What about the other side?

Hiya,

Do you want to read what people in other parts of the country are thinking?
How about outside this city?

Durand

from The WSJ, Nov 5th 2009

Rebooting the Democrats

Voters fear that liberal policies are endangering economic recovery.

Tuesday's GOP gubernatorial sweep revealed an electorate deeply anxious about jobs, the state of the economy and the wider Obama agenda. We realize we sound like St. Jude, the patron saint of lost causes, but if the Democratic establishment wants to avoid a repeat in 2010 they'll dump their current ambitions and start over.

In New Jersey and Virginia, the Republicans campaigned on lower taxes and more disciplined government as a way to boost growth and jobs. With unemployment brushing up against 10% even as gasoline is nearing $3 a gallon, voters were obviously sending a message about Washington's Great Reflation bet. This was particularly true for independents, who voted in droves for President Obama but broke for the GOP this year by more than two to one in both states. Suburban voters, too, went for Bob McDonnell 55% to 44%, and 51% to 43% for Chris Christie, according to exit polls.

These elections should signal Defcon 2 for the 49 Democratic Congressmen who come from districts that John McCain carried in 2008, as well as Senators like Arkansas's Blanche Lincoln and Indiana's Evan Bayh seeking re-election in 2010. New Jersey's budget, with its surging taxes and structural deficits, looks remarkably like Mr. Obama's—and even the President's all-out "Weekend at Bernie's" campaign to prop up Jon Corzine couldn't save the former Goldman Sachs executive despite a huge Democratic voter-registration advantage.

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Associated Press

President Barack Obama

In Virginia, which has been trending leftward and Mr. Obama took handily, voters in the Washington suburbs of Fairfax, Loudoun and Prince William counties all went heavily for Mr. McDonnell on their anxiety about high taxes and the expanding federal government. The former state attorney general played down his social conservatism in favor of a bread-and-butter economic message.

In New York, the national media focused on the narrow (49%) Democratic victory in the 23rd Congressional district thanks to a Conservative Party challenge to the liberal Republican nominee. But even in the blue bastion of the Empire State, the three-term Democratic Westchester County executive was ousted, while Republicans captured the Nassau County legislature and almost won the county executive seat too. Michael Bloomberg nearly lost his third term as New York City mayor to the inept and unknown comptroller Bill Thompson, which shows that it's not a good time to be an incumbent even if you have an acceptable record and billions of dollars for TV ads.

Some rejections of national liberal priorities were far more explicit. Virginia's southwestern ninth district, long represented in Congress by Democrat Rick Boucher, went 67% for Mr. McDonnell—largely over the prospect of a cap-and-trade energy tax that will obliterate the coal production that underlies the region's economy. For the first time in decades one part of this United Mine Workers stronghold also elected a Republican, Will Morefield, to Virginia's House of Delegates.

Speaker Nancy Pelosi has already forced House Democrats to walk the cap-and-tax plank, adding to the policy uncertainty that is helping to depress what ought to be a more robust recovery after a long and deep recession. The White House and its liberal allies believe government can drive prosperity. Yet the costs that cap and tax would impose—whether through Congress or via the activist EPA regulation that the Administration is pursuing—is part of the political uncertainty that is slowing the revival of risk-taking and job creation.

Democrats are imposing wage controls and continuing to embrace a phony populism against Wall Street, while the new liberal industrial policy has annexed the auto sector. The Energy Department is now the largest venture capital firm in the world and is redirecting capital that could be devoted to more productive uses than green energy gambles. Private lenders to college students are being run out of the market.

Mr. Obama campaigned on a pledge to spare 95% of Americans from tax increases, but the American middle class is slowly figuring out that it will eventually be asked—that's the polite way of putting it—to pay for all of this. These looming bills, and not only from the $787 billion stimulus, are clouding the investment outlook.

Nowhere is this more true than on health care. The House bill is the very definition of a job killer, funding another entitlement program with a payroll tax equal to 8% of wages on businesses that don't offer insurance even as it inflicts a huge 5.4-percentage-point marginal rate tax hike on those earning over $500,000. The Democrats' own Joint Tax Committee says that one-third of the $460.5 billion this is estimated to raise over 10 years will come from small businesses that create most new jobs.

The tragedy is that while ObamaCare is running into ever-deeper problems among moderates and sinking in the polls, Democrats could easily shift gears and build a genuine bipartisan health reform. The compromise worked out earlier this year by Bob Dole and Tom Daschle is not our policy ideal, though it would address some of the cost drivers created by the tax code and maybe garner durable political majorities. Even the bill released this week by House Republicans, and quickly trashed by Democrats, would hand out $50 billion in "incentive payments" to states that reduce the number of uninsured. Once upon a time in Washington, $50 billion counted as a lot of money—and it still does to most voters.

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Democrats entered this year well positioned to get political credit for a recovering economy, whether or not their policies had much to do with it. Yet a year later their willy-nilly expansion of government is creating fear and uncertainty that are inhibiting the animal spirits crucial to job creation—and, as Tuesday showed, endangering their political ascendancy.

More of the Same Change

Hello Again,

I was having a conversation last night about what the fundamental difference was between a Conservative and a Liberal. I am speaking about the persons most basic view on the role of Government in peoples lives.

I told him that Conservatives believe the Individual is the best person to allocate resources while the Liberal believes that the Government should allocate resources.

I know that I am better at choosing where to put my resources then the Government.
Are you worse than the Government at choosing where to allocate your resources?

I believe that people should allocate resources and the Government should be the referee making sure people play by the same rules.

If the Government decides it must add resources into the economy it should do so in ways that stimulate the entrepreneur and reward those who take risks to create something new instead of merely making transfer payments into current liabilities.


This article today in the WSJ summed up my thoughts nicely.

Durand


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• SEPTEMBER 11, 2009, 3:37 P.M. ET

The Keynesians Were Wrong Again

We won't see a return to growth without incentives for job-creating investment.

By PETER FERRARA

From the beginning, our representatives in Washington have approached this economic downturn with old-fashioned, Keynesian economics. Keynesianism—named after the British economist John Maynard Keynes—is the theory that you fight an economic downturn by pumping money into the economy to "encourage demand" and "create jobs." The result of our recent Keynesian stimulus bills? The longest recession since World War II—21 months and counting—with no clear end in sight. Borrowing close to a trillion dollars out of the private economy to increase government spending by close to a trillion dollars does nothing to increase incentives for investment and entrepreneurship.

The record speaks for itself: In February 2008, President George W. Bush cut a deal with congressional Democrats to pass a $152 billion Keynesian stimulus bill based on countering the recession with increased deficits. The centerpiece was a tax rebate of up to $600 per person, which had no significant effect on economic incentives, as reductions in tax rates do.

Learning nothing from this Keynesian failure, which he vigorously supported from the U.S. Senate, President Barack Obama came back in February 2009 to support a $787 billion, purely Keynesian stimulus bill.

Even the tax-cut portion of that bill, which Mr. Obama is still wildly touting to the public, was purely Keynesian. The centerpiece was a $400-per-worker tax credit, which, again, has no significant effect on economic incentives. While Mr. Obama is proclaiming that this delivered on his campaign promise to cut taxes for 95% of Americans, the tax credit disappears after next year.

The Obama administration is claiming success, not because of recovery, but because of the slowdown in economic decline. Last month, just 216,000 jobs were lost, and the economy declined by only 1% in the second quarter. Based on his rhetoric, Mr. Obama expects credit for anyone who still has a job.

The fallacies of Keynesian economics were exposed decades ago by Friedrich Hayek and Milton Friedman. Keynesian thinking was then discredited in practice in the 1970s, when the Keynesians could neither explain nor cure the double-digit inflation, interest rates, and unemployment that resulted from their policies. Ronald Reagan's decision to dump Keynesianism in favor of supply-side policies—which emphasize incentives for investment—produced a 25-year economic boom. That boom ended as the Bush administration abandoned every component of Reaganomics one by one, culminating in Treasury Secretary Henry Paulson's throwback Keynesian stimulus in early 2008.

Mr. Obama showed up in early 2009 with the dismissive certitude that none of this history ever happened, and suddenly national economic policy was back in the 1930s. Instead of the change voters thought they were getting, Mr. Obama quintupled down on Mr. Bush's 2008 Keynesianism.

The result is the continuation of the economic policy disaster we have suffered since the end of 2007. Mr. Obama promised that his stimulus would prevent unemployment from climbing over 8%. It jumped to 9.7% last month. Some 14.9 million Americans are unemployed, another 9.1 million are stuck in part-time jobs and can't find full-time work, and another 2.3 million looked for work in the past year and never found it. That's a total of 26.3 million unemployed or underemployed, for a total jobless rate of 16.8%. Personal income is also down $427 billion from its peak in May 2008.

Rejecting Keynesianism in favor of fiscal restraint, France and Germany saw economic growth return in the second quarter this year. India, Brazil and even communist China are enjoying growth as well. Canada enjoyed job growth last month.

U.S. economic recovery and a permanent reduction in unemployment will only come from private, job-creating investment. Nothing in the Obama economic recovery program, or in the Bush 2008 program, helps with that.

Producing long-term economic growth will require a fundamental change in economic policies—lower, not higher, tax rates; reliable, low-cost energy supplies, not higher energy costs through cap and trade; and not unreliable alternative energy surviving only on costly taxpayer subsidies.

Unfortunately, Mr. Obama seems to be wedded to his political talking points, and his ideological blinders seem to be permanently affixed. So don't expect any policy changes. Expect an eventual return to 1970s-style economic results instead.

Mr. Ferrara, director of entitlement and budget policy for the Institute for Policy Innovation, served in the White House Office of Policy Development under President Reagan, and as associate deputy attorney general of the United States under the first President Bush.

High hopes...Dashed

We are about to enter a new world...a world of change. Sadly this is a change I believe we will come to regret over the next 10-30 years. I had high hopes that Obama would be a centrist, using the best parts of Conservatism and Liberalism together. Instead he has demonized the choices of the past 30 years, during which our country has grown by leaps and bounds, the quality of life ever improving, by casting derision on anything conservative, fomenting a populist rage that will result in a dramatic reshaping of America into a place where Government decides how the economy should be run instead of the private sector. We are going to watch the unprecedented expansion of Government into every aspect of our lives. I do not think people understand how this will change what we understand to be 'America'.

And it will be very hard to stop it or change it once in motion. I believe it is already too late.

The party line is that these 'investments' ie spending, will all be cut back in 2 years. Fat chance. Government never gets smaller...only larger. Once these programs are in place who will have the will to cut them? Nobody. That is what the Democrats are counting on. These new constituencies who are on the receiving end of the Governments handouts will have a powerful interest in maintaining their newfound gifts.

If I believed that all this spending was for future looking projects that would show a return greater than that of the money being used in the private sector I would give it a chance. But what government agency has ever made a profit? Or created something that makes new jobs, not just make work? A much more practical approach would be to fund start ups, give tax breaks to entrepreneurs and encourage people to create new ideas and business. Dumping Trillions of your tax dollars into the same old system will just get the same results.

Will throwing another 100 billion dollars at education (doubling the budget, which already had doubled under George Bush) do anything unless the incentives for teaching change? Unless Obama reforms all of these institutions we are going to see good money going after bad.

I have included an article below from the WSJ....check it out. The numbers are staggering.

With trepidation I am looking to the future...

The more things Change, the more they stay the same,

Durand

The Obama Revolution

Paid for by the people.

In the closing weeks of last year's election campaign, we wrote that Democrats had in mind the most sweeping expansion of government in decades. Liberals clucked, but it turns out even we've been outbid. With yesterday's fiscal 2010 budget proposal, President Obama is attempting not merely to expand the role of the federal government but to put it in such a dominant position that its power can never be rolled back.

AP

The first point to understand is the sheer magnitude of federal spending built into this proposal. As the nearby chart shows, federal outlays will soar in fiscal 2009 to $4 trillion, or 27.7% of GDP, from $3 trillion or 21% of GDP in 2008, and 20% in 2007. This is higher as a share of the economy than any year since 1945, when the country was still mobilized for World War II. It is more spending by far than during the Vietnam War, or during the recessions of 1974-75 or 1981-82.

But let's assume, for the sake of argument, that Mr. Obama is right that this spending is needed now to "jump-start" an economic recovery. Though the budget predicts that the economy will recover in 2010, spending will still be 24.1% of GDP that year, and the budget proposes that spending will remain higher than 22% for the entire next decade even as the defense budget steadily declines. All Presidential budgets predict spending will decline in the "out years," if only to give the illusion of spending restraint. Mr. Obama tries the same trick, but he is proposing so many new and expanded nondefense programs that his budgeteers can't get anywhere close even to Jimmy Carter spending levels.

These columns focus on spending, rather than deficits, because Milton Friedman taught us that spending represents the real future burden on taxpayers. Nonetheless, the 2009 budget deficit is estimated to be an eye-popping 12.7% of GDP, which once again dwarfs anything we've seen in the postwar era. The White House blueprint predicts that this will fall back down to 3.5% as soon as 2012, but this is based on assumptions about Washington that aren't going to happen.

For example, Mr. Obama's budget assumes that nearly all of the new stimulus spending will be temporary -- a fantasy. He also proposes to eliminate farm subsidies for those with annual sales of more than $500,000. This is a great idea, and long overdue. But has the President checked with Senators Kent Conrad (North Dakota) or Chuck Grassley (Iowa)? We hope we're wrong, but a White House that showed no interest in restraining Congress during the recent stimulus bacchanal isn't likely to stand athwart history to stop the agribusiness lobby.

The falling deficit also assumes the largest tax increase in U.S. history, starting in 2011 with the repeal of the Bush tax rates on incomes higher than $200,000 for individuals and $250,000 for couples. The White House says this will yield upwards of $1 trillion, if you choose to believe that tax rates don't affect taxpayer behavior.

In the real world, two of every three tax filers who fall into this income category are small business owners or investors, who are certainly capable of finding ways to invest that allow them to declare less taxable income. The real impact of this looming tax increase will be to cast further uncertainty over economic decisions and either slow or postpone the recovery. Ditto for the estimated $646 billion from a new cap-and-trade tax, which no one wants to call a tax but would give the political class vast new leverage over the private economy. (See here.)

Then there is Mr. Obama's plan for national health care. The White House has put a $634 billion place holder in the budget to pay for covering tens of millions of uninsured Americans with government subsidized coverage. But even advocates of this government plan say the cost will be closer to $1 trillion over 10 years, and probably much more. Meanwhile, the President is promising to reform entitlements, but his budget proposes a net increase of about $1 trillion in Medicare, Medicaid and other entitlements.

The biggest illusion in this budget may be its optimistic economic forecast. The White House assumes that the economy will decline by only 1.2% this year, before growing by 3.2% next year. This assumes the recovery will begin later this year and gather steam quickly to return to normal levels of growth. By 2010 to 2013, the budget adds, the economy will be cooking by an average of 4% a year -- which is also how it conjures up magical deficit reduction.

This growth is a lovely thought, but how? The only impetus for growth in this budget comes from the government spending more money that it is taking out of the job-producing private economy. With $1 trillion of new entitlements, $1.4 trillion in new taxes, and $5 trillion in new debt, America's entrepreneurs aren't getting any help soon from Washington.

Democrats will want to rush all of this into law this year while Mr. Obama retains his honeymoon aura and they can blame the recession on George W. Bush. But Americans are only beginning to understand the magnitude of Mr. Obama's ambitions, and how much of their own income will be required to fulfill them. Republicans have an obligation to insist on a long and considerable debate on all of this, lest Americans discover in a year or two that they live in a very different country.