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On Financial Matters, Panic Is Democrats’ Preferred Currency

November 28, 2012 By: Scott Spiegel Category: Economy

Democrats haven’t passed a budget in years, yet somehow it’s Republicans’ fault that the country is about to go over a fiscal cliff.

Harry Reid’s Democratic-controlled Senate has, for three consecutive years, refused to pass a federal budget or even bring a proposal to the floor as required by law.  In 2011 Reid announced that passing a budget would be “foolish” because of ongoing negotiations over other fiscal matters.  Senator Chuck Schumer declared that proposing budgets was “not the point” of the Senate.

Later in 2011, Nancy Pelosi claimed that when Democrats controlled the House in 2010, they didn’t pass a budget because Republicans would have filibustered it.  White House Chief of Staff Jacob Lew made the same claim.  In fact, both were lying: filibustering a budget is impossible, because budgets require only a simple majority to pass.

Earlier this year, Reid announced, “We do not need to bring a budget to the floor this year — it’s done, we don’t need to do it.”  He was referring to the Budget Control Act of 2011—which is not a federal budget—that raised the debt ceiling, established the supercommittee that failed to agree on debt reduction, and set the country up for the fiscal cliff we face today.

Reid’s other excuse for not passing a budget in 2012 was that there was an election in November.

(Type “Democrats haven’t” into any browser’s search engine and see what auto-complete suggests.)

Now Senator Patty Murray, who seeks to chair the Senate Budget Committee next year, hints that the Democratic Senate won’t pass a budget in 2013, either.

Thanks to Democratic intransigence, Congress isn’t even required to pass a balanced budget, just a budget.  Is that so hard?

Meanwhile, Democrats’ inaction is forcing the country to white-knuckle it via an endless series of herky-jerky, over-before-the-ink-is-dry continuing resolutions and stopgap measures every couple of months.

Last year’s fiscal crisis resulted when the government was about to run out of money and needed its debt ceiling increased.  This year’s crisis has two parts: (1) Congress’s failure to address deficit reduction during last year’s debt ceiling showdown will trigger unpalatable, automatic, across-the-board spending cuts of $1.2 trillion over the next ten years; and (2) the Bush tax cuts expire at the end of the year, Congress is divided on whether to extend them for high-income earners, and taxes will increase for everyone if an agreement isn’t reached.

The debt ceiling debacle was demonstrably, entirely the result of Democrats’ failure to pass a budget anytime in recent history.  The Bush tax cuts are also Democrats’ fault, because a 2013 budget would have specified whether the cuts were to continue, and we would have had this discussion long before the end of November.  (It was also Democrats’ fault that the cuts weren’t made permanent or extended for more than two years in 2010.)

Since Democrats will control the Senate for at least two more years, yet show no inclination toward passing a budget anytime soon, they’ll probably set us up for another fiscal cliff after we avert the current one.  The U.S. is already set to hit its debt ceiling limit again in spring 2013.

Why do Democrats deliberately leave financial matters unresolved until the last minute?

Answer: So they can spread fear and leverage Americans’ anxiety to threaten Republicans into giving in.

Democrats’ M.O. for prevailing on fiduciary matters these days seems to be: irresponsibly and historically refuse to pass a budget for several consecutive years; dismiss the very requirement as an antiquated relic; continually lead us to a series of unnecessary, economy-rattling, bond-rating-threatening fiscal crises; then scream that Republicans are kamikaze pilots who want to take the nation down to score political points.

The site About.com lyingly describes the current standoff thus: “[L]awmakers have had three years to address this issue, but Congress – mired in political gridlock – has largely put off the search for a solution…”  No.  Republicans have been dealing with this issue all along, including proposing and passing budgets and debt reduction plans once they took control of the House.  Democrats have been obfuscating, stalling, and spinning their wheels, even when they controlled both chambers of Congress and were capable of passing a budget without a filibuster-proof majority.  It’s not gridlock when one party has the right of way and refuses to move.

To Democrats, fiscal stability is anathema.  Republicans plan long-term; Democrats thrive in crisis-filled environments—like the 2008 financial collapse—that allow them to charge in and claim we need more government.

Democrats traffic in panic, adrenaline, chaos; it’s their preferred currency.  Getting everyone all agitated at the eleventh hour gives them cover to toss out crazy ideas at random—like eliminating mortgage interest deductions—before the public can properly scrutinize them.  When things move too quickly for people to pay attention, there’s room for mistakes to be made, for cowardly Republicans like Lindsey Graham and Saxby Chambliss to slip up and later justify themselves by whining to constituents, “I had to do it.”  And Democrats know this.

Democrats not only pushed the country to the edge of the fiscal cliff, they invented the fiscal cliff.

Previously published in modified form at Red Alert Politics


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Extend The Bush Tax Cuts For Everyone But Obama’s Donors

July 11, 2012 By: Scott Spiegel Category: Economy

It’s not a tax increase, it’s a penalty expansion!

In a bold, unpredictable move, President Obama declared on Monday his desire to extend the Bush-era tax cuts for all but the highest-income earners, by which he means anyone richer than Al and Peg Bundy.

Meanwhile, House Republicans plan to continue their Chinese water torture on the nation by voting on whether to continue the cuts for all levels of income earners for just 365 more days.

Yahoo News repeats Obama’s claim that not raising taxes on the wealthy will mean “cash-strapped state and federal governments have to make deeper cuts to education, infrastructure and scientific research,” by which he means copies of An Inconvenient Truth, solar panels at the White House, and Solyndra subsidies.

Could we stop talking for a moment about the lunacy of raising taxes in a recession, and focus on the fact that the federal government’s failure to enact a fixed, long-term tax structure for more than a few months at a time is nearly as detrimental to the country’s growth as failure to keep down rates on “the rich”?

High-income earners, after all, are the ones whose investment and hiring activity benefits most from long-term tax certainty.  Stringing out the productive class over and over again is like letting factory owners know on the last day of each month whether they’ll have electricity next month.  Even Stalin luxuriated in the relative certainty of Five-Year Plans.

Lower marginal tax rates and prolonged tax rate predictability are actually just two versions of the same thing.  Both policies signify that less private income will be confiscated by the federal government to fund projects of dubious efficacy and zero wealth-generating capacity.

Lower tax rates keep large quantities of money in private hands in the short-term.  Fixed tax rates keep stable quantities of money in private hands in the long-term.  Combine low marginal tax rates with a predictable tax structure, and you’ve got a recipe for skyrocketing growth.

Liberals constantly bemoan “top-down” or “trickle-down” economics.  Why don’t conservatives decry “spur-of-the-moment” or “Johnny-come-lately” economics?

Investing and hiring require long-range planning.  Investments appreciate over long stretches of time, and employees who receive time-consuming training are expected to provide years of service to justify their employers’ outlay.  Aren’t investors more likely to invest, and employers more likely to employ, when they can predict their tax burdens more than a couple of quarters down the road?

Surprisingly, Senate Finance Committee member Chuck Schumer and House Minority Leader Nancy Pelosi have served as the comparative voices of reason in this latest tax struggle.  They want to compromise with Congressional Republicans by setting the upper-income cutoff at $1 million, four times as high as Obama’s limit.  Schumer nonetheless maintains that people who earn more than that won’t spend any of the tax savings they receive to help boost the economy.  What does he think they’re going to do—stick the money under their mattresses?  High-income earners are far more likely to use their marginal savings for investments or hiring than, say, buying six-packs or copies of Diablo III.

Naturally Obama plans to stage lots of showy campaign events in battleground states like Iowa in which he surrounds himself with “working-class” Americans who would allegedly benefit most from his middle-class-only tax cut.  Why doesn’t Obama surround himself with the boards of directors of companies that hire all the people he’s concerned about?

The New York Times began its stop-by-stop chronicle of Obama’s Wealth Resentment Tour thusly: “In Cedar Rapids, Mr. Obama plans to visit the home of Jason and Ali McLaughlin, a high school principal and an account manager at a document-scanning company.”  Obama will decry the $2,000 increase in the McLaughlins’ tax burden they will suffer next year if his cuts don’t go through.  Why not appear with the upper management of that document-scanning company, who are surely trying to forecast growth over a potentially tumultuous five more years under Obama?  Why not link arms with several of the childless small business owners in the McLaughlins’ district who are about to get gouged every year to pay for that high school?

Despite their protestations, liberals somehow always seem to cave in at the last minute on tax cut extensions for all income earners, because they supposedly care so much about not wanting to do anything that might hinder the fragile economic recovery.  Somehow this disingenuous reversal of position always happens in the eleventh hour of every tax battle, when liberals realize they’re about to lose the public’s sympathy.  But if lowering taxes helps speed economic recovery during a recession, wouldn’t it also accelerate economic growth in boon times?  If endless one- and two-year extensions assist recovery, wouldn’t five- or ten-year extensions—or permanently lower tax rates—really boost the economy?

The left hates greedy corporations, except for the ones funding Obama’s reelection campaign.  How about we test the president’s theory that cutting taxes for the wealthy hinders growth, by extending the Bush tax cuts to everyone except his donors?

Surely the one-percenters who fuel Obama’s reelection campaign won’t hold back, just because they know they’re going to be walloped with a giant, Democrat-endorsed annual tax increase in 2013.

Previously published in modified form at Red Alert Politics

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What Obama Could Have Done

August 24, 2011 By: Scott Spiegel Category: Obama

woulda

Image by Scott Spiegel via Flickr

Liberal hack and annoying twerp Ezra Klein recently posted a lament for the president’s waning popularity titled “What could Obama have done?”

Klein’s query is just an updated iteration of an eternal, intractable, metaphysical question for the left: How can Democrats govern like liberals for any extended period of time and generate good results so they can maintain their favorable ratings?

To conservatives (and Bill Clinton), the answer is obvious: You can’t.  Liberal policies don’t work.  Any goodwill remaining toward you from your base for remaining a stubborn ideologue in the face of contrary evidence is overshadowed by widespread revulsion toward the disastrous consequences of your policies.

In other words: Conservatives are never going to like you, a few crazy liberals always will, but a large number of independents, moderates, and center-left voters will abandon you if you don’t give up on your leftist policies after the public realizes you are not a magician.

Since Klein asked, here’s what Obama could have done to enjoy a successful presidency and retain the sky-high favorability ratings he held in those blissful few minutes after he was sworn in before the trouble began.

Let’s start with the good news—things Obama did and should have done (hurry back from the fridge, right-wingers; this won’t take long!):

He didn’t get in the way of the Navy SEAL team that killed Osama bin Laden.  He voiced support for the protestors in Egypt’s Tahrir Square calling for the overthrow of Hosni Mubarak.  He joined a coalition of nations in materially aiding the Libyan rebels who took down Gaddafi.  He signed the repeal of Don’t Ask, Don’t Tell.  He extended the Bush tax cuts and argued for their utility during a recession.

Also, a few things Obama shouldn’t have done and didn’t:

He gave up on closing the terrorist detention center at Guantanamo Bay.  He reversed his pledge to hold a civilian trial for 9/11 mastermind Khalid Sheikh Mohammed.  He supported renewing the Patriot Act, thus abandoning his campaign promise to end warrantless wiretaps of those with terrorist connections.  He never pushed through global warming legislation imposing caps on carbon dioxide emissions.

Much longer is the list of things Obama did and shouldn’t have done:

He shouldn’t have signed the $1 trillion stimulus bill, which had a trivial impact on job growth, did nothing to stop the rise of unemployment, and exploded the national deficit.

He shouldn’t have signed the Patient Protection and Affordable Care Act, which infringes on individual liberties, raises the deficit by hundreds of billions of dollars, and implements none of the free-market reforms House Republicans proposed.

He shouldn’t have signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which gave two of the architects of the subprime lending-induced financial crisis the power to impose massive, vague, disruptive regulations on the banking industry, without even revoking the much-hated principle “too big to fail.”

He shouldn’t have signed Congress’s August 2011 bill raising the debt ceiling, which was both unnecessary and insufficient to prevent an S&P downgrade, and whose spending cuts are miniscule in the short-term, dependent on the caprice of a bipartisan “supercommittee” in the medium-term, and likely to be overturned by future Congresses in the long-term.

He shouldn’t have authorized rounds one and two of quantitative easing, which have led to rising inflation.

He shouldn’t have created a botched fund to prevent home foreclosures, one of many examples of his administration’s propensity to reward failure.

He shouldn’t have supported the National Labor Relations Board’s decision to prevent Boeing from relocating part of its operations from a unionized state (Washington) to a right-to-work state (South Carolina).

He shouldn’t have taken over the nation’s largest car companies and signed into law the wasteful Cash for Clunkers program.

He shouldn’t have showily banned waterboarding as an enhanced interrogation technique, insisted that Israel return to its pre-1967 borders, demanded premature troop withdrawal in Afghanistan independent of the advice of generals running the war, or bowed to the British Queen, the Saudi king, and every other world leader he could.

Finally, he shouldn’t have blamed George W. Bush, the Republican minority in Congress, the Tea Party, the BP oil spill, the Arab Spring, the Japanese tsunami, ATMs, corporate jet owners, Europe’s sovereign debt crisis, a butterfly flapping its wings in Tobago—anything but his own policies—for the country’s economic woes.

And here are the things Obama didn’t do but should have:

He should have demanded that Congress pass budgets for fiscal years 2011 and 2012.

He should have made the Bush tax cuts permanent.

He should have supported free-market health care reforms, such as allowing the sale of insurance across state lines, expanding health savings accounts, and enacting malpractice tort reform.

He should have voiced greater support for Iran’s and Syria’s pro-reform protestors.

Happy you asked, Ezra?

And one more thing Obama didn’t do but should have.

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Dump Boehner: A No-Brainer

September 15, 2010 By: Scott Spiegel Category: Economy

WASHINGTON - JANUARY 28:  U.S. House Minority ...

President Barack Obama wants the Bush tax cuts of 2001 and 2003 extended at the end of this year for only those making under $250,000, and not for small business owners and two-income families—sorry, “the filthy, stinking rich.”

Republicans, including House Minority Leader John Boehner, want all of the tax cuts renewed.

Last June, Obama’s former economic advisor Christina Rohmer published an empirical paper demonstrating that tax cuts stimulate economic growth.

In July, Obama’s Federal Reserve Chairman Ben Bernanke observed that continuing all of the Bush tax cuts past 2010 would be a wise idea.

Recently, moderate Democrats and Independents in Congress including Senators Kent Conrad, Evan Bayh, Ben Nelson, Jim Webb, and Joe Lieberman, and a dozen Representatives, have stated that they are open to extending all of the Bush tax cuts.

Last week, Peter Orszag, Obama’s former Director of the Office of Management and Budget, wrote an editorial in the New York Times supporting both sets of tax cuts as preferable to neither.

On Monday, Rasmussen reported that a majority of Americans favor letting the Bush tax cuts continue for upper income brackets.

Naturally, in this environment of receptiveness to renewing the Bush tax cuts and reinterpreting economic history, Boehner has capitalized on the wave of bipartisan goodwill and public support by announcing that he is fine with… discontinuing the tax cuts for high earners.

The setup for Boehner’s boner was foreseeable, since it has happened to spineless Republicans too many times before.  During his speech last Wednesday in Cleveland, Obama did a nice little hit job on Boehner and his policies, claiming that Boehner had no new ideas and simply wanted to return to the Bush era.

Last week, The New York Times did its own hit job on Boehner.

On Sunday, Boehner did something to actually deserve a hit job.

On CBS’s “Face the Nation,” host Bob Schieffer tried, successfully, to trap Boehner into saying that he would support only the middle class tax cuts, if Democrats opposed the tax cuts on high earners.

I may be reading too much into the tea leaves, but it seems that Schieffer may possibly have tipped his hand to Boehner when he rhetorically asked his audience, in the immediate lead-up to the interview, “Will he try to block middle-class tax cuts, if he can’t get the same cuts for the wealthy?  We’ll ask.”

When asked, Boehner sheepishly agreed that this would be a dandy idea.

Schieffer rubbed Boehner’s nose in his blunder by restating, no fewer than three times, what Boehner’s new position on taxes apparently was.  Boehner never once regained his footing.

As Mark Levin put it, Boehner responded to Schieffer by “embracing the template of the left, rather than deconstructing it.”

In the midst of a national anti-spending, anti-taxing, anti-class warfare tempest, in which Republicans have their largest lead by far in the history of the generic poll, and are poised to make overwhelming gains in Congress, Boehner decided, on the most important issue of the day, to punt.

Evidently Boehner fears that if he stands his ground against extending only some of the tax cuts, Democrats will try to portray the Republican leader as opposing all tax cuts.  This is like portraying a fish as opposing water.  Even liberal voters don’t believe Republicans are opposed to tax cuts.

Boehner should have responded, “I object to the premise of the question, which inappropriately puts our side on the defensive.  Why aren’t you asking House Democrats, who are actually the ones in power and can set the agenda for what we vote on, whether they would veto tax cuts for the middle class if the legislation didn’t exclude tax cuts for people in the upper brackets?  Is their irrational desire to punish the rich so strong that they would hurt lower income earners just to spite Republicans?  Are they not even going to allow an up-or-down vote on our proposal?”

When the Republicans sweep Congress in November, they will need a leader who can bravely implement conservative views and oppose Democratic monstrosities.

House Minority Whip Eric Cantor, Senate Minority Leader Mitch McConnell, and Senate Minority Whip John Kyl all disavowed Boehner’s comments on Monday, affirming that they would insist on a vote on renewing the entire set of tax cuts.  McConnell and Kyl reported that all 41 Republican Senators are opposed to extending the tax cuts to only the middle class.  But no—Boehner had to make nice to a liberal talk show host and demonstrate to Democrats that he was too weak-kneed to stand up to their disastrous agenda.

I don’t care if Boehner is “triangulating,” or trying to win points with the administration because he thinks Obama’s bill can’t pass the Senate anyway.  He needs to defend the principle that tax cuts for high earners increase incentives to invest and take risks, and yield greater government revenue, and he needs to say it using those terms.  Boehner may think he’s being clever, but what if his strategy backfires during the upcoming lame duck session of Congress—a distinct possibility, given the ruthless kamikaze machinations we saw from Democrats on the health care bill?  What if his words lead some moderate Republicans to feel pressured into giving in on tax cuts?

This is not an ideological purity test—it is a test of basic competence.  If Boehner isn’t clever enough to come up with an uncompromising response to a predictable query from a leftist septuagenarian in the dinosaur media, then he’s not adept or coherent enough to be an effective House Majority Leader for the reenergized, newly ascendant, Tea Party-infused conservative movement.

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