Category Archives: Cato Institute

The state of our economy under President Obama according to Cato Institute

October 1, 2011 – 11:34 pm

It is truly said how far to the left our country has gone.

Happy Fiscal New Year (with an Unhappy Obama Hangover)

Posted by Daniel J. Mitchell

Today, October 1, is the first day of the 2012 fiscal year.

And if you’re wondering why America’s economy seems to have a hangover (this cartoon is a perfect illustration), it’s because politicians had a huge party with our money in FY2011.

We don’t have final numbers for the fiscal year that just ended, but let’s look at the CBO Monthly Budget Report, the CBO Economic and Budget Update, and the OMB Historical Tables, and see whether there’s anything worth celebrating.

o The federal government spent about $3.6 trillion in FY2011, more money than any government has ever spent in a 12-month period in the history of the world.

o The FY2011 budget is nearly double the burden of federal spending just 10 years earlier, when federal outlays consumed “only” $1.86 trillion.

o The federal budget in FY2011 consumed about 24 percent of national output, up sharply compared to a spending burden in FY2001 of “just” 18.2 percent of GDP.

o Defense spending is too high, and has increased by about $400 billion since 2001, but the vast majority of the additional spending is for domestic spending programs.

o Federal tax revenue in FY2011 will be about $2.25 trillion, an increase of 7-8 percent over FY2010 levels.

o Economic stagnation has affected tax revenues, which are lower than the $2.6 trillion level from FY2007.

o Federal receipts amount to about 15.3 percent of GDP, below the long-run average of 18 percent of GDP.

o The Congressional Budget Office does predict that revenues will rise above the 18-percent average – without any tax increases – by the end of the decade.

o Record levels of government spending, combined with low revenues caused by a weak economy, will result in a $1.3 trillion deficit.

o This is the third consecutive deficit of more than $1 trillion.

o The publicly-held national debt (the amount borrowed from the private sector) is now more than $10 trillion.

With budget numbers like these, no wonder America has a fiscal hangover.

And let’s be blunt about assigning blame. Yes, Obama has been a reckless big spender, but he is merely continuing the irresponsible statist policies of his predecessor.

Fortunately, there is a solution. All we need to do is restrain the growth of federal spending, as explained in this video.

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But we also know that it is difficult to convince politicians to do what’s right for the nation. And if they don’t change the course of fiscal policy, and we leave the federal government on autopilot, then America is doomed to become another Greece.

The combination of poorly designed entitlement programs (mostly Medicare and Medicaid) and an aging population will lead to America’s fiscal collapse.

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

Republicans need to tackle runaway entitlement spending

September 30, 2011 – 7:44 am

Republicans need to tackle runaway entitlement spending

Uploaded by on Feb 15, 2011

Dan Mitchell, Senior Fellow at the Cato Institute, speaks at Moving Forward on Entitlements: Practical Steps to Reform, NTUF’s entitlement reform event at CPAC, on Feb. 11, 2011.

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I am disappointed in some of the Republicans who do not want to take the bull by the horns on this issue.

GOP Needs an Entitlement Plan

by Michael D. Tanner

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

Added to cato.org on September 28, 2011

This article appeared on National Review (Online) on September 28, 2011

There was telling moment during the CNN Republican presidential debate: Asked about the possibility of repealing George W. Bush’s Medicare prescription-drug benefit, which is adding some $17 trillion to Medicare’s unfunded liabilities, every one of the candidates pledged varying degrees of fealty to the program. No one came out for significantly cutting this vestige of Bush-style big-government conservatism, let alone repealing it. This put the current crop of Republicans to the left of John McCain, who at least campaigned in favor of means-testing the program in 2008.

The failure to stand up against one of the Bush administration’s most obvious mistakes is not just a case of hypocrisy; it is part of a disturbing trend toward ducking the tough decisions on budget cutting among the Republican aspirants. For all the sound and fury, and the charges and countercharges surrounding entitlement reform, the GOP candidates have been remarkably reluctant to put forward actual proposals.

Former Massachusetts governor Mitt Romney, for example, has been attacking Texas governor Rick Perry over Social Security from the left, praising the program as “an essential federal program,” that has been a “success” for more than 70 years. But for all his criticism of Perry, Romney has been much vaguer about his own plans for reform. At times he has sounded almost like Obama, suggesting that there are lots of reform ideas — raising the retirement age, means testing, changing the wage-price indexing formula — that are “on the table,” but not actually endorsing any of them. One reform that Romney has taken off the table is allowing younger workers to privately invest a portion of their payroll taxes through personal accounts. In his book, No Apology, Romney endorses so-called “add on” accounts, allowing workers to save in addition to Social Security, but not carving out a portion of their current taxes. “Given the volatility of investment values that we have just experienced, I would prefer that individual accounts were added to Social Security, not diverted from it,” Romney wrote.

The Republican candidates all talk about reducing government spending. But they cannot do that unless they commit to real entitlement reform.

On Medicare, Romney has avoided specifics as well, praising Paul Ryan’s proposed reforms for example as “taking important strides in the right direction,” but not endorsing them.

For his part, Governor Perry has been forthright about the flaws of Social Security but has offered nothing in the way of a proposal for reform. As Romney has pointed out endlessly, Perry suggested in his book that Social Security might be returned to the states. But Perry has since disavowed that idea, claiming that he was only referring to state employees, some 7 million of whom are currently outside the Social Security system. Perry has also praised the privatized system for public employees in Galveston and two other Texas counties, suggesting that he might be open to some type of private investment option. But “suggesting” is as far as he goes.

On Medicare, Perry has been equally murky. At times, he has suggested that we should “transition away from” the current Medicare system, but without saying what we should transition to. His aides point out that Perry has only recently joined the race and hasn’t had time to develop specific proposals. But given his fiery talk on the issues, until he does he will seem more hat than cattle.

Rep. Michelle Bachmann has also largely tried to have it both ways on entitlement reform. She voted for the Ryan plan in Congress but promptly put out a statement distancing herself from it, claiming that her vote came with an asterisk. On Social Security, Bachmann once called the program a “monstrous fraud,” but has now joined Romney in attacking Perry’s “Ponzi scheme” description. She says that a key difference between her and Perry is that she believes Social Security “is an important safety net and that the federal government should keep its promise to seniors.” But with Social Security currently facing more than $20 trillion in unfunded liabilities, the question is how it will keep that promise.

Second-tier candidates, with less to lose, have been more willing to spell out their proposals. Businessman Herman Cain, for example, supports both the Ryan plan and Chilean-style personal accounts for Social Security. Former Pennsylvania senator Rick Santorum takes similar positions, as does former New Mexico governor Gary Johnson. Former Utah governor Jon Huntsman has endorsed the Ryan plan but has not spelled out his views on Social Security reform. Newt Gingrich, on the other hand, has focused on cutting “fraud, waste, and abuse,” rather than fundamentally altering the structure of those programs. Ever the iconoclast, Rep. Ron Paul opposes both the Ryan plan and personal accounts for Social Security, since he opposes a federal role in either health care or retirement on principle.

The facts are both simple and frightening. The unfunded liabilities of Social Security and Medicare run between $50 trillion and $110 trillion. Those two programs, along with Medicaid, are the primary drivers of our future indebtedness. In fact, by 2050, those three programs alone will consume 18.4 percent of GDP. If one assumes that revenues return to and stay at their traditional 18 percent of GDP, then those three programs alone will consume all federal revenues. There would not be a single dime available for any other program of government, from national defense to welfare.

The Republican candidates all talk about reducing government spending. But they cannot do that unless they commit to real entitlement reform. There’s time, and lots of debates, to hear specifics from them. But so far, the omens are not auspicious

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

Milton Friedman addressed the belief that inflation can cure unemployment, implicit in the Obama administration’s spending blowout

September 29, 2011 – 7:19 am

Ep. 9 – How to Cure Inflation [1/7]. Milton Friedman’s Free to Choose (1980)

Cochrane’s Kinky Curves

Posted by Jim Powell

The doctrine that inflation can cure unemployment, implicit in the Obama administration’s spending blowout, goes way back.

The modern version originated with William Phillips, a New Zealand-born economist who, in 1958, wrote a paper modestly titled “The Relation between Unemployment and the Rate of Change of Money Wage Rates in the United Kingdom, 1861‑1957.”  Phillips suggested that when inflation went up, unemployment went down. Keynesian economists Paul Samuelson and Robert Solow popularized Phillips’ idea as a reason to ratchet up government spending and inflate the money supply.  That’s what the Kennedy and Johnson administrations did during the 1960s.

In 1967, Milton Friedman expressed a skeptical view about what had come to be known as the Phillips Curve, launching an extended debate.  Then in 1973, President Richard Nixon, who had famously declared “I am now a Keynesian,” leaned hard on Fed Chairman Arthur Burns to inflate the money supply and drive down unemployment, hopefully to improve Nixon’s prospects for re-election.  Well, as those of us who were around back then recall, both inflation and unemployment went up!  This was a bit of a problem for Phillips Curve aficionados.

As if the stubborn stagflation of the 1970s wasn’t bad enough, subsequent efforts by new Fed Chairman Paul Volcker and President Ronald Reagan to stop inflation cold delivered another hammer blow against the Phillips Curve: both inflation and unemployment went down!

Now fast-forward to January 2009: President Obama levitated the Phillips Curve from the dead when he repeatedly declared that it was urgent to enact his $825 billion stimulus bill so unemployment would go down.  But both spending and unemployment went up!  It became harder to deny that the stimulus spending flopped, though the New York Times’ Keynesian columnist Paul Krugman tried valiantly.  He claimed stimulus spending flopped because Obama didn’t spend enough.  Accordingly, several weeks ago, Obama proposed still more stimulus spending to fight unemployment, and he begged people to support it: “If you love me, pass this bill!”

There shouldn’t have been any surprise about Obama’s flop, since the underlying idea – the Phillips Curve – proved to be a dud long ago.  This would be a good time to review experience with the Phillips Curve.

Thankfully, Cato Adjunct Scholar John H. Cochrane, the AQR Capital Management Distinguished Service Professor of Finance at the University of Chicago Booth School of Business, has done just that.  He focused on the period from 1966 to the present.  That year, President Lyndon Johnson was going full bore, promoting runaway spending on new entitlement programs and on the Vietnam war simultaneously, and inflation reared its ugly head.

Cochrane charted what happened year-by-year to inflation and unemployment.  The result wasn’t a nice smooth curve dreamed about by Keynesians.  Rather, there was a kinky curve.  One year, inflation went up, and unemployment went down.  Next year, inflation went up again, and unemployment went up.  Then when inflation went down, unemployment went up again.  On and on as if we followed a drunk stumbling around a street.  Since a single chart would have become an unreadable tangle if it tried to cover the entire 45-year period, Cochrane developed two charts, 1966-1984 and 1985-2011.  Clearly, what we see is a random relationship between inflation and unemployment, that makes the Phillips Curve worthless as a policy tool.

The charts appear in an insightful article Cochrane wrote, published in the Fall 2011 National Affairs.  The article is important quite apart from the Phillips Curve charts.  Although the prevailing view seems to be that high inflation is most likely to occur if and when the Fed increases the money supply, Cochrane warns high inflation could occur as a consequence of soaring government debt.  Such inflation would amount to a default.  It would be triggered by a run on dollar-denominated assets, if and when investors conclude that the government cannot pay its debts.  Runs occur without warning, often after a succession of events have undermined investor confidence.

By Everette Hatcher III | Also posted in Milton Friedman, President Obama | Tagged , , , | Comments (0)

Unemployment benefits do not stimulate economy

September 28, 2011 – 10:56 pm

President Obama is wrong again.

Unemployment Insurance System Fosters Unemployment

Posted by Tad DeHaven

The Wall Street Journal reports on rising state and federal unemployment taxes at a time when unemployment remains high. Keynesian economists keep telling us that unemployment benefits have a stimulative “multiplier effect” on the economy. Unfortunately, that sticky little problem of the government having to suck resources out of the economy to pay for this alleged stimulus keeps getting in the way:

The higher tax tab could discourage hiring. ‘It’s just one more cost to add,’ said Douglas Devnew, vice president for finance and administration at Trumpf Inc., a Farmington, Conn., manufacturer. ‘Companies like ours are going to think that much harder if we need more folks.’

Yes, that’s only an anecdote. But I find anecdotes to be considerably more indicative of reality than, say, the fancy economic models favored by the White House that continue to erroneously predict growth and reduced unemployment if the government spends more of the private sector’s money.

If anecdotes aren’t your thing, check out this excellent Cato essay on the unemployment insurance system. Critics of a government administered unemployment insurance system are often accused of being callous toward the plight of those seeking work. But the essay’s examination of the history of unemployment insurance, and the ill-effects and failures of the government-run system indicate that it’s the supporters of the government-run system who should be on the defensive.

By Everette Hatcher III | Tagged , , , , | Comments (0)

How to tackle Medicaid?

September 28, 2011 – 10:39 am

How to tackle Medicaid?

We got to take the bull by the horns eventually.

Block-Granting Medicaid Is a Long-Overdue Way of Restoring Federalism and Promoting Good Fiscal Policy

Posted by Daniel J. Mitchell

This new video, based in large part on the good work of Michael Cannon, explains why Medicaid should be shifted to the states. As I note in the title of this post, it’s good federalism policy and good fiscal policy. But the video also explains that Medicaid reform is good health policy since it creates an opportunity to deal with the third-party payer problem.

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One of the key observations of the video is that Medicaid block grants would replicate the success of welfare reform. Getting rid of the federal welfare entitlement in the 1990s and shifting the program to the states was a very successful policy, saving billions of dollars for taxpayers and significantly reducing poverty. There is every reason to think ending the Medicaid entitlement will have similar positive results.

Medicaid block grants were included in Congressman Ryan’s budget, so this reform is definitely part of the current fiscal debate. Unfortunately, the Senate apparently is not going to produce any budget, and the White House also has expressed opposition. On the left, reducing dependency is sometimes seen as a bad thing, even though poor people are the biggest victims of big government.

It’s wroth noting that Medicaid reform and Medicare reform often are lumped together, but they are separate policies. Instead of block grants, Medicare reform is based on something akin to vouchers, sort of like the health system available for Members of Congress. This video from last month explains the details.

In closing, I suppose it would be worth mentioning that there are two alternatives to Medicaid and Medicare reform. The first alternative is to do nothing and allow America to become another Greece. The second alternative is to impose bureaucratic restrictions on access to health care—what is colloquially known as the death panel approach. Neither option seems terribly attractive compared to the pro-market reforms discussed above.

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

USA slips from 3rd to 10th in ranking of freedom

September 28, 2011 – 6:40 am

Uploaded by on Jan 12, 2011

http://www.heritage.org/index Is the American Dream dead? How free is America’s economy? Check out the 2011 Index of Economic Freedom for all the answers.

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Economic freedom is not heading the right direction in the USA. My son Wilson has been asking me if there are any other countries that are less socialistic then us and I have been painting a pretty bleak picture out there for him. This article and chart below show there are some countries heading the right direction. Unfortunately, the USA is not one of them.

Economic Freedom of the World: Lessons for the U.S.

by James D. Gwartney, Robert Lawson and Joshua Hall 

James Gwartney is a professor at Florida State University. Robert Lawson is a professor at Southern Methodist University. Joshua Hall is a professor at Beloit College. They are co-authors of the Economic Freedom of the World report, which can be found at http://www.freetheworld.com, and is co-published by the Cato Institute.

Added to cato.org on September 26, 2011

This article appeared on The Huffington Post on September 25, 2011

Economic freedom in the United States is on the wane. Historically a standard bearer for freer markets, the United States has seen its economic freedom rating fall in the last decade according to the latest Economic Freedom of the World index, published by a world-wide network of institutes. In 2000, the U.S. was ranked 3rd in the world behind only Hong Kong and Singapore, but in the most recent report, the U.S. is ranked 10th behind countries like Canada, Chile, Australia, and the United Kingdom.

The index measures the degree to which people in a nation are free to pursue their own economic objectives without government taxes and regulations, as well as the extent to which government protects property rights and provides a sound monetary environment. The decline of the U.S. is the result of massively higher government spending and borrowing, increased regulation, and especially less secure property rights. Ballooning budget deficits are crowding out private credit causing the rating in this component to fall to 0.0 from 9.3 (out of 10) since 2000. Asset forfeiture laws, eminent domain abuse, the wars on drugs and terrorism, TSA, and warrantless wiretaps have apparently taken their toll on the security of property rights.

The so-called Washington Consensus of the 1990s — free trade, stable money, and privatization — appears dead. The housing bubbles, financial crises, bankruptcies, bailouts, stimulus, debt crises, and erratic markets of the past few years seem to have led to a new consensus. Policymakers now tell us that markets have failed, and government stimulus, subsidies and new regulations are needed to set things right.

James Gwartney is a professor at Florida State University. Robert Lawson is a professor at Southern Methodist University. Joshua Hall is a professor at Beloit College. They are co-authors of the Economic Freedom of the World report, which can be found at http://www.freetheworld.com, and is co-published by the Cato Institute.

 

More by James D. Gwartney

When evaluating such claims, it is important to remember the fundamental truth of economic life: Markets work. When people are free to buy, sell, produce, trade, and move they do a pretty good job of bettering themselves and others in the process. This is not just common sense or idle theory — there is tons of evidence.

Nations that score higher on the index tend to be richer, grow faster, have less poverty, live longer, be more educated, and on and on. On virtually every measure of the good life, we find that more economic freedom yields better results. Other research finds economic freedom corresponds with less warfare, greater human rights, more gender equity, less unemployment, improved democracy, more trust, and less corruption. The results of the Economic Freedom of the World project and the scholarly analysis it has facilitated are simply overwhelming. Economic freedom works.

Over the past decade, the rating of the United States has fallen almost a full point on the economic freedom scale. Prior research indicates that a decline of this magnitude will reduce a country’s long-term growth rate by at least a full percentage point. In the case of the United States, this will mean future average annual growth of real GDP of 2 percent rather than our 3 percent historical average.

While economic freedom has fallen in the United States, there is good news in the former communist world. A number of formerly centrally planned economies have made remarkable progress toward freer markets during the past decade. Eight of them, Slovakia, Estonia, Hungary, Lithuania, Bulgaria, Albania, Mongolia, and Georgia, now rank in the top 40. By way of comparison, only three Latin American countries, Chile, Panama, and Peru, place in the top 40. All of these countries now rank higher than Sweden and France, for example.

With economic freedom, profits and losses direct resources toward socially beneficial activities. When too many resources are allocated by politics, a system of crony capitalism emerges where politicians can reward the politically powerful. Unlike true entrepreneurs, crony capitalists do not create wealth; instead they plunder wealth from taxpayers and other citizens.

America has prospered historically because we have chosen economic freedom rather than political allocation and crony capitalism. To the extent we move away from economic freedom, our future prosperity will be diminished.

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This article includes a List of countries by economic freedom.

2011 List by the Fraser Institute[1] 2011 List by The Heritage Foundation[2]
Rank↓ Country↓ Score↓
1  Hong Kong 9.01
2  Singapore 8.68
3  New Zealand 8.20
4  Switzerland 8.03
5  Australia 7.98
6  Canada 7.81
7  Chile 7.77
8  United Kingdom 7.71
9  Mauritius 7.67
10  United States 7.60
11  Bahrain 7.59
11  Finland 7.59
13  Slovakia 7.56
14  United Arab Emirates 7.54
15  Denmark 7.52
15  Estonia 7.52
15  Hungary 7.52
18  Cyprus 7.51
19  Austria 7.50
20  Luxembourg 7.49
21  Germany 7.45
22  Japan 7.44
23  Panama 7.41
24  Lithuania 7.40
25  Ireland 7.38
26  Taiwan 7.37
27  Georgia 7.36
28  Bulgaria 7.34
28  Oman 7.34
30  Albania 7.32
30  Netherlands 7.32
30  South Korea 7.32
Rank↓ Country↓ Score↓
1  Hong Kong 89.7
2  Singapore 87.2
3  Australia 82.5
4  New Zealand 82.3
5  Switzerland 81.9
6  Canada 80.8
7  Ireland 78.7
8  Denmark 78.6
9  United States 77.8
10  Bahrain 77.7
11  Chile 77.4
12  Mauritius 76.2
13  Luxembourg 76.2
14  Estonia 75.2
15  Netherlands 74.7
16  United Kingdom 74.5
17  Finland 74.0
18  Cyprus 73.3
19  Macau 73.1
20  Japan 72.8
21  Austria 71.9
22  Sweden 71.9
23  Germany 71.8
24  Lithuania 71.3
25  Taiwan 70.8
26  Saint Lucia 70.8
27  Qatar 70.5
28  Czech Republic 70.4
29  Georgia 70.4
30  Norway 70.3
 
By Everette Hatcher III | Also posted in Current Events, spending out of control, Taxes | Tagged , , , , | Comments (0)

Is soaking the rich fair?

September 28, 2011 – 6:14 am

Is soaking the rich fair?

Five Key Reasons to Reject Class-Warfare Tax Policy

Uploaded by on Jun 15, 2009

President Obama and other politicians are advocating higher taxes, with a particular emphasis on class-warfare taxes targeting the so-called rich. This Center for Freedom and Prosperity Foundation video explains why fiscal policy based on hate and envy is fundamentally misguided. For more information please visit our web page: www.freedomandprosperity.org.

Is soaking the rich fair?

Soaking the Rich Is Not Fair

by Jeffrey A. Miron

Jeffrey A. Miron is Senior Lecturer and Director of Undergraduate Studies at Harvard University and Senior Fellow at the Cato Institute. Miron blogs at JeffreyMiron.com and is the author of Libertarianism, from A to Z.

Added to cato.org on September 2, 2011

This article appeared on The Huffington Post on September 2, 2011.

What is the “fair” amount of taxation on high-income taxpayers?

To liberals, the answer is always “more.” Liberals view high income — meaning any income that exceeds their own — as the result of luck or anti-social behavior. Hence liberals believe “fairness” justifies government-imposed transfers from the rich to everyone else. Many conservatives accept this view implicitly. They oppose soak-the-rich policies because of concern over growth, but they do not dispute whether such policies are fair.

But high tax rates on the rich are not fair or desirable for any other reason; they are an expression of America’s worst instincts, and their adverse consequences go beyond their negatives for economic growth.

The liberal hatred of the rich is a minority view, not a widely shared American value.

Consider first the view that differences in income result from luck rather than hard work: some people are born with big trust funds or innate skill and talent, and these fortuitous differences explain much of why some people have higher incomes than others.

Never mind that such a characterization is grossly incomplete. Luck undoubtedly explains some income differences, but this is not the whole story. Many trust fund babies have squandered their wealth, and inborn skill or talent means little unless combined with hard work.

But even if all income differences reflect luck, why are government-imposed “corrections” fair? The fact that liberals assert this does not make it true, any more than assertions to the contrary make it false. Fairness is an ill-defined, infinitely malleable concept, readily tailored to suit the ends of those asserting fairness, independent of facts or reason.

Worse, if liberals can assert a right to the wealth of the rich, why cannot others assert the right to similar transfers, such as from blacks to whites, Catholics to Protestants, or Sunni to Shia? Government coercion based on one group’s view of fairness is a first step toward arbitrary transfers of all kinds.

Now consider the claim that income differences result from illegal, unethical, or otherwise inappropriate behavior. This claim has an element of truth: some wealth results from illegal acts, and policies that punish such acts are appropriate.

But most inappropriate wealth accumulations results from bad government policies: those that restrict competition, enable crony capitalism, and hand large tax breaks to politically connected interest groups. These differences in wealth are a social ill, but the right response is removing the policies that promote them, not targeting everyone with high income.

The claim that soaking the rich is fair, therefore, has no basis in logic or in generating desirable outcomes; instead, it represents envy and hatred.

Why do liberals hate the rich? Perhaps because liberals were the “smart” but nerdy and socially awkward kids in high school, the ones who aced the SATs but did not excel at sports and rarely got asked to the prom. Some of their “dumber” classmates, meanwhile, went on to make more money, marry better-looking spouses, and have more fun.

Liberals find all this unjust because it rekindles their emotional insecurities from long ago. They do not have the honesty to accept that those with less SAT smarts might have other skills that the marketplace values. Instead, they resent wealth and convince themselves that large financial gains are ill-gotten.

Jeffrey A. Miron is Senior Lecturer and Director of Undergraduate Studies at Harvard University and Senior Fellow at the Cato Institute. Miron blogs at JeffreyMiron.com and is the author of Libertarianism, from A to Z.

 

More by Jeffrey A. Miron

The liberal views on fairness and redistribution are far more defensible, of course, when it comes to providing for the truly needy. Reasonable people can criticize the structure of current anti-poverty programs, or argue that the system is overly generous, or suggest that private charity would be more effective at caring for the least vulnerable.

The desire to help the poor, however, represents a generous instinct: giving to those in desperate situations, where bad luck undoubtedly plays a major role. Soaking the rich is a selfish instinct, one that undermines good will generally.

And most Americans share this perspective. They are enthusiastic about public and private attempt to help the poor, but they do not agree that soaking the rich is fair. That is why U.S. policy has rarely embraced punitive income taxation or an aggressive estate tax. Instead, Americans are happy to celebrate well-earned success. The liberal hatred of the rich is a minority view, not a widely shared American value.

For America to restore its economic greatness, it must put aside the liberal hatred of the rich and embrace anew its deeply held respect for success. If it does, America will have enough for everyone.

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

Chicago style politics from President Obama?

September 28, 2011 – 12:10 am

Ford Director of U.S. Marketing Discusses Ford “Press Conference” Commercials

Uploaded by on May 1, 2011

http://www.yourlocalforddealers.com/

Matt VanDyke, Ford Director of U.S. Marketing, describes the evolution of the Ford “Drive One” campaign and the latest series of TV Spot

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We have all heard about the forceful way the old school style of politics was in Chicago. I wonder after reading this story below if President Obama has brought that way of doing business to the White House? Brummett complains about attack dogs here in Arkansas verbally accusing the other party of misdeeds, but at least we don’t have the Chicago style politics thing going on like President Obama.

Ongoing Ripples from the Auto Bailout

Posted by Daniel Ikenson

A couple of weeks ago I suggested that the person responsible for Ford’s anti-bailout ads was deserving of a raise. Today, I wonder how that extra income will be spent…in Siberia. According to media accounts seemingly originating with the Detroit News, Ford has pulled that ad after learning the Putin Obama White House was none too pleased.

It is unclear from the Detroit News article whether overt threats, implied repercussions, or mild expressions of regret best characterize the communications from the White House to Ford. Regardless, something spooked Ford enough to prompt it to pull the popular ad (no longer available on YouTube), which sought to differentiate the Ford brand over the “bailout” characteristic, which is not insignificant to auto purchasing decisions.

Hopefully, some probing journalists will discover the true nature of what transpired. In the meantime, it’s important to reflect on the fact that—contrary to the views of E.J. Dionne and others who cannot contemplate what is not seen—the auto bailout was not a discreet event, which happened and now resides in our memories. It is an ongoing tipping of the scales of competition—intentionally and inadvertently. Ford’s mere perception that the administration might stir up trouble if it didn’t fall into line is a vestige of the bailout.

To the extent that the administration wants to tout the bailout as evidence of its “successful” economic stewardship, it should know that there are plenty of us willing and able to do the auditing on that claim.

By Everette Hatcher III | Also posted in President Obama | Tagged , , , , | Comments (0)

We need to close U.S.Post Office

September 27, 2011 – 7:24 am

We need to close U.S.Post Office

There is only one option in my view. We can not keep on losing money every year like the U.S.Postal Service (7 billion this year).

Closing Post Offices

 
PrintThe U.S. Postal Service just posted a $3.1 billion loss for the third quarter and the outlook for the rest of the year is bleak. The USPS wants to save money by closing post offices. I recently examined this issue in an op-ed for the Daily Caller:The United States Postal Service has lost over $20 billion since 2006 and is projected to lose another $8 billion this year. Government Mail is about to max out its $15 billion line of credit with the U.S. Treasury, and it faces $66 billion in unfunded obligations due to excessive labor costs. With more and more people using email, sending text messages and paying their bills online, the Postal Service’s long-term prospects are undeniably bleak.Although USPS management has been able to cut costs, the savings haven’t been nearly enough to stem the rising tide of red ink. If the USPS were a private business, it might be able adapt to the rapidly changing economic landscape and evolve into a viable commercial entity. But it’s not a private business — it’s a branch of the federal government. As a result, the USPS has been hopelessly hamstrung by constant meddling from politicians, as exemplified by the difficulty the USPS faces when trying to close post offices.

Postal management announced this week that it will weigh the closure of 3,700 of its 32,000 post offices, hoping to save $200 million a year. Those savings are miniscule compared to the $8 billion alone that the USPS will lose this year, but it’s a start.

Unfortunately, there’s a very good chance that those members of Congress whose districts will be affected by a post office closure will raise a stink. In 2009, for example, the USPS looked at closing 3,200 post offices. Following a congressional outcry, the number under consideration was reduced to a mere 140. Two years later, only 80 have actually been closed.

The USPS is required to provide services to all communities, including areas where post offices have low traffic and are not cost-effective. Before closing a post office, the USPS must provide customers with at least 60 days of notice before the proposed closure date, and any person served by the post office may appeal its closure to the Postal Regulatory Commission. The USPS cannot close a post office “solely for operating at a deficit.” That’s a problem because four out of five post offices are operating at a loss.

Can anyone seriously imagine any other business not being able to close a store or factory for “solely operating at a deficit”? That would be a recipe for bankruptcy. While the USPS is structured like a business — revenues from the sale of postal products are supposed to cover costs and it receives virtually no federal appropriations — Congress prevents it from actually operating like a private business by inhibiting its ability to reduce costs, improve efficiency or innovate.

Postal management is attempting to head off the inevitable congressional interference by creating “Village Post Offices” in the communities affected by the closings. Local businesses, such as pharmacies and grocery stores, would be allowed to offer postal products and services. This makes sense because whereas post offices used to generate almost all postal retail revenue, 35 percent is now generated through alternative channels like USPS.com, self-service kiosks and private stores.

Closing post offices is a small step towards cutting costs and “rationalizing” the retail network, which the USPS management recognizes as critical. However, that won’t be enough to overcome economic reality — let alone the control freaks in Congress. Ultimately, if the USPS is to continue operating like a business instead of becoming just another taxpayer-funded bureaucracy, Congress is going to have to hand the reins over to the private sector. That means privatizing the United States Postal Service.

This article appeared in the Daily Caller on July 28, 2011.

By Everette Hatcher III | Tagged , , , , | Comments (0)