Free Markets, Free People

Monthly Archives: August 2011


East Coast earthquake shakes up the day

A 5.8 earthquake was felt along the East coast from Atlanta, GA to Buffalo, NY and as far west as Detroit, MI.   The quake was centered in VA.  News of the quake spread quickly via Twitter.  Little damage has been reported and no loss of life.  But it did shake up the population.

One wag, determining that the fault line ran under DC, claimed it was soon to be called “Bush’s Fault”.

People on the West coast had an entirely different reaction to the eastern quake:

"Well, Easterners, don’t believe it. When it comes to quakes, no one gets used to them, especially not when they’re in the magnitude 5.0-plus range," a Los Angeles Times writer confesses.

"The truth is, what most of us on the West Coast were thinking is, Thank God it wasn’t us this time."

Did you experience yesterday’s quake?  Apparently people felt it in Atlanta, but not me.  Oh, well.

~McQ

Twitter: @McQandO


Destroying the “taxing the rich is the solution” myth

If you listen to Democrats, all we need to do to solve the debt and deficit problem is to let the Bush era tax rates expire and raise the tax rate on the rich.  We’ve had Warren Buffet, among others, saying “hey, tax me more, I can afford it”.  And, of course, those standing their ground on principle saying revenue isn’t the problem and tax increases aren’t the solution are roundly condemned for being greedy and protecting the rich.

Well what if we increased the taxes on the rich?  What if we increased them dramatically?  Is our deficit problem likely to be solved?  The answer, of course, is “no”.  And here are the numbers:

“Even taking every last penny from every individual making more than $10 million per year would only reduce the nation’s deficit by 12 percent and the debt by 2 percent,” the non-partisan Tax Foundation’s David Logan writes.

“There’s simply not enough wealth in the community of the rich to erase this country’s problems by waving some magic tax wand,” said Logan.

Rest assured you’d only get one shot at all the money as well.  The  next year the majority of the rich — and that most likely would include Warren Buffet — would find ways to hide their income from such a level of taxation.  Human Nature 101.

So 12% of the deficit and 2% of the debt with 100% taxation.  Sound like a solution to you?  Of course not.   How about raising taxes in general,  good idea right now?

If you said, “no”, you’re in good company:

The majority of economists surveyed by the National Association for Business Economics believe that the federal deficit should be reduced only or primarily through spending cuts.

The survey out Monday found that 56 percent of the NABE members surveyed felt that way, while 37 percent said they favor equal parts spending cuts and tax increases. The remaining 7 percent believe it should be done only or mostly through tax increases.

Whether the president likes to admit it, we’re in danger of a double-dip recession, and one way to guarantee it is to raise taxes during such an unstable time as now.  Obviously if taxes are increased on the rich, it won’t be 100%, so the impact on the debt and deficit are likely to be minimal at best.  And it would be an action counter to what economists believe to be the best approach to avoiding a double-dip.

That most likely means that Democrats will continue to pursue such an increase with a single-minded purpose.  Or, in short, they still don’t get it — it’s the spending, stupid.

~McQ

Twitter: @McQandO


4 Trillion in debt added under Obama’s term

Deficit spending has risen faster under Barack Obama than any other president in history.  That’s not to say other presidents weren’t in the red during their administrations, but in the case of Obama, its over 4 trillion dollars in less than a single term

The latest posting by the Treasury Department shows the national debt has now increased $4 trillion on President Obama’s watch.

The debt was $10.626 trillion on the day Mr. Obama took office. The latest calculation from Treasury shows the debt has now hit $14.639 trillion.

It’s the most rapid increase in the debt under any U.S. president.

The national debt increased $4.9 trillion during the eight-year presidency of George W. Bush. The debt now is rising at a pace to surpass that amount during Mr. Obama’s four-year term.

The immediate problem isn’t about taxes or revenues, “it’s the spending, stupid!”  Byron York echoes the point:

It’s conventional wisdom in Washington to blame the federal government’s dire financial outlook on runaway entitlement spending. Unless we rein in Social Security, Medicare and Medicaid, the conventional wisdom goes, the federal government is headed for disaster.

That’s true in the long run. But what is causing massive deficits now? . . . The bottom line is that with baby boomers aging, entitlements will one day be a major budget problem. But today’s deficit crisis is not one of entitlements. It was created by out-of-control spending on everything other than entitlements. The recent debt-ceiling agreement is supposed to put the brakes on that kind of spending, but leaders have so far been maddeningly vague on how they’ll do it.

Precisely.  When treating a badly wounded person the immediate need is to stop the bleeding, not treat them for heart disease.  Once the bleeding is stopped, then you can worry about their heart and future treatments.

The spending has to stop.   And President Obama is not the man to do that.  He blames his spending on everyone but himself which indicates to many that he has no intention of slowing it down:

Mr. Obama blames policies inherited from his predecessor’s administration for the soaring debt. He singles out:

  • "two wars we didn’t pay for"
  • "a prescription drug program for seniors…we didn’t pay for."
  • "tax cuts in 2001 and 2003 that were not paid for."

While there is some truth to what he points too, the last is nonsense unless you believe the government has first claim to your earnings.  Those aren’t tax cuts, they’re tax rates.  They’ve been in place for almost 10 years for the first and eight for the second.  Tax rates are changed all the time, but until recently they’ve never been referred too as “tax cuts … that were not paid for”.  Also not mentioned in Mr. Obama’s litany is TARP – something he voted for – and the trillion dollar stimulus bill, not to mention the new health care law which analysis now shows bends the cost curve up.

Just as this economy is all his, so is the 4 trillion in borrowed money he’s spent during his term to little or no effect during his term.  And the budget he submitted to Congress this year, the budget that was rejected 97-0, indicated he still doesn’t understand the spending has to stop.

Our debt now stands at 97.6% of our GDP.  That’s default territory.  Yet there are those who have attacked Standard and Poors for downgrading their rating to reflect that reality.   This is serious business that effects or will effect everyone if it isn’t stopped.   GOP candidates need to concentrate on the immediate problem and announce and run on their plan to stop the bleeding.

~McQ

Twitter: @McQandO


The burdens of voluntary association

Since the passage of the public employee union reforms in Wisconsin the past year, things have changed for the public unions. They have to recertify by member vote every year, and they can no longer collect dues directly from members’ paychecks. The response of one union has now been to decertify itself, as reported by Inside Higher Ed.

The Teaching Assistants’ Association at the University of Wisconsin at Madison dates to 1966. In 1970, following a four-week strike, the graduate students at Madison became the first T.A. union to win a contract. Over the years, the union — affiliated with the American Federation of Teachers — has been a leader in the drive to promote collective bargaining for graduate student workers.

Last week, after hours of debate, the union’s members voted not to seek state certification to continue to act as a collective bargaining agent…

Union leaders said that they couldn’t function well if they had to effectively be in a perpetual organizing drive for the annual union votes, and also if they had to pay annual fees to be certified…

Seeking certification year after year, [Adrienne Pagac, co-president of the union,] said, "would have meant diverting resources and neglecting all of the other things we do for members – representing them at the work site, being advocates for them, engaging our community." Pagac added that "being a union member is not just about sitting across the table from management and hammering out a contract. It’s about democracy in the workplace.”

…The union faces challenges as it adjusts to the limits imposed by the state law. Under the old contract, union dues were automatically deducted from the paychecks of the 2,700-2,800 graduate teaching assistants at Madison. Now the Teaching Assistants’ Association must seek dues from members by itself.

Quite apart from the idea that the workplace is a fairly inopportune place for "democracy"—at least if the cold wind echoing hollowly through the empty streets of Detroit is any indication—it clearly isn’t about democracy. If it was about democracy, then an annual recertification vote would be viewed as a plus, not an obstacle. I mean, regular elections are something we associate with democracy, as I understand it. The practice in the past was to have the certification vote taken once, after which the union is perpetually certified. That’s nothing more than a version of "one man, one vote, one time" that we associate with various "democratic" revolutions in the Third World. But for this union, at least, having democracy in the workplace by holding a certification vote every year is too much of a burden.

No, this has almost nothing to do about democracy in the workplace and everything about the gravy train pulling into the station at the end of the line. It was a great gig while it lasted. As soon as you could get a majority of employees to certify your organization, you were certified forever.  The state collected your dues money without fail every paycheck, and if any of the employees ever got dissatisfied, you had the resources to slap them down.

Now, all of the sudden, you have to convince the rank and file to send you their dues payments voluntarily. And every year, you have to convince them to voluntarily recertify you. The rank and file now have both purse power and democratic power to punish you, rather than the reverse. It seems that a voluntary association is inconvenient. You have to make members happy. Listen to them. Perhaps, even, respond to their concerns in a timely and effective manner. Voluntary association imposes a web of mutual obligation, unlike a top-down command system.

Now, the union just isn’t as fun. And it isn’t certified any more, either.

~
Dale Franks
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The growth of the regulatory state

While President Obama vacations on Martha’s Vineyard, he is supposedly committing to paper a plan to boost employment.  During the recession unemployment has remained high, near 10%, and with the economy slowing again, that number is likely to go higher.

One area that hasn’t suffered jobs losses during Obama’s time in office is the government regulatory regime.  In fact, it has managed to add a significant number of jobs, all, unfortunately, at the expense of business.  While most Americans feel some level of regulation is necessary by the Federal government, over-regulation is always a danger.  When that danger is realized, it is businesses who bear the brunt of the cost of compliance.  And, of course, businesses pass their costs on to consumers in the price of their goods.   So regulation compliance costs drive the price of goods up.

In the past three years of the Obama administration we’ve seen an explosion of regulations.  Investors Business Daily brings you the gory details:

Regulatory agencies have seen their combined budgets grow a healthy 16% since 2008, topping $54 billion, according to the annual "Regulator’s Budget," compiled by George Washington University and Washington University in St. Louis.

That’s at a time when the overall economy grew a paltry 5%.

Meanwhile, employment at these agencies has climbed 13% since Obama took office to more than 281,000, while private-sector jobs shrank by 5.6%.

Michael Mandel, chief economic strategist at the Progressive Policy Institute, found that between March 2010 and March 2011 federal regulatory jobs climbed faster than either private jobs or overall government jobs.

Those agencies have churned out new regulations and rules at an amazing rate:

The Obama administration imposed 75 new major rules in its first 26 months, costing the private sector more than $40 billion, according to a Heritage Foundation study. "No other president has imposed as high a number or cost in a comparable time period," noted the study’s author, James Gattuso.

The number of pages in the Federal Register — where all new rules must be published and which serves as proxy of regulatory activity — jumped 18% in 2010.

This July, regulators imposed a total of 379 new rules that will cost more than $9.5 billion, according to an analysis by Sen. John Barrasso, R-Wyo.

And much more is on the way. The Federal Register notes that more than 4,200 regulations are in the pipeline. That doesn’t count impending clean air rules from the EPA, new derivative rules, or the FCC’s net neutrality rule. Nor does that include recently announced fuel economy mandates or eventual ObamaCare and Dodd-Frank regulations.

As mentioned above, regulations and rules impose a significant cost on businesses which must comply with them.  In a time when the economy is staggering, these increases in costs delivers another body blow to any recovery.  And most of them have been imposed via the Executive Branch through its various Departments and not Congress.  The agenda brought to the White House by Barack Obama is being serviced by regulators and the legislators are being left out

"Our economy is continuing to sink," Sen. Barrasso said, "and it’s being weighed down by regulations coming out of this administration."

By 2008, the cost of complying with federal rules and regulations already exceeded $1.75 trillion a year, according to a 2010 study issued by the Small Business Administration.

Worse, the SBA found that small companies — which account for most of America’s new jobs — spend 36% more per employee to comply with these rules than larger firms.

Of course the administration flatly denies what the reports above tell us is happening:

Cass Sunstein, who runs the White House Office of Information and Regulatory Affairs, denies the regulatory upsurge, writing recently that "there has been no increase in rule making in this administration." He also notes Obama ordered a comprehensive regulatory review in January that uncovered $1 billion worth of needless red tape.

As is always the case, never believe what the administration tells you, always look behind the curtain at the facts.   And the facts are that 379 new rules have been imposed under this administration and it has 4,200 new regulations “in the pipeline” not counting the exceptions to that count noted in the IBD article.  So, as usual, the numbers tell a different story.

If President Obama is serious about creating job opportunities, this is an area in which he obviously exercises direct control via the federal government and the executive branch.  Rolling back the regulator regime, suspending all new rules until a comprehensive study can be made of their economic impact and generally getting regulators out of the way of businesses would be a very good start.

Somehow I doubt any of that will find its way into the jobs plan Mr. Obama presents after his vacation.

~McQ

Twitter: @McQandO


Libya – Now what?

After months, not weeks, of a NATO bombing campaign, it appears that the regime of Libyan strong-man Moammar Gaddafi is about to end.  Rebels have advanced into Tripoli, the capital, and Gaddafi is said to be cornered in his compound.  When last heard from his advice to his remaining supporters was to take to the streets:

In a brief broadcast on state television, Gaddafi made what came across as a desperate plea for support. “Go out and take your weapons,” the Libyan leader said. “All of you, there should be no fear.”

But the opposite seems to be what his loyalists are doing:

But reporters traveling with rebel forces said Gaddafi’s defenses were melting away faster than had been expected. There were reports of entire units fleeing as rebels entered the capital from the south, east and west, and his supporters inside the city tearing off their uniforms, throwing down their weapons and attempting to blend into the population.

A Tripoli-based activist said the rebels had secured the seaport, where several hundred reinforcements for the opposition had arrived by boat, and were in the process of evicting Gaddafi loyalists from the Mitiga air base on the eastern edge of the city.

There are also reports that a safe haven is or is still being negotiated for Gaddafi.  South Africa has been identified as a participant in those negotiations with Zimbabwe and the Congo as two possible destinations.

Obviously Gadaffi’s reign is within hours, if not days of ending.

The question then becomes, “now what”?  While this is supposedly a flowering of the Arab spring, there have been disturbing reports of Islamist radicals in leadership positions within the Rebel alliance.   Additionally, there have been various councils and groups claiming leadership.   Once Gadaffi is ousted and the capitol taken, the hard part begins – governing.   Who or what band or group is likely to emerge as the leadership group.   While there is a lot of talk about “revolutionary youth”, etc.,  in cases like this the most ruthless and best organized group usually take charge.

The “Twitter revolution” started by “revolutionary youth” in Egypt has since yielded to the Muslim Brotherhood – a well organized Islamist group which has seemingly reached an accommodation with the army and will apparently take power there after the next election.  The secular and democratic activists have been pushed to the side.

There’s also the question of “now what” for the West.   Does NATO tip its hat to the rebels and wish them good luck, or does it plan on some sort of post-Gaddafi role?   France has a historic interest in Libya.   Will European nations simply walk away or will they attempt to help craft a solution in Libya?

Finally, is the collapse of the Gadaffi regime a vindication of Obama’s “leading from behind” strategy?  It certainly forced NATO to do more than has in quite some time and the campaign got the desired result.   Does that make it a good strategy for the future, or a one-of-a-kind campaign that got lucky given the weakness of the target and the geography of the nation?

All of these questions and more will be answered in the next few weeks.  One has to wonder how many of the answers will come as a surprise.

~McQ

Twitter: @McQandO


Observations: The QandO Podcast for 21 Aug 11

In this podcast, Bruce and Dale discuss Rick perry, the Obama jobs plan, and much more.

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 2010, they can be accessed through the RSS Archive Feed.


Who is the “racist” here?

I don’t fling the “R” word around much, because it is a pretty loaded word.  But every now and then you come across something that just requires its use.

One of the things I’ve noticed about many “progressives” is their smug belief that they’re untainted by racism while most of those on the right are completely eaten up with it.  So what they tend to do is try to validate that belief with outlandish and absurd scenarios that they obviously believe because they actually put them out publicly with a straight face.

For example, take Janeane Garofalo’s recent rambling thoughts on why GOP presidential nominee Herman Cain is in the race.   It has nothing to do with his political desires or issues he’d like to effect.  It has nothing to do with his life’s experiences and how they’ve shaped his political beliefs.

Nope, it has to do with his race and a conspiracy by Republicans to appear to not be what Gerafalo is sure they are.  Thus this explanation:

“It’s actually not new,” Garofalo said. “It’s from the first time I ever saw him, especially after the first Fox debate and Frank Luntz as you know, has zero credibility — has these alleged ‘just plain folks’ polls after these Fox debates — and he asked who won the debate. And he was just about to say raise your hand if you support and before he finished, everybody’s hand went up to support Herman Cain. So it seemed as if they had been coached to support Herman Cain.

“I believe Herman Cain is in this presidential race because he deflects the racism that is inherent in the Republican Party, the conservative movement, the tea party certainly, and the last 30 years, the Republican Party has been moving more and more the right, also race-baiting more, gay-baiting more, religion-baiting more.”

You might believe she was saying all of that to comfort herself and deny the reality that the GOP actually none of the above.  She has obviously been a leftist Kool Aid drinker for years and this is the litany they believe despite facts to the contrary.  Thus it is important to those like Garafalo that they “refute” this new reality by claiming, without evidence (or by making up stuff – coached?), to fit in their manufactured reality.

Herman Cain, in Garofalo’s world and the world of many on the progressive left, is a race traitor.  He can’t be a serious candidate, because she assumes anyone with black skin must reject the right because the right is “inherently racist”.   Of course that must make Allen West, Bobby Jindal and Nikki Haley all racial plants as well.  But to explain people like this, it requires a grand conspiracy designed to “deflect” attention away from that “inherent racism” assumed by Garofalo’s ilk:

“But Herman Cain, I feel like, is being paid by somebody to be involved and to run for president so that you go, ‘Oh, they can’t be racist. It’s a black guy. It’s a black guy asking for Obama to be impeached’ or ‘It’s a black guy who is anti-Muslim,’ or ‘It’s a black guy who is a tea party guy,’” she continued. “I feel like, well wouldn’t that suit the purposes of whomever astroturfs these things, whether it be the Koch Brothers or ALEC or Grover Norquist or anything. It could even be Karl Rove. ‘Let’s get Herman Cain involved so it deflects the obvious racism of our Republican Party.’”

The absurdity of Garofalo’s theory is evident to anyone who knows even a little bit about Herman Cain.  He’s no one’s dupe.  But to the racist left he’s the Clarence Thomas of the political world.  “How dare he wander off the plantation.  We want our escaped slave back!”

Yeah, harsh, I know – but deserved.  Garofalo comes from a long line of projecting progressives who hide their inherent racism with ignorant utterings like this.   The purpose is to warn other blacks away from such behavior, i.e. thinking for themselves, and to again try to use racism as a potent charge against the right.   It is all about narrative building.  

The problem for Garofalo is she comes off as ignorant and transparent in her attempt.  Stupid.  She still doesn’t understand that in terms of narrative, that ship sank long ago.  It is both insulting to Herman Cain and other blacks who’ve chosen the right because that’s where they feel most comfortable  and revealing about Garafalo and where the real “inherent racism” lies.

~McQ

Twitter: @McQandO

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