by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMA, OBAMACARE, POLITICS, TAXES
I’ve written several times over the years about Obama’s economic policies and anti-business climate as factors that have hampered this country’s growth and recovery. Phil Gramm has a good piece in the WSJ recently that gave a succinct overview of all that is still wrong with the economy. Obama continues to insist that either a) the economy is good or b) any problems are someone else’s fault. Do yourself a favor and read this piece which is sobering, but accurate, about the state of our economy today.
What’s Wrong With the Golden Goose?
Since the Obama recovery began in the second quarter of 2009, public and private projections of economic growth have consistently overestimated actual performance. Six years later, projections of prosperity being just around the corner have given way to a debate over whether the U.S. has fallen into “secular stagnation,” a fancy phrase for the chronic low growth seen in much of Europe.
This is just another in a long line of excuses. America’s historic ability to outperform Europe is well documented; we call it American exceptionalism. It has always been based on the fact that the U.S has had better, more market-driven economic policies and our economy therefore worked better. But, as the U.S. economy is Europeanized through higher taxes and greater regulatory burdens, American exceptionalism is fading away, taking economic growth with it.
How bad is the Obama recovery? Compared with the average postwar recovery, the economy in the past six years has created 12.1 million fewer jobs and $6,175 less income on average for every man, woman and child in the country. Had this recovery been as strong as previous postwar recoveries, some 1.6 million more Americans would have been lifted out of poverty and middle-income families would have a stunning $11,629 more annual income. At the present rate of growth in per capita GDP, it will take another 31 years for this recovery to match the per capita income growth already achieved at this point in previous postwar recoveries.
When the recession ended, the Federal Reserve projected future real GDP growth would average between 3.8% and 5% in 2011-14. Based on America’s past economic resilience, these projections were well within the norm for a postwar recovery. Even though the economy never came close to those projections in 2011-13, the Fed continued to predict a strong recovery, projecting a 2014 growth rate in excess of 4%. Yet the economy underperformed for the sixth year in a row, growing at only 2.4%.
Implicit in these projections and in the headlines of most economic news stories—which to this day blame cold winters, wet springs, strikes, hiccups and blips for America’s failed recovery—is the belief that there has been no fundamental change in the U.S. economy. Underlying this belief is the assumption that either the economic policies of the Obama administration are not fundamentally different from the policies America has followed in the postwar period or that economic policy doesn’t really matter.
And yet we know that the Obama program represents the most dramatic change in U.S. economic policy in over three-quarters of a century. We also know from the experience of our individual states and the historic performance of other nations that policy choices have profound effects on economic outcomes.
The literature on economic development shows that U.S. states and nations tend to prosper when tax rates are low, regulatory burden is restrained by the rule of law, government debt is limited, labor markets are flexible and capital markets are dominated by private decision making. While many other factors are important, economists generally agree on these fundamental conditions.
As measured by virtually every economic policy known historically to promote growth, the structure of the U.S. economy is less conducive to growth today than it was when Mr. Obama became president in 2009.
Marginal tax rates on ordinary income are up 24%, a burden that falls directly on small businesses. Tax rates on capital gains and dividends are up 59%, and the estate-tax rate is up 14%. While tax reform has languished in the U.S., other nations have cut corporate tax rates. The U.S. now has the highest corporate rate in the world and the most punitive treatment of foreign earnings.
Meanwhile, federal debt held by the public has doubled, so a return of interest rates to their postwar norms, roughly 5% on a five-year Treasury note, will send the cost of servicing the debt up by $439 billion, almost doubling the current deficit.
Large banks, under aggressive interpretation of the 2010 Dodd-Frank financial law, are regulated as if they were public utilities. Federal bureaucrats are embedded in their executive offices like political officers in the old Soviet Union. Across the financial sector the rule of law is in tatters as tens of billions of dollars are extorted from large banks in legal settlements; insurance companies and money managers are subject to regulations set by international bodies; and the Consumer Financial Protection Bureau, formed in 2011, faces few checks, balances or restraints.
With ObamaCare the government now effectively controls the health-care market—one seventh of the economy. The administration’s anti-carbon policies hamstring the energy market, distort investment and lower efficiency. Despite the extraordinary bounty that has flowed to America from an unfettered Internet, Mr. Obama has dictated that the Web be regulated as a 1930s monopoly, bringing the cold dead hand of government down on what was once called the “new economy.”
During Mr. Obama’s presidency, the number of Americans receiving food stamps has risen by two-thirds and the number of people drawing disability insurance is up more than 20%. Not surprisingly, labor-force participation has plummeted. Crony capitalism and artificially low interest rates have distorted the capital markets, misallocating capital, overpricing assets and underpricing debt.
Despite the largest fiscal stimulus program in history and the most expansive monetary policy in more than 150 years, the U.S. economy is underperforming today because we have bad economic policies. America succeeded in the Reagan and post-Reagan era because of good economic policies. Economic policies have consequences.
With better economic policies America was like the fabled farmer with the goose that laid golden eggs. He kept the pond clean and full, he erected a nice coop, threw out corn for the goose and every day the goose laid a golden egg. Mr. Obama has drained the pond, burned down the coop and let the dogs loose to chase the goose around the barnyard. Now that the goose has stopped laying golden eggs, the administration’s apologists—arguing that we are now in “secular stagnation”—add insult to injury by suggesting that something is wrong with the goose.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
Last summer, I wrote an article about how an audit performed by the Government Accountability Office (GAO) on the government transparency site — USASpending.gov — revealed that more than 90% of the information found on the website was inaccurate.
The GAO audited spending data from 2012, the most recent year for which data is available, by comparing government agency records with those found on USASpending.gov. The GAO reported that only 2-7% of the numbers found on the website is ‘fully consistent with agencies’ records.” and that at least “$619 billion from 302 federal programs” was missing. (You can read the GAO report here).
Prior to the release of that report, Congress had recently passed the DATA Act, which was subsequently signed into law. This took USASpending.gov from the Office of Management and Budget and handed it over to the Department of the Treasury.
At the time, I noted:
“For those expecting the Department of the Treasury to fix the problem of transparency on how the government spends its tax dollars, think again. The Department of the Treasury is the parent agency of the IRS — and we all know how transparent the IRS has been with record-keeping.”
It seems that my prediction came true. The Treasury Department’s Bureau of the Fiscal Service was entrusted with overhauling the USASpending.gov website — and the new design, functionality, and transparency was unveiled yesterday. Unfortunately, the ability for citizens to find government spending information is now more difficult.
The Washington Free Beacon did a great analysis of the new design and found gems such as:
”
–Users can no longer search federal spending by keywords, sort contracts by date, or easily find detailed information on awards, which are delivered in bulk.
–Information, such as how much the Pentagon spends on Viagra, used to be available at the click of a button. Locating those same contracts on the new website is virtually impossible, akin to finding a needle in a haystack.
–In its previous form, the website provided easy access to how taxpayer dollars are spent, as it happens. A user now must have the federal grant identification number to see details of a contract.
–The list of agencies does not include smaller government bodies such as the National Endowment for the Arts (NEA), but does include the “Barry Goldwater Scholarship and Excellence in Education Foundation.” Results for the profile of “Other Small Agencies” returns zero grants or contracts, with the reply “no data found.””
The article provides a thorough analysis of how the site used to be searchable vs how searchable it is now, complete with graphics. You can read the list of examples here.
Equally distressing is the fact that “search results are also not indexed on Google, making the website’s search engine the only avenue for citizens and reporters to find information within the site. Microsoft Sharepoint operates the new website’s search, and the results are limited.”
This is yet another prime example of what constitutes “transparency” from the “most transparent administration ever”. Fittingly, the Bureau of Fiscal Service did not return requests for comment about the functionality of its new design. Kudos to the Washington Free Beacon for exposing the latest data shroud.
At least they didn’t hire the firm that built healthcare.gov.
by | ARTICLES, BLOG, ECONOMY, GOVERNMENT, OBAMA, POLITICS, TAXES
Ben Bernanke debuted his new gig today, that of a writer on the “Ben Bernanke Blog”. Though he is not in charge of the Fed anymore, nevertheless he proved that he is still trying to stay relevant by continuing to be an old shill for the President.
The most ridiculous point Bernanke tried to defend was the strategy of keeping “rates low to encourage borrowing and spending and strengthen their economies.” But as Fed Chairman he knew that companies really weren’t borrowing at all and that banks were simultaneously reluctant to lend. However it was not because of the down economy — as he would have you think — but of other meddling, mitigating factors like stifling regulations, Dodd-Frank, unrelenting business bashing by President, and the constant threat of higher taxes. And because these circumstances are still widely pervasive, we have yet to see any real economic recovery.
The fact of the matter is during his tenure as the Fed Chairman, Ben Bernanke remained absolutely silent about the egregious anti-business environment. He was (and continues to be) a mouthpiece for this Administration instead of as a leader of an independent Fed.
by | ARTICLES, BLOG, FREEDOM, GOVERNMENT, OBAMA, POLITICS, TAXES
The New Republic recently went through an internal overhaul in order to stay relevant, and the recent drivel that was written shows that it wasn’t for the better. Last week, there was an article written called, “”Dear Politicians, Stop Calling People ‘Taxpayers'”, in which the author proposes to eliminate the word “taxpayer” from everyday lexicon because it favors those who pay taxes. You can’t make this stuff up.
The article, which was released coincidentally during the same week as the House Republican FY2016 budget, accuses said budget of being “an ideological document meant to advance a particular set of beliefs about how government should function, and toward what end”. Her evidence of such ideology is that, “in the 43-page budget, the word “taxpayer” and its permutations appear 24 times, as often as the word “people.”
Imagine that. How dare a budget — which is a plan that fleshes out income and expenditures over a period of time — should use the word taxpayer, seeing that the main source of revenue for that budget is taxes, which is paid by…wait for it…taxpayers.
She further analyzes this phenomenon by suggesting, “It’s worthwhile to compare these usages, because the terms are, in a sense, rival ideas. While “people” designates the broadest possible public as the subject of a political project, “taxpayer” advances a considerably narrower vision — and that’s why we should eliminate it from political rhetoric and punditry.”
In other words, it is a “narrow” vision to consider a budget at all from the perspective of taxpayer, from which the government derives most of its revenue. Oh, and the government is now a “political project.”
It gets better.
The author goes on to point out that Democrats also use the word “taxpayer” in their budget: “Democrats often refer to “taxpayers,” too. At 150 pages, the White House budget proposal for 2016 uses the term 26 times”. However, it’s different when Democrats use it! Really it is.
Let’s compare the two. With regard to the use of taxpayer in the House Republican budget, the author writes,
“The House budget is full of examples of seemingly straightforward deployments of the term which are, upon closer inspection, clearly furthering a particular ideology. “There are too many scenarios these days in which Washington forgets that its power is derived from the ‘consent of the governed,’” the plan reads in one instance of the term’s use. “It forgets that its financial resources come from hard-working American taxpayers who wake up every day, go to work, actively grow our economy and create real opportunity.” In other words, Americans’ taxes are parallel with taxpayers’ consent, suggesting that expenditures that do not correspond to an individual’s will are some kind of affront.”
And more,
“The report goes on to argue that “food stamps, public housing assistance, and development grants are judged not on whether they achieve improved health and economic outcomes for the recipients or build a stronger community, but on the size of their budgets. It is time these programs focus on core functions and responsibilities, not just on financial resources. In so doing this budget respects hard-working taxpayers who want to ensure their tax dollars are spent wisely.”
Put simply, taxpayers should get what they pay for when it comes to welfare programs, and not be overcharged. But, as the Republican authors of this budget know well, the beneficiaries of welfare programs tend to receive more in benefits than they pay in taxes, because they are in most cases low-income. The “taxpayers” this passage has in mind, therefore, don’t seem to be the recipients of these welfare programs, but rather those who imagine that they personally fund them. By this logic, the public is divided neatly into makers and takers, to borrow the parlance of last election’s Republicans.”
So here we have it. The use of the word “taxpayers” is bad coming from Republicans because the Republican budget takes into consideration those who personally fund government programs with their taxes. Unfortunately for the author, taxpayers don’t “imagine that they personally fund them”, but actually, truly do fund them with the taxes that they pay. This is problematic to the author, because, she writes, “the “taxpayers” this passage has in mind, therefore, don’t seem to be the recipients of these welfare programs”. (Probably not, largely because, “the beneficiaries of welfare programs tend to receive more in benefits than they pay in taxes”.)
Presumably, that is mean. It is mean to consider at all the source of revenue when writing a budget, even though budgets (are supposed to) have finite revenue limits — which, in this case of a federal budget, are the taxes collected by the taxpayer. But it’s worse than mean. It’s ideological. And narrow.
Contrast this with her defense of the Democrat’s use of the word “taxpayer” in their budget plan (she references the White House one). Taxpayer is used
“26 times, predictably invoking it when referring to cuts and reductions in services. The Budget includes initiatives to improve the service we provide to the American public; to leverage the Federal Government’s buying power to bring more value and efficiency to how we use taxpayer dollars…,” President Barack Obama writes in his introductory message. “The Budget includes proposals to consolidate and reorganize Government agencies to make them leaner and more efficient, and it increases the use of evidence and evaluation to ensure that taxpayer dollars are spent wisely on programs that work.”
So, because the Democrats talk about the “taxpayer” with regard to, and in reference to, “services” and “Government agencies”, that is good. Because Government is good. And “services” and “Government agencies” surely include everyone.
What’s really interesting is that both budgets have similar language, but one is bad (Republican) and one is good (Democrat). See here:
Republicans wrote, “this budget respects hard-working taxpayers who want to ensure their tax dollars are spent wisely”, while the President wrote, “The Budget includes proposals… to ensure that taxpayer dollars are spent wisely on programs that work” (emphasis added).
So, because the President focused his words on describing Government programs (that work), ergo, it must be true and good. And not ideological or narrow. This is reinforced by the author’s assertion further in the article that “public revenue is just that: a pool of public money to be used for the good of the public, not 300 million pools of private money each to be used to serve private individuals’ interests.” The greater good. Everyone. People. So, how dare any budget consider at all those “taxpayers” who fund it it with (taxpayer) revenue!
The final paragraph of this article, however, is the creme de la creme:
“Whereas “taxpayers” is strewn throughout political documents, “people” is associated with populist and revolutionary movements, and not for nothing. Power to the people, the evergreen revolutionary slogan trumpeted by popular fronts around the world, has a ring that power to the taxpayers does not precisely because it demands an inclusive view of public goods. The same could be said about the first line of the U.S. Constitution: “We the Taxpayers” would have been an odd construction for a nation born from a revolt against British taxation. So let’s leave “taxpayer” to the IRS and remove it from everyday speech. With every thoughtless repetition of the word, we’re carrying political water.” (emphasis original).
This is what passes for meaningful discourse these days. “Taxpayer” is now another word of class warfare, because it suggests there is a divide of “makers and takers”. The Left is content with taking our money to fund (endlessly) whatever programs it deems good — and now it is content to take our speech too.
by | ARTICLES, BLOG, CONSTITUTION, FREEDOM, GOVERNMENT, HYPOCRISY, OBAMA, POLITICS, TAXES
Eric Holder recently announced his plan to move forward with prosecuting “campaign-finance “coordination” between candidates and outside groups.” This is ridiculous.
Holder has the time to do this, but yet he hasn’t even begun to compose a report on the IRS — which everyone now knows is full of very serious breaches of impropriety.
How can he find the time to develop the politically charged concept of coordination (with no real evidence); investigations are based merely on supposition. In contrast, we have actual facts and actions with regard to the IRS fiasco — which was also politically charged — and Holder has done nothing so far.
Even the WSJ recognizes the farce that this “coordination” campaign is, pointing out that “the federal government can subpoena your documents, email, computers and bank records in a political fishing expedition conducted by the FBI.”
And more: “A coordination investigation can be started on almost any pretext. All you need is an allegation that someone talked to someone they should not have. Once the investigation makes it over that low evidentiary hurdle, the feds can comb through every shred of personal and group communications to find illegal contact.”
Why is the same diligence not being applied to the substantiated, documented IRS abuses? Where is the Department of Justice report on this egregious overreach by another federal department?
Unfortunately, we already know the answer.
2015/2016 is shaping up to be a particularly nasty election cycle. You can read the scathing WSJ opinion on the matter of “coordination” here:
