Brace For Impact!!!

Uh-oh...

The Fed has shocked us once again, and it's probably right. There's a firestorm on the horizon. It starts in Europe, but it threatens the U.S. economy just as surely, and the Fed is getting ready.

The most fundamental role of any central bank is to deal with a financial market crisis, to ensure markets operate as normally as circumstances permit. A central bank does this primarily by ensuring an adequate flow of liquidity to market participants, whether banks, other financial institutions, or other central banks. It is in this light one should view the coordinated announcement by the Federal Reserve along with the European Central Bank and four other central banks across Europe and Asia.

Specifically, the Fed cut the price of emergency dollar funding from 1 percent to a half a percent. The Fed has arrangements with other central banks that allow it to swap dollars for other currencies on an overnight basis. The Fed cut the price of these swapline arrangements and extended the life of the swapline by 6 months to February 1, 2013.

As the global reserve currency, much of the world's commerce takes place in dollars. Foreign central banks often source dollars to their own banking systems, which use the dollars to fund internal commerce as well as export purchases. Inadequate dollar liquidity abroad can upend financial markets abroad and also in the United States. Three years ago, these same financial markets hemorrhaged during a financial crisis, and the U.S. unemployment rate is still around 9 percent.

To be clear, the Fed is not bailing out Europe or the euro. There has been some musing about the Fed bailing out the euro—an idea so preposterous it doesn't rise past the level of cocktail party speculation. But what the Fed is doing is something quite different. It's not putting taxpayer money at risk. It's not buying foreign sovereign debt. It's not increasing the bailout capacity of the International Monetary Fund or any of the tools Europe has constructed to paper over its troubles. The Fed is just beefing up its own tools for lending dollars on a short-term basis to foreign central banks.

Why now? Europe, of course, is going through a terrible time financially and economically, but where's the crisis that would trigger such an action by the Fed? And why is the market reacting so positively? Just wait.

A good way to think about this is to imagine that every fire engine in and around New York City were to converge on Manhattan. Every fire truck would lay out every bit of hose and tap every fire hydrant they could find. Every post is manned and ready, but there's no fire, only a little smoke. Just wait.

The market's reaction is analogous to a real estate buyer who sees all this fire equipment, decides the neighborhood must be really safe, and bids up the nearest townhouse. Today's 400-point initial rally in the Dow is proof positive that markets are either irrational, perfectly myopic, or both.

What's going on here? The Fed and its counterparts in Europe and Asia are getting ready for utter calamity. The crisis in Europe is reaching a crescendo. Bank credit in Europe is collapsing; interest rates, even in Germany, are rising; recession and worse is at the doorstep in southern Europe and threatens to engulf the entire continent; even the euro technocrats are now talking about having only a matter of days to save themselves and their beloved monetary union.

There's no real fire yet. But there will be. A big one. It's heading this way, and the Fed is doing what it can to get ready.

To quote the old phrase: I have a baaaad feeling about this...

So True It Hurts Is HILARIOUS!!!

The Danger Of EMPs

Yet another warning:

During last Tuesday’s Heritage Foundation/AEI debate on national security, the GOP candidates were queried on what lesser-known dangers to American security most concerned them.

One particularly visceral threat is nuclear fissile material falling into the hands of non-state belligerents. The American public, however, is acutely aware of such a threat. The notion of a “dirty bomb” attack has been pounded into the nation’s collective consciousness by pop-culture hits such as the Fox television drama 24. What is less known, but equally disconcerting, is the danger posed by an electromagnetic pulse (EMP) attack.

An electromagnetic pulse results from the sudden burst of electromagnetic radiation emanating from the detonation of a nuclear weapon. An EMP can also result from natural phenomena, such as a geomagnetic solar storm; however, our nation’s national security apparatus should be prepared to deal with the consequences of an enemy EMP attack.

If a nuclear weapon were to be detonated hundreds of miles into the atmosphere above the continental United States, the resulting electromagnetic pulse could destroy the nation’s electric grid and render impotent all elements of society that rely on electricity. In short order, many aspects of American society would be thrust into the early 19th century.

In 2004, the Commission to Assess the Threat to the United States from Electromagnetic Pulse Attack reported:

Several potential adversaries have or can acquire the capability to attack the United States with a high-altitude nuclear weapon-generated electromagnetic pulse (EMP). A determined adversary can achieve an EMP attack capability without having a high level of sophistication. EMP is one of a small number of threats that can hold our society at risk of catastrophic consequences. EMP will cover the wide geographic region within line of sight to the nuclear weapon. It has the capability to produce significant damage to critical infrastructures and thus to the very fabric of US society, as well as to the ability of the United States and Western nations to project influence and military power.

Given the dangers posed by EMP, how can the United States protect itself from such an attack? The answer rests in the pursuit of a comprehensive and layered missile defense system.

In a recent Heritage Foundation WebMemo, Baker Spring and Michaela Bendikova outline a number of steps that the Obama Administration can take to update and strengthen our missile defense capabilities. The suggestions include the expansion of Aegis-equipped vessels within the U.S. Navy’s arsenal.

The Aegis system is currently capable of intercepting ballistic missiles of short and intermediate range; however, the Obama Administration could pursue deployment of Standard Missile-3 interceptors capable of countering long-range ballistic missile threats.

The Obama Administration currently plans to deploy such interceptors as far out as 2020, but the threats facing our nation demand more immediate action. An EMP attack could be executed from within a vessel surreptitiously operating off the coast of the United States or from distances far beyond American soil. America’s missile defense capabilities should be prepared for any and all contingencies.

Spring and Bendikova further advocate for a more comprehensive system of land- and air-based detection and tracking capabilities, including an increase in ground-based interceptors and the development and deployment of space-based interceptors.

The Heritage Foundation/AEI–sponsored debate brought to light a number of important national security threats that may be faced by our next president. An EMP attack is certainly one of the more disconcerting yet least discussed and understood of such threats. Improving and expanding upon our current missile defense infrastructure is paramount to countering the dangers posed by an EMP attack.

We ignore this at our peril.  Our elected leaders are regrettably silent on the issue; hopefully they won't remain so until it is too late.

Happy Thanksgiving!

Rush Limbaugh has a tradition that I've really come to appreciate.  Every year on the day before Thanksgiving he reads the real story of Thanksgiving.  If you've been educated by the public school system, you probably don't know it as well as you think you do.  Check it out:

Now time for a tradition, an annual tradition, and that is The Real Story of Thanksgiving from my book that I wrote back in the early nineties. I wrote two of them, actually. In one of the books I wrote, The Real Story of Thanksgiving. And reading from it has become something we do every year on the program because it's still not taught. The myth of Thanksgiving is still what is taught, and that myth is basically that a bunch of thieves from Europe arrived quite by accident at Plymouth Rock, and if it weren't for the Indians showing them how to grow corn and slaughter turkeys and how to swallow and stuff, that they would have died of starvation and so forth. The Indians were great -- and then, in a total show of appreciation, we totally wiped out the Indians!

We took their country from 'em. We started racism, sexism, bigotry, homophobia; spread syphilis; and, basically, destroyed the environment. That is the multicultural version of Thanksgiving, and it simply isn't true. The real version of Thanksgiving is in my second best-seller, 2.5 million copies in hardback: See, I Told You So. "Chapter 6, Dead White Guys, or What the History Books Never Told You: The True Story of Thanksgiving -- The story of the Pilgrims begins in the early part of the seventeenth century ... The Church of England under King James I was persecuting anyone and everyone who did not recognize its absolute civil and spiritual authority. Those who challenged ecclesiastical authority and those who believed strongly in freedom of worship were hunted down, imprisoned, and sometimes executed for their beliefs." In England.

So, "A group of separatists first fled to Holland and established a community.  After eleven years, about forty of them agreed to make a perilous journey to the New World, where they would certainly face hardships, but could live and worship God according to the dictates of their own consciences. On August 1, 1620, the Mayflower set sail. It carried a total of 102 passengers, including forty Pilgrims led by William Bradford. On the journey, Bradford set up an agreement, a contract, that established just and equal laws for all members of the new community, irrespective of their religious beliefs. Where did the revolutionary ideas expressed in the Mayflower Compact come from? From the Bible. The Pilgrims were a people completely steeped in the lessons of the Old and New Testaments. They looked to the ancient Israelites for their example.

"And, because of the biblical precedents set forth in Scripture, they never doubted that their experiment would work. But this was no pleasure cruise, friends. The journey to the New World was a long and arduous one. And when the Pilgrims landed in New England in November, they found -- according to Bradford's detailed journal -- a cold, barren, desolate wilderness." The New York Jets had just lost to the Patriots. "There were no friends to greet them, he wrote." I just threw that in about the Jets and Patriots. "There were no houses to shelter them. There were no inns where they could refresh themselves. And the sacrifice they had made for freedom was just beginning. During the first winter, half the Pilgrims -- including Bradford's own wife -- died of either starvation, sickness or exposure. When spring finally came, Indians taught the settlers how to plant corn, fish for cod and skin beavers for coats.

"Life improved for the Pilgrims, but they did not yet prosper! This is important to understand because this is where modern American history lessons often end. Thanksgiving is actually explained in some textbooks as a holiday for which the Pilgrims gave thanks to the Indians for saving their lives, rather than as a devout expression of gratitude grounded in the tradition of" the Bible, "both the Old and New Testaments. Here is the part that has been omitted: The original contract the Pilgrims had entered into with their merchant-sponsors in London called for everything they produced to go into a common store, and each member of the community was entitled to one common share. All of the land they cleared and the houses they built belonged to the community as well." Everything belonged to everybody. "They were going to distribute it equally. All of the land they cleared and the houses they built belonged to the community as well.

"Nobody owned anything." It was a forerunner of Occupy Wall Street. Seriously. "They just had a share in it," but nobody owned anything. "It was a commune, folks." The original pilgrim settlement was a commune. "It was the forerunner to the communes we saw in the '60s and '70s out in California," and Occupy Wall Street, "and it was complete with organic vegetables, by the way." There's no question they were organic vegetables. What else could they be? "Bradford, who had become the new governor of the colony, recognized that this form of collectivism was as costly and destructive to the Pilgrims as that first harsh winter, which had taken so many lives. He decided to take bold action. Bradford assigned a plot of land to each family to work and manage," as they saw fit, and, "thus turning loose the power of the marketplace. That's right. Long before Karl Marx was even born, the Pilgrims had discovered and experimented with what could only be described as socialism.

"And what happened? It didn't work!" They nearly starved! "It never has worked! What Bradford and his community found was that the most creative and industrious people had no incentive to work any harder than anyone else, unless they could utilize the power of personal motivation! But while most of the rest of the world has been experimenting with socialism for well over a hundred years -- trying to refine it, perfect it, and re-invent it -- the Pilgrims decided early on to scrap it permanently. What Bradford wrote about this social experiment should be in every schoolchild's history lesson. If it were, we might prevent much needless suffering in the future." If it were, there wouldn't be any Occupy Wall Street. There wouldn't be any romance for it.

"The experience that we had in this common course and condition,'" Bradford wrote. "'The experience that we had in this common course and condition tried sundry years...that by taking away property, and bringing community into a common wealth, would make them happy and flourishing -- as if they were wiser than God,' Bradford wrote." This was his way of saying, it didn't work, we thought we were smarter than everybody, everybody was gonna share equally, nobody was gonna have anything more than anything else, it was gonna be hunky-dory, kumbaya. Except it doesn't work. Because of half of them didn't work, maybe more. They depended on the others to do all the work. There was no incentive.

"'For this community [so far as it was] was found to breed much confusion and discontent, and retard much employment that would have been to their benefit and comfort. For young men that were most able and fit for labor and service did repine that they should spend their time and strength to work for other men's wives and children without any recompense,'" without being paid for it, "'that was thought injustice.'" They figured it out real quick. Half the community is not working -- living off the other half, that is. Resentment built. Why should you work for other people when you can't work for yourself? that's what he was saying. So the Pilgrims found that people could not be expected to do their best work without incentive. So what did Bradford's community try next? They unharnessed the power of good old free enterprise by invoking the under-girding capitalistic principle of private property.

"Every family was assigned its own plot of land to work and permitted to market its own crops and products. And what was the result? 'This had very good success,' wrote Bradford, 'for it made all hands industrious, so as much more corn was planted than otherwise would have been.' ... Is it possible that supply-side economics could have existed before the 1980s? Yes," it did. "Now, this is where it gets really good, folks, if you're laboring under the misconception that I was, as I was taught in school. So they set up trading posts and exchanged goods with the Indians." This is what happened. After everybody had their own plot of land and were allowed to market it and develop it as they saw fit and got to keep what they produced, bounty, plenty resulted.

"And then they set up trading posts, stores. They exchanged goods with and sold the Indians things. Good old-fashioned commerce. They sold stuff. And there were profits because they were screwing the Indians with the price. I'm just throwing that in. No, there were profits, and, "The profits allowed them to pay off their debts to the merchants in London." The Canarsie tribe showed up and they paid double, which is what made the Canarsie tribe screw us in the "Manna-hatin" deal years later. (I just threw that in.) They paid off the merchant sponsors back in London with their profits, they were selling goods and services to the Indians. "[T]he success and prosperity of the Plymouth settlement attracted more Europeans," what was barren was now productive, "and began what came to be known as the 'Great Puritan Migration.'

But this story stops when the Indians taught the newly arrived suffering-in-socialism Pilgrims how to plant corn and fish for cod. That's where the original Thanksgiving story stops, and the story basically doesn't even begin there. The real story of Thanksgiving is William Bradford giving thanks to God," the pilgrims giving thanks to God, "for the guidance and the inspiration to set up a thriving colony," for surviving the trip, for surviving the experience and prospering in it. "The bounty was shared with the Indians." That's the story. "They did sit down" and they did have free-range turkey and organic vegetables. There were no trans fats, "but it was not the Indians who saved the day. It was capitalism and Scripture which saved the day," as acknowledged by George Washington in his first Thanksgiving Proclamation in 1789.

Speaking of which...

"It is the duty of all Nations to acknowledge the providence of Almighty God, to obey his will, to be grateful for his benefits, and humbly to implore his protection and favors." --George Washington, Thanksgiving Proclamation, 1789

Happy Thanksgiving!

Super Dud

Shocking though it may be, the nation is still intact.  That's right, friends, the Supercommittee has announced its failure, but the world hasn't melted down quite yet, and life goes on.  In fact, it goes on pretty much as it was going on yesterday, last week, and last month.  Here's what happened:

To the surprise of nobody, the Congressional Supercommittee tasked with coming up with $1.2 trillion in deficit-cutting measures has completely failed.

If the definition of insanity is doing the same thing over and over again and expecting different results, then Washington is officially bonkers. The entirely predictable face-plant of the Supercommittee came on the heels of the highly predictable failure of the Simpson-Bowles Commission and the Obama-Boehner grand bargain talks.

You don't have to have a Ph.d. in political science to grasp the dynamic at work. The White House has a set of preferences, which it has laid out here. But it doesn't spend a lot of time campaigning for them, and it doesn't believe that getting intensely involved in the negotiations will help move the ball. Democrats aren't entirely sure what they want, though they insist any large deficit reduction deal must include significant tax increases, preferably on higher-income earners and companies. Otherwise, they won't consider significant changes in entitlements that their forebears created, like Social Security and Medicare. As for Republicans, there are two things they aren't interested in: (1) raising taxes; and (2) doing a large deal with President Obama that will give him an achievement going into the next election..

Oh, and the overwhelming majority of people who parade around Washington posing as fiscal hawks are frauds. They're the ones who created a tax system that collects revenues that can't fully fund the spending system they also voted to create.

The blame game has commenced, with fingerpointing all around.  Of course, this hurts the GOP worst because Obama can now campaign against a 'do-nothing Congress' for the next year or so.  This is exactly the outcome he wanted in all this mess, because he certainly can't campaign on his abysmal record.  Anyway, here's a bit of analysis that I think is dead on:

The real cause of the failure of the supercommittee was the idea that a supercommittee would act any differently than the Congress at large.  Instead of using the normal process of having each chamber pass their own bills and using a conference committee to reconcile them, the debt-ceiling deal assumed that a dozen eminences grises could hand down a solution from on high that would significantly depart from the months and years of debate that had already taken place over the debt and deficit problem.  The members of this committee were a part of that debate, which means they took the same issues into their chamber that everyone else had to handle outside of it.

Instead of using the proper procedure, we’ve just wasted three months in pursuit of a Deus ex machina rescue that was never going to materialize.  While that’s bad news in the short run, it’s probably good news in the long run.  Anyone proposing blue-ribbon supercommittees in the future will be laughed out of town –  which is what should have happened the first time.

One interesting side note:

He’s actually generated a glimmer of bipartisanship in a moment of stark partisanship: Prominent Republicans, Democrats, and even independents are blaming him for contributing to the Committee’s failure.

I generally frown upon bipartisanship, but in this case I'll make an exception.  

Anyway, back when the deal was struck to form this supercommittee, there was a clause that dictated some required automatic cuts if they failed to bring forth a plan, so some are saying that these automatic cuts are a silver lining that may actually be the best possible outcome.  Um...not exactly:

Failing to enact the plan by January 15, 2012, would result in automatic cuts to military spending–a scenario that Defense Secretary Leon Panetta describes as “devastating.”

That would be Democrat Leon Panetta, former Clinton advisor and now Obama's own hand-picked Defense Secretary.  If he's saying these cuts would be devastating, you know they're bad.

In letters sent to Senators John McCain (R-AZ) and Lindsey Graham (R-SC) last week, Panetta detailed the danger of further defense cuts if the super committee fails to meet its target. Panetta said that under the worst-case scenario, “the total cut will rise to about $1 trillion compared with the FY 2012 plan,” which in practical terms means “the smallest ground force since 1940, the smallest number of  ships since 1915, and the smallest Air Force in its history.”

What’s more, as Panetta explained, the Pentagon would face the prospect of terminating the F-35 Joint Strike Fighter; littoral combat ship; all ground combat vehicle and helicopter modernization programs; European missile defense; all unmanned intelligence, surveillance, and reconnaissance systems. It may also have to delay the next-generation ballistic missile submarine; terminate next-generation bomber efforts; and eliminate the entire intercontinental ballistic missile (ICBM) leg of America’s nuclear “triad.”

And amidst these potential reductions to U.S. forces, Panetta wrote, “Unfortunately, while large cuts are being imposed, the threats to national security would not be reduced. As a result, we would have to formulate a new security strategy that accepted substantial risk of not meeting our defense needs.” Tragically, America’s military is being threatened despite the fact that national defense is the priority job of the national government, as set forth in the U.S. Constitution.

I'm no professional political pundit, but when a die-hard liberal Democrat is talking like a conservative about defense and Constitutional priorities, it means he's either campaigning or facing a truly desperate situation.  In this case, Panetta is not campaigning, so that makes it pretty obvious.  Much more at the link above.  Personally, I think this is a gladly accepted side effect to the supercommittee's failure - not only does Obama get his one and only possible campaign issue handed to him, but any chance for a liberal to take a chunk out of the American military is a good thing (for the liberal).  It's a sad reality, but a reality nonetheless.

Still, there is the real problem of cuts - if cuts have to be made, where should they be focused?  Here are two suggestions.  First, how about entitlements rather than defense?

The major misconception here is that people will be harmed if any entitlements get cut, but that's not true.  There are hundreds of billions of dollars being wasted every year on redundant programs that should be easy, no-brainer reductions.


And how about the big one?  Obamacare is the elephant in the room:

The money could come from Obamacare, to avoid implementing its huge expenses.  Repealing the health care law would solve the super committee’s dilemma, yielding more than enough savings to fulfill their mission.


Yet Obamacare has been placed “off-limits” for no good reason.

As POLITICO noted:

“Anyone tracking the super committee has heard the mantra: Everything is on the table.  But there’s one big item that doesn’t appear to be on that gigantic deficit-cutting table: President Barack Obama’s health reform law, his signature domestic achievement.”

By itself, repeal of Obamacare would more than fulfill the mission assigned to the super committee.  If we didn’t have the expense of Obamacare, it would save more than the $1.2-trillion in savings they are supposed to find over the next 10 years.

But gutting it now would prevent these massive inevitable expenses from ever becoming reality, with one major added benefit:

...Obamacare’s brand-new entitlement programs are not yet operative, so nobody’s current benefits would be lost or reduced.  Cutting out those Obamacare programs would also avoid the defense cuts and Medicare cuts that otherwise would occur (under sequestration law) if the super committee fails to find $1.2-trillion somewhere else.

Is anyone else seeing the irony here?


Anyway, it's not complex to get this done, with the proper perspective and understanding of the context we're living in.  Unfortunately, it's simply not going to happen, at least not as long as Democrats remain in charge of anything.


But the world isn't going to end just because the supercommittee fails.

Obama Fails All Viability Tests

The truth hurts:

Last week’s column asserting that the president is unelectable has triggered strong responses. Democrats, in particular, seem to think my judgment is premature. It strikes them as ridiculous that anyone could make such a “bold prediction” so far in advance of the 2012 election. Hey, that’s what we do, as seasoned political professionals, as pollsters. But I must stress that I am not so much making a personal prediction as drawing an informed conclusion based on all the numbers available. I do this in each election cycle for other candidates, and it’s time to make the call on President Obama.

Whenever I have an incumbent client running for reelection, I insist on a viability study about a year out from the election — so, in the case of the presidential race, right about now. Anything that I do for my own, I should do for the opposition. So here goes. First, I look at the polling results from traditional “deserves reelection” questions, the gold standard of viability testing. The most recent nationwide public poll I could find was one conducted by Quinnipiac University early last month. It showed 42 percent saying the president deserves reelection while 54 percent say he doesn’t. While this reelect number by itself is not necessarily a doomsday figure, it’s the 54 percent on the con side that’s a killer. Most often, there is a large undecided percentage, but here it’s only 4 points. Voters have closed their minds — and the book on this president. It ensures that when Obama faces a Republican nominee, the undecided voters in early polling will eventually vote against an undeserved reelection.

The second numbers I peruse are perceptions of accomplishments. Eventually, Republicans will ask voters, “What has Barack Obama really accomplished?” and he must answer. A Washington Post/ABC News poll conducted in his first year found that only 14 percent of all voters felt he had accomplished “a great deal ” during his initial nine months in office, his “salad days.” I cannot find evidence that the same question has been asked lately, but is there any chance that the result would be much different? In its Moving America Forward manifesto, the Democratic Congressional Campaign Committee says Obama, with help from congressional Democrats, has five accomplishments: created private sector jobs, reduced debt, kept taxes low, passed a healthcare plan and reformed Wall Street. That’s the group’s best list. Do you think most Americans believe Obama has accomplished those things? Aside from passing a healthcare plan, he has done almost none of that, in the public’s mind. According to the latest AP polling, conducted in mid-October, the president’s average approval rating across those five areas is 42 percent. Obama brings no record of genuine accomplishment to his bid for reelection.

The third set of determinative data for an incumbent is perception of the direction of the nation or state. Everyone knows this is the biggest problem for Obama. The latest CBS/New York Times poll has the “right direction” at 21 percent. It hasn’t been above 30 percent since the early summer. Incumbents simply don’t get reelected when three-fourths of the electorate see things “seriously off” on the “wrong track.” Even if Obama’s approval ratings or likability were better, he could not overcome the negative sentiment that demands a change in direction. Americans are going to demand and get change next November.

So Obama fails on all counts. The numbers say that voters don’t think he deserves reelection, he has no meaningful accomplishments, and the nation is headed off in the wrong direction under his watch. He is simply not viable by any measure. That’s an empirically informed, hard-nosed judgment. This isn’t a movie or fantasy tale where a miracle occurs at the last moment to save the day. If Democrat campaign professionals don’t start acknowledging the same, and intervening, they risk Obama bringing down their entire ticket.

And that would be the ideal case, of course.

 

But let's examine one other measure of whether or not he deserves a second term...his own:

President Obama did voters a favor. During the 2008 campaign and early in his administration, he laid out the standards by which he should be judged. He made it perfectly clear under what conditions he would deserve re-election.

And by his own standard he doesn’t deserve a second term.

• In February 2009, when employment was at 8.2 percent, he declared, “If I don’t get this done in three years, then this is going to be a one term proposition.”
• Unemployment has yet to return to February 2009 levels, much less fall lower. Based on that standard alone, this should indeed be a “one term proposition.”
• But consider the President’s other promises and self-imposed standards.
• On the stimulus: He predicted unemployment below 8 percent. Today: We’re not even close.
• On Obamacare: He promised accessibility and affordability. Today: Prices continue to skyrocket and many Americans have discovered they cannot keep their current plan.
• On the deficit: He promised to cut it in half by the end of his first term. Today: He produced three years of record budget deficits, exceeding $1 trillion each.
• On the debt: He promised to slow its growth. Today: He accelerated it and it has now surpassed $15 trillion.
• On ethics: He promised the most transparent administration in history. Today: The administration has been caught gambling taxpayer money on failed investments like Solyndra for political purposes.
• On lobbyists: He promised there would be no lobbyists in his administration and no lobbyist money in his campaign coffers. Today: He has gladly welcomed both.
• He promised a thriving economy. It’s stalled.
• He promised change. We have gotten more of the same.
• He promised to unite us. We’re divided.
• He has so little to run on, Democrats have resorted to pathetically arguing that “it could’ve been worse.”

In 2012, Republicans will hold the president accountable. He laid out the terms on which he wanted to be judged.  And we’re happy to accept those terms.

It’s not our standard. It’s not a partisan standard. It’s the President’s standard. Let’s hold him to it.
There are no words more damaging to Obama’s re-election prospects than his own. That makes our messaging strategy quite straightforward: Repeat those words—his broken promises—as often as possible.

Sounds like a plan to me.

Not So Super After All

But we already knew that:

Almost no one had high or even medium hopes for the congressional super committee on deficit reduction. The 12-member committee was established earlier this year as part of the deal to raise the debt ceiling; six Democrats, six Republicans, three each from the House and Senate. Their task: Come up with at least $1.2 trillion in budget savings (over, ahem, 10 years). Failing a deal by Thanksgiving, automatic across-the-board cuts would take effect. With a federal budget approaching $4 trillion every year, this task seemed neither tall nor especially consequential. Yet politics is as politics does, and the committee's efforts have all but collapsed.

This failure comes despite major Republican concessions. Long insisting on no tax increases, Republicans offered a plan that would eliminate or cap many deductions while lowering rates. The top individual rate would fall from 35 percent to 28 percent, and the corporate rate would drop from 35 percent to 25 percent. Static scoring says these changes would combine for $500 billion in additional revenue, and the benefit would be flattened rates and simplified returns. The last time it was done, the result was solid economic growth.

The tax proposal requires that cuts would need to total just $750 billion over 10 years to achieve the committee's stated goal. Democrats, however, continued to refuse any deal that would involve lower tax rates, or less than $1 trillion in additional tax revenue. In fact, they still insist that tax rates go up, not down. On top of that, they want to use savings from the wars in Iraq and Afghanistan winding down to boost "stimulus" spending.

Still, why are Democrats suddenly unwilling to take these big concessions? After all, as The Wall Street Journal explains, "[T]he deal ... would be a big political win for all concerned. It would give the economy a major lift by taking the tax increase now scheduled for 2013 off the table, and it would show that Congress could at least make some progress toward controlling federal spending. With a ratio of $1.50 in spending cuts to $1 in tax increases, the offer is far better for Democrats than the $3 to $1 ratio that President Obama's own Simpson-Bowles deficit commission recommended."

We think the reasons for the Democrats' actions are actually pretty obvious. First, they need someone and something to demagogue. They can't budge on sticking it to the rich, and lower rates would be seen by their Flea Party minions as a cave. Second, Barack Obama is desperate to campaign against a "do-nothing" Congress, but he can't do that if Congress actually does something. Obviously, he will still try to blame Republicans for obstruction, and a large part of the electorate will fall for it.

Hm, it looks like that's precisely what is playing out now:

With the Washington Post reporting – and Senator Jon Kyl confirming – that there’s a general sense of malaise surrounding budget deal negotiations, the end may be in sight. Unfortunately, the light at the end of the tunnel is looking more and more like it’s the headlight of an oncoming train.

The congressional committee tasked with reducing the federal deficit is poised to admit defeat as soon as Monday, and its unfinished business will set up a year-end battle over emergency jobless benefits and an expiring payroll tax holiday.
Those provisions are among a host of measures set to lapse at the end of December. During nearly three months of negotiations, the “supercommittee” had been weighing whether to extend at least some of them as part of a broader plan to shave a minimum of $1.2 trillion over the next decade.

The mere fact of failure, should it occur, probably won’t come as a shock to most observers. (Our friends at Outside the Beltway, in fact, rather blandly call it “An Unsurprising Failure.”) But from all of these interviews and a sampling of the talking heads this weekend, what was more startling to me was an indication that a lot of these folks really never wanted the committee to succeed in the first place. But why? A few observations follow.

From the Left side of the aisle, there does seem to be one possible answer which led me to one of those forehead slapping, “I coulda’ had a V-8″ moments. I was watching a panel of entirely left wing pundits on MSNBC this morning, two of whom came out without prevarication and said they were openly hoping the group would fail to meet the deadline. The reason? Because then the sequestration would kick in and it leaves entitlement programs essentially untouched while making deep cuts in the military. And as one noted, such cuts to the military are, “long overdue.” Further, they pointed out that failure would result in the end of the Bush era tax cuts which, as one of them put it, “would solve most of our problems right there.”

I’ve long since gotten over being shocked at hearing things like this, and in some ways it was rather refreshing to hear it stated so openly and honestly. Of course, it’s also disastrously wrong as far as I can tell, but at least it’s honest.

But there have been plenty on the Right who have adopted a hang dog attitude about the work the committee is attempting as well. The general consensus seems to be that if there were to be a deal, in order to get any of the Democrats on board it was going to involve massive tax increases. Better to give up and head to sequester rather than give in on that, goes this line of thinking.

But was the entire thing a dog and pony show with no real effect except for 2012 political positioning? The other chatter, including some of the comments from John Kerry, is that none of the threatened “draconian cuts” from the original deal will happen anyway. Remember… they don’t take place until 2013. And at least according to some, that gives Congress an entire year to get together and repeal that decision. And if that happens, you may wind up with tax cuts expiring, no measurable cuts in spending, and no significant change in course in terms of basic government theory. Game.. set.. match.

So.. was this all just for show?

Well, yeah.  These are elected politicians, after all.  Sadly, even those on our side seem to be more concerned with their own political power and positions than the economic future of our nation's children and grandchildren.

Hey, you don't earn a single-digit approval by being honorable or standing on principle, you know.

U.S. Can Learn From Europe's Mistakes

...but will we...?

Case In Point

The Founding Fathers, Income Inequity, And OWS

I like this post at Heritage...the whole thing is worth a read:

What did America's founders say about economic inequality? Rather than unload statistics about the reality of inequality in America today, which we have done on other occasions, this post considers inequality based on the economic principles on which our republic was founded. These principles remind us why economic inequality is not necessarily an injustice, but rather a necessary component of any prosperous society.

Property Rights

Far from the notion of merely owning physical property, the founders understood property rights to include "natural rights." In an essay on property rights in 1792, James Madison wrote:

He has a property very dear to him in the safety and liberty of his person. He has an equal property in the free use of his faculties and free choice of the objects on which to employ them…Conscience is the most sacred of all property…the exercise of that, being a natural and unalienable right.

Property rights, therefore, include utilizing our faculties to acquire property, which precedes the ownership of physical property.

Economic Inequality

The founders were very aware that protecting the faculties of individuals would lead to inequality. In Federalist 10, Madison said that "From the protection of different and unequal faculties of acquiring property, the possession of different degrees and kinds of property immediately results." But is this just?

Thomas West writes that the first reason the founders understood this to be just is that "property rights benefit all classes equally insofar as they protect the body and mind of every individual from exploitation or enslavement by others."

Secondly, the founders knew that protecting individual faculties likely helps the poor if it enables economic productivity that creates more jobs.

Madison articulated that industry and labor left to their own courses will be directed to "those objects which are most productive, and this in a more certain and direct manner than the wisdom of the most enlightened legislature could point out."

Likewise, Alexander Hamilton noted in his Report on Manufactures that individual faculties organically create a division of labor, which "has the effect of augmenting the productive powers of labor, and with them, the total mass of the produce or revenue of a country."

Consider a person who freely uses his own talents to create wealth, like Steve Jobs. The creation of Apple products has led to the employment of tens of thousands of individuals who design, assemble, and manufacture these products; not to mention that each Apple building employs janitors, maintenance workers, landscapers, and others.

Government's Role

Also in Federalist 10, Madison stressed that protection of natural rights is the first job of government: "Diversity in the faculties of men, from which the rights of property originate…. The protection of these faculties is the first object of government." Any violation of these rights was considered morally unjust. Government also has a role in enforcing contracts, and encouraging and defining ownership of property.

Throughout the first century of America, government adhered fairly closely to these principles. Even spending on "internal improvements," or infrastructure projects, was acceptable only if it was in the national—as opposed to the state or local—interest. Aiding the interests of some over others was considered unconstitutional, hence the word "general" in the general welfare clause.

That's why in 1822, President James Monroe vetoed a bill that redistributed wealth to a local interest, contending that government spending was restricted "to purposes of common defence, and of general, national, not local, or state, benefit." This tradition was followed by Presidents James K. Polk and James Buchanan, in 1847 and 1857, respectively. They each vetoed measures that were not in the general interest. Likewise, in 1893, President Grover Cleveland vetoed a $10,000 bill to help farmers in Texas during a depression, stating: "federal aid in such cases encourages the expectation of paternal care on the part of the government and weakens the sturdiness of our national character."

The Right Focus Regarding Inequality

America's founders certainly believed a minimum safety net was desirable. Nevertheless, they would view the current focus on income-growth disparity as misplaced and poisonous. Prosperity is inseparable from economic inequality; conversely, forced economic equality tends toward destitution. The more government attempts to equalize incomes, the less an economy produces. Who wants to produce when one doesn't receive the full benefits of his or her labor? Founder James Wilson captured it best: "Who would cultivate the soil, and sow the grain, if he had no peculiar interests in the harvest?" The focus should be encouraging people to utilize their inherent rights, rather than discouraging doing so by focusing on differences in income growth.

These guys embody the mindset that made America the greatest, strongest, most free and prosperous society in the history of the world.  Why would we not want to go back to that?

In contrast, we have today's political Left and its most recent cause du jour, the Occupy movement (backed by liberal unions, of course).  These classy people aren't so much standing for a cause on principle as just generally protesting anyone who has what they want.  Not that they're willing to work to get it, of course...no, they just want it handed to them.  At the same time, they're complaining about freeloaders (***IRONY ALERT***) infiltrating their camps and eating their food.  They're also boldly promoting anarchy, flag burning, and violence (while struggling with their own rampant internal sexual violence), and endorsing nastiness like public defacation and all kinds of other mayhem.  When they get forcibly removed from one city they just migrate on to another.  Perhaps more disturbing is that the legal system -- and the agenda-driven liberals therein -- is supporting them despite the clear danger they present to public safety.

These are not the 99%.  These are the fringe wackos.  Their actions betray their intentions and true selves, and convey volumes more than any words written about them ever could.  One only has to look at them to see that they are not representative of what the Founding Fathers set forth, nor the majority of Americans today.

The real problem is that these fringe wackos share the same fundamental beliefs as the liberals currently in power in the American government.  While Barack Obama, Harry Reid, and the other so-called 'elites' in Washington may have a much more polished look and speak in well-practiced platitudes, the beliefs and motivations are one and the same.

The longer these people control the direction of America, the worse off this great nation will become.  The sooner they get ousted, the sooner we can begin the monumental task of repairing, restoring, and rebuilding what they are figuratively and literally trying to destroy.

Daily Life

Pondering School Teacher's Salaries

Hm.  This WSJ article is a very interesting -- and, dare I say it, controversial -- take on the idea that teachers are underpaid:

A common story line in American education policy is that public school teachers are underpaid—"desperately underpaid," according to Education Secretary Arne Duncan in a recent speech. As former first lady Laura Bush put it: "Salaries are too low. We all know that. We need to figure out a way to pay teachers more."

Good teachers are crucial to a strong economy and a healthy civil society, and they should be paid at a level commensurate with their skills. But the evidence shows that public school teachers' total compensation amounts to roughly $1.50 for every $1 that their skills could garner in a private sector job.

How could that be?

You have to look past the hype and political correctness to the real numbers, and perform some legitimate comparisons:

First, consider salaries. Public school teachers do receive salaries 19.3% lower than similarly-educated private workers, according to our analysis of Census Bureau data. However, a majority of public school teachers were education majors in college, and more than two in three received their highest degree (typically a master's) in an education-related field. A salary comparison that controls only for years spent in school makes no distinction between degrees in education and those in biology, mathematics, history or other demanding fields.

How often have you heard that comparison being made?  This is the first time I've ever heard it, but I think it changes the perspective quite a bit.  The article goes on with the common knowledge that education is one of the easiest curricula to complete, and shows that on any number of objective professional exams (i.e. the SAT or GRE) teachers typically score around the 40th percentile.  Not exactly a ringing endorsement.  Then we get to the fringe benefits...

Data on employee benefits from the Bureau of Labor Statistics (BLS) ... do not include retiree health coverage, which for teachers is worth about an additional 10% of their salaries. Because of differing accounting rules between the public and private sectors, BLS data also make teachers' defined-benefit pensions appear only slightly more generous than the typical 401(k) plan found in the private sector.

In reality, a teacher who retired after 30 years of service with an annual salary of $40,000 might receive guaranteed annual pension benefits of about $20,330. Under a typical private 401(k) plan, a guaranteed annual benefit might be only around $4,450 (assuming the money is invested in U.S. Treasurys and the employee buys an annuity).

BLS data on paid leave for teachers count vacation days only during the school year, omitting summer and long holiday breaks. A valid pay comparison should include this extra time off, in which teachers can enjoy longer vacations or earn additional income.

Properly counted, a typical public school teacher with a salary of $51,000 would receive another $51,480 in present or future fringe benefits. A worker in private business with the same salary would receive around $22,185 in fringe benefits.

And don't forget that those long breaks often include secondary jobs that bring in additional income that non-teachers don't have the opportunity to make.  And we haven't even approached the subject of job security yet, which is especially relevant in uncertain economic times like now:

...teachers still have greater job security than workers in private businesses. While employment in education declined by 2.9% between September 2008 and July 2011, according to BLS data, overall private-sector employment declined by 4.4%. Moreover, from 2005 through 2010 the unemployment rate for public school teachers averaged 2.1%, versus 4.1% for private school teachers and 3.8% for occupations that some consider comparable, such as computer programmers and insurance underwriters. ...

Consider that one-fifth of the highest-performing public school teachers in Washington, D.C., recently declined to give up even part of their job security in exchange for base salary increases of up to $20,000.

Clearly they valued security over that huge chunk of change.  The WSJ calculates this security is worth another 9% in salary compensation.  And how about the simple math of the real world:

...the average person who moves into teaching receives a pay increase of almost 9%, while the average teacher who leaves for the private economy must take a pay cut of over 3%.

The bottom line:

In short, combining salaries, fringe benefits and job security, we have calculated that public school teachers receive around 52% more in average compensation than they could earn in the private sector.

And here's why it should matter to everyone:

The compensation premium is especially relevant today, as states and localities struggle with budget deficits. Restraining the growth of teacher compensation—in particular, pension and retiree health benefits that outstrip what comparable private-sector workers receive—could help balance budgets and perhaps restore school resources lost to rising labor costs. Broader pay reform should give school administrators greater flexibility to reward the best or most-needed teachers with high salaries and benefits, while encouraging the least effective ones to improve or to leave the profession.

Effective reform, however, requires knowing all the facts about teacher pay. Policy makers and the public should not accept at face value that the typical teacher earns far less than he or she would in the private sector. The evidence points to a very different conclusion.

Now, let's be clear about something: I'm not trying to bag on teachers.  In fact, I firmly believe that a good teacher is priceless, and worth three times the salary he/she probably gets paid.  My family has been blessed to have top-notch teachers in a great school district, and I am in no way trying to demean any of them.  The WSJ article points out that the data presented are based on averages, and that the very best teachers are likely paid less than equivalent private sector performance and skill level, and I would agree.  But...any discussion of teacher salaries is peripheral.  My point is to address the underlying root of this discussion - blindly throwing money at education without regard to whether or not a teacher deserves it.

There is currently a national misconception of teachers being underpaid everywhere, and that is simply not true.  Quite the opposite, in fact, as the above article clearly shows.  Now, when we consider that U.S. education is going down the tubes with each successive year (the last numbers I heard said that some 15% of high school age kids don't graduate at all, and many of those who do are functionally illiterate), should we really keep throwing money at the current educational system?  I could be persuaded by a reasonable argument that showed money being heaped directly upon teachers based on incentives for good performance, but that's not what happens.  In reality, huge chunks of taxpayer money go to the NEA (yet another liberal Democrat money-laundering union) and unnecessary administration expenditures rather than anything that directly benefits the educational value or capability of teachers or schools.

And our children -- again, on average across the nation -- pay the price for it.  Ultimately, as these kids grow up, this whole nation will suffer.

We need to rethink the entirety of our educational system.

Economic Problems And Solutions

Let's review:

A related note about income mobility:

"Consider these data compiled by the Federal Reserve and put in a chart by the American Enterprise Institute's Mark J. Perry in Tuesday's Examiner. The data showed that fully 56 percent of those who in 2001 were in the lowest 20 percent quintile of income earners had moved up to a higher income quintile. At the opposite end of the spectrum, 66 percent of those who in 2001 were in the highest quintile of income earners dropped at least one quintile by 2007. And, as Perry notes on his Carpe Diem blog, lest anybody think the period spanning those years might not be representative because of the housing boom that triggered the Great Recession of 2008, data cited by the Fed point to the same pattern of high income mobility from 1996 to 2005. Fully 57.5 percent of those in the top 1 percent of income earners dropped to a lower quintile by 2005, while 57.8 percent of those in the lowest quintile in 1996 moved to a higher one by 2005. Since the Occupy Wall Street protestors took up residence in New York's Zuccotti Park, Americans have been repeatedly assaulted by Democratic politicians, academics and members of the liberal mainstream media bewailing the growing income inequality in the country. ... But such a static analysis misses entirely the more relevant question that has long been at the heart of the American economic miracle: To what degree can individuals change their economic status through their own labor and without having to overcome obstacles to their efforts by law or custom? ... The income mobility data above surely make clear that the right answer is not increasing federal taxes on the rich or expanding government regulation of business."

So what would work?  How about focusing on growth via policies that actually promote it:

The RSC, which is the most respected conservative group within Congress, has proposed a jobs growth plan today, which seeks to achieve [reforms focused on taxation, regulation, and energy production].

Much like Rick Perry’s flat tax plan, the RSC bill would offer an optional transition to a new, flatter system; however, the details are slightly different.  The RSC’s optional plan includes:

•  Just two rates 15% (first $50,000 taxable income for single filers, $100,000 for joint filers) and 25% (taxable income above that);
• A standard deduction of $12,500 for single filers and $25,000 for joint filers;
• An additional deduction of $12,500 for each dependent; and
• No other individual deductions or credits or exclusions
• Also, after the initial choice is made, individuals are allowed one additional changeover
  between the two systems. Individuals are also allowed to
  change tax systems when a major life event (death, divorce, marriage) changes their tax filing status.

Governor Perry’s plan offers one 20% tax rate, while this plan has two tax brackets; 15% and 25%, but excludes any and every deduction, including the market-distorting mortgage interest deduction (retained in both Perry and Gingrich plans) and the deduction for state and local taxes (retained in Perry’s plan).  Both plans include a $12,500 standard deduction and dependent deduction (Gingrich’s is $12,000). ...



Other major provisions of the bill include changes to the current system as well:

• “Reduces America’s top corporate tax rate from 35% to 25%. The legislation also directs the House Ways and Means Committee to identify tax deductions and credits that could be eliminated and to report legislation transitioning the U.S. to a territorial tax system.”  Also, they would seek to eliminate the pernicious employer healthcare exemption.
• Permanently repeals AMT and Death Tax
• The legislation lowers the tax on foreign-earned profits repatriated by U.S. corporations to 5.25% for one year
• Permanently keeps CapGains taxes at 15% (Bush tax cuts).  Additionally, it eliminates the government’s ability to impose CapGains taxes on the value of the investment that rose due to inflation.

 The RSC seems to be a genuinely conservative voice in Washington, and is well accepted by the political Right, even on this particular plan.  These are common sense reforms that should be no-brainers, especially right now.  It's one thing to complain about the status quo; it's something else to put forward legitimate solutions that have been proven to work time and time again.

The key is knowing who (and what) to support.  These guys are the who, and this plan is the what.

Today's Unemployment Numbers

Good news?

Nonfarm payroll employment continued to trend up in October (+80,000), and the unemployment rate was little changed at 9.0 percent, the U.S. Bureau of Labor Statistics reported today. Employment in the private sector rose, with modest job growth continuing in professional and businesses services, leisure and hospitality, health care, and mining. Government employment continued to trend down. …

Total nonfarm payroll employment continued to trend up in October (+80,000). Over the past 12 months, payroll employment has increased by an average of 125,000 per month. In October, private-sector employment increased by 104,000, with continued job growth in professional and business services, leisure and hospitality, health care, and mining. Government employment continued to contract in October.

Not really, no:

Analysts expected an overall job growth number around 95,000, so this falls short of predictions. Even with just the private-sector growth taken into consideration, the number isn't enough to keep up with population growth.

And, as usual with liberals, it gets even worse if you go beneath the covers:

Looking a little deeper into the year-on-year numbers for people not in the work force (and therefore not counted in the jobless rate), those numbers (not seasonally adjusted) increased from October 2010, from 84.878 million to 86.181 million.  People who want work but remain outside the labor force rose from 5.867 million to 5.969 million, although the category of "discouraged workers" dropped from 1.219 million to 967,000.  The seasonally-adjusted numbers show a one-month increase in people who want a job but don't have one from 6.241 million to 6.403 million — a bad sign after last month's decrease in this figure.

So, while it is genuinely good that any jobs are being created, the reality is that Obamanomics simply isn't good for the economy, and never will be.  As much as the liberal Left is going to trumpet the reduction from 9.1% to 9% in the overall unemployment numbers, there's still no reason for long-term optimism here.  Some of them are even admitting it publicly, and some of the more honest are offering a warning:

The Democrats are losing the battle of public perceptions over which party can best improve the economy, according to a new analysis by prominent Democratic pollster Stan Greenberg and other strategists.

Greenberg's Study for Democracy Corps, a Democrat-oriented research organization, finds that, "Although voters do not trust either party right now to create jobs, the Republicans are more trusted on the economy, business and big business, and spending and deficits…Democrats are losing the economic argument because right now voters do not see how increased spending helps the economy and they fear increased debt will prevent the economy from growing." …

The Democracy Corps says, "The mood on the economy is as bleak as we have seen it in recent years. By a two-to one ratio, voters are pessimistic about the future of the middle class." And the least optimistic people are union members, white women (both married and unmarried), non-college educated whites, and white voters living in rural areas outside the South. All of these groups have been hit hard by the recession and they will be crucial in the 2012 election.

And they're not favoring Democrats right now.  Without some serious positive economic movement in the next year, it's going to get even worse.

Which means better for America, because with fewer Democrats running the government, the better chance we have to actually get a recovery underway.

Legislative Perfection

Oh please oh please oh please oh please...

Perhaps no form of out-of-control government spending is more exasperating than the money the federal government pretends it doesn’t spend. Since 2005, accounting tricks and budget gimmicks have enabled more than $350 billion in additional deficit spending. That’s why, about a month ago, Sen. Jeff Sessions and Sen. Olympia Snowe introduced the Honest Budget Act to eliminate the nine most common deceptive budgeting practices Washington routinely employs. You might remember me writing about it.

It’s a sound piece of legislation — one that would restore somewhat the American people’s confidence in their legislators, one that would actually save money. Little by little, it’s acquired significant support in the Senate: The number of co-sponsors is up to 11, with Sens. Mike Lee (R-Utah) and Rand Paul (R-Ky.) signing on today. But, now, GOP senators have another reason to support the bill: It’s extremely popular with voters.

Last night on “Your World with Cavuto,” Republican pollster Frank Luntz described it as “legislative perfection” and reported that the bill polled better than anything he’s tested all year. The Cavuto clip is illuminating, as the scenes from Luntz’ focus group reveal just how committed voters are to the concept of honesty in budgeting — even when they despair of its possibility. They want legislators to at least try to restore integrity to the budgeting process.

This is a no-brainer: Does any politician actually want to stand up and defend dishonest accounting?

Well...yes, there are plenty of politicians who have no problem with dishonesty.  But it would be really fun to watch them try to dance around this one, wouldn't it?