Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts

Final Election Predictions

Tomorrow’s the big day. So, I thought I’d join Bruce in tossing out my final pre-election prognostications (with error bars).

House: Republicans 247, Democrats 188 (+/-3)

Senate: Democrats 50, Republicans 50 (+/-1)

The Senate is the real imponderable here. With Patty Murray leading by only 0.3% in a watershed year, I’m going to go ahead and tentatively call this one for Dino Rossi. But this one could go either way, so worst case for the Senate, I think, is a 51/50 Democrat chamber. I also think it might be days before we know that final Senate number, too.

Observations: The Qando Podcast for 31 Oct 10

In this podcast, Bruce, Michael, and Dale discuss Tuesday’s midterm elections.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.

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Following the House of Bourbon

I really do try not to be pessimistic about the future, but this is the kind of thing that keeps me up at night:

[W]ithout serious course correction, America is doomed. It starts with the money. For dominant powers, it always does – from the Roman Empire to the British Empire. “Declinism” is in the air these days, but for us full-time apocalyptics we’re already well past that stage. In the space of one generation, a nation of savers became the world’s largest debtors, and a nation of makers and doers became a cheap service economy. Everything that can be outsourced has been – manufacturing to by no means friendly nations overseas; and much of what’s left in agriculture and construction to the armies of the “undocumented”. At the lower end, Americans are educated at a higher cost per capita than any nation except Luxembourg in order to do minimal-skill checkout-line jobs about to be rendered obsolete by technology. At the upper end, America’s elite goes to school till early middle age in order to be credentialed for pseudo-employment as $350 grand-a-year diversity consultants (Michelle Obama) or in one of the many other phony-baloney makework schemes deriving from government micro-regulation of virtually every aspect of endeavor.

So we’re not facing “decline”. We’re already in it. What comes next is the “fall” – sudden, devastating, off the cliff. That’s why this election is consequential – because the Obama-Pelosi-Reid spending spree made what was vague and distant explicit and immediate. A lot of the debate about America’s date with destiny has an airy-fairy beyond-the-blue-horizon mid-century quality, all to do with long-term trends and other remote indicators. In reality, we’ll be lucky to make it through the short-term in sufficient shape to get finished off by the long-term. According to CBO projections, by 2055 interest payments on the debt will exceed federal revenues. But I don’t think we’ll need to worry about a “Government of the United States” at that stage. By 1788, Louis XVI’s government in France was spending a mere 60 per cent of revenues on debt service, and we all know how that worked out for the House of Bourbon the following year.

Oh, but wait, it gets worse, because we’re not just talking about the effect on the US. Our current path affects the whole world.

In 2009, the US spent about $665 billion on its military, the Chinese about $99 billion. If Beijing continues to buy American debt at the rate it has in recent times, then within a few years US interest payments on that debt will be covering the entire cost of the Chinese military. This summer, the Pentagon issued an alarming report to Congress on Beijing’s massive military build-up, including new missiles, upgraded bombers, and an aircraft-carrier R&D program intended to challenge US dominance in the Pacific. What the report didn’t mention is who’s paying for it.

Answer: Mr and Mrs America.

By 2015, the People’s Liberation Army, which is the largest employer on the planet, bigger even than the US Department of Community-Organizer Grant Applications, will be entirely funded by US taxpayers. When the Commies take Taiwan, suburban families in Connecticut and small businesses in Idaho will have paid for it.

When these kinds of crises hit, they often happen suddenly, without warning, often as the result of an event that is minor, in and of itself, but becomes the straw that breaks the camel’s back. When Gavrilo Princip popped a couple of slugs into Franz Ferdinand and his wife, Sophie, it seemed trivial. It was the kind of story that appeared on Page C-4 of Le Monde or the Times of London, and yet, weeks later, sparked a war that literally unmoored Western Civilization from everything that had gone before.

Let’s also be clear that this won’t be a European experience. The post-war European decline , if not painless, was at least very powerfully cushioned by the financial and political support of the United States. We won’t have that cushion.

In a two-party system, you have to work with what’s available. In America, one party is openly committed to driving the nation off the cliff, and the other party is full of guys content to go along for the ride as long as we shift down to third gear. That’s no longer enough of a choice.

Hard choices–very hard choices–are at hand. We will make those choices willingly, and try to maintain some control over our destiny, or reality will simply make those choices for us.

Observations: The Qando Podcast for 24 Oct 10

In this podcast, Bruce, Michael, and Dale discuss the NAACP’s finding of racism in the Tea Party, and the Tea party in general.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.

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Legislative Seat Counter

It’s getting close to election time, so once again, it’s time for me to release the 2010 version if Legislative Seat Counter shockwave app. The interface looks like the screen shot below.

The app will run in your browser, or you can download the SWF file  it and run it locally in your computers flash player.  The file can be found here: CongressSeats

Oh, and while we’re at it, even though it’s a couple of years early, you can also play with the 2012 Electoral Vote Calculator, too. Just remember, this will have to be revised once the 2010 census updates the electoral votes of each state: PresidentialElection

Observations: The Qando Podcast for 17 Oct 10

In this podcast, Bruce, Michael, and Dale discuss the Economy, and the government’s effect on it.

The direct link to the podcast can be found here.

Observations

As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2009, they can be accessed through the RSS Archive Feed.

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Looking at the PPI

Today’s release of the Producer Price Index raises some interesting and scary questions. The core PPI was up only 0.1%, but a 1.2% increase in good prices and a 0.5% increase in energy prices brought the overall PPI up by 0.4%.

Now, the reason that food and energy are excluded from the core PPI and CPI is that they often show a lot of monthly volatility. Those prices simply rise and fall quickly, so, on a month-to-month basis, they may not mean much. Ultimately, however, a trend of price increases in, say, energy will trend to raise prices across the board, as that increases the cost of production.

The traditional Keynesian argument about inflation is that it tends to decrease when the economy is struggling, as aggregate demand is stifled. Sadly, in the 1970’s we learned that simply wasn’t true, and the existence of stagflation sent the Keynesians back to the drawing board for about 15 years to reformulate a Neo-Keynesian economic model. Essentially what happened in the late 60’s and early 70’s was that the Fed pursued a very accomodative monetary policy. Ultimately, even a slow economy couldn’t prevent that monetary expansion from showing up as inflation.

Sound familiar?

It should, because the housing boom was kicked off by a similar policy, and since the collapse, the Fed has pursued a policy of “quantitative easing”, i.e., buying $1.2 trillion of securities with hastily printed money. Overall, the monetary base has more than doubled over the past two years, also, as the Fed has kept short-term interest rates at 0%.

So, I guess the question is whether today’s PPI is just a monthly outlier due to the volatile sectors, or whether it’s a sign that monetary expansion is beginning to kick off an inflationary spike that will soon begin to show up in the CPI as real, noticeable inflation.

VFW and VFWPAC come to a crossroads

Veterans of Foreign Wars National Commander Richard Eubank, Sr. Vice Commander Richard DeNoyer, and Jr. Vice Commander John E. Hamilton, all appear miffed at the political endorsements made by the VFW’s independent political action committee. The endorsement of Barbara Boxer (D-CA), known colloquially as “Senator Ma’am” seems to be the straw that broke the camel’s back. They now say they’ll be putting the question of the PAC’s termination to the membership.

California Ballot Propositions for 2010

Once again, it’s time to review the ballot propositions for the upcoming election in California.  While this may seem like an item of limited interest to many of you, you should remember that these propositions, in the fullness of time, often appear in other states once California has passed them.

Proposition 19: YES

A YES vote on this measure means: Individuals age 21 or older could, under state law, possess and cultivate limited amounts of marijuana for personal use. In addition, the state and local governments could authorize, regulate, and tax commercial marijuana-related activities under certain conditions. These activities would remain illegal under federal law.

Drug prohibition has failed.  Although, I guess that really depends on your definition of failed.  If you’re the head of drug cartel that’s made billions of dollars by supplying prohibited drugs at prices inflated artificially by government action, then I guess it’s been a rousing success.  All depends on your point of view, I suppose.

In any event, marijuana, despite being a Schedule I drug according to the Feds, is probably the least likely candidate for continued prohibition.  Perhaps there’ll be horrific outbreaks of Reefer Madness if this passes, but, you know, I’m willing to risk it.  Besides, as of last week, you can’t even get arrested for it any more in California, as possession of less 1 oz is now an infraction that’ll get you a $100 ticket.  Not even a court appearance.  So, it’s pretty clear that, in the big picture scheme of things, marijuana is pretty small potatoes.

Besides, it’ll set up a really nasty legal and political struggle between California and the Feds, which I think would be fun and instructive to watch.

Proposition 20: YES

Removes elected representatives from process of establishing congressional districts and transfers that authority to recently-authorized 14-member redistricting commission comprised of Democrats, Republicans, and representatives of neither party. A YES vote on this measure means: The responsibility to determine the boundaries of California’s districts in the U.S. House of Representatives would be moved to the Citizens Redistricting Commission, a commission established by Proposition 11 in 2008. (Proposition 27 on this ballot also concerns redistricting issues. If both Proposition 20 and Proposition 27 are approved by voters, the proposition receiving the greater number of “yes” votes would be the only one to go into effect.)

California’s redistricting plans have traditionally been made with a keen eye to preserving safe districts for the aging hippies that run the place.  With Prop 11 in 2008, and this proposition, elected politicians will be essentially removed from the redistricting process. One hopes this will result in more bipartisan redistricting that results in more competitive districts.  If not, it can’t be worse than what we’ve already got.

Proposition 21: NO

A YES vote on this measure means: An $18 annual surcharge would be added to the amount paid when a person registers a motor vehicle. The surcharge revenues would be used to provide funding for state park and wildlife conservation programs. Vehicles subject to the surcharge would have free admission and parking at all state parks.

A new tax–excuse me, “surcharge”–on one of the most highly taxed population in the country?  Uh…no. Raising taxes is always the politicians’ answer to fiscal problems.  Instead, let’s force them to cut spending–especially the unsustainable pension agreements for public workers, some of whom can retire at 50 with 85% of their salaries.  The state of California is already taking a huge chunk of money from the taxpayers, and their cry is always for more.  It’s past time for our cry to be , “Enough.”

Proposition 22: YES

A YES vote on this measure prohibits the state from borrowing or taking funds used for transportation, redevelopment, or local government projects and services.  The state’s authority to use or redirect state fuel tax and local property tax revenues would be significantly restricted.

California’s General Fund tramples on every type of revenue in the state.  Local property taxes? Right into the General Fund’s maw. Fuel taxes to pay for transportation and infrastructure? Right into the General Fund. That has to stop.  I note that the teachers and firefighters unions, etc., are against it, so I assume it must be a good thing.

Proposition 23: YES

A YES vote on this measure means: Certain existing and proposed regulations authorized under state law (“Assembly Bill 32″) to address global warming would be suspended. These regulations would remain suspended until the state unemployment rate drops to 5.5 percent or lower for one year.

This proposition would, in effect, completely gut the global warming bill’s provisions.  Requiring an unemployment rate in California to remain at 5.5% for one year means that the bill will, as a practical matter, never be implemented.  So, the billions in costs for CO2 reduction, etc., will never be imposed.

Proposition 24: NO

A YES vote on this measure means: Three business tax provisions will return to what they were before 2008 and 2009 law changes. As a result: (1) a business will be less able to deduct losses in one year against income in other years, (2) a multistate business will have its California income determined by a calculation using three factors, and (3) a business will not be able to share tax credits with related businesses.

Another tax hike.  Go screw.

Proposition 25: NO

A YES vote on this measure means: The Legislature’s vote requirement to send the annual budget bill to the Governor would be lowered from two-thirds to a majority of each house of the Legislature.

I’m happy forcing a 2/3 majority for the budget, especially since California is a one-party state.  It’s really the only way to force bipartisanship on the legislature, and it gives the minority party a chance to do something besides getting run over roughshod.

Proposition 26: YES

A YES vote on this measure means: The definition of taxes would be broadened to include many payments currently considered to be fees or charges. As a result, more state and local proposals to increase revenues would require approval by two-thirds of each house of the Legislature or by local voters.

This makes it harder to raise fees or surcharges without explicit voter approval, or a supermajority in the legislature.  I have to live within a budget, let them try it for a while, instead of simply using my wallet to fill up the holes they create with overspending.

Proposition 27: NO

A YES vote on this measure means: The responsibility to determine the boundaries of State Legislature and Board of Equalization districts would be returned to the Legislature. The Citizens Redistricting Commission, established by Proposition 11 in 2008 to perform this function, would be eliminated. (Proposition 20 on this ballot also concerns redistricting issues. If both Proposition 27 and Proposition 20 are approved by voters, the proposition receiving the greater number of “yes” votes would be the only one to go into effect.)

Nope.  We already decided that we didn’t want politicians to create safe districts. Let’s keep this as a technical, bipartisan process.