The entire continent of Europe may seem most useful these days as an object lesson in how not to conduct public finance, but as a fascinating new piece in the UK’s The Spectator makes clear, Sweden provides at least one unlikely exception. While the rest of the world was clamoring for Keynesian stimulus measures in the immediate aftermath of the global financial crisis, Sweden was following the lead of Anders Borg, its libertarian-leaning Finance Minister. As a result, the country took a drastically different path — one that’s now paying dividends:
While most countries in Europe borrowed massively, Borg did not. Since becoming Sweden’s finance minister, his mission has been to pare back government. His ‘stimulus’ was a permanent tax cut. To critics, this was fiscal lunacy — the so-called ‘punk tax cutting’ agenda. Borg, on the other hand, thought lunacy meant repeating the economics of the 1970s and expecting a different result.
Three years on, it’s pretty clear who was right. ‘Look at Spain, Portugal or the UK, whose governments were arguing for large temporary stimulus,’ he says. ‘Well, we can see that very little of the stimulus went to the economy. But they are stuck with the debt.’ Tax-cutting Sweden, by contrast, had the fastest growth in Europe last year, when it also celebrated the abolition of its deficit. The recovery started just in time for the 2010 Swedish election, in which the Conservatives were re-elected for the first time in history.
The good news: Sweden provides a success story that drives one more nail into Keynesianism’s coffin. The bad news: We’re living in an age where Scandinavia can muster more enthusiasm for free market economics than the U.S.
Michael Barone has a very wise piece today on why Mitt Romney may go the “white bread” route — or, as he puts it, “double vanilla” — in choosing a vice president. He focuses on Paul Ryan, Mitch Daniels, Rob Portman, and Bob McDonnell, and I agree that all four of them would each be a solid choice.
On the extreme other side of the VP-strategery spectrum is my column today at The American Spectator online about a “Crazy Eight” of potential long-shot choices, which include a mix of ethnicities, genders, ages, and even political parties. I’ll ask you to read it for yourselves… but PLEASE note what I went to great pains to repeat, but which some readers apparently overlooked, which is that this is the first of a multi-part series I am writing on the subject, and thus amounts to a creative list of long-shot outliers, not the likely picks or the ones I think would be best. It is an illustrative list, to show the sorts of creativity Romney should use in analyzing every angle. These are not me recommendations as to who the choice should be, but they are suggestions for the sorts of people who should be on the original, very long, list under preliminary consideration. Subsequent columns will move into more likely, and probably more wise or desirable, territory (although I do think one or two of the Crazy Eight should move up the ranks at least somewhat).
For the record, I think Barone’s list is a mighty fine one.
Michelle Malkin says that while the million-dollar junkets enjoyed by General Services Administration officials at taxpayer expense deserve outrage, the real scandals are the $25 million+ paydays the GSA gives to Big Labor thanks to a rule implemented by President Barack Obama.
As I’ve reported previously, the linchpin is E.O. 13502, a union-friendly executive order signed by Obama in his first weeks in office. It essentially forces contractors who bid on large-scale public construction projects worth $25 million or more to submit to union representation for its employees. The blunt instrument used to give unions a leg up is the “project labor agreement,” which in theory sets reasonable pre-work terms and conditions. But in practice, it requires contractors to hand over exclusive bargaining control, to pay inflated, above-market wages and benefits, and to fork over dues money and pension funding to corrupt, cash-starved labor organizations.
One analyst told Congress that “the adoption of a PLA amounts, in effect, to a conferral of monopoly power on a select group of construction unions over the supply of construction labor.”
Since 85 percent of construction laborers are non-union, Obama’s GSA-enforced PLA is a financial boon to the shrinking unionized sector.
Echoing Malkin, the GSA administration’s luxuriant trips to Las Vegas and other locales should be prosecuted fully, but let’s not be distracted from the crony capitalism wasting several times those amounts just about every time a new federal building gets constructed.
If there’s going to be oversight – and there should be – let’s hope the bulk of it zeroes in on unwinding President Obama’s disastrous PLA.
Politico has a great article grappling with the question, What happens to all the agencies and personnel funded by ObamaCare if the Supreme Court rules the health care reform bill unconstitutional?
Unless the Court spells out in great detail how to unwind a bureaucratic behemoth that has already created 500 new positions in 2 new agencies – with another 3,000 new jobs in the Office of the Health and Human Services Secretary alone – it seems the answer is, no one knows.
Realistically, the issue will boil down to which party has control of the public’s purse:
“The issue you’re looking at here is cash flow,” said Jim Dyer, a former Republican staff director of the House Appropriations Committee, who is now a principal at the Podesta Group.
The federal spending pipeline is complex and secretaries have a lot of tricks up their sleeves. Even if the courts strike down the health reform law, Dyer said, the onus will still be on Congress to fully shut off the tap.
“If I’m an appropriator, … I would want to draw a hard line in the sand,” he said. The committee could immediately demand HHS stop its spending if the court strikes down the law so that it can exert tight control over how it winds the program down. Exactly how that would shake out if a Republican-controlled House committee wanted HHS to stop the spending but a Democratic-controlled Senate did not would be part of the uncertain political terrain.”
Here’s one more reason to ensure that next year’s budget process is dominated by fiscal conservatives.
In my column just up today at this site, one item I mention is the administration’s hijacking of the Common Core educational standards. Well, here’s a WSJ video interview just out, with Lindsey Burke of the Heritage Foundation, that discusses the issue at length. Well worth viewing.
Writing in the Washington Times, Richard Rahn — Senior Fellow at the Cato Institute and Chairman of the Institute for Global Economic Growth — puts the current state of federal spending in rather horrid relief:
The federal government is spending about 24 percent of gross domestic product (GDP). Most of it goes for Social Security, Medicare, Medicaid and other entitlement programs. The “discretionary” portion of the budget equals about 9 percent of GDP, with about half going for defense. Until 1930, the federal government normally spent less than 4 percent of GDP, except for the periods during World War I and the Civil War. The Constitution gives the federal government very few tasks for which it is required to spend money — the big item being the “common defense.” Again, up until 1930, the courts forced the federal government to live largely within the confines of the Constitution. Deducting defense spending from the federal budgets before 1930 shows that the federal government lived perfectly well on 2 percent to 3 percent of GDP for the first 140 years of the republic.
What all of this means is that approximately three-quarters of all federal government spending is not required by — and often is contrary to — the Constitution.
Conventional wisdom in Washington increasingly holds that those who wish to see the federal government pare back its expenditures rather than increase the tax burden on the American people are delusional, if not antediluvian. Yet for the majority of American history, the federal government was only a fraction of what it is today — and the Republic did quite well for itself.
Are we really to believe today that spending cuts that would still leave the federal government’s share of GDP several multiples higher than it was less than a century ago mark some civilizational rot? Because by all indicators (Europe comes to mind), the failure to prune seems to be the more perilous course.
Yesterday, Senate Republicans blocked consideration on President Barack Obama’s so-called ‘Buffett Rule’ to impose a minimum federal income tax on some millionaires earning income on certain kinds of investments. As I discussed in my column last week, no tax authority thinks implementing the Buffett Rule will make a scintilla of difference in the federal deficit. So good riddance to a time-wasting distraction.
But before we pivot to the Obama reelection campaign’s next economic inanity, let’s pause to consider what liberal support for the Buffett Rule really says about modern liberalism’s discriminatory use of the tax code.
In a splendid piece published yesterday, former Reagan advisor Richard Rahn explains that the Buffett Rule only hits the type of investment income most used by entrepreneurs, and thus blocks those trying to ascend the personal wealth ladder.
Even if the Buffett tax ever passes, it was crafted by members of Congress to hit few of their own. Very rich members of Congress, such as Sens. John F. Kerry and John D. Rockefeller IV, receive much of their income from tax-exempt state and local bonds and from trust funds, which largely avoid the tax. Members of Congress generally are restricted from entrepreneurial activities. So, of course, they have decided to increase the tax on entrepreneurs — the capital gains tax — which is a tax on becoming rich, not a tax on being rich.
Most people, such as students, are relatively poor by government methodology when they are young but rise through the income ranks as they become more productive and experienced and then fall in relative income as they near and enter retirement, even though they may have considerable net wealth. By increasing the tax on capital gains and marginal rates, the government makes it more difficult to move into higher income brackets, thus actually reducing income-class mobility.
Those who support the Buffett millionaires’ surtax as written reveal themselves either to be economically ignorant or to believe the voters are fools who will not see through their destructive games.
Three cheers for the fiscal conservatives in the Senate who blocked consideration on this atrocious bill. It’s time to get beyond gimmicks, and implement policies that get America back to work without further distorting the tax code.
In a new book by Human Events political editor Katie Pavlich, sources tell the author that Napolitano was lying when she told Congress – twice – that she never discussed the illegal gun-walking scandal with Attorney General Eric Holder and Dennis Burke, the U.S. Attorney for Arizona.
According to Pavlich’s sources…
“There are five emails linking [Napolitano] to [Attorney General Eric] Holder. They go back two days after it happened – the first email was two days after Brian was killed.” (Referencing the murder of Border Patrol Agent Brian Terry’s by Mexican drug cartel members armed with at least one Fast & Furious gun.)
“…Napolitano was briefed regularly by an agent from another of her agencies, Immigration and Customs Enforcement, known as ICE.” (ICE was involved in Fast & Furious because it has jurisdiction over the U.S.-Mexico border and thus had to sign-off on guns walking over the border.)
“There was an ICE agent assigned specifically to be the co-case agent of Fast & Furious. He had to [file] an ICE report that either mirrored or referenced every ATF report that was done.”
Based on the preview, Pavlich’s book seems like a must-read for anyone appalled by the disregard for the rule of law and basic safety manifested by the Secretary for Homeland Security and the Attorney General.
When all the facts are known, the fall-out from the Fast & Furious fiasco will likely be huge. From Human Events:
Pavlich makes a strong case that when people are finally charged with crimes, Napolitano will have to answer for her perjury to Congress.
“Let me tell you something about Janet,” another source said to the author. “Janet will be lucky not to go to prison.”
Under current British law, only a few factors can keep a member of the House of Lords from office: bankruptcy, conviction on charges of treason, and holding judicial office amongst them. Apart from that short list, removing a peer requires an act of Parliament, something that last happened nearly a century ago, when two members were removed for supporting the U.K.’s enemies during World War I. With that precedent in mind, Parliament should act to remove Lord Nazir Ahmed, who provides a similar set of circumstances. From the Daily Caller:
British Lord Nazir Ahmed put a £10 million ($16 million) bounty on both President Barack Obama and former President George W. Bush Friday, according to The Express Tribune, an English language Pakistani newspaper.
Nazir, who is of Pakistani heritage and a member of the British House of Lords, reportedly made the comments while at a reception in Haripur, a Pakistani city 40 miles north of Islamabad. Nazir told the audience that he was putting the bounty out for the capture of the American leaders in response to the bounty placed on Hafiz Muhammad Saeed by the United States.
Saeed, by the way, is the terrorist thought responsible for the gruesome 2008 terrorist attack in Mumbai, which killed over 160 people. By his words and his actions (he claims that he would sell his home to pay the bounties for Bush and Obama), Lord Ahmed has shown himself an enemy to Britain, the United States, and the forces of civilization throughout the world. He ought not be allowed in the front door of the House of Lords, let alone in a seat there.
Over the weekend at NRO, Andy McCarthy took a verbal Bowie knife to the gut of Attorney General Eric Holder — and deservedly so. I have written about Holder’s thuggish reign here numerous times before. Here’s McCarthy, or part of McCarthy’s summary, of the lawlessness and racialism of Holder:
Eric Holder rode in on the stench of Marc Rich and will ride out on the stench of Al Sharpton. He’s spent the three-plus years in between branding Americans as “cowards” on race matters; investigating the CIA; coddling CAIR and the New Black Panthers; green-lighting voter fraud; swaddling Khalid Sheikh Mohammed in the Bill of Rights; and converting the Justice Department into a full-employment program for the Lawyer Left and its Gitmo boutique. But now he’s hit the big time.
This week, our esteemed attorney general canoodled with Reverend Al at the annual convention of the “National Action Network,” home base for the infamous huckster (that would be Sharpton, not Holder — sorry for any confusion). It is difficult to imagine another attorney general in American history sucking up to such a race-mongering charlatan.
Do read the whole thing. This man is a hater. He has no business being in law enforcement.
Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.” Today’s guest lineup includes:
4:00 (CDT)/5:00 pm (EDT): Shannon Goessling, Executive Director of the Southeastern Legal Foundation: Global Warming — Lawsuits and Science;
4:30 (CDT)/5:30 pm (EDT): Todd Young, President & CEO of the Center for America: Jobs, Hope and Brighter Future;
5:00 (CDT)/6:00 pm (EDT): Angela Logomasini, Senior Fellow, Center for Energy and Environment at the Competitive Enterprise Institute (CEI): Chemical Laws and Plastic Bans; and
5:30 (CDT)/6:30 pm (EDT): Lyss Stern, Founder and CEO of Diva Moms: Bullying (http://Divamoms.com).
Listen live on the Internet here. Call in to share your comments or ask questions of today’s guests at (850) 623-1330.
The debate over unemployment benefits isn’t an easy one. While the left completely ignores the rudimentary economics (and the empirical evidence) showing that prolonged benefits tend to keep unemployment artificially high, the fact remains that many workers use the system in good faith, relying on it as a bridge during uncertain times. We can all probably agree, however, that this doesn’t make any sense. From MarketWatch’s report on rising unemployment claims:
Weekly jobless claims jumped by 13,000 to a seasonally adjusted 380,000 in the week ended April 7, the highest level since late January, the U.S. Labor Department said Thursday.
Much of the increase was related to spring break, when many school bus drivers and cafeteria workers are allowed to file for temporary unemployment benefits.
Hey, if this is the direction we’re going, why not allow them to file for unemployment over the weekend? Or perhaps for those oppressive hours of 5 PM-9 AM every weekday when they’re not gainfully employed?
This is an offense both to people who really require unemployment benefits and to the taxpayers who are underwriting school workers’ spring breaks. And with MarketWatch attributing”much of the increase” to these workers, are we to understand that it’s become common practice for school workers to exploit this outrageous provision?
Some aspects of the unemployment debate are difficult trade-offs between economics and empathy. This one, however, is a no-brainer.
I blog about this at the American Spectator today: Conrad Black has a great essay against out-of-control federal prosecutors, in which he highlights a case I wrote about a few weeks ago. (Sorry for the internal links, but they are well worth following. Please do check out my post and the Black column.)
What I want to note here is that these stories are a continuing manifestation of a problem of overcriminalization and rogue prosecution that I have written about here at CFIF several times. See here and here. This is an important issue. It’s especially important when lawless people, like those now in charge, run the top ranks of the Justice Department.
Just months ago, T-Mobile became another unjustified casualty of the arbitrary and capricious Federal Communications Commission (FCC). It was bad enough that the FCC curiously opposed T-Mobile’s proposed merger with AT&T, which would have upgraded wireless service for tens of millions of American consumers and created thousands of new jobs. Compounding that injustice, however, the FCC committed the unprecedented transgression of releasing a confidential staff report that inaccurately maligned the proposed merger’s justifications.
Sadly, T-Mobile now seeks to employ that same FCC as a bureaucratic bludgeon to cripple a market competitor, by asking it to block a private spectrum purchase by Verizon Wireless. Whereas T-Mobile announced a few months ago that, “The U.S. wireless industry will remain fiercely competitive” by allowing acquisition of 50 MHzof T-Mobile’s spectrum as part of the AT&T deal, it now claims that Verizon’s proposed acquisition of 20 MHz of unused spectrum will somehow “unduly tip the scales” in Verizon’s favor. Moreover, T-Mobile itself seeks to acquire 20 MHz of spectrum, which it claims is in the public interest and “seeks only to assign spectrum licenses and no other assets.”
CFIF supported T-Mobile’s right to enter into a bargained-for exchange between private parties during its proposed merger with AT&T, which the FCC and Obama Justice Department improperly blocked. But by the same token, it should not turn around and attempt to interfere with other parties’ market transactions. T-Mobile is a subsidiary of Deutsche Telecom, the world’s fourth-largest telecommunications company, which itself is partly owned by the German government. So it’s not exactly David fighting Goliath, unable to contend in the marketplace without exploiting the FCC as some sort of protective big brother.
Verizon Wireless merely seeks to purchase unused spectrum, which will bring desperately-needed wireless service improvements for U.S. consumers. That’s none of T-Mobile’s business, and the FCC is not some sort of instrument to be used as a competitive weapon.
Dan Walters of the Sacramento Bee is the dean of California political writers and today he’s got a gem. Walters criticizes including yet another entry on the state’s list of population groups required to be taught in a positive light in history classes.
The latest effort is Senate Bill 993 by Sen. Kevin de León, D-Los Angeles, which would require social science instruction on the “braceros,” a long-expired federal program that brought workers into the country, mostly from Mexico, during and after World War II to offset farm labor shortages.
Lest Walters be accused of insensitivity, he rightly directs attention to the real crisis facing California’s schools:
In a state as diverse as California, there’s literally a bottomless well of ethnic and cultural groups that could seek inclusion not only on the instruction list but in the liturgy of those that must be portrayed only in the most positive terms.
We don’t need to brainwash our kids. We need to give them well-rounded, accurate instruction that prepares them for life beyond childhood – and our poor academic test scores indicate that we’re neglecting that important task while filling their minds with feel-good pap.
Wouldn’t it be nice to have an alternative to such a broken system by applying your tax dollars to tuition at a private or charter school of your choice? If you think so, check out Troy’s column on Bobby Jindal’s school reform breakthrough in Louisiana.
And if you’re a pap-hating Californian with school-age kids, consider moving.
By the end of this decade India will surpass China as the most populous nation.
Japan will lose 1 million people a year by 2060, contracting from 127 million to less than 87 million.
Europe’s expensive social welfare model and aging populations will increasingly spur governments to scale back military spending in order to fund burgeoning entitlement program.
Even though America’s current rate of replacing itself gives it a demographic advantage, unless serious reforms are instituted to entitlement spending, it too will continue to cut military expenditures to pay for rapidly expanding benefits for the elderly.
India surpassing China means that democracy – not a communist-controlled autocracy – will be the government adopted by the most populous country on Earth. It may also encourage the United States and India to forge a closer strategic partnership around shared values to check China’s ambitions.
And of course, we’ve already seen how the European model of heavy on services, light on defense is making the region – though not a few individual countries – increasingly irrelevant when it comes to making the world safe.
In his budgets, President Barack Obama has chosen to increase spending on entitlements and gut defense, arguing like a European that multilateral institutions such as the United Nations and NATO can accomplish more than any one nation.
Paul Ryan highlighted this danger in his latest budget proposal, “The Path to Prosperity: A Blueprint for American Renewal.” In it, he faults President Obama for cutting $500 billion from the Defense Department instead of making the changes needed to entitlements so that Americans can be protected both at home and abroad.
Americans need not accept decline through badly prioritized budgets. Instead, using innovative entitlement reforms like the ones in Ryan’s Path to Prosperity, we can have sustainable entitlement programs and a robust defense.
We’ve got the people. Now we need to implement the right policies.
With President Obama now into his fourth year in the oval office, CFIF’s Renee Giachino looks back and compares Obama’s promises and rhetoric to his results.
California, as has become universally known in recent years, has become a fiscal and political basket case. Take a look at the state as it stands in the spring of 2012: it has a $9.2 billion budget deficit, approximately half a trillion dollars in unfunded public pension liabilities, and a business environment ranked worst in the nation by Chief Executive magazine (in 2010, the periodical referred to the state as “the Venezuela of North America”).
Part of the problem, of course, is the liberal-labor union coalition that dominates Golden State politics, in which the most nefarious force is the California Teachers Association, the hulking union that overwhelmingly outspends any other special interest in the state. Now, in the midst of this economic crisis, the CTA is getting behind Governor Jerry Brown’s proposal to increase state sales and income taxes, a move that would only hasten the state’s decline.
CTA officials contend that Brown’s proposal—an extra quarter of a cent added to the sales tax and up to three extra percentage points on the state income tax, depending on income levels—represents only a modest increase, a cost that the Golden State’s economy can easily absorb. But the margin of the increases is less significant than the final rates they will produce. If Brown’s package passes, California would have both the highest state sales tax in the nation and the highest top income-tax rate. That will only continue to drive economic activity out of the state, a trend that recent IRS data shows cost California $27 billion in tax revenue from 1999 to 2009.
The lesson should be clear: the kind of punitive taxation that Brown’s initiative promotes is precisely what depletes the tax base necessary to finance California’s public schools and pay the salaries of CTA members. Raise rates and you only dim the prospects for public education further.
In a 2009 piece for National Affairs, I noted that, “from 2004 to 2007 more people left California for Texas and Oklahoma than came west from those states to escape the Dust Bowl in the 1930s.” Yet in the intervening years California’s political class has done nothing to improve conditions for those who might be tempted to leave the beauty and cultural dynamism of the Golden State behind for more economically palatable environs. One wonders exactly what natural disaster they’ll have to approximate before the lesson sinks in.
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