Published for www.nationalreview.com, April 23, 2012
Once upon a time, President Obama was a traditional Keynesian. When he came into office, he favored a massive injection of new governmentspending into the economy in the name of “stimulus” — counter-cyclical federal activity aimed at offsetting depressed consumer demand emanating from a recession-battered private sector.
Unfortunately for the president, that approach to economic revival has now been thoroughly discredited in the public’s mind. The problem with Keynesianism isn’t the theory; it’s the practice. What happens in the real world — that is, the world in which Congress drafts and passes legislation — isn’t a series of tidy, one-time, highly valuable public investments that would not have occurred were it not for the legislation.
No, when Congress writes stimulus spending bills, what we get are narrow-purpose pet projects, large federal bureaucracies, ideological hobbyhorses, and spending that simply displaces what otherwise would have occurred anyway, especially at the state level. The net result provides little if any boost to aggregate demand because the states — and to some extent private citizens — simply pocket the federal money and reduce their deficits and debts. Meanwhile, what federal taxpayers get is a permanent increase in the size of government — because almost nothing in politics is ever “one-time” — as well as a massive increase in the national debt.
Of course, it didn’t help that the president and his advisers claimed that the $800 billion stimulus bill that Congress passed in early 2009 would keep the unemployment rate below 8 percent. Because unemployment soared past 8 percent in early 2009, and even now, more than three years after passage of the stimulus bill, it still has not fallen back below that level even once.
Full post here
Published for www.nationalreview.com, April 4, 2012
In April 2011, President Obama went to George Washington University and delivered a highly publicized and very political attack on the budget plan put together by House Budget Committee Chairman Paul Ryan. In that speech, the president called the Ryan plan, and especially its Medicare-reform component, an unconscionable attack on the elderly. He also accused it of being, effectively, un-American.
Fast-forward to April 2012. Congressman Ryan has again assembled a budget plan to head off national insolvency. He has again rallied his colleagues to take up this budget blueprint and pass it through the full House, despite the political risks associated with doing so. And, like night following day, the president has again delivered an incredibly partisan attack on the House’s handiwork, denouncing it with some of the most over-the-top political rhetoric ever heard in a presidential address.
In that regard, yesterday’s “address” was very similar to last year’s highly political budget speech. It was sort of like a movie sequel, trying to capture that same partisan magic that fired up his electoral base a year ago. Unfortunately for the president, his speech today was about as imaginative and interesting as most big-budget movie sequels.
He called the budget plan adopted by the House last week a “radical vision” that would undo the nation’s social contract by penalizing the poor and favoring the rich. And he again supported an alternative vision for fiscal policy, based on what he calls a “balanced plan” for deficit reduction — meaning a plan that raises taxes to cover higher governmental spending commitments.
At the bottom of this budget standoff is a fundamental difference of views on what is causing our fiscal crisis in the first place, both today and in the future.
The president and his allies continue to cling to the false narrative that the reason we are experiencing budget deficits is because of tax cuts and unfinanced wars. This is a completely distorted view of budgetary reality.
Full post here
Published for www.nationalreview.com/corner, March 16, 2012
At 4:15 p.m. this afternoon, the Obama administration issued its latest pronouncement on the HHS mandate, in the form of an Advanced Notice on Proposed Rulemaking (ANPRM). So what did the administration have to say on this late Friday afternoon?
Basically, it was a thinly veiled attempt to punt the entire issue into 2013, thus allowing the president to continue his doublespeak on the issue — pretending that he is interested in protecting religious liberty with pronouncements about a forthcoming concession while the policies he actually implements go in exactly the opposite direction.
In the ANPRM, the administration said it is seeking input and comments on the so-called “accommodation” that the president announced on February 10. But the ANPRM also makes it clear that this process of getting input and issuing new rules will be very long and drawn out — so much so that the administration doesn’t expect to issue final regulations until August 1, 2013. Thus, with the issuance of the ANPRM, the administration is basically saying it won’t be making any further policy in this regard prior to this November’s election. That’s telling in and of itself. The administration is desperate to get past November without this issue further hurting the president. Thus they announce an elaborate process that they expect to take more than a year to complete. Meanwhile, the president will undoubtedly continue to reiterate his interest in protecting religious liberty — it’s just that he can’t tell us how exactly he will do so until he has safely secured a second term.
Full post here
Published for www.economics21.org, February 14, 2012
In the budget President Obama proposed yesterday, he once again chose to placate constituencies and promote an activist government agenda at the expense of getting the nation’s fiscal house in order. The budget forecasts a $1.3 trillion deficit for the current fiscal year — the fourth year in a row of trillion dollar deficits. The president is thus on track to pile up an astonishing $5.3 trillion in deficits during his first term, for fiscal years 2009 to 2012. For those who say he shouldn’t be held accountable for 2009 since he assumed office one-third of the way through it (and then promptly pushed through an $800 billion spending program), the cumulative deficit for the four year period 2010 to 2013 is nearly as bad — $4.8 trillion.
The fundamental problem in the federal budget is the relentless increase in entitlement spending. The administration’s apologists like to say that our fiscal problems stem from tax cuts, the Medicare drug benefit, and unfinanced wars. But this is not so. Over the past four decades, the federal government has collected revenue that has averaged 18 percent of GDP annually. In 1972, when total spending on Social Security, Medicare and Medicaid was 4.4 percent of GDP, there was plenty of revenue left over for other priorities of government, like national security. But today, the situation is very different. Spending on Social Security, Medicare, Medicaid, and the entitlements created in the health care law are expected to reach 10.2 percent of GDP in 2012, well over half of the normal tax take of the government. That’s the primary reason the government is now experiencing massive fiscal pressure.
The president’s budget does nothing to address this problem and, in fact, makes it much, much worse. According to the administration’s own figures, the president’s plan would increase entitlement spending to about $3.7 trillion in 2022, up from $1.8 trillion in 2008. On average, the president’s budget proposes to increase spending on this segment of the budget by 5.3 percent per year over the coming decade.
Full post here
Published for www.nationalreview.com, January 30, 2012
The decision last week by Health and Human Services Secretary Kathleen Sebelius to reject the appeals of scores of religious leaders and retain a very narrow “religious” exemption from Obamacare’s so-called contraception mandate has ignited an uproar among Catholic leaders, as well it should — because it’s hard to fathom a government dictate more offensive than this one.
Here’s how we got where we are: Obamacare includes within its massive delegation of power to the federal government the authority to define what constitutes “preventive services” that must be covered by all health-insurance plans sold and purchased in the United States, including plans sponsored by employers. Services defined by HHS as preventive for purposes of this provision are required under the new law to be covered by the insurer or employer with no charge to the insurance plan’s enrollees.
Last August, in the course of writing a rule that would determine preventive health services for women, HHS decided that free contraception and sterilization services are a must. As a practical matter, that means all health-insurance plans sold in the United States in the very near future will include full coverage of products that terminate pregnancies, since some products classified by the FDA as contraceptives — and thus covered under the HHS definition — also act as abortifacients. While it is true that many insurance plans cover such products today, that’s mainly been the choice of the insurers and employers sponsoring the plans. HHS has now made such coverage obligatory nationwide, thus forcing tens of millions of pro-life Americans to pay for “services” with their health-insurance premiums that they find morally objectionable. (Grandfathered plans are exempt from this and other Obamacare rules, but the number qualifying for grandfathered status is expected to decline precipitously in the next couple of years.)
Bad as all that is, it gets worse. Not only must Catholics who work for non-Catholic employers pay for such products with their premiums, HHS also wants religious employers to cover such products in their health plans. Knowing that Catholic leaders and others would strongly object to this requirement, HHS included in the regulation issued last August a narrow exemption from this requirement for employers that are basically houses of worship. Much larger religiously affiliated institutions, such as Catholic universities, hospitals, and charitable enterprises, do not fit within the HHS exemption.
Full post here
Published for www.nationalreview.com, January 30, 2012
The decision last week by Health and Human Services Secretary Kathleen Sebelius to reject the appeals of scores of religious leaders and retain a very narrow “religious” exemption from Obamacare’s so-called contraception mandate has ignited an uproar among Catholic leaders, as well it should — because it’s hard to fathom a government dictate more offensive than this one.
Here’s how we got where we are: Obamacare includes within its massive delegation of power to the federal government the authority to define what constitutes “preventive services” that must be covered by all health-insurance plans sold and purchased in the United States, including plans sponsored by employers. Services defined by HHS as preventive for purposes of this provision are required under the new law to be covered by the insurer or employer with no charge to the insurance plan’s enrollees.
Last August, in the course of writing a rule that would determine preventive health services for women, HHS decided that free contraception and sterilization services are a must. As a practical matter, that means all health-insurance plans sold in the United States in the very near future will include full coverage of products that terminate pregnancies, since some products classified by the FDA as contraceptives — and thus covered under the HHS definition — also act as abortifacients. While it is true that many insurance plans cover such products today, that’s mainly been the choice of the insurers and employers sponsoring the plans. HHS has now made such coverage obligatory nationwide, thus forcing tens of millions of pro-life Americans to pay for “services” with their health-insurance premiums that they find morally objectionable. (Grandfathered plans are exempt from this and other Obamacare rules, but the number qualifying for grandfathered status is expected to decline precipitously in the next couple of years.)
Full post here
Published for www.nationalreview.com, January 23, 2012
Yesterday, the White House issued a new “study” on the supposed progress states have made in implementing the “health exchanges” that are central to constructing the Obamacare system. According to the administration’s spin, some 28 states are “on their way” toward establishing the exchanges, so everything is apparently well under control. In other words, nothing to worry about here. Full speed ahead!
But is that really what’s going on here?
Because, even if one were to accept the White House’s accounting (which one shouldn’t), that would mean that 22 states — roughly 40 percent of the country — are not “on their way” toward erecting the Obamacare exchanges. Isn’t that a problem? Further, upon closer inspection, it’s clear that many of the 28 states that are supposedly “on their way” really aren’t “on their way.” That’s just comical White House spin, in which the truly inconsequential — the acceptance of minor federal grant money, or the setting up of a committee to “study” the question — is elevated into a sure sign that Obamacare is a fait accompli. It’s ridiculous.
Full post here
Published for www.economics21.com, December 22, 2011
Just over a year ago, Republicans won the midterm election in a landslide. They picked up a historic number of seats in the House of Representatives, substantially narrowed the Democratic majority in the Senate, and took control of scores of state legislatures and governors’ mansions. The message from voters was clear: they wanted to put an end to the hyper-activist agenda coming from the Obama administration, and to renew policymakers’ focus on promoting private sector economic growth, not more government jobs.
Still, because it was a midterm election, the Republicans weren’t in a position to take full control of government. At the national level, they took over one house of one branch of the federal government. Barack Obama would still be occupying the White House, and would for at least two more years. And Democrats were able to hang onto a slim majority in the U.S. Senate too, despite losing six seats in the election.
Thus, 2011 began with great uncertainty and anticipation. How would the new House majority, propelled into office with the energy from the emergent Tea Party movement, share power with a Democratic White House and Senate? And what would it all mean for economic and fiscal policy?
Now that 2011 is nearing an end, it’s safe to say that this particular political marriage — arranged to some extent by the voters who pulled the lever both for Barack Obama in 2008 and then for conservative Republican congressional candidates in 2010 — has been a rocky one, to put it mildly. Over the course of the past year, the news has been dominated by a series of high-level budget negotiations that were initiated by both sides with great fanfare and much hope for historic and game-changing breakthroughs, and that ended instead as spectacular, headline-grabbing failures.
Full Post Here
Published for economics21.org, September 26, 2011
Last week, the president unveiled yet another budgetary proposal (his third of the year!). Officially at least, this latest offering is supposed to be aimed at influencing the Joint Select Committee on Deficit Reduction. The twelve-member Joint Committee was created in the August legislation lifting the debt ceiling and is charged with drawing up a plan to cut at least $1.2 trillion from the expected ten-year budget deficit.
But, truthfully, the president’s latest proposal is far more likely to undermine the Joint Committee than help it. The twelve-person committee, which is composed of six Democrats and six Republicans, can only advance a deficit reduction proposal to the House and Senate for legislative consideration if seven committee members support it. That’s means any plan recommended by the Joint Committee must have some level of bipartisan support behind it.
But the president’s plan wasn’t aimed at building bipartisan momentum for a deficit-cutting plan. That was evident from the president’s speech unveiling it, in which he threatened to veto any deficit-cutting legislation that included entitlement reforms but no tax hikes on the rich. And it is also evident from the president’s total reliance on tax increases to narrow future budget deficits. As Keith Hennessey has explained, the administration’s contention that the president’s proposal would cut the budget deficit by $3.0 trillion over ten years is based on gimmicks and sleight of hand. When those are stripped away, all that’s really left is a massive, ten-year $1.5 trillion tax hike on upper income households, many of whom own small businesses that are supposed to the be engine of job creation.
Full Post Here
Published for E21, September 2, 2011
As Congress gets set to reconvene after Labor Day, all eyes have turned toward the so-called “super committee” — the special budgetary panel created by the debt limit deal. That’s understandable because the super committee has the potential to be a very, very powerful force in Washington. As constituted, if seven of the twelve members of the committee agree to a proposed deficit reduction plan, it will be brought up for an up or down vote in the House and Senate — without the possibility of amendment from non-super committee members. Further, and even more importantly, the super committee’s legislative proposal can’t be filibustered in the Senate. That effectively lowers the bar of support needed to get a super committee-endorsed plan through the upper chamber by nine votes — from a super majority of 60 to a simple majority of 51.
The committee’s legislative mandate is also sweeping. It is charged with finding a minimum of $1.2 trillion in deficit reduction over the coming decade to avoid the same amount getting cut automatically and indiscriminately from a wide array of spending programs, including Medicare and the defense budget. To meet its deficit cutting objective, the super committee has the authority to tackle tax and entitlement reform, health care, the budget and appropriations process, even government reorganization. All it takes to get something big and serious moving through Congress is for seven of the super committee members to support it.
Full Post Here
