The Real 'Stimulus' Record

By ARTHUR B. LAFFER

Policy makers in Washington and other capitals around the world are debating whether to implement another round of stimulus spending to combat high unemployment and sputtering growth rates. But before they leap, they should take a good hard look at how that worked the first time around.

It worked miserably, as indicated by the table nearby, which shows increases in government spending from 2007 to 2009 and subsequent changes in GDP growth rates. Of the 34 Organization for Economic Cooperation and Development nations, those with the largest spending spurts from 2007 to 2009 saw the least growth in GDP rates before and after the stimulus.

The four nations—Estonia, Ireland, the Slovak Republic and Finland—with the biggest stimulus programs had the steepest declines in growth. The United States was no different, with greater spending (up 7.3%) followed by far lower growth rates (down 8.4%).

Still, the debate rages between those who espouse stimulus spending as a remedy for our weak economy and those who argue it is the cause of our current malaise. The numbers at stake aren't small. Federal government spending as a share of GDP rose to a high of 27.3% in 2009 from 21.4% in late 2007. This increase is virtually all stimulus spending, including add-ons to the agricultural and housing bills in 2007, the $600 per capita tax rebate in 2008, the TARP and Fannie Mae and Freddie Mac bailouts, "cash for clunkers," additional mortgage relief subsidies and, of course, President Obama's $860 billion stimulus plan that promised to deliver unemployment rates below 6% by now. Stimulus spending over the past five years totaled more than $4 trillion.

If you believe, as I do, that the macro economy is the sum total of all of its micro parts, then stimulus spending really doesn't make much sense. In essence, it's when government takes additional resources beyond what it would otherwise take from one group of people (usually the people who produced the resources) and then gives those resources to another group of people (often to non-workers and non-producers).

Often as not, the qualification for receiving stimulus funds is the absence of work or income—such as banks and companies that fail, solar energy companies that can't make it on their own, unemployment benefits and the like. Quite simply, government taxing people more who work and then giving more money to people who don't work is a surefire recipe for less work, less output and more unemployment.

Yet the notion that additional spending is a "stimulus" and less spending is "austerity" is the norm just about everywhere. Without ever thinking where the money comes from, politicians and many economists believe additional government spending adds to aggregate demand. You'd think that single-entry accounting were the God's truth and that, for the government at least, every check written has no offsetting debit.

Well, the truth is that government spending does come with debits. For every additional government dollar spent there is an additional private dollar taken. All the stimulus to the spending recipients is matched on a dollar-for-dollar basis every minute of every day by a depressant placed on the people who pay for these transfers. Or as a student of the dismal science might say, the total income effects of additional government spending always sum to zero.

Meanwhile, what economists call the substitution or price effects of stimulus spending are negative for all parties. In other words, the transfer recipient has found a way to get paid without working, which makes not working more attractive, and the transfer payer gets paid less for working, again lowering incentives to work.

But all of this is just old-timey price theory, the stuff that used to be taught in graduate economics departments. Today, even stimulus spending advocates have their Ph.D. defenders. But there's no arguing with the data in the nearby table, and the fact that greater stimulus spending was followed by lower growth rates. Stimulus advocates have a lot of explaining to do. Their massive spending programs have hurt the economy and left us with huge bills to pay. Not a very nice combination.

Sorry, Keynesians. There was no discernible two or three dollar multiplier effect from every dollar the government spent and borrowed. In reality, every dollar of public-sector spending on stimulus simply wiped out a dollar of private investment and output, resulting in an overall decline in GDP. This is an even more astonishing result because government spending is counted in official GDP numbers. In other words, the spending was more like a valium for lethargic economies than a stimulant.

In many countries, an economic downturn, no matter how it's caused or the degree of change in the rate of growth, will trigger increases in public spending and therefore the appearance of a negative relationship between stimulus spending and economic growth. That is why the table focuses on changes in the rate of GDP growth, which helps isolate the effects of additional spending.

The evidence here is extremely damaging to the case made by Mr. Obama and others that there is economic value to spending more money on infrastructure, education, unemployment insurance, food stamps, windmills and bailouts. Mr. Obama keeps saying that if only Congress would pass his second stimulus plan, unemployment would finally start to fall. That's an expensive leap of faith with no evidence to confirm it.

Generation Squeezed

Generation Squeezed

By Robert Samuelson - August 6, 2012

WASHINGTON -- I worry about the future -- not mine but that of my three children, all in their 20s. It is an axiom of American folklore that every generation should live better than its predecessors. But this is not a constitutional right or even an entitlement, and I am skeptical that today's young will do so. Nor am I alone. A recent USA Today/Gallup poll finds that nearly 60 percent of Americans are also doubters. I meet many parents who fear the future that awaits their children.

The young (and I draw the line at 40 and under) face two threats to their living standards. The first is the adverse effect of the Great Recession on jobs and wages. Even if this fades with time, there's the second threat: the costs of an aging America. It's not just Social Security, Medicare and Medicaid -- huge transfers from the young to the old -- but also deferred maintenance on roads, bridges, water systems and power grids. Newsweek calls the young "generation screwed"; I prefer the milder "generation squeezed."

Already, batteries of indicators depict the Great Recession's damage. In a Pew survey last year, a quarter of 18-to-34-year-olds said they'd moved back with parents to save money. Getting a job has been time-consuming and often futile. In July, the unemployment rate among 18-to-29-year-olds was 12.7 percent. Counting people who dropped out of the labor market raises that to 16.7 percent, says Generation Opportunity, an advocacy group for the young. Among recent high-school graduates, unemployment rates are near half for African-Americans, a third for Hispanics and a quarter for whites, notes the Economic Policy Institute, a liberal think tank.

The weak labor market hurts even job holders. From 2007 to 2011, "real" (inflation-adjusted) wages fell nearly 5 percent for recent college graduates and 10 percent for recent high-school graduates, says EPI. Among college grads, only four in 10 said their jobs required a four-year degree, reports a survey by the John J. Heldrich Center at Rutgers University. If the economy doesn't fully recover, slack labor demand will continue to depress employment and wages for years.

Of course, generalizations can be overdone. Countless millions of young people are doing -- and will do -- fine. History can't be predicted. The mass retirement of baby-boom workers may create job scarcities and raise wages. Still, some setbacks will endure. Some skills that would have been learned on the job won't ever be. Life decisions are deferred. Among 18-to-29-year olds, the weak economy is causing 18 percent to postpone marriage and 23 percent to delay starting a family, reports a survey by Generation Opportunity.

And then there are the costs of aging. Gains in productivity -- from new technologies or better skills -- that would normally flow into paychecks will be siphoned off to pay for retiree benefits, underfunded state and local government pensions and infrastructure repair. Taxes will rise; if not, public services will fall. Or both. Population change can't be repealed. The ratio of workers to retirees, 5-to-1 in 1960 and 3-to-1 in 2010, is projected at nearly 2-to-1 by 2025.

It's often said that today's young will ultimately benefit from this lopsided tax-and-transfer system. Old themselves, they will be similarly subsidized by their young. Doubtful. Sooner or later, the system's oppressive costs will become so obvious that future benefits will be curbed. Chances are the young will still pay for today's elderly without themselves receiving comparable support.

As a parent, all this rattles me. We judge our success by how well our children do. We love them and want them to succeed, even if most of us recognize -- at some point -- that our ability to influence and protect them has expired. Peering into the unfathomable future, we don't like what we think we see. We're dispatching them into a less secure and less prosperous world. These parental anxieties, I think, are the presidential campaign's great, unacknowledged issue. Many voters will decide based on a calculus of which candidate would minimize the economic perils for their grown children.

But the calculus will be selective. To aid the young, we could tighten Social Security and Medicare, raising eligibility ages and reducing payouts for wealthier retirees. Unlikely. Younger voters seem clueless about advancing their economic interests. In 2008, 18-to-29-year-olds supported Barack Obama by 34 percentage points. They love his pseudo-youthfulness. Or his positions on other issues (immigration, gay rights) trump economics. As president, Obama has done nothing to improve generational fairness.

If the young won't help themselves, their parents and grandparents might. They might champion revising retirement programs. Dream on. Parents and grandparents may be worried about their offspring's prospects, but they're not so worried as to sacrifice their own. There are real conflicts between the young and old; so far, the young are losing.

Who else, Mr. President?

Who else, Mr. President?

Author: John Kass

When President Barack Obama hauled off and slapped American small-business owners in the mouth the other day, I wanted to dream of my father.

But I didn't have to close my eyes to see my dad. I could do it with my eyes open.

All I had to do was think of the driveway of our home, and my dad's car gone before dawn, that old white Chrysler with a push-button transmission. It always started, but there was a hole in the floor and his feet got wet in the rain. So he patched it with concrete mix and kept on driving it to the little supermarket he ran with my Uncle George.

He'd return home long after dark, physically and mentally exhausted, take a plate of food, talk with us for a few minutes, then flop in that big chair in front of the TV. Even before his cigarette was out, he'd begin to snore.

The next day he'd wake up and do it again. Day after day, decade after decade. Weekdays and weekends, no vacations, no time to see our games, no money for extras, not even forMcDonald's. My dad and Uncle George, and my mom and my late Aunt Mary, killing themselves in their small supermarket on the South Side of Chicago.

There was no federal bailout money for us. No Republican corporate welfare. No Democratic handouts. No bipartisan lobbyists working the angles. No Tony Rezkos. No offshore accounts. No Obama bucks.

Just two immigrant brothers and their families risking everything, balancing on the economic high wire, building a business in America. They sacrificed, paid their bills, counted pennies to pay rent and purchase health care and food and not much else. And for their troubles they were muscled by the politicos, by the city inspectors and the chiselers and the weasels, all those smiling extortionists who held the government hammer over all of our heads.

I thought about this after I heard what Obama told a campaign crowd the other day, speaking about business owners and why they were successful.

"You didn't get there on your own," Obama said. "I'm always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

"If you were successful, somebody along the line gave you some help. There was a great teacher somewhere in your life. Somebody helped to create this unbelievable American system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you've got a business, you didn't build that. Somebody else made that happen. The Internet didn't get invented on its own. Government research created the Internet so that all the companies could make money off the Internet."

If you've got a business, you didn't build that? Somebody else made that happen?

Somebody else, Mr. President? Who, exactly? Government?

One of my earliest memories as a boy at the store was that of the government men coming from City Hall. One was tall and beefy. The other was wiry. They wanted steaks.

We didn't eat red steaks at home or yellow bananas. We took home the brown bananas and the brown steaks because we couldn't sell them. But the government men liked the big, red steaks, the fat rib-eyes two to a shrink-wrapped package. You could put 20 or so in a shopping bag.

"Thanks, Greek," they'd say.

That was government.

We didn't go to movies or out to restaurants. Everything went into the business. Uncle George and dad never bought what they could not afford. The store employed people, and the workers fed their families and educated their children and put them through college. They were good people, all of them. We worked together and worked hard, but none worked harder than the bosses.

It's the same story with so many other businesses in America, immigrants and native-born. The entrepreneurs risk everything, their homes, their children's college funds, their hearts, all for a chance at the dream: independence, and a small business of their own.

Most often, they fail and fall to the ground without a government parachute. But some get up and start again.

When I was grown and gone from home, my parents finally managed to save a little money. After all those years of hard work and denying themselves things, they had enough to buy a place in Florida and a fishing boat in retirement. Dad died only a few years later. You wouldn't call them rich. But Obama might.

Obama's changed. Gone is that young knight drawing the sword from the stone, selling Hopium to the adoring media, preaching an end to the broken politics of the past. These days, he wears a new presidential persona: the multimillionaire with the Chicago clout, playing the class warrior, fighting for that second term.

And he offers an American dream much different from my father's. Open your eyes and you can see it too. He stands there at the front of the mob, in his shirt sleeves, swinging that government hammer, exhorting the crowd to use its votes and take what it wants.

jskass@tribune.com
Twitter @John_Kass

Budget Insanity

Budget Insanity

By John Stossel - July 11, 2012

Last year, Congress agreed to $1.2 trillion in automatic spending cuts, unless politicians find other things to cut. They didn't, of course. So now, with so-called sequestration looming in January, panic has set in. Even the new "fiscally responsible" Republicans vote against cutting Energy Department handouts to companies like Solyndra and subsidies to sugar producers. Many claim that any cut in military spending will weaken America and increase unemployment.

It's another demonstration of the politicians' addiction to spending -- and how we are complicit. "One more infrastructure bill" or "this jobs plan" will jumpstart the economy, and then we'll kick our spending addiction once and for all.

But we don't stop.

For most of American history, government was tiny. But since Lyndon Johnson's Great Society and the promise that government would cure poverty, spending has gone up nonstop. This is not sustainable.

Progressives say: If you're so worried about the deficit, raise taxes! But it's a fantasy to imagine that taxing the rich will solve our deficit problem. If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That's only a third of this year's deficit.

It's the spending, stupid.

Even if you could balance the budget by taxing the rich, it wouldn't be right. Progressives say it's wrong for the rich to be "given" more money. But money earned belongs to those who earn it, not to government. Lower taxes are not a handout.

That's the moral side of the matter. There's a practical side, too. Taxes discourage wealth creation.

Even if you think -- despite all evidence -- that government spends money more usefully than people in the private sector, there is a limit to how much government can tax before people work less or flee.

Progressives claim a small increase in tax rates won't stop the wealthy from producing. But some would stop. When the top marginal rate was 90 percent, actor Ronald Reagan worked just half the year. He said that woke him up to the damage that high taxes impose.

Higher taxes give rich people and politicians more reasons to collude. The rich make contributions, and politicians pay the rich back by giving them tax loopholes.

That's a big loss to America. That money and creative energy spent on figuring out taxes might have gone to build new products, make music, cure cancer or ... who knows what?

Politicians promise to balance the budget by getting rid of what is wasteful, redundant or unnecessary. There's plenty of that, but they have promised to eliminate it for years. They cannot. It's just in the nature of the beast. Centrally planned monopolies do things that are wasteful, redundant and unnecessary.

What will bankrupt us first are the wealth transfers to my generation: Medicare and Social Security

When FDR started Social Security, most people didn't even live to age 65. Today, we average 78 -- and we baby boomers demand all the cool new stuff that modern medicine invents: anti-cholesterol drugs, hip replacements, etc. And we don't want to pay for most of it because we've been trained by government to assume that we're entitled to these things for free, or nearly free. We paid into Social Security and Medicare for our entire working lives, and damn it, we're entitled to get our money back!

Few of us realize that most of us get back up to three times what we paid in, that politicians have promised Social Security and Medicare recipients an impossible $46 trillion more than will exist and that our sense of entitlement will ruin America much faster than foreign aid, subsidies for NPR or foreign wars ever will.

Amazingly, we could grow our way out of debt if Congress simply froze spending at today's levels. That would balance the budget by 2017. If spending growth were limited to just 2 percent per year, the budget would balance by 2020!

But the politicians won't do even that.

It's depressing writing this. But it's not hopeless. There are examples of fiscal sanity we can follow -- if we have the will.

So basically the argument is that soft drinks are empty calories that provide no nutritional value. 


Two Responses:
1) Please stop telling me what to consume, especially related to food.  I am an adult and am capable of making my own choices, weighing benefits and costs.  Often, supporters argue that "bad" consumption choices affect everyone because the government ends up picking up the tab for health care needs that result from that consumption.  But that is a government created problem resulting from government subsidization of  healthcare.  Stop paying for healthcare, and we remove this issue.  So, in order to protect freedom of choice, we must decide as a society to either A) stop providing subsidized healthcare or B) accept that costs will be high as we provide subsidized healthcare.  Limiting freedom of choice in the name of subsidized healthcare should not be an option.  


2)  You know what else has empty calories that provide no nutritional value (while leading to even more negative impacts on society)?  Alcohol.  Interestingly, no mention of limiting alcohol consumption exists in the article.  Could that be because NY City makes a lot of money off taxes and licensing related to alcohol?  Until Alcohol is part of this "empty" calorie conversation, I will not view this as a genuine effort to improve health but rather an effort to expand the "nanny state".

New York City seeks to ban big sodas from restaurants, food carts - CNN.com
By Ronni Berke and Josh Levs , CNN
updated 11:43 AM EDT, Thu May 31, 2012 CNN.com

New York (CNN) -- New York City is set to ban the sale of large-size sodas and other sugary beverages in an effort to combat rising obesity rates, city officials said Thursday.

The ban would outlaw the sale of such drinks larger than 16 ounces at restaurants, food carts and any other establishment that receives a letter grade for food service. It would not apply to grocery stores

The New York City Department of Health will submit the measure to the Board of Health on June 12. There will then be a three-month comment period before the board votes on the proposal, according to a document city officials provided to CNN.

"The Health Department will then provide restaurants six months from the time the Board of Health adopts the proposal before citing violations, and nine months before issuing fines," the document says.

The department's commissioner, Dr. Tom Farley, tweeted that big sugary drinks are a "major contributor" to the "obesity epidemic. We're proposing to cap them at 16 oz in restaurants."

"There they go again," Stefan Friedman, a spokesman for the New York City Beverage Association, said in a statement. "The New York City Health Department's unhealthy obsession with attacking soft drinks is again pushing them over the top. The city is not going to address the obesity issue by attacking soda because soda is not driving the obesity rates."

Center for Science in the Public Interest spokesman Jeff Cronin told CNN that his group considers the decision the "boldest move in the country" and "not the first time that Mayor (Michael) Bloomberg has led the charge."

"In the same way New York City generated momentum for calorie labeling and for getting rid of artificial trans fat, we hope this move today will start a national movement to ratchet down out of control soda serving sizes," Cronin said.

McDonald's restaurants issued a statement saying, "Public health issues cannot be effectively addressed through a narrowly focused and misguided ban. This is a complex topic, and one that requires a more collaborative and comprehensive approach."

A statement from the Coca-Cola company said the "people of New York City are much smarter than the New York City Health Department believes. ... New Yorkers expect and deserve better than this. They can make their own choices about the beverages they purchase. We hope New Yorkers loudly voice their disapproval about this arbitrary mandate."

Broad public health initiatives have become a hallmark of Bloomberg's administration. Under the mayor, the city has banned trans fats from restaurants, smoking from parks, and has placed graphic ads targeting junk food and tobacco in public transit.

The Centers for Disease Control and Prevention says that "many people don't realize just how many calories beverages can contribute to their daily intake."

The CDC's National Center for Health Statistics, in a brief last August, said sugar drinks "have been linked to poor diet quality, weight gain, obesity, and, in adults, type 2 diabetes."

The American Heart Association has recommended a consumption goal of no more than 450 kilocalories of sugar-sweetened beverages -- fewer than three 12-ounce cans of carbonated cola -- per week, the report says.

But Friedman, in his statement, said that "as obesity continues to rise, CDC data shows that calories from sugar-sweetened beverages are a small and declining part of the American diet."

Beverage Digest, which tracks sales, reported that in 2011, sales of carbonated soft drinks dropped by 1%, a steeper decline than the year before. Total sales of carbonated soft drinks are down to the level they were in 1996, the report said.

Per capita consumption is at its lowest since 1987, the report said.

But the CDC notes that the consumption of sugar drinks -- including non-carbonated beverages -- is higher than it was 30 years ago. And part of the key to cutting calories is "to think about what you drink," it says.

That includes watching calories in coffee drinks and smoothies, the CDC says. Just over half -- 52% -- of calories from sugar drinks are consumed at home, the CDC brief said.

CNN's Ronni Berke reported from New York; CNN's Josh Levs reported from Atlanta.

Nancy Pelosi's USA Today Editorial

Note that middle class tax cuts, "strengthen the economy by putting money into the pockets of consumers and supporting small businesses, the engines of our recovery and job creation", but tax cuts for the wealthy "increase the deficit and do not grow the economy or create jobs".  

Also notice the complete lack of support for this inconsistency.

Additionally, there are ~1 Million US households who make more than $1 Million in yearly income.  If we confiscate an additional $100K from each, that would bring in $100 Billion in revenue.  While this is not an insignificant amount of money, is does little to close the $1.3 Trillion budget deficit from last year alone.  Even if we move forward with tax increases, increasing revenue from the risk is not going to be enough - overall spending must decrease.

http://www.usatoday.com/news/opinion/editorials/story/2012-05-29/nancy-pelosi-bush-tax-cuts/55272674/1

By House Minority Leader Nancy Pelosi

America's middle class — families, workers and small businesses — deserves economic stability and certainty. That is why Democrats have called on House Speaker John Boehner, R-Ohio, to set an immediate vote on extension of the middle-income tax cuts. Our economic growth requires that we act now.

Our nation's entrepreneurial spirit depends on a thriving middle class. These tax cuts strengthen the economy by putting money into the pockets of consumers and supporting small businesses, the engines of our recovery and job creation.

We face two tasks: One is to promote growth and create jobs; the other to reduce the deficit. Our proposal achieves both goals.

If Democrats and Republicans agree that we should not raise taxes on the middle class, then the question Republicans must answer is: Will they support middle-class tax relief now, or will they continue to insist that it be coupled with tax breaks for the wealthy that increase the deficit and do not grow the economy or create jobs?
Rate the debate

Democrats have always opposed the Bush tax cuts for the wealthiest Americans. Since President Obama's election, we have repeatedly called for an end to tax cuts for those making more than $250,000 a year. Republicans have rejected this effort, holding tax relief for the middle class and small businesses hostage to permanent tax breaks for millionaires, Big Oil, and corporations that ship jobs overseas.

Democrats are committed to moving the process forward by asking the wealthiest to pay their fair share through the expiration of tax cuts for those earning over $1 million a year. Democrats are committed to using the significant savings to reduce the deficit. And in the future, Democrats are committed to reforming the tax code, closing special interest loopholes.

Democrats and President Obama have supported a grand bargain to spur our economy and reduce our deficit in a balanced way. We hope Republicans return to negotiations after walking away. Until then, we must not allow the middle class and small businesses to pay the price. We must invest in jobs and growth, as we reduce the deficit and restore certainty for Americans.

Rep. Nancy Pelosi, D-Calif., the first female speaker of the House, serves as minority leader.

Too much agreement means more entitlements

Why is the cost of college increasing so quickly?  


In part, I believe it is because the government continues to provide cheap loan terms to students.  If loans were more expensive, demand for high-priced colleges would go down, and these institutions would have to reduce their prices (or at least slow the rate of tuition increases).  


Additionally, it is not clear to me why the federal government needs to provide loans - private companies would be willing to make these loans if they believe they are likely to be repaid.  If they are unlikely to be repaid, why should the tax payers be left taking the loss on these "bad bets"?  I suppose one could argue that the benefit to society associated with disadvantaged students achieving upward mobility outweighs the financial loss of education debts that go unpaid.  This is unpersuasive - if the upward mobility occurs, it would allow for the repayment of education debt.  If students are regularly unable to pay, this would indicate that this upward mobility is not occurring.

Too much agreement means more entitlements
By George F. Will, Published: May 16

Bipartisanship, the supposed scarcity of which so distresses the high-minded, actually is disastrously prevalent.

Since 2001, it has produced No Child Left Behind, a counterproductive federal intrusion in primary and secondary education; the McCain-Feingold speech rationing law (the Bipartisan Campaign Reform Act); an unfunded prescription drug entitlement; troublemaking by Fannie Mae and Freddie Mac; government-directed capitalism from the Export-Import Bank; crony capitalism from energy subsidies; unseemly agriculture and transportation bills; continuous bailouts of an unreformed Postal Service; housing subsidies; subsidies for state and local governments; and many other bipartisan deeds, including most appropriations bills.

Now, with Europe’s turmoil dramatizing the decadence of entitlement cultures and with American governments — federal, state and local — buckling beneath unsustainable entitlements, Congress is absent-mindedly creating a new entitlement for the already privileged. Concerning the “problem” of certain federal student loans, the two parties pretend to be at daggers drawn, skirmishing about how to “pay for” the “solution.” But a bipartisan consensus is congealing: Certain student borrowers — and eventually all student borrowers, because, well, why not? — should be entitled to loans at a subsidized 3.4 percent interest rate forever.

In 2006, Democrats, trying to capture control of Congress by pandering to students and their parents, proposed cutting in half the statutory 6.8 percent rate on some federal student loans. Holding Congress in 2007, and with no discernible resistance from the compassionately conservative George W. Bush administration, Democrats disguised the full-decade cost of this — $60 billion — by pretending that the subsidy, which now costs $6 billion a year, would expire in five years.

The five years are up July 1, and of course the 3.4 percent rate will be extended. Barack Obama supports this. So does Mitt Romney, while campaigning against a “government-centered society.” What would we do without bipartisanship?

The low 6.8 percent rate — private loans for students cost about 12 percent — was itself the result of a federal subsidy. And students have no collateral that can be repossessed in case they default, which 23 percent of those receiving the loans in question do. The maximum loan for third- and fourth-year students is $5,500 a year. The payment difference between 3.4 percent and 6.8 percent is less than $10 a month, so the “problem” involves less than 30 cents a day.

The 3.4 percent rate applies to only one category of federal loans, but because the Obama administration has essentially socialized the student loan business, federal loans are 90 percent of student borrowing, and this “temporary” rate probably will eventually be made permanent for all federal student loans.

Unsurprisingly, Obama has used this loan issue as an occasion to talk about himself, remembering the “mountain of debt” he and Michelle had when, armed with four Ivy League degrees (he from Columbia, she from Princeton, both from Harvard Law), they graduated into the American elite. The Atlantic’s Conor Friedersdorf notes that if Washington is feeling flush enough to spend another $60 billion on education in a decade, it could find more deserving people to subsidize than a privileged minority of college students who are acquiring credentials strongly correlated with higher-than-average future earnings.

The average annual income of high school graduates with no college is $41,288; for college graduates with just a bachelor’s degree it is $71,552. So the one-year difference ($30,264) is more than the average total indebtedness of the two-thirds of students who borrow ($25,250).

Taxpayers, most of whom are not college graduates (the unemployment rate for high school graduates with no college education: 7.9 percent), will pay $6 billion a year to make it slightly easier for some fortunate students to acquire college degrees (the unemployment rate for college graduates: 4 percent).

Between now and July, the two parties will pretend that it is a matter of high principle how the government should pretend to “pay for” the $6 billion while borrowing $1 trillion this year. But bipartisanship will have been served by putting another entitlement on a path to immortality.

Campaigning recently at Bradley University in Peoria, Ill., Romney warned students about their burden from the national debt, but when he took questions, the first questioner had something else on her peculiar mind: “So you’re all for like, ‘Yay, freedom,’ and all this stuff and ‘Yay, like, pursuit of happiness.’ You know what would make me happy? Free birth control.”

While awaiting that eventual entitlement, perhaps she can land a subsidized loan so she can inexpensively continue to hone her interesting intellect.

Divider in Chief

By CHARLES KRAUTHAMMER

 "The pundits like to slice and dice our country into red states and blue states ..." – Barack Obama, rising star, Democratic convention, 2004

Poor Solicitor General Donald Verrilli. Once again he's been pilloried for fumbling a historic Supreme Court case. First shredded for his "train wreck" defense of Obamacare's individual mandate, he is now blamed for the defenestration in oral argument of Obama's challenge to the Arizona immigration law.

The law allows police to check the immigration status of someone stopped for other reasons. Verrilli claimed that constitutes an intrusion on the federal monopoly on immigration enforcement. He was pummeled. Why shouldn't a state help the federal government enforce the law? "You can see it's not selling very well," said Justice Sonia Sotomayor.

But Verrilli never had a chance. This was never a serious legal challenge in the first place. It was confected (and timed) purely for political effect, to highlight immigration as a campaign issue with which to portray Republicans as anti-Hispanic.

Hispanics are just the beginning, however. The entire Obama campaign is a slice and dice operation, pandering to one group after another, particularly those that elected Obama in 2008 – blacks, Hispanics, women, young people – and for whom the thrill is now gone.

What to do? Try fear. Create division, stir resentment, by whatever means necessary – bogus court challenges, dead-end Senate bills and a forest of straw men.

Why else would the Justice Department challenge the photo ID law in Texas? To charge Republicans with seeking to disenfranchise Hispanics and blacks, of course. But in 2008 the Supreme Court upheld a similar law from Indiana. And it wasn't close: 6-3, the majority including that venerated liberal, John Paul Stevens.

Moreover, photo IDs were recommended by the 2005 Commission on Federal Election Reform, co-chaired by Jimmy Carter. And you surely can't get into the attorney general's building without one. Are Stevens, Carter and Eric Holder anti-Hispanic and anti-black?

The ethnic bases covered, we proceed to the "war on women." It sprang to public notice when a 30-year-old student at an elite law school (starting private-sector salary upon graduation: $160,000) was denied the inalienable right to have the rest of the citizenry (as co-insured and/or taxpayers – median household income: $52,000) pay for her contraception.

Despite a temporary setback – Hilary Rosen's hastily surrendered war on moms – Senate Majority Leader Harry Reid will resume the battle with a Paycheck Fairness Act that practically encourages frivolous lawsuits and has zero chance of passage.

No matter. Its sole purpose is to keep the war-on-women theme going, while the equally just-for-show Buffett Rule, nicely pitting the 99 percent versus the 1 percent, is a clever bit of class warfare designed to let Democrats play tribune of the middle class.

Ethnicity, race, gender, class. One more box to check: the young. Just four years ago, they swooned in the aisles for Obama. No longer. Not when 54 percent of college graduates under 25 are unemployed or underemployed.

How to shake them from their lethargy? Fear again. Tell them, as Obama repeatedly does, that Paul Ryan's budget would cut Pell Grants by $1,000 each, if his domestic cuts were evenly distributed. (They are not evenly distributed, making the charge a fabrication. But a great applause line.)

Then warn that Republicans would double the interest rate on student loans. Well, first, Mitt Romney has said he would keep them right where they are. Second, as The Washington Post points out, this is nothing but a recycled campaign gimmick from 2006 when Democrats advocated (and later passed) a 50 percent rate cut that gratuitously squanders student aid by subsidizing the wealthy as well as the needy.

For Obama, what's not to like? More beneficiaries, more votes.

What else to run on with 1.7 percent GDP growth (2011), record long-term joblessness and record 8 percent-plus unemployment (38 consecutive months, as of this writing). Slice and dice, group against group.

There is a problem, however. It makes a mockery of Obama's pose as the great transcender, uniter, healer of divisions. This is the man who sprang from nowhere with that thrilling 2004 convention speech declaring that there is "not a black America and white America and Latino America and Asian America; there's the United States of America."

That was then. Today, we are just sects with quarrels – to be exploited for political advantage. And Obama is just the man to fulfill Al Gore's famous mistranslation of our national motto: Out of one, many.

While Syria burns

While Syria burns
By Charles Krauthammer, Published: April 26

Last year President Obama ordered U.S. intervention in Libya under the grand new doctrine of “Responsibility to Protect.” Moammar Gaddafi was threatening a massacre in Benghazi. To stand by and do nothing “would have been a betrayal of who we are,” explained the president.

In the year since, the government of Syria has more than threatened massacres. It has carried them out. Nothing hypothetical about the disappearances, executions, indiscriminate shelling of populated neighborhoods. More than 9,000 are dead.

Obama has said that we cannot stand idly by. And what has he done? Stand idly by.

Yes, we’ve imposed economic sanctions. But as with Iran, the economic squeeze has not altered the regime’s behavior. Monday’s announced travel and financial restrictions on those who use social media to track down dissidents is a pinprick. No Disney World trips for the chiefs of the Iranian and Syrian security agencies. And they might now have to park their money in Dubai instead of New York. That’ll stop ’em.

Obama’s other major announcement — at Washington’s Holocaust Museum, no less — was the creation of an Atrocities Prevention Board.

I kid you not. A board. Russia flies planeloads of weapons to Damascus. Iran supplies money, trainers, agents, more weapons. And what does America do? Support a feckless U.N. peace mission that does nothing to stop the killing. (Indeed, some of the civilians who met with the U.N. observers were summarily executed.) And establish an Atrocities Prevention Board.

With multiagency participation, mind you. The liberal faith in the power of bureaucracy and flowcharts, of committees and reports, is legend. But this is parody.

Now, there’s an argument to be made that we do not have a duty to protect. That foreign policy is not social work. That you risk American lives only when national security and/or strategic interests are at stake, not merely to satisfy the humanitarian impulses of some of our leaders.

But Obama does not make this argument. On the contrary. He goes to the Holocaust Museum to commit himself and his country to defend the innocent, to affirm the moral imperative of rescue. And then does nothing of any consequence.

His case for passivity is buttressed by the implication that the only alternative to inaction is military intervention — bombing, boots on the ground.

But that’s false. It’s not the only alternative. Why aren’t we organizing, training and arming the Syrian rebels in their sanctuaries in Turkey? Nothing unilateral here. Saudi Arabia is already planning to do so. Turkey has turned decisively against Bashar al-Assad. And the French are pushing for even more direct intervention.

Instead, Obama insists that we can act only with support of the “international community,” meaning the U.N. Security Council — where Russia and China have a permanent veto. By what logic does the moral legitimacy of U.S. action require the blessing of a thug like Vladimir Putin and the butchers of Tiananmen Square?

Our slavish, mindless self-subordination to “international legitimacy” does nothing but allow Russia — a pretend post-Soviet superpower — to extend a protective umbrella over whichever murderous client it chooses. Obama has all but announced that Russia (or China) has merely to veto international actions — sanctions, military assistance, direct intervention — and America will back off.

For what reason? Not even President Clinton, a confirmed internationalist, would acquiesce to such restraints. With Russia prepared to block U.N. intervention against its client, Serbia, Clinton saved Kosovo by summoning NATO to bomb the hell out of Serbia, the Russians be damned.

If Obama wants to stay out of Syria, fine. Make the case that it’s none of our business. That it’s too hard. That we have no security/national interests there.

In my view, the evidence argues against that, but at least a coherent case for hands-off could be made. That would be an honest, straightforward policy. Instead, the president, basking in the sanctity of the Holocaust Museum, proclaims his solemn allegiance to a doctrine of responsibility — even as he stands by and watches Syria burn.

If we are not prepared to intervene, even indirectly by arming and training Syrians who want to liberate themselves, be candid. And then be quiet. Don’t pretend the U.N. is doing anything. Don’t pretend the U.S. is doing anything. And don’t embarrass the nation with an Atrocities Prevention Board. The tragedies of Rwanda, Darfur and now Syria did not result from lack of information or lack of interagency coordination, but from lack of will.

Gov’t party never ends

Gov’t party never ends
By Michael Graham | Wednesday, April 18, 2012 | http://www.bostonherald.com | Op-Ed

To paraphrase those General Services Administration party animals during their $823,000 bash in Las Vegas: “What happens in Obama- care stays in Obamacare.”

The White House spent much of last week attacking a Washington Post article that laid out why the so-called “Affordable Care Act” is — contrary to the president’s promises — going to add billions to our debt. There was much back and forth about “double counting Medicare savings” and “accepted accounting practices,” blah, blah, blah.

Unfortunately I couldn’t hear most of this debate because it was drowned out by laughter over the GSA and Secret Service scandals. Vegas clown shows and Car- tageña hookers? That’s news!

In fact, they’re all part of the same story, a story I would headline: “What Did You Expect? You Asked The Government To Do It.”

Outraged by $4 shrimp, $19 “artisanal cheese” service, $50-per-person breakfasts and $75,000 “team-building” bicycle games? Who isn’t?

Uh . . . the GSA, that’s who. And that’s the problem.

The job of the GSA, the government’s landlord, is to prevent ridiculous spending. They, in turn, spent millions holding parties to celebrate the great job they thought they were doing.

“I want this conference to really make a statement,” GSA regional boss Jeffrey Neely reportedly said. And he got it.

But if you think “the statement” is, “These specific GSA employees are bad,” you’ve missed the point: This is how most people spend money . . . when they’re spending other people’s money.

As Neely himself emailed:

“We typically host a nice happy hour in my suite one night . . . I know. I am bad. But as [his wife] deb and I say often, why not enjoy it while we have it and while we can. Aint going to last forever.”

Neely was right: No $179K government gig that includes taxpayer-funded hot tubs and expensive electronic gifts for the kids can last forever. And Neely’s reaction — “get it while the gettin’s good” — is a completely normal human reaction.

The Founding Fathers understood this (though what they would have made of $7,000 in sushi, I have no idea). That’s why they made government small, gave it as little as possible to do, and divided it so one branch could keep an eye on the other.

Which brings us back to Obamacare, and what it will really cost. In Massachusetts, the Romneycare version is already hundreds of millions over original projections, while also giving us the highest per-person medical costs and driving up insurance premiums.

At the national level, a study predicts $1.1 trillion in new federal spending and $340 billion added to the deficit over 10 years. The White House disagrees.

But this partisan debate is a misdirected joke because it leaves out the Neely factor. Once you put control of the health care system into the hands of hundreds of GSA-wannabes and government YouTube rap stars, costs are going to explode.

Who doesn’t know this? Surely all the people advocating for Obamacare have to be aware of this unchangeable truth. So how can they argue with a straight face that the same people who run the GSA, the Pentagon and/or the EBT system are going to cut our costs and save us money?

Once Obamacare is fully enacted, there will be a Jeffrey Neely in charge of your family’s health care and its costs. It could even be the same Neely. Do you know what happened a few months ago when this GSA spending spree came to light?

Neely got a $9,000 bonus.

Like they say in Vegas: “Jackpot!”

Michael Graham hosts an afternoon drive time talk show on 96.9 WTKK.

Obama v. SCOTUS
By Charles Krauthammer, Published: April 5

“I’m confident that the Supreme Court will not take what would be an unprecedented, extraordinary step of overturning a law that was passed by a strong majority of a democratically elected Congress.”

— Barack Obama, on the constitutional challenge to his health-care law, April 2


“Unprecedented”? Judicial review has been the centerpiece of the American constitutional system since Marbury v. Madison in 1803. “Strong majority”? The House has 435 members. In March 2010, Democrats held a 75-seat majority. Obamacare passed by seven votes.

In his next-day walk back, the president implied that he was merely talking about the normal “restraint and deference” the courts owe the legislative branch. This concern would be touching if it weren’t coming from the leader of a party so deeply devoted to the ultimate judicial usurpation — Roe v. Wade, which struck down the abortion laws of 46 states — that fealty to it is the party’s litmus test for service on the Supreme Court.

With Obamacare remaking one-sixth of the economy, it would be unusual for the Supreme Court to overturn legislation so broad and sweeping. On the other hand, it is far more unusual to pass such a fundamentally transformative law on such a narrow, partisan basis.

Obamacare passed the Congress without a single vote from the opposition party — in contradistinction to Social Security, the Civil Rights Act, the Voting Rights Act, Medicare and Medicaid, similarly grand legislation, all of which enjoyed substantial bipartisan support. In the Senate, moreover, Obamacare squeaked by through a parliamentary maneuver called reconciliation that was never intended for anything so sweeping. The fundamental deviation from custom and practice is not the legal challenge to Obamacare but the very manner of its enactment.

The president’s preemptive attack on the court was in direct reaction to Obamacare’s three days of oral argument. It was a shock. After years of contemptuously dismissing the very idea of a legal challenge, Democrats suddenly realized there actually is a serious constitutional argument to be made against Obamacare — and they are losing it.

Here were highly sophisticated conservative thinkers — lawyers and justices — making the case for limited government, and liberals weren’t even prepared for the obvious constitutional question: If Congress can force the individual into a private contract by authority of the commerce clause, what can it not force the individual to do? Without a limiting principle, the central premise of our constitutional system — a government of enumerated powers — evaporates. What, then, is the limiting principle?

Liberals were quick to blame the administration’s bumbling solicitor general, Donald Verrilli, for blowing the answer. But Clarence Darrow couldn’t have given it. There is none.

Justice Stephen Breyer tried to rescue the hapless Verrilli by suggesting that by virtue of being born, one enters into the “market for health care.” To which plaintiffs’ lawyer Michael Carvin devastatingly replied: If birth means entering the market, Congress is omnipotent, authorized by the commerce clause to regulate “every human activity from cradle to grave.”

Q.E.D.

Having lost the argument, what to do? Bully. The New York Times loftily warned the Supreme Court that it would forfeit its legitimacy if it ruled against Obamacare because with the “five Republican-appointed justices supporting the challenge led by 26 Republican governors, the court will mark itself as driven by politics.”

Really? The administration’s case for the constitutionality of Obamacare was so thoroughly demolished in oral argument that one liberal observer called it “a train wreck.” It is perfectly natural, therefore, that a majority of the court should side with the argument that had so clearly prevailed on its merits. That’s not partisanship. That’s logic. Partisanship is four Democrat-appointed justices giving lock-step support to a law passed by a Democratic Congress and a Democratic president — after the case for its constitutionality had been reduced to rubble.

Democrats are reeling. Obama was so taken aback, he hasn’t even drawn up contingency plans should his cherished reform be struck down. Liberals still cannot grasp what’s happened — the mild revival of constitutionalism in a country they’ve grown so used to ordering about regardless. When asked about Obamacare’s constitutionality, Nancy Pelosi famously replied: “Are you serious?” She was genuinely puzzled.

As was Rep. Phil Hare (D-Ill.). As Michael Barone notes, when Hare was similarly challenged at a 2010 town hall, he replied: “I don’t worry about the Constitution.” Hare is now retired, having been shortly thereafter defeated for reelection by the more constitutionally attuned owner of an East Moline pizza shop.

Obama’s oil flimflam

Obama’s oil flimflam
By Charles Krauthammer, Published: March 15

Yes, of course, presidents have no direct control over gas prices. But the American people know something about this president and his disdain for oil. The “fuel of the past,” he contemptuously calls it. To the American worker who doesn’t commute by government motorcade and is getting fleeced every week at the pump, oil seems very much a fuel of the present — and of the foreseeable future.

President Obama incessantly claims energy open-mindedness, insisting that his policy is “all of the above.” Except, of course, for drilling:

●off the Mid-Atlantic coast (as Virginia, for example, wants);

●off the Florida Gulf Coast (instead, the Castro brothers will drill near there);

●in the broader Gulf of Mexico (where drilling in 2012 is expected to drop 30 percent below pre-moratorium forecasts);

●in the Arctic National Wildlife Refuge (more than half the size of England, the drilling footprint being the size of Dulles International Airport);

●on federal lands in the Rockies (where leases are down 70 percent since Obama took office).

But the event that drove home the extent of Obama’s antipathy to nearby, abundant, available oil was his veto of the Keystone pipeline, after the most extensive environmental vetting of any pipeline in U.S. history. It gave the game away because the case for Keystone is so obvious and overwhelming. Vetoing it gratuitously prolongs our dependence on outside powers, kills thousands of shovel-ready jobs, forfeits a major strategic resource to China, damages relations with our closest ally, and sends billions of oil dollars to Hugo Chavez, Vladimir Putin and already obscenely wealthy sheiks.

Obama boasts that, on his watch, production is up and imports down. True, but truly deceptive. These increases have occurred in spite of his restrictive policies. They are the result of Clinton- and Bush-era permitting. This has been accompanied by a gold rush of natural gas production resulting from new fracking technology that has nothing at all to do with Obama.

“The American people aren’t stupid,” Obama said (Feb. 23), mocking “Drill, baby, drill.” The “only solution,” he averred in yet another major energy speech last week, is that “we start using less — that lowers the demand, prices come down.” Yet five paragraphs later he claimed that regardless of “how much oil we produce at home . . . that’s not going to set the price of gas worldwide.”

So: Decreasing U.S. demand will lower oil prices, but increasing U.S. supply will not? This is ridiculous. Either both do or neither does. Does Obama read his own speeches?

Obama says of drilling: “That’s not a plan.” Of course it’s a plan. We import nearly half of our oil, thereby exporting enormous amounts of U.S. wealth. Almost 60 percent of our trade deficit — $332 billion out of $560 billion — is shipped overseas to buy crude.

Drill here and you stanch the hemorrhage. You keep those dollars within the U.S. economy, repatriating not just wealth but jobs and denying them to foreign unfriendlies. Drilling is the single most important thing we can do to spur growth at home while strengthening our hand abroad.

Instead, Obama offers what he fancies to be the fuels of the future. You would think that he’d be a tad more modest today about his powers of divination after the Solyndra bankruptcy, the collapse of government-subsidized Ener1 (past makers of the batteries of the future) and GM’s suspension of production — for lack of demand — of another federally dictated confection, the flammable Chevy Volt.

Deterred? Hardly. Our undaunted seer of the energy future has come up with his own miracle fuel: algae.

Why, explained Obama, “we can grow it right here in the United States.” (Sounds like a miraculous local find — except that it grows just about everywhere on earth.) Accordingly, yet another $14 million of taxpayer money will be sprinkled on algae research by Steven Chu’s Energy Department.

This is the very same Dr. Chu who famously said in 2008 that he wanted U.S. gas prices to rise to European levels of $8-$10 a gallon — and who on Tuesday, eight months before Election Day, publicly recanted before Congress, Galileo-style.

Who do they think they’re fooling? An oil crisis looms, prices are spiking — and our president is extolling algae. After Solyndra, Keystone and promises of seaweed in their gas tanks, Americans sense a president so ideologically antipathetic to fossil fuels — which we possess in staggering abundance — that he is utterly unserious about the real world of oil in which the rest of us live.

High gasoline prices are a major political problem for Obama. They are not just a pain at the pump, however. They are a constant reminder of three years of a rigid, fatuous, fantasy-driven energy policy that has rendered us scandalously dependent and excessively vulnerable.

letters@charleskrauthammer.com

Obama: I've got 'five years' left to solve immigration


Seriously?  No one has a problem with this?

In an interview with Univision Radio, President Barack Obama said that he has "five years" left in his presidency to figure out issues like comprehensive immigration reform. Striking a confident note about his reelection prospects, Obama assured a largely Hispanic audience that he has not given up on getting an immigration bill done — one that would provide a pathway to citizenship.

"My presidency is not over," Obama told Univision's Eddie “Piolin” Sotelo. "I’ve got another five years coming up. We’re going to get this done."

Obama also said that Hispanic voters would ultimately face an easy choice in deciding between him and the Republican nominee in November — emphasizing his support for comprehensive immigration reform and a pathway to citizenship.

"So far, ... we haven’t seen any of the Republican candidates even support immigration reform. In fact, their leading candidate said he would veto even the DREAM Act, much less comprehensive immigration reform," Obama said, in an apparent reference to former Massachusetts Gov. Mitt Romney. "So the choice at the presidential level will not be that difficult."  He’s absolutely right – the choice will not be that difficult.  Why would I vote for a president who wants me to force me to pay for illegal immigrants to go to college (as if we had money to spare at the Federal level)?  If Romeny is the nominee, I want him to show this clip and then say into the camera – “I don’t believe you should have to pay for people who have broken the law to have advantages your own children do not enjoy.  In America, we don’t reward people who break our laws.  I am a strong supporter of legal immigration, and I will work to simplify the process so those who desire a better life can pursue their dreams in the land of opportunity.  However, we will never bestow gifts on individuals who flaunt our laws and then come to us for handouts.  Not on my watch.”  You’re telling me that won’t receive a positive response?  I find that hard to believe.

Obama also defended his administration's approach to immigration, which has been characterized by a high level of deportations, saying that the law needed to be changed and Congress needs to act.

"The only way we’re going to do this is to get something passed through Congress, and that’s why we have to keep the pressure up. Unfortunately, the Republican side, which used to at least give lip service to immigration reform, now they’ve gone completely to a different place, and have shown themselves unwilling to talk at all about any sensible solutions to this issue, and we’re going to have to just keep up the pressure until they act," Obama said.

Hispanic voters remain an important part of Obama's coalition, though his approval rating has dropped 30 points among Hispanics from a 2009 high of 86 percent approval. A more recent Univision/Latino Decisions poll, however, puts his approval back up to 72 percent. In 2008, Obama won the Latino vote by a 36-point spread, beating John McCain 67 percent to 31 percent, according to national exit polls.

Rent Control

George F. Will 

Supreme Court should take on New York City’s rent control laws

James and Jeanne Harmon reside in and supposedly own a five-story brownstone on Manhattan’s Upper West Side, a building that has been in their family since 1949. But they have, so to speak, houseguests who have overstayed their welcome by, in cumulative years, more than a century. They are the tenants — the same tenants — who have been living in the three of the Harmons’ six apartments that are rent controlled.

The Harmons want the Supreme Court to rule that their home has been effectively, and unconstitutionally, taken from them by notably foolish laws that advance no legitimate state interest. The court should.

This “taking” has been accomplished by rent-control laws that cover almost 1 million — approximately half — of the city’s rental apartments. Such laws have existed, with several intervals of sanity, since the “emergency” declared because returning soldiers faced housing shortages caused by a building slowdown during World War I.

Most tenants in rent-controlled units can renew their leases forever. Tenants can bequeath their rent-controlled apartments — they have, essentially, a property right to their landlord’s property — to their children, or to a friend who lives with them for two years . This is not satire; it is the virtue of caring, as understood by liberal government.

The tenants in the Harmons’ three rent-controlled units are paying an average 59 percent below market rates. The Harmons would like to reclaim one apartment for a grandchild, but because occupants of two of the units are over 62, the Harmons would have to find the displaced tenant a comparable apartment, at the same or lower rent, in the same neighborhood.

In addition to rent control’s random dispersal of benefits — remember, half of the Harmons’ apartments are uncontrolled — rent control is destructive because it discourages construction of new apartments and maintenance of existing ones.

Thus it creates the “emergency” it supposedly cures.

It exemplifies what the late New York senator Pat Moynihan called “iatrogenic government.” In medicine, an iatrogenic illness is induced inadvertently by a physician’s treatment.

Rent control is unconstitutional because it is an egregious and uncompensated physical occupation of property. The Constitution says that private property shall not “be taken for public use, without just compensation.” The Harmons get no compensation for being coerced into privatized welfare: The state shows compassion to tenants — many of whom are not needy; one of the Harmons’ entitled tenants owns a house on Long Island — by compelling landlords to subsidize them.

A property right in a physical thing is a right to possess, use and dispose of this thing. Because government-compelled possession of property by a third party is an unambiguous taking, the Harmons’ property right has been nullified.

John Locke, an intellectual source of American freedom, said that property rights, which he defined to include rights to “lives, liberties and estates,” exist prior to, and independent of, government, and their preservation is “the great and chief end” for which governments are founded. Property rights provide a sphere of personal sovereignty, a zone of privacy into which government should be able to intrude only with difficulty and only so far. Because they are the basis of individual independence, America’s Founders considered property rights the foundation of all other liberties, including self-government — the governance of one’s self.

The Harmons’ case illustrates government’s steady and no longer stealthy desire to transform property from a fundamental right into an attenuated, conditional privilege. Government would like the right to be contingent on whatever agenda it has for ameliorating “emergencies” it causes.

The Supreme Court’s worst decision of this century, the 2005 Kelo ruling, held that government may take private property for the spurious “public use” of giving it to a third party that will pay the government higher taxes than the original owner would. The Harmons’ case is an occasion for the court to begin making amends for Kelo.

In the 1920s, even Justice Oliver Wendell Holmes, who was excessively permissive regarding what governments could legislate, said rent-control laws were on the “verge” of being unconstitutional. Surely a substantial regulation — which a physical occupation is — of real property violates the Fifth Amendment’s Takings Clause if it does not substantially advance legitimate state interests. The court also has held that a regulation of real property violates the Takings and Due Process clauses if it serves no “public use” or is “arbitrary.”

Are the arbitrary distribution of unmerited benefits and the cultivation of an entitlement mentality among renters a “public use”? If not, rent control is unconstitutional.

How states are restricting political speech

George F. Will 

How states are restricting political speech

Dina Galassini does not seem to pose a threat to Arizona’s civic integrity. But the government of this desert community believes that you cannot be too careful. And state law empowers local governments to be vigilant against the lurking danger that political speech might occur before the speakers notify the government and comply with all the speech rules.

Last October, Galassini became annoyed — like many Ron Paul supporters, she is easily annoyed by government — about the city’s plan to augment its spending with a $29.6 million bond issue, to be voted on by mail by Nov. 8. On Oct. 6, she sent e-mails to 23 friends and acquaintances, urging them to write letters to newspapers and join her in two demonstrations against the bond measure. On Oct. 12, before she could organize the demonstrations, she received a stern letter from the town clerk: “I would strongly encourage you to cease any campaign-related activities until the requirements of the law have been met.”

State law — this is the state of John McCain, apostle of political purification through the regulation of political speech — says that anytime two or more people work together to influence a vote on a ballot measure, they instantly become a “political committee.” This transformation triggers various requirements — registering with the government, filing forms, establishing a bank account for the “committee” even if it has raised no money and does not intend to. This must be done before members of this fictitious “committee” may speak.

Galassini wrote to ask the clerk if it would be permissible for her to e-mail the 23 persons telling them the demonstrations were canceled — she got no response — and told the clerk, “This is all so confusing to me.” Confusion and inconvenience — Galassini could have made an appointment for tutoring by the clerk’s office concerning permissible speech — are probably intended consequences of laws designed to burden political speech that is potentially inconvenient for government. Galassini gave up trying to influence the vote.

The Supreme Court, in its splendid 2010 Citizens United decision, said that laws requiring licenses or other official permission to speak “function as the equivalent of prior restraint by giving the (government) power analogous to licensing laws implemented in 16th- and 17th-century England, laws and governmental practices of the sort that the First Amendment was drawn to prohibit.” Paul Avelar of the Institute for Justice, the nation’s only libertarian public-interest law firm, which is helping Galassini contest the constitutionality of Arizona’s law, says that such niggling nuisances are proliferating nationwide.

A Florida law requires disclosure, including the name and address of the contributor, of any contribution, no matter how small — a penny for your thoughts? Report it — to a political committee. A Washington state law is notably protective of the political class: There must be litigation before a campaign to recall a public official can start, and lawyers are essentially forbidden from volunteering their help with that litigation. In Mississippi, anyone can put up his or her own Web page about a ballot issue, but the Web page designer must disclose the time he or she took to do it. And anyone who spends more than $200 on political speech — say, a small ad in a local newspaper — is required to give the government monthly reports about his or her political activity.

Such pettifogging laws reflect, aside from the joy governments derive from bossing people around, the current rage for regulating political speech lest . . . what? Campaign regulations usually focus on money, supposedly to prevent quid pro quo corruption or the appearance thereof pertaining to candidates. But many laws cover activities involving ballot measures, which suggests that, for reformers, limiting political speech is itself the goal. Hence their obsession with political money, most of which funds the dissemination of speech.

Nationally, political hygienists are regretting their inadvertent creations, this year’s super PACs, entities run by supporters of presidential candidates but forbidden to “coordinate” with the candidates. Super PACs are spending money that the reformers, by imposing low limits on contributions to candidates and parties, have diverted away from campaigns that otherwise could be held directly accountable for, and judged in terms of, the speech they finance. We hear, yet again, the reformers’ cry: “There is too much money in politics.” This year, the presidential campaigns combined may spend almost $2 billion, which is almost as much as Americans will, in a few weeks, spend on Easter candy.

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.