Freedom Line Blog

Reason’s Matt Welch on President Obama and the “Economic Consensus” of his fiscal policy:

Obama is a political master at drawing boundaries around the “respectable” debate and marginalizing a swath of his critics as being beyond the pale. Will he succeed at doing it with economics, too? We only know that he will try.

The Obma White House has long followed the idea that there’s no problem that the federal government shouldn’t fix.

Now, it’s telling us that there’s no improvement that the federal government shouldn’t fix, either.

That appeared to be the message from White House Council of Economic Advisors Chairman Christina Romer and National Economic Council Chairman Lawrence Summers, both of whom made the rounds on yesterday’s Sunday talk shows.  In his comments to George Stephanopoulos on ABC’s This Week, Mr. Summers said that, “most professional forecasters are now looking for a return to job growth by spring.”  And appearing on NBC’s Meet the Press, Ms. Romer predicted “positive job growth sometime in the first quarter.”

But as noted by The Wall Street Journal today, we must ignore federal deficits in favor of more “stimulus” spending.  According to both Summers and Romer, shifting focus to the deficit instead of spending even more during a period of record deficits would be “suicide.”

So let’s get this straight:  Obama’s first “stimulus” was supposed to cap unemployment at 8%.  It’s now at 10%.  But despite the fact that the White House expects job growth to return in the next quarter, it wants to spend even more to “stimulate?”

One is left to wonder whether the Obama Era more closely resembles a work of Orwell or merely an issue of The Onion.

The White House has made the decision that debt, all $12 trillion worth of it, no longer matters in America.  Instead of attempting to lower the $1.4 trillion annual budget deficit, the White House is looking for another round of stimulus pork.

According to White House Economic Advisor Christina Romer, it would be “suicide” to focus on deficit reduction to the exclusion of “job creation.”  Her solution, of course, is to repeat the past two/three failed stimulus bills and spend another $50 billion on infrastructure.   In Washington, D.C. that means $5 billion on infrastructure and $45 billion on pork and other preferred government handouts.

Romer’s solution is odd considering this paper she authored with her husband in April (after she began working at the White House) that concluded each dollar of tax cuts historically raised Gross Domestic Product (GDP) by $3, greater than many similar estimates of government stimulus spending.

Romer also concluded that tax increases can easily lower GDP.  As she wrote, “Our results indicate that tax changes have very large effects on output.  Our baseline specification implies than an exogenous tax increase of 1% of GDP lowers real GDP by almost 3%.”  There appears to be a big difference between Doctor of Economics Romer and White House employee Romer.

With all this knowledge about the virtues of tax cuts and the harm of tax increases, Dr. Romer should pay a visit to the West Wing occasionally and remind President Obama that his policies will continue to shrink GDP and impede job creation.

Barack Obama has done little, if anything, right during his year in office, but he’s obviously perfecting the art of shameless hypocrisy.

Appearing on CBS’s 60 Minutes yesterday, Barack Obama said with a straight face that “the people on Wall Street still don’t get it.  They don’t get it.” For good measure, he also broadly labeled bankers “fat cats” who have behaved in an “irresponsible” manner and not shown “a lot of shame.”

Let’s see.  This is the same Barack Obama who promised to address the $0.4 trillion deficit, only to add a trillion to make it $1.4 trillion in just his first year.  In other words, he is addressing the deficit by…  tripling it.  Lest one reflexively attribute that to his inheritance, this year’s deficit is on an even worse trajectory.  He is also the man who proposes adding an endless array of new entitlements and highly-paid new federal employees to an already-unsustainable budget trajectory.  He is also the man who seeks to reward the same federal bureaucracies that failed to recognize the financial bubble, and even abetted it, by granting them nearly plenary powers over the entire struggling economy.  He is also the man who aims to compound the nation’s economic woes by imposing catastrophic healthcare costs and carbon taxes upon it.  He is also the man who seeks to increase taxes on broad swaths of struggling individuals and small businesses by allowing rates to increase next year. He is also the man who promised to usher in a new era of international diplomacy and peace, only to see rogue regimes such as Iran increase their menace since his inauguration.

Yet he says that others “don’t get it?”

Laughably, he mocked bankers for being “puzzled” why the public is “mad” at them.  Perhaps he was merely projecting his own puzzlement at his record-low poll numbers, which similarly reveal a public “mad” at him?

Politico – Lieberman Says No to Medicare Buy-In
WSJ – Senators Doubt Medicare Compromise
The Weekly Standard – Reid’s Medical Malpractice
Clive Crook – Trust Public on Climate Change

AP – Dems Plan $2 Trillion Debt Hike
The Hill – Senate Passes $1.1 Trillion Spending Bill
NY Times – McCain Raises Senate Voice
Washington Times – Obama Secrecy

Federal Debt: $12.117 trillion

In the never ending succession of bad legislation coming out of Congress, the Democrats added another one to the list today.

By a 223-202 vote, the House passed the “Wall Street Reform and Consumer Protection Act of 2009.”  Twenty-seven Democrats joined every single Republican to oppose the legislation.

The bill is a hodgepodge of more regulations, higher taxes and new government.  After Sarbanes-Oxley, Congress thought it had effectively ended the debate over financial regulations.  For Congress, it’s never too late to re-regulate.

You can read the Congressional Research Service summary of the legislation here.

Here is the CBO’s cost estimate of the bill.

Foreign Policy Initiative’s Abe Greenwald does an excellent riff on President Obama’s Nobel Peace Prize acceptace speech today on National Review’s website. The upshot: Greenwald wonders whether Obama’s stark articulation of evil’s presence in the world (and its impact on international affairs) shows a president who’s starting to rethink some of the first principles of his foreign policy.

Greenwald sees some promising signs, but still wonders whether Obama can ever fully turn the corner. In one bravura passage:

“Irving Kristol said, almost too memorably, ‘A neoconservative is a liberal who has been mugged by reality.’ With that definition in mind, an eminent national-security personage put this perfectly phrased query to me over the summer: ‘Is Obama too arrogant to get mugged by reality?'”

“An excellent question. What the president calls his “philosophy of persistence” looks increasingly like the vice of conceit. The new White House imperiousness explains Obama’s inability to offer full-throated praise for the Iraq War — an undertaking he staunchly opposed. It also explains his devotion to de-fanging Iran through the voodoo of his personal allure (and to his correspondent obtuseness on Iran’s democrats).”

Today’s best piece on foreign policy (apart from this one). Read it here.

The Cato Institute has a terrific critique on the Democrats’ comprehensive health care “reform” bill.  Throughout the article runs a description of the expansive interpretation given to the U.S. Constitution’s Interstate Commerce Clause by the Supreme Court, and further stretched by Congress.   The best part though is a counter-proposal for increasing competition in the health insurance market while lowering costs.

If Congress were interested in using the commerce clause for its intended purpose, we would be debating the Health Care Choice Act, which would permit the interstate purchase of individual health policies. The Democrats, however, bottled up that bill in committee.

They would rather exploit the cartelization of health insurance in selected states to argue for a government-run insurance company. Never mind that a major reason for those cartels is the prohibition against purchasing insurance across state lines.

The Health Care Choice Act is an elegant piece of legislation designed to allow health insurance carriers to sell – and consumers to purchase – plans across state lines.  Of course, there are federalism concerns about allowing different states to regulate according to their own policy preferences.  Then again, the Health Care Choice Act does give the GOP something to support in the health reform debate.  Additional commentary on the proposal is available here.

Senate Majority Leader Harry Reid (D – Nevada) appeared on the verge of tears on the Senate floor yesterday, lamenting criticisms lodged against him.

His complaint?  That those big, bad, meanie Republicans had the audacity to question his personal judgment in scooting off to a Louisiana fundraiser, even while he threatens to keep the Senate in session into the holidays to address healthcare legislation.  Voice cracking, he feigned heartbreak that criticisms against him could become so “personal.”  He professed an inability to fathom how supposed “friends” from across the aisle could “embarrass or denigrate” him in such a cruel, cruel manner.

This is the same Harry Reid who, just three days earlier, compared opponents of his healthcare legislation to those who defended slavery and opposed the Civil Rights Act.  Never mind that the Republican Party originated from opposition to slavery, or that Republicans voted for the 1964 Civil Rights Act in higher proportions than Democrats.  Factual realities are apparently no more relevant to Harry Reid than is a sense of personal decorum and judgment.

In this way, he is like the proverbial boy who murdered his parents only to later plead for mercy as an orphan.  He started a fight, but didn’t like it when his targets fought back.  In less than one year, Nevada voters will have their opportunity to render judgment on Reid’s plea.  According to the latest polls, they are apparently unamused.

This week’s edition of the Liberty Update, CFIF’s weekly e-newsletter, is out. For those readers who don’t receive it in their e-mail inboxes or if you haven’t had a chance to read it yet, below is a summary of its contents:

Ellis:  Jobs for Us or Jobs Being Done On Us?
CFIF Staff:  ClimateGate in Perspective – The Road Ahead
Lee:  Sarbanes-Oxley – An Unconstitutional Monument to Governmental Incompetence
Batkins:  The Evolution of a President – Not Yet Trans-Partisan

Freedom Minute Video:  ObamaCare – Slapping a Tax on America’s Youth
Podcast:  The Real Crisis in the Climate Change Debate – Interview with Lord Christopher Monckton
Jester’s Courtroom:  No Talking Turkey in This Court

Editorial Cartoons:  Latest Cartoons of Michael Ramirez
Quiz:  Question of the Week
Notable Quotes:  Quotes of the Week

If you are not already signed up to receive CFIF’s Liberty Update, sign up here.

In today’s New York Times, economist Paul Krugman seems to think that along with propping up failed financial institutions and distorting the nation’s currency, the Federal Reserve should also play a part in creating jobs. Predictably, the answer is more government spending.

Mr. Bernanke has received a great deal of credit, and rightly so, for his use of unorthodox strategies to contain the damage after Lehman Brothers failed. But both the Fed’s actions, as measured by its expansion of credit, and Mr. Bernanke’s words suggest that the urgency of late 2008 and early 2009 has given way to a curious mix of complacency and fatalism — a sense that the Fed has done enough now that the financial system has stepped back from the brink, even though its own forecasts predict that unemployment will remain punishingly high for at least the next three years.

The most specific, persuasive case I’ve seen for more Fed action comes from Joseph Gagnon, a former Fed staffer now at the Peterson Institute for International Economics. Basing his analysis on the prior work of none other than Mr. Bernanke himself, in his previous incarnation as an economic researcher, Mr. Gagnon urges the Fed to expand credit by buying a further $2 trillion in assets. Such a program could do a lot to promote faster growth, while having hardly any downside.

But there is a downside, and it’s more than immediately exceeding the proposed raise in the national debt by $1.8 trillion. As astute observers of California politics say, the government doesn’t have a revenue problem – it has a spending problem. As I’ve mentioned before, the main impediment to private sector job creation is not access to credit: it’s uncertainty about what the government will regulate or tax next. Some form of human activity has to be taxed in order to pay for “stimulus” policies like the one Krugman supports. Business owners know this because they must identify income before they pay out for services, goods, and yes, people. Adding an employee to the payroll is a tremendously expensive decision that isn’t made easier just because the Federal Reserve makes it easier to get a company credit card. If Washington is serious about job creation it needs to stop spending and taxing other people’s money.

In this week’s Freedom Minute, CFIF’s Renee Giachino explains how passage of ObamaCare will mean higher taxes, fewer jobs and less freedom for America’s youth.

Watch the video below:

Jonah Goldberg – Global Warming as a Political Tool
Red State – Congress and College Football?
Atlanta Journal-Constitution – Stimulus III is More of the Same
Washington Examiner – Life Insurers Lobby to Save Death Tax

Washington Times – Tip of the ClimateGate Iceberg
WSJ Editorial – Compromise is Worse Than the Public Option
Reason – Health Care Debate Reveals Nasty Liberal Tendency
Washington Post – Medicare Compromise Could Lead to Single-Payer

Federal Debt: $12.104 trillion

No, the munchkins didn’t proclaim this, but the liberal Huffington Post did.

The supposedly good news (for Republicans, libertarians, Whigs, patients, taxpayers and moderate Democrats who like their current office space) was reported today by Ryan Grim.  He noted sarcastically, “The public health insurance option died on Thursday, December 10, 2009, after a months-long struggle with Senate parliamentary procedure.  The time of death was recorded as 11:12 a.m. Eastern Standard Time.”

Apparently Nancy Pelosi read the political tea leaves and noticed that voters simply won’t tolerate a government-run public option.  When questioned, it took Pelosi about two-hundred words to essentially say that the House would accept the Senate “compromise” to drop the public option in exchange for lowering the eligibility age for Medicare enrollment.

But make no mistake.  This is no cause for celebration.

Some Democrats are actually excited, hoping that expanding an already financially strapped Medicare system will pave the way for a true single-payer socialized system.  Indeed, as Brian Faughnan of RedState.com noted earlier today, the idea is actually the brain child of Howard Dean, who proposed a similar plan during his 2004 presidential bid.   And why is Dean, who is a strong proponent of a single-payer system and has been critical of his fellow Democrats for not going far enough in their efforts to put the government in charge of your health care, supportive of this so-called compromise?  As Faughnan writes:

The reason Dean likes this compromise – the reason he proposed this compromise – is that he would rather have the government bureaucracy in charge of people’s health care plans than private insurance companies. That’s one point of view. Some may agree with it; others not. But it seems the real value of this proposal to Dean is that it ‘moves the ball’ toward a single-payer health care system.”

Was Chicago-style political thuggery the type of “hope and change” for which Americans voted in 2008?

Either way, that’s the White House’s emerging modus operandi.

Intially, the Obama Administration at least paid lip service to bipartisanship, even if the reality behind closed doors was quite different.  But with the EPA’s recent determination that everyday carbon dioxide constitutes a “dangerous pollutant,” Obama has abandoned even that pretense.  According to an anonymous White House source quoted by Fox News, the EPA’s absurd ruling is a bald political tactic to bludgeon the Senate and the business community into accepting carbon cap-and-tax legislation:

If you don’t pass this legislation, then … the EPA is going to have to regulate in this area.  And it’s not going to be able to regulate on a market-based way, so it’s going to have to regulate in a command-and-control way, which will probably generate even more uncertainty.”

The House of Representatives passed a cap-and-tax bill by razor-thin margins, but its prospects in the Senate appeared slim.  Meanwhile, many business coalitions have refused to play ball in the White House’s game of global warming hysteria.  Enter the team of Rahm Emanuel and David Axelrod, with their ugly form of Chicago politics.

As Obama’s popularity falls to record lows for a President at this stage, and with his extremist agenda in increasing jeopardy, we should prepare for more.

Moderate Senator Olympia Snowe Discussing Health Care Reform:

Every line and every word in this 2,000-page document matters. . . When it comes to the subject at hand, the most consequential health-care legislation in the history of our country and reordering $33 trillion in health-care spending over the coming decade, surely, we can and must do better.

Washington Examiner – Failed States: Daylight in Michigan
Michael Barone – Expanding Government Power
Karl Rove – Can the GOP Retake the Senate in 2010?
George Will – Playing Politics with the Fed

Politico – Public Option Dream Fading
WSJ – Obama Accepts Nobel Prize
Red State – The Necessary GOP Civil War
The Hill – Net Neutrality Would Hinder Free Speech

Federal Debt: $12.099 trillion

Bjorn Lomborg is probably the coolest head when it comes to global warming and climate change.  Rather than dispute the science – a task ably engaged in by Lord Christopher Monckton, among others – Lomborg takes aim at the Environmental Left’s specious claim that regulating energy consumption enables human flourishing.  If the goal is to help people, then why not get the biggest bang for a nation’s tax dollars?  As Lomborg points out:

The choice is stark: for a few hundred million dollars, we could help almost half of humanity now. Compare this to the investments to tackle climate change – $40 trillion annually by the end of the century – which would save a hundred times fewer starving people. For every person saved from malnutrition through climate policies, the same money could have saved half a million people from micronutrient malnutrition through direct policies.

Some argue that the choice between spending money on carbon cuts and on direct policies is unfair. But it is a basic fact that no dollar can be spent twice. Rich countries and donors have limited budgets and attention spans. If we spend vast amounts of money on carbon cuts in the belief that we are stopping malaria and reducing malnutrition, we are less likely to put aside money for the direct policies that would help today. Indeed, for every dollar spent on strong climate policies, we will likely do about $0.02 of good for the future. If we spent the same dollar on simple policies to help malnutrition or malaria now, we could do $20 or more good – 1,000 times better, when all impacts are taken into account.

If you haven’t encountered Lomborg before, here’s a link to his website.  If you want to read a sensible viewpoint on using scarce resources to improve life for the most people possible, there’s no better place to start.  Now, if Bjorn could just get Al Gore to debate him…

As this piece from Reason explains, the Congressional Budget Office (CBO) is pretty much the final word on whether a bill is perceived as saving money, costing money, or having no fiscal effect. By most accounts, the CBO is staffed by competent people making the most objective calculations possible. The problem is, what’s possible?

The question goes to the heart of the dispute between central planners and free market types. While the former thinks that the intricacies of human behavior can be predicted (and influenced) with the right data and formulas, the latter can’t help but see the endeavor as nothing more than chasing after an economic Bigfoot. For all its sophistication, the CBO is still bedeviled by the criticism that it simply doesn’t know enough information to render any kind of economic certainty.

These days, CBO analysts are scoring bills using intricate computer simulations based in large part on survey data. The raw information is interpreted through academic research on how human beings respond to various economic assumptions. In an interview with The Washington Post, the CBO’s chief health care analyst, Phil Ellis, compared the process to playing Sim City, a computer game that simulates urban development. But even the best model is still only as good as its input data. And for policies that have no real-world antecedent, it’s extremely difficult to come up with accurate input data.

In fact, it may be impossible. But that doesn’t really matter to the Democrats pushing health care “reform.” As long as they can get the non-partisan CBO to score their proposals as saving money – no matter how unreliable the data – their primary purpose of expanding coverage is served. Make no mistake; liberals are pushing universal – not cost effective – health care. Like their Soviet-era predecessors, today’s central planners can’t predict the future, no matter how much survey data they throw at the forecasters working at the CBO. That certainly won’t stop them from trying though.

What do Obamanomics and global warming hysteria have in common?

A numbers hoax.

As anyone outside the deepest redoubts of the Daily Kos and MSNBC’s Countdown with Keith Olbermann knows, the foundation underlying the global warming agenda is crumbling.  This is the result of revelations of politically-correct climate scientists explicitly attempting to distort data, blacklist opposing viewpoints and redefine what constitutes scholarly publication on the subject.  Even the shameless Al Gore has been embarrassed enough to avoid the climate change summit taking place in Copenhagen this month.

In a similar manner, the data trumpeted by the Obama White House to justify its “stimulus” efforts has been exposed.  Last week, the chief of the board tracking stimulus spending announced that inspectors will review the data underlying Obama’s claim that he “saved or created” approximately 650,000 jobs.  This number was announced in October of this year, only to be quickly refuted.  Among other things, the estimate included non-existent Congressional districts, and dozens of jobs purportedly created by grants of less than $1,000.

Although these two news items have received well-deserved attention, few people have connected them.  The simple fact is that two of the greatest icons of liberal thought – global warming and government spending – have been exposed as reliant upon fraudulent data.  When the White House wonders why its poll numbers continue to plummet to unprecedented lows and voters begin to smell the coffee, perhaps they merely need to read the news.