Category Archives: Cato Institute

An open letter to President Obama (Part 57)

April 16, 2012 – 6:27 am

President Obama c/o The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500

Dear Mr. President,

I know that you receive 20,000 letters a day and that you actually read 10 of them every day. I really do respect you for trying to get a pulse on what is going on out here.

Over the last 20 or 30 years I have heard conservatives say that it is  a real shame that we are headed towards a bankrupt European liberal socialist kind of state. However, we are now there.

We’re Already Europe

by Michael D. Tanner

Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Added to cato.org on February 22, 2012

This article appeared in National Review (Online) on February 22, 2012.

With seemingly every day bringing more bad news from Europe, many are beginning to ask how much longer the United States has before our welfare state follows the European model into bankruptcy. The bad news is: It may already have.

This year, the fourth straight year that we borrowed more than $1 trillion to support the U.S. government, our budget deficit will top $1.3 trillion, 8.7 percent of our GDP. If you think that sounds bad, it’s because it is. In fact, only two European countries, Greece and Ireland, have larger budget deficits as a percentage of GDP. Things are only slightly better when you look at the size of our national debt, which now exceeds $15.3 trillion, 102 percent of GDP. Just four European countries have larger national debts than we do — Greece and Ireland again, plus Portugal and Italy. That means the U.S. government is actually less fiscally responsible than countries like France, Belgium, or Spain.

And as bad as things are right now, we are on an even worse course for the future. If one adds the unfunded liabilities of Social Security and Medicare to our official national debt, we really owe $72 trillion, by the Obama administration’s projections for future Medicare savings under Obamacare, and as much as $137 trillion if you use more realistic projections. Under the best-case scenario, then, this amounts to more than 480 percent of GDP. And, under more realistic projections, we owe an astounding 911 percent of GDP.

At that point does the United States cease being the United States as we have known it?

Meanwhile, counting both official debt and unfunded pension and health-care liabilities, the most indebted nation in Europe is Greece, which owes 875 percent of GDP. That’s right, the United States potentially owes more than Greece. France, the second most insolvent nation in Europe, owes just 549 percent of GDP. Even under the most optimistic scenario, we owe more than such fiscal basket cases as Ireland, Italy, Portugal, and Spain.

So far we have been able to avoid the consequences of our profligate ways because the very public turmoil in Europe has helped prop us up as the world’s safe haven for foreign investment. Compared to the euro’s problems, the dollar looks pretty safe. This means that others are still willing to lend us money at absurdly low rates. But that won’t last forever. In fact, already seven European countries, including Germany and Sweden, have better credit ratings than the U.S.

Perhaps we can take some solace in the fact that our welfare state is not yet as big as Europe’s. But the key word here is “yet.” Today, our federal government spends more than 24 percent of GDP. Throw in state and local spending, and government at all levels consumes over 43 percent of everything produced in this country over the course of a year. As bad as that is, it’s still less than Europe, where the average of government spending at all levels is slightly more than 50 percent of GDP. But the Congressional Budget Office projects that federal-government spending in this country is currently on a path to exceed 42 percent of GDP by 2050. Government spending at all levels will exceed 59 percent of GDP. And CBO assumes state and local spending will decline in the future, which seems unlikely.

By way of comparison, today, Ireland is the only country in Europe with a bigger government than the U.S.’s will be in 2050. That’s right, one can look at countries like France and Greece, or even Denmark and Sweden, and realize that we will eventually have bigger governments than those quintessential welfare states have today.

At that point does the United States cease being the United States as we have known it? At the very least, can our economy survive such a crushing burden of government spending, and its attendant level of taxes and debt?

Given this looming disaster, President Obama has just submitted a budget that explicitly rejects “austerity,” avoids any reform of Medicare or Social Security, and adds some $7 trillion to the national debt over the next ten years….

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Thank you so much for your time. I know how valuable it is. I also appreciate the fine family that you have and your committment as a father and a husband.

Sincerely,

Everette Hatcher III, 13900 Cottontail Lane, Alexander, AR 72002, ph 501-920-5733, lowcostsqueegees@yahoo.com

On Bloomberg, Sessions Discusses Astounding Gimmicks In President’s Budget

Uploaded by on Feb 13, 2012

By Everette Hatcher III | Also posted in President Obama, spending out of control | Comments (0)

Why is Obamacare unpopular?

April 16, 2012 – 6:23 am

Cato’s Michael F. Cannon Discusses ObamaCare’s Individual Mandate

Uploaded by on Mar 26, 2012

http://www.cato.org/event.php?eventid=9074

The individual mandate to purchase health insurance is the linchpin of the Patient Protection and Affordable Care Act. It is among the issues to be handled by the Supreme Court beginning March 26, 2012.

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I am little confused why the Democrats are still supporting Obamacare after the 2010 election results. I can’t figure it out.

Why Is ObamaCare Unpopular?

Posted by Roger Pilon

Today POLITICO Arena asks:

Was ObamaCare doomed from the start, an unpopular proposal that was unlikely to ever catch on with the public?

My response:

Let’s remember how ObamaCare was passed — without a single Republican vote, and after the “Cornhusker Kickback,” the “Louisiana Purchase,” the Florida Flim-Flam,” and countless other shenanigans, including a phony 10-year price tag of $938 billion that the CBO now tells us will be $1.76 trillion. And remember too that ObamaCare’s passage was followed by the massive repudiation of the 2010 elections. Is it any wonder that it continues to be unpopular?

But the Supreme Court next week will be looking not at ObamaCare’s unpopularity but at its unconstitutionality — or so 26 states and others have claimed, and for good reason. The Act, if upheld, would effectively end constitutionally limited government in America. A government that can order individuals to engage in commerce is limited only by politics, not law. A federal government that can compel states to expand their Medicaid roles on pain of losing the federal tax dollars the state’s citizens must continue to pay is no longer a government subject to checks by the states.

The American people aren’t stupid. They know a massive power-grab when they see it. What makes this power-grab special is that it concerns not retirement or education, or the many other areas in which the federal government has usurped constitutionally unauthorized power over the years but that most intimate of human concerns, health care. Bad as our health care system is today, due to government meddling in the past, ObamaCare will transform it into one massive bureaucracy — high costs, poor service — and the American people know it. That’s why it continues to be so unpopular.

By Everette Hatcher III | Also posted in Healthcare | Comments (0)

Dan Mitchell of the Cato Institute takes on the Buffett Rule

April 13, 2012 – 1:44 pm

Class warfare again from President Obama. 

I’ve already explained why Warren Buffett is either dishonest or clueless about tax policy. Today, on CNBC, I got to debate the tax scheme that President Obama has named after the Omaha investor.

One of my big points was that the United States already has a self-destructive set of tax laws for investment. As such, it would be very foolish to increase the double taxation of income that is saved and invested.

Dan Mitchell Debating the Buffett Rule on CNBC

Published on Apr 10, 2012 by

No description available.

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And my closing point, which I snuck in before they could go off air, was that the left should want lower tax rates if they want more revenue from the rich. It’s called the Laffer Curve.

By Everette Hatcher III | Also posted in Taxes | Comments (0)

Liberals don’t think we should keep much of our money

April 13, 2012 – 5:31 am

 

Liberals want to spend our money and they think that government should get more of our money.

Brandon Stewart

September 14, 2011 at 11:16 am

In a interview with Chicago’s Don Wade & Roma radio show , Congresswoman Jan Schakowsky claimed that Americans aren’t entitled to all of their own money.

Toward the end of a wide-ranging interview, the hosts played a clip from this week’s Republican Presidential Debate where California teenager Tyler Hinsley asked, “Of every dollar that I earn, how much do you think I deserve to keep?” Co-host Don Wade asked Schakowsky to answer the same question.

After some initial back-and-forth, she replied, “I’ll put it this way, you don’t deserve to keep all of it. It’s not a question of deserving, because what government is, is those things that we decide to do together.”

Despite the hosts’ persistence, Schakowsky declined to answer what percentage of a person’s income they deserved to keep. “I pay at a 35% tax rate, happy to do it,” she explained when the hosts persisted with their question. She again declined to say how much more she would personally be willing to pay.

But Rep. Schakowsky is not alone. Her views are sadly typical of a liberal worldview that sees a person’s earnings as belonging first to the state. In fact, the left is now doubling down on this misguided belief, with the President pushing for more stimulus spending despite the failures of earlier “stimulus.”

But while the left continues to promote the same failed policies—more taxes, more regulation, more big government—conservatives need to trumpet the benefits of low taxes, sensible regulations, and small government. As Heritage’s Dubay explains:

The best way to grow revenues is to promote faster economic growth, which will increase the number of taxpayers and taxable income more rapidly. Tax hikes—whether through higher tax rates or slashing credits, deductions, and exemptions without offsetting reductions elsewhere—will not do the job. Under President Obama’s current policies, spending will continue to grow at a faster rate than can be paid for by tax hikes—even assuming the huge tax increases the President insists upon. To add insult to injury, as history has shown, tax hikes would slow economic growth and make it even harder for unemployed Americans to find a job.

Listen to the full interview here:

WLS 890 – Don Wade & Roma’s interview with Jan Schakowsky

By Everette Hatcher III | Also posted in spending out of control | Tagged , , , , | Comments (0)

Obamacare is a power grab for control of more our lives!!!

April 13, 2012 – 4:58 am

Cato’s Michael F. Cannon Discusses ObamaCare’s Individual Mandate

Uploaded by on Mar 26, 2012

http://www.cato.org/event.php?eventid=9074

The individual mandate to purchase health insurance is the linchpin of the Patient Protection and Affordable Care Act. It is among the issues to be handled by the Supreme Court beginning March 26, 2012.

Michael F. Cannon is the director of health policy studies at the Cato Institute.

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I have always opposed Obamacare because it the government control of giving anyone the right to have an abortion paid for by the government and I think that is wrong. However, there are some constitution problems with this power grab of Obamacare too. This article below from the Cato Institute makes this point:

Obamacare Gives Congress License to Micromanage Every Facet of Our Lives

by Timothy Sandefur

Timothy Sandefur is an adjunct scholar with the Cato Institute and author of The Right to Earn A Living: Economic Freedom And The Law (2010).

Added to cato.org on March 27, 2012

This article appeared in Christian Science Monitor on March 27, 2012.

The US Supreme Court today heard arguments today on what may be the most important constitutional case in a generation. Some of the nation’s top attorneys are debating the Patient Protection and Affordable Care Act, often known as Obamacare.

The eventual ruling could chart the boundaries of federal power for generations to come — not only for health care, but across the policy spectrum.

A major focus of the Supreme Court hearings is the individual mandate — the law’s requirement that almost all Americans who aren’t covered by employers must purchase a health-care plan, whether they want to or not.

The plaintiffs — including 26 states as well as individuals and businesses — argue that Congress has no authority to force people to buy insurance. Most Americans agree: A recent Gallup poll found that 72 percent — including 56 percent of Democrats – consider the mandate unconstitutional.

If Congress can force us to buy health insurance, what can’t it order us to buy?

Obama administration attorneys counter that Article I, Section 8 of the Constitution, known as “the commerce clause” — giving Congress power to “regulate commerce among the several states” — is more than expansive enough to validate the mandate.

They rely on a list of Supreme Court precedents that stretch the definition of “interstate commerce” pretty far.

In the 1940s, the court allowed Congress to punish a farmer for growing wheat on his own land for his own use, on the theory that wheat prices would be affected if everyone did that. In the 1960s, the court classified civil rights laws as “regulations of commerce” even when they involved businesses that did practically no interstate business. And in 2005, the court ruled that Congress could prohibit someone from growing marijuana in her yard for her personal medical use, because federal laws against drugs are a kind of economic regulation.

Still, the court has never held that the federal government may compel people to participate in commerce. And this is what makes the individual mandate unprecedented: Never before has Congress presumed to order average Americans to purchase a good or a service in the marketplace.

Simply from the standpoint of semantics, the law’s defenders face a challenge. As ordinarily understood, the word, “regulate,” implies rules for activity that people have freely chosen to engage in (running a business, for instance). The word doesn’t imply forcing people, say, to start a business in the first place.

Likewise, “commerce” implies economic activity — but someone who fails to buy health insurance is not engaged in economic activity.

Beyond these disputes over definitions lies a fundamental question about the extent of federal power: If Congress can force us to buy health insurance, what can’t it order us to buy?

Practically any individual decision to buy something, or not to do so, has some theoretical effect on the economy as a whole. And if that’s all that’s needed to justify federal intrusion, limitless dictates could be imagined. For example, what’s to stop Congress from forcing us to buy spa memberships — or electric cars — in the name of making us healthier, or more fuel-efficient, consumers?

As Federal District Court Judge Henry Hudson, who ruled in favor of Virginia’s challenge to the individual mandate in December 2012, put it: The argument for the mandate’s constitutionality “lacks logical limitation.”

Remarkably, the Obama administration has never offered a principled explanation of how to square the mandate with constitutional principles of limited federal government.

Instead, Americans are offered more semantic games. We’re told the mandate only moves forward a purchase that would have happened in any case. People will now pay up-front for health care that they would have eventually paid for, on their own, when they received it.

But again, this is a rationale without “logical limitation.” Some version of this argument could be offered for practically any kind of forced purchase. If Congress commands you to buy something because lawmakers deem it “good for you,” then almost by definition, it’s something you might have bought on your own, eventually — so, voila, the mandate isn’t really a mandate at all!

Bottom line: Upholding the individual mandate would set a treacherous precedent by licensing Congress to start micromanaging every facet of our lives.

Striking down the mandate, on the other hand, could pressure Congress to finally get creative about reforming America’s ailing health care delivery system. With the mandate off the table, Congress could be forced to de-emphasize rigid bureaucratic prescriptions in favor of market-based reforms to expand competition and consumer choice.

So this case is not just a pulse check for constitutional principles of limited government. The health of health care could also be on the line.

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By Everette Hatcher III | Also posted in Healthcare | Comments (0)

Public schools need more money? Is that the problem?

April 12, 2012 – 11:30 pm

Uploaded by on Mar 5, 2010

What is the true cost of public education? According to a new study by the Cato Institute, some of the nation’s largest public school districts are underreporting the true cost of government-run education programs.

Cato Education Analyst Adam B. Schaeffer explains that the nations five largest metro areas and the District of Columbia are blurring the numbers on education costs. On average, per-pupil spending in these areas is 44 percent higher than officially reported. Districts on average spent nearly $18,000 per student and yet claimed to spend just $12,500 last year.

It is impossible to have a public debate about education policy if public schools can’t be straight forward about their spending.

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Public schools need more money? Is that the problem?

Public Schools Eat Too Much At Government Trough

by Neal McCluskey

Neal P. McCluskey is the associate director of the Center for Educational Freedom at the Cato Institute and the author of Feds in the Classroom: How Big Government Corrupts, Cripples and Compromises American Education.

Added to cato.org on September 26, 2011

This article appeared in Investor’s Business Daily on September 23, 2011

Soon after his boss introduced the American Jobs Act, Vice President Joe Biden held a conference call to get teachers’ unions behind it.

It was an easy task, with American Federation of Teachers honcho Randi Weingarten promising to “do whatever we can” to get the legislation passed. And why not? It’s teachers and other politically potent interests, not kids or the economy, that the Act is really about.

That teachers’ unions are gung-ho about the proposal — which would furnish $30 billion for education jobs and another $25 billion for school buildings — doesn’t necessarily mean it’s a bad thing. Kids need teachers and classrooms, right?

Many public schools are in terrible shape, but not for lack of funds…

Sure. But we all need food, too, yet we can eat too much, or scarf down the wrong things, and end up sick as dogs. And for the last several decades public schools have been throwin’ down Twinkies like they’re going out of style.

Look at staffing. According to the federal Digest of Education Statistics, between 1969 and 2008 (the latest year with available data) public schools went from 22.6 students per teacher to 15.3. District administrative staff went from 697.7 students per employee to just 363.3. In total, students per employee dropped from 13.6 to 7.8.

And what happened to achievement? Scores on the National Assessment of Educational Progress — the “nation’s report card” — flatlined for 17-year-olds, our schools’ “final products.”

But those employment figures are just through 2008. Haven’t the last few years truly devastated education employment? We don’t have perfect numbers, but what we do have says no.

The 2009 “stimulus,” recall, included $100 billion for education, most of which went to elementary and secondary schooling. A year later, the Feds allocated another $10 billion to keep education employment intact. Oodles of education jobs probably were created or preserved.

Unemployment rates support that. Bureau of Labor Statistics data for April — a month when most schools are in session — show that the rates in “education services” (which includes K-12, colleges and other training) were 4.8% in 2009, 4.2% in 2010 and 3.8% in 2011.

Education unemployment has been falling, and has been below not just overall unemployment, but unemployment for people with college degrees. In April 2011, the unemployment rate for the latter was 4.5%.

Assuming that staffing has been roughly constant since 2008, what would the magnitude of the cut be if the Obama administration’s worst-case scenario — 280,000 lost positions — came true?

Small, especially since the administration is talking not just about teachers, but also “guidance counselors, classroom assistants, after-school personnel, tutors, and literacy and math coaches.” Most of those positions are considered “instructional” and “support” staff, and in 2008 there were 6,182,785 such employees. Losing 280,000 would be just a 4.5% trimming. And that’s the worst-case scenario.

So much for employment. How about crumbling schools?

Many public schools are in terrible shape, but not for lack of funds: Public school spending rose from $5,671 per student in 1970-71 to $12,922 in 2007-08. Much of that went to pay for all the new employees, but facilities spending ballooned as well.

Where’d the money go?

Neal P. McCluskey is the associate director of the Center for Educational Freedom at the Cato Institute and the author of Feds in the Classroom: How Big Government Corrupts, Cripples and Compromises American Education.

 

More by Neal McCluskey

It’s hard to know for sure, but too often not dull maintenance. Instead, it went to glory projects such as the $578 million Robert F. Kennedy Community Schools complex in Los Angeles, which boasts such educationally essential features as talking benches that explain the site’s history (Robert Kennedy was shot at the hotel that once stood there), and an auditorium that mimics the Cocoanut Grove nightclub.

Politicians simply don’t star in golden-shovel groundbreakings when bathroom stalls are replaced. They do get such free publicity when opulent buildings are erected. And while the Jobs Act wouldn’t fund new buildings, it would bail out districts that long traded function for flash, and would pay for spiffy new science labs and other glitzy additions. And naturally, all the work would have to be done at union rates.

This makes no educational sense. It also makes no economic sense: Taxpayers would ultimately have to pay for the Jobs Act, meaning money would be taken from the people who earned it and given to infamous squanderers. That almost certainly means a net loss of jobs.

But this isn’t really about education or job growth. It’s about politics. At least, that’s all that the evidence allows you to conclude.

By Everette Hatcher III | Also posted in Current Events | Comments (0)

Videos by Cato Institute on failed stimulus plans

April 11, 2012 – 6:12 am

In this post I have gathered several videos from the Cato Institute concerning the subject of failed stimulus plans.

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Government Spending Doesn’t Create Jobs

Uploaded by on Sep 7, 2011

Share this on Facebook: http://on.fb.me/qnjkn9 Tweet it: http://tiny.cc/o9v9t

In the debate of job creation and how best to pursue it as a policy goal, one point is forgotten: Government doesn’t create jobs. Government only diverts resources from one use to another, which doesn’t create new employment.

Video produced by Caleb Brown and Austin Bragg.

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Keynesian Catastrophe: Big Money, Big Government & Big Lies

Uploaded by on Jan 19, 2012

The Cato Institute’s Dan Mitchell explains why Obama’s stimulus was a flop! With Glenn Reynolds.

See more at http://www.pjtv.com and http://www.cato.org

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Keynesian Economics Is Wrong: Bigger Gov’t Is Not Stimulus

Uploaded by on Dec 15, 2008

Based on a theory known as Keynesianism, politicians are resuscitating the notion that more government spending can stimulate an economy. This mini-documentary produced by the Center for Freedom and Prosperity Foundation examines both theory and evidence and finds that allowing politicians to spend more money is not a recipe for better economic performance.

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Obama’s So-Called Stimulus: Good For Government, Bad For the Economy

Uploaded by on Jan 26, 2009

President Obama wants Congress to dramatically expand the burden of government spending. This CF&P Foundation mini-documentary explains why such a policy, based on the discredited Keynesian theory of economics, will not be successful. Indeed, the video demonstrates that Obama is proposing – for all intents and purposes – to repeat Bush’s mistakes. Government will be bigger, even though global evidence shows that nations with small governments are more prosperous.

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Big Government Is Not Stimulus: Why Keynes Was Wrong (The Condensed Version)

Uploaded by on Jan 13, 2009

The CF&P Foundation has released a condensed version of our successful mini-documentary explaining why so-called stimulus schemes do not work. Based on a theory known as Keynesianism, politicians are resuscitating the notion that more government spending can stimulate an economy. This mini-documentary produced by the Center for Freedom and Prosperity Foundation examines both theory and evidence and finds that allowing politicians to spend more money is not a recipe for better economic performance.

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Eight Reasons Why Big Government Hurts Economic Growth

Uploaded by on Aug 17, 2009

This Center for Freedom and Prosperity Foundation video analyzes how excessive government spending undermines economic performance. While acknowledging that a very modest level of government spending on things such as “public goods” can facilitate growth, the video outlines eight different ways that that big government hinders prosperity. This video focuses on theory and will be augmented by a second video looking at the empirical evidence favoring smaller government.

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Keynesian Economics Is Wrong: Economic Growth Causes Consumer Spending, Not the Other Way

Uploaded by on Nov 29, 2010

Politicians and journalists who fixate on consumer spending are putting the cart before the horse. Consumer spending generally is a consequence of growth, not the cause of growth. This Center for Freedom and Prosperity video helps explain how to achieve more prosperity by looking at the differences between gross domestic product and gross domestic income. www.freedomandprosperity.org

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Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending

Uploaded by on May 10, 2010

Huge budget deficits and record levels of national debt are getting a lot of attention, but this video explains that unfunded liabilities for entitlement programs are Americas real red-ink challenge. More important, this CF&P mini-documentary reveals that deficits and debt are symptoms of the real problem of an excessive burden of government spending. www.freedomandprosperity.org

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Now that I have been critical of the Democrat President, I wanted to show that I am not concerned about taking up for Republicans but looking at the facts. President Clinton did increase government spending at a slower rate than many other presidents. Here are two  videos that praise both Reagan and Clinton for both accomplished this feat.

Spending Restraint, Part I: Lessons from Ronald Reagan and Bill Clinton

Uploaded by on Feb 14, 2011

Ronald Reagan and Bill Clinton both reduced the relative burden of government, largely because they were able to restrain the growth of domestic spending. The mini-documentary from the Center for Freedom and Prosperity uses data from the Historical Tables of the Budget to show how Reagan and Clinton succeeded and compares their record to the fiscal profligacy of the Bush-Obama years.

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Spending Restraint, Part II: Lessons from Canada, Ireland, Slovakia, and New Zealand

Uploaded by on Feb 22, 2011

Nations can make remarkable fiscal progress if policy makers simply limit the growth of government spending. This video, which is Part II of a series, uses examples from recent history in Canada, Ireland, Slovakia, and New Zealand to demonstrate how it is possible to achieve rapid improvements in fiscal policy by restraining the burden of government spending. Part I of the series examined how Ronald Reagan and Bill Clinton were successful in controlling government outlays — particularly the burden of domestic spending programs. www.freedomandprosperity.org

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It seems that liberals will never wake up. On 3-8-12 a Arkansas Times blogger pointed out that Obama’s stimulus in 2009 was not made up of just increased but also tax cuts. That is true but the real truth is that there have been about 1/2 dozen stimulus efforts by President Obama and all of them have failed.  Over and over they have tried stimulus plans but they don’t work. Take a look at this excellent article from the Cato Institute:

Keynesian Policies Have Failed

by Chris Edwards

Chris Edwards is the director of tax policy studies at the Cato Institute and the editor of Downsizing Government.org.

Added to cato.org on December 2, 2011

This article appeared on U.S. News & World Report Online on December 2, 2011

Lawmakers are considering extending temporary payroll tax cuts. But the policy is based on faulty Keynesian theories and misplaced confidence in the government’s ability to micromanage short-run growth.

In textbook Keynesian terms, federal deficits stimulate growth by goosing “aggregate demand,” or consumer spending. Since the recession began, we’ve had a lot of goosing — deficits were $459 billion in 2008, $1.4 trillion in 2009, $1.3 trillion in 2010, and $1.3 trillion in 2011. Despite that huge supposed stimulus, unemployment remains remarkably high and the recovery has been the slowest since World War II.

Policymakers should ignore the Keynesians and their faulty models, and instead focus on reforms to aid long-run growth…

Yet supporters of extending payroll tax cuts think that adding another $265 billion to the deficit next year will somehow spur growth. That “stimulus” would be on top of the $1 trillion in deficit spending that is already expected in 2012. Far from helping the economy, all this deficit spending is destabilizing financial markets, scaring businesses away from investing, and imposing crushing debt burdens on young people.

For three years, policymakers have tried to manipulate short-run economic growth, and they have failed. They have put too much trust in macroeconomists, who are frankly lousy at modeling the complex workings of the short-run economy. In early 2008, the Congressional Budget Office projected that economic growth would strengthen in subsequent years, and thus completely missed the deep recession that had already begun. And then there was the infamously bad projection by Obama’s macroeconomists that unemployment would peak at 8 percent and then fall steadily if the 2009 stimulus plan was passed.

Chris Edwards is the director of tax policy studies at the Cato Institute and the editor of Downsizing Government.org.

 

More by Chris Edwards

Some of the same Keynesian macroeconomists who got it wrong on the recession and stimulus are now claiming that a temporary payroll tax break would boost growth. But as Stanford University economist John Taylor has argued, the supposed benefits of government stimulus have been “built in” or predetermined by the underlying assumptions of the Keynesian models.

Policymakers should ignore the Keynesians and their faulty models, and instead focus on reforms to aid long-run growth, which economists know a lot more about. Cutting the corporate tax rate, for example, is an overdue reform with bipartisan support that would enhance America’s long-run productivity and competitiveness.

If Congress is intent on cutting payroll taxes, it should do so within the context of long-run fiscal reforms. One idea is to allow workers to steer a portion of their payroll taxes into personal retirement accounts, as Chile and other nations have done. That reform would feel like a tax cut to workers because they would retain ownership of the funds, and it would begin solving the long-term budget crisis that looms over the economy.

Related posts:

Stimulus plans do not work (part 2)

Dan Mitchell discusses the effectiveness of the stimulus Uploaded by catoinstitutevideo on Nov 3, 2009 11-2-09 When I think of all our hard earned money that has been wasted on stimulus programs it makes me sad. It has never worked and will not in the future too. Take a look at a few thoughts from […]

Stimulus plans do not work (Part 1)

Government Spending Doesn’t Create Jobs Uploaded by catoinstitutevideo on Sep 7, 2011 Share this on Facebook: http://on.fb.me/qnjkn9 Tweet it: http://tiny.cc/o9v9t In the debate of job creation and how best to pursue it as a policy goal, one point is forgotten: Government doesn’t create jobs. Government only diverts resources from one use to another, which doesn’t […]

Dumas thinks we don’t need Balanced Budget Amendment but should balance it on our own

In his recent article Ernie Dumas sticks to his guns that we should balance the budget without being forced to with a “Balanced Budget Amendment,” but I wonder how well that has worked so far? I have made this a key issue for this blog in the past as you can tell below: Dear Senator […]

Maybe the “Occupy Wall Street” crowd should be angry at Obama

(Picture from Arkansas Times Blog) When I think about all the anger and hate coming from the Occupy Wall Street crowd, I wonder if they have read this story below? Solyndra: Crooked Politics or Just Bad Economics? Posted by David Boaz Amy Harder has a good take on the Solyndra issue in National Journal Daily […]

Dear Senator Pryor, why not pass the Balanced Budget Amendment? (Part 13 Thirsty Thursday, Open letter to Senator Pryor)

Dear Senator Pryor, why not pass the Balanced Budget Amendment? (Part 13 Thirsty Thursday, Open letter to Senator Pryor) Office of the Majority Whip | Balanced Budget Amendment Video In 1995, Congress nearly passed a constitutional amendment mandating a balanced budget. The Balanced Budget Amendment would have forced the federal government to live within its […]

Mark Pryor not for President’s job bill even though he voted for it

Andrew Demillo pointed this out  and also Jason Tolbert noted: PRYOR OPPOSES THE OBAMA JOBS BILL THAT HE VOTED TO ADVANCE  Sen. Mark Pryor has been traveling around the state touting a six-part jobs plan that he says “includes a number of bipartisan initiatives, is aimed at creating jobs by setting the table for growth, encouraging new […]

Is a lack of money the problem for our public schools?

Is a lack of money the problem for our public schools? Everything You Need to Know About Public School Spending in Less Than 2½ Minutes Posted by Adam Schaeffer Neal McCluskey gutted the President’s new “Save the Teachers” American Jobs Act sales pitch a good while back, as did Andrew Coulson here. Thankfully, it seems […]

By Everette Hatcher III | Also posted in President Obama, spending out of control, Taxes | Comments (0)

The real truth about the financial condition of Social Security can be seen on the www.thedailyhatch.org

April 10, 2012 – 3:00 pm

Uploaded by on Jan 8, 2009

Professor Williams explains what’s ahead for Social Security

If you want to know the real truth about the financial condition of Social Security then check out these links below:

Ark Times reader says Social Security is not Ponzi Scheme

Social Security is a Ponzi Scheme but Blake who is a blogger said I was off base. Ark Times reader says Social Security is not Ponzi Scheme Social Security Disaster Walter E. Williams Columnist, Townhall.com Politicians who are principled enough to point out the fraud of Social Security, referring to it as a lie and […]

Social Security is a Ponzi scheme that needs to be reformed

We got to do something soon about Social Security. The Case for Social Security Personal Accounts Posted by Daniel J. Mitchell There are two crises facing Social Security. First the program has a gigantic unfunded liability, largely caused by demographics. Second, the program is a very bad deal for younger workers, making them pay record […]

Senator Obama’s ideas on Social Security

Senator Obama’s Social Security Tax Plan Uploaded by afq2007 on Jul 23, 2008 In addition to several other tax increases, Senator Barack Obama wants to increase the Social Security payroll tax burden by imposing the tax on income above $250,000. This would be a sharp departure from current law, which only requires that the tax […]

Social Security is a Ponzi scheme (part 13)

Saving Social Security with Personal Retirement Accounts Uploaded by afq2007 on Jan 10, 2011 There are two crises facing Social Security. First the program has a gigantic unfunded liability, largely thanks to demographics. Second, the program is a very bad deal for younger workers, making them pay record amounts of tax in exchange for comparatively meager benefits. This […]

What does the Heritage Foundation have to say about saving Social Security:Study released May 10, 2011 (Part 7)

“Saving the American Dream: The Heritage Plan to Fix the Debt, Cut Spending, and Restore Prosperity,” Heritage Foundation, May 10, 2011 by  Stuart Butler, Ph.D. , Alison Acosta Fraser and William Beach is one of the finest papers I have ever read. Over the next few days I will post portions of this paper, but […]

Only difference between Ponzi scheme and Social Security is you can say no to Ponzi Scheme jh2d

Is Social Security  a Ponzi Scheme? I just started a series on this subject. In this article below you will see where the name “Ponzi scheme” came from and if it should be applied to the Social Security System. Ponzi! Ponzi! Ponzi! 9/14/2011 | Email John Stossel | Columnist’s Archive Ponzi! Ponzi! Ponzi! There, I […]

Social Security a Ponzi scheme?

Uploaded by LibertyPen on Jan 8, 2009 Professor Williams explains what’s ahead for Social Security Dan Mitchell on Social Security I have said that Social Security is a Ponzi scheme and sometimes you will hear someone in the public say the same thing. Yes, It Is a Ponzi Scheme by Michael D. Tanner Michael Tanner […]

Dan Mitchell on Social Security

 

 

By Everette Hatcher III | Also posted in President Obama, Social Security, spending out of control, Taxes | Tagged | Comments (0)

Obama’s big government solutions have not worked

April 6, 2012 – 8:48 am

Government Spending Doesn’t Create Jobs

Uploaded by on Sep 7, 2011

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In the debate of job creation and how best to pursue it as a policy goal, one point is forgotten: Government doesn’t create jobs. Government only diverts resources from one use to another, which doesn’t create new employment.

Video produced by Caleb Brown and Austin Bragg.

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I don’t understand why people think that big government is the answer for everything when what the federal government should do is get out of the way. Cutting taxes and regulations would help us get out of the recession!!

Obama Has Tried All the Wrong Policies

by Daniel J. Mitchell

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.

Added to cato.org on March 13, 2012

This article appeared in U.S. News & World Report on March 13, 2012

The Minneapolis Federal Reserve Bank has a very useful interactive website that allows anybody to compare recessions and recoveries during the post-World War II era. It takes only a couple of clicks to complete the exercise, and does not reflect well on the current occupant of the White House—as you can see at this link.

This does not mean that Obama caused the economic downturn. That was the result of policies that were implemented during the Bush years (though the current president was a big supporter of the Fannie Mae and Freddie Mac subsidies that played such a big role in the financial crisis). Indeed, the recession officially began in December 2007, more than one year before Obama’s inauguration.

Taking money out of the economy’s productive sector and letting politicians engage in a spending spree is the opposite of prudent policy.

But we can hold the president at least partially responsible for an extraordinarily weak and slow recovery. It’s been nearly three years since the recession officially ended in June 2009, yet jobs are still well below their pre-recession levels. And overall economic output, or gross domestic product, has just now finally gotten back to where it was when the downturn began.

This is an anemic record. Especially since an economy normally enjoys a strong bounce when coming out of a deep recession.

Daniel J. Mitchell is a top expert on tax reform and supply-side tax policy at the Cato Institute.

 

More by Daniel J. Mitchell

The problem is that Obama has tried all the wrong policies. He tried a big-spending Keynesian package that was supposed to be a “stimulus,” butthat’s the same failed approach that Bush tried in 2008, the same failed approach that Japan tried in the 1990s, and the same failed approach that Hoover and Roosevelt tried in the 1930s. Taking money out of the economy’s productive sector and letting politicians engage in a spending spree is the opposite of prudent policy.

The president also has continuously expanded subsidies for unemployment, even though academic scholars (and even left-wing economists) all agree that such policies cause more joblessness.

And now he’s demanding higher tax rates, holding a Sword of Damocles over entrepreneurs, investors, and small business owners.

The nation recently endured eight years of a big-spending interventionist in the White House. The problem with Obama is that he promised hope and change, but he’s continuing the failed statist policies of his predecessor.

By Everette Hatcher III | Also posted in President Obama, spending out of control, Taxes | Comments (1)

Obamacare was pushed through in the first place with at best minimal concern for congressional rules, no wonder the Supreme Court may terminate it

April 6, 2012 – 5:04 am

Milton Friedman – Socialized Medicine at Mayo Clinic in 1978

I have always opposed Obamacare because it the government control of giving anyone the right to have an abortion paid for by the government and I think that is wrong. However, there are some constitution problems with this power grab of Obamacare too. This article below from the Cato Institute makes this point:

Yes, We Can Wait

by Michael D. Tanner

Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Added to cato.org on March 28, 2012

This article appeared in National Review (Online) on March 28, 2012

In pushing through parts of the New Deal, President Franklin Roosevelt reportedly told one wavering congressman, “I hope you will not permit doubts as to constitutionality, however reasonable, to block the suggested legislation.”

As one listens to the Obama administration and others defend the Patient Protection and Affordable Care Act (a.k.a Obamacare), one gets the impression that Roosevelt’s nostrum has been adopted as the official motto of this administration. Their attitude seems to be that, of course Obamacare is constitutional because, well, because it’s important.

The idea that federal government’s power should be limited is dismissed as a quaint relic of a bygone age. There are important national problems to be solved, and we should not be held back by a document from the past. As Representative Kathy Hochul (D., N.Y.) puts it, “Basically we are not looking at the Constitution… The decision has been made by this Congress that American citizens are entitled to health care.”

The genius of the American system is that we are a government of laws and not of men.

This attitude is on display in other areas as well. Constitutional niceties,legislative rules, and democratic debate are all impediments to be dispensed with when “we can’t wait.”

For example, the administration apparently grew tired of Republican opposition to the appointment of Richard Cordray as head of the new Consumer Financial Protection Agency created under the Dodd-Frank law, so they simply made a recess appointment of Cordray — despite the fact that Congress was not in recess. President Obama used the same non-recess recess appointment to name three new members to the National Labor Relations Board. When asked how he could justify doing so, the president simply shrugged and said, “I refuse to take ‘no’ for an answer. I am not going to stand by while a minority in the Senate puts party ideology ahead of the people we were elected to serve.”

President Bush was justly criticized for his extraordinary use of executive orders and signing statements to avoid the untidiness of the legislative process. But President Obama has adopted the same tactics, choosing to act unilaterally or to disregard parts of legislation that he thinks impinges on his authority. For example, rather than go through the difficult and lengthy process of having Congress revise the No Child Left Behind Act, the president simply gave the states waivers from NCLB if they agreed to adopt the administration’s preferred education policies. It is no defense of NCLB to wonder how the president gets the power to make federal education policy, and for that matter state education policy, through the waiver process.

Then again, this is the administration that unilaterally decided to grant some 1,200 waivers from various provisions of Obamacare.

The president has also felt free to repeatedly commit American troops to action without congressional approval. Indeed, not only has the president refused to seek a declaration of war, but in the case of the U.S. bombing of Libya, he didn’t even bother with the congressional notification required under the War Powers Act. The same is true of the president’s dispatch of troops to Uganda.

Democrats in Congress also seem impatient with the normal give and take of the legislative process. Thus, when Senate Republicans used their power to delay consideration of legislation dealing with Chinese currency manipulation, Democrats simply changed the Senate rules to deny Republicans the ability to offer amendments to the legislation. And hardly a week seems to pass without some Democratic proposal to eliminate or restrict the filibuster.

Of course, we should not forget the health-care law was pushed through in the first place with at best minimal concern for congressional rules.

The genius of the American system is that we are a government of laws and not of men. That often makes for a messy and slow process. But it is far better than the alternative. That’s true even when a president believes “we can’t wait.”

By Everette Hatcher III | Also posted in Healthcare | Comments (0)