Monthly Archives: February 2012
Stories like this infuriate me. They again point to the depth to which government has come to intrude in our lives. And yes, while this is an anecdote, it points to the wider problem of increasing intrusion and the loss of our freedoms. Tyranny by a thousand paper cuts.
The incident took place in a North Carolina pre-school of all places. There, a “lunch inspector” rejected the home packed lunch a 4 year old and required the child eat a school provided lunch instead, claiming the home packed lunch didn’t meet USDA requirements.
The child in question then ate all of 3 chicken nuggets for lunch as provided by the school and threw the rest away.
Now, the fact that the “lunch inspector” was wrong isn’t the story. The lunch provided by the mother was more than acceptable by the USDA standard which requires 1 serving of meat, 1 serving of grain and one serving of fruit or vegetable. The mother had packed a turkey sandwich, a banana, potato chips and apple juice. The “lunch inspector” mistakenly believe that the lack of a vegetable disqualified the lunch.
The story, as far as I’m concerned is that the “lunch inspector” exists at all.
This is the problem:
The state regulation reads:
"Sites must provide breakfast and/or snacks and lunch meeting USDA requirements during the regular school day. The partial/full cost of meals may be charged when families do not qualify for free/reduced price meals.
"When children bring their own food for meals and snacks to the center, if the food does not meet the specified nutritional requirements, the center must provide additional food necessary to meet those requirements."
Really? If ever there was a place the state has no business, its poking its long nose in my child’s lunch box. None of the Nanny’s freaking business.
Who knows better what their child will eat, the state or the family? Ever try to feed a 4 year old? Forget the fact that the lunch packed was better than the meal the child was served and ate at school, or that the home provided lunch met and exceeded the USDA guidelines. The fact that someone poked their state approved nose where it had on business is the problem.
Oh, and here’s reality of these sorts of misguided programs.
The bottom line: back off, government! The responsibility for children belong to parents whether you like it or not. You can’t both demand they take responsibility and then usurp that responsibility at will when the state decides it “knows better” for whatever arbitrary and god-awful reason.
This anecdote highlights a mostly silent and progressive usurpation of parental rights and authority. It is happening everywhere, because, you see, the “experts” always know best.
Of course you’d think the bright set would know that:
Gone with the wind? Hurricanes could destroy the offshore wind farms the US is planning to build in the Atlantic and the Gulf of Mexico.
The US Department of Energy set a goal for the country to generate 20 per cent of its electricity from wind by 2030. One-sixth is to come from shallow offshore turbines that sit in the path of hurricanes.
Talk about a “d’oh” moment.
Stephen Rose and colleagues from Carnegie Mellon University in Pittsburgh, Pennsylvania, modelled the risk hurricanes might pose to turbines at four proposed wind farm sites. They found that nearly half of the planned turbines are likely to be destroyed over the 20-year life of the farms. Turbines shut down in high winds, but hurricane-force winds can topple them.
You don’t say. Each wind farm costs about $175 million.
Safe, reliable and eco-friendly – well except for the birds they regularly grind up. But hey, in the ocean those birds drop into the sea and no one ever sees them. They provide chum for the fish (if a bird gets chopped up in the ocean and no one sees it does it make a sound?).
That’s good … right? No? I’m confused. PETA, where are you?
Reading the obvious and understanding that they’re going to do this anyway (somewhere in this you, Mr and Mrs. Taxpayer, are paying a hefty chunk of the bill and taking most of the risk) makes you realize how, well, “not so bright” many of those who “lead” us are or how much they really don’t care about the outcome of what they do if it satisfies some voting constituency. As long as they have access to your tax dollars or borrowed dollars with little or no accountability, this sort of nonsense will continue unabated.
You may find this interesting … I did. The New York Times editorialized about the minimum wage on the 12th of February. Unsurprisingly, they’re for raising it:
New York is an expensive place to live, and unaffordable for workers struggling on $7.25 an hour, the federal minimum wage. Nineteen other states, recognizing that the federal minimum is too low for survival, even with food stamps or other government assistance, have increased their minimum above that level. Lawmakers in Massachusetts raised it to $8 an hour. Connecticut’s is $8.25, and it is $9.04 an hour in Washington State.
It is time for New York to raise its minimum wage enough to help more than 600,000 struggling workers. Assembly Speaker Sheldon Silver is vigorously pushing a bill to raise the minimum to $8.50 an hour immediately and to adjust it each year for inflation. This should not be a controversial measure.
Want to know what would be a controversial measure, at least as far as the NYT would be concerned? George Mason University economics professor Donald J. Boudreaux (Café Hayek) answers the Times:
In the same spirit of demanding that government improve people’s economic well-being simply by ordering that people be paid more, allow me to make a similar plea on your behalf.
The newspaper business today is in difficult straits. So I hereby call upon the legislature in Albany to force you and other newspapers in New York to raise your subscription and advertising rates by 17.2 percent (the same percentage raise that you want to force low-skilled workers to demand from their employers). Voila! If your economic theory is correct, your profits will rise. And the magnitude of these higher profits, we can assume (just as you assume in the case of low-skilled workers), will be greater than any negative consequences that might be unleashed by such legislative interference in your ability to determine the terms on which you sell your services.
I. Loved. That. Answer.
It is the perfect comeback to those who would use the force of government to arbitrarily raise wages and commit your money to their priorities. As with most things, they’d never stand for you doing the same to them. Boudreaux’s answer highlights that in spades. It’s perfect. And he challenges them with “if your economic theory is correct …”. I laughed out loud reading that.
Oh, and we demand that the NYT adjust their subscription and advertising rates each year for inflation.
That shouldn’t be a controversial measure, should it?
You can hear the huffing and puffing in the NYT boardroom from here.
[HT: Villainous Company]
The following statistics were released today on the state of the US Economy:
The Mortgage Bankers’ Association reports that mortgage purchase applications fell -8.4%, while refinance apps rose just 0.8% last week. This brings the composite to a -1.0% drop.
The Empire State Manufacturing Survey’s General Business Conditions Index rose sharply to 19.53, the best reading in 18 months.
The Treasury reports that net demand for US securities was $17.9 billion in December, on $21.0 billion of sales, offset by $38.9 billion in sales of foreign securities from US accounts. Foreign buying of US long-term securities was weak, and foreigners were net sellers of US equities for the third month in a row.
The Fed reports industrial production was unchanged last month. Capacity utilization dropped to 78.5% from 78.6% in December.
The Housing Market Index rose sharply to 29 from last month’s 25. This is the 5th straight increase, and the second straight 4-point rise. One notes, however, that these increases have not yet shown up in the hard housing data.
One of the claims President Obama made in his State of the Union address was that his administration was engaged in cutting the red tape and doing away with regulations that stood in the way of prosperity.
There is no question that some regulations are outdated, unnecessary, or too costly. In fact, I’ve approved fewer regulations in the first three years of my presidency than my Republican predecessor did in his. I’ve ordered every federal agency to eliminate rules that don’t make sense. We’ve already announced over 500 reforms, and just a fraction of them will save business and citizens more than $10 billion over the next five years.
Of course, like many of his claims, the devil is in the details and upon closer scrutiny, the claim has no real foundation in fact.
His first claim is a carefully constructed lie as Free Enterprise points out:
The White House admits that its rules have so far cost $25 billion, which is much more than at the same point during the Clinton and George W. Bush administrations.
The claim is also couched in non-specifics for a reason. The “500 reforms” are mostly regulations with little or no monetary impact on those who have to satisfy them. However, the administration has added more rules that cross the magic 100 million dollar impact line than any other administration. And, of course, those require, by law, that the monetary impact be assessed. Here’s an example of one (PDF, pg 69):
Enforcement Fairness Act (5 U.S.C. 801 et seq.). This interim final rule:
a. Will have an annual effect on the economy of $100 million or more. This rule will affect every new well on the OCS, and every operator, both large and small must meet the same criteria for well construction regardless of company size. This rulemaking may have a significant economic effect on a substantial number of small entities and the impact on small businesses will be analyzed more thoroughly in an Initial Regulatory Flexibility Analysis. While large companies will bear the majority of these costs, small companies as both leaseholders and contractors supporting OCS drilling operations will be affected.
Considering the new requirements for redundant barriers and new tests, we estimate that this rulemaking will add an average of about $1.42 million to each new deepwater well drilled and completed with a MODU, $170 thousand for each new deepwater well drilled with a platform rig, and $90 thousand for each new shallow water well. While not an insignificant amount, we note this extra recurring cost is less than 2 percent of the cost of drilling a well in deepwater and around 1 percent for most shallow water wells.
b. Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions. The impact on domestic deepwater hydrocarbon production as a result of these regulations is expected to be negative, but the size of the impact is not expected to materially impact the world oil markets. The deepwater GOM is an oil province and the domestic crude oil prices are set by the world oil markets. Currently there is sufficient spare capacity in OPEC to offset a decrease in GOM deepwater production that could occur as a result of this rule.
Therefore, the increase in the price of hydrocarbon products to consumers from the increased cost to drill and operate on the OCS is expected to be minimal. However, more of the oil for domestic consumption may be purchased from overseas markets because the cost of OCS oil and gas production will rise relative to other sources of supply. This shift would contribute negatively to our balance of trade.
These rules were proposed in the wake of the BP oil spill in the Gulf of Mexico (GOM). They clearly identify the effect of the rules. Ironically they include increased cost to consumers, more dependence on foreign oil, and a negative increase in the balance of trade – all problems the administration and most economists identify is problems to be solved if the economy is to move forward.
Now, some may argue that these rules were necessary. I’d argue that perhaps some new regulation was necessary, but it should have been a regulation which, to the best of its ability, mitigated the effects listed to the minimum, or eliminated them altogether. Instead, the regulators airily note the effects and then blow them off. In reality, regulators really don’t care if it costs consumers more, deepens our dependence on foreign oil or ups the balance of trade.
In the State of the Union address, Obama tried to grab the middle and pretend he is a friend to small business:
You see, an economy built to last is one where we encourage the talent and ingenuity of every person in this country. That means women should earn equal pay for equal work. (Applause.) It means we should support everyone who’s willing to work, and every risk-taker and entrepreneur who aspires to become the next Steve Jobs.
After all, innovation is what America has always been about. Most new jobs are created in start-ups and small businesses. So let’s pass an agenda that helps them succeed. Tear down regulations that prevent aspiring entrepreneurs from getting the financing to grow. (Applause.) Expand tax relief to small businesses that are raising wages and creating good jobs. Both parties agree on these ideas. So put them in a bill, and get it on my desk this year. (Applause.)
But again facts undermine the claim. As the Small Business Association reports, regulations disproportionately effect small businesses:
In the face of yet higher costs of federal regulations, the research shows that small businesses continue to bear a disproportionate share of the federal regulatory burden. The findings are consistent with those in Hopkins (1995), Crain and Hopkins (2001), and Crain (2005).
The research finds that the total costs of federal regulations have further increased from the level established in the 2005 study, as have the costs per employee. More specifically, the total cost of federal regulations has increased to $1.75 trillion, while the updated cost per employee for firms with fewer than 20 employees is now $10,585 (a 36 percent difference between the costs incurred by small firms when compared with their larger counterparts).
Say one thing while doing the opposite. Vintage Obama. Tomorrow’s Steve Jobs would have a very expensive uphill climb in today’s regulatory climate. The net effect? $1.75 trillion dollars of cost to small businesses, the place where “most jobs are created” per Obama.
The SBA also reports:
Environmental regulations appear to be the main cost drivers in determining the severity of the disproportionate impact on small firms. Compliance with environmental regulations costs 364 percent more in small firms than in large firms. The cost of tax compliance is 206 percent higher in small firms than the cost in large firms.
Those regulations are primarily driven by OSHA and EPA. And there’s no secret about the expansion of both regulators and regulation being pushed by Obama’s EPA focused on the environment.
The “good” news, however, this is one “shovel ready” project that seems to be creating jobs:
Large, small, global and regional — law firms are opening Washington offices at a rate not seen since before the recession, as they position themselves for work centered around the capital’s regulatory machinery.
Yes, I was being very facetious, however, when sharks smell blood in the water, they tend to gather in large numbers in anticipation of a feeding frenzy. Despite Obama’s claims to the contrary, there’s a reason this is happening, and it isn’t because the administration is lessening or cutting regulations, it is because it is imposing more and needs additional legal enforcement help (there’s also the side that will concentrate on defense).
Don’t forget, the $1.75 trillion dollar cost above applies to only small business. That means that the total cost of regulation is much higher than that. Also don’t forget, when Obama makes his claim about not passing as many regulations as previous administrations, that’s meaningless without an dollar effect numbers. As noted, in regulatory cost to the economy, he’s passed many more costly regulations at this point in his presidency than did the previous administration.
The bottom line, of course, is that A) you can’t believe a thing the man says and B) contrary to his claims, he’s imposed more cost on the economy via regulation, not less.
Finally, if you think it is bad now, wait until ObamaCare kicks in. One of the reasons law firms are beefing up their Washington DC presence is in anticipation of that law going into effect. If you think it’s a regulatory nightmare now, just wait. It’s going to get worse.
Sean Hackbarth, commenting on the increase in lawyers:
Resources spent on paperwork and re-jiggering business plans is less money going to business investment and job creation, but at least we know someone is benefiting from the regulatory pile-on.
Shovel-ready – and not in the good sense.
More on the increasing culture of dependency on government:
The percentage of people who do not pay federal income taxes, and who are not claimed as dependents by someone who does pay them, jumped from 14.8 percent in 1984 to 49.5 percent in 2009. This means that in 1984, 34.8 million tax filers paid no taxes; in 2009, 151.7 million paid nothing.
It is the conjunction of these two trends—higher spending on dependence-creating programs, and an ever-shrinking number of taxpayers who pay for these programs—that concerns those interested in the fate of the American form of government. Americans have always expressed concern about becoming dependent on government, even while understanding that life’s challenges cause most people, at one time or another, to depend on aid from someone else. Americans’ concern stems partly from deeply held views that life’s blessings are more readily obtained by independent people and that growing dependence on government erodes the spirit of personal and mutual responsibility created through family and civil society institutions. These views help explain the broad public support for welfare reform in the 1990s.
This ethic of self-reliance combined with a commitment to the brotherly care of those in need appears threatened in a much greater way today than when this Index first appeared in 2002. This year, 2012, marks another year that the Index contains significant retirements by baby boomers. Over the next 25 years, more than 77 million boomers will begin collecting Social Security checks, drawing Medicare benefits, and relying on long-term care under Medicaid. No event will financially challenge these important programs over the next two decades more than this shift into retirement of the largest generation in American history.
And yet we just got a budget from the President of the United States which essentially ignores that fact. Just like his previous three.
But more important than that is this culture of dependence that has perniciously grown in this country over the preceding decades fueled by politicians and the ideology of the left.
Libertarians and many Conservatives have been warning about this phenomenon for years. But in 2008, what had been a relatively slow ride to growing dependence became a ride on a rocket sled:
Not only did the federal government effectively take over half of the U.S. economy and expand public-sector debt by more than all previous governments combined, it also oversaw a second year of enormous expansion in total government debt at the federal level. Much of that growth in new debt can be traced to programs that encourage dependence.
In 40 plus years we’ve gone from a dependency percentage of 28.3% to over 70% in 2010. I don’t think anyone realized how big the change has been or what significance it has. But it has made us a nation of takers vs. makers.
As Heritage’s Bill Beach and Patrick Tyrrell explain, "the index score has grown by more than 15 times its original amount. This means that, keeping inflation neutral in the calculations, more than 15 times the resources were committed to paying for people who depend on government in 2010 than in 1962."
It is the same trap that countries like Greece were in and will result in the same collapse.
Ed Feulner adds some context to the increased percentage of dependence:
Perhaps the most startling part of the index concerns how much assistance is being distributed. Americans who rely on government receive an average $32,748 worth of benefits. How high is that? Higher than the average American’s disposable personal income: $32,446.
More than 67.3 million Americans rely on assistance from Washington for everything from food, shelter and clothing to college tuition and health care. These benefits cost federal taxpayers roughly $2.5 trillion annually.
So the president offers a 3.8 trillion dollar budget of which, according to these numbers, all but 1.3 trillion goes to “assistance”.
And in order to offset these “assistance” payments somewhat, the president decides that the only Constitutionally mandated expense within the budget – defense – has to pay the butcher’s bill.
We talk about “tipping points” often, but looking at that chart, I’m convinced that tipping point may have been passed years ago.
Some quotes to leave you with. Rep. Allen West, this past weekend said he has no problem with a safety net. His problem is “when that safety net becomes a hammock.” In this case a $32,000 hammock.
Alexis de Tocqueville reputedly said that the American republic will last only "until the majority discovers it can vote itself largess out of the public treasury." We’ve seen that majority discover it with a vengeance.
And finally, George Bernard Shaw said, ““Liberty means responsibility. That is why most men dread it.”
70% dependence says a majority now dreads “it”, and has decided it likes others, the makers, paying their way.
As one friend aptly described it on reviewing these numbers, “we’re screwed”.
The following statistics were released today on the state of the US Economy:
Despite strong core numbers, weak auto sales meant that retail sales were up a less-than-expected 0.4% for January. Ex-autos, retail sales rose 0.7%, and removing gasoline sales brings the core number to 0.6%.
In weekly store sales, ICSC-Goldman reports a weak -2.0% drop in sales, with the year-on-year rate at 2.8%. Redbook is also weak at a 2.7% same store sales increase from last year.
Export prices rose 0.2% for January, which is up 2.5% from last year. Import prices rose 0.3% for the month, and 7.1% for the year.
The NFIB Small Business Optimism Index rose very slightly to 93.9 in January.
The Ceridian-UCLA Pulse of Commerce Index fell 1.7% in January to a level of 93.17.
Business inventories rose 0.4% in December. Sales rose 0.7%, so the stock-to-sales ratio dropped to 1.26.
Representative Paul Ryan characterized the Obama budget as not a fiscal plan but “a political plan designed to help the President’s reelection.” Getting into the details seems to validate Ryan’s point.
He also pointed out that the debt crisis is the most predictable crisis imaginable and the president has "punted" again with this budget. Said Ryan, “Instead of an America built to last we get an America drowning in debt.”
The White House claims the Obama budget saves 4 trillion over and above the Budget Control Act. But in fact, the Obama budget rides the base line and throws more taxing and spending on top of it (while claiming to save 4 trillion). Analysis of the budget shows, at best, a savings of 300 billion over 10 years.
As for an “America Built To Last”, Obama approaches that in a very odd way. He goes after businesses and investors:
1. The top income rate would be raised to 39.6 percent vs. 35 percent today.
2. Under the “Buffett rule,” no household making over $1 million annually would pay less than 30 percent of their income in taxes.
3. Between now the end of a second Obama term, Obama proposes $707 billion in “net deficit reduction proposals.” Of that amount, only 16 percent is spending cuts.
4. The majority of small business profits would be taxed at 39.6 percent vs. 35 percent today.
5. The capital gains rate would rise to 25.0 percent (including the Obamacare surtax and deduction phase out) from 15 percent today.
6. The double-tax on corporate profits (including dividends) would increase to 64 percent based on the statutory corporate tax rate (58 percent using the effective tax rate), easily the highest among advanced economies.
7. The double tax on corporate profits (including capital gains) would increase to 51 percent (44 percent using the effective tax rate), also among the highest among advanced economies.
Those details alone are a basis for declaring his budget “dead on arrival” at Congress. These new taxes would take the tax revenue as a share of GDP to 20.1 percent in 2022. The historical average is 18 percent. In a time of deep recession, when government should be proposing economic, tax, labor and trade policies to create jobs and move the economy in a positive direction, Obama’s budget proposes to do exactly the opposite. The attack on small business, as well as corporations, points to a president out of touch with the problems of the economy. He claims to save 4 trillion on debt with these policies but in fact, his budget proposals add 6.7 trillion to the debt over the next 10 years and the debt-to-GDP ratio is predicted to be 74.2 percent this year and 76.5 percent in 2022.
And here’s the bottom line truth about policies such as Obama is pursuing:
Corporate taxes are paid by consumers in higher prices and by workers in lower wages – so much for the promise not to increase taxes on those making less than $250,000. Every good tax economist knows this, but the president chooses to ignore reality and demagogue the issue.
Given that, how does the White House justify such policies? Well, it simply makes up a rosy forecast for the future, that’s how. 3.4 percent in 2015, 4.1 percent in 2017 and 3.9 percent in 2018. As James Pethokoukis points out:
The U.S. economy has only seen a run like that three times in the past four decades.
Yet we’re supposed to believe that we’ll come roaring out of one of the longest and deepest recessions since the Great Depression with taxes focused mostly on business at a higher than historical rate? Not likely.
Meanwhile we’re being told by the President’s Chief of Staff that it is all the Republican’s fault that we don’t have a budget out of the Senate. Mistakenly claiming that it takes 60 votes to pass a budget, he points to the Republican Senators as the obstructionists.
Of course, on budget matters, it only takes a simple majority. And there are 53 Democratic Senators. If you recall, the Senate minority leader, Republican Mitch McConnell introduced and got votes on two budgets last year – the Ryan budget, voted down by Democrats and President Obama’s budget which was voted down 97-0. Harry Reid, however, has introduced no budget in over 1,000 days.
And the gimmicks:
At issue is how the government projects spending and deficits going forward. Of the $4 trillion in deficit reduction claimed by the White House, $3 trillion would come from a combination of tax increases and spending cuts. Another $900 billion would come from domestic spending caps agreed to with Republicans last year to resolve the impasse over raising the nation’s statutory borrowing limit.
But if Congress and the president did nothing, spending would actually fall by $2 trillion under current law. That is because automatic cuts to defense and nondefense programs totaling $1.2 trillion are already set to go in force in 2013. The Obama budget assumes those cuts will not happen. The president also assumes that sharp cuts to reimbursement rates for doctors treating Medicare patients will never be enforced, but the budget does not detail how those scheduled cuts will be prevented.
Republicans say that effectively negates $522 billion over 10 years, since Congress will have to figure out how to pay for the so-called Medicare doc fix.
Republicans also protest that Mr. Obama is "saving" nearly $1 trillion by not spending over the coming decade what the United States has spent each year on wars in Iraq and Afghanistan.
So the Obama savings are built on assuming the “Doc Fix” won’t be made and that war spending will remain at the current level (even with the withdrawal from Iraq and the coming withdrawal from Afghanistan) for 10 years – something obviously not the case. He’s built his 4 trillion in “savings” on 1 trillion in tax increases, 2 trillion on spending cuts already enacted into law (sequestration), 1 trillion assuming war spending will remain level for 10 years. Meanwhile most of his spending cuts come from where? The military, of course.
Finally, remember this?
“This is big,” wrote White House director of new media Macon Phillips in a February 23, 2009 blog post, ”the President today promised that by the end of his first term, he will cut in half the massive federal deficit we’ve inherited. And we’ll do it in a new way: honestly and candidly.”
Indeed, President Obama did make that promise that day, saying, “today I’m pledging to cut the deficit we inherited in half by the end of my first term in office. This will not be easy. It will require us to make difficult decisions and face challenges we’ve long neglected. But I refuse to leave our children with a debt that they cannot repay — and that means taking responsibility right now, in this administration, for getting our spending under control.”
This budget does none of the above. In fact, it’s not even close. There are no “difficult decisions” included. There are now “challenges” faced. As Rep. Ryan said, Obama has again “punted”.
This is indeed the most predictable crisis imaginable and again, the man who claimed he would do what is necessary to fix the problem has once again kicked the can down the road.
And no, that’s not a joke about Turkey. What you’re seeing in Greece is what you see in any drug rehab program … the results of withdrawal. In this case, the addiction isn’t to heroin or cocaine, but other people’s money. And Greece passed the tipping point of dependency years ago, decades ago.
But the money has finally run out and the addict doesn’t have the necessary money for the next fix.
Result? Violence, denial and the refusal to accept the treatment.
More than 40 buildings were set ablaze in an orgy of looting that left scores injured as protesters vented their anger at the caretaker government and parliament’s ordering of a further €3.3bn of savings by slashing wages and pensions and laying off public sector workers.
But the scenes of mayhem on the streets of Athens and all across the country leave big questions unresolved regarding Greece’s capacity to stick with the savage austerity. The country is in its fifth year of recession and has little prospect of halting a steep decline in living standards.
Meanwhile street battles between police firing rounds of teargas and demonstrators hurling firebombs and marble slabs left Syntagma square, the plaza in front of the parliament building, resembling a war zone.
Rubbish bins burned and plumes of smoke and asphyxiating clouds of toxic chemicals filled the air.
The explosions were so loud, they could be heard inside parliament and the teargas drifting across square reached the debating chamber. The buildings that were set on fire included cinemas, banks and a number of shops, and Greek television reported that dozens of citizens and at least 40 police officers had been injured.
Why? Because the caretaker parliament has, of necessity, tried to do what is necessary to return the country of Greece to fiscal sanity. And that entails drastically reducing or eliminating decades of entitlements that the government granted but which was obvious the country couldn’t afford. Among them:
Parliament backed drastic cuts in wages, pensions and jobs on Sunday as the price of a 130-billion-euro ($172 billion) bailout by the European Union and International Monetary Fund …
That included a roll back of Greece’s minimum wage. This doesn’t settle anything though. Although the vote was important, EU leaders are still not convinced that implementation will ever happen:
The EU welcomed the vote, but told Greece it had more to do to secure the funds and avoid a disorderly default next month that would have "devastating consequences."
Euro zone finance ministers meet on Wednesday, and the fragile ruling coalition of Prime Minister Lucas Papademos has until then to say how 325 million euros of the 3.3 billion euros in budget savings will be achieved.
A government spokesman said political leaders also had until Wednesday to give a written commitment that they will implement the terms of the deal, reflecting fatigue in Brussels over what EU leaders say have been a string of broken promises.
So this has turned into a series of attempts and votes and “guarantees” and failures leading to this latest attempt to keep Greece afloat – something the rest of Europe, according to reports, deems as critical.
There’s also a vote in April, a month after the demand that the deal agreed upon is scheduled to be implemented. Many observers believe the vote will be driven to the extreme left or right by these events. That, of course, would set up political polarization which will be difficult, if not impossible, to overcome. A preview of that problem was seen after this vote:
The leaders of two of the three major political parties in Prime Minister Lucas Papademos’s interim coalition government — the Socialists and the center-right New Democracy party — agreed on the new round of austerity after days of tense debate, maneuvering and threats. The leader of the third, the right-wing Popular Orthodox Rally, refused to endorse the measures and later withdrew from the coalition.
In the debate on Sunday night before the vote, Mr. Papademos appealed to lawmakers to do their “patriotic duty” and pass the measures, saying they would be saving Greece from bankruptcy in March, when a bond issue comes due that Greece cannot repay without foreign help.
In a sign of how the crisis has frayed the political order in Greece, the three leading political parties all moved swiftly to expel lawmakers who had broken ranks with leaders in the voting.
Although we’re likely to deny any applicability of the crisis there to our circumstances, our country is headed in the same direction, albeit later and more slowly. But the end-state will be the same. The difference is just a matter of degree, not design. Greece is simply the first of many countries who’ve tried to redistribute income to support a socialist inspired lifestyle from a diminishing pool of workers.
It is our future, if we don’t change our ways … drastically.
If you haven’t seen the Heritage Foundation report on government dependency for this year, you need to spend some time at least perusing it. Some of the charts will shock you.
I’m planning on looking at different parts of it over the next few weeks as appropriate and I get the time.
We often hear the Democrats cited as the reason we’re in this mess today, but that’s a cop out. The right in the guise of the Republican party are just as guilty as the Democrats. In fact, I’d argue they’re more guilty. The reason we’re in this mess today is because over the years the Republicans have accommodated the Democrats by compromising their principles.
The most recent examples are Medicare Part D and No Child Left Behind – two huge government programs one of which put a new entitlement in place and the other which increased federal control of education (at an equally huge cost).
Here’s a quote from the Heritage Foundation report I’d like you to focus on:
The last decade has seen a significant expansion of benefits provided by Medicare, including the new prescription drug benefit created under Medicare Part D. From 2004 to 2010, Part D was responsible for $214 billion in federal spending. Though the role of competition in its defined-contribution model has caused estimates of its 10-year cost to drop 41 percent from initial CMS projections, the program has added substantially to health care entitlement spending. Additionally, the publicly funded Part D program has crowded out private coverage alternatives. Research by economists Gary Engelhardt and Jonathan Gruber suggests that before Medicare Part D was enacted, 75 percent of seniors currently receiving public coverage held private drug coverage. Part D also increased average spending on prescription drugs by seniors, an expense that is funded by an increase in public spending of 184 percent, accompanied by a reduction in seniors’ out-of-pocket spending of 39 percent and private insurance plan spending of 37 percent.
First, remember that we’re talking about the “richest” demographic in our country when we talk about seniors. Yes, everyone knows that, like every demographic, there are exceptions, but for the most part, seniors are pretty well set.
Now, notice the effect that this program has had. It has “added substantially to health care entitlement spending” It has “crowded out private coverage alternatives”. And it has “increased the average spending on prescription drugs by seniors … funded by an increase in public spending of 184%”.
So A) it increased public spending in an ear in which we can’t afford increased public spending, B) it basically destroyed a market that was apparently working prior to its implementation C) the taxpayer is on the hook for more spending as seniors, who now pay less out of pocket, shift the cost to them.
This wasn’t a program supported just by the left, folks. This was negotiated, passed and signed into law with the blessing of a Republican President.
THIS is why we’re in the mess we’re in. THIS is where the precedent for ObamaCare was set.
As much as the other candidates want to hit Mitt Romney on RomneyCare (and they should), one should remember that Rick Santorum voted for Part D (although he now says that was a “mistake”) and Newt Gingrich lobbied for it.
It is those sorts of compromises and accommodations which have put us in the mess we’re in today. The party of smaller government has consistently caved in to larger government programs all the while hollering about the left.
This is one reason there’s so much disgust on the right with the party, at least among activists and Tea Party types.
As I said, I’m going to be spending some time on this report, but this is one area that needs to be illuminated and discussed. If the GOP ever wants to recover its soul, it has to quit compromising its principles and find a way to explain, in a compelling way, why programs like this are the wrong way to go. They managed that with ObamaCare. They need to take that lesson and translate it into all future actions.
They need to back away from the trough of federal money and truly embrace smaller less costly government. In terms of entitlement and dependency, if we’re not at a tipping point, we’re very close. The critical nature of this upcoming election can’t be over emphasized.
If ObamaCare becomes law, we’re sunk. I believe it was Margaret Thatcher who said the reason she wasn’t able to accomplish as much as Ronald Reagan was because of the National Health Service.
Unfortunately, since Reagan’s time subsequent Republican administrations have helped build one here.