The Republicans have caved once again. The deal hammered out between Biden and McConnell is one more setback for the nation. It promises to put real brakes on the economic recovery because of the tax increases and makes no progress at all toward reducing the deficit that continues be the nation's number one economic problem.
Why Democrats support this is a mystery? This deal and others like it, soon to be agreed to, virtually guarantee that future beneficiaries of social security and medicare are in for a very unpleasant surprise. Those now 50 and under cannot expect much more than half of the promised social security and medicare. Those under 40 should not expect anything at all.
Now, while age limits can be increased and means testing can be implemented, we should do it. Doing it two years from now will effectively reduce future benefits more than doing it now. Putting these things off just make things much, much worse in the future. This was a squandered opportunity.
Republicans should replace Boehner as Speaker and every Republican who votes for this deal should receive a primary challenge. Hopefully, McConnell will be challenged in the primary in his upcoming bid for re-election. It gets harder and harder to see how Boehner and McConnell are an improvement over Reid, Pelosi and Obama. They all seem to get to the same place eventually. It doesn't do any good to win elections if this is the ultimate political outcome.
It's not clear what the Republicans are fighting for -- but they are definitely not fighting for smaller government and for economic growth. Nothing in this deal moves in those directions.
This is a good deal for Obama and a good deal for the media. They should be very happy. The steady decline of the US into a second rate status in the world economy proceeds apace. This seems to be what Obama and his fans in the media want to happen and they are getting their wish.
Monday, December 31, 2012
What Happened to Curbing the Deficit?
In its extreme enthusiasm for Obama, the press has totally neglected the deficit issue, which was the entire reason behind the creation of the fiscal cliff in the first place. Instead the press has focused exclusively on Obama's absurd "tax the rich" gambit. Obama's plan will likely lead to lower, not higher, revenues from the top two percent. So, that part of the Obama agenda simply raises the deficit and provides disincentives to expand employment. Great policy!
Meanwhile, the $ 1.6 trillion deficit is getting larger. The real cliff lies ahead when the debt markets begin to balk at the continued explosion in US sovereign debt. We are now on "Greece watch." It is only a matter of time.
Meanwhile, the media continues to be irrelevant to the real issue of our time. For a brief period, the media and Obama can enjoy their "victory," but the long run, not so long run now, leads to insolvency. Watching Greece and Spain is instructive. The media should spend some time in Greece and Spain to see where their policies lead.
Let's hope that McConnell can resist Reid, Biden and Obama and let nature take it's course. Over the cliff we go.
Meanwhile, the $ 1.6 trillion deficit is getting larger. The real cliff lies ahead when the debt markets begin to balk at the continued explosion in US sovereign debt. We are now on "Greece watch." It is only a matter of time.
Meanwhile, the media continues to be irrelevant to the real issue of our time. For a brief period, the media and Obama can enjoy their "victory," but the long run, not so long run now, leads to insolvency. Watching Greece and Spain is instructive. The media should spend some time in Greece and Spain to see where their policies lead.
Let's hope that McConnell can resist Reid, Biden and Obama and let nature take it's course. Over the cliff we go.
Saturday, December 29, 2012
Republicans for Tax Hikes
A number of Republicans have decided to vote for the restoration of the Bush tax cuts with an upper limit. Obama's upper limit is $ 250,000. Apparently, many Republicans are willing to sign on if the upper limit is moved up a bit to $ 400,000 or $ 500,000. If Republicans would simply refuse to sign on unless all the Bush cuts were restored, they would, without any doubt, get their way. But somehow they have become convinced by the media, the Democrats, and their reading of the polls that they must buy into the Obama tax hike.
Why would Republicans get their way? Because Obama would be forced to go along if the choice were that stark. Obama does not want to preside over a major tax increase that further damages an already weak economy. He would own it, not Republicans. After all, the Republican House passed a full extension of the Bush tax cuts last July. It is only Obama's petty insistence on raising rates on the top 2 percent, raising at best a trivial amount of revenue, that is holding up the extension. It is Obama's economy for good or evil. That is the leverage that the Republicans have. But, they seem intent on throwing away that leverage. They won't have this opportunity again if they let it slip away now.
Boehner, they say, will hold an "open vote" on any Reid-McConnell compromise so that House passage can be accomplished with a majority of Republicans voting no.
It's time to rev up the tea party. What good is a Republican who votes for tax and spending increases, which is what the Reid-McConnell compromise will amount to? If there were no Republicans at all in the House or Senate would the ultimate outcome be much different?
Various conservative pundits, Bill Kristol for one, have advocated that Republicans simply surrender and vote for the tax increase on the top 2 percent. Has Kristol forgotten the effect of higher marginal tax rates on job creation? Or is Kristol only concerned about pleasing the media?
Republicans should reject any compromise that involves raising taxes on anyone unless there are major cuts to social security and medicare. Boehner should be replaced as Speaker if he permits a vote on a bill that a majority of House Republicans are opposed to.
The country's future is at stake because of the exploding national debt. Going over the fiscal cliff is far, far preferable to a bad Reid-McConnell deal.
It looks for now like Republicans are planning to join their Democratic brethren in raising taxes, increasing spending, and further damaging the country's future prospects and economic vitality.
Deja vu.
Why would Republicans get their way? Because Obama would be forced to go along if the choice were that stark. Obama does not want to preside over a major tax increase that further damages an already weak economy. He would own it, not Republicans. After all, the Republican House passed a full extension of the Bush tax cuts last July. It is only Obama's petty insistence on raising rates on the top 2 percent, raising at best a trivial amount of revenue, that is holding up the extension. It is Obama's economy for good or evil. That is the leverage that the Republicans have. But, they seem intent on throwing away that leverage. They won't have this opportunity again if they let it slip away now.
Boehner, they say, will hold an "open vote" on any Reid-McConnell compromise so that House passage can be accomplished with a majority of Republicans voting no.
It's time to rev up the tea party. What good is a Republican who votes for tax and spending increases, which is what the Reid-McConnell compromise will amount to? If there were no Republicans at all in the House or Senate would the ultimate outcome be much different?
Various conservative pundits, Bill Kristol for one, have advocated that Republicans simply surrender and vote for the tax increase on the top 2 percent. Has Kristol forgotten the effect of higher marginal tax rates on job creation? Or is Kristol only concerned about pleasing the media?
Republicans should reject any compromise that involves raising taxes on anyone unless there are major cuts to social security and medicare. Boehner should be replaced as Speaker if he permits a vote on a bill that a majority of House Republicans are opposed to.
The country's future is at stake because of the exploding national debt. Going over the fiscal cliff is far, far preferable to a bad Reid-McConnell deal.
It looks for now like Republicans are planning to join their Democratic brethren in raising taxes, increasing spending, and further damaging the country's future prospects and economic vitality.
Deja vu.
Friday, December 28, 2012
Was This By Design?
Listening to the media and democratic pundits ignore the exploding national debt to indulge in a dialogue about an almost irrelevant issue -- taxing the upper 2 percent -- makes one wonder? Do these folks not understand the arithmetic. Are they unaware of the $ 16.5 trillion national debt, growing by ten percent per year in an economy with just over $ 15 trillion in GDP? Why the focus on something that, at the most optimistic assessments, can only produce 0.08 trillion in revenues annually? Even that miniscule number is unlikely. Far more likely is that the increased tax rates on the upper 2 percent would drive down revenues from that group. But, even at the most optimistic assessment, it is a waste of breath.
So, why is that the entire conversation? Maybe these folks are untroubled by a US decline. They seem so fundamentally out of touch with traditional American values, maybe they are mainly interested in changing the culture to suit themselves even if that means economic decline. That's what redistribution seems to be all about. Maybe the media and the democratic pundits don't really care if economic growth is zero and the young have no future and old folks end up with nothing. Perhaps this is all by design, not simply gross stupidity.
So, why is that the entire conversation? Maybe these folks are untroubled by a US decline. They seem so fundamentally out of touch with traditional American values, maybe they are mainly interested in changing the culture to suit themselves even if that means economic decline. That's what redistribution seems to be all about. Maybe the media and the democratic pundits don't really care if economic growth is zero and the young have no future and old folks end up with nothing. Perhaps this is all by design, not simply gross stupidity.
Thursday, December 27, 2012
Don't Blame the Economy on the Cliff
The economy is weak because of government policy -- not the ongoing fiscal cliff stalemate. The Obama Administration has waged war against the private sector free market from the day it took office. That war has borne fruit. This is the slowest economic recovery since the 1930s.
The slow pace of economic growth has nothing to do with the cliff. It has been going on since late 2009. There is not going to be any serious economic growth in the US given the regulatory and legal environment that has been imposed upon the US economy since Obama took office. The financial sector has been crushed, bank lending has been discouraged by the regulators, the energy sector has just barely survived the Obama onslaught, and employees are an endangered species.
Obamacare pretty much says it all. Another costly mandate on companies and ultimately on individuals was the final kicker. Along the way the elimination of the Keystone pipeline project was emblematic of the Obama strategy. Push government spending and expansion and crush the private sector.
Well, guess what. They have succeeded.
So, forget the cliff. The cliff, whether we go over it or not, won't matter. This is not an economy going anywhere. The only significance of the cliff is that if a deal is reached, US bankruptcy will be sooner not later. At 20 trillion in debt and an economy in the ditch, it is unlikely that bankruptcy can be avoided and we should reach that level in Obama's seventh year in office.
The slow pace of economic growth has nothing to do with the cliff. It has been going on since late 2009. There is not going to be any serious economic growth in the US given the regulatory and legal environment that has been imposed upon the US economy since Obama took office. The financial sector has been crushed, bank lending has been discouraged by the regulators, the energy sector has just barely survived the Obama onslaught, and employees are an endangered species.
Obamacare pretty much says it all. Another costly mandate on companies and ultimately on individuals was the final kicker. Along the way the elimination of the Keystone pipeline project was emblematic of the Obama strategy. Push government spending and expansion and crush the private sector.
Well, guess what. They have succeeded.
So, forget the cliff. The cliff, whether we go over it or not, won't matter. This is not an economy going anywhere. The only significance of the cliff is that if a deal is reached, US bankruptcy will be sooner not later. At 20 trillion in debt and an economy in the ditch, it is unlikely that bankruptcy can be avoided and we should reach that level in Obama's seventh year in office.
Wednesday, December 26, 2012
Markets Like Going Over The Cliff
Why is the stock market so much higher than just a few weeks ago? Don't stocks know that we are headed over the fiscal cliff?
Going over the cliff is a good thing, not a bad thing. Higher taxes, lower spending is just the beginning. Much, much higher taxes and the virtual elimination of the military and other discretionary spending will be required just to get through the next 15 years of the entitlement programs. Going over the cliff will provide 15 years of breathing room against the collapse of the entitlement programs.
Not going over the cliff could force a crisis in treasury financing within the next two or three years. Going over the cliff gets you past the end of the Obama years with a national debt of 20 Trillion and eight years of a lost decade. But, it will get you to the end of the Obama years most likely.
Not going over the cliff will accelerate the national debt crisis with a good chance that we can't get through the Obama years without a treasury financing crisis, similar to that of Greece.
So, let's buy a few more years by going over the cliff. This is the price you pay for entitlement reform being "off the table."
Going over the cliff is a good thing, not a bad thing. Higher taxes, lower spending is just the beginning. Much, much higher taxes and the virtual elimination of the military and other discretionary spending will be required just to get through the next 15 years of the entitlement programs. Going over the cliff will provide 15 years of breathing room against the collapse of the entitlement programs.
Not going over the cliff could force a crisis in treasury financing within the next two or three years. Going over the cliff gets you past the end of the Obama years with a national debt of 20 Trillion and eight years of a lost decade. But, it will get you to the end of the Obama years most likely.
Not going over the cliff will accelerate the national debt crisis with a good chance that we can't get through the Obama years without a treasury financing crisis, similar to that of Greece.
So, let's buy a few more years by going over the cliff. This is the price you pay for entitlement reform being "off the table."
Sunday, December 23, 2012
Why Pretend -- Let the Tax Cuts Expire
If there is no appetite for reforming entitlements, then our future is massive tax increases and a stagnant and depressed economy. Why not start this process now? The track that we are on will eventually lead to the kind of top tax rates that we see in Europe -- 70 percent in France, for example. And even those rates won't improve the national debt situation.
The truth is that the Democrats plan is to continue to raise tax rates by pretending that somehow tax revenues can catch up with entitlement spending. But there are no tax rates or revenues that can match the entitlement explosion. Our national debt will be a multiple of GDP within a few years and is probably already unpayable at any level of tax revenues.
It's time to let the public get a taste of their future -- high taxes, massive bureaucracy, a crushing of the private sector, high and permanent unemployment, and diminished employment and income prospects for younger generations. Within a dozen years, we will begin to back away from spending for the elderly -- not because we want to -- but because there is simply no money available to maintain these programs at existing benefit levels.
The problem we have is that a majority of Americans think all of this stuff is affordable. That's why entitlement reform is "off the table."
So, let taxes rise. Among Democrats, only Harold Dean seems to be aware of the arithmetic. He has made it clear that he supports letting all of the tax cuts expire. It's rare that I agree with Dean, but, on this one, I agree.
The public needs to get a taste of the future regime that they have voted for. If the entitlements are "off the table," then lets put the reality of the future on the table now before it is too late. Perhaps four years of economic stagnation, smothering regulations and high taxes will be enough of a taste of our future to bring our citizenry to its senses.
The truth is that the Democrats plan is to continue to raise tax rates by pretending that somehow tax revenues can catch up with entitlement spending. But there are no tax rates or revenues that can match the entitlement explosion. Our national debt will be a multiple of GDP within a few years and is probably already unpayable at any level of tax revenues.
It's time to let the public get a taste of their future -- high taxes, massive bureaucracy, a crushing of the private sector, high and permanent unemployment, and diminished employment and income prospects for younger generations. Within a dozen years, we will begin to back away from spending for the elderly -- not because we want to -- but because there is simply no money available to maintain these programs at existing benefit levels.
The problem we have is that a majority of Americans think all of this stuff is affordable. That's why entitlement reform is "off the table."
So, let taxes rise. Among Democrats, only Harold Dean seems to be aware of the arithmetic. He has made it clear that he supports letting all of the tax cuts expire. It's rare that I agree with Dean, but, on this one, I agree.
The public needs to get a taste of the future regime that they have voted for. If the entitlements are "off the table," then lets put the reality of the future on the table now before it is too late. Perhaps four years of economic stagnation, smothering regulations and high taxes will be enough of a taste of our future to bring our citizenry to its senses.
Saturday, December 22, 2012
The Latest from Greece
Greek riots and demonstrations are now a daily event in Athens and other major cities. Civil disorder is common place -- looting and random thievery are accepted in modern day Greece.
Meanwhile, the Greek public still believes that they are beset by the evil greed of rich people and large corporations. If only....
For three generations, the Greeks have been told that the "middle class" deserves endless services, employment guarantees, free health care, and no taxes. They bought in.
It's always about "fighting for the middle class," until there is no longer a middle class. That's where we are in Greece. We now have a protracted battle between the protected class -- mostly government employees -- and everybody else. We now witness a civil war between the young -- who are supposed to support all of this nonsense -- and the old, who no longer can support much of anything.
Greece is the target. That's where the Obama policies take you. Substitute personal responsibility for government largess and you get modern Greece. Meanwhile, move the rhetoric over to demonizing the rich and you get the Obama plan. Freedom, free markets, hard work -- these are now outmoded notions to be replaced by "defending the middle class." One such defense is the announcement today that GM workers will receive $ 7,000 bonuses this year, thanks to the taxpayers, who have lost billions of dollars underwriting GM worker pension funds.
This is where it goes. Pit one group of Americans against another. It is no longer about merit and hard work. Those are outmoded notions. The Greeks don't believe any of that either. They have been carefully nurtured to believe that the government will take care of everything. Obama has taken heed. You can win a lot of elections and curry favor with an adoring media by simply pretending that effort is no longer required for the good life. These rich folks have enough for us all.
So, modern Greece is descending into chaos. Don't visit Athens as a tourist, because police protection has broken down. This is a society that no longer believes in civil order. Virtually all Greeks now believe that their problems are caused by rich people, German banks, and big corporations. They have been watching TV and listening to their leaders. They drank the koolaide.
Now, we are drinking the koolaide. What is the Obama plan to reduce the deficit? Tax rich people. How do you deal with a $ 70 trillion unfunded entitlement deficit. Raise $ 80 billion a year from rich people. This year alone that will reduce our deficit from $ 1.6 Trillion to $ 1.52 Trillion. That's what we are talking about. These terrible Republicans. If they would only agree to the Obama plan our national debt would rise a mere $ 1.52 trillion per year and the national debt would reach only $ 24 Trillion in six years instead of $ 25 Trillion. Thank you, Mr. President. That's a big help. No point in trying to deal with the entitlements, after all, $ 24 Trillion in six years isn't bad and that's only the beginning. We can do better than that (or more than that, if you like).
No need to worry about Greece with such a statesman-like President. The adoring media deserves some credit as well. If they get their way...just think. We can get to a mere $ 24 trillion in debt in six years. In 20 years, we should be able to scale the $ 40 Trillion mark. Hey, maybe Greece isn't that far way after all.
Meanwhile, the Greek public still believes that they are beset by the evil greed of rich people and large corporations. If only....
For three generations, the Greeks have been told that the "middle class" deserves endless services, employment guarantees, free health care, and no taxes. They bought in.
It's always about "fighting for the middle class," until there is no longer a middle class. That's where we are in Greece. We now have a protracted battle between the protected class -- mostly government employees -- and everybody else. We now witness a civil war between the young -- who are supposed to support all of this nonsense -- and the old, who no longer can support much of anything.
Greece is the target. That's where the Obama policies take you. Substitute personal responsibility for government largess and you get modern Greece. Meanwhile, move the rhetoric over to demonizing the rich and you get the Obama plan. Freedom, free markets, hard work -- these are now outmoded notions to be replaced by "defending the middle class." One such defense is the announcement today that GM workers will receive $ 7,000 bonuses this year, thanks to the taxpayers, who have lost billions of dollars underwriting GM worker pension funds.
This is where it goes. Pit one group of Americans against another. It is no longer about merit and hard work. Those are outmoded notions. The Greeks don't believe any of that either. They have been carefully nurtured to believe that the government will take care of everything. Obama has taken heed. You can win a lot of elections and curry favor with an adoring media by simply pretending that effort is no longer required for the good life. These rich folks have enough for us all.
So, modern Greece is descending into chaos. Don't visit Athens as a tourist, because police protection has broken down. This is a society that no longer believes in civil order. Virtually all Greeks now believe that their problems are caused by rich people, German banks, and big corporations. They have been watching TV and listening to their leaders. They drank the koolaide.
Now, we are drinking the koolaide. What is the Obama plan to reduce the deficit? Tax rich people. How do you deal with a $ 70 trillion unfunded entitlement deficit. Raise $ 80 billion a year from rich people. This year alone that will reduce our deficit from $ 1.6 Trillion to $ 1.52 Trillion. That's what we are talking about. These terrible Republicans. If they would only agree to the Obama plan our national debt would rise a mere $ 1.52 trillion per year and the national debt would reach only $ 24 Trillion in six years instead of $ 25 Trillion. Thank you, Mr. President. That's a big help. No point in trying to deal with the entitlements, after all, $ 24 Trillion in six years isn't bad and that's only the beginning. We can do better than that (or more than that, if you like).
No need to worry about Greece with such a statesman-like President. The adoring media deserves some credit as well. If they get their way...just think. We can get to a mere $ 24 trillion in debt in six years. In 20 years, we should be able to scale the $ 40 Trillion mark. Hey, maybe Greece isn't that far way after all.
Friday, December 21, 2012
Road Signs on the Way to Greece
"Get something done....anything!" That seems to be the thinking of the financial and political pundits. Who cares if the outcome is further explosion in the national debt, more crushing taxes, and strangling regulations? That seems to be the "rise above" mentality. The ultimate policy is less important than the desire to get this episode behind us. This is known as "kicking the can down the road." The fact that the economy is getting a swift kick as well does not seem to concern the pundits.
The only thing that the President and his allies are willing to do is further the punish the free market and the private sector with increasing taxes and increasing regulation and creating further divisions between rich and poor and young and old. This is the strategy that Greek politicians used for the past three decades to get Greece to the place where it is now.
Blame rich people, blame the private sector and expand further government activity and the percentage of folks who are riding the stagecoach of government benefits.
When Greece was going down this road, the media strongly and vocally supported the trip. They are doing so again as the US follows the Greek path.
The only thing that the President and his allies are willing to do is further the punish the free market and the private sector with increasing taxes and increasing regulation and creating further divisions between rich and poor and young and old. This is the strategy that Greek politicians used for the past three decades to get Greece to the place where it is now.
Blame rich people, blame the private sector and expand further government activity and the percentage of folks who are riding the stagecoach of government benefits.
When Greece was going down this road, the media strongly and vocally supported the trip. They are doing so again as the US follows the Greek path.
Boehner and his Troops
John Boehner is doing his best, but it is hard to fault the House Republicans for refusing to go along. Boehner is playing tactics, while many House Republicans think it is too late for tactics. They are probably both right.
Boehner tried to push the ball back into the President's court, since the President has been unwilling to bend on anything. It is not unreasonable for those among Republican ranks to ask why they should vote to raise taxes on some folks absent any offer of spending cuts at all from the White House. This is especially the case given that Senate leader Harry Reid said that the Boehner plan was dead on arrival and Obama promised to veto it. Why capitulate pre-emptorily when there is nothing forthcoming from the other side?
Not that any of this matters much as long as entitlements are "off the table." No deal is of any significance without entitlement reform. Obama is perfectly willing to let the country go over the cliff and proceed on its way to Greece. Boehner is doing his best, but Obama and the Democrats are determined to continue the march to insolvency.
Boehner tried to push the ball back into the President's court, since the President has been unwilling to bend on anything. It is not unreasonable for those among Republican ranks to ask why they should vote to raise taxes on some folks absent any offer of spending cuts at all from the White House. This is especially the case given that Senate leader Harry Reid said that the Boehner plan was dead on arrival and Obama promised to veto it. Why capitulate pre-emptorily when there is nothing forthcoming from the other side?
Not that any of this matters much as long as entitlements are "off the table." No deal is of any significance without entitlement reform. Obama is perfectly willing to let the country go over the cliff and proceed on its way to Greece. Boehner is doing his best, but Obama and the Democrats are determined to continue the march to insolvency.
Tuesday, December 18, 2012
Without Medicare, There is Nothing There
The big driver of the national debt is medicare spending, made worse by Obamacare. This subject is "off the table" according to the White House. Put simply, the Obama administration is prepared for an exploding national debt and is unwilling to make any effort at all to slow that explosion.
Raising tax rates and tinkering with social security cost-of-living adjustments is a joke. Neither will reduce the future trajectory of the national debt and raising tax rates will actually make things worse.
If Republicans sign on to this deal, you have to wonder what they plan to run for re-election on in 2014. Why control the House of Representatives, if you intend to do nothing but cave to Obama? Where is the loyal opposition?
Raising tax rates and tinkering with social security cost-of-living adjustments is a joke. Neither will reduce the future trajectory of the national debt and raising tax rates will actually make things worse.
If Republicans sign on to this deal, you have to wonder what they plan to run for re-election on in 2014. Why control the House of Representatives, if you intend to do nothing but cave to Obama? Where is the loyal opposition?
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