Scott Spiegel


Archive for the ‘Economy’

Democrats’ War on Competent Women

April 09, 2014 By: Scott Spiegel Category: Economy

war-on-womenOn Tuesday the nation’s grievance-mongers celebrated Equal Pay Day, the day up through which women supposedly must work to catch up with men’s earnings from the prior year.

Based on the actual research, however, women would need to work only up until about brunch on New Year’s Day.

Liberals have been bleating for decades about some apocryphal pay gap, whereby full-time working women receive just 77 cents for every dollar men earn for the same work.

To help rectify this situation, President Obama signed the Lilly Ledbetter Fair Pay Act, which made it easier to file a lawsuit alleging salary discrimination, as his first act in office.

In a desperate attempt to mobilize Democrats’ largest voting bloc before the 2014 midterm elections, Obama recently renewed his push to remedy the injustice of pay inequality by promising to go around Congress if it doesn’t act.  On Tuesday he signed executive orders banning federal contractors from prohibiting workers from discussing their pay, and requesting pay statistics by gender from contractors.

Meanwhile, investigative journalists have documented that the Obama White House has paid its female staffers less than men for years.  So according to liberal logic, Obama is either discriminating against women applying for prestigious positions or stiffing them in their paychecks.

As journalist Christina Hoff Summers and others have documented, women’s work habits and life circumstances differ from men’s in many ways that affect their earnings.

Women tend to major in subjects that lead to lower-paying jobs and to pick lower-paying careers.  Women are more likely, for example, to become schoolteachers or nurses, whereas men are more likely to become college professors or doctors.  Men are more likely to choose careers that involve difficult manual labor or dangerous work conditions, which yield extra compensation relative to safe desk jobs.

Women are more likely to interrupt their careers, often when they’re just taking off, to give birth and stay home to rear children.  Many return to their jobs after sacrificing months or years’ worth of experience, networking, and resume-building opportunities.

Women are more likely to choose to work part-time, or to work fewer overtime hours, which compounds the experience gap and compromises their utility to employers.

Controlling for all of the above factors, the gender gap dwindles to 6.6 cents on the dollar.  And in our litigious, politically correct era, the fact that there’s still any gender difference suggests that researchers simply haven’t pinned down the situational factors that explain away those final few cents—e.g., women’s less aggressive salary negotiating style, or control variables that classify a woman who majors in sociology and a man who majors in economics both as “social science” majors.

As even the U.S. Department of Labor admitted in a comprehensive study of the pay gap in 2009, “[T]he raw wage gap should not be used as the basis to justify corrective action.  Indeed, there may be nothing to correct.  The differences in raw wages may be almost entirely the result of the individual choices being made by both male and female workers.”  Is Obama unaware of his own Labor Department’s research on the pay gap?

Conservatives have been pointing out all of the above facts for years—but all to no avail.  Brain-dead feminist Joan Walsh recently scolded Republicans for telling women to stop lying about the pay gap.  Liberal reporter Dana Milbank sneered that Republicans can “kiss votes from women goodbye.”  Birth control connoisseur and California State Senate candidate Sandra Fluke helpfully outlined all of the steps we can take to reduce the pay gap.  (I don’t know about you, but when Sandra Fluke has something to say, I do absolutely nothing differently than if she hadn’t spoken.)

For liberals who don’t buy the economic data showing no discriminatory pay gap, tell me: If employers could get away with hiring women with the same skills and experience as men for a 23% discount, why wouldn’t they be snapping up women and giving them their male employees’ jobs?  (They might even have to keep binders full of women!)  The left regularly accuses heads of companies of selling unsafe products or gouging customers just to squeeze out a few more pennies per transaction.  Are we to believe that these capitalist overlords haven’t noticed that they’re paying a 30% markup for male employees?

If it’s illegal to pay women less than men with the same qualifications for the same work, why don’t we see more gender discrimination lawsuits?  Where are the thousands of women proving in courts of law that their bosses give them less money than equally qualified men doing the same work?  Most heads of Human Resource Departments, which keep employee resumes, work requirements, and salary information, are women.  Are female human resource managers jealously conspiring to cover up widespread gender discrimination?

Research shows that the pay gap is narrowest at the start of women’s careers and widens as they get older.  So it’s unlikely that employers simply have an unfounded bias against women at all stages of their careers.  In fact, U.S. Census data reveal that the pay gap is reversed when comparing single men and women in their twenties.

If women want the same pay as men, then they should enter high-paying, high-prestige, high-responsibility careers that require lots of overtime and no interruptions in work history for having babies or part-time schedules to care for children.

As Megan McArdle points out, the real pay gap is the one that results from the differences between women and men, and the divergent life choices they make.  The left doesn’t want women to receive the same pay as men for equal work; they want women to receive the same pay as men for unequal work.

And these whining obfuscators whose appeals to social justice belie their assumption that women can’t compete on their own terms are the ones who call themselves feminists.

Previously published in modified form at Red Alert Politics

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Time to Furlough Essential Federal Employees

October 09, 2013 By: Scott Spiegel Category: Economy

government-shutdown-make-it-hurt-politifakeThe federal government shouldn’t be shutting down non-essential functions, it should be privatizing them and shutting down essential functions.

The one thing you can say about all the things Obama has chosen to shut down during the current budget battle is that they made someone happy.  Whether it’s the National Zoo, national parks, private parks, historic and cultural monuments, children’s cancer research, campgrounds, or fishing outlets, Obama wants to make well and sure you don’t benefit from any of them while he waits for Republicans to buckle over Obamacare.

As the stories emerged about Obama’s goons stringing wire through barricades to ruin 80-year-old vets’ chances to see the World War II Monument and blocking the view from the road to Mount Rushmore, I went from guffawing at the ineffectuality of the shutdown to seething over his maliciousness in targeting the most innocent bystanders via a series of heavy-handed shutdown spectacles that cost more to carry out than to just leave the damn sites open.

While parks, monuments, and campgrounds bring people pleasure, you can’t say the same about the agencies Obama left open, which nominally provide key services but regularly inflict torment on hapless citizens not bothering anyone.  When was the last time you heard someone gush over how the Department of Education or the IRS made his life better?

Consider the putative roles of these federal behemoths and the tortures they rain down on us:

Department of the Interior, budget $20 billion.  This harmless agency that’s been around since before the Civil War is there to manage and conserve federal land, right?  Wrong.  Lately its main duties seem to be preventing off-shore drilling, banning oil exploration in Alaska, and keeping retailers and developers from expanding.

Internal Revenue Service, budget $13 billion.  No one likes the IRS, but don’t we need them to enforce the federal tax code?  Except that they’re best known these days for stalking Tea Party groups, intimidating political opponents, and forcing people to buy health insurance.

Department of Justice, budget $27 billion.  Tasked to enforce federal law for cases of national importance, they’re best known in the Obama era for criminalizing whistleblowers, enabling voter intimidation, and shipping guns to Mexican drug cartels.

Department of Commerce, budget $9 billion.  Charged with promoting an infrastructure that supports commerce, but better known since FDR for punishing farmers for not growing crops, banning guns in school zones, and forcing people to buy health insurance.

Federal Reserve.  Designed for setting monetary policy and interest rates on U.S. bonds; best known for inflating the currency, devaluing the dollar, and buying good economic news for the administration by printing money and causing the stock market to rally.

Social Security Administration, budget $736 billion.  Intended for assisting with workers’ retirement and disability benefits; known for confiscating wealth that could be more profitably invested elsewhere, discouraging workers from properly preparing for retirement, and going bankrupt.

Department of Health and Human Services, budget $78 billion.  Intended: Ensuring the health and safety of the citizenry.  Actual: Holding up crucial drug approvals, making a trusting populace obese with the carb-heavy Food Pyramid, and forcing people to buy health insurance.

Department of Housing and Urban Development, budget $48 billion.  Intended: Developing policies on housing and metropolitan living.  Actual: Spreading rat-infested projects through minority neighborhoods, banning truthful descriptions in real estate ads as “offensive,” and promoting subprime housing loans to poor Americans.

Department of Energy, budget $31 billion.  Intended: Setting the nation’s energy policy.  Actual: Preventing nuclear power plants from operating, subsidizing flimflam solar panel companies, and pushing global warming hysteria.

Federal Emergency Management Agency, budget $11 billion.  Intended: Providing disaster relief to victims of catastrophic events.  Actual: Confiscating guns, misdirecting funds, and dillydallying over bureaucratic regulations while hurricane refugees suffer.

Department of Education, budget $71 billion.  Intended: Overseeing and strengthening the public school system.  Actual: Mobilizing teachers’ unions to vote for Democratic candidates, indoctrinating students in liberal ideology, and dumbing down America.

Department of Homeland Security, budget $61 billion.  Intended: Protecting the nation from terrorist threats.  Actual: Strip-searching babies and monks at airports, exposing the populace to scatter radiation, and stockpiling ammunition.

So just how much does it cost to run the National Zoo?  $25 million to operate two facilities, about a quarter of which comes from private donations.  That’s an annual budget of 0.3 percent of the EPA, the cheapest of the behemoths listed above.

I’ve changed my mind—turn the Panda Cam back on, and turn off the spigot to these wholly unnecessary, actively harmful, misery-spreading “essential” federal agencies.

Previously published in modified form at Red Alert Politics

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Dems Fail to Terrify Americans with Threat of Panda-Cam Deprivation

October 02, 2013 By: Scott Spiegel Category: Economy

originalNow that the federal government has partially shut down, the big question isn’t how we’ll ever manage, but: Did anything actually shut down?

On Monday night the House and Senate missed their deadline for passing a budget resolution due to disagreement over Obamacare funding, which  naturally drove the media into a frenzy.  But consider all of the things that will not shut down during the so-called shutdown:

  • All branches of the military, including our troops in Afghanistan
  • The Department of Homeland Security
  • All federal law enforcement offices and officials, right down to traffic cops
  • Emergency services, including 911
  • Federal prisons
  • Maintenance of the power grid
  • Disaster assistance
  • Social Security checks
  • Unemployment checks
  • Medicare payments (at least the ones Democrats haven’t siphoned off to pay for Obamacare)
  • Medicaid payments
  • Food stamps
  • Federal school lunch programs
  • Most veterans’ services
  • Mail service, which will continue six days a week
  • The Supreme Court and other federal courts
  • Border control
  • Processing of immigration applications
  • The National Weather Service
  • Air traffic control
  • NASA/the International Space Station
  • Amtrak, Metrorail, and Metrobus
  • Travel safety services, including the Transportation Security Administration
  • Food inspectors
  • Hazardous waste handlers
  • Most passport requests, which are funded by fees and not taxes

Also, of course, the full salaries of President Obama ($400,000) and all House and Senate members ($174,000 to $230,700 each).

Also the offices of the 76% of the 3.3 million federal employees who have been deemed “essential” for the nation to continue to function, even though most of their positions and offices didn’t exist 50 years ago and we somehow got along fine.  The other 24% of employees will be furloughed and most likely receive back pay for the time they were off the job, as they always have in the past.  The Office of Management and Budget (which will not shut down) will make the determination of who stays on the job (with pay) and who gets furloughed (likely with pay).  Those lucky enough to stay on the job and pick up some of their missing coworkers’ slack may be eligible for overtime.

Highly critical government offices that will not shut down and the essential services they provide include: the Bureau of Labor Statistics (fudging the unemployment numbers), the Internal Revenue Service (monitoring Tea Party groups), the Federal Reserve (deflating the currency), the Consumer Financial Protection Bureau (harassing banks), and the U.S. Patent Office, which will bravely continue to crank out patents during the apocalypse.

Just 15% of Justice Department employees will be furloughed.  (Attorney General Eric Holder needs a lot of help suing North Carolina for being racist.)  And don’t worry—99% of all Head Start programs will remain open.

Also… Obamacare!  The state health care exchanges went live October 1, and with three months till coverage starts, Democrats will move heaven and earth to make sure funding flows their way.

Here are the things that will shut down:

National parks, the Smithsonian museums, and the National Zoo.

That’s about it.  As CNN mournfully noted in its recent headline, “‘Panda cam’ to go dark in shutdown.”

In other words, a few D.C. tourists with bad timing will have to entertain themselves paddle boating in Baltimore’s Inner Harbor and shopping at Pentagon City.  (Note: the Kennedy Center for the Performing Arts is still open!)

Oh—and federal loans to buy houses will be temporarily unavailable, which should help stave off the next financial crisis; and the federal government won’t be able to issue gun permits, which we shouldn’t have to petition it to do anyway.  Also, E-Verify will naturally be out of commission.

Why have House Republicans been so daring in pushing us to the brink of a shutdown?  Perhaps it’s because they’re confident that Obamacare is so detested that public opinion will break their way and turn against Democrats who refuse to revoke their self-awarded exemption from the bill.

But perhaps it’s because of what a non-issue the supposedly catastrophic sequester earlier this year turned out to be.

The government has shut down 17 times since 1977, not counting your occasional sequester or Snowpocalypse, and somehow we’ve survived.  If your average American is generally skeptical of government, doesn’t understand most of its functions, and suspects it’s too big, why would he quake in terror at the prospect of its taking a breather for a few days?

As Mark Levin noted, there’s a government shutdown every Friday with no untoward consequences—it’s called “the weekend.”

Previously published in modified form at Red Alert Politics

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No Ceiling on Obama’s Debt Recklessness

September 25, 2013 By: Scott Spiegel Category: Economy

untitledContrary to popular belief, the debt ceiling wasn’t instituted to rein in Congressional spending, it resulted from a power grab by a Democratic President to circumvent Congressional authority.

Based on his recent debt recklessness, Obama is happily restoring that ignominious tradition.

In 1917, President Wilson decided he didn’t feel like waiting for Congress to appropriate funds to enter World War I, so he schemed to go around them.  He insisted that as Commander in Chief he couldn’t pause for Congress to authorize military spending, that his Treasury Department needed the power to print large numbers of bonds whenever it wanted to drum up cash.

Congress eventually agreed to Wilson’s demands, but on the grounds that he be constrained such that he could not unilaterally incur more debt without Congress’s approval.  (As NPR wryly notes, “Sort of like putting a leash on a toddler.”)

The debt ceiling concept not only survived the war but expanded under FDR from a mechanism intended to pay for armed conflict to a catchall wink-wink approval to Congress to keep spending as much as it wanted as long as it didn’t exceed the limit.

Then Congress started raising the debt ceiling.  A lot.

In NPR’s words, “The toddler grew into a giant, and Congress just ordered longer leashes every couple of years.”

The history of the U.S. debt ceiling reveals that: (1) both parties have raised the ceiling by enormous amounts over the last century; (2) Democratic Presidents have increasingly taken advantage of debt ceiling increases for non-war discretionary spending; and (3) President Obama is in a league of his own in debt ceiling abuse.

In FDR’s third term in office, during World War II, the debt ceiling quintupled from $49 billion to $260 billion.  Over six years of peace and two of war under Truman, the debt ceiling rose to only $275 billion.  Under Eisenhower it inched to $293 billion.

Under JFK the ceiling ratcheted up to $309 billion; under LBJ it hiked to $365 billion.  During the Vietnam War under Nixon, it spiked to $495 billion, but after war’s end it came back down to $400 billion.  Carter’s failed economic policies reversed that trend and sent the ceiling up to a shocking $935 billion.

While Reagan was building our arsenal of nuclear weapons and winning the Cold War, the debt ceiling doubled to $2.8 trillion.  Under George H. W. Bush, who fought the first Iraq War, it rose to $4.1 trillion.  During eight years of peace under Clinton, it chugged up to $8.2 trillion.

While George W. Bush was fighting two wars, the debt ceiling rose to $11.3 trillion, but a good chunk of that boost came in response to the financial crisis of the fall of 2008: nearly a third of the debt ceiling increase under Bush occurred in his last four months in office, under political pressure from Democrats.

And then there’s Obama.

When Obama assumed office, the debt ceiling was $11.3 trillion.  As of May 2012, it was $16.7 trillion.

It’s probably going to get raised again in a few weeks.  And Obama wants to raise it much, much higher before he’s done with us.

Look at a graph of debt ceiling increases over the past 30 years, and you’ll see a steady accumulation of baby steps across Reagan, Bush, Clinton, Bush…  Then—wham! the effort meter on your Stairmaster shoots up to Matterhorn level, and you’re confronted with a massive, vertical wall of debt.

Obama loves to point out that Reagan raised the debt ceiling 18 times.  But Reagan’s increases were much smaller, even in combination, than Obama’s.  Reagan increased the debt ceiling an average of $233 billion a year.  Bush Sr. increased it $336 billion, Clinton $226 billion, and Bush Jr. $671 billion.

Obama?  A cool $1.4 trillion per year.

If Obama continues at his current rate, the debt ceiling will be $25 trillion when he leaves office.  That’s 10 times its level at the height of the Cold War, and 30 times its level during the peak of the Carter recession.

Under Wilson in 1917, Congress authorized the issuance of $11.5 billion in bonds, which would be $193 billion in today’s inflation-adjusted dollars.  Obama’s debt ceiling?  86 times as large as that inflation-adjusted amount.

As The Atlantic noted, “The U.S. isn’t fighting a world war, but the nation’s government is borrowing like it is.”

Even the originator of the debt ceiling would be appalled at Obama’s debt ceiling recklessness.

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Detroit Happens

July 24, 2013 By: Scott Spiegel Category: Economy

130718130808-detroit-protests-bankruptcy-620xaAh, Detroit!  The most liberal metropolis in the country, a city that hasn’t elected a Republican city council member since Nixon’s first term, a city that hasn’t elected a Republican mayor since Eisenhower was president.

Naturally, Republicans are responsible for Detroit’s woes.

Last week Detroit filed for bankruptcy, the largest municipal bankruptcy filing in U.S. history.  The city is $18 billion in debt and owes $3.5 billion to city employees in unfunded pension and health care obligations.

Kevyn Orr, Detroit’s emergency city manager, proposed cutting pension benefits and interest to bondholders as part of his Chapter 9 filing.  Last Friday a circuit judge ruled that Detroit’s bankruptcy filing was unconstitutional, because it violated municipal employee contracts with predefined pension payments.

Commentators have been tossing around a variety of explanations for Detroit’s problems, including: residential and business flight to the suburbs, a lost manufacturing base, auto plants closing, mismanagement and corruption in city government, racial segregation, and the national housing crisis and recession.

I’ve noticed a curious thread running through most commentators’ explanations: namely, the suggestion that no one is at fault for what happened in Detroit; or that everyone is at fault; or that many factors contributed to Detroit’s decline and we can’t say which had the most influence; or that it doesn’t really matter who’s at fault because all we can do now is move forward.

New York Times columnist Paul Krugman expressed the following passive account: “Detroit does seem to have had especially bad governance, but for the most part the city was just an innocent victim of market forces.”  You know, like those Republican-led cities and states that suffered through the same recession as Detroit and somehow managed to emerge prosperous.

But something is clearly at fault for the budget shortfall of the city’s pension system, which continues to offer guaranteed retirement income and health care benefits to recipients, no matter how long they live, no matter how expensive their medical care.  Where does that exist in the private sector these days?

Why do municipal employees—some of whom perform dangerous jobs, but many of whom sit at library checkout desks or hospital reception counters all day—think they deserve such privilege?

The resistance to cutting pensions is probably driven in part by what decision-making psychologist Daniel Kahneman calls loss aversion—or, alternatively, the endowment effect.  Namely, losses seem more unjust to most people than gains seem just, so instead of cutting benefits and lowering taxes to spur wealth creation, society resists touching entitlements to prevent anyone from ever losing anything, even if this hamstrings entrepreneurs.  Another way of looking at this is to say that people who already have benefits feel that they are “endowed” with them and have more of a right to them than if they had never possessed them.

The American Prospect’s Harold Meyerson makes this case in ethical terms: “[T]oday’s bankruptcy filing is likely to reduce [city] services still further, while likely reducing the monthly pension checks of its retirees, though they and their unions have a strong moral claim to most favored creditor status.”  According to Meyerson, the businessmen and investors who created the jobs that allowed taxes to be collected and city services to be provided—well, their moral claim on much of anything is moot.  But the people cashing in on those services—now, they’re the ones whose rights we have to protect, whose claim to pensions and free health care are enshrined in the Michigan State Constitution.

But for an even more direct answer to the question of why city employees feel so entitled, see the comments of 65-year-old Michael Wells, plaintiff in a city union-sponsored lawsuit against Detroit’s bankruptcy: “He said he viewed the pension as part of the overall pay he was promised…  ‘Had I not had a pension, perhaps I would have gotten several dollars an hour more and that would be O.K.  I would have taken that money and invested it in some kind of mutual fund or stock.’”

That last sentence is key: Because he was relying on government to fund his retirement, Wells did no financial planning.  Why should he feel the need to?  And hundreds of thousands of other Detroiters no doubt put similar faith in government, and now find themselves in the same predicament.  Their thinking must be, Government not only gives us jobs and salaries, it takes responsibility for our financial well-being right on up through retirement.  How can it possibly withdraw its services now?

Also see Times columnist Steven Rattner’s rationale for why “We Have to Step In and Save Detroit”: “[T]he 700,000 remaining residents of the Motor City are no more responsible for Detroit’s problems than were the victims of Hurricane Sandy for theirs, and eventually Congress decided to help them.”  Right.  Retiring, being the victim of a historically destructive weather event that occurs once a century—they’re equally unpredictable, and people shouldn’t be expected to build up savings any more than they should be expected to build bunkers and hurricane shelters in Manhattan.

The Pittsburgh Post-Gazette, wary of that city’s potential slide into Detroithood, mused, “There has been finger-pointing about who is to blame.  The answer is everyone.”  No.  The answer is Democratic politicians, moderate Republican politicians who enable them, and voters who elect them all on the platform of making government a nanny-state protector of able-bodied human beings to the absurd extent of doing their retirement planning for them.  That’s who’s to blame.

Previously published in modified form at Red Alert Politics

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David Stockman: Supplying Both Sides with Bad Economics

April 03, 2013 By: Scott Spiegel Category: Economy

David Stockman.The Great DeformationIn a controversial New York Times piece that’s been receiving attention from both the left and the right, former Reagan budget director David A. Stockman recently argued that the federal government’s activist role in manipulating our economy for the past eight decades is responsible for our current dire financial straits.

Stockman dissects the history of abuses carried out by the Federal Reserve and notes, correctly, that the Keynesian policy of endless money printing to stimulate demand and promote liquidity leads to long-term, permanent inflation and an erosion of our currency’s value.  He takes to task George W. Bush for recklessly expanding Medicare, Obama for his poorly targeted stimulus bill, and both for their role in the 2008 bank bailout.  He notes that even so-called fiscal hawks like House Budget Committee Chairman Paul Ryan vastly underestimate the severity of our debt crisis and soft-pedal the steps needed to resolve it.

But Stockman gets a lot wrong, too, and the bulk of his error seems to stem from a renegade streak that reflects his desire to prove himself more sagacious than both left and right.  To wit: any analyst who finds equal economic fault in both parties—labeling the problem “bipartisan,” as Stockman does—misunderstands the situation.  Yes, the right deserves blame: Nixon decoupled paper money from gold; Reagan built up massive federal deficits; George W. Bush increased government spending more than any president before him.  But Stockman justifies holding both parties equally accountable by inappropriately coupling spending cuts with raising taxes as solutions to mitigate deficits.  Stockman falls into the trap—as do most liberals—of equating federal expenditures with tax cuts.  In the liberal worldview, both entities are equivalent, because each involves spending in different forms—one on government programs that largely help the poor and middle class, the other on tax breaks that largely favor the wealthy.

But lowering marginal tax rates on high-income earners doesn’t involve spending; it involves not taking money that isn’t the government’s in the first place.  Revealing either his confusion or his deliberate blurring of the issue, Stockman writes, “Washington is piling a soaring debt burden on our descendants, unable to rein in either the warfare state or the welfare state or raise the taxes needed to pay the nation’s bills [emphasis added].”  Cut massive wasteful federal spending, gouge the rich—it’s all the same to Stockman.

Similarly, he bemoans Bush’s “giant expansion of Medicare and a tax-cutting spree for the wealthy…  In effect, the G.O.P embraced Keynesianism—for the wealthy.”  In other words, Stockman thinks letting the wealthy keep their money in the hope they’ll invest and create more wealth is the functional equivalent of burying money and paying people to dig it up.

At times Stockman rails against the size of the entitlement state, but he’s inconsistent in denouncing it.  At one point he complains that Ryan’s “proposal for draconian 30 percent cuts over a decade on the $7 trillion safety net—Medicaid, food stamps and the earned-income tax credit—is another front in the G.O.P.’s war against the 99 percent.”  Is Stockman Reagan’s former budget director or a closet Occupy Wall Streeter?

Stockman betrays further obtuseness when he complains that our two stubborn political parties, caught in “stasis,” won’t resolve our fiscal crisis in one fell swoop, but rather “in carefully choreographed crises over debt ceilings, continuing resolutions and temporary budget patches.”  In other words, the country’s having to white-knuckle it through endless, panic-filled stopgap measures is equally the fault of Democrats who refused to pass a budget for four years and Republicans who desperately tried to get one signed into law during that period.  Neither party is more to blame than the other.

Showing further solidarity with the left, Stockman writes that not only should we end deposit insurance and inexpensive Fed loans for Wall Street, but banks should be “banned from trading, underwriting and money management in all its forms.”  So banks should have to shoulder all the risks inherent in their profession—a sensible idea—but government should arbitrarily restrict the scope and nature of their profit-generating activities?  Isn’t that just the inverse of the problem we have now?

But what really undercuts Stockman’s case is the solutions he presents to resolve our crisis.  While he suggests some sensible ideas involving smaller government, including reining in the Fed and replacing the welfare state with a modest means-tested safety net, he inadvertently reveals an odd, megalomaniacal desire for control.  Under his plan, for example, Stockman would demand “the abolition of incumbency”; he would order “sweeping constitutional surgery” that would require “providing 100 percent public financing for candidates; strictly limiting the duration of campaigns (say, to eight weeks)… [and] overturning Citizens United…”  Stockman is willing to throw out free speech—including our ability to spend money to advocate for political candidates and messages—in the process of saving the country.  Why don’t we just let Stockman pick our leaders right now and be done with it?

Anyone who sees so little difference between the ideological foundations and policy contributions to our economy of our two major political parties—and who botches so many of the specifics in his exegesis of our current woes—either doesn’t have a grasp of the situation or is trying to mislead us.  And Stockman’s restrictive, authoritarian solutions suggest that—as with Democrats and their congenital desire to manipulate other people’s wealth—he really just wants to tell us working-class schlubs what to do.

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Democrats Want Job Creation—But Not Under Republican Governors

March 13, 2013 By: Scott Spiegel Category: Economy

Indiana_IFT_Protest2The progressive Wisconsin-based Cap Times recently released a graph featuring Bureau of Labor Statistics numbers showing Wisconsin well below neighbors Minnesota, Michigan, Iowa, and Illinois in job creation over the past two years.  Liberals have been tittering over the graph, because in 2010, Wisconsin gubernatorial candidate Scott Walker campaigned on the promise of creating 250,000 new jobs in his first term, yet the state has witnessed a net decline of 16,000 jobs since he took office in January 2011.

In defense of Walker, comparing Wisconsin unfavorably to Michigan and Illinois—two of the states with the highest unemployment rates in the country—is hilarious.  In December 2012, Wisconsin’s unemployment rate was 6.6%, compared to Illinois’s at 8.7% and Michigan’s at 8.9%.  (Iowa, with its Republican governor and House, is admittedly doing very well at 4.9%).

Remember that Walker promised to create 250,000 jobs by the end of his first term, which lasts until January 2015.  I think it’s a bit premature for liberals to gloat over the presumed economic fallout from the slight limitations he enacted on lavish taxpayer-funded union benefits via his Wisconsin Budget Repair Bill.  As anyone who grimaced while first-term President Reagan rode out the second half of a double-dip recession can attest, reform takes time to kick in.  There’s so much variability in the numbers of jobs Wisconsin’s neighbors have created over the past 24 months—from Minnesota’s 72,200 down to Iowa’s 18,600—that it’s way too early to tell whether Walker’s policies have worked.  And Reagan didn’t have to waste the first year of his presidency fighting a pointless recall election staged by powerful public sector unions.  (The Wisconsin recall election also set taxpayers back to the tune of 16 to 18 million job-killing dollars.)

Also remember that the change in Wisconsin’s net jobs includes not only private-sector jobs but government jobs.  Since Walker explicitly campaigned on a platform of cutting government spending, it’s safe to assume that several thousand of those “lost” jobs came from laying off pencil-pushing bureaucrats to save the state money.

In addition, Walker promised to create jobs via business expansion.  Yet Democrats have been doing everything in their power since he was elected to stymie his job-creation legislation.  Most regrettable is their effort to stop his mining bill that would open territory in the Lake Superior region for a gigantic $1.5 billion iron ore mine and create thousands of jobs in the mining, trucking, and housing industries.  Despite the bill’s recent passage after a year of Democratic stall tactics, the mine’s opening could be delayed for years due to environmentalist legal challenges.

But since Democrats want to draw comparisons, let’s take a broader view.  Crunching the numbers reveals that unemployment rates declined more across the country in red states—as defined by 2012 Electoral College votes—than blue states from January 2011 to December 2012: 20% on average in red states and 14% in blue states.

Unemployment increased in only two states over the past two years: New Jersey and New Hampshire—both blue.  Unemployment decreased by piddly single-digit percentages in New York, Illinois, Maryland, Connecticut, Maine, and Pennsylvania—all blue states. Similarly, decreases were 17% or less in blue states Michigan, Washington, Hawaii, Vermont, Rhode Island, Colorado, and D.C.

In contrast, unemployment plummeted for red states Utah (32%), Idaho (32%), Missouri (30%), Louisiana (29%), Texas (27%), Alabama (24%), Montana (24%), Oklahoma (23%), Kentucky (22%), West Virginia (22%), Wyoming (22%), Kansas (21%), South Carolina (20%), and Tennessee (20%).

Florida was a blue state in 2012—barely—but has a Republican governor, Senate, and House, and their unemployment dropped a whopping 33% from January 2011.  Swing state Ohio similarly tipped blue in 2012, but also has a Republican governor, Senate, and House, and their unemployment plunged 29%.

Red states also had lower average point-in-time unemployment rates in December 2012 than blue states—7.5% vs. 6.6%.  The following red states all boasted unemployment rates below 6.0%: North Dakota (3.2%), Nebraska (3.7%), South Dakota (4.4%), Wyoming (4.9%), Oklahoma (5.1%), Utah (5.2%), Kansas (5.4%), Louisiana (5.5%), and Montana (5.7%).  Seven of the ten states with the lowest unemployment rates in the nation are red.  The states with the four lowest unemployment rates are all red.

Meanwhile, these poor blue states all had miserable unemployment rates above 8.0% in December 2012: Rhode Island (10.2%), Nevada (10.2%), California (9.8%), New Jersey (9.6%), Michigan (8.9%), Illinois (8.7%), Connecticut (8.6%), D.C. (8.5%), Oregon (8.4%), and New York (8.2%).  Seven of the ten states with the highest unemployment rates in the nation are blue.  The states with the four highest unemployment rates are all blue.

So here’s some advice for Democrats who whine when Republican governors fail to fully implement their economic growth promises quickly enough: Stop saddling them with costly, time-consuming recall elections, and stop opposing every job-creation measure they propose.  They can create a lot more jobs that way—if that’s truly what you want.

Previously published in modified form at Red Alert Politics

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Sequester Tall Tales

March 06, 2013 By: Scott Spiegel Category: Economy

PAULBUNYANANDBABE=DHow far is the Obama administration willing to go to spread the meme that the budget sequester will wreak havoc on the populace and unravel the nation’s economy?

Telling lies in the abstract didn’t prevent the sequester, so the White House and its media allies have been trotting out specific cases of hardship to horrify voters.  But the devil is in the details, as any liberal politician who’s ever had to mask his policy intentions, then watched his popularity drop the more people learned about his plans, can tell you.  As The Washington Post’s Fact Checker Glenn Kessler wrote, “The administration may rue the day that it issued so many scary statistics with such specificity.  If sequestration remains in effect for the rest of the fiscal year, reporters will certainly attempt to check whether the administration’s predictions came close to reality.”

How far off have their predictions been?  On February 8, the White House posted an online sequester Fact Sheet that claimed that because of the sequester, “Federally-assisted programs like Meals on Wheels would be able to serve 4 million fewer meals to seniors.”  But Fact Checker gave this claim two Pinocchios, noting that states had broad discretion in using other sources of federal funding and charitable contributions to pay for the fewer than 2% of meals affected by the sequester.

In a speech on February 19, Obama reeled off a whole school of whoppers.  First he threatened that under the sequester, “Federal prosecutors will have to close cases and let criminals go.”  PolitiFact labeled the claim Mostly False, explaining that, as with Meals on Wheels, program officials have wide latitude and ample flexibility to trim unnecessary spending and reallocate money to fund high-priority cases.  A Justice Department spokeswoman confirmed that “the Bureau of Prisons, which houses 218,000 federal prisoners, does not intend to let anyone go on March 1 because of the cuts.  She said that bureau personnel might be furloughed and that vocational education programs and others might be curtailed.”  Not exactly opening the floodgates and letting violent criminals run free.

Obama then made three wild claims in one paragraph.  First he warned that because of the sequester, “kids [would] not have access to Head Start.”  The White House’s sequester Fact Sheet concurs that “70,000 young children would be kicked off Head Start.”  Fact Checker gave the claim two Pinocchios, observing that Obama’s stimulus bill had permanently expanded Head Start, and that even with sequester cuts, the program would have more funds in inflation-adjusted dollars than in 2008.

A few sentences later, Obama declared that under the sequester, “Tens of thousands of parents will have to scramble to find childcare for their kids,” and that “Hundreds of thousands of Americans will lose access to primary care and preventive care like flu vaccinations and cancer screenings.”  PolitiFact labeled the child care and health care claims only Half True.  Indeed, administration officials admitted, when pressed, that “day care centers are almost certainly not going to be padlocked on March 1.”  And PolitiFact complained that Obama’s language on vaccinations and screening “was imprecise enough to suggest that people may lose their access to primary care doctors outright,” and noted that multiple factors “could make the estimate for immunization and cervical screening too high.”

Most infamously, Education Secretary Arne Duncan joined the fabrication bandwagon on Face the Nation with his claim that “[A]s many as 40,000 teachers could lose their jobs…  [T]here are literally teachers now who are getting pink slips, who are getting notices that they can’t come back this fall.”  He continued the fraud a few days later by referencing supposedly sequester-induced cuts in Kanawha County, West Virginia.  But Fact Checker gave the claim four Pinocchios after discovering that the cuts were actually transfer notices and completely unrelated to the sequester.  PolitiFact rated the claim Mostly False, noting, “The other districts held up by education officials haven’t fired a single teacher because of sequestration.”  (Meanwhile, Media Matters gave the claim four Rigoberta Menchus.)

Two days later, Representative Ami Bera made the outrageous claim that because of the sequester, “There will be $50 million cut from firefighting funding…  People are going to be unsafe, homes are going to burn.”  (Across the nation, struggling Americans asked, “‘Homes?’  What are these ‘homes’ he speaks of?)  PolitiFact investigated, found Bera’s numbers to be enormously exaggerated, and called the claim Mostly False.

But the most egregious sequester fib came last Friday, when President Obama, frantic that Americans weren’t pulling their hair out over a 3% decrease in federal spending, announced that maintenance staff and security guards at the Capitol had received a pay cut: “Starting tomorrow everybody here, all the folks who are cleaning the floors at the Capitol.  Now that Congress has left, somebody’s going to be vacuuming and cleaning those floors and throwing out the garbage.  They’re going to have less pay.  The janitors, the security guards, they just got a pay cut, and they’ve got to figure out how to manage that. That’s real.”  Fact Checker gave the claim four Pinocchios, noting that Obama’s lie—which contradicted the sequester plan previously and publicly circulated by the Architect of the Capitol—had prompted the Capitol superintendent to e-mail panicked staff members to insist that Obama’s claims were “NOT true.”

How low will this White House go to win the sequester public relations battle and pretend that, throughout Democrat-induced fiscal cliffs and budget sequesters and financial crises, it cares about the little guy?  We have the answer: it will glibly frighten Capitol Hill janitors with vicious lies about Republicans cutting their pay and taking away their jobs.

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Top Ten Sequester Lies

February 27, 2013 By: Scott Spiegel Category: Economy

02-25_Ax_Editorial_cartoon_Sequester_is_but_an_insect_t6402The budget sequester, which President Obama opposed when it was passed in 2011, will hurt the economy, arbitrarily cut $85 billion in spending, and put hundreds of thousands of essential federal employees out of work; yet Republicans refuse to compromise to avert the crisis.

There’s nine lies right there, all in one sentence.  Let’s break them down for the “low-information voter”:

1. Obama opposed the sequester.  Obama swore in the fall of 2011 to veto any attempts to repeal the sequester his party had incorporated into the Budget Control Act as part of the debt ceiling compromise.  Democrats bet that in the sequester game of chicken, Republicans would flinch because they wouldn’t be able to stomach proposed defense cuts.  Democrats bet wrong.  Now they’re trying to rewrite history to make it look as though they didn’t underestimate determined Republicans.

2. The sequester scheduled to take place on March 1 will hurt the economy.  Minor spending cuts don’t hurt the economy; they show investors and employers we’re taking steps to resolve our debt crisis and avoid credit downgrades.  They also pave the way for federal tax cuts, which—from JFK to Reagan to Clinton to Bush—have stimulated the economy and promoted growth.

3. The sequester will put hundreds of thousands of federal employees out of work.  Given how these things usually unfold, the odds are that whatever time these workers spend off the job they will most likely be compensated for via the furlough appeals process or unemployment benefits.

4. If the sequester takes place, fires won’t be put out, crime won’t be stopped, air traffic will halt, meat will rot, etc.  All of the essential functions of government, and many more, will continue to be carried out under a sequester.  Most agencies under Obama have increased significantly in size since he took office; a return to roughly 2009 spending levels isn’t going to send them into a tailspin.  For comparison, look at the huge aviation disaster that didn’t happen in 1981 when President Reagan fired 10,000 air traffic controllers.

5. The cuts proposed in the sequester are capricious and arbitrary.  In 2011 the 12-member, bipartisan supercommittee hashed out the cuts that would form the sequester, half from domestic spending and half from military spending.  While neither side is happy with the balance, at least it’s clear how the division was arrived at.  But propagandists like Paul Krugman make it sound as though lawmakers started randomly targeting hapless federal employees to fire.  As George Will counters the sequester naysayers,  “[C]ritics are utopians if they are waiting for the arrival of intelligent government.  The real choice today is between bigger or smaller unintelligent government.”

6. Republicans refuse to compromise on the sequester.  No one considered the sequester an ideal solution.  However, at some point it dawned on the GOP that the sequester might be the only way to force Democrats to cut spending on anything, ever, other than the military.  Republicans are willing to take a haircut on defense if Democrats are forced to trim a whisker or two off the giant entitlement state.  How is that not compromising?  Also, Republicans did compromise with Democrats, just last month, on the fiscal cliff deal that postponed the sequester for two months, and whose $600 billion tax increase was much more consequential than the sequester.  Republicans also compromised with Democrats on the original deal to raise the debt ceiling that led to the sequester.

7. The sequester will result in large budget cuts.  The sequester cuts $85 billion, or 3% of projected $3.6 trillion federal discretionary 2013 spending—also known as a “budget” before Democrats came to power.  As The Washington Post admitted, “[S]ome White House allies worry the slow-moving sequester may fail to live up to the hype.”  Or, as healthcare lobbyist Emily Holubowich charmingly put it, “‘The good news is, the world doesn’t end March 2.  The bad news is, the world doesn’t end March 2…  The worst-case scenario for us is the sequester hits and nothing bad really happens.’”

8. The sequester will cut $85 billion out of the 2013 budget.  Actually, it will cut only $44 billion, or about half that amount.  The $85 billion figure references the cut in “spending authority,” the other half of which Congress will likely postpone indefinitely, then reverse once voters have forgotten about it.

9. The sequester will in fact cut spending.  Actually, the sequester will merely slow the baseline increase in spending.  Even with the sequester, the 2013 federal budget will exceed the 2012 budget.  The sequester will no more cut spending than shooting a bullet through shrubbery will reverse its course.

And one more:

10. Republicans can win the sequester fight.  Only if they stand up and make the above points—in clear, easy-to-digest language, with concrete examples, scathing refutations of quotes by Democratic fear-mongers, and relentless attacks on Obama for lying to Americans and treating them like children.

Previously published in modified form at Red Alert Politics

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Minimum Wage Is Too High For Paul Krugman

February 20, 2013 By: Scott Spiegel Category: Economy

Wage_labour.svgIn his State of the Union Address last week, President Obama called for yet greater federal interference in the economy via a $1.75 per hour minimum wage hike, from $7.25 to $9.00, with additional increases tagged to inflation.

New York Times gossip columnist Paul Krugman opined that, “surprisingly,” increasing the minimum wage may be good policy: “Why ‘surprisingly’?  Well, Economics 101 tells us to be very cautious about attempts to legislate market outcomes.”  No, I didn’t make up that disclaimer; that’s just Krugman trying to sucker you in with a little false modesty.  Don’t worry—he still comes out all in favor of the wage increase.

And what an increase it would be: Raising the minimum wage $1.75 an hour would be by far the biggest single hike since the federal minimum wage was established in 1938.  The next biggest increase—of $0.70 an hour—occurred three times in 2007, 2008, and 2009, when newly sworn-in Democrats spiked the rate three years in a row.  Before the 2006 wave of Democrats rode into power, the minimum wage had never increased more than $0.50 at a time.

The proposed 24% increase would be the largest hike by percentage since 1974, when Congress raised it 25% from $1.60 to $2.00.

So what’s the argument for raising the minimum wage?  Proponents claim that raising it:

(1) Is moral, because workers at the bottom of the economic ladder will earn more;

(2) Helps the economy, because those workers will spend more and stimulate the economy;

(3) Increases employment, because more spending will lead to more hiring.

(Never mind that the employers who will supposedly do all that extra hiring will be the ones paying their workers to buy more of their products in the first place.)

In contrast, opponents argue that raising the minimum wage:

(1) Is immoral, because it restricts employers’ ability to hire low-wage workers, and thus reduces their employment;

(2) Hurts the economy, because it forces employers to direct financial resources in less efficient ways;

(3) Decreases employment, because small businesses can’t keep up with the need to increase all of their workers’ wages to maintain relative parity.

So what happens after minimum wage increases take effect?  Do employers hire more or less?  Does the economy improve or worsen?

To answer this question, I took a look at all federal minimum wage increases since World War II, to see what transpired after these hikes—in particular, what happened to the unemployment rate and the gross domestic product (GDP).

First I looked at the monthly U.S. national unemployment rate following the passage of each post-WWII federal minimum wage increase, to see what effect minimum wage legislation had on employment.  I found that the average unemployment rate during the first full month after each minimum wage increase, for all increases from January 25, 1950 to July 24, 2009, was 6.00%.  From three months out through ten months out, the average monthly national unemployment rate progressed as follows: 6.01%, 6.09%, 6.10%, 6.11%, 6.13%, 6.23%, 6.25%, and 6.33%.  So over the ten months following mandatory federal minimum wage increases, the unemployment rate steadily and reliably increased, on average a third of a percentage point from what it had been upon passage of the law.

Next I looked at the quarterly percent change in GDP following passage of each hike, to see what effect minimum wage legislation had on GDP.  The average percent change in GDP for all quarters from 1950 to 2012 was +3.31%.  In contrast, the average percent change in GDP during the first full quarter after each wage increase was +2.48%, almost a full point lower.  In the second quarter after the wage increase, the percent change was +3.00%, and in the third it was +2.63%.

These aren’t huge differences, largely because many factors besides minimum wage affect employment and GDP.  Other economists have done more detailed studies and isolated the deleterious effects of minimum wage laws.  But even my cursory analysis confirms that Krugman and his ilk are loons if they think that placing restrictions on employers’ hiring practices—which is what minimum wage laws do—will somehow increase hiring and strengthen the economy.  (Other pet theories of Krugman’s are that wearing leg irons helps you walk faster and having laryngitis makes you speak more mellifluously.)

Krugman pooh-poohs the detrimental effects of minimum wage increases: “Now, you might argue that even if the current minimum wage seems low, raising it would cost jobs.  But there’s evidence on that question…  And while there are dissenters, as there always are, the great preponderance of the evidence from these natural experiments points to little if any negative effect of minimum wage increases on employment.”

Krugman is such a pathological liar that when he says “the great preponderance” of evidence shows “little if any” negative effect, you know he’s brushing aside mountains of data contradicting his position.  Krugman cites just one paper titled “Why Does the Minimum Wage Have No Discernible Effect on Employment?,” published by leftist D.C. think tank the Center for Economic and Policy Research, whose founder recently authored a book called “The End of Loser Liberalism: Making Markets Progressive.”

If liberals want a minimum wage hike, why don’t they just come right out and demand more redistribution of wealth from the bourgeois to the proletariat?  Could they spare us the act of dressing up their request in convoluted economic theories using data that can be manipulated to give them any results they want, and whose conclusions no one with common sense believes?

Previously published in modified form at Red Alert Politics

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