Freedom Line Blog

Political Wire – Nixon v. Kennedy
Cafe Hayek – Bernanke the Savior?
John Stossel – Stupid Rules
Government Bytes – Moran Townhall
Reason – Trouble in Japan
WSJ – Charlie Rangel Hides Income and Assets
Politico – Romney Won’t Run
Politico – Pelosi Needs $100,000

Federal Debt: $11.733 trillion

The Almanac of American Politics arrived at our offices today, and with it, a handy little chart on page 1699.

The typical refrain is that the GOP is the party of big-money country club types and Democrats are the party of the little-guy.  As stereotpyical as these labels might be, numbers from the 2008 election tell a strange story.

The Almanac broke down the zip codes in the U.S. by total amount of political contributions.  For example, zip code 10021, which resides in the upper-east side in New York City, contributed over $21 million during the 2007-08 cycle.  Of that amount, over 72% went to Democrats.

This was a typical refrain from the chart.  The six most prolific donor zip codes during the last cycle were all from New York City and all gave big money to Democrats, a total of over $44 million.  That’s $44 million from literally a few square miles on Manhattan Island.  Of the 25 most prolific zip codes, only 3 favored Republicans over Democrats.

More proof of the drastic change in certain demographic groups toward the Democratic Party is evidenced in recent election data.  According to the Almanac, President Obama won 52% of the vote for those reporting income over $200,000 in 2008, even though the President promised to raise income taxes for anyone making over $250,000.

To put that figure in perspective, John Kerry, the 2004 Democratic nominee, received only 35% of the vote for individuals reporting over $200,000 in income.  This  18% jump in high-earners and a massive amount of cash from New York City and California helped propel President Obama to the White House.

WSJ – How Business Can Contain Health Care Costs
Reason – Ted Kennedy’s Deregulation Legacy
John Stossel – Cash for Clunkers
Club for Growth – Dumb Quote of the Day
Cato Institute – Is $19,000 Per Student Enough?
Cafe Hayek – Ted Kennedy’s Appetites
Political Wire – Bill Richardson Cleared in Investigation

Federal Debt: $11.729 trillion

There has been a lot of talk in the media (here, here and here) about how Herbert Hoover was a great miser and should have spent his way out of the economic downturn like Obama is attempting to do.  The myth might be as old as Hoover’s administration: Hoover was a free-market Republican who let Americans suffer instead of attempting government intervention.

False.  It’s hard to believe that a quick search through our own budget data proves that Hoover was more of Keynesian, someone who spent plenty and raised taxes in his vain attempt to “prime” the U.S. economy toward a resurgence.

Reviewing budget numbers from the White House’s own budget, we see that Hoover drastically increased the size and scope of government.  When Hoover arrived in the White House in 1929, he inherited a surplus of $734 million (back when that was real money).  After he left in 1933, the surplus turned into a $2.6 billion deficit.

Of course, some of this decline was due to lower revenues as a result of the depression, but looking at the outlays during his tenure and you’ll see a massive increase in the size of the federal budget, partly with the help of a Republican Congress as well.  From 1929 to 1933, Hoover increased federal outlays from $3.1 billion to approximately $4.6 billion, a 48% increase. From 1931 to 1932, outlays surged 30%.  Yes, Hoover was a real miser, a free-market fiend who hated spending the money of hard-working taxpayers.

To put Hoover’s 48% increase in perspective, progressives often assailed President Bush as a free-market disciple who refused to spend money on levies, the poor, or the uninsured.  During Bush’s tenure, estimated federal outlays surged 57%, even more than Hoover and LBJ’s Great Society (approximately 50%).

So, the next time you hear someone say that a runaway free-market caused the Great Depression and our current crisis, just remind them that Bush made LBJ look like Uncle Scrooge and Hoover drove federal expenditures faster than President Clinton.  Old rumors die slowly but this is one that needs to end now before we continue to perpetuate even more big-spending government boondoggles.

According to the WSJ, SAT scores dropped this year.  From the story:

“Many observers Tuesday viewed the flat results of recent years as discouraging in light of a more than 25-year effort to improve U.S. education. ‘This is a nearly unrelenting tale of woe and disappointment,’ said Chester E. Finn Jr., president of the Thomas B. Fordham Institute, a Washington, D.C., think tank. ‘If there’s any good news here, I can’t find it.'”

Perhaps that’s because there is absolutely no correlation between spending more money on public education and output.  The public school system, like any other monopoly, operates at a high cost and typically produces mediocre results.

WSJ – Senator Edward Kennedy Dies at 77
Congressional Budget Office – Budget and Economic Outlook
Cafe Hayek – Health Care Manifesto
John Stossel – On Competition
Greg Mankiw – Our Fiscal Hole
Politico – Pelosi’s Pledge on Health Care to Honor Kennedy
Politico – Doubts on Giuliani Bid for NY Gov.

Federal Debt: $11.735 trillion

Many Obamacare proponents paint a government-run or single-payer system as some Utopian endgame for health care.   It’s not.  The same debate that takes place here rages overseas as well.

Tuning in to the Prime Minister’s Question Hour is a good way to appreciate (in addition to the unintended hilarity) how a government-run system doesn’t end the debate, it merely changes it.   Instead of asking questions about universal coverage, complaints arise over seniors being denied care because the government offered care to younger patients.

This article from the UK’s Liberal Democratic Party is illustrative:

“When doctors at that hospital have confirmed that they were instructed by their managers to abandon seriously ill patients and to treat people with minor ailments instead in order to meet the Prime Minister’s targets, it is not enough to talk of reviews, inquiries and to blame other people. Will he scrap the mad targets that make hospitals tick boxes rather than look after the desperately ill?”

Full article is here.  Remember, putting Uncle Sam in charge typically raises the cost, reduces efficiency, and introduces severe unintended consequences: see Medicare, Medicaid, Social Security, Cash for Clunkers, AMTRAK, etc., etc…

“Accidentally, but relentlessly, America has built a health-care system with incentives that inexorably generate terrible and perverse results. Incentives that emphasize health care over any other aspect of health and well-being. That emphasize treatment over prevention. That disguise true costs. That favor complexity, and discourage transparent competition based on price or quality. That result in a generational pyramid scheme rather than sustainable financing. And that—most important—remove consumers from our irreplaceable role as the ultimate ensurer of value.” – David Goldhill, writing in the Atlantic.

WSJ – Dealers Get More Time on Cash-for-Clunkers
Government Bytes – Deficit News
Club for Growth – Infant Mortality and Government Health Care
Political Wire – Obama to Reappoint Bernanke
Cafe Hayek – Health Care Wisdom
Cato Institute – High Speed Fail
Politico – Groups Target GOP on Cap-and-Trade
Political Wire – Giuliani for NY Governor?

Federal Debt: $11.732 trillion

Michael Moore has another movie coming out this year.  After bashing the 2nd Amendment and praising socialized medicine, Moore takes on what else … capitalism.

Judging by his recent trailer and his comments on YouTube, the movie looks like a tired rehash of past arguments for further redistribution of wealth and government intervention.

Moore will argue that the “market” is too powerful but the trailer includes clips from the bailout fiasco last year and other examples of corporate welfare.  Of course, this is not capitalism.  The last eight years have been an exercise in how the government distorts markets and rewards the politically powerful.

For example, corporate power last year allowed some companies, like AIG , to prosper and receive massive bailouts, while others were left to wither.  Capitalism doesn’t endorse multi-billion dollar transfers of capital from taxpayers to corporations, and I’m not sure why Moore thought the bailout was the perfect example of how the market is evil and corrupt.

On the contrary, the last 12 months have provided a brilliant example of how the government is corrupt.  The government distorted credit markets by keeping interest rates below the market rate and then encouraged reckless lending and borrowing.  Furthermore, the government compounded the problem when it rewarded large reckless lenders with bailouts from taxpayers.  Capitalism has suffered this past year, not government.  Government remains bigger and stronger than ever, poised to consume even larger portions of the market and take on new responsibilities.

Finally, in the comments section, Moore states that the rich “feed” off of the rest of us.  For someone who has made his fortune by practicing capitalism, it’s strange that he would describe himself as a vampire.  People, liberal and conservative, pay money to see his films and either agree or disagree with him, but few would deny that Moore has a talent for film-making; that is why he is rich.

I wish him the best of luck as he continues to pursue his profession, just as I wish the billions of other workers on the planet the best of luck pursuing their vocation.  For some reason, Moore thinks that there is some finite supply of money at the end of a rainbow that the rich and powerful have found and only occasionally share  with the rest.  But, Moore himself found no stash of money.  He created money and personal wealth through his own skill, just like any other talented worker.  And, consumers voluntarily saw his films because they saw some merit in his skill.

Let’s hope Mr. Moore includes some of the true virtues of the free market and capitalism when his film is finally released.

Here is the trailer:

Harry Reid is in big trouble in his home state of Nevada.  A new poll shows the Senate Majority Leader trailing both of his possible GOP opponents by as many as 11 points.  Reid’s approval ratings remains at a paltry 37 percent.

WSJ – Obama Plays Defense
Political Wire – Will Democrats Go It Alone?
Cafe Hayek – Health Care v. Health Insurance
Dan Mitchell – Powerful Evidence for School Choice
John Stossel – Cash for Clunkers is Dead
Reason – The Truth About Health Care and Infant Mortality
The Atlantic – How American Health Care Killed My Father

U.S. Debt: $11.746 trillion

“Rationing is bad policy. It forces individuals with different preferences to accept the same care. It also imposes an arbitrary cap on the future growth of spending instead of letting it evolve in response to changes in technology, tastes and income. In my judgment, rationing would be much worse than excessive care.”

-Dr. Martin Feldstein writing in today’s Wall Street Journal.

Politico – Axelrod’s Health Insurance Ties
WSJ – GOP Rejects Co-Ops
Cafe Hayek – A Mind Made Clearer by Experience
Republican Study Committee – Tom Price on Public Option
John Stossel – Capitalism in Cuba
Chris Cillizza – Is California Competitive?
Martin Feldstein – Obamacare is All About Rationing

Federal Debt: $11.707 trillion

According to the Wall Street Journal, President Obama is trying to reassure his closest allies that the Public Option (government-run health care) is still on the table.  As we noted yesterday, dropping the Public Option could mean losing over 100 votes in the House.

From the story:

“The government-run plan does not have the votes to pass in the Senate, and it never has,” said Michael Mahaffey, spokesman for Sen. Mike Enzi (R., Wyo.), a Finance Committee member. “So while Sen. Enzi is pleased to see the White House backing away from its insistence on including a government-run plan, the fact is this doesn’t change the dynamic in the Senate very much.”

The President no doubt has a difficult balancing act to walk in the next few months.  The fall of the Public Option could spell the demise of his health care overhaul and even possibly other heavy-handed legislative goals like Cap-and-Tax.

Perhaps most troubling, however, is that government control could be re-branded under new names like co-op or individual mandate.  Taxpayers should still be on the lookout for whatever derivation of government control that the White House conjures in the next few weeks.

Lovers of freedom lost two strong leaders today as both Rose Friedman and Robert Novak passed away.

Rose, wife of famed Nobel Laureate Milton Friedman, was a renowned economist in her own right and co-wrote several books with her late husband, including Free to Choose, Capitalism and Freedom, and Two Lucky People.   Reason’s Brian Doherty imparts a few kind words over at Hit & Run.

Robert Novak, who covered Washington politics since the Eisenhower administration, rose to fame when he published the Evan-Novak Political Report with his longtime friend Rowland Evans.  Here is a nice piece about Novak’s long life over at the WSJ.