at the housing market, is crony capitalism.

It’s actually worse. It’s crank policy, as the redoubtable Mr. Peter Schiff summarizes: “Ben Bernanke’s plan to revive the U.S. economy and create jobs is to inflate another housing bubble. That’s it. That’s what the Fed’s got. That’s what it came up with. As if the last housing bubble worked out so well for the economy that the Fed wants an encore.”

Our leaders are obviously desperate.

And out of control. George Will states that the Fed has gone far beyond “mission creep” — it’s “mission gallop on part of the Fed, which is on its way to becoming the fourth branch of government — accountable to no one and restrained by nothing, as far as I can tell, in exercising both monetary and fiscal policy.”

This is what forsaking limited government and the Constitution gets you: a sort of frantic idiocy in aid of politically connected speculators and financiers.

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies too much government

716 Billion Lies

As the campaign for the presidency heats up, we’re going to hear the words “taxes” and “deficit” and “spending” repeated ad nauseam. And this number: $716,000,000,000.

That’s the amount of future Medicare spending that President Obama and the Democrats in Congress (exclusively, without a single Republican vote) cut, slashed, ripped, hacked out of the hands of elderly Americans over the next ten years.

And I thought Democrats loved Medicare, believed in it, wanted to keep it like it is against the bitter schemes of GOP Scrooges!

Now, as Republicans attack the Democrats’ attack on Medicare, Dems have counter-attacked by charging that in his plan GOP VP nominee Paul Ryan cuts Medicare this exact same $716 billion. Ryan explains that his approach simply took the status quo as the baseline, and, sadly, tragically, that includes Obamacare’s nearly trillion dollar malpractice in gutting Medicare funds.

With older citizens constituting a huge voting block, this fall’s election may hinge on this $716 billion being taken from Medicare. Funny thing is, the number is a mirage. Meaningless. Not real. Medicare will not be cut $716 billion. Not really. Instead, it will grow in leaps and bounds over the next decade.

Nothing in Obamacare stops Congress from spending that $716 billion and more in coming years. In fact, they already plan for Medicare spending to grow by far more.

That’s the problem more broadly with the cuts Democrats offer in exchange for higher taxes. The cuts are illusory because the spending continues to grow. Therefore, any tax increases to plug deficit spending would be pouring water into a bucket full of holes.

This is Common Sense. I’m Paul Jacob.

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national politics & policies

Lies You Can Believe In

“Folks, whether the American people believe what I just said or not may be the whole election,” former President Bill Clinton intoned at the Democratic National Convention this week. “I just want you to know that I believe it. With all my heart, I believe it.”

Don’t believe it.

Also not worth believing? Clinton’s television ad, for which, you can be sure, every word was chosen carefully, not just ad-libbed (as some of the gray-haired Lothario’s lines from the convention were said to be):

This election, to me, is about which candidate is more likely to return us to full employment. This is a clear choice. The Republican plan is to cut more taxes on upper-income people and go back to deregulation. That’s what got us in trouble in the first place.

President Obama has a plan to rebuild America from the ground-up — investing in innovation, education and job training. It only works if there is a strong middle class, That’s what happened when I was president. We need to keep going with his plan.

Very persuasive . . . until examined.

Is the current economic depression the result of tax cuts and deregulation? No.

The original implosion was in the mortgage bundle markets, and that was fed by Clintonian homeownership policy and the Federal Reserve’s cheap credit. Regulation had increased dramatically under Bush, and the only bit of deregulation worth talking about was the repeal of Glass-Steagall . . . which Clinton himself signed.

The idea that the prosperity of the Clinton years was caused by his “investment” and “education” and “job training” plans is a howler. Clinton’s era was blessed, instead, with

  1. a mostly stable Fed policy;
  2. Republican opposition in the House that forced him to make his most famous policy moves; and
  3. low gas prices.

This latter was the result of the two most astounding policy moves in the years prior to his administration:

  1. The Carter-Reagan deregulation of the oil industry; and
  2. George Herbert Walker Bush’s sending Saudi Arabia and Kuwait the bill for the Persian Gulf War.

Politics, we must remember, is often dominated by expert liars.

This is Common Sense. I’m Paul Jacob.

Categories
government transparency ideological culture national politics & policies

Great & Powerful Teleprompter

There’s a man behind a curtain somewhere doing whatever one does to a teleprompter.

Load? Arm? Detonate?

Last week, in Tampa, a Republican teleprompter put words into the mouth of Speaker of the House John Boehner, then chairing the convention, specifically these words: “In the opinion of the chair, the ‘ayes’ have it and the resolution is adopted.”

The resolution concerned whether a number of Ron Paul delegates would be seated. The vote was awfully close. How the actual voice vote turned out was supposed to be for Boehner to judge, not an anonymous guy (or gal) behind the curtain, ghost-writing democracy.

Yesterday, while the Democrats gathered in Charlotte, North Carolina, were busy tucking God and Jerusalem back into their platform, Los Angeles Mayor Anthony Villaraigosa held the gavel. But not control of his own teleprompter.

The resolution restoring those elements to the party’s platform, coming after the platform committee had already completed its work, required a two-thirds vote. When the votes were heard . . .  well, Mayor Villaraigosa wasn’t sure. He had the convention vote again. And then again.

Finally, perhaps after seeing the teleprompter, which read, “In the opinion of the chair, two-thirds having voted in the affirmative . . .” he decided, to loud booing, that the resolution had received two-thirds.

As the country prepares (cringes) for the fall campaign, we’ll hear plenty from President Barack Obama and Governor Mitt Romney and about both men. But who cares? The real power in our system of governance, as these conventions make clear, are the guys running the teleprompters.

This is Common Sense. I’m Paul Jacob.

Categories
ideological culture national politics & policies political challengers

The Gray Fox

Clint Eastwood, crazy? Like a fox.

Last Thursday, at the Republican Party Convention in Tampa, he spoke to a primetime television audience of millions in the type of direct language politicians never utter. The movie star’s message was simple, but his presentation was more acting routine than speech, using an empty chair as a prop and pretending President Obama was sitting next to him. His delivery came in stops and starts, seemingly ad-libbed with the 82-year old no quicker or more nimble of thought and word than other octogenarians I know.

Much of the mainstream media pounced, diagnosed Eastwood as nearly insane, and noted that the actor’s 12-minute talk upstaged presidential nominee Mitt Romney. Funny, I think Eastwood’s words touched many regular folks — and perhaps a raw nerve for those favoring the president.

While celebrities have every right to speak, I’m tired of the usual sophomoric spewing of famously uninformed opinion — “hot-dogging it,” as Eastwood put it. But we didn’t watch movie star Clint Eastwood last week; we saw businessman Clint Eastwood.

In 1967, early in his Hollywood career, Eastwood created his own production company, Malpaso, which has handled virtually all of his American films. Eastwood knows firsthand the demands of running a business. In fact, he enjoys a reputation for finishing his films on time and on budget and making profits.

When someone doesn’t do the job, Eastwood signs the proverbial pink slip. He thinks voters should do likewise. After all, “we own this country,” Eastwood reminded us. “Politicians are employees of ours.

“When somebody does not do the job, we got to let them go.”

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies too much government

I Know Savings

I don’t personally know Lance Armstrong, the cyclist who won the Tour de France seven times, including after beating cancer.

I don’t know if Armstrong tricked folks for all those years he was competing, finding some ingenious way to pass more than 500 drug tests even while doping, as witnesses tell the United States Anti-Doping Agency.

I don’t know what to make of the USADA’s doping charges, but, as for the agency’s motivations, a federal judge wrote that, “USADA’s conduct raises serious questions about whether its real interest in charging Armstrong is to combat doping, or if it is acting according to less noble motives.”

And I don’t know whether Armstrong chose to drop his challenge to the USADA charges against him because after years of fighting the agency, as he wrote, “enough is enough,” or, as USADA contends, there was ample “evidence” that “Armstrong used . . . and administered doping products.”

But there is something I know. I know where we can cut some federal spending.

On the Opposing Views blog, Tim Dockery points out that USADA “receives almost 70 percent of its funding from the federal grants” and “is a government program masquerading as a non-profit organization. This non-profit status allows it to investigate and prosecute athletes without affording them the constitutional and due process protections required of other federal agencies.”

Why is the federal government paying to police sport? In a way that undermines our standard of justice? When we’re already 16 trillion in debt and butting in costs money?

Yes, “enough is enough.”

This is Common Sense. I’m Paul Jacob.

Categories
national politics & policies political challengers

The Punisher Vote

As bad weather and thousands of good Republicans descend upon Florida, it’s worth keeping perspective: The best (and perhaps only) reason to vote for Mitt Romney is the same as the best/only reason Americans had to vote for Barack Obama in 2008: to punish the party previously in power.

The excesses of united Republican government in the mid-oughts, and the sheer irresponsibility and insider bias in the lame duck Bush years, as the GOP president panicked and turned Wall Street into the largest welfare queen class in America, required punishment.

Americans wanted a change. So they voted, understandably, for the man who promised change.

But what did they get?

Bush had pushed in a new welfare “entitlement” program; so did Obama and the Democrats. Bush had pushed bailouts for the wealthy and the protected; so did Obama and the Democrats. Bush had pushed war and occupation and “nation building”; so did Obama and the Democrats. Bush had presided over deficits and a rising debt; so did Obama and the Democrats.

Turnabout being not merely fair play, but the will of the pendulum to swing back, it seems like voting against Obama is what is in order. It seems almost ineluctable.

But, uh, there’s a problem. Is Romney electable?

Both major parties tend to throw up lackluster candidates when the opposition has an incumbent in the White House. Take three examples: Walter Mondale, Bob Dole, and John Kerry, paragons of pointlessness.

But, this time, a pointless challenger has history endow him with a point: Obama and the Democrats deserve to be punished.

Not much of a platform? True. But it’s something.

This is Common Sense. I’m Paul Jacob.