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Posts Tagged ‘spending’

Here’s a chart from Veronique de Rugy’s new article in The American. Amazing how the problem becomes obvious when you look at real numbers and don’t get trapped into using “baseline” math (as I explain in my latest video).

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Our fiscal policy goal should be smaller government, but here’s a video for folks who think that balancing the budget should be the main objective.

The main message is that restraining the growth of government is the right way to get rid of red ink, so there is no conflict between advocates of limited government and supporters of fiscal balance.

More specifically, the video shows that it is possible to quickly balance the budget while also making all the 2001 and 2003 tax cuts permanent and protecting taxpayers from the alternative minimum tax. All these good things can happen if politicians simply limit annual spending growth to 2 percent each year. And they’ll happen even faster if spending grows at an even slower rate.

This debunks the statist argument that there is no choice but to raise taxes.

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The fault line in American politics is not really between Republicans and Democrats, but rather between taxpayers and the Washington political elite. Here are two examples that symbolize why economic policy is such a mess. First, we have President Bush’s former top aide, Karl Rove, making the case in the Wall Street Journal that the Obama Administration has been fiscally irresponsible. That’s certainly true, but as I’ve pointed out on previous occasions (here and here), Rove has zero credibility on these issues.

In the excerpt below, Rove attacks Obama for earmarks, but this corrupt form of pork-barrel spending skyrocketed during the Bush years. He attacks Obama for government-run healthcare, but Rove helped push through Congress a reckless new entitlement for prescription drugs. He attacks Obama for misusing TARP, but the Bush Administration created that no-strings-attached bailout program.

These are examples of hypocrisy, but Rove also is willing to prevaricate. He blames Obama for boosting the burden of government spending to 24 percent of GDP, but it was the Bush Administration that boosted the federal government from 18.2 percent of GDP in 2001 to 24.7 percent of GDP in 2009. Obama is guilty of following similar policies and maintaining a bloated budget, but it was Bush (with Rove’s guidance) that drove the economy into a fiscal ditch.

The president’s problem is largely a mess of his own making. Deficit spending did not begin when Mr. Obama took office. But he and his Democratic allies have supported, proposed, passed or signed and then spent every dime that’s gone out the door since Jan. 20, 2009.

Voters know it is Mr. Obama and Democratic leaders who approved a $410 billion supplemental (complete with 8,500 earmarks) in the middle of the last fiscal year, and then passed a record-spending budget for this one. Mr. Obama and Democrats approved an $862 billion stimulus and a $1 trillion health-care overhaul, and they now are trying to add $266 billion in “temporary” stimulus spending to permanently raise the budget baseline.

It is the president and Congressional allies who refuse to return the $447 billion unspent stimulus dollars and want to use repayments of TARP loans for more spending rather than reducing the deficit. It is the president who gave Fannie and Freddie carte blanche to draw hundreds of billions from the Treasury. It is the Democrats’ profligacy that raised the share of the GDP taken by the federal government to 24% this fiscal year.

This is indeed the road to fiscal hell, and it’s been paved by the president and his party.

http://online.wsj.com/article/SB10001424052748703426004575338832391393128.html

Second, we have the amusing spectacle of Nancy Pelosi actually claiming that paying people to remain unemployed is a good way of creating jobs. She is being appropriately mocked for this assertion, but keep in mind that she is accurately regurgitating standard Keynesian theory. It doesn’t matter that Keynesianism didn’t work for Hoover and Roosevelt in the 1930s, didn’t work for Japan in the 1990s, and didn’t work for Bush in 2008. Proponents of this approach have a childlike faith in the Keynesian model and its ability to generate very specific (albeit completely inaccurate) numbers. Here are two videos that offer the policy-wonk version of a steel cage match. In one corner, we have the Speaker of the House arguing that subsidizing joblessness is a “stimulus” strategy. In the other corner, I explain why transferring money from the economy’s left pocket to the right pocket is not a recipe for growth.

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It is probably safe to assume that government bureaucrats are overpaid in every city and state, but it won’t come as a big surprise to learn that San Francisco is especially profligate. Here are some disturbing details compiled by Investor’s Business Daily:

We have seen the future and it works — for certain people. Take San Francisco municipal workers. The San Francisco Chronicle recently detailed just how overpaid the city’s employees are. Their average yearly salary is $93,000 before benefits. A third of them made more than $100,000 in 2009. A newly retired deputy police chief (not even the city’s top cop) made $516,118.

…The city’s unions, which are powerful even by California standards, have produced a public-workers’ paradise financed by high taxes on tourists, businesses (San Francisco even has a 1.5% tax on payrolls) and regular folk who choose to live there or who haven’t figured out a way to leave. The city has poor and homeless people just like any other.

…[I]n 2009, 28 city employees made more than the mayor, Gavin Newsom, who pulled down a respectable $250,903. Firefighters in San Francisco have a base salary of $102,648, while even lowly payroll clerks start at $54,314.

http://www.investors.com/NewsAndAnalysis/Article.aspx?id=532030

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Obama and the Democrats are trying to enact a third so-called stimulus (a.k.a., jobs bill). I’d make a joke about three strikes and your out, but we should remember that this is actually the fourth attempt since we should count Bush’s lame faux stimulus in 2008. In any event, one would hope people would learn that borrowing money from the private sector and then squandering it on inefficient and counterproductive programs is not a recipe for economic growth. I was interviewed by Derek Thompson of The Atlantic. Here are a couple of excerpts: 

The Keynesian theory is just completely wrong. It didn’t work for Hoover, for FDR, for Japan in the 1990s, for Bush in 2008 or for Obama. Taking money out of your right pocket and putting it in your left pocket doesn’t make sense. We’re wasting money on astoundingly bad ideas, especially by bailing out profligate state governments. It’s better to let the economy run its course than to shovel money at the problem. …recessions are the economy adjusting to previous bad policies. There’s not much you can do. Our economy got way out of whack because of bad policy, and that includes bad monetary policy like easy money from the Federal Reserve.  It’s like a hangover. And the best thing after a hangover position is to not compound the mistake with more drinking. I don’t believe in the hair of the dog theory for getting the economy back on track.
http://www.theatlantic.com/business/archive/2010/06/the-case-against-more-stimulus/57774/ 

This leads to a rather obvious question. If deficit spending is not stimulus, why are politicians making the same mistake over and over again? The answer, of course, is that politicians will use any excuse to spend money. But there’s another reason for the current orgy of fiscal recklessness. As explained in this video, Obama and the Democrats want to take credit for the economic expansion that eventually will occur. And even if it is a weak recovery because of all the wasteful spending, they can claim the growth occurred because of the so-called stimulus. This makes about as much sense as a rooster crowing and taking credit for the sunrise, but politicians care about spin.

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I’ve been on a lonely crusade to expose big-government Republicans for being just as bad as Democrats (or even worse, since they should know better), so I’m glad to see Don Devine and David Keene in the Washington Post making similar points. Every conservative who despises big-government RINOs such as Arlen Specter (who at least had the decency to become a Democrat) should feel the same about Bush and Rove.

From William F. Buckley Jr. to Barry Goldwater to Ronald Reagan, the creators of the modern conservative movement always taught that excessive concentration of power in government leads inevitably to corruption and the diminution of personal freedoms. But while Rove credits these leaders for shaping his early political views — “at the age of thirteen, I was wild for Barry Goldwater,” he writes — he did not pursue their values while in the White House. To the contrary, as the chief political architect of the Bush presidency, Rove was instrumental in directing an administration most notable for its enormous expansion of national government. …In total, Bush increased federal spending on domestic programs more than any president since Richard Nixon, easily surpassing Bill Clinton, Carter and his own father, so much so that by 2008, America had two big-government parties. Rove writes that as a teenager he carried around a paperback copy of Goldwater’s “Conscience of a Conservative,” but he should have heeded the book’s first few pages, in which Goldwater warned against hyphenated conservatism. The Bush administration’s move toward big government was not gradual, either; it was signaled during then-Gov. Bush’s campaign. In 1999, the journalist Tucker Carlson interviewed Bush in Austin and asked him if he was a small-government conservative. Mr. Bush replied no; he said he was an “efficient-government conservative.” Bush’s campaign rarely called for spending cuts of any kind and even opposed eliminating the Department of Energy, whose abolition had been in every GOP platform since 1980. …Rove reveals his true heroes in his memoir, when we learn that he decorated his White House office with memorabilia of progressive Teddy Roosevelt and pragmatist William McKinley. …The astonishing concentration of power in Washington today has created a huge opportunity for conservatives and the GOP. With President Obama’s policies of big government, big bailouts, big banks and big bureaucracy, the Democratic Party has jettisoned the working men and women of America, who are increasingly coming to reject being ruled by one corrupt city along the Potomac. They want to be governed by themselves in their communities, their localities and their states, in a 21st-century version of the founders’ federalism. But thanks in part to their recent big-government legacy, Republicans have been slow to seize this opportunity. In his concluding passages, Rove concedes that Bush “went deep into Democratic territory to show how government can use the tools of capitalism to soften its rough justice” — an admission that neglects state, local and individual alternatives to creating a just society, and that confirms our worst fears about hyphenated conservatism. Recently, President Obama visited a bookstore in Iowa and joked that he was there to purchase Rove’s memoir. Conservatives can only hope it was not to get any more ideas on how to expand government.
http://www.washingtonpost.com/wp-dyn/content/article/2010/03/31/AR2010033102630.html 

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I shudder to think how many American politicians and bureaucrats squandered our tax dollars by attending the enivornmental boondoggle in Copenhagen last December, but the behavior of one EPA official is a perfect illustration of how the political elite have no intention of abiding by the rules they want to impose on the rest of us. The hypocrisy of Ms. Jackson is offensive, but her callous disregard for tax dollars also deserves comment. She had free use of “environmentally sensitive” cars, but she rented a car (and driver!) for more than $1,000 per day.

At last December’s UN Climate Change Conference in Copenhagen, the U.S. Environmental Protection Agency (EPA) ran up a $13,000 bill for conventional combustion engine cars, a private driver, and old-fashioned baggage vans, according to government records. The EPA paid more in two weeks for cars than most Americans make in a month. Lisa Jackson, the EPA administrator, chose to ignore Copenhagen’s readily available crunchy alternatives, like hybrids or algae-fueled vehicles that were available — for free — to VIPs and governments through the Danish Foreign Ministry, or demonstration cars that ran on new green fuels produced by California companies. Jackson rented from the very conventional Avis, and drove around in a 158-horsepower, 16 valve conventional gas-powered Ford Mondeo. The car that Lisa Jackson and her driver used in Copenhagen would have failed the president’s new fuel efficiency standards released yesterday of 35.5 miles per gallon. Her Mondeo only got 25.2 miles per gallon. Copenhagen isn’t Los Angeles, where mass transit is as prevalent as ice storms. All UN delegates received free passes for public transport throughout the Danish capital… Ms. Jackson charged taxpayers $8,732 for a car — and driver — over six days, as she conventionally crawled through traffic congestion in downtown Copenhagen. An additional $3,457 went towards another Ford and at least two vans to carry the delegation’s baggage.
http://pajamasmedia.com/blog/epa-wasted-13000-on-low-mpg-car-rentals-in-copenhagen-%E2%80%94-were-offered-free-zero-emission-cars-pjm-exclusive/ 

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