Learning The Economic Lessons Of History

Yesterday George Will posted an article at National Review Online about the sluggish economic recovery under President Obama. When Ronald Reagan took office in 1981, the unemployment rate was approximately 7.5%. By January 1, 1983, the unemployment rate had risen to 10.4%. By January 1, 1988, the unemployment rate was 5.70%. Presidential economic policies do impact the economy.

The article reminds us:

Ronald Reagan lightened the weight of government as measured by taxation and regulation. Obama has done the opposite. According to the annual “snapshot of the federal regulatory state” compiled by Clyde Wayne Crews Jr. of the Competitive Enterprise Institute, four of the five largest yearly totals of pages in the Federal Register — the record of regulations — have occurred during the Obama administration. The CEI’s delightfully cheeky “unconstitutionality index,” measuring Congress’s excessive delegation of its lawmaking policy, was 51 in 2013. This means Congress passed 72 laws but unelected bureaucrats issued 3,659 regulations.

One of the things that is slowing down the recovery in our consumer-drive economy is the amount of student loan debt. Student loan debt is currently the fastest growing debt–larger than credit-card or auto-loan debt. Another factor is the retirement of the baby boomers.

The article further reports:

In April, the number of persons under 25 in the workforce declined by 484,000. Unsurprisingly, almost one in three (31 percent) persons 18 to 34 are living with their parents, including 25 percent who have jobs.

These are not positive numbers.

The article concludes:

There is, however, something new under the sun. The Pew Research Center reports that Americans 25 to 32 — “Millennials” — constitute the first age cohort since World War II with higher unemployment or a greater portion living in poverty than their parents at this age. But today’s Millennials have the consolation of having the president they wanted.

At some point the Millennials may realize that elections have consequences and that they have voted themselves out of jobs.

Enhanced by Zemanta

Quote Of The Week

From George Will at the Washington Post on May 13:

Jay Carney, whose unenviable job is not to explain but to explain away what his employers say, calls the IRS’s behavior “inappropriate.” No, using the salad fork for the entree is inappropriate. Using the Internal Revenue Service for political purposes is a criminal offense.

Separating Truth From Fiction

Sequestration will take effect on Friday, March 1.To hear President Obama describe it, sequestration will be the end of life as we know it in America.

There were two articles posted in the Washington Post on Friday–one written by George Will and one written by Bob Woodward. George Will describes sequestration as a manufactured crisis, and Bob Woodward states that sequestration was initiated by Jack Lew, Rob Nabors, and President Obama (contrary to the claims of the President that it was the Republican’s idea).

George will reminds us that that USS Truman was delayed in deploying to the Persian Gulf. He is not convinced that this was necessary. He states:

The Defense Department’s civilian employment has grown 17 percent since 2002. In 2012, defense spending on civilian personnel was 21 percent higher than in 2002. And the Truman must stay in Norfolk? This is, strictly speaking, unbelievable.

George Will reminds us of previous crises that never quite materialized:

Remember when “a major cooling of the climate” was “widely considered inevitable” (New York Times, May 21, 1975) with “extensive Northern Hemisphere glaciation” (Science magazine, Dec. 10, 1976) which must “stand alongside nuclear war as a likely source of wholesale death and misery” (International Wildlife, July 1975)? Remember reports that “the world’s climatologists are agreed” that we must “prepare for the next ice age” (Science Digest, February 1973)? Armadillos were leaving Nebraska, heading south, and heat-loving snails were scampering southward from European forests (Christian Science Monitor, Aug. 27, 1974). Newsweek (April 28, 1975) said meteorologists were “almost unanimous” that cooling would “reduce agricultural productivity.”

We’ve been here before.

Bob Woodward reports:

“The sequester was something that was discussed,” Carney said. Walking back the earlier statements, he added carefully, “and as has been reported, it was an idea that the White House put forward.”

This was an acknowledgment that the president and Lew had been wrong.

Why does this matter?

First, months of White House dissembling further eroded any semblance of trust between Obama and congressional Republicans. (The Republicans are by no means blameless and have had their own episodes of denial and bald-faced message management.)

Second, Lew testified during his confirmation hearing that the Republicans would not go along with new revenue in the portion of the deficit-reduction plan that became the sequester. Reinforcing Lew’s point, a senior White House official said Friday, “The sequester was an option we were forced to take because the Republicans would not do tax increases.”

In fact, the final deal reached between Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) in 2011 included an agreement that there would be no tax increases in the sequester in exchange for what the president was insisting on: an agreement that the nation’s debt ceiling would be increased for 18 months, so Obama would not have to go through another such negotiation in 2012, when he was running for reelection.

So when the president asks that a substitute for the sequester include not just spending cuts but also new revenue, he is moving the goal posts. His call for a balanced approach is reasonable, and he makes a strong case that those in the top income brackets could and should pay more. But that was not the deal he made.

Make no mistake–the purpose of all this panic is to create an atmosphere where Americans are willing to raise taxes–even on the middle class. The tax increases will be on everyone. The panic over sequestration is necessary to pave the way for those taxes.

As I said, we have been here before.

Enhanced by Zemanta

The Danger Of Having More Government Than We Need

On Friday, George Will posted an article in the Washington Post about some recent events in Tewksbury, Massachusetts. It is a story of excessive big government–not Massachusetts government, but the federal government.

Russ Caswell owns a budget motel his father built in 1955. He is 68, and the motel provides his retirement income. The motel has seen better days, but still hosts tourists, some workers on extended stays and some elderly people who call it home. The 56 rooms rent for $56 a night or $285 a week.

The article reports:

Since 1994, about 30 motel customers have been arrested on drug-dealing charges. Even if those police figures are accurate — the police have a substantial monetary incentive to exaggerate — these 30 episodes involved less than 5/100ths of 1 percent of the 125,000 rooms Caswell has rented over those more than 6,700 days. Yet this is the government’s excuse for impoverishing the Caswells by seizing this property, which is their only significant source of income and all of their retirement security.

The federal government is now planning to seize the property, sell it (expecting to receive about $1.5 million) and give 80 percent of that to the Tewksbury Police Department.

The article reports:

The Caswells have not been charged with, let alone convicted of, a crime. They are being persecuted by two governments eager to profit from what is antiseptically called the “equitable sharing” of the fruits of civil forfeiture, a process of government enrichment that often is indistinguishable from robbery.

The lawsuit is titled United States of America v. 434 Main Street, Tewksbury, Massachusetts. The Caswells are represented by the Institute for Justice (IJ), described in the article as a ‘libertarian public-interest law firm.’ The IJ describes the civil forfeiture proceeding as something that was used against pirates to seize their booty. In this case the federal government is the pirate!

 

Enhanced by Zemanta

The Myth Of Actually Cutting Spending

As long as we have the current leadership in Congress, the federal government will continue to grow. That is true despite what you are hearing about coming drastic cuts by the super committee or drastic cuts if the super committee fails.

This is where we are:

George Will posted an article at the Washington Post yesterday explaining that the current discussions are all smoke and mirrors.

The article reports:

But suppose the sequester occurs. Ignore loose talk about “draconian” spending cuts. Veronique de Rugy of George Mason University’s Mercatus Center has a graph you should see.

It shows two lines. The top one charts spending, 2013-2021, without the sequester; the other shows spending with the sequester. Both lines are ascending. Both show annual spending rising from less than $4 trillion to more than $5 trillion. The space between them is so narrow that it is difficult to see that there are two lines. Without the sequester, spending will increase $1.7 trillion; with the sequester, spending will increase $1.6 trillion. Here are categories of spending:

Ten-year spending increases:

                                                     Without                         With

Defense                                   20 percent                    18 percent

Nondefense discretionary     14 percent                   12 percent

Medicare                                   62 percent                    62 percent

Other mandatory                      51 percent                     51 percent

Net interest                            152 percent                   136 percent

This whole super committee thing seems to be much ado about nothing.


Enhanced by Zemanta