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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?

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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

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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

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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

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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

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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

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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.

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