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Op-ed at RealClearMarkets: Austerity Works: It's Time to Give It a Try

This piece is with my son Sherwin. The graphs are pretty powerful. The piece starts this way:

Austerity or growth, is that the choice facing Americans and others around the world?
The debate never seems to abate. European Union finance ministers last week gave Spain permission to delay cutting some government spending and reducing its deficit, though many such as The Economist magazine fear that even the cuts that will be made go too far. A similar decision may soon have to be made for Greece. Even though the pro-bailout parties won the June Parliamentary election, they too are asking for a two-year delay in cutting spending and reducing their budget deficit.
The Obama administration has put increasing pressure on German Chancellor Angela Merkel to ease up on Germany's austerity prescription. President Obama continually touts more government spending as the cure, and derided Republican "let's cut more" spending strategy as the cause of Europe's economic problems.
Last month, German Finance Minister Wolfgang Schäuble was having none of it, telling Obama to fix the U.S. deficit before giving Europe advice: "Herr Obama should above all deal with the reduction of the American deficit. That is higher than that in the euro zone." . . .

So who really wants a "top down" economy?

campaignideas Obama Regulation

It is becoming a constant theme in Obama's talks that Republicans want to run the economy from the top down. You would think that the press would realize that government mandates and central planning are the ultimate "top down" way to run things. Obama obviously doesn't understand this, but companies don't dictate to consumers what they will buy.

I heard another speech today that said virtually the same thing, but here is something that he said on Friday.

The Republicans who run Congress, the man at the top of their ticket, they don’t agree with any of the proposals I just talked about. They believe the best way to grow the economy is from the top down. So they want to roll back regulations, and give insurance companies and credit card companies and mortgage lenders even more power to do as they please. They want to spend $5 trillion on new tax cuts -- including a 25-percent tax cut for every millionaire in the country. And they want to pay for it by raising middle-class taxes and gutting middle-class priorities like education and training and health care and medical research. . . .

Here is a similar claim from his big economic address a couple of weeks ago in Cleveland.

Governor Romney and his allies in Congress believe deeply in the theory that we tried during the last decade -- the theory that the best way to grow the economy is from the top down. So they maintain that if we eliminate most regulations, if we cut taxes by trillions of dollars, if we strip down government to national security and a few other basic functions, then the power of businesses to create jobs and prosperity will be unleashed, and that will automatically benefit us all. . . .

UPDATE: Here is what I heard from his speech today (June 25th) at the Oyster River High School in Durham, New Hampshire.

I believe they’re wrong. I believe their policies were tested, and they failed. (Applause.) And that -- my belief is not just based on some knee-jerk partisan reaction. It’s based on the fact that we tried it. And you look at our economic history. In this country, prosperity has never come from the top down. It comes from a strong and growing middle class. (Applause.) It comes from successful, thriving small businesses. (Applause.) . . .

The Obama administration doesn't believe in letting consentual adults live their sexual lives the way they want

discrimination Obama

Let me get this right. The Obama administration does everything that they can to push gay marriage and gay rights, but somehow they want to go after polygamists and make their lives difficult. What is the difference whether consenting adults are homosexuals or polygamists? Over much more of human history polygamy was many, many, many more times the normal state for humans. Would the Obama administration have ever brought such a suit against a town filled with a lot of homosexuals? From the Associated Press:

The U.S. Justice Department has sued two polygamous towns along the Utah-Arizona border, claiming religious discrimination against non-sect members.
The federal civil rights lawsuit was filed Thursday against the towns of Hildale, Utah, and Colorado City, Ariz.
Most residents in both towns are members of the Fundamentalist Church of Jesus Christ of Latter Day Saints, run by the group's jailed leader Warren Jeffs. . . .
The lawsuit comes after Legislatures in Utah and Arizona failed to pass bills to abolish the local police department for the communities. . . .

49% of Americans live in Households Receiving Government Benefits

Government Obama wealthtransfers

From the WSJ:

. . . . The 49.1% of the population in a household that gets benefits is up from 30% in the early 1980s and 44.4% as recently as the third quarter of 2008.
The increase in recent years is likely due in large part to the lingering effects of the recession. As of early 2011, 15% of people lived in a household that received food stamps, 26% had someone enrolled in Medicaid and 2% had a member receiving unemployment benefits. Families doubling up to save money or pool expenses also is likely leading to more multigenerational households. But even without the effects of the recession, there would be a larger reliance on government.
The Census data show that 16% of the population lives in a household where at least one member receives Social Security and 15% receive or live with someone who gets Medicare. There is likely a lot of overlap, since Social Security and Medicare tend to go hand in hand, but those percentages also are likely to increase as the Baby Boom generation ages. . . .

Obama does poorly in Oklahoma Democratic Primary

2012DemocratPrimary 2012election Democrats Obama

This is pretty amazing. At about 11:30 PM on Tuesday, March 6th, the WSJ reports that in the Democratic primary, Obama has lost 15 out of the 77 counties in Oklahoma.

. . . But with 93% of the Democratic vote counted – and President Barack Obama ahead with 56.4% of the vote – AP hasn’t called it. Randall Terry, who has pushed an antiabortion message, has 18.2% of the vote, followed by Jim Rogers, who has run for other offices in Oklahoma, with 14.2% and a couple others in the single digits.

AP did report that it appears Mr. Obama will lose a delegate in Oklahoma to Mr. Terry, founder of Operation Rescue. It also noted that the president was bested in 15 counties.

A 64% total tax on corporate profits?: Obama sure knows how to encourage investment

Obama Obamaantibusiness ObamaDishonest obamadoesntunderstandeconomics

Companies already face a 40% marginal income tax. If they pay out their profits as dividends, Obama wants up to a 40% tax on those dividends. Those two taxes together would imply a 64% total tax on the profits earned by American shareholders. Of course, the total tax won't be that high because firms would immediately stop paying dividends, though I am sure that the Obama administration is assuming that the tax will have no effect on the dividend payout rate. From TVNZ:

President Barack Obama's 2013 election-year budget took investors by surprise with a call for significantly higher taxes on dividends, a major change from his earlier tax proposals and one that will raise the ire of dividend-paying companies.

Households earning more than $250,000 a year would see the tax they owe on dividends rise to a maximum of almost 40% next year, equal to the higher maximum income tax rate set to take effect in 2013. The current top income rate is 35%.

Obama again proposed raising the current 15% long-term capital gains tax rate to 20% for the wealthy. He had earlier also sought to set a 20% tax on dividends. . . .

Obama's consolidation plans might actually save $3 billion total over 10 years

governmentwaste Obama

Wow, an average yearly cut of $300 million a year! Obama is really getting serious about reforming government waste. A video discussion is available here.

Obama's judges who had a hard time being confirmed because of their views on guns

Guns Judiciary Obama

Caitlin Joan Halligan to the U.S. Court of Appeals for the District of Columbia Circuit

Goodwin Liu to the U.S. Court of Appeals for the Ninth Circuit was also objected to, but there were many issues that he faced objections on.

John McConnell to a seat on the United States District Court for the District of Rhode Island. He was confirmed over objections from groups concerned about people's right to self defense.

And in response to Sen. Tom Coburn’s (R-OK) questioning about the Second Amendment and the Bill of Rights, McConnell was evasive and refused to declare that the right to keep and bear arms is a fundamental, individual liberty. . . .

Obama's nondecision is really a decision on the Canada to Texas oil pipeline

Economy Environment Obama Regulation

Obama is increasing the costs of the pipeline and may kill it simply by delaying it. In addition, everyone knows that it will be easier for Obama to kill this once the election is over. From Reuters:

The decision would be a victory for environmentalists, many of whom oppose the pipeline, and a setback for TransCanada Corp, whose $7 billion Keystone XL project is seen as the most important North American oil pipeline plan for decades.

One source familiar with the matter said that studying a new route for the pipeline would likely take 12-18 months, putting a final decision after President Barack Obama's bid for re-election on November 6, 2012.

If the administration explores a new route, "it's a huge victory, and it would probably be the biggest environmental gift that President Barack Obama has given us," said Tony Iallonardo, a spokesman at the National Wildlife Federation. . . .

More on Democrats being uncomfortable with Obama's Jobs Bill

2012election Obama unemployment

It is pretty amazing that Democrats are willing to go to this length to keep from voting on Obama's jobs bill. From The Hill:

Partisan anger hit a boiling point in the chamber this week after Republicans refused to allow final passage of a China currency bill unless Democrats voted on President Obama’s jobs package, as originally drafted.
Triggering what has come to be known as the chamber’s “nuclear option,” Reid overturned Senate precedent that allowed Republicans to force votes to proceed to non-germane amendments. He did so by voting with 50 of his Democratic colleagues to overturn a ruling by the Senate parliamentarian.

The controversial procedural tactic hasn’t been used in years. In a chamber where it requires the consent of all 100 senators to dispense with the reading of a bill, changing the rules unilaterally is considered bad form. . . .

Most Democrats think that Obama and Clinton were about the same, not Independents and Republicans

billclinton Obama poll

This Gallup Poll is pretty stunning, at least I am sure that Bill Clinton isn't very happy about it.

A breach of diplomatic protocols?

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Even MSNBC asks: "I don't know much about diplomatic protocols, but I would guess that waving during the group photo is something to avoid."

See also the end of this post here for another awkward foreign policy gaffe.

Does Obama understand that phasing out deductions raises the marginal income tax rate?

Obama stimulus Taxes

Losing deductions as you earn more money effectively raises people's marginal income tax rate and discourages work.

President Barack Obama is proposing a series of tax increases, mainly on the wealthy, to help cover the cost of a $447 billion economic stimulus proposal, budget chief Jack Lew said on Monday.
Lew said Obama's plan would raise $400 billion over 10 years by placing new limits on itemized deductions for individuals making more than $200,000 a year and families earning more than $250,000. . . .

Are Democrats panicking over Obama's economic disaster?

2012election Obama

When the New York Times runs an article like this either Democrats are really panicking or it is part of some strategy to make it look like Obama is coming back.

Democrats are expressing growing alarm about President Obama’s re-election prospects and, in interviews, are openly acknowledging anxiety about the White House’s ability to strengthen the president’s standing over the next 14 months. . . .

But a survey of two dozen Democratic officials found a palpable sense of concern that transcended a single week of ups and downs. The conversations signaled a change in mood from only a few months ago, when Democrats widely believed that Mr. Obama’s path to re-election, while challenging, was secure. . . .

His own economic advisers concede that the unemployment rate, currently 9.1 percent, is unlikely to drop substantially over the next year, creating a daunting obstacle to re-election. . . .

For all the hand-wringing among Democrats, some party leaders say Mr. Obama has time to reverse his slipping fortunes — but not much. . . .

"Political optics" drives Obama's Iraq policy

ForeignPolicy Obama

Concern about costs are a fine reason to include in making foreign policy decisions. Concerns about short term political considerations is not so laudable. From Fox News:

The Obama administration has decided to drop the number of U.S. troops in Iraq at the end of the year down to 3,000, marking a major downgrade in force strength, multiple sources familiar with the inner workings and decisions on U.S. troop movements in Iraq told Fox News. . . .

The generals on the ground had requested that the number of troops remaining in Iraq at the end of the year reach about 27,000. But, there was major pushback about "the cost and the political optics" of that decision that the number was then reduced to 10,000. . . .

What Obama thought about the 1992 LA Riots

Obama

Given the comparisons being made of the London riots to the LA riots, Kurtz mentions this interesting tidbit about Obama:

Said Obama in 1992: “The Los Angeles riots reflect a deep distrust and disaffection with the existing power pattern in our society.” That’s Alinsky-speak for “We’ve got to use the power of the angry underclass to put capitalism in check.” . . .

"Obamacare cost estimates hide up to $50 billion per Year"

brokenpromisesobama Fraud healthcare Obama ObamaDishonest

Wow, this is fraud. To purposely not include such obvious costs should be a real scandal, and this adds up to a total of $500 billion more in total costs. So much for officially trying to keep the costs at around $1 trillion. From the Daily Caller:

Federal payments required by President Barack Obama’s health care law are being understated by as much as $50 billion per year because official budget forecasts ignore the cost of insuring many employees’ spouses and children, according to a new analysis. The result could cost the U.S. Treasury hundreds of billions of dollars during the first ten years of the new health care law’s implementation.

“The Congressional Budget Office has never done a cost-estimate of this [because] they were expressly told to do their modeling on single [person] coverage,” said Richard Burkhauser in a telephone interview Monday. Burkhauser is an economist who teaches in Cornell University’s department of policy analysis and management. On Monday the National Bureau of Economic Research published a working paper on the subject that Burkhauser co-authored with colleagues from Cornell and Indiana University.

Employees and employers can use the rules to their own advantage, he said. “A very large number of workers” will be able to apply for federal subsidies, “dramatically increasing the cost” of the law, he said. . . .

Of course, this also broke multiple Obama promises: that the health care bill wouldn't add to the deficit and what the program would cost when he ran for president.

After leveling off, market resumes downward plummeting while Obama addresses nation, "a familiar air of indecision"

Economy Obama Obamadetachment

Boy, talk about the press turning on Obama. Dana Milbank, a liberal columnist for the Washington Post, may often be quite snide, but this piece seemed an unusually bitter attack on Obama. Personally, I wonder how much of the renewed drop during and following Obama's speech was due to him signally through talk of more taxes that he is unwilling to cut spending (note how he keeps talking of increasing taxes).

A familiar air of indecision preceded President Obama’s pep talk to the nation.

The first draft of his schedule for Monday contained no plans to comment on the downgrading of the U.S. credit rating by Standard & Poor’s. Then the White House announced that he would speak at 1 p.m. A second update changed that to 1:30. At 1:52, Obama walked into the State Dining Room to read his statement. Judging from the market reaction, he should have stuck with his original instinct.

“No matter what some agency may say, we’ve always been and always will be a AAA country,” Obama said, as if comforting a child who had been teased by the class bully.

When he began his speech (and as cable news channels displayed for viewers), the Dow Jones industrials stood at 11,035. As he talked, the average fell below 11,000 for the first time in nine months, en route to a 635-point drop for the day, the worst since the 2008 crash. . . .

From the WSJ's Political Diary:

The president missed the 1:45 deadline as well. When he finally began to speak a few minutes later, it was clear that he had no news to offer. And while he didn't engage in a direct attack on S&P, as Mr. Geithner had done, he did quote Berkshire Hathaway CEO Warren Buffett in suggesting that S&P had made a poor decision. Did no one at the White House or Treasury realize that Berkshire is a major investor in Moody's, the main competitor to S&P? As Mr. Obama spoke, stock indexes hit fresh lows for the day. His declarations that there's not much discretionary spending left to cut and that "tax reform" to him still means raising taxes on rich people did nothing to slow the rout. . . .

UPDATE: In contrast to Obama, look at what happens in the UK.

Prime Minister David Cameron -- who cut short a holiday in Italy to deal with the crisis -- recalled Parliament from its summer recess for an emergency debate on the riots and looting that have spread from the deprived London neighborhood of Tottenham to districts across the capital, and the cities of Birmingham, Liverpool and Bristol. . . .

UPDATE: Other Democrats turning on Obama.

“The president has shown himself unwilling to just dig in on a position,” said Dee Dee Myers, who was Bill Clinton’s White House press secretary. “He’s for jobs. I’ve heard him say that. He’s for being the grown-up in the room. But beyond that, I’m not actually sure what his bottom line is.” . . .

In debt ceiling talks, Obama offers to cut $2 billion from next year's spending?

deficits Obama

One almost has to read this Reuter's news article a few times to make sure that you read it correctly. In a budget of some $3.73 trillion (see Table S-1), Obama is willing to cut $2 billion in spending. That is 5 hundredths of one percent! How can anyone cut so little? Obviously, the Democrats want to push of any cuts, even small ones well off into the future, so they can be undone at a future date. Taxes though are to start right now. My previous post showed how Obama wasn't willing to name any cuts in his press conference yesterday.

President Barack Obama has offered a spending cut of $2 billion for the coming fiscal year in White House budget talks, far below the level sought by Republicans, Senate Republican Leader Mitch McConnell said on Thursday.

"We have not been able to get them to a place that we're comfortable makes a serious difference and getting our spending trajectory headed downward," McConnell said on the Hugh Hewitt radio show.

Republicans are already moving spending bills through the House of Representatives that would cut $30 billion from the current fiscal year's funding levels. Because the Pentagon would get a spending increase, cuts would be even steeper for the domestic programs beloved by Democrats.

The two sides are working on a budget deal that would cut roughly $1 trillion over 10 years from the annual discretionary spending that funds everything from space exploration to law enforcement.

Republicans want as big a cut as possible for the coming fiscal year, which starts October 1, to set a lower baseline for the coming years.

"So far it's been pretty puny," McConnell said of the Democrats' $2 billion offer. "Our response to that is the government borrowed $4 billion today." . . .

Obama doesn't talk about new jobs numbers, gets some boos from union workers

AustinGoolsbee Obama unemployment

Two years into the recovery and the unemployment rate has risen for the second straight month and is stuck above 9 percent.

President Obama didn't mention Friday's weak jobs report in his speech at a Chrysler plant in Ohio, instead choosing to talk about the recovery of the auto industry.

Josh Earnest, a White House spokesman, told reporters on the flight to Toledo that Obama "will talk about the jobs numbers."

But one of the only allusions Obama made to the bleak report was when he said that "we're going to pass through some rough terrain that even a Wrangler would have a hard time with." (The Chrysler workers, who make the Wrangler at that plant, responded by booing and heckling him.) . . .

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