The president plays small ball

Charles Krauthammer

The president plays small ball
 
Once upon a time, small ball was not Barack Obama’s game. Tuesday, it was the essence of his State of the Union address. The visionary of 2008 — purveyor of hope and change, healer of the earth, tamer of the rising seas — offered an hour of little things: tax-code tweaks to encourage this or that kind of behavior (manufacturing being the flavor of the day), little watchdog agencies to round up Wall Street miscreants and Chinese DVD pirates, even a presidential demand “that all students stay in high school until they graduate or turn 18.” Under penalty of what? Jail? The self-proclaimed transformer of America is now playing truant officer?

It sounded like the Clinton years with their presidentially proclaimed initiatives on midnight basketball and school uniforms. These are the marks of a shrunken presidency, thoroughly flummoxed by high unemployment, economic stagnation, crushing debt — and a glaring absence of ideas.

Of course, this being Obama, there was a reach for grandeur. Hope and change are long gone. It’s now equality and fairness.

That certainly is a large idea. Lenin and Mao went pretty far with it. As did Clement Attlee and his social-democratic counterparts in postwar Europe. Where does Obama take it? Back to the decade-old Democratic obsession with the Bush tax cuts, the crusade for a tax hike of all of 4.6 points for 2 percent of households — 10 years of which wouldn’t cover the cost of Obama’s 2009 stimulus alone.

Which is why Obama introduced a shiny new twist — the Buffett Rule, a minimum 30 percent rate for millionaires. Sounds novel. But it’s a tired replay of the alternative minimum tax, originally created in 1969 to bring to heel all of 155 underpaying fat cats. Following the fate of other such do-goodism, the AMT then metastasized into a $40 billion monster that today entraps millions of middle-class taxpayers.

There isn’t even a pretense that the Buffett Rule will do anything for economic growth or job creation (other than provide lucrative work for the sharp tax lawyers who will be gaming the new system for the very same rich). Which should not surprise. Back in 2008, Obama was asked if he would still support raising the capital-gains tax rate (the intended effect of the Buffett Rule) if this would decrease government revenue.

Obama said yes. In the name of fairness.

This is redistribution for its own sake — the cost be damned. It took Indiana Gov. Mitch Daniels about 30 seconds of his State of the Union rebuttal to demolish that idea. To get the rich to contribute more, explained Daniels, you don’t raise tax rates. This ultimately retards economic growth for all. You (a) eliminate loopholes from which the rich benefit disproportionately (tax reform) and (b) means-test entitlements so that the benefits go to those most in need.

Tax reform and entitlement reform are the really big ideas. The first produces social equity plus economic efficiency; the second produces social equity plus debt reduction. And yet these are precisely what Obama has for three years steadfastly refused to address. He prefers the easy demagoguery of “tax the rich.”

After all, what’s he got? Can’t run on his record. Barely even mentioned Obamacare or the stimulus, his major legislative achievements, on Tuesday night. Too unpopular. His platform is fairness, wrapped around a plethora of little things, one mini-industrial policy after another — the conceit nicely encapsulated by his proclamation that “I will not cede the wind or solar or battery industry to China or to Germany.” As if he can command these industries into existence. As if Washington funding a thousand Solyndras will make solar economically viable.

Soviet central planners mandated quotas for steel production, regardless of demand. Obama’s industrial policy is a bit more subtle. Tax breaks for manufacturing — but double tax breaks for high-tech manufacturing, which for some reason is considered more virtuous, despite the fact that high tech is less likely to create blue-collar jobs. Its main job creation will be for legions of lawyers and linguists testifying before some new adjudicating bureaucracy that the Acme Umbrella Factory meets its exquisitely drawn criteria for “high tech.”

What Obama offered the nation Tuesday night was a pudding without a theme: a jumble of disconnected initiatives, a gaggle of intrusive new agencies and a whole new generation of loopholes to further corrupt a tax code that screams out for reform.

If the Republicans can’t beat that in November, they should try another line of work.

Losing the future

Losing the future
Obama proposes to spend more money we don't have
Chicago Tribune

January 29, 2012

President Barack Obama knows the federal government has a big spending problem, and he is not reluctant to point it out. "The American people deserve to have their leaders come together to make the tough choices necessary to live within our means, just as American families do every day in these tough economic times," the White House said in November.

In his State of the Union address, Obama was not so keen on preaching austerity. As part of his plan to create an economy that is "built to last," he said it's necessary to "pay down our debt and invest in our future."

The phrase "invest in our future," we regret to report, is Washington-speak for "spend money." And in the current fiscal context, that means "spend money we don't have."

His speech to Congress contained a litany of new spending programs, from creating a new "Trade Enforcement Unit" to helping out homeowners who haven't been able to refinance their mortgages. Each one, taken by itself, can be defended. But added together, the National Taxpayers Union Foundation reports, they would require more than $20 billion in new spending.

The president says that doesn't matter because defense spending will be coming down by some $48 billion, for a net saving of about $28 billion. That sounds pretty good — until you consider that next year (according to the fiscal watchdog Concord Coalition), the government will most likely run a deficit of about $1 trillion.

What part of "fiscal crisis" does the administration not understand? On Friday, the federal debt ceiling was raised by $1.2 trillion, bringing it to a staggering $16.394 trillion — double what it was in 2005. And it's going to keep rising in the years to come.

When you are that deep in the hole, you need to focus on eliminating expenditures, not adding them. The defense savings are a start, but they're no excuse to gin up new outlays in other parts of the budget. Even by themselves, the defense savings amount to less than 5 percent of next year's deficit.

If the president wants to boost expenditures in one nondefense program, he should pay for it by reducing it in another. Better yet, he should cut $2 or $3 in nondefense programs for every $1 in new nondefense spending.

The excuse that we are "investing" in the future has been used way too often to excuse fiscal bloat. The best investment in our future is to lighten the burdens that will fall on the taxpayers of tomorrow.

For that matter, the promise to "pay down our debt," which the president made twice in his address, is false. Republicans and Democrats are not arguing about how to pay down debt. They're arguing about how quickly or slowly we will continue to accumulate debt.

Obama says he wants to foster the long-term health of the economy. But it looks as though Washington's habit of living beyond its means is built to last.

How Mitt Romney Beat Us

How Mitt Romney Beat Us

By Tim Miller - January 20, 2012
Tim Miller is Jon Huntsman's national press secretary.

The end of a presidential campaign brings inevitable dissection of what went wrong and where. Too often such hand wringing focuses on the minutiae that journo-pundits and political flacks choose to obsess over. But in reality, it’s the broad structural issues that shaped the race that impacted the result, not the literati with their tweets and trivia.

Candidates have to define themselves and their opponents on their terms. They have to play by the rules of the game and execute efficiently. They need a message that resonates with the electorate, and the resources to make it all happen. This case was no different.

As the Huntsman campaign's spokesman (and one of the Romney campaign's chief Primary antagonists), I saw first hand how strong of a campaign Governor Romney ran, and how he did it at a time that uniquely suits his background and character. There were a handful of possible impediments in his way. Our campaign was more effective than any of his other opponents at exposing those...we even had a little fun doing it. But Romney avoided those impediments in a few important ways. Here is a breakdown of how it happened:

1. You Can Teach An Old Dog New Tricks

Politicians and men over 60 are two brands of humans that are especially unlikely to be self-critical enough to assess personal flaws and make marked changes. That is what makes Mitt Romney’s political skill this cycle all the more impressive. In 2008 he played to his audience and was unsure of his message, a bore on the stump and a pedestrian debater. This year, he had a clear message, was comfortable in his own skin, relentlessly honest, and the best debater in the field.

In 2008 he made opposition researchers and rapid responders giddy with his propensity for saying different things to different audiences in spite of his own record or message. Now? He takes glee in telling voters exactly what he feels this country needs, whether they agree or not.

He took his biggest potential hurdles – Romneycare and the flip-flopping tag -- head on. He didn’t apologize for his record or try to rewrite history. Instead he clearly and succinctly explained how his view on health care differed from President Obama’s.

2. The Rules of the Game Apply

A favorite trope of political analysts each cycle is that technology has so changed the political landscape that the same old rules of politics no longer apply. The reality is just the opposite. Not only do they still apply; they are more important than ever. You can’t win a campaign with Facebook posts. You can’t win a campaign without negative television ads. You can’t win a campaign while on a book tour or through satellite Fox News hits.

You need to manage your message through television ads and traditional media in addition to on Fox and the web. The Romney campaign had a clear message across all mediums and quickly dispensed with any threats to that message.

Message discipline alone doesn’t work. You also need the funds to do it the right way.

In 2007 Mitt Romney smartly spent millions of dollars up front to increase his name ID and poll numbers in early states. He essentially bought a ticket to the top tier and all the free earned media that comes with that distinction. He was on television in February 2007, seven months before the equivalent ad in this cycle.

This time, such spending wasn’t necessary. He already had the name recognition and poll numbers. Instead the Romney campaign sat on their war chest. They waited, like a sniper in a clock tower, until a rival threatened them; then they delivered the head shots with brutal efficiency. (See: Perry, Rick and Gingrich, Newt).

When necessary they did so with paid media. But they were just as effective through the traditional press, filleting unprepared rivals who thought the rules of the game didn’t apply to them. Others tried to flout the rules. Boston knew better.

3. A Message to Match the Moment

An efficient campaign organization and talented candidate can only get you so far. You need the message, background, and temperament that resonate with voters. Oftentimes in our democracy the fates determine who is the person that matches a given moment in history.

Staring down a stagnant economy and 24 million out of work, Romney’s background as a job creator and turnaround artist is just what the doctor ordered. He will be able to go head to head with a president who has been an utter failure at fixing our economy. A president who spent two years working on onerous health care and banking regulations that stifle economic growth. A president who has overseen a $5 trillion ballooning of our debt with nothing to show for it. There couldn’t be a clearer alternative to that than Governor Romney.

I couldn’t be more proud of the campaign Jon Huntsman ran, and am so glad I was a part of it. Governor Huntsman is uniquely prepared to be president. He brought a distinct message about restoring trust in Washington that is critical at this time in history. And most importantly, he and his family campaigned with honor and integrity. I can only hope that his moment in history is yet to come. But there is no doubt this one was Mitt Romney’s.

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Clogging our ports with rules
By George F. Will,

CHARLESTON, S.C.

Thanks to globalization, and to containerized shipping that began in 1956 and makes globalization work, commodities swiftly move vast distances around the planet. Wal-Mart alone imports 400,000 containers a year. Trade flows can, however, be deflected or even defeated by a distance of just five feet. Herewith a story of the high costs of a few feet and of too many years required for our nation’s increasingly sluggish public processes to move.

This city’s port, the East Coast’s fourth busiest (1.38 million shipping containers a year), is 45 feet deep. But in two years the Panama Canal will open a larger set of locks capable of handling ships 50 percent wider and with deeper drafts than today’s “Panamax” ships — the largest that can currently transit the canal.

The first container ship reached Charleston in 1966, carrying 600 containers. Today the port receives ships carrying more than 9,000. By 2014 there will be 1,200 “post-Panamax” ships — marvels of naval architecture, floating mountains — built for commerce after the canal widening. They will carry up to 18,000 containers. The widening, says Jim Newsome, CEO of the South Carolina State Ports Authority, will be “the biggest game-changer in the history of containerization.”

Charleston could be out of the game, with huge anti-competitive consequences for the burgeoning manufacturing and exporting industries of the Southeast — affecting BMW, Michelin, General Electric (turbines) and others in South Carolina alone. By 2014, two-thirds of the world’s container capacity will be carried by ships bigger than the unwidened canal could handle. Some things are moving rapidly.

There are four southeastern ports along 400 miles of Atlantic coast — Wilmington, N.C., Charleston, Savannah, Ga., and Jacksonville, Fla. — but none is 50 feet deep, which would give post-Panamax ships easy access. The Army Corps of Engineers, which must do the dredging, says that, on the basis of preliminary studies of other harbors, the harbor in Charleston “would probably be the cheapest South Atlantic harbor to deepen to 50 feet.”

Determining the feasibility of such projects typically takes five to eight years even if expedited (10 years or longer if not). Perhaps Congress could require globalization to pause while America studies things. Or perhaps post-Panamax vessels will be willing to loiter offshore a decade or so.

The federal government would pay $120 million, South Carolina $180 million. The $300 million — a sum equal to a rounding error on the General Motors bailout — would be quickly recouped as the deepened port delivered more than $100 million in net benefits annually. Today, 70 percent of imports from Asia arrive at West Coast ports and are distributed inland by truck and rail. But shipping is the cheapest transportation per mile and will become cheaper with post-Panamax ships, including those coming here.

Newsome says the study for deepening Savannah’s harbor was made in 1999. It is 2012, and studies for the environmental impact statement are not finished. When they are, the project will take five years to construct. “But before that,” he says laconically, “they’re going to be sued by groups concerned about the environmental impact.” A Newsome axiom — that institutions become risk-averse as they get challenged — is increasingly pertinent as America changes from a nation that celebrated getting things done to a nation that celebrates people and groups who prevent things from being done.

Newsome says that because of labor costs — in constructing and crewing ships — America has essentially no deep-sea shipping industry. This is a facet of the de-industrialization of the nation. But the nation is currently enjoying a renewed export boom, which accelerates the need for deep harbors.

The huge project of widening the Panama Canal began in 2006; it will be completed in eight years. Newsome, who is unstinting in his praise of the Army Corps, knows it must comply with ever-thickening layers of laws. But even if we stipulate that all these laws are wonderful, we should also stipulate that surely things would move faster if the nation faced an emergency. Such as economic enfeeblement.

The Empire State Building was built in 14 months during the Depression, the Pentagon in 16 in wartime. The aircraft carrier USS Yorktown, which earned 11 battle stars in the Pacific and now is anchored here, was built in less than 17 months, back when America was serious about moving forward. Is it necessary to take eight years — just two years less than it took to build the Panama Canal with yellow fever and without computers — to deepen this harbor five feet?

Government: The redistributionist behemoth

George F. Will
Opinion Writer - Washington Post
Government: The redistributionist behemoth


Liberals have a rendezvous with regret. Their largest achievement is today’s redistributionist government. But such government is inherently regressive: It tends to distribute power and money to the strong, including itself.

Government becomes big by having big ambitions for supplanting markets as society’s primary allocator of wealth and opportunity. Therefore it becomes a magnet for factions muscular enough, in money or numbers or both, to bend government to their advantage.

The left’s centuries-old mission is to increase social harmony by decreasing antagonisms arising from disparities of wealth — to decrease inequality by increasing government’s redistributive activities. Such government constantly expands under the unending, indeed intensifying, pressures to correct what it disapproves of — the distribution of wealth produced by consensual market activities. But as government presumes to dictate the correct distribution of social rewards, the maelstrom of contemporary politics demonstrates that social strife, not solidarity, is generated by government transfer payments to preferred groups.

This includes generational strife. Most transfer payments redistribute wealth from workers to nonworkers in the form of pensions and medical care for retirees. The welfare state’s primary purpose is to subsidize the last years of Americans’ lives, and the elderly are, after a lifetime of accumulation, better off than most Americans: In 2009, the net worth of households headed by adults ages 65 and older was a record 47 times that of households headed by adults under the age of 35 — a wealth gap that doubled just since 2005.

The equalizing effects of redistributive transfer payments are less today than in 1979, when households in the lowest income quintile received 54 percent of such payments. In 2007, they received 36 percent.

Because Social Security and Medicare are not means-tested, the share of transfer payments going to middle- and upper-income households tends to increase, for several reasons. The retirement age is essentially fixed, but people are living longer. And because the welfare state is so good to them, the elderly are unusually diligent voters and are especially apt to vote on the basis of protecting their benefits.

Beyond transfer payments, redistributionist government is itself governed by the law of dispersed costs and concentrated benefits: For example, sugar import quotas confer substantial wealth on a small cohort of producers already wealthy enough to work the political levers of redistributive government. The increased cost of sugar substantially penalizes consumers as a group but not so noticeably that individuals protest.

The tax code, government’s favorite instrument for distributing wealth to favored factions, has been tweaked about 4,500 times in 10 years. Generally, the beneficiaries of these changes are interests sufficiently strong and sophisticated to practice rent-seeking.

Not only does redistributionist government direct wealth upward; in asserting a right to do so, it siphons power into itself. A puzzling aspect of our politically contentious era is how little contention there is about the ethics of coercive redistribution by progressive taxation and other government “corrections” of social outcomes it considers unethical or unaesthetic.

This reticence, in an age in which political reticence is rare, reflects the difficulty of articulating principled defenses of these practices. They go undefended because they are generally popular with a public that misunderstands their net effects and because the practices are the political class’s vocation today. The big winners from these practices are that class and the interests adept at collaborating with it.

Government uses redistribution to correct social outcomes that offend it. But government rarely explains, or perhaps even recognizes, the reasoning by which it decides why particular outcomes of consensual market activities are incorrect. When taxes are levied not to efficiently fund government but to impose this or that notion of distributive justice, remember: Taxes are always coerced contributions to government, which is always the first, and often the principal, beneficiary of them.

Try a thought experiment suggested decades ago by University of Chicago law professors Walter Blum and Harry Kalven in their 1952 essay “The Uneasy Case for Progressive Taxation,” published in their university’s law review. Suppose society’s wealth trebled overnight without any change in the relative distribution among individuals. Would the unchanged inequality at higher levels of affluence decrease concern about inequality?

Surely not: The issue of inequality has become more salient as affluence has increased. Which suggests two conclusions:

People are less dissatisfied by what they lack than by what others have. And when government engages in redistribution in order to maximize the happiness of citizens who become more envious as they become more comfortable, government becomes increasingly frenzied and futile.