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Archive for January, 2010

 A recent poll, conducted in early January, shows that the America people are catching on to the stimulus scam. Three-fourths of respondents believe that at least one-half of the money has been wasted. Here’s a brief excerpt from the CNN story, which includes a rather bizarre assertion that the stimulus represented a “cost to the government.” Actually, the so-called stimulus was a shot-in-the-arm to government. The burden of all the new spending is borne by the economy today and taxpayers in the future:

    Nearly three out of four Americans think that at least half of the money spent in the federal stimulus plan has been wasted, according to a new national poll. A CNN/Opinion Research Corporation survey released Monday morning also indicates that 63 percent of the public thinks that projects in the plan were included for purely political reasons… the program, formally known as the American Recovery and Reinvestment Act of 2009, attempts to stimulate the country’s economy…at a total cost to the government of $787 billion.
    http://www.cnn.com/2010/POLITICS/01/25/poll.stimulus.money/?hpt=T2

 

But it gets worse. According to the new CBO budget numbers, Obama’s boondoggle proposal actually will cost $75 billion more than he said last year (typical mistake with government budgeting, yet we’re somehow supposed to believe his fatuous claims that a giant new healthcare entitlement will reduce the deficit). By the way, this doesn’t count the added interest on the debt from all this new spending, so the actual cost of the so-called stimulus is more than $1 trillion – and rising. And as this AP story notes, there’s more bad news since the Senate is crafting a second “stimulus” to waste another $82.5 billion:

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George Bush ranks as one of America’s most fiscally irresponsible presidents. He increased overall spending from $1.8 trillion to $3.5 trillion and most of that new spending was used to create or expand domestic programs (no-bureaucrat-left-behind education spending, pork-filled highway bills, sleazy Wall Street bailouts, corrupt farm spending, new Medicare entitlements, etc) that are not legitimate functions of the federal government. So it is galling to see his former senior adviser writing columns complaining about Barack Obama being a big spender. Many of the criticisms about the Obama Administration are correct, to be sure, but Karl Rove has zero moral authority to make those arguments. Moreover, Rove once again engages in sloppy or dishonest (you choose) analysis by blaming Obama for some of Bush’s mistakes. In the excerpt below, he blames Obama for any of the Fiscal Year 2009 debt that was incurred after January 20 of last year. But as I’ve already explained, 96 percent of the spending in FY2009 is the result of Bush’s policies:

    Consider that from Jan. 20, 2001, to Jan. 20, 2009, the debt held by the public grew $3 trillion under Mr. Bush—to $6.3 trillion from $3.3 trillion at a time when the national economy grew as well. By comparison, from the day Mr. Obama took office last year to the end of the current fiscal year, according to the Office of Management and Budget, the debt held by the public will grow by $3.3 trillion. In 20 months, Mr. Obama will add as much debt as Mr. Bush ran up in eight years. …Mr. Bush’s deficits ran an average of 3.2% of GDP, slightly above the post World War II average of 2.7%. Mr. Obama’s plan calls for deficits that will average 4.2% over the next decade. Team Obama has been on history’s biggest spending spree, which has included a $787 billion stimulus, a $30 billion expansion of a child health-care program, and a $410 billion federal spending bill that increased nondefense discretionary spending 10% for the last half of fiscal year 2009. Mr. Obama also hiked nondefense discretionary spending another 12% for fiscal year 2010. 
    http://online.wsj.com/article/SB10001424052748704320104575015072822042 394.html


Correction:
In an earlier post on one of Rove’s columns (https://freedomandprosperity.wordpress.com/2010/01/14/karl-roves-hypocritical-call-for-fiscal-rectitude/), I incorrectly claimed that Bush never vetoed a bill because it spent too much.That was wrong. He did veto a handful of bills once Democrats took control of Congress.

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The Washington establishment rallied behind Ben Bernanke, so the Fed Chairman was confirmed for another term. But this is precisely why he is the wrong man for the job. As the Wall Street Journal opines, Bernanke is guilty of two sins. His track record on monetary policy is weak, indicating an insufficient commitment to protecting the value of the dollar. And his willingness to resist political pressure is even weaker, suggesting that America could be headed back to 1970s-style inflation:

The White House said yesterday it has damped down a political revolt against Ben Bernanke and now has the votes to secure the Federal Reserve Chairman’s second four-year term. Whether or not Mr. Bernanke is confirmed, the lesson we draw is that overly political central bankers will eventually be undone by politics. …When we opposed Mr. Bernanke’s reconfirmation on December 3, the facile consensus was that the Fed chief was a master of the universe who had saved the world from depression. But after Scott Brown’s victory in Massachusetts last week, Senate Democrats are suddenly looking for a financial political sacrifice. …The Democrats’ loudest complaint, moreover, is that Mr. Bernanke and the Fed haven’t been easy enough in printing money. …The Fed has already kept interest rates at near zero for more than a year, and it is buying $1.25 trillion in mortgage-backed securities to refloat the housing bubble, among other interventions into fiscal policy and credit allocation. Is the Fed going to buy another $1.25 trillion, or promise to keep rates at zero for another 14 months? Mr. Reid’s declaration of a confirmation quid pro quo will not reassure global investors who already fear that the Fed lacks the political will to withdraw its historic post-crisis liquidity binge soon enough to avoid new asset bubbles. …Mr. Bernanke is already far too susceptible to political pressure. As a Fed governor, he was Alan Greenspan’s intellectual co-pilot last decade when their easy money policies created the housing mania. When Congress later put political pressure on the Fed to direct credit toward housing, and even to student loans, Mr. Bernanke (who was then chairman) also quickly obliged. More ominously for the next four years, Mr. Bernanke continues to deny any Fed monetary culpability for creating the mania. Shortly after the New Year, even with his nomination pending, Mr. Bernanke issued an apologia that was striking for its willingness to play to the Congressional theory of the meltdown by blaming bankers and lax regulators. …Yes, much of Wall Street wants to see Mr. Bernanke confirmed. The Street is currently making a bundle off Fed policy, as it borrows at near-zero rates and lends long, and the banks don’t want that to end. The banks also loved negative real interest rates in the middle of the last decade, and we know how that turned out.
http://online.wsj.com/article/SB10001424052748704562504575021704013095 196.html

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When people ask me about global warming, or climate change, or whatever they’re calling it now, I freely admit that I’m not a climatologist and thus have no informed opinion on whether the planet is warming due to human activity (or whether this, on net, would be a bad thing). But I am somewhat familiar with how special interests like to obtain power and unearned wealth using the coercive power of government. So when I see people who have always favored statism suddenly say we need big government to fight global warming, I am inherently skeptical. My doubts become even larger when I see that some of the same people were playing Chicken Little a few decades ago saying we faced a coming ice age. And I get downright suspicious when these people (did someone say Al Gore?) directly line their own pockets as a result of the policies they promote. So I was not surprised when the climate-gate scandal broke. After all, these supposed scientists had every reason to behave dishonestly and unethically to keep the gravy train of government grants rolling. The latest scandal comes from a high-level con artist with the so-called Intergovernmental Panel on Climate Change at the United Nations. First, we have a stunning confession that a major claim of the IPCC is fake, as noted by the Wall Street Journal:

…when it comes to unsubstantiated research it’s hard to beat the IPCC, whose 2007 report insisted that the glaciers—which feed the rivers that in turn feed much of South Asia—were very likely to nearly disappear by the year 2035. “The receding and thinning of Himalayan glaciers,” it wrote in its supposedly definitive report, “can be attributed primarily to the [sic] global warming due to increase in anthropogenic emission of greenhouse gases.” It turns out that this widely publicized prediction was taken from a 2005 report from the World Wildlife Fund, which based it on a comment by Indian glacier expert Syed Hasnain from 1999. Mr. Hasnian now says he was “misquoted.” Even more interesting is that the IPCC was warned in 2006 by leading glaciologist Georg Kaser that the 2035 forecast was baseless. …Mr. Kaser told the Agence France-Presse. “It is so wrong that it is not even worth discussing.”
http://online.wsj.com/article/SB10001424052748703837004575013393219835 692.html

Then we have the revelation that the Chairman of the IPCC used (and almost certainly was aware that he was using) totally dishonest assertions to fleece donors – including gullible American foundations and oppressed European taxpayers. Chairman Pachauri already has been appropriate mocked for his giant “carbon footprint” due to his globe trotting (in first class, of course). Now he’s catching some much-deserved flak for lining his pockets while pimping for the IPCC hucksters:

The chairman of the UN’s Intergovernmental Panel on Climate Change (IPCC), has used bogus claims that Himalayan glaciers were melting to win grants worth hundreds of thousands of pounds. Rajendra Pachauri’s Energy and Resources Institute (TERI), based in New Delhi, was awarded up to £310,000 by the Carnegie Corporation of New York and the lion’s share of a £2.5m EU grant funded by European taxpayers. It means that EU taxpayers are funding research into a scientific claim about glaciers that any ice researcher should immediately recognise as bogus. …In one presentation at last May’s launch, Anastasios Kentarchos, of the European Commission’s Climate Change and Environmental Risks Unit, specifically cited the bogus IPCC claims about glacier melt as a reason for pouring EU taxpayers’ money into the project. …questions remain. One of the most important is in connection with Pachauri’s earnings. In an interview with The Sunday Times he said his only income came from his salary at TERI. However TERI does not publish his salary and he refused to divulge it. In India questions are also being asked about Pachauri’s links with GloriOil, a Houston, Texas-based oil technology company that specialises in recovering extra oil from declining oil fields . Pachauri is listed as a founder and scientific advisor. 
http://www.timesonline.co.uk/tol/news/environment/article6999975.ece

But you have to give the guy credit for cojones. An article in the Times of India reports that, “…while his credibility and that of the IPCC has taken a battering, Pachauri maintains his chutzpah in the face of growing skepticism, arguing that his acceptance that the research on glaciers had been dodgy had actually somehow enhanced the credibility of the body.”

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My favorite Heritage Foundation publication (other than the papers I wrote, of course) is the Index of Economic Freedom. The 2010 Index was just released and it is bad news for America. The United States moved significantly in the wrong direction, dropping 2.7 points (on a 0-to-100 scale), which was almost as bad as the reduction of 2.8 points in the thugocracy known as Venezuela. America now ranks below Canada, which is rather embarrassing, and has dropped from “free” to “partly free” in the overall ratings. These findings echo the data in the Fraser Institute’s Economic Freedom of the World (co-published by Cato), which also show a decline in America’s score (as an aside, I will brag that the EFW must be a bit more accurate than the IEF since it was quicker to show America (see page 185) becoming less free during the big-government Bush years). The new Heritage Index has lots of fascinating information, including Chile’s top-10 ranking, making it far and away the freest economy in Latin America. Montenegro enjoyed the biggest jump in the yearly rankings, climbing by 5.4 points (though it still ranks only #68), and Timor-Leste (wherever that is) had the biggest fall, dropping by 4.7 points (are they getting advice from Obama’s economic team?). One final thing worth noting, as seen below, is that the United Kingdom and six of its former colonies dominate the top 10.

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A Swiss court just threw a wrench in the gears of an IRS effort to impose bad US tax law on an extraterritorial basis, ruling that UBS does not have to hand over data to the American tax authorities. This ruling nullifies an agreement that the Swiss government was coerced into making with the US government last year. In typical arrogant fashion, the IRS already has indicated that it still expects acquiescence, notwithstanding Switzerland’s strong human rights policy on personal privacy. The Bloomberg story excerpted below has the details, but it’s worth noting that this entire fight exists solely because the internal revenue code imposes double taxation on income that is saved and invested and imposes that bad policy on economic activity outside America’s border. But just as other governments should not have the right to impose their laws on things that happen in America, the United States should not have the right to trample the sovereignty of other nations:

A UBS AG account holder won a Swiss court case preventing data from being disclosed in a ruling that may impede a U.S. crackdown on overseas tax evasion. The failure by U.S. citizens to complete certain tax forms or declare income doesn’t constitute “tax fraud” that would require Switzerland to disclose account data, the country’s Federal Administrative Court ruled in a judgment released today. …”The prosecutors at the Justice Department are not going to be happy with this opinion,” Namorato said in an interview in Washington. “It guts the settlement that they negotiated with the Swiss authorities.” …The Swiss government said in a statement that it will decide Jan. 27 how the Swiss-U.S. agreement can be implemented in light of the ruling. U.S. Justice Department spokesman Charles Miller declined to comment. …The Internal Revenue Service said in a statement that while the agency hadn’t reviewed the ruling it “had every expectation that the Swiss government will continue to honor the terms of the agreement.” …Today’s ruling involved a single test case, and the court said there were 25 more involving similar claims that it will ask the Swiss tax authority to review. “It’s a landmark decision,” said Bernhard Loetscher a partner at Zurich-based law firm CMS von Erlach Henrici AG. “The court considers the case so crystal clear that it invited the SFTA to withdraw the 25 other claims.” …Under the 1996 double taxation treaty, “tax fraud and the like” means fraudulent behavior that causes or attempts an illegal and important reduction in tax owed. Examples included keeping separate accounts of incorrect profit, losses and orders, as well as a scheme of lies. Switzerland distinguishes between tax fraud, which is a crime, and tax evasion, which is a civil offense. “The U.S. will soon start to renegotiate the double taxation treaty, to give up the distinction between tax evasion and tax fraud,” said Zurich lawyer Wolfram Kuoni. “The key battle will be if it will apply retrospectively.”
http://www.bloomberg.com/apps/news?pid=20601087&sid=ahda1JxPJaU8

This battle is part of a broader effort by uncompetitive nations to persecute “tax havens.” Creating a tax cartel for the benefit of greedy politicians in France, Germany, and the United States would be a mistake. An “OPEC for politicians” would pave the way for higher taxes, as explained here, here, and here. But this also is a human rights issue. Look at what happened recently in the thugocracy known as Venezuela, where Chavez began a new wave of expropriation. The Venezuelans with money in Cayman, Miami, and Switzerland were safe, but the people with assets inside the country have been ripped off by a criminal government. Or what about people subjected to persecution, such as political dissidents in Russia? Or Jews in North Africa? Or ethnic Chinese in Indonesia? Or homosexuals in Iran? And how about people in places such as Mexico where kidnappings are common and successful people are targeted, often on the basis of information leaked from tax departments. This world needs safe havens, jurisdictions such as Switzerland and the Cayman Islands that offer oppressed people the protection of honest courts, financial privacy, and the rule of law. Heck, even the bureaucrat in charge of the OECD’s anti-tax competition campaign admitted to a British paper that “tax havens are essential for individuals who live in unstable regimes.” With politicians making America less stable with each passing day, let’s hope this essential freedom is available in the future.

Link to CF&P’s The Tax Havens Video Trilogy
http://www.freedomandprosperity.org/videos/taxhavens1-3/taxhavens1-3.s html

Tax Havens: Myths vs. Facts
http://www.freedomandprosperity.org/videos/taxhavens3/taxhavens3.shtm l

The Moral Case for Tax Havens
http://www.freedomandprosperity.org/videos/taxhavens2/taxhavens2.shtm l

The Economic Case for Tax Havens
http://www.freedomandprosperity.org/videos/taxhavens1/taxhavens1.shtm l

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 As reported by the Wall Street Journal, the Obama Administration will propose a three-year freeze for a portion of the budget known as “non-defense discretionary” spending. Many critics will correctly note that this is like going on a drunken binge in Vegas and then temporarily joining Alcoholics Anonymous. Others will point out that more than 80 percent of the budget has been exempted, which also is an accurate criticism. Nonetheless, even a partial freeze would be a semi-meaningful achievement. But don’t get too excited yet. It is not clear whether the White House is proposing a genuine spending freeze, meaning “budget outlays” for these programs stay at $477 billion for three years, or a make-believe freeze that applies only to “budget authority.” This is an enormously important distinction. Budget outlays matter because they represent the actual burden of government spending. Budget authority, by contrast, is a bookkeeping measure that – at best – signals future intentions. During the profligate Bush years, for instance, apologists for the Administration tried to appease fiscal conservatives by asserting that budget authority was growing at ever-slower rates. In some cases, they were technically correct, but their arguments were deceptive because real-world spending kept climbing to record levels. And needless to say (but I’ll say it anyhow), future intentions never became reality. Domestic discretionary spending soared from less than $350 billion to more than $600 billion during the Bush years (and rose almost another $100 billion in Obama’s first year!). If the Obama Administration proposes a genuine outlay freeze, he will be taking a genuine (albeit small) step in the right direction. If the “freeze” applies only to budget authority, however, that will be a pretty clear indication we are in George W. Bush’s third term.

To attack the $1.4 trillion deficit, the White House will propose limits on discretionary spending unrelated to the military, veterans, homeland security and international affairs, according to senior administration officials. Also untouched are big entitlement programs such as Social Security and Medicare. The freeze would affect $447 billion in spending, or 17% of the total federal budget, and would likely be overtaken by growth in the untouched areas of discretionary spending. It’s designed to save $250 billion over the coming decade, compared with what would have been spent had this area been allowed to rise along with inflation. …administration officials acknowledged the freeze is directed at only a small part of overall spending, but that fiscal discipline has to start somewhere. President Obama had requested a 7.3% increase last year in the areas he now seeks to freeze. 
http://online.wsj.com/article/SB10001424052748703808904575024772877067 744.html

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