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Posts Tagged ‘Statism’

Michael Gerson is upset that the GOP budget would trim some money from the foreign aid budget. In his Washington Post column, he regurgitates Obama Administration talking points, claiming that less foreign aid will kill tens of thousands of poor children in Africa.

USAID estimates that reductions proposed in the 2011 House Republican budget would prevent 3 million malaria treatments. …this means about 1.5 million people in need of treatment would not receive it. About 3 percent of untreated malaria infections progress to severe malaria — affecting 45,000 children. Of those children, 60 to 73 percent will not survive, yielding 27,000 to 30,000 deaths. …global health programs are not analogous to many other categories of federal spending, such as job training programs or support for public television. A child either receives malaria treatment or does not. The resulting risk of death is quantifiable. The outcome of returning to 2008 spending levels, as Republicans propose, is predictable. …One can be a budget cutter and still take exception to cuts at the expense of the most vulnerable people on earth. …Cuts for global health programs should be of special concern to those of us who consider ourselves pro-life. No pro-life member of Congress could support welfare savings by paying for abortions.

Gerson’s moral preening is a bit tedious. He’s a guy who presumably is part of top 2 percent of income earners in America. And I bet his family’s overall level of consumption must be in the top 1 percent worldwide. Yet he wants to take money from the rest of us, with our lower living standards, so he can feel morally superior.

Having met Gerson a couple of times, I don’t doubt his sincerity, and I’m guessing he probably gives a lot of money to charity. Moreover, I doubt he personally benefits from more spending in these areas (i.e., he’s not an overpaid bureaucrat, a consultant with a fat contract from USAID, or anything like that).

But I still have a hard time taking him seriously because he thinks the coercive power of government should be used to spend money in ways that he finds desirable – even if that means that people with much lower levels of income and wealth are picking up the tab for something that Gerson wants.

My Cato colleague, Roger Pilon, had a column in yesterday’s Wall Street Journal examining the broader issue of whether federal spending is an appropriate way of fulfilling charitable impulses. As Roger notes, it’s not charity when you make other people pay for things that you think are important.

‘What Would Jesus Cut?” So read the headline of a full-page ad published in Politico last month by Sojourners, the progressive evangelical Christian group. Urging readers to sign a petition asking Congress “to oppose any budget proposal that increases military spending while cutting domestic and international programs that benefit the poor, especially children,” it was the opening salvo of a campaign to recast the budget battle as a morality play.

Not to be outdone, Catholics for Choice took to Politico on Tuesday to run “An Open Letter from Catholic State Legislators to Our Colleagues in the US Congress.” The letter condemned “policies that unfairly target the least among us,” echoing a blogger at the National Catholic Reporter who averred last month that the federal budget is, after all, “a moral document.”

…The budget battle is thus replete with moral implications far more basic than Sojourners and Catholics for Choice seem to imagine. They ask, implicitly, how “we” should spend “our” money, as though we were one big family quarreling over our collective assets. We’re not. We’re a constitutional republic, populated by discrete individuals, each with our own interests. Their question socializes us and our wherewithal. The Framers’ Constitution freed us to make our own individual choices.

The irony is that Jesus, properly understood, saw this clearly—both when he asked us to render unto Caesar what is Caesar’s and unto God what is God’s, and when he spoke of the Good Samaritan. The ads’ signers imagine that the Good Samaritan parable instructs us to attend to the afflicted through the coercive government programs of the modern welfare state. It does not. The Good Samaritan is virtuous not because he helps the fallen through the force of law but because he does so voluntarily, which he can do only if he has the right to freely choose the good, or not.

Americans are a generous people. They will help the less fortunate if left free to do so. What they resent is being forced to do good—and in ways that are not only inefficient but impose massive debts upon their children. That’s not the way free people help the young and less fortunate.

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Ronald Reagan would have been 100 years old on February 6, so let’s celebrate his life by comparing the success of his pro-market policies with the failure of Barack Obama’s policies (which are basically a continuation of George W. Bush’s policies, so this is not a partisan jab).

The Federal Reserve Bank of Minneapolis has a fascinating (at least for economic geeks) interactive webpage that allows readers to compare economic downturns and recoveries, both on the basis of output and employment.

The results are remarkable. Reagan focused on reducing the burden of government and the economy responded. Obama (and Bush) tried the opposite approach, but spending, bailouts, and intervention have not worked. This first chart shows economic output.

The employment chart below provides an equally stark comparison. If anything, this second chart is even more damning since employment has not bounced back from the trough. But that shouldn’t be too surprising. Why create jobs when government is subsidizing unemployment and penalizing production? And we already know the so-called stimulus has been a flop.

None of this should be interpreted to mean Reagan is ready for sainthood. He made plenty of compromises during his eight years in office, and some of them were detours in the wrong direction. But the general direction was positive, which is why he’s the best President of my lifetime.*

*Though he may not be the best President of the 20th Century.

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The title of this post doesn’t quite roll off the tongue like “It was the best of times, it was the worst of times.” But what can you expect when you compare politicians to the opening line of Charles Dickens’ A Tale of Two Cities.

That’s what came to my mind, though, when I noticed two stories next to each other on the Washington Post website. The first story was about a new lawmaker, infused with the spirit of the Tea Party, seeking to shrink the size and scope of Washington. The other story was about a career politician trying to expand the power of the federal government.

Let’s start with the good news. Here’s an excerpt from the Washington Post report about Senator Rand Paul’s bold plan to reduce the burden of government spending, including an attack on one of Washington’s sacred cows – subsidies for Israel.

The freshman Kentucky lawmaker unveiled his budget proposal this week that would make significant cuts in education, housing and energy while reducing money for wars in Afghanistan and Iraq by $16 billion. Paul’s plan also would cut some $20 billion in overseas aid, and he said he wants to eliminate the $3 billion the United States provides to Israel annually in foreign military assistance. “The overwhelming majority of Americans agree with Senator Paul – our current fiscal crisis makes it impossible to continue the spending policies of the past,” Paul spokesman Gary Howard said in a statement responding to the criticism. “We simply cannot afford to give money away, even to our allies, with so much debt mounting on a daily basis.” The latest economic forecast puts the deficit at a record $1.5 trillion. Paul explained his position in an interview with CNN on Wednesday, saying he respects Israel as a Democratic nation but feared funding an arms race in the Mideast.

Now, for the business-as-usual story, we have a story about the latest antics of Senator Charles Schumer, who has discovered a new “crisis” that requires action by Washington. Here’s a blurb from the Washington post.

U.S. Sen. Charles Schumer of New York says he wants the federal government to ban new designer drugs known as bath salts that pack as much punch as cocaine or methamphetamines. The small, inexpensive packets of powder are meant to be snorted for a hallucination-inducing high, but they are often marketed with a wink on the Internet or in convenience stores as bathing salts. The Democratic senator is announcing a bill Sunday that would add those chemicals to the list of federally controlled substances. …Schumer says the bath salts “contain ingredients that are nothing more than legally sanctioned narcotics.”

I confess total ignorance about “narcotic” bath salts, but even in the unlikely case that they should be banned, that is a decision for state governments. Last time I checked, the enumerated powers of Congress did not include authority to tell us what we can put in our baths or up our noses.

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I’ve always rejected coercive redistribution, particularly when imposed by the federal government.

But some types of redistribution are worse than others, and when big business and big government get in bed together, ordinary people are the ones who get screwed.

This is why Obama’s supposed “move to the center” is a bunch of nonsense.

Tim Carney is the go-to guy on this issue, and his column this morning in the Washington Examiner exposes the real meaning of Obama’s recent appointments of a “banker” and a “CEO.”

Let’s start with Bill Daley, the supposed banker who will be Obama’s new Chief of Staff. Does this signal a move to the right, as some left-wingers fear? That might be the case if Obama had appointed a real banker like John Allison of BB&T, who wants government to get out of the way and believes banks should sink or swim without bailouts or subsidies. But, as Tim explains, that is not the attitude of Bill Daley, who is more akin to Jim Taggart, the rent-seeking businessman in Atlas Shrugged.

Check out Daley’s resume. In the 1990s, he ran Amalgamated Bank, owned by a union and described by the Chicago Sun-Times as “one of the city’s most politically connected financial institutions.” Bill’s brother, Mayor Richard Daley, kept the city’s money on deposit at Amalgamated. Later, Bill held a seat on Fannie Mae’s board, pocketing six-figure compensation from the government-sponsored enterprise that used a housing bubble and an implicit government guarantee to fill a slush fund for well-connected Democrats — until taxpayers bailed it out in 2008. This is Obama’s kind of businessman: a banker who leverages his political connections for profit.

Or what about Obama’s appointment of Jeff Immelt of General Electric? Does this mean Obama wants to unleash the power of free enterprise? That would be welcome news, but GE has morphed into a corrupt company that specializes in fleecing taxpayers (a very sad development since GE once sponsored Ronald Reagan). Once again, Tim hits the nail on the head with a devastating indictment.

GE, which marches in sync with government, pocketing subsidies, profiting from regulation, and lobbying for more of both. …Obama bragged GE would be selling to a power plant in Samalkot, India. That sale is no triumph of free trade — Obama’s Export-Import Bank is providing at least $400 million in subsidized financing to grease the skids. Subsidies are GE’s lifeblood, and Immelt’s own words make that clear. In his op-ed announcing his appointment, Immelt called for a “coordinated commitment among business, labor and government…” He also advocated “partnership between business and government…” This is Immelt’s style. …wherever Obama has led, GE has followed. Obama has championed cap and trade in greenhouse gasses, and GE has started a business dedicated to creating and trading greenhouse gas credits. As Obama expanded subsidies on embryonic stem cells, GE opened an embryonic stem-cell business. Obama pushed rail subsidies, and GE hired Linda Daschle — wife of Obama confidant Tom Daschle — as a rail lobbyist. GE, with its windmills, its high-tech batteries, its health care equipment, and its smart meters, was the biggest beneficiary of Obama’s stimulus. To get these gears in sync isn’t cheap: The company has spent $65.7 million on lobbying during the Obama administration — more than any other company by far. So much for Obama’s war on lobbyists.

In other words, appointing Daley and Immelt does not mean a change in policy. These are people who want a bigger government because these are people who have learned to line their pockets when government has more power. They may have different motives than traditional leftists, but the result is the same. As I’ve noted before, my former Cato colleague Will Wilkinson said it best when he wrote that, “…the more power the government has to pick winners and losers, the more power rich people will have relative to poor people.”

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I’ve already posted about the nut who claimed that global warming was causing AIDS, so I guess I shouldn’t be too surprised that a writer for the New Republic says global warming may lead to genocide.

But that may not be the silliest thing said by a left winger in the past couple of days. Hugo Chavez is blaming capitalism for heavy rains that have caused flooding in Venezuela.

So which statement is more laughable? After careful consideration, I give the excessive hyperbole prize to Timothy Snyder, the author of the New Republic article.

Yes, I despise the Venezuelan dictator, but I can understand why a thug politician would want to deflect blame for his personal incompetence and his  government’s inability to deal with bad weather. Heck, even non-thug politicians look for scapegoats when their policies are failing.

Snyder, by contrast, is much more on the cutting edge of left-wing absurdity. Congrats to Tim!

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In the real world, rational people know that companies will stop selling products if they are forced to lose money. In the political world, though, common sense doesn’t matter. Or at least it ranks far below other considerations, such as power, polling, fundraising, and spite.

If you think I’m being too harsh, just look at what’s happened since Obamacare. As the Wall Street Journal notes, the “child-only” insurance market has been decimated by a new law that allows parents to wait until children get sick before buying insurance. Needless to say, that is an open invitation to lose money, and no business (other than crony capitalism entities such as Fannie Mae and Freddie Mac) exists to throw away shareholder funds. Obama, Pelosi, and Reid probably think this is a good development, however, since they can demagogue against “greedy” insurance companies and claim that government should fully take over the health care system.

This week, almost every big insurance company in America—including Aetna, Cigna, UnitedHealth Group, WellPoint, Humana, Coventry, some Blue Cross Blue Shield affiliates and others—stopped writing “child-only” policies in the individual market. This is a niche product that parents typically buy when their employer health plan doesn’t cover dependents. The exact plans vary company to company and state to state, and the insurers will still offer family policies and make good on the child-only policies that they’ve already sold. But most won’t be writing new ones.

In other words, for-profit businesses are refusing to sell products that consumers want to buy. Exact data aren’t available, but the child-only market covers roughly a million kids a year.

The reason is a regulation that President Obama mentions every time he talks about health care, as he did recently in Falls Church, Virginia: “Children who have pre-existing conditions are going to be covered.” Insurers are now required to cover everyone under 19 when their parents apply for coverage, regardless of health status. The problem with this kind of “guaranteed issue” is that it encourages people, in this case parents, to wait until their kids are sick before seeking coverage.

This drives up premiums for the healthy, encouraging consumers in turn to drop coverage, and eventually it leads to what’s known as a “death spiral,” the industry term for an insurer with rapidly increasing costs as a result of population changes in its coverage pool. The child-only market is a particular death-spiral risk because it is so small and unstable, which explains why so many insurers left in a stroke.

The collapse of the child-only market is a preview of what will happen when guaranteed issue and the rest of ObamaCare comes on line in 2014 for adults, except then insurers will have nowhere to flee. Exiting the market will mean going out of business.

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Our tax system in America is an absurd nightmare, but at least we have some ability to monitor what is happening. We can’t get too aggressive (nobody wants the ogres at the IRS breathing down their necks), but at least we can adjust our withholding levels and control what gets put on our annual tax returns. The serfs in the United Kingdom are in much worse shape. To a large degree, the tax authority (Inland Revenue) decides everyone’s tax liability, and taxpayers have no role other than to meekly acquiesce. But now the statists over in London have decided to go one step farther and have proposed to require employers to send all paychecks directly to the government. The politicians and bureaucrats that comprise the ruling class then would decide how much to pass along to the people actually earning the money. Here’s a CNBC report on the issue.

The UK’s tax collection agency is putting forth a proposal that all employers send employee paychecks to the government, after which the government would deduct what it deems as the appropriate tax and pay the employees by bank transfer.

The proposal by Her Majesty’s Revenue and Customs (HMRC) stresses the need for employers to provide real-time information to the government so that it can monitor all payments and make a better assessment of whether the correct tax is being paid.

“If HMRC has direct access to employees’ bank accounts and makes a mistake, people are going to feel very exposed and vulnerable,” [George Bull, head of Tax at Baker Tilly] said.

And the chance of widespread mistakes could be high, according to Bull. HMRC does not have a good track record of handling large computer systems and has suffered high-profile errors with data, he said.

…[T]he cost of implementing the new system would be “phenomenal,” Bull pointed out.

…The Institute of Directors (IoD), a UK organization created to promote the business agenda of directors and entreprenuers, said in a press release it had major concerns about the proposal to allow employees’ pay to be paid directly to HMRC.

This is withholding on steroids. Politicians love pay-as-you-earn (as it’s called on the other side of the ocean), largely because it disguises the burden of government. Many workers never realize how much of their paychecks are confiscated by politicians. Indeed, they probably think greedy companies are to blame when higher tax burdens result in less take-home pay. This new system could have an even more corrosive effect. It presumably would become more difficult for taxpayers to know how much government is costing them, and some people might even begin to think that their pay is the result of political kindness. After all, zoo animals often feel gratitude to the keepers that feed (and enslave) them.

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