Wednesday, April 20, 2011

The Economy, Front And Center

As usual, the economy is front and center on the political radar. Let's hit some highlights.

Recently, the S&P officially downgraded the American economic outlook to 'negative'. The White House immediately downplayed its significance, but the GOP was right to point out that it is a wake-up call to action NOW. Not ten years from now, not 50 years from now...NOW. Much can be (and has been) said about what triggered this change from the S&P, but I can't find any fault in the logic of Erick Erickson at RedState:

For the past year, Democrats have spent freely arguing that their free spending ways did not matter. In fact, Barack Obama’s proposed budget for 2012 increases the national debt to 116% of gross domestic product, even while adding $2 trillion in tax increases.

It is not that budget proposal that became the straw to break the camel’s back.

It was not even his trillion dollar stimulus plan or his multi-trillion dollar stimulus plan than became the straw to break the camel’s back.

In fact, it was Barack Obama’s disastrous speech last week that broke the camel’s back.

As James Pethokoukis noted, Obama’s muddled plan to solve the crisis was “fastened together by the chewing gum and sticky tape of rosy economic assumptions and fiscal opacity.” But more so, it was Barack Obama’s angry words and denunciation of Paul Ryan’s own plan that drove S&P to its conclusion.

S&P said

We view President Obama’s and Congressman Ryan’s proposals as the starting point of a process aimed at broader engagement, which could result in substantial and lasting U.S. government fiscal consolidation. That said,we see the path to agreement as challenging because the gap between the parties remains wide. We believe there is a significant risk that Congressional negotiations could result in no agreement on a medium-term fiscal strategy until after the fall 2012 Congressional and Presidential elections. If so, the first budget proposal that could include related measures would be Budget 2014 (for the fiscal year beginning Oct. 1, 2013), and we believe a delay beyond that time is possible.

Remember, up until the President’s attack, even Democrats on the Deficit Commission were praising Paul Ryan’s willingness to engage the issue “at an adult level.” Everyone expects congressional partisans to take pot shots, but for the President of the United States to have a temper tantrum over it akin to a three year old denied a lollipop? That’s unheard of.

The President’s open hostility to an adult plan while offering no substantive plan of his own was the straw that broke the camel’s back. And because Mr. Obama still cannot deal with the issue as an adult, we will keep heading down this treacherous road.

Barack Obama was also caught on a hot microphone admitting that he was trying to implement his Leftist agenda through the outlandish spending in his budget. We kind of knew that already, but it was one of those moments when the true man peeked out from behind the mask, and one we should remember as he moves forward with his proposals.

A relative handful of jobs have started coming back, causing the unemployment rate to dip below 9% for the first time in months, but the vast majority of those jobs are government jobs which don't produce anything. Indeed, there are more government workers than manufacturing workers in all but two states, and there are now more government workers nationwide than there are workers in manufacturing, farming, fishing, forestry, mining, and utilities...combined. This is a different problem to discussed in a different post, but even with those modest gains the percentage of employed workers in the country remains at its lowest point in decades. The reality is that any hint of recovery is either a total mirage, or something that will, in the long run, make genuine recovery even harder.

And most Americans knows this. In fact, 6 in 10 would rather see spending cuts than increased taxes. It's common sense, and the only people who don't get it are the ignorant or the upper crust elite (hm, interesting how those two go together). Even more interesting is the fact that if you look at a poll of whether to extend the last round of tax cuts (George W. Bush, in 2001 and 2003), Republicans and Independents support making those cuts permanent in overwhelming numbers...but not Democrats. Apparently, Democrats like paying taxes and want to pay more. Well hey, if they want to pay more of their 'fair share', there's nothing stopping them from doing so. They can write out a check to the Treasury Department any time they want. Hm, I wonder why they're not doing that? Surely they wouldn't be hypocritical on this sort of thing, would they...?

Here's one really, really easy solution that should be a no-brainer: eliminate duplicate government programs. That would save at least $100 billion a year. Chump change, really, but at least a genuine start toward reducing the egregious waste in government, and a signal that our elected leaders are serious about putting things back on the right track. But they're not doing it. Here's an example of how easy this really is:

The GAO examined numerous federal agencies, including the departments of defense, agriculture and housing and urban development, and pointed to instances where different arms of the government should be coordinating or consolidating efforts to save taxpayers’ money.

The agency found 82 federal programs to improve teacher quality; 80 to help disadvantaged people with transportation; 47 for job training and employment; and 56 to help people understand finances, according to a draft of the report reviewed by The Wall Street Journal…

There have been multiple efforts to cull the number of federal programs in recent years, but they often run into opposition from lawmakers in both parties who rush to defend individual spending provisions. In fact, GAO’s recommendations are often ignored or postponed by federal agencies and lawmakers, particularly when they could require difficult political votes…

The report says there are 18 federal programs that spent a combined $62.5 billion in 2008 on food and nutrition assistance, but little is known about the effectiveness of 11 of these programs because they haven’t been well studied.

Seems pretty simple and obvious, don't you think? And even Obama himself gives lip service to reducing waste and duplication, though he also contradicts himself in both word and deed while doing it.

The point is made, though, that even if this waste reduction happens, the key to really making a difference is entitlement reform. Think government handouts. Freebies paid for by taxpayers and greedily sucked out of existence by the 47% of people who pay no income taxes at all. These are the biggest expenditures of the federal government, and the things that most need to be cut down to a reasonable size.

And that won't happen through an increase in taxes, nor even with a reduction in the rate of growth of government (it's a baseline budget thing; let me know if you want more explanation). No, we need actual cuts in government for things to really change. It's going to take a lot of political will for someone to stand up and lead the charge, but we may be getting to the point where enough people realize that our situation is precarious enough that drastic measures have to be taken or else we risk our entire way of life foundering. Yes, it's that critical.

But don't listen to the rhetoric from the Left - though we've gone over this repeatedly, the misunderstanding persists, so it's worth revisiting again, this time in the Wall Street Journal: there simply isn't enough money to soak the rich and put things back on track. The bread and butter is the middle class, so don't let the rhetoric fool you - that's where they want to sink their grubby hands into back pockets. Here's a fantastic bottom-line analysis to illustrate the point:

As I have argued before, what we are really negotiating about at this point is not how we are going to go about paying for these things, but how we are going to go about not paying for these things. Paul Ryan’s plan for Medicare is to let Americans shop for health-care coverage and then have the government pay the first $15,000 in premiums — a reasonably generous deal. (And even more generous for the very poor.) That premium support would grow relatively slowly, putting pressure on both consumers and providers of health-care to reduce costs. This is eminently sensible — critical, in fact: The reason that cellphones and computers don’t cost $10,000 isn’t that Motorola and Apple love us: It’s that consumers spending their own money are cost-conscious, so everybody has to compete on both price and quality. The only important products in the United States that do not get better and cheaper every year are K–12 education and health care, which are about 97 percent and 55 percent dominated by the government, respectively, and therefore have little consumer-price pressure.

Obama’s alternative is another magical committee of wise men, no doubt drawn from the same stale bowl of political Froot Loops from which he spooned up his various czars and advisers, from Marxist nut cutlet Van Jones to tax-dodging Treasury boss Tim Geithner. Markets aren’t perfect, but I trust consumers to make their own decisions better than I trust Obama and these jokers to make them on our behalf. Either way, cuts are coming, and the main question now is what shape they will take and who gets to make the final choice about health-care decisions: consumers and providers, or Obama and his experts.

That's really what it comes down to. Most Americans want to choose for themselves; Barack Obama and the other radical Leftists in American government want the power to dictate these decisions to you.

And because of all this, Obama is seeing frightening (for him...for us it's really exciting) new lows in polls, even when the pollsters are skewing the results ten points in his favor. A lot could change, of course, but at this rate by the time the 2012 election comes around, we could see results even more decisive than in 2010! That would be sweet, and precisely what the country needs to begin actually recovering.

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