Can You Hear Me Now?

Edwards:       Drop the weapon and put your hands on your head.

K:                    I warned him.

Edwards:       Drop the weapon!

K:                    You warned him.

Edwards:       Don’t make me kill you.

Jeebs:              You insensitive prick!  Don’t you know how much that stings!

—Will Smith as Edwards, Tommy Lee Jones as K, and Tony Shalhoub as Jack Jeebs in Men In Black

OK, everybody who’s surprised by the colossal failure of the rollout of FUBARCare raise your hand.

Mr. Obama, you can put yours down.

Amazingly, the Progressives are still trying with a straight face to defend this thing, and some are even having the brass stones to blame Republicans for the problems.  But by now it is impossible for any remotely rational person not to see what a pack of lies this has been:

But the FUBARCare debacle over the last week is hardly surprising; to the contrary, it was utterly predictable, because it is merely the most recent illustration of this Administration’s consistent display of incompetence and deceit.  Indeed, is there anything this Administration has touched that hasn’t turned out to be a gigantic steaming pile of cow flop covered with (f)lies?

Afghanistan

The primary goal of our military involvement in Afghanistan was to “get” Osama Bin Laden.  That was achieved—in Pakistan—on May 2, 2011, over two and a half years ago, yet Americans are still dying in Afghanistan.  At last count, over 700 Americans—more than during the entire Bush administration—have been killed there since Bin Laden’s death.  Why?  Perhaps if Obama attended a security briefing once in awhile he’d be aware that our armed forces are still engaged in that theater.

Benghazi

On September 11, 2012, four Americans, including Ambassador Chris Stevens, were killed in a series of military-style assaults on our consulate—sovereign U.S. soil—in Benghazi, Libya.  Although Stevens had repeatedly warned of the deteriorating situation and requested additional security, although escalating incidents over the preceding several months had led the British to close their facility, and although the 9/11 anniversary posed an obvious symbolic targeting date, the Administration refused to bolster security and left the diplomatic personnel in place.  Although the President knew about the attacks less than 90 minutes after they began, and although they took place over a period of some nine hours as the President and his staff watched in real time via surveillance drone, the President did nothing.  That weekend, Obama sent U.N. Ambassador Susan Rice all over the Sunday talk shows with a series of talking points blaming a silly internet video when they knew it was an al-Qaeda affiliated terrorist assault, while he ran around to multiple campaign fundraisers.  Obama later pledged to hunt down those responsible and bring them to justice, yet to date the only person jailed as a result has been the producer of the irrelevant internet film (who just recently got out of prison); no one in Libya has been arrested, and the Benghazi raid isn’t even among the crimes for which the Administration is offering a reward for information.

Economy and Budget

We’ve been told for several years now that we’re in a “recovery” from the Bush recession.  Obama has repeatedly said that he was focused like a laser on jobs, and that he “will not rest” until everyone has one.  Yet as of September, a full ten million people have left the workforce since Obama took office.  Workforce participation is now at a paltry 63%.  A recent Census Bureau report counts more people receiving means-tested government benefits (read: welfare) than with full-time jobs.  Meanwhile the national debt now exceeds $17 trillion, nearly double what it was when Obama took office (just under $10 trillion), Obama is continuing to spend at around a $4 trillion/year clip, and Harry Reid says “everybody” wants to pay more in taxes.

This is some rescue.

Fast & Furious

On December 14, 2010, U.S. Border Patrol agent Brian Terry was killed in a gun battle with Mexican drug runners.  Guns used in the fight were traced back to Operation Fast & Furious, a Justice Department action in which illegal guns were deliberately permitted to be sold and transported outside the U.S. in an effort to track them to Mexican cartels.  Despite multiple memos and emails to Attorney General Eric Holder mentioning the program—including some from before Terry’s murder—Holder has steadfastly denied (read: lied) knowing anything about it.  Since then, he and the President have spent the better part of the last three years doing everything possible to avoid providing Congress, the American people, or the Terry family any information about it.

Government “Investments”

Obama the investment banker, in his infinite wisdom, illegally diverted $80 billion in TARP bailout money effectively to nationalize GM and Chrysler.  On the GM side alone, taxpayers are still out nearly $20 billion, and the GM stock still held by the government would have to triple in value for John Q. Public just to break even.  To put that in perspective, the first time in our entire history that the total federal budget reached $20 billion was 1942, and here we’re talking about the loss on a single piece of a single program.  Meanwhile as I have reported previously, Obama’s Energy Department has lost billions making high-risk loans to unproven “green energy” firms—many, not coincidentally, owned by huge Obama donors—that have gone belly-up.  And the few jobs “created” through the bailout and loans have in large part been overseas.  Not a particularly good rate of return.

IRS & NSA

When the IRS hasn’t been gearing up to serve as the jack-booted enforcers of FUBARCare, it turns out they’ve been selectively targeting conservative political groups to delay or deny them tax-exempt status.  Originally passed off as the isolated action of a couple of rogue low-level employees in Cincinnati, it is becoming increasingly clear that this was actually a deliberate program to weaponize the IRS as a political tool for the Left, overseen at the highest levels.  Meanwhile, we’re learning that the NSA has been—without a warrant—effectively spying on millions of innocent private U.S. citizens.  Once again, however, the Administration absolutely refuses to discuss either issue with Congress or the American people.

World Image

Obama took office pledging to restore America’s image in the world.  Then in his first official act, he embarked on a global apology tour, basically denouncing everything America has ever been or done.  Since then, he has displayed a breathtaking lack of leadership in the Middle East, he’s been horrifyingly weak in dealing with Russia, and he’s alienated and offended our European and Western Hemisphere allies by repeatedly getting caught spying on them (compounded by the fact that he never sits down with those leaders one-on-one to foster those relationships).  The Saudis have recently severed diplomatic ties.  And Obama’s relationship with Israel is so deteriorated that one suspects the only circumstance in which he wouldn’t piss on Benjamin Netanyahu is if the Prime Minister were on fire.  If there is left any nation that would count us as a friend, or at least acknowledge any respect for us, I don’t know who that would be.

At this point the grim reality has to be inescapable.  Even the true believers on the Left can’t avoid recognizing—without engaging in an unconscionable self-fraud—that this President is an embarrassingly epic failure.  He has accomplished exactly nothing positive, and the level of arrogance, ignorance, incompetence, and paranoia that permeates this Administration is unlike anything we’ve ever seen.  At the end of the day, we’re left with nothing but angry lectures, empty platitudes, cheesy staged political stunts, fundraisers, and golf.

And lies.  Upon lies.  Upon lies.

This is what you get when you elect a community organizer with literally zero real-world experience, whose sole drivers are a blind adherence to radical ideology, and a limitless thirst to erect a monument to his own ego, real-world results and consequences be damned.

Some of us tried to tell you . . .

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Illustrating Government Inefficiency

 

“I don’t mind a parasite.  I object to a cut-rate one.”

            —Humphrey Bogart as Rick Blaine in Casablanca

 

My apologies for the extended absence.  I’ve been occupied with other things, and frankly the news just hasn’t been that interesting.

That said, a reader sent me a series of local news articles that, taken together, cast a neat light on the inherent inefficiency (or corruption) of government.  These articles happen to come out of Akron, Ohio, but they’re not unique and it is not my intent to single Akron out—you can find similar stories (I’ve seen some recently out of Newark and Philadelphia) just about anywhere.  It’s just that the collection makes for a convenient focus on a broader point.

In the first story, it seems that the City of Akron is giving its (largely unionized) employees raises despite a reduced overall budget and significantly decreased revenues.  The raises are to be funded mostly from “federal grant money.”  Meanwhile, as with many private sector employers, the looming specter of Obamacare is likely to produce layoffs and reductions in hours among the lowest-paid workers.  Case in point: Tim Wheeler, a sanitation worker currently working 40 hours a week—subject to regular  90 day furloughs—has been informed he will likely be cut back to 29 hours, specifically so he no longer qualifies as a full-time employee for whom the City would be obligated under Obamacare to provide with health care coverage.  

In the second story, we learn that the University of Akron is facing a nearly $27 million budget gap in 2014.  The shortfall is blamed largely on the loss of $14 million in federal “stimulus” funds.  This is on the heels of a retroactive 5% raise for faculty and top administrators approved by University Trustees last Fall.  Once again, those on the “in” will get theirs, even while the budget shows a deficit.

Notice that these two situations provide a sharp illustration of the inefficiency of government.  In both instances, public institutions facing fiscal headwinds—in the case of the University of Akron, an actual budget shortfall—are nevertheless handing out raises.  This, of course, is exactly the wrong behavior from an entity having trouble paying its bills; you don’t increase your fiscal obligations when you already don’t have enough money.  Unfortunately, however, it’s exactly what we’ve come to expect from bureaucrats whose sole real mission is not protecting the public interest but in preserving their own power base.

Then there’s the policy inefficiency that inevitably results when a perhaps well-intentioned, but nevertheless naïve and ill-informed government exceeds its charter in an attempt to solve every problem of every individual human being.  These efforts inevitably backfire, as those who assume the power/responsibility of crafting the supposed “solution” lack the expertise, foresight, and sometimes basic intelligence necessary to do the job properly (or to recognize that it can’t or shouldn’t be done at all).  In this case, the City of Akron provides us with yet another example of Obamacare directly imposing negative health care and employment effects on the very people it was supposed to help.  I’ll bet you a million dollars Mr. Wheeler voted for Obama and the other Democrats in large part because he thought Obamacare was going to help him; instead he finds his hours—and thus his income—cut by over 25%, and he’s without medical insurance, which is exactly the opposite of what he was promised.

Perhaps more interesting, though, is the common thread in the funding discussion.  The City of Akron is funding its pay hikes with money received through federal grants.  Meanwhile, the University of Akron’s budget shortfall is blamed on the loss of federal funding.  Both circumstances beg the same fundamental question:

Why is there any federal funding involved at all?

Taking the situations in reverse order, it should come as no surprise to the University of Akron that any stimulus money it received dried up.  By definition, that funding was intended to be a temporary boost, not a permanent addition to general revenues.  Yet one gets the impression that the University’s trustees failed to plan for the day when the stimulus funding went away and they would be left to make their way on their own revenue sources, as they had done before.  But like all government money, there’s a sort of ratchet mentality attached to it that assumes that, once granted, the funding represents a permanent floor, and that each subsequent raise only lifts that floor; future funding can increase, but it can never decrease.

More to the point, and germane to both contexts, there is no provision in the Constitution for federal funding of either a municipality or a state university.  Certainly, I understand that such funding has existed for decades, if not longer.  But there’s no constitutional basis for it.  You won’t find anything in Article I that authorizes Congress to appropriate money from the general public to then give to a city.  Nor will you find anything authorizing Congress to appropriate money to fund education (you can argue that the military academies are different, as a legitimate extension of the federal government’s authority to field an army and navy).  Yet there it is.

But here’s what gets me, and it’s the core illustration of the inherent inefficiency (if not outright corruption) of government:

Where does the money the federal government gives to the City of Akron and the University of Akron come from?

Of course the answer to that question is it comes from the government’s general revenues, which means it comes from your taxes.  The rub is in how the outlays are allocated.  There are only two (three, really) alternatives.  One is that they’re allocated proportionately to contribution, such that the people of Akron (and, in the University’s case, of Ohio) are receiving back in the form of federal grants the same proportion they contributed to the general revenue.  And that would seem fair, but it begs the question why it needed to be laundered through the IRS at all.  If we’re just giving Akron and Ohio back their proportionate share of what they put in, wouldn’t it have been far more efficient never to have taken that money in the first place, thus leaving it in Akron and Ohio for the City Council and State Legislature to tax it directly as they locally deem appropriate?

The other—more likely—alternative is that the allocation isn’t proportionate; Akron and Ohio receive back from the federal government grants and funding in greater proportion than their respective contribution to the general revenues.  What this means as a matter of mathematical necessity is that the federal government is taking money from people in, say, Texas, to give to Akron and Ohio.  Even if we indulge in the very unlikely third alternative that Akron and Ohio are receiving funding in a lesser proportion than their share of contribution you still end up with the inequitable situation that they’ve had their money taken from them to give to people somewhere else, say, California.

What we’re left with is a two-edged shaft, if you will.  Either the government is taking money only then to skim off the top and give it back—which is simply unnecessary—or the government is taking money then to skim off the top and give it to someone else—which is looting.  All at the behest of an alleged majority of Americans, but increasingly those who vote for and benefit from the federal largesse aren’t the ones who have to pay for it. 

Inefficiency/corruption at its finest.

*******************************

EDITOR’S NOTE:  Just as an aside, is there anyone who gives a crap what Dennis Rodman does?  I mean, honestly; CNN has been giving The Worm’s budding bromance with Kim Jong Un almost equal coverage with the now-ended conclave in Vatican City.  I could have sworn he became irrelevant a decade ago.

Form Over Substance

“I was thinkin’, it really don’t matter if I lose this fight.  It really don’t matter if this guy opens my head, either.  ‘Cause all I wanna do is go the distance.  Nobody’s ever gone the distance with Creed, and if I can go that distance, you see, and that bell rings and I’m still standin’, I’m gonna know for the first time in my life, see, that I weren’t just another bum from the neighborhood.”

            —Sylvester Stallone as Rocky Balboa in Rocky

 

One of the better columnists out there is Charles Krauthammer, and it is a rare occasion indeed when I dare to disagree with him.

This is one of those times.

In his latest piece at Jewish World Review (h/t to my buddy Brutus), Krauthammer argues that there is no real fundamental split in the GOP; that the divide is simply a matter of tactics, rather than one of substantive philosophy on policy.  One camp, as Krauthammer views it, is committed to fighting the President and the Democrats on shrinking government and reducing spending, even though they only hold a majority in one half of one branch of government.  The other camp—that of the GOP establishment (Speaker Boehner, Minority Leader McConnell, et al.)—views resistance as futile, and therefore eschews the fight in favor of capitulation.

Krauthammer takes the view that the latter position is the only practical alternative.  Either way, he says, the GOP is going to lose on the budget/debt issue, and if they press the issue and stick to their guns they’ll not only lose but take the blame for being obstructionists.  So rather than lose and come away with egg on their face, he argues that the pragmatic approach is to accept that you can’t govern from this position, and offer a watered-down short term proposal that cannot be refused.

In other words, roll over and punt.

I hold Mr. Krauthammer in the highest regard, but respectfully I could not disagree more on this one.  First, the situation as he describes it in fact does reflect a fundamental substantive split.  Either you hold to a conservative fiscal philosophy or you don’t.  If you do, that’s not subject to compromise (or, in this case, all-out abandonment) simply because 51% of the country (or, more to the point, 51% of the votes that got counted) elected Obama.  There are those in Congress who actually do stand on conservative principles; the GOP establishment simply isn’t among them.

Second, Krauthammer’s position that even if you resist you’ll end up losing depends on his assumption that at the eleventh hour even the resistance will be forced to cave in.  Why?  If you’re going to resist, resist.  If they have the votes to pass something over your objection, let them do so; then they own it and you can rub their noses in it before the public when it fails, something you can’t do if you’ve capitulated, because they’ll cast the policy as bipartisan.  If they don’t have the votes, then you’ve won by stopping a bad policy—it’s not a loss if nothing happens.  It’s OK for Washington to stop.  A legislature doesn’t HAVE to legislate.

Third, I think Krauthammer may be being a little naïve here.  There is no middle ground compromise to be made, and no offer that cannot be refused.  Obama and the Democrats have made it clear that they are not going to negotiate on anything.  It is a fool’s errand to try it.  Look back to the original debt limit discussions in 2011: the entire thing consisted of Boehner making revised offers and Obama telling him to “spit higher.”  The result, of course, was the “compromise” that led to the current problems with the debt ceiling, budget sequestration, and the “fiscal cliff.”  That’s just how it’s going to be with this President if you try to meet him in the middle.

Finally, Krauthammer’s concern over the GOP “taking the blame” is misplaced.  What is the nature of this “blame”?  Public opinion.  But what is that, really?  Nationwide polling asking about a global opinion of the GOP as a party is almost totally irrelevant, particularly now that we’re out of the Presidential election cycle.  Nobody in Congress, particularly in the House, represents the nation, or Gallup; the President is the only one elected on that scale.  Each member of the House is elected by the 750,000 or so citizens of his or her district.  The job of a Representative is precisely that: to represent the interests of those people, and no one else.  It’s not their job to compromise or go along to get along.  And it’s certainly not their job to concede the interests of the people in their district simply because they are not part of a governing majority.

And this is the real rub with Krauthammer’s argument (and it particularly irritates me, because he knows better).  He’s effectively accepting the premise that this country is a true democracy, that we operate on an absolute majority rule basis, and that anything 50%-plus-one wants, they get without opposition, dissent, or even discussion.  That, of course, isn’t the way our government was designed to operate, and in fact Krauthammer’s premise defeats the very point of that mechanism.  Rather than a true democracy, we have a constitutional republic, where power is distributed among three co-equal branches of government, and the legislative power is divided yet further into a bicameral (two houses) body.  The system is specifically designed to promote debate and opposition, and to protect the minority from the whim of the majority.

But all of that is lost if you simply punt because it’s more pragmatic to recognize that you can’t pass anything of your own when you’re in the minority.  If you’re not going to oppose when you’re in the opposition, then why bother showing up in the first place?   We could just say that everything was decided on November 6, and now the Democrats get to do whatever they want for the next two years; they can legislate via teleconference among their own caucus, and we don’t even need to convene Congress.

I’ve been making this point from the very beginning of Chasing Jefferson.  You don’t fight only the fights you can win; you fight the fights that need fighting.  You stick to your guns, and if you go down, you go down swinging.  Rather than worrying about being blamed for obstructionism, the Republicans need to re-learn how to present their case to the public.  The current leadership can’t do it.

The Democrats are going to do what they’re going to do.  The GOP doesn’t need to accommodate them.  It needs to be able to explain that, explain who owns it, and explain the cause-and-effect when it goes bad.

Getting Serious About Cutting Spending

“Looks like there’s not a lot of options, kid.  Somebody’s gonna have to make the hard choice if we’re gonna get out of here alive.”

            —Morgan Freeman as Joe Matheson in RED

 

Just to recap, the national debt now stands at $16.4 TRILLION and climbing.  Last week’s “fiscal cliff” deal will add another $4 trillion, meaning it will top TWENTY TRILLION DOLLARS by the end of the Obama administration.  And the federal government currently borrows about 40 cents out of every dollar it spends, meaning it spends roughly 67% more than it takes in.

Now, against that backdrop we see that apparently the $632 billion in additional taxes built into last week’s debacle just isn’t enough for the Left; Nancy Pelosi and the Dems are now making noises about seeking an additional $1 trillion in new revenue (read: yet more taxes).

Where does this end?

Now I will agree that we are in serious need of some reform on the revenue side of the fiscal equation.  When the income tax was instituted in 1913, the Internal Revenue Code was just 400 pages long, roughly the length of a Harry Potter novel.  Today, that same body of law weighs in at a staggering 70,000 pages, and that’s exclusive of the thousands of court decisions and IRS opinion statements interpreting the law.  It’s no wonder that over half of Americans have to hire a tax professional in order to navigate the law and make some attempt at actually paying their taxes.  Moreover, one suspects the complexity of the tax code is a major reason the Treasury budget in 2011 was $532.3 billion.

That’s right kiddos: we spend over a half-trillion dollars a year on taking money from ourselves.

And this alone highlights the fact that the real issue isn’t revenue, it’s spending.  We’ve previously covered the fact that you can’t raise enough taxes to cover our spending.  There simply isn’t enough money to tax.  And yet the solution—in the interest of ensuring that “everyone pays their fair share,” and not making the middle class and the elderly bear the burden—is always more and more taxes (or more and more borrowing).

The District has for too long promised too much to too many, and far more than it actually had to give.  And what’s so perverse about this whole fiscal discussion is that the spending is not only the cause of the problem, it is now so entrenched as fait accompli that it actually becomes the justification for more taxes.  We see the same argument now coming from a number of corners on the debt ceiling debate.  They point out that the debt ceiling isn’t really about future borrowing, but about covering money already spent; you can’t argue about increasing the debt ceiling, they say, because that’s just paying off what’s already been done.  And so spins in a never-ending cycle of increasing spending, then throwing up the hands and saying we have to raise additional revenue (higher taxes/higher debt limit) because we already spent the money.

To be serious about addressing our fiscal problems, you must cut spending.  You must cut it drastically, and you must cut it now.  This is how you know nobody in the District (on either side of the aisle) is serious, because they simply never address this fundamental reality.  The best they do is speak in vague terms about “considering” spending cuts over time in the future, which really means at most reducing future spending increases.  That’s never going to get it done.

Any legitimate, adult consideration of the issue has to focus on the big ticket items:  Defense, HHS (Medicare), and Social Security.  These three alone cost $2.28 trillion in 2011, 59.7% of the total federal budget.  Add in another $532 billion for the IRS, and you account for three-quarters of all federal spending.  I submit there’s some room to maneuver here.

Let’s start with Defense.  I believe in peace through strength, and I understand that we have a legitimate interest in maintaining some global presence (or at least capability).  But come on.  Looking at the Defense Department listing linked in Wikipedia, and the DOD base roster, we have over 600 overseas military facilities in over 150 countries.  Pardon the unintentional pun, but that’s overkill.  I mean, do we really need a military presence (however small) in Nepal?  In Papua New Guinea?  In Chad?  Surely we can still project power and help our allies without stationing troops on every square inch of the planet—that’s why the Constitution gave us the U.S. Navy.

This massive global presence carries a massive price tag.  According to the Stockholm International Peace Research Institute (SIPRI), our current defense budget not only ranks first in the world, it comprises 41% of the entire planet’s military spending.  We spend five times as much as China, the next biggest military spender.  We spend ten times as much as Russia, the next biggest.  In fact, we spend about as much as the rest of the top 15 military spenders COMBINED, and many of the others on that list are our friends.  Let’s cut that budget by 40% by putting an end to the occupation of Afghanistan, Iraq, and Libya, closing the bases in Japan and Europe, and turn it back over to the rest of the world to defend themselves.  And just to put it in context, a 40% cut would still leave us spending $444 billion a year, which is really only ratcheting back to about 2005; we’d still be spending three times as much as China, and twice as much as China and Russia combined.

We can parallel that 40% cut in HHS, through serious rollbacks in Medicare and other unconstitutional “services.”  As with Defense, this cut isn’t as harsh as it sounds, as it reflects only a return to 2005 spending levels.  And if you reformed the Tax Code as I suggest, my guess is the Treasury budget could be cut in half (probably more); $266 billion a year is still more than insane.

Other big-ticket agencies that, frankly, it’s difficult to see what they do anyway, could take cuts of 50% to 67%, and for the most part would only be returning to the levels of the Bush 43 administration: Agriculture, Education, Energy, HUD (I would cut entirely), Labor, International Assistance, and the Office of Personnel Management.  One could make a strong argument for doing away with most of these agencies altogether.  I mean, what do they do, really?  The Department of Agriculture doesn’t grow anything (if anything it subsidizes farmers not to grow).  The Department of Education doesn’t educate anybody.  The Department of Energy mostly impedes the production of energy.  HUD doesn’t house anybody.  And so on.  So why do we pour hundreds of billions of dollars into these things year after year?

That leaves Social Security and the remaining “other” spending.  Social Security needs an overhaul, but it’s sticky because for all its problems you are talking about beneficiaries who spent a lifetime contributing into a system based on the promise that they’d get that money back.  We can’t renege on that.  Any reform would have to come over time, and it will require a younger generation accepting the difficult premise that they’re going to have to contribute in and NOT get anything back.  But surely the SSA can find 10% of waste it can trim.  As to the rest of the budget, I think a 20% haircut is a modest request.

These are big-ticket cuts on big-ticket items, and that’s the only way you’re going to get serious progress on correcting our financial situation.  All together, these proposed cuts would yield a budget of about $2.4 trillion—still a huge federal edifice, but a good start towards getting things back under control.

But more than a few in the District are going to have to own up to the problem like grownups, and I don’t see that happening any time soon.

Running Scared

 

Johnny take a walk with your sister the moon

Let her pale light in to fill up the room

You’ve been living underground, eating from a can

You’ve been running away from what you don’t understand.

            —U2, Mysterious Ways

 

Brand new year: same old, same old.

By now you’ve heard that Congress managed to avoid the “fiscal cliff,” a supposedly imminent disaster.  It did so via a 154-page bill that was initially passed in the Senate at 1:39 a.m. Tuesday morning, just three minutes after it was made available to the membership for review.  The House passed it later Tuesday morning, and the President signed it on Wednesday, both in violation of pledges to have any legislation available for a minimum public review period before taking any action.

This is how out of control the District has become: passing bills in the middle of the night that no one can possibly have read, purportedly to resolve some sort of emergency crisis.  Worse, the so-called emergency is one of Congress’ own making, in no small part to a courage void in the GOP leadership.

Flashback to the summer of 2011.  The Beast was butting up against what was then a debt ceiling of $14.3 trillion (ah, the good old days).  Congressional Republicans, pushed by Speaker of the House John Boehner (R-OH), caved in to the Obama administration and agreed to a stopgap measure that allowed for immediate and future increases in the debt limit in exchange for modest spending cuts identified now and larger spending cuts to be hashed out by an unconstitutional “supercommittee,” whose decision would be final and binding on the rest of Congress.  Of course, I and others pointed out at the time that the spending “cuts” were illusory; those that were identified were miniscule and spread over ten years (i.e., they were really small reductions in future spending increases), and the larger cuts to be determined by the supercommittee would never come to pass.

This 2011 deal amounted to a Wimpy-style payment plan in which they agreed to debt (read: spending) increases now in exchange for a promise to discuss spending cuts later.  The debt ceiling was increased to $14.7 trillion, then $15.2 trillion, then to its current level of $16.4 trillion.  Meanwhile, the supercommittee met a grand total of five times, and predictably failed to reach any agreement on additional future spending cuts.  All the while, Obama got to campaign for re-election without having to face his base over reductions in government giveaways.

This is what the Democrats call “bipartisan cooperation”:  they get what they want right now, and then renege on what they promised to give the Republicans in the future in exchange.

Fast-forward to December 2012.  The stick that was supposed to have driven the supercommittee was the 2011 plan’s provision for an automatic $1.2 trillion in essentially across-the-board spending cuts, effective January 2 of this year (so-called “budget sequestration”).  This was the self-policing mechanism Congress set up in an attempt to manage its lack of discipline and fortitude when it comes to spending issues.  Yet with the January 2, 2013 deadline known to all, Congress went 14 months—not coincidentally, through the entire 2012 election cycle—and did exactly nothing about it.  By December, the Beast was once again butting up against what was now a $16.4 trillion debt cap, facing expiration of the Bush-era tax cuts, and staring down the barrel of automatic budget cuts, all of which were issues Congress itself created.  This is the “fiscal cliff” no one in Congress had the temerity to face.

And this is what I can’t understand:  why were Congressional Republicans so afraid of this?  My problem with the debt deal back in 2011 was that even the automatic sequestration didn’t go nearly far enough.  You want to cut $1.2 trillion (really $120 billion each year for 10 years)?  Fine.  You want to have to shut down for awhile rather than continue to borrow insane amounts from the Chinese?  Great.

But instead, just as they did in 2011, when it came time to cross bayonets and do political battle, Speaker Boehner and the GOP leadership abandoned the field.  The deal they agreed to Tuesday, in an effort supposedly to deal with the District’s fiscal irresponsibility, raises taxes with essentially no corresponding spending cuts (current CBO estimates score it 10:1 taxes to cuts), and further delays any discussion of either the debt ceiling or the cuts called for by the automatic budget sequestration agreed to in 2011.  In other words, once again Republicans took the bait and agreed to actual tax (again, read: spending) increases now in exchange for a promise to discuss spending cuts later.  Moreover, as with anything the District does, this one is laden with totally unrelated pork; in this case, millions in special tax candy for Hollywood, NASCAR, Puerto Rican rum makers, and biofuel producers.  In all, this plan will actually add some $4 trillion to the debt, again according to CBO.

Crazy.

I’ve seen defenders of this tell us to relax, that this is really just a return to the Clinton-era tax rates, and don’t we recall how prosperous that time was?  That forgets, of course, that the 1990s were largely still benefitting from an economy that had been revived under Reagan.  But more importantly, this argument really misses the point, which should be getting our fiscal house in order.  It would be one thing if we were talking about matching 1994 taxes against a return to 1994 spending, but we’re not.  In constant 2005 dollars, the federal budget in 1994 was a little over $1.8 trillion, versus about $3.3 trillion for fiscal 2011; we’re spending roughly twice today what we were spending under Clinton.  The national debt in 1994 was under $5 trillion, less than one-third what it is today.

This week’s deal does nothing—nothing—to address this country’s budget problem.  Boehner says he’s now done trying to negotiate directly with Obama, but that’s too little, too late.  He’s once again given Obama what he wants in the way of raising taxes, while putting off the real issue in reliance on a false promise that real spending cuts will be discussed sometime in the future.  This is the same stunt Obama pulled on him in 2011, and frankly it’s the same stunt the Democrats pulled on Reagan in 1982, and again on Bush 41 (remember “read my lips”?) in 1990.

And the engorgement of the Beast ratchets ever upward.

Fixing this problem requires having the maturity and political courage to stand up to Obama and insist on actually making significant spending cuts; not hypothetical reductions in future spending increases, but real cuts that take effect now.  Including defense.  Sadly, few in the GOP seem inclined to grow a backbone any time soon.  Thursday morning they re-elected Boehner as Speaker, with even Majority Leader Eric Cantor (R-VA), (former?) Tea Party darling Michele Bachmann (R-MN), and former VP candidate Paul Ryan (R-WI) voting in favor.  Beltway politics over principles, as usual.  So I assume we’ll continue to see more of the same, which means little or no opposition from an opposition party that controls a sizeable majority in the House.

Retreat.

Professor Krugman, Debt DOES Matter

I used to like to go to work, but they shut it down
I got a right to go to work, but there’s no work here to be found
Yes, and they say we’re gonna have to pay what’s owed
We’re gonna have to reap from some seed that’s been sowed
—Dire Straits, Telegraph Road
In his latest installment of I Never Met A Dollar I Couldn’t Borrow And Spend, Paul Krugman again argues for more government debt to finance a never-ending orgy of government spending.  For the good Professor, government debt is different than other debt because, in his world, governments don’t really have to pay it back.
That’ll come as news to the Chinese.
First, as I’ve tried repeatedly to point out in this space, the only money government can spend—whether directly, or in paying back money it borrowed from elsewhere—is money it takes from its citizens.  There can’t be any “stimulating” effect, because the money the government purports to inject into the economy is money the government took out of the economy in the first place, a fundamental point even Krugman concedes, albeit while continuing to deny the obvious policy implication. 
And one really need only look at federal spending over the last five years to see that it doesn’t work.  We have gone from about $2.7 trillion for 2006 (19% of GDP), to over $3.5 trillion for 2010 (24% of GDP) and $3.8 trillion for 2011, yet we face the same question Ronald Reagan immortally posed back in 1980:
Are you better off than you were four years ago?
The fact is we have increased federal spending by a trillion dollars—36%—over the last five years, and the economy remains at best stagnant; virtually zero growth, and unemployment stuck for three years running essentially at (or above) 9%.  Of course, the Krugmans and Obamas of the world never say exactly how much spending is enough, conveniently allowing them when it predictably fails to fall back on the saw that we just haven’t spent enough yet.
Leaving aside the debate over the long-dead John Maynard Keynes, Krugman’s main thesis is that government debt isn’t a problem because governments don’t have to pay that debt back.  First, he says, the federal debt is one we largely owe to ourselves, which is itself a dishonest semantic game, and in any event irrelevant.  The federal debt isn’t one that the United States as a political entity owes to itself and thus it simply cancels itself out, as Krugman implies; it’s a debt the United States owes to, among others, specific individual Americans.  In other words, it’s not a debt we all owe to all of us, but a debt we all owe to some of us.  But whether the creditor is an American citizen or the Chinese government, there’s a larger question of who we want to be as a people:  Do we really want to borrow money with the specific intention of never paying it back (what in some places is called “stealing”)?  Is that how we want to conduct ourselves? 
Somehow I thought we were better than that, and I think men like Jefferson and Franklin did, too.
But it doesn’t matter to Krugman, because at 100%+ of GDP, the federal debt is actually less than the debt incurred to finance World War II, and what a great thing that was.  What Krugman doesn’t tell you is that the immediate post-war period and right now are the only times in our history that the federal debt has ever exceeded 100% of GDP.  Other than those two peaks, federal debt since WWII has hovered around 50% of GDP—roughly half the current level—and for the 140 years prior to the Great Depression it fluctuated between 0% and about 40%.  The fact is that debt levels of the current magnitude are new and essentially unique in our experience.  The E.U. and Japan have already shown us the ultimate consequences of this kind of debt/spending, and it isn’t pretty.  When Krugman has to hold up Great Britain as his poster child for the economic benefits of excessive government debt, he basically makes the point for me.  
But the real reason Krugman says governments don’t have to pay back debt is that, as he tells it, all they really have to do is keep growing the tax base.  In other words, as long as there are more people to pay taxes tomorrow than there were yesterday, government revenues grow, yesterday’s debt gets serviced (i.e., the interest gets paid), and it’s all OK. 
Alex, who is Charles Ponzi
The problem is that Krugman’s underlying premise that the tax base will in fact forever continue to grow is deeply flawed.  The Social Security Administration has concluded that very soon there will be too few people contributing into the system to continue to support it at current taxation and benefit payout levels.  That alone suggests that the group of payors—the tax base—isn’t growing fast enough.  But let’s consider the broader numbers.  A March 31, 2011 Congressional Research Service report tells us that the 2008 fertility rate of 2.08 per female is below replacement level (the birth rate statistically necessary for a population to sustain itself), and that other than 2006 and 2007, U.S. fertility rates have been below replacement level every year since 1971 (contrast that with the immediate post-WWII era, when the rate peaked at 3.77 in 1957, well above the replacement level).  What this means is that for the last 40 years, without net immigration, the population level—which ultimately must impact the size of the tax base—hasn’t even treaded water.  This is much of the problem in Europe, where declining populations have left fewer and fewer taxpayers to support the ever-increasing government debt/spending edifice.  Further, that same CRS report tells us that not only is the indigenous population getting smaller, it’s also getting older and poorer; not exactly the recipe for an ever-increasing tax base.
The tax base growth upon which Krugman depends must, therefore, come from immigration.  Well, is our net immigration comprised of hoardes of wealthy people who earn incomes likely to support significant additional tax liability? 
Um, not exactly. 
According to the CRS report, the leading regions for net immigration are North America (read: Mexico, Cuba, El Salvador, Dominican Republic) and Asia, which combine for nearly 70% of the total.  Hispanics (25.3%) and Asians (12.5%) had significantly higher poverty rates than did non-Hispanic whites (9.4%).  This isn’t a comment on immigration policy, but simply highlights the statistical reality that the immigration driving U.S. population growth is comprised largely of people who are less likely to add to the tax base than they are to draw from the system. 
Krugman ignores this reality.  What happens when there’s no longer enough base growth to service the debt?  Does Professor Krugman expect those who are owed the money—whether it’s the Chinese or ordinary Americans holding savings bonds—to just eat the loss?  Not bloody likely.
Krugman also misses—or deliberately ignores—the fundamental point that this is ultimately about liberty.  Every dollar the federal government spends is a dollar it must forcibly take from its citizens.  Every government program is yet another set of rules whereby the federal government tells you what you can and cannot do.  Every time we increase spending and increase government, we give up just a little more liberty, and at some point—if we’re not already past it—the Beast will be so large we can never get it back.
What then, Professor?

Our NSF Government

On the outside, underneath the wall
All the money couldn’t buy
You’re mistaken, no one’s standing there
For the record, no one tried
Oh, I try to
What if we give it away?
—R.E.M., What if We Give It Away?
I know I’ve hit this before, but because I have yet to hear anyone, particularly among the GOP Presidential candidates, articulate and explain the point very clearly, I’ll keep banging away. 
Thomas Jefferson famously warned us:
A government big enough to give you everything you want is big enough to take everything you have.
Well, let’s just put that into practice for a second.
As a starting point, let’s recognize that the U.S. federal government currently spends at about a $3.6 trillion dollar annual clip.  That’s $3,600,000,000,000 spent per year.  Now, with all the haggling over the supercommittee and resolving the growing debt and annual spending deficit, there’s been considerable debate over whether, and to what extent, we should reduce spending vs. increasing revenues.  But what no one seems to be able to say out loud in this discussion is that the problem cannot be that we don’t raise enough revenue, because as a matter of basic mathematics there simply isn’t enough revenue to be raised, even if you allow the government to take it all.
Raise taxes on the rich!  We are the 99%!
OK.  Let’s say we do that, in the interest of making sure the rich pay their fair share.  Consider the following.  As I’ve pointed out previously, if you took those making $1 million and above—that’s the top 0.17% of tax returns, for you “occupiers”—and taxed them at 100%, according to the IRS you’d generate about $735 billion.  And just so we don’t get into any unnecessary debates over deductions and credits and loopholes, that’s based on 2009 total income figures.  In other words, I’m not talking about adjusted gross income (as I have in prior posts), and I’m not talking about taxing income above $1 million; I’m talking about taking every dime they made.  No credits.  No deductions.  Do that, take it all, and you’d fund a grand total of 20% of total federal spending.
Ah, but, Rusty, you know perfectly well that you don’t need $1 million to be rich!  You’re not making enough of the wealthy pay their fair share.
Quite right.  Let’s expand our experiment to everyone making $500,000 and above.  That more than doubles our base to the top roughly 0.5% of total tax returns.  Tax that total income at 100%—again, take very last nickel.  You’d generate less than $1.1 trillion, or less than 30% of total federal spending.  You’ll have to do better than that if you want to correct the deficit problem by increasing revenues.  We could drop down to everyone making $200,000 or more—that’s about 2.8% of total returns, so we’re now dipping into the upper income levels of the 99%.  The federal government could take every penny made by everyone making $200,000 or more, and still that would generate less than $2 trillion, or a little better than half of what it spends.  Taxing the rich ain’t gonna get you there, because they don’t make enough money, even if you take it all.
But, but, how can that be if we’re just making them pay their fair share?
How indeed.
Taking everything from the wealthy doesn’t get it done.  So we have to start dipping into the sacred “middle class.”  Clearly we can’t tax the middle class at 100%.  That would be unfair and just silly, right?  But what if we took, say, half of what they earn?  We could raise taxes to 50% on all income for those making between $50,000 and $200,000, and keep the tax at 100% for the “wealthy” as discussed above.  That would net you about $3.9 trillion, enough to cover current federal spending—but just barely, and just for now.  But this, of course, is a moot exercise, because nobody’s going to let you tax a unionized teacher or government clerk making $50,000 a year at 50%.  And taxing at those rates immediately adds about a third of the population to those already below the poverty level—over 4 million filers would go directly to ZERO income net of taxes, and even millionaires need something to live on.  Even for someone like Paul Krugman this is obviously not a practical solution to anything.
But what if we just dictated a livable wage and taxed everything above that?  For example, let’s say we decide in our infinite wisdom that the current median income of about $50,000 is really all anyone needs for a decent standard of living, and the rest they earn above that should be committed to the common good.  So, every dollar earned above $50,000 is taxed at 100%.  You could do that, and you’d generate about $3.6 trillion, or just enough to cover current spending. 
Of course, for 50 large a year you may be able to hire a barista at your local Starbucks, but good luck getting Jay-Z to cut a record.
Or Michael Moore to make a movie. 
Or a doctor to treat you (even if you have federally-funded health insurance).
Signing an NBA point guard?  Fuggheddaboudit. 
Most of us in professions where incomes tend to exceed the $50,000 threshold by any significant margin would quit altogether, or would work part of the year until we earned our $49,999, then take vacation for the rest (for those needing a more detailed explanation, read Atlas Shrugged), thus eliminating most if not all of the wealthy tax base altogether.  In other words, there would cease to be any high wage earners to tax, because there would no longer be anything to be gained by working more to earn more.  Real revenue under this system would end up being substantially less than I describe here, and certainly wouldn’t come anywhere near covering existing spending levels. 
That’s crazy talk.  You don’t need to tax the middle class, and you’re leaving out corporations.  Tax the millionaires and the evil corporations!  People before profits!
OK.  The most current IRS data for corporations is 2008, so it’s a bit of an apples to oranges comparison.  But for 2008, corporations had net income of not quite $1.9 trillion.  You could tax that at 100%, and add that to taxing all the million-dollar earners at 100% as discussed above.  You could take every red cent made by the corporations and millionaires, and it would only generate about $2.7 trillion, still leaving you nearly a trillion dollars short of covering everything the federal government spends.  Never mind what would happen to business development in the U.S. if the corporate tax rate went to 100%.  No, adding corporations to the mix doesn’t get you where you need to be, either.
Slice it however you want.  You can talk about raising taxes to close the deficit until the cows come home.  The basic point remains, and it’s not complicated:  At any practical level there simply isn’t enough revenue in this country to cover federal spending at its current levels, even if you taxed it all.  Like Monopoly, there’s only so much money in the box, and the District is waaaaaayyyy over the limit.
Apparently a government can be big enough to give you everything you want.  But it can’t pay for it all, even if it takes everything you and everybody else has.

Our Spending Jones

“Every single time it gets harder.  Money, money, money, money, money!  We can’t keep doing this, Bob!  We appreciate what you did in the old days, but those days are over.
—Bud Luckey as the voice of Rick Dicker in The Incredibles
OK, so the unconstitutional “debt supercommittee” failed to come up with the required $1.2 trillion in deficit reduction by its self-imposed November 21 deadline.
Shocking.
The only thing shocking here is that anyone thinks that that failure matters much, other than giving Obama and the Democrats precisely the political ammo they wanted heading into the 2012 election cycle.  The truth is, as I previously posted here, even had the supercommittee managed to find some combination of cuts and revenue to trim the target amount, spread over 10 years it wasn’t going to make a material difference in light of a budget that is projected to amount to some $44 trillion over that time.  $44 trillion, $42.8 trillion:  I don’t see a real distinction there.
Let me point out what even Republicans in the District can’t bring themselves to acknowledge at any serious level:
We spend too damn much money.  Period.
You can talk all you want about “fair shares” and increasing revenues by taxing the rich.  The simple fact is that we have become totally—and perhaps hopelessly—addicted to borrowing and spending money WE.  DO.  NOT.  HAVE.  One need only look to Europe to see where this ultimately leads, as after 100 years of profligate borrowing/spending on a massive infrastructure of social programs and government freebies, the tab is now coming due.  Given that our “enlightened” friends across the pond are now even taking official positions like “water doesn’t hydrate,” I think we have to accept the fact that they are simply too far gone now to be saved.  And if we don’t get our fiscal house in order, we are not long for the same fate.
If you don’t believe me—and if you can stomach it—check out the national debt clock.  As I type this, the total national debt stands at north of $15 trillion (you can add to that another $3 trillion or so in state and local debt), and it is increasing at a pace of about $25,000 a second.  But let’s consider some details behind that gross figure.
The total U.S. National Debt stands at $133,606 per taxpayer, and $48,088 per citizen.  It is now more than 100% of GDP—that’s approaching Greece territory (120%), friends—meaning the federal government alone owes more than we as a nation produce.  Combined annual federal, state, and local spending is 46.55% of GDP, which means that nearly half of what we produce each year is consumed by government.  With total annual revenues at only 30.88% of GDP, you can see that at all levels, government is spending half again as much as it takes in.
We have to add to this spending the growing unfunded liability obligations associated with our massive entitlement edifice.  These are the future commitments to pay benefits under the Social Security, Medicare, and prescription drug (Medicare part D) programs over and above the projected revenue for those programs.  At present, those commitments total $116.5 TRILLION, or $1,035,246 per taxpayer.
The unavoidable truth is we have made promises to ourselves that we simply cannot afford to keep.  And the problem isn’t just government spending.  As individuals we are also living way beyond our means.  Consider that total personal debt—mortgages, credit cards, and personal loans—in the U.S. stands at $15.9 trillion.  That’s $51,168 per person, which becomes a serious problem when we realize that the median U.S. income per household is just under $50,000 a year.  Even if government didn’t take and spend a dime, on average we owe more than we make. 
When you combine government and personal spending, the total U.S. debt approaches $54.5 trillion, or a staggering $660,503 per family.  Sooner or later, all that debt will come due—I’ve preached it before, and it’s one of those things that’s easy to forget: borrowed money has to be paid back.
This is a situation that requires drastic changes in our lifestyle.  I can’t speak to personal spending habits other than we all need to reconsider whether we really need a flatscreen TV in every room and a new car every 3 years.  But at the government level it requires serious cuts at levels exponentially higher than those the supercommittee was charged with making.  Real reform is going to be painful, and it’s not politically expedient, but someone has to have the courage to hold our collective nose and make us take our medicine.  Let me offer a couple of suggestions.
1.         Phase out Social Security
While I’d like to say simply cancel it, you can’t tell someone already living on the system or someone who is close to retirement and who has planned all their life to be able to depend on social security: too bad for you.  It has to be phased out over time, and yes, that means that there are going to have to be some of us who pay into the system who will get little or none of that money back.  But given enough time, you can and should plan for that. I propose that we first begin ratcheting back the eligibility age; starting with those born in 1951 eligibility is raised to 66, then raise it every couple of years until beginning with those born in 1960 the eligibility age is 70.
Second, beginning with those born in 1961, we progressively reduce the benefits levels they will ultimately receive—say, 5 percentage points a year—such that those born in 1980 or later will receive 0 benefits, meaning by 2050 there will be no new recipients.  As a tradeoff for that, those born in 1980 or later would only contribute at 30% of the current rate.  For those born earlier, contribution percentages would reduce over time; the idea is that those who expect to draw more from the system would contribute more into the system.  Everyone is going to take something of a haircut, but it’s the most equitable way to eliminate the problem.
2.         Cut the government
I would also suggest DRAMATIC cuts to the government itself.  Consider the following:
  • Cut by 75% International programs (read: foreign aid) and the departments of Labor, Housing and Urban Development, Agriculture, Energy, Education, Health and Human Services, and EPA.  This results in savings of approximately $412 billion.
  • Cut by 33% the budgets for Defense, Medicare, and Medicaid.  This results in savings of approximately $534 billion.  For those of you concerned about Defense cuts, this would still leave a budget of just under $500 billion, which would still be about the same as the annual defense budgets for the rest of the world’s top ten military spenders—including China—combined.
  • Eliminate 100% of the waste identified by the CBO, and the stupid pork spending about which I have previously posted.  This results in an additional $130 billion in savings.
  • Reduce the remaining budget by 15% across the board.  This saves another $165 billion. 
These cuts reduce federal spending by approximately $1.25 trillion per year, not over 10.  The resulting remaining federal budget is about $2.15 trillion, which is nearly $150 billion less than current annual revenues.  Apply half that difference to paying down the debt, and the debt is eliminated in roughly 20 years.  Return the rest to the taxpayers.
Just a suggestion.
******************************
Happy Thanksgiving, everybody!

Right Back Where We Started

Cohaagen:    Richter, you know why I’m such a happy person?
Richter:         No, sir.
Cohaagen:    Because I have one of the greatest jobs in the solar system.  As long as the turbinium keeps flowing, I can do anything I want.  Anything.  In fact, the only thing I worry about is, one day, if the rebels win, it all might end.
—Ronny Cox as Vilos Cohaagen and Michael Ironside as Richter in Total Recall
 
Am I the only one alarmed by these things?
Foxnews.com reports that this week the President will begin announcing a series of measures to try to jump start the economy, beginning with the Affordable Loan Refinance Program.  Apparently, not enough people with bad credit or other high risk factors are able to refinance mortgages that are under water; that is, people who are at high risk of default can’t get loans on houses that aren’t worth as much as what’s owed on them.  So to boost sagging demand in the housing market, Obama is by executive fiat going to order banks to make low-interest (read: low return relative to risk) loans to people who fail the normal underwriting rules designed to mitigate against the risk of foreclosure, and to do so on assets that by definition won’t cover the amount of the loan in the event the borrower defaults.
Wasn’t it Einstein who said the definition of insanity is doing the same thing over and over again and expecting different results?
As I’ve discussed previously, it is exactly this sort of government program that is at the root of our current economic mess.  The mortgage crisis and banking industry meltdown stemmed directly from the government effectively forcing banks to make high risk loans with little security.  Of course, why should we be at all concerned about repeating this mistake—after all, this time it’s Obama, and we know all about the Obama administration’s sterling track record when it comes to dabbling in high-risk lending.
Apparently, after 1000 days in office, the situation is now so urgent that we absolutely cannot wait any longer for Congress to act, so Obama-the-Savior has to assume the burden of rescuing us himself.
But I want to leave aside the sheer stupidity of repeating the forced lending mistake and focus on the real danger here, which is the process by which this is coming about.  This of course isn’t the first time we’ve seen this (as I’ve covered here and here and here), and there have been several examples of this use of executive fiat in recent weeks.  Barely 10 days ago, HHS Secretary Kathleen Sebelius informed Congress that because of long well-known problems with its long-term financial viability, the Administration would not be implementing the “CLASS Act,” the long term care program baked into the Obamacare bill, effectively exercising an after-the-fact line-item veto by administrative action. 
I guess they really did need to pass it so they’d know what was in it.
Last week, the President—again citing Congress’ failure to act—announced that his Department of Education would waive State compliance with basic elements of the No Child Left Behind law, effectively repealing the statute by executive decree.
Let’s assume for a second that Obama’s right (and, frankly, I don’t disagree that the CLASS Act and the No Child provisions the administration is avoiding were bad ideas—the mortgage thing is a different story, but my point here has nothing to do with the substance or merits of any of these statutes).  Let’s assume that he’s omniscient, endlessly benevolent, and really does need to take these measures for our own good.  Let’s assume that it’s really that urgent and we can’t wait any longer for Congress to enact legislation.  Let’s forget for a moment the colossally incompetent mess this President and his cabinet staff of career academics made the last time they got into the high risk loan/investment business, and assume that this time he’s got it right.
From where does the President derive the authority to do any of this?
Article II, Section 2 of the Constitution lays out the powers of the President:
The President shall be Commander in Chief of the Army and Navy of the United States, and of the Militia of the several States, when called into the actual Service of the United States; he may require the Opinion in writing, of the principal Officer in each of the executive Departments, upon any subject relating to the Duties of their respective Offices, and he shall have the Power to Grant Reprieves and Pardons for Offenses against the United States, except in Cases of Impeachment.
 
            He shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two-thirds of the Senators present concur; and he shall nominate, and by and with the Advice and Consent of the Senate, shall appoint Ambassadors, other public Ministers and Consuls, Judges of the supreme Court, and all other Officers of the United States, whose Appointments are not herein otherwise provided for, and which shall be established by Law: but the Congress may by Law vest the Appointment of such inferior Officers, as they think proper, in the President alone, in the Courts of Law, or in the Heads of Departments.
 
            The President shall have Power to fill up all Vacancies that may happen during the Recess of the Senate, by granting Commissions which shall expire at the End of their next Session.
Oh, yes, and Section 3 goes on to provide that the President “shall take Care that the Laws be faithfully executed[.]”
There is no “Congress fails to act” provision in the Constitution allowing the President to take unilateral action if Congress gets bogged down.  There is no line-item or after-the-fact veto allowing the President to—whether officially or de facto through deliberate inaction—write laws out of existence, even if those laws are stupid, fiscally unsustainable, or otherwise useless piles of steaming dung.  That is so, regardless of how urgent the need is.
I’ve harped on this before; the unilateral assumption of Presidential authority to rewrite or simply ignore acts of Congress that have been duly passed and signed into law is by far the single most dangerous threat to what’s left of this Republic.  Once the President has the power to do that, Congress becomes meaningless.  Presumably that same power to ignore actions of the Legislative branch would also permit the President to ignore actions of the Judicial branch.  At that point, we cease to be a nation of laws at all.  The President would have absolute power, because he would no longer be bound by anything Congress or the courts do.  That’s how it works in places like North Korea and Cuba. 
“The history of the present King of Great Britain is a history of repeated injuries and usurpations, all having in direct object the establishment of an absolute Tyranny over these States.”
We’re about two steps away from square one.

The Politics of Wishful Thinking

Teacher, don’t ya fill me up with your rules,
‘Cause everybody knows that
Smoking ain’t allowed in school.
—Motley Crue/Brownsville Station, Smoking in the Boys’ Room

 
I’d probably be a much happier person if I just quit reading Paul Krugman.  I know I’d live longer.

In a column last week, Krugman accuses congressional Republicans, in particular House majority leader Eric Cantor, of abandoning all sense of fair play and decency in seeking to have federal aid for hurricane Irene victims be financed through offsetting cuts in other spending.  In so doing, Krugman charges—twice in five paragraphs—Cantor with “threatening to take Irene’s victims hostage” for political gain.  He goes on to complain that House conservatives are ignoring the legislative process in favor of achieving their policy goals by unilateral dictation:
Not long ago, a political party seeking to change U.S. policy would try to achieve that goal by building popular support for its ideas, then implementing those ideas through legislation.  That, after all, is how our political system was designed to work.
But today’s GOP has decided to bypass all that and go for a quicker route.  Never mind getting enough votes to pass legislation; it gets what it wants by threatening to hurt America if its demands aren’t met.
Um, Mr. Krugman, have you seen the federal bench?  Or the President?
Never mind that the debt/spending-for-offset-cut deal is one that was already made a month ago.  Never mind that Cantor and House conservatives are doing exactly what their constituents elected them as their representatives to do.  Never mind that what Cantor is doing is the legislative process, and if he can’t get the votes it doesn’t matter what threats he makes or who he attempts to hold hostage.  Anything that gets between Krugman and limitless federal spending is anathema.
Krugman goes on to argue that disaster relief is precisely the situation that is tailor-made for “temporary” deficit spending.  The U.S., he says, is having “no trouble borrowing to pay for current expenses”—query how borrowing actually pays for anything—and that longer term deficit issues can be corrected by “borrowing now and repaying gradually via a combination of lower spending and higher taxes.”  Of course, the problem is in Krugman’s world deficit spending isn’t temporary, and neither the longer term lower spending to repay current debt nor the reduction in ongoing borrowing ever comes. 
But Krugman’s argument highlights a larger point.  Conservatives believe that fair play and decency begin by recognizing we all are governed by the same rulebook, i.e., the Constitution.  It’s not a question of what the government should do, but what it’s permitted to do.  For the Left, the issue is reversed, and is really one of pursuing their subjective perception of decency, rules be damned.  While I sympathize with our friends in the Northeast, the fact is the Constitution only gave Congress and the federal government certain limited powers, and giving away billions in disaster relief isn’t among them.
We’ve been over this before—and yes, I’m aware of the Supreme Court’s history on this issue in the context of disaster aid—but by any fair and unpoliticized reading of the Constitution this isn’t a close call.  Article I, Section 8 lists the specific powers Congress has (plus the ability to enact such legislation as may be necessary and proper to exercise those powers):
·         To borrow money, coin money, and punish counterfeiters;
·         To regulate commerce with foreign nations and among the States;
·         To establish uniform rules on immigration and bankruptcy;
·         To establish a Post Office and post roads;
·         To provide for patents and trademarks;
·         To establish lower courts of law;
·         To define and punish piracy and felonies on the high seas;
·         To declare war;
·         To provide and regulate the armed forces, and to call forth and train militia; and
·         To legislate for the District of Columbia.
That’s it.  Under the Ninth and Tenth Amendments, anything not listed above is reserved to the States or to the People; in other words, if it ain’t spelled out, Congress doesn’t have the authority.  No matter how right it is, or how badly you want it.
The Framers were clear on what they meant by this.  Again, as James Madison wrote in Federalist Paper No. 45:
The powers delegated by the proposed Constitution to the federal government are few and defined.  Those which are to remain in the State governments are numerous and indefinite.  The former will be exercised principally on external objects, as war, peace, negotiation, and foreign commerce; with which last the power of taxation will, for the most part, be connected.  The powers reserved to the several States will extend to all the objects which, in the ordinary course of affairs, concern the lives, liberties, and properties of the people, and the internal order, improvement, and prosperity of the State.
Those “few and defined” powers delegated to the federal government were to be focused on external matters such as war and dealing with foreign governments.  It was left to the “numerous and indefinite” powers reserved to the States to deal with people’s lives, property, and prosperity.
As my Contracts professor used to say, “Wars happen.  Insurance is available.”
Don’t come to me with the “general welfare” clause in the preamble.  Both Madison and Thomas Jefferson—men in a much better position to know what the Constitution meant than anyone—rejected the idea that it trumps the Article I limitations.  Madison wrote in objecting to a federal aid package, “I cannot undertake to lay my finger on that article of the Constitution which granted a right to Congress of expending, on objects of benevolence, the money of their constituents.”  Jefferson wrote, “Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated.”
If the “general welfare” clause is not limited by the powers specifically enumerated in Article I, Section 8, then that enumeration and the reservations in the Ninth and Tenth Amendments become meaningless.  Congress may do anything for which it can assemble a majority to agree it is in the general national interest.  And therein is the danger in Krugman’s position.  Rather than being moored to the objective rules set forth by the Constitution, Congress’ only limitation is a majority’s subjective view of what seems like a good idea at the time. 
We can all agree that Irene has been a major calamity for those in its path, and helping them clean up and rebuild is a nice and even decent thing to do.  This allows Krugman to claim the moral high ground and accuse those who oppose federal aid spending of callousness and political thuggery.  But basing government on a subjective sense of right and wrong as opposed to the limitations of the rule of law leaves it unpredictable, and subject to the very tyranny of factions against which Madison, Jay, and Hamilton warned.  What if a majority in Congress concludes that it is in the interest of the country’s general welfare to, say, remove Jews from positions in the media, or from commerce?  

That’d be 1933 Germany for $100, Alex. 

Fair play and decency, with no grounding in the rule of law, are fickle friends indeed.