"Our Country!
In her intercourse with foreign nations may she always be in the right;
but right or wrong, our country!"

    --Commodore Stephen Decatur

Friday, December 10, 2010

Tax Reform and the "Hidden" Marriage Penalty

Stop the presses!!!  Longtime readers know that the Prolix Patriot is not usually a fan of President Obama.  However, today's New York Times suggests that massive losses for his party in 2010 are bringing the President around to more reasonable policies with genuine bipartisan appeal:

While administration officials cautioned on Thursday that no decisions have been made and that any debate in Congress could take years, Mr. Obama has directed his economic team and Treasury Department analysts to review options for closing loopholes and simplifying income taxes for corporations and individuals, though the study of the corporate tax system is farther along, officials said.

The objective is to rid the code of its complex buildup of deductions, credits and exemptions, thereby broadening the base of taxes collected and allowing for lower rates — much like a bipartisan majority on Mr. Obama’s debt-reduction commission recommended last week in its final blueprint for reducing the debt through 2020.

Republicans have made much hay over provisions such as the "marriage penalty" which was supposedly abolished as part of the Bush tax cuts of 2001 and 2003.  However, the graphic above shows that even after doubling the standard deduction for married couples, the tax code is still extremely unfair for married couples, especially for people with modest incomes.

In the graphic, the green and purple bands represent tax savings for married couples vs. the amount they would have owed Uncle Sam if they each filed as singles.  Conversely, the red and blue bands represent an increased tax burden for the couple after celebrating their nuptials.  From this, we can see that the current tax code punishes couples with similar incomes--even without the massive increases that will go into effect for 2011 if Congress fails to extend the current rates.

For hardworking parents who each bring home $25,000 a year in taxable income, the net tax savings from getting married is exactly zero.  Then, for two people who each bring home a taxable income of $40,000 a year before marriage, their taxes will actually increase by 10 dollars a year after saying, "I do."  Meanwhile, if a millionaire is betrothed to a pauper, his or her taxes will actually decrease by thousands of dollars each year.

Of course, liberals can take consolation that if couples both make six-figure salaries, they will really get taken for a ride at tax time.  If two people each make $110,000 a year and are thinking of getting married, they are actually better off staying single to the tune of $1,300 a year.  If you think the wedding reception is going to be expensive, just multiply the increased tax burden by 20, 30, or even 50 years of wedded bliss!

Bottom line: whether a couple is earning a modest income or is at the top of the income ladder, the tax code punishes hard working families with dual incomes and rewards single-income families--especially the super rich--with higher tax savings.  Given that the majority of American families have two incomes, meaningful tax reform that rewards hard work is long overdue.  If Obama wants to make good on his promise to lower taxes for the middle class, abolishing the hidden marriage penalty would be a good place to start.

Thursday, December 9, 2010

Belated Thanksgiving Trivia

The next time you're on an eight-hour flight from Amsterdam to Boston, and you hear the pilot come on the intercom to announce that there is some turbulence ahead, consider this: it took the pilgrims 66 days and they didn't have free wi-fi.

Friday, December 3, 2010

One State, Two State, Red State, Blue State

As armchair quarterbacks anaylze the aftermath of the 2010 election, potential presidential challengers are quietly gearing up for the 2012 cycle.  With sweeping Republican gains in statehouses across the country, the 2010 census apportionment is likely to give a slight edge to the GOP in congressional races, but more interesting are the demographic shifts which will benefit the Republican presidential nominee.

The map above shows the states which went to Obama and McCain in the 2008 presidential election, but with a twist.  Instead of varying the shading by the depth of partisan support, the darkness of each state instead corresponds to the predicted changes in the electoral college.  Meanwhile, several states are also shaded to indicate a potential weakness for the opposing party to pick up electoral votes in the 2012 cycle.

Dozens of states shifted perceptibly to the right in 2010, especially in the midwest.  Even President Obama's home state of Illinois, while still solid blue, is less so.  Mark Kirk won the Senate race there and the state legislature is slightly less lopsided in favor of Democrats than it was.  Also, like many liberal bastions, Illinois will be losing an electoral vote after the 2010 census reapportionment.

Republicans completely swept the 2010 election by winning races for governor, both houses of the state legislature, and a majority of the congressional delegation in seven states that went to Obama in 2008: Florida, Indiana, Michigan, Ohio, Pennsylvania, Virginia, and Wisconsin.  Meanwhile, Republicans also now control at least one house of the state legislatures in Colorado, Iowa, Maine, Minnesota, New Hampshire, and North Carolina.

Democrats can take some consolation that during redistricting they will at least have some leverage in Arkansas, Kentucky, Mississippi, and West Virginia.  However, with the exception of West Virginia, none of these states are seriously in play for 2012--unless Hillary Clinton mounts a successful renegade primary challenge to her current boss.

Numerous factors, such as gerrymandered minority districts, weak turnout in an off-year, and the potential for improvement in the economy make it hard to draw strong conclusions from 2010 about the upcoming presidential race.  2012 will still be a very difficult year for Republicans, especially because there is no clear favorite with the widespread appeal that will be necessary to convince independents who voted for Obama to change their vote this time around.

However, Obama's political team should have reason to worry that no less than 117 electoral votes will be at stake in the seven states that slipped away from the Democrats in a complete rout this past cycle.  Adding other traditional battlegrounds like Colorado, Iowa, and New Hampshire into the mix presents a daunting race to the 270 electoral votes that will be needed to keep President Obama from joining the 15 million Americans currently on the unemployment rolls.

Tuesday, October 19, 2010

V-A Day: Victory in America Day

A contemporary account of the Surrender at Yorktown, by Dr. James Thatcher, a surgeon in the Continental Army:
October 19th.-

This is to us a most glorious day; but to the English, one of bitter chagrin and disappointment. Preparations are now making to receive as captives that vindictive, haughty commander, and that victorious army, who, by their robberies and murders, have so long been a scourge to our brethren of the Southern states. Being on horseback, I anticipate a full share of satisfaction in viewing the various movements in the interesting scene...

At about twelve o'clock, the combined army was arranged and drawn up in two lines extending more than a mile in length. The Americans were drawn up in a line on the right side of the road, and the French occupied the left. At the head of the former, the great American commander, mounted on his noble courser, took his station; attended by his aids. At the head of the latter was posted the excellent Count Rochambeau and his suite.

The French troops, in complete uniform, displayed a martial and noble appearance, their band of music, of which the timbrel formed a part, is a delightful novelty, and produced while marching to the ground a most enchanting effect. The Americans, though not all in uniform, nor their dress so neat, yet exhibited an erect, soldierly air, and every countenance beamed with satisfaction and joy. The concourse of spectators from the country was prodigious, in point of numbers was probably equal to the military, but universal silence and order prevailed.

It was about two o'clock when the captive army advanced through the line formed for their reception. Every eye was prepared to gaze on Lord Cornwallis, the object of peculiar interest and solicitude; but he disappointed our anxious expectations; pretending indisposition, he made General O'Hara his substitute as the leader of his army. This officer was followed by the conquered troops in a slow and solemn step, with shouldered arms, colors cased, and drums beating a British march.

Having arrived at the head of the line, General O'Hara, elegantly mounted, advanced to his excellency the commander-in-chief, taking off his hat, and apologized for the non-appearance of Earl Cornwallis. With his usual dignity and politeness, his excellency pointed to Major-General Lincoln for directions, by whom the British army was conducted into a spacious field, where it was intended they should ground their arms.

The royal troops, while marching through the line formed by the allied army, exhibited a decent and neat appearance, as respects arms and clothing, for their commander opened his store, and directed every soldier to be furnished with a new suit complete, prior to the capitulation. But in their line of march we remarked a disorderly and unsoldierly conduct, their step was irregular, and their ranks frequently broken.

But it was in the field, when they came to the last act of the drama, that the spirit and pride of the British soldier was put to the severest test: here their mortification could not be concealed. Some of the platoon officers appeared to be exceedingly chagrined when giving the word "ground arms," and I am a witness that they performed this duty in a very unofficer-like manner; and that many of the soldiers manifested a sullen temper, throwing their arms on the pile with violence, as if determined to render them useless. This irregularity, however, was checked by the authority of General Lincoln.

After having grounded their arms and divested themselves of their accoutrements, the captive troops were conducted back to Yorktown, and guarded by our troops till they could be removed to the place of their destination.

The British troops that were stationed at Gloucester, surrendered at the same time and in the same manner, to the command of the Duke de Luzerne.

This must be a very interesting and gratifying transaction to General Lincoln, who, having himself been obliged to surrender an army to a haughty foe the last year, has now assigned him the pleasing duty of giving laws to a conquered army in return, and of reflecting that the terms which were imposed on him are adopted as a basis of the surrender in the present instance.

It is a very gratifying circumstance that every degree of harmony, confidence and friendly intercourse subsisted between the American and French troops during the campaign - no contest, except an emulous spirit to excel in exploits and enterprise against the common enemy, and a desire to be celebrated in the annals of history for an ardent love of great and heroic actions.

We are not to be surprised that the pride of the British officers is humbled on this occasion, as they have always entertained an exalted opinion of their own military prowess, and affected to view the Americans as a contemptible, undisciplined rabble. But there is no display of magnanimity when a great commander shrinks from the inevitable misfortunes of war; and when it is considered that Lord Cornwallis has frequently appeared in splendid triumph at the head of his army, by which he is almost adored, we conceive it incumbent on him cheerfully to participate in their misfortunes and degradations, however humiliating; but it is said he gives himself up entirely to vexation and despair.

Tuesday, October 12, 2010

"Prolong the Recovery"

The Washington Post reported on Saturday that, faced with a pre-election foreclosure crisis, the Obama Administration is considering a nationwide moratorium on foreclosures. You have to admire their chutzpah: rather than facing up to economic realities, the President and his advisors believe they can simply command the economy to improve. If only it were so easy! Even the Washington Post admits that the plan will likely backfire, in a roundabout way:

With foreclosed properties comprising one in every four homes sold in the United States, the spreading moratorium could disrupt real estate deals in progress, slow down the process of clearing the backlog of troubled home loans and prolong the economic recovery, analysts said.
Prolong the economic recovery indeed! When did the recovery begin? The unemployment rate has remained nearly constant over the past year at between 9-10% despite constant gaming of the system with over-reporting of census and election workers. The real unemployment rate is much higher if you consider that the private sector has continued to shed jobs for more than two years straight.  Worse still, just when it seems things couldn’t get any worse, the suggestion of a foreclosure moratorium comes as yet another assault on the markets.

Part of the reason why there has not been a robust and broad-based recovery is that investors are terrified of just this sort of government involvement. The administration’s proposal would force banks to write off massive losses with no recourse to obtain payment from borrowers who bought homes without ever realistically having the ability to pay. The plan is somewhat reminiscent of a scene from Atlas Shrugged, summarized below by SparkNotes:

The Fair Share Law dictates that Rearden must supply metal to all who ask, but there is no way to meet all the orders. Men with influence manage to acquire much more than their “fair share,” while legitimate orders go unfilled...Rearden chooses to ignore an order from the State Science Institute for something called Project X. A week later, a man from the Institute comes to see Rearden...Rearden tells the representative to bring in trucks and steal as much metal as the Institute needs, but he will not help Washington pretend that he is a willing seller...
Meanwhile, in another article published today, the Washington Post profiles Barney Frank, the man at the controls when Fannie and Freddie melted down, which in turn lead to the largest destruction of wealth in the history of the world. Just as with the proposed foreclosure freeze, Democrats gambled on unsustainable short-term economic manipulation to appease their constituents, but ultimately brought about the global financial crisis. The Post is slightly more charitable though:

For all his efforts, Frank readily acknowledges that there are more people needing decent housing than there were when he started in Congress. And with millions of others losing their homes to foreclosure, Frank asks to be judged by how much worse things would have been without him.
It’s hard to expect very much of the Washington Post these days, but this is beyond incredible. Not only has Frank failed entirely in his mission to give more people a roof over their heads, but we’re supposed to believe that had he and fellow Democrats not rigged the system to create trillions of dollars in bad loans that the economy would be even worse today?

Instead of trying to force economic growth through government control, Democrats need to accept that the only way to create long-term sustainable economic growth is by vigorously protecting personal property rights and by preserving the rule of law. By thumbing the scales in favor of special interests, the Democrats have tipped the markets into chaos and upheaval. The last thing we need is for President Obama and Barney Frank to create more regulations that will “prolong” (i.e., delay) a lasting economic recovery.

Friday, October 8, 2010

Make Like a Car and Leaf

We've been down this road before.

The New York Times published an ecstatic review of the new Nissan Leaf today which claims the new zero-emissions production car is the "first all-electric car from a major auto company."  Apparently the Times didn't bother to check their facts.  The cute little coupe pictured above is the 1947 Tama which was built by Prince Motor Company in Japan.  In 1966, Prince Motor Company merged with...Nissan Motors.  So not only is the Leaf not the first all-electric car.  It's not even the first all-electric car made by Nissan.

Of course, the New York Times never lets the facts get in the way of a good story, but in this case, the facts are even more unbelievable:
“It just keeps getting better and better,” said Justin McNaughton, among the 20,000 people who have reserved a Leaf. “My wife thinks it’s funny because at the end of the day, we’re just buying a car.”

Since Mr. McNaughton, a lawyer in Nashville, paid his $99 deposit, he has been bombarded with government incentives — promises of a $7,500 federal tax credit, a $2,500 cash rebate from the state of Tennessee, and a $3,000 home-charging unit courtesy of the Energy Department.
That's right, the federal government and the state of Tennessee have promised Mr. McNaughton a combined $13,000 in government handouts to buy a car that only costs $32,000.  Best of all, the Times reports that the Nissan factory which will make new Leafs (Leaves?) hasn't even been built yet.  Thus, your taxpayer dollars are being given away to promote a car made in Japan.  When President Obama spoke of creating 5 million new "green" jobs making fluorescent lightbulbs and electric cars, who knew that his vision was to create those jobs overseas?

More importantly, how green is an electric car really?  According to the Department of Energy, fossil fuels accounted for more than 70% of electricity generation in 2008.  Coal alone accounts for roughly 50%.  Thus, Obama's pledge to create "green" electricity with windmill farms seems particularly quixotic when we consider that hydroelectric, wind, solar, and biomass (i.e., doo-doo) account for barely 8.5% of the total national output.  The Nissan Leaf might as well come with a bumper sticker already applied at the factory that says, "This Car Runs on COAL."

Aside from the outsourcing of American jobs and the negligible environmental benefits, the Leaf also has a major practical problem.  According to the Nissan website, the car only has a maximum range of 100 miles.  So if you want to drive the 99 miles from Baltimore to Philadelphia, you better hope there aren't any detours!  According to the manufacturer, a full charge takes 8 hours, so if you want to take a short road trip of a few hundred miles, you're going to need to make a lot of stops.

Bottom line, without massive investments in nuclear and renewable energy and major advances in battery technology, an electric car is neither environmentally sound or very practical.  Ironically, even Mr. Electricity himself, Thomas Edison, couldn't make an electric car that was commercially viable and despite more than 100 years of progress, the internal combustion engine still reigns supreme.

Sunday, September 12, 2010

Another Slice of Pie?

Slate has been running a series about the widening income gap in America. Refreshingly, after almost a century of government policies designed to decrease income inequality, liberals are admitting that these policies do not work. Still, Timothy Noah, the series’ author, cannot resist using the language of class warfare to decry the evils of American capitalism. White-collar office jobs are bad, but unionized blue-collar jobs are good. One quote is particularly telling:

The top was occupied by a group that Clinton's first labor secretary, Robert Reich, labeled "symbolic analyst." These were people who "simplify reality into abstract images that can be rearranged, juggled, or experimented with" using "mathematical algorithms, legal arguments, financial gimmicks, scientific principles, psychological insights," and other tools seldom acquired without a college or graduate degree. At the bottom were providers of "in-person services" like waitressing, home health care, and security. The middle, once occupied by factory workers, stenographers, and other moderately skilled laborers, was disappearing fast.
What about plumbers, electricians, auto mechanics, steamfitters, carpenters, train conductors, and all of the other blue-collar trades? These are respectable jobs with good pay and strong growth potential. As long as there are people, these moderately skilled jobs will always be in demand. These jobs are manually intensive so they cannot be automated, and they cannot be outsourced because they depend on a local workforce. The theory advocated by Mr. Noah seems to ignore this segment of the economy.

For insight into how Noah manipulates the data to feed his storyline of the downtrodden proletariat, notice that his analysis relies entirely on the share of aggregate income statistics from the Census. According to these figures, the share of aggregate income for all but the top 20% has decreased. However, at the same time, the economy has also grown. It's not as if millionaires are fighting with the homeless for a slice of a never-changing pie.

If we look at the actual household income figures, we see that all quintiles, even the lowest, saw an increase in income in inflation-adjusted terms. The reason the top quintile has grown more than the others is because the rich are the ones who generate growth in the economy. You don't see very many bums opening factories, shopping malls, or office parks. Contrary to Mr. Noah's polemic about the inherent evils of capitalism, if you take away money from the rich in the pursuit of “equality,” you will only slow economic growth for all.

Friday, September 10, 2010

Colonization: An Alternative History

What if we lived in an alternate universe in which the United States colonized Britain? The map below shows real place names in England and Wales, but labeled as if they were named after their American counterparts, instead of vice-versa.

If you have any other suggestions, add them in the comments!

Friday, August 27, 2010

The Rise of Hoover-Carterism

Remember when President Obama was popular? Last year, when the media was spreading stimulus propaganda, the meme was "worst downturn since the great depression." As an incredible testament to the power of groupthink, that exact phrase returns more than 700,000 results on google.

Of course, when Obama enjoyed high approval numbers, the "worst downturn" trope was a good thing! By trumping up the scale of the disaster, liberal media types thought they were giving support to the argument at the time that Obama, in his exalted greatness, was going to rescue us all like F.D.R. supposedly did back in the '30's.

But now Obama is not popular. Instead of being "somebody else's mess" that Obama was going to clean up, the "worst downturn" is becoming a real political liability for the current administration. Even more tellingly, comparisons of Obama to Herbert Hoover and Jimmy Carter are becoming more frequent.  As Niles Gardinier put it in the Telegraph the other day:
In contrast to the soaring rhetoric of his 2004 Convention speech in Boston which succeeded in impressing millions of television viewers at the time, America is no longer inspired by Barack Obama’s flat, monotonous and often dull presidential speeches and statements delivered via teleprompter. From his extraordinarily uninspiring Afghanistan speech at West Point to his flat State of the Union address, President Obama has failed to touch the heart of America. Even Jimmy Carter was more moving.
Like a motorcycle daredevil, Obama promised us he could jump the moon only to crash and burn. Unlike the fickle opinions of media elites, the immutable laws of gravity--and of economics--are not swayed by flashy self-promotion and arrogant bravado. As a symptom of this, the New York Times includes this hilarious quote in an article about the dismal condition of the economy:
Mr. Herzon said that he was not expecting a double-dip back into recession, however. “It’s difficult to point to a shock that would be bad enough to put the economy back into a recession,” he said. “I just think it means that this recovery is going to be slower and more painful than we originally expected.”
In the words of Tanto, "Who do you mean 'we,' kemo sabe?" How could anyone have honestly expected to go from the "worst downturn since the great depression" to the "summer of recovery" within a year or even two years? The media's unaccountable optimism that massive Keynesian spending, increased regulation, higher taxes, and crippling uncertainty in the marketplace would somehow produce different results this time around is only matched by Obama's own audacity and self-regard. As Adam Smith wrote:
The uniform, constant, and uninterrupted effort of every man to better his condition, the principle from which public and national, as well as private opulence is originally derived, is frequently powerful enough to maintain the natural progress of things towards improvement, in spite both of the extravagance of government, and of the greatest errors of administration. Like the unknown principle of animal life, it frequently restores health and vigour to the constitution, in spite not only of the disease, but of the absurd prescriptions of the doctor.
Ironically, Adam Smith's medical metaphor is especially apt when we consider that Obama's blind and irrational obsession with health care reform has done more harm to the economy than his inaction with regard to tax cuts. Like Adam Smith's quack doctor, Obama has given our economy a medical treatment far worse and more damaging than the disease it was meant to cure. We can only hope that Dr. Obama's euthusiasm for snake oil and liver pills does not kill the patient entirely before it has a chance to recover on its own.

Tuesday, August 10, 2010

Guest Posts

The Prolix Patriot is featured today at the Washington Examiner and at the American Principles Project.  Check them out and show your support!

Tuesday, August 3, 2010

"Drain the Swamp"

A view of the House chamber during recess.

A month before Democrats took control of Congress in 2006, then-Minority Leader Nancy Pelosi famously declared that it was time to "drain the swamp." The Democrats' November victory that year was widely seen as a public repudiation of Republican abuses, especially Abramoff's web of corruption.

As a result of widespread scandals, four Republicans--Tom DeLay, Duke Cunningham, Bob Ney, and Mark Foley--were forced out of office and two spent time in jail. Meanwhile, Harry Reid and Patrick Kennedy are still in office despite being caught in their own scandals in 2006.

Today, Democrats Charlie Rangel and Maxine Waters are in big trouble over ethics violations, John Kerry is in the news for evading Massachusetts sales and property taxes, and Al Gore is seeking a divorce amid accusations of sexual misconduct. Plus ├ža change! At least in 2006, none of the public figures embroiled in scandal were former Presidential candidates.

Nevertheless, today's New York Times explains this all away as nothing more than "a heightened sensitivity in Washington to indiscretions by members of Congress." The Times goes on to explain Rangel’s particular "indiscretions:"

...there was an unusually close overlap, the committee contended, between appeals for donations and his intervention on legislative matters, citing in particular a meeting Mr. Rangel held in 2007 at a New York hotel with an executive from an oil drilling company at which he made a bid for a donation and also discussed a tax break the company was seeking.

The executive, Eugene Isenberg, and his company ended up making a $1 million contribution to the educational center, and Mr. Rangel helped the company secure a tax break worth an estimated $500 million.
In addition to soliciting contributions for an educational institution bearing his name, Rangel also failed to report hundreds of thousands of dollars of income in Congressional disclosure forms and did not pay any taxes on rental income from his Dominican villa until 2008, after his misconduct had already been made public. Rangel's former Republican colleagues went to jail for similar "indiscretions."

In light of these scandals, Speaker Pelosi seems to have failed on her promise to create the "most ethical Congress in history." It's enough to make one wonder whether Democrats and the liberal press used ethics as a prop for temporary political advantage back in 2006. But lest we jump to any conclusions, Pelosi explained last week that she only meant to drain the Republican side of the swamp. We'll see if voters buy it in November.

Tuesday, July 20, 2010

Moratorium on Brains

President Obama waving goodbye to American jobs

The Washington Post reports today that Obama’s deep-water drilling moratorium is creating plenty of new jobs--in Egypt, and elsewhere abroad:

This month, Diamond Offshore Drilling announced that it is sending one of its deep-water drilling rigs from the Gulf of Mexico to Egypt. The rig, which can work in water up to 10,000 feet deep, has a new contract running at least through June 2011. On Monday, Diamond said another Gulf of Mexico rig called the Ocean Confidence would depart for Congo.

Diamond said it might move more of its three remaining Gulf of Mexico rigs to foreign countries. While apologizing for the loss of jobs in the United States, Diamond chief executive Larry Dickerson said, "We are actively seeking international opportunities to keep our rigs fully employed."
That should help jump-start the ailing economy!

Tuesday, June 29, 2010

The Irish Grasshopper

Today's New York Times reports on a new kind of "troubles" in Ireland. After more than a decade of capitalizing on cheap labor and goods in the expensive Euro-zone, Ireland has fallen harder than most in the global downturn. The same forces that propelled Ireland's economy forward before the crash have now driven unemployment above 13%. Trapped by the Euro, Ireland cannot now devalue their currency to boost economic growth.

Despite this, the Times portrays Ireland's economic troubles as the tragic consequence of so-called austerity measures that were enacted in 2008 to prevent Ireland's government from defaulting. Sticking with the liberal playbook, the Times trumpets Keynesian stimuli enacted by other countries while lamenting that Ireland couldn't afford to save jobs with a stimulus of their own. This is preposterous: raising taxes while Ireland's economy was going down the toilet is the source of their trouble, not a lack of stimulus.

To wit, we have seen that the Democrats' massive $800 billion Keynesian "stimulus" package has done nothing to slow the loss of jobs here in America. After passage of the bill in February of 2009, the US unemployment rate continued to rise, spiking at 10.6% in January of this year. At 9.3%, it is still higher than it was then. Worse still, jobs "created or saved" by the stimulus—if not outright fabrications—are at best only temporary. Unless the private sector starts creating new jobs—which it has not—unemployment will spike again.

The real problem with Ireland's austerity is that, like all of Europe, they waited until after the crisis to address outrageous deficits and runaway spending. Like the grasshopper of fable, Ireland and the rest of Europe danced in the summertime, blithely spending money they didn't have to fund an ever-increasing entitlement state. Now, Europe's welfare bomb has exploded, and it can't be put together again. America still has hope of avoiding the same fate, but we must learn to save when times are good.

The Obama Administration has created vast new spending programs that will not take full effect for several years, and while repealing ObamaCare is a good start, it will take much more to put America back in the black. Politicians hate cutting spending; more so when revenues are high, but when the economy eventually recovers, we must remember this moment. If we do not reduce spending when times are good, we too will end up like the grasshopper, dying in the cold.

Wednesday, June 16, 2010

"BP Will Pay"

The New York Times reports on President Obama's speech last night with the type of puffery we would expect from the mainstream media. Apparently, the American people--especially the people on the Gulf Coast most directly affected by the spill--are supposed to take solace that the President has appointed a commission.

Until now he has employed most of the tools of his office, imposing a deepwater drilling moratorium, traveling repeatedly to the region, firing an agency director and appointing a commission. He used a few more Tuesday night, summoning the cameras to the Oval Office, appointing a long-term recovery coordinator and demanding that the company responsible, BP, set up a multibillion-dollar escrow account to compensate the victims.
Meanwhile, oil continues to leak from the seafloor despite BP's efforts to bring the well under control. While Obama is busy appointing new oil spill czars, the Associated Press reports that government scientists have increased their estimates of the oil being leaked by a factor of 10, up to as much as 2.5 million gallons per day. Even if BP succeeds in shutting off the flow, there will still be 50-100 million gallons of oil loose out in the Gulf of Mexico, waiting to be washed ashore by the first hurricane that comes through, or worse, to be spread along the entire eastern seaboard by the Gulf Stream current.

In the White House transcript of Obama's speech, one line jumps out as an indicator of how the President is still underestimating the vastness of the spill. While outlining his plan for recovery, Obama took pains to assure the American people that, "BP will pay for the impact this spill has had on the region," but Obama's $20 billion escrow fund is nothing compared to the mind boggling scale of this disaster.

Even if BP is deemed by the new oil spill czar to be liable for unlimited damage claims, Obama's plan has one major problem: what happens when BP runs out of money? The Washington Post reports that as members of Congress scathe BP's leaders with a withering crossfire of recriminations, they are also selling all stocks related to BP. At the same time, BP's shares have declined by almost 50% since the explosion of the Deepwater Horizon on April 20.

Obama is talking tough and is even taking tough actions, but the real measure of his leadership skills is whether his actions actually bring the spill under control and repair the damage. In both cases, he continues to push all responsibility to BP. This may be a good political tactic, but it also comes with a big risk. If BP ultimately fails, the responsibility he now evades will come back to him--with interest.

Thursday, June 10, 2010

The Party Is Over

The New York Times reports today on the passage by plebiscite of Proposition 14 in California, which outlaws party primary elections for all offices except the Presidency and party leadership positions. As is often the case with public referenda, an initiative which was put directly to the people will in the end take power away from the same people who supported it.

Supporters for the initiative claimed that the "top two" primary system would promote more moderate candidates, but this flies in the face of all logic. Quite to the contrary, California’s new system will promote more extreme candidates in some areas, while at the same time diminishing voters’ choices and influence in the rest of the state.

In districts which lean heavily one way or the other, the dominant party can run multiple candidates with the hopes of blocking the other party from the general election. But this can backfire as we saw in the electoral oddity of Republican Charles Djou’s special election victory in Hawaii last month with only 39% of the vote. Under Hawaii’s normal election rules this fall, he won’t stand a chance against a unified Democratic party backing a single opponent in a strongly liberal district.

Conversely, in districts which are evenly balanced, the "top two" system will encourage each party to choose one candidate to support before the voice of the people can be heard. As we saw in the public and acrimonious internal struggle of the NY-23 special election, Republican leaders chose Dede Scozzafava, whom they perceived as the strongest candidate despite voters’ opposition. This led to disaster and embarrassment for conservatives when Democrat Bill Owens won with only 49% of the vote.

California has always been weird, but it now joins Washington and Louisiana as the only three states that allow voters to pick candidates from multiple parties during a primary. Although the Supreme Court heard a challenge to the system in 2008, it ruled that the Washington’s version was too new to draw any conclusions about its fairness.

Examples like the ones above show how the "top two" system will result in anomalous results which run contrary to the will of the people--results which are bound to be repeated in the coming years as Washington and California continue with their experiments in hyperpluralism. Although it is entertaining to see the underdog do well in sports, this is a dangerous trend for our system of representative government.

Tuesday, June 8, 2010

Sound as a Pound

The BBC reported today that the British pound took a massive hit as a major ratings agency issued a warning about the scale of the United Kingdom’s debt crisis. Fitch’s warning echoes Britain’s new Prime Minister, David Cameron, by drawing attention to one of the highest debt ratios in the world. At the same time, the loss of confidence in the pound is a warning that no country is safe from the emerging worldwide debt crisis, not even the United States.

Of course, not all debts are bad. The United States is forced maintain a large amount of government debt as a consequence of our position as the world’s dominant reserve currency and the same is true for Britain, although to less of a degree. In order to hold dollars in reserve, a large portion of our debt will be continuously renewed by the same countries that are holding it now. Far more important than the amount of a nation’s debt is whether or not a nation is able to meet its obligations.

In this regard, a much more important measure than the size of the debt is the ratio of interest payments on the debt to GDP. For 2009, the interest on the U.S. debt totaled more than $383 billion, or about 2.7% of GDP, thanks to extremely low interest rates. Meanwhile, the Guardian reports that the interest on the debt for the United Kingdom is currently about £42 billion, which is about the same in terms of GDP.

That 2.7% may not sound like a lot, but when interest rates start to increase, the ballooning debts here and in the United Kingdom will take an ever larger proportion out of tax revenue. With no end to trillion-dollar deficits in sight, our national debt is well on its way to doubling as a percentage of GDP within a few years compared to the 69% debt-to-GDP ratio of 2008.

It is worth considering that defense spending and government health care each account for about 5-6% of GDP right now, but as the baby-boomer generation ages, government health care expenditures are going to skyrocket. If the ratio of interest on the debt to GDP approaches 5%, the United States will face massive societal upheaval and economic collapse. Britain is making painful choices now in order to avoid this bleak forecast. We postpone the same difficult choices at our peril.

Thursday, June 3, 2010

The Real Enemy is Cynicism

President Obama famously said while still a candidate that, "...our rivals won't be one another, and I would assert it won't even be the other party.  It's going to be cynicism that we're fighting against."  Apparently he is waging an epic internal struggle against himself.  The Washington Post reports today that Obama has realized that the crude oil bubbling up in the Gulf of Mexico is destroying more than federally protected wetlands.  In response, he is now going to press for climate change legislation in a cynical move to deflect public anger away from himself.
President Obama tried Wednesday to channel public outrage about the Gulf of Mexico oil spill into support for a climate-change bill, seeking to redefine an issue that threatens to tarnish his presidency.

...Allies of the president have argued for weeks that the administration should stop talking about BP, the oil company responsible for the spill, and instead tap into the public attention to the catastrophe in hopes of giving it at least some redemptive value in the long term.
Obama fears that this crisis could destroy what little credibility he has left with an angry American public.  President Obama made a big point during his press conference to tell the nation that he's "in charge," but after spending so much time trying to convince the American people that he can do anything, Obama now must grapple with the limits of the government's power.  Congress can pass as many laws as they would like and the Justice Department can sue everything in sight, but the oil keeps bubbling up.

When a disaster strikes, people often look to the government for help.  Floods and earthquakes are acts of God and only a few fringe crackpots would think of blaming the government in their aftermath.  This disaster is different.  Although Obama claims that BP bears full responsibility, it is clear that government regulations meant to avert this type of spill were not being enforced.  Few people will be fooled by a cynical ploy to divert attention away from the spill and the government failures which contributed to it.  Obama can talk himself blue in the face about punishing BP, but what about reforming government?

Presumably, Democrats in the House of Representatives did not anticipate a massive oil spill when they passed their version of the climate change legislation almost a year ago.  Jamming the same legislation through the Senate would be a naked power grab, and would do nothing to reduce the dangers of another spill.  Furthermore, as long as the sludgy crude oil is washing ashore, it is ludicrous for Obama to ask people to entrust the government with even more power when his administration is so obviously unable to wield the power it already has.

[Editor's Note: if you would like to help the cleanup efforts in the Gulf, please support one of the charities listed in an earlier post here on the Prolix Patriot.]

Tuesday, June 1, 2010

Come Sail Away

The loss of life in the Gaza blockade incident is tragic.  However, the Times of London has published first-hand accounts which reveal that the organizers of the so-called "Freedom Flotilla" were prepared for violence.  The flotilla entered the blockaded area despite repeated warnings and refused to turn away when confronted by the Israeli navy.  Downplaying the dangers, the organizers of this mission used willing civilians as human shields for a cynical political stunt.

One woman was quoted as saying, "We were aware of the possible danger; in joining the trip, but there are thousands of babies in Gaza.  If we had reached Gaza we would have played with them and taken them food."  Feeding babies is a fine thing, but this same woman also brought her own baby with her to a war zone in an attempt to run a blockade.  One has to question the motives of a mother who would knowingly place her own child in such extreme danger.

The Times also reports that one of the men aboard the flotilla, "told his wife that the journey could be potentially fatal and asked for her blessing."  The people aboard these vessels knew they were going into danger.  They were not going to Gaza in peace, but openly vowing to provoke confrontation with the Israeli Defense Forces.  Whether by running the blockade itself, or otherwise stirring up trouble, the so-called "activists" were not headed to Gaza for a pleasure cruise.

Media accounts which portray the Israeli navy as acting unlawfully are nothing more than political posturing.  Throughout history, navies have always enforced blockades against unlawful civilians with deadly force.  The archives of the New York Times include a contemporary first-hand account from the Civil War of a British blockade runner.  In those days, the U.S. Navy was not afraid of using force--even against a neutral British ship in foreign waters:
The [U.S.S.] Tuscarora fired a plank gun as soon as she left her anchorage to arouse the watch, I suppose, partly, and to call us to stop and as a warning of what was coming.  We kept on as hard as we could but the wretched funnel showed the cruiser our course by a great flame.  Bang, bang, ping, went the shot and shell from the Tuscarora as she overhauled us hand over fist.  She is uncommonly fast, and beat our craft all to nothing.  We thought the game was all up.  One shot passed right under our stern, and the last, a shell from his 11-inch Dahlgren, went in a straight line over us, and luckily fell in the water without bursting, just ahead.
In the account above, the British ship ended up escaping from its American pursuer in a storm, but not every blockade runner was always so lucky.  Although the death of some of the Gaza blockade runners is regrettable to modern sensibilities, those who died were not under any illusion about the risk of their mission.  Worse still, by seeking confrontation, this "humanitarian" mission will only prolong the plight of the Palestinians whom they claim to help.

Friday, May 28, 2010

Friends in High Places

The New York Times reports today on a strange story about the Pennsylvania Senate race.  Political horse-trading is a fact of life inside the Beltway, but Republicans have seized on efforts by the Obama Administration to convince Congressman and retired Admiral Joe Sestak to drop out of the Democratic primary and to clear the way for Arlen Specter as a possible scandal.  According to the White House, there was no wrongdoing:

The office of Robert F. Bauer, the White House counsel, has concluded that Mr. Emanuel’s proposal did not violate laws prohibiting government employees from promising employment as a reward for political activity because the position being offered was unpaid. The office also found other examples of presidents offering positions to political allies to achieve political aims.
In a tough election, a candidate will often make special deals with his or her primary opponents in order to consolidate support for their party earlier in the election cycle, especially at the national level.  If then-candidate Obama had not offered Hillary Clinton a high-level post in his administration in return for her support, the 2008 Democratic National Convention would have been a disaster.  Although Obama had a slight advantage in the delegate counts, Hillary could have easily caused a split in the party.

Now that Obama is President, we have seen other examples of special deals that are probably not illegal, but are also pretty sleazy.  The attempt to eliminate the ability of Republicans to filibuster in the Senate by appointing Senator Judd Gregg as a cabinet secretary was particularly egregious.  However, the Hatch Act specifically prohibits the use of influence to influence an election.  Whereas Gregg was already a sitting Senator who was asked to resign, Sestak had not yet been elected.

By now it is an old joke that Obama has brought the "Chicago Way" of politics to Washington.  Despite the largest Democratic majority in Congress in a generation, the Obama Administration, lead by Chief of Staff Rahm Emanuel has taken an aggressive and risky approach to further consolidate political power.  Even if the allegations of scandal prove to be unfounded in this case, it is only a matter of time before the Chicago way of doing business catches up with this administration.

Thursday, May 27, 2010

Actions Speak Louder Than Words

In regard to the oil spewing from the bottom of the Gulf of Mexico, an exasperated President Obama is reported to have said, "Plug the damn hole."  Clearly, when public opinion demands it of him, Obama can be decisive.  Nevertheless, Obama's approach to Iran has been painstakingly slow and will do nothing to stop the Islamic Republic's nuclear program.  While Obama plays diplomatic games, Iran is running thousands of centrifuges day and night and could have enough enriched uranium for a bomb within one or two years.

The New York Times reports today that President Obama has released his new National Security Strategy.  Of course, the Times also cannot resist adding a little editorializing about the Bush administration:
That line is just one of many subtle slaps at President George W. Bush.  Much of the National Security Strategy, which is required by Congress, reads as an argument for a restoration of an older order of reliance on international institutions, updated to confront modern threats.  While Mr. Bush’s 2002 document explicitly said the United States would never allow the rise of a rival superpower, Mr. Obama argues that America faces no real military competitor, but that global power is increasingly diffuse.
This analysis provides a stark contrast with the reality of the two presidents' foreign policy--particularly regarding the issue of nuclear weapons proliferation.

Despite the liberal trope that the United States acted alone when we invaded Iraq, the truth is that Bush navigated the same UN Security Council process that now bedevils his successor and obtained a unanimous vote that Saddam's defiance must come to an end.  Furthermore, he built a coalition which involved more than 30 other nations at one time or another.  Most importantly, Saddam Hussein is now dead and the Iraqi people no longer live in fear of his tyrannical regime.

Meanwhile, on the issue of Iran, Obama has sought to convince our "friends" in the UN to support tough sanctions, but only after making painful concessions such as the removal of the so-called "missile shield" from Eastern Europe.  Now, Russia has finally agreed to support sanctions against Iran, but only after getting a last-minute loophole to allow weapons sales between the two countries to continue.  Brazil and Turkey are in an uproar and it remains to be seen what other sacrifices the United States will have to make before the sanctions can actually go into effect.

Even then, what happens when Iran defies international pressure and sanctions and continues enriching enough uranium for a bomb?  Iraq's pursuit of nuclear weapons turned out to be illusory, but in the case of Iran, we face a growing and imminent threat which is very real.  At some point, Obama will have to take decisive and possibly unilateral action.  Let us hope that he is up to the task.

Wednesday, May 26, 2010

The Liberal Paradox

Today's New York Times asks the question, why are American politics stuck in the mindset of the 1960's?  To answer this question, perhaps the old grey lady should recall the fable of the crab and its mother:
A CRAB said to her son, "Why do you walk so one-sided, my child?  It is far more becoming to go straight forward."  The young Crab replied: "Quite true, dear Mother; and if you will show me the straight way, I will promise to walk in it."  The Mother tried in vain, and submitted without remonstrance to the reproof of her child.
As with the crab, the liberal-leaning New York Times is trapped in the 1960's by its own nature.  Bai observes, "The choices of our moment are not nearly so neat or so satisfying as they were a generation ago, which makes them less useful as a basis for one’s political identity."  The language there is telling.  Only a liberal would describe the moral choices of the '60's as "neat" and "satisfying."  For the rest of us, the '60's were a dark time of assassinations, riots, and social upheaval that nearly tore the nation apart.

In his analysis, Bai cites two recent examples of this continuing trend.  In both cases, the scandal was created and then whipped up by liberals.  In the first, Blumenthal himself opened the door by "misstating" (i.e., lying about) his service.  Then the liberal-leaning Times obligingly announced the scandal, tearing open the wounds of the Vietnam era once again for the nation to reconsider for the umpteenth time.  Meanwhile, Rand's difficulties with the Civil Rights Act were prompted by an absurd hypothetical posed by a correspondent on MSNBC whose political views are well known.

Similarly, during the Bush Administration, liberals could not resist drawing comparisons between Iraq and Vietnam, even though the reality has turned out to be very different.  Hurricane Katrina raised the ghosts of the civil rights movement and the destruction of New Orleans was viewed by many as an example of deep-seated racism, even though the death toll was color-blind.  These perverse comparisons with the liberal myth of the 1960's as a glorious triumph were simply too much for liberals to resist, no matter how crass and misguided.

For liberals, it is much more politically expedient to stoke the last faint embers of those divisive times, possibly to win a few more votes in the next election by reminding aging baby boomers of their guilt and shame.  However, it is worth remembering that after the liberal triumph of Carter in the 1970's, the nation overwhelmingly elected Reagan by a landslide and moved strongly to the right.  If Bush was a repeat of Nixon, a repeat of the subsequent decades would not favor Democrats.

Tuesday, May 25, 2010

The President Obama Comedy Hour

The Associated Press reported today, apparently without any sense of irony, that President Obama, "sent legislation to Congress on Monday that would allow him to force lawmakers to vote on cutting earmarks and wasteful programs from spending bills."  Back in 2008, candidate Obama spoke of using a scalpel to eliminate waste.  Of course, that was before the $787 billion "stimulus" bill, which was nothing more than the mother of all earmarks.

The AP itself criticized the underwhelming results of the stimulus bill last year:
The AP reviewed a sample of federal contracts, not all 9,000 reported to date, and discovered errors in one in six jobs credited to the $787 billion stimulus program — or 5,000 of the 30,000 jobs claimed so far.

Even in its limited review, the AP found job counts that were more than 10 times as high as the actual number of paid positions; jobs credited to the stimulus program that were counted two and sometimes more than four times; and other jobs that were credited to stimulus spending when none was produced.
With the so-called stimulus bill, GM and Chrysler bailouts, and continuing subsidies for Fannie and Freddie, the Obama Administration created a 2009 federal budget deficit of more than $1.4 trillion, or almost 10% of GDP.  At the beginning of this year, the Congressional Budget Office predicted the 2010 deficit would decrease slightly to $1.3 trillion, but that was before the trillion-dollar health care bill and the European debt crisis, which threatens to reverse the modest economic gains of the past few months.

For Obama to demand tighter controls on spending after the presiding over the largest increases in federal spending since the Second World War is reminiscent of the old joke about locking the stable door after the horse has bolted.  Thus, it turns out that Al Franken isn't the first comedian to serve in the Senate.  If this trend continues, C-SPAN might start competing with Comedy Central for ratings.

Monday, May 24, 2010

Don't They Know It's Rude To Point?

The Associated Press ran a story yesterday analyzing the financial "reform" bill which recently passed in the Senate with the absurd headline, "New financial rules might not prevent next crisis."  Stop the presses!  Messrs. Wagner and Jacobs might really be on to something here!  As reported on these pages earlier, the final version of the bill does not include the tough measures proposed by Senators McCain, Shelby, and Gregg to force Fannie Mae and Freddie Mac out of government conservatorship.

Instead, the government will continue to own and run the two institutions at the very heart of the financial collapse.  Bad mortgages will continue to be issued or underwritten by Fannie and Freddie, backed by the unlimited credit of the federal government.  Big Wall Street banks will still find loopholes in the laws and regulations in order to make a profit, emboldened by new rules which only further strengthen the policy of "too big to fail."  Loose monetary policy and speculation will continue to drive up prices and lead to another asset bubble.

Democrats have used this crisis as nothing more than a cynical ploy to claim that they're "getting tough on Wall Street" and to shift public rage away from the health care fiasco leading up to the elections.  However, the longer-term implications of this self-serving blame game are troubling for the nation.  By claiming that they have fixed the problem, Democrats reinforce the dubious notion that the government can predict and control the future even though the events which led up to the crisis argue precisely the opposite.

In a profile of Sheila Bair, the head of the FDIC, Time magazine notes that she saw warning signs that mortgage markets were headed for trouble almost immediately after her appointment:
Bair had hardly been named to the FDIC post by George W. Bush in 2006 when aides alerted her to a dangerous disintegration of lending standards across the banking industry — loans with hidden fees, poor documentation and explosive adjustable rates. Even though the regulation of these standards was the primary responsibility of the Federal Reserve, Bair authorized her staff to purchase a large industry database to confirm their suspicions. "It was just amazing to us what we saw," she says.
Despite these and many other warnings in 2006 and 2007, the Democrat-controlled Congress failed to act.  It takes a stunning credulity to think that next time will somehow be any different.  The problem was not a lack of regulations or oversight, but a lack of will on the part of politicians to respond.  Instead of pointing fingers at the private sector, Democrats could have implemented real reform, but that would have required them to admit that government is the problem, not the solution.