Stimulus by whatever name it is called should, nonetheless, be subjected to economic analysis and Art Laffer, that infamous supply-sider, has obliged in the current issue of National Review. Laffer calls it a “four point plan for failure.” His article is worth a summary here, with full attribution:

Payroll tax: This is broad-based but effects only the moderately paid workers; it stops at a bit over $100,000 of annual compensation. Broad-based, low-rate taxes are generally good since there is little incentive to avoid them, so a reduction in these taxes presents little incentive to work or not to work, to hire or not to hire. Laffer points out that a reduction in this tax will not effect the decision makers typically earning over the $100K limit and much of that in dividends and capital gains. Laffers point is that cutting the payroll tax, temporarily, will not effect hiring or seeking employment. In other words, it doesn’t effect any job creation.

Extending unemployment benefits to almost two years: Laffer uses a time tested analogy to the Department of Agriculture payments: pay farmers to grow and they grow; pay them not to grow and they don’t grow. Simple: people respond to economic incentives. Obama wants to pay people not to work for almost two years. Obviously, they will take the money. And, by the way, not look very hard for that next job. In short, this is a big negative to job creation.

More deficit stimulus spending: Here we get in to the so-called Keynesian multiplier: the recipients of the extra federal dollar will spend a portion of it thereby creating new jobs which induce more spending thus more new new jobs. This “marginal propensity to consume” gives us the “multiplier;” or $1 divided by $1 minus that marginal propensity to consume. So if the marginal propensity to consume is only 50 cents, the multiplier effect is $2 for ever $1 borrowed! Thus the Keynesians have magically created money!

Wow! What’s missing here? Well, to get that dollar of federal largess, the federal government must take that dollar from someone else. In this case it must take not only that dollar, but it must run that dollar through the federal bureaucracy, then it must pay interest on that dollar because it borrowed the dollar. In short, the economic effect is to rob Peter, waste part of the loot on bureaucracy and interest, and pay Paul the balance. The economic effect is not neutral but is NEGATIVE. It destroys jobs, the jobs that would otherwise be created by Peter via his spending or investment! Look no further for proof than Obama’s last stimulus expenditures.

To cap off the point Laffer offers the “Slutsky equation:” This aggregates the deficit financed stimulus, both debits and credits. “By taking resources from those who produce and giving resources to those who don’t produce, government reduces the incentives to work for both parties. Output, employment, and production will fall.”

Higher taxes on “the rich:” It’s hard to tell if Obama wants to raise revenue or merely redistribute income with this effort. If raising income is the goal, increasing tax rates at the highest brackets will have the opposite effect; lowering tax rates on that bracket however will raise revenue. The simple reason is that those earners in the highest tax brackets have the ability to minimise marginal taxes by converting income to capital gains, deferring income, and shifting income; and they have access to tax accountants, investment advisors and attorneys to help in this process. If, on the other hand, he merely wants to redistribute income or wealth, he succeeds in his election tactic of creating class warfare but he fails in his so-called job creation purpose. And this for the same reason suggested by the “Slutsky equation.” Taking money from the producers and giving it to the non-producers has a negative effect on both; it’s a double disincentive!

In sum, our President is a campaigner who has a negative record on which to run. He has created a straw man with his rants against the “Republican Congress” failing to mention the Democrat controlled Senate which is fully one-half of that Congress. And he has come up with a sure-to-fail stimulus plan which he will use to deflect voter attention away from his abysmal record.

USA Today reports that President Obama has predicted “dire” consequences if there is a shutdown. However, he has instructed agencies not to reveal their shutdown plans. Seems kinda strange, doesn’t? If consequences are so dire, why wouldn’t he let the agencies explain?

“In e-mails from the Office of Management and Budget (OMB) last month, agencies were told their statements to Congress “should not state or imply what functions would or would not be continued in the event of a funding gap.”

It continued: “Agencies should not be previewing shutdown plans — that is, policy and operational decisions — in any way.” Agencies were instructed to clear any responses to questions about their shutdown plans with OMB.”

Here’s the point: why is the United States government rendering NON-ESSENTIAL SERVICES, AND WITH OUR TAX MONEY?

By the blood of our forefathers we are a Constitutional Republic, one of limited powers, those not granted by us are reserved to the states or retained by us; this is embodied in the 10th Amendment. The government should perform ONLY essential services.

So, I say, shut it down. And consider shutting it down permanently. The boogyman Obama and his lackeys in the  main stream media would have us fear is our own ignorance and dependency. This doesn’t portend a very confident future for our children!

Hurt points out that since Obama took office the Democrats have been AWOL on budgeting:

“Over the past year and a half, the vast majority of which Democrats held total control over Congress, Democrats failed to produce a single spending bill or even a simple budget.

“When Democrats in the House managed to get a spending proposal through the lower chamber, those bills only went on to the Senate to die under Mr. Reid’s failed leadership.

“Not a single spending bill actually made it to the desk of the president, who would have gladly signed whatever his party sent him.”

He recounts the historic Republican landslide in November changing control of the House and weakening control in the Senate.

So, they haven’t passed a budget, but their failure to cut fat has made Obama famous for deficits and debt! Obama’s deficits in this and last year have been in the  $1.5 Trillion range. We borrow 42 cents of every dollar these spendthrifts waste. Since taking office Obama, Pelosi, Reid and their fellow statists have increased the national debt by $3.445 Trillion, that’s $5 Billion a day! The pain will get worse as interest rates inevitably increase.

The worst part is they are stealing our children’s', grandchildren’s', and great-grandchildren’s’ money, indeed stealing their future! This sick excuse for a leader in the Senate is desperate. He’s so beholden to the unions, trial lawyers, Hollywood libs, and hands-out dole takers, that he’s frozen.

Harry, you are one poor excuse looking for another poor excuse. Get a spine, man and quit stealing from my grandchildren!

TIME TO REDUCE BENEFITS FOR ALL OF US

The United States and the State of Nevada together are facing budget deficits that threaten the financial viability of the country and the state. The national debt is reaching unprecedented levels– this year alone it will reach a record $1.6 trillion, due to the weak economy, higher spending, and renewed tax cuts.

At the national level, combined expenditures on Social Security, Medicare, and Medicaid are projected to account for 45% of federal spending, up from 27% in 1975. That entitlement spending could triple by 2035. When defense spending, interest on the debt, and federal pensions are added in, this accounts for 86% of federal spending. Interest on the debt currently costs $200 billion annually, but if nothing is done, in just five years the interest on this debt will triple to around $640 billion.

Nevada does not have the luxury of printing money to cover budget deficits, and must have a budget that is balanced. The Governor is set to accomplish that by severe spending cuts and not raising taxes. His opponents in the Legislature have squawked loudly, but have yet to offer an alternative plan. The target of the Governor’s cuts are personnel, since that is where the lion’s share of expenditures go, with a focus on reigning in overly-generous pensions, benefits and salaries, a problem that is even greater at the local government level.

Government employees must be prepared to accept reductions in retirement pensions and pay much more for health benefits. That goes not only for local and state employees, but those who work for or are retired from the federal government, including military retirees. The Defense budget is not sustainable and will have to be reduced in the future, especially to offset soaring retirement and health benefit costs.

Those of us who have reached 65 and are now receiving Social Security and Medicare must also be prepared to accept changes—means testing of Social Security perhaps, more paid in doctor visits and prescriptions. Yes, I know, we who have paid money into the system for decades in good faith have reason to protest while those who have been less thrifty in planning their retirements will not be penalized. It is what it is—not fair, not fair at all, but it must be done.

And those of us who served in the military can make the point that our service was much more demanding and difficult. I, for one, had two tours in Viet-Nam in my 26 years—living in the swamps, fighting off the VC and cobras alike, separated from our families for a year at a time (I only saw my first-born one week the first year of her life!). We moved 17 times our first 13 years of marriage, I worked 24 hours a day, 7 days a week in my 6 years in the White House. No overtime, no sick leave, no padding my retirement with phony “call backs” or special health programs (oh, I do go to the VA, but to participate in an Agent Orange tracking program for those of us exposed to the dangerous defoliant).

Still, the nation cannot afford the entitlement programs that I and many others are eligible for. The state, and especially local governments, is on the verge of a financial crisis and personnel costs, particularly benefits and retirement, must be roped in. It is happening in Wisconsin, New Jersey, Indiana and other states where budgets can only be balanced by reigning in benefits for government employees. GOV Sandoval says it must also happen here, and he is right, but at all levels of government.

It ain’t nice, it isn’t pretty, but it must be done.

-Tyrus W. Cobb

Former Special Assistant to the President, Republished from Nevada Appeal

By Frank Partlow

I can barely spell it, but I am a Septuagenarian.  At 72, I receive a federal pension for 34 years of Army service, Social Security, Medicare, Tricare and VA benefits.   I believe I am “entitled” to all of that.  Septuagenarians disagree on many issues, but not on their “entitlements.”

These entitlements are unsustainable.  My federal paymaster is $14.5 trillion in debt and borrowing $1.5 trillion more each year.  72 million entitled “Boomers” are right behind.  Social Security is a “Ponzi Scheme” which makes Bernie Madoff blush.  I receive as benefits what three current workers pay in.  What happens when there are two workers paying in?  More federal debt.

The only way to fix the deficit and balance the federal budget is to reduce current and future entitlements, which account for 62% of budget outlays and grow each year.  Septuagenarians and Boomers not only cringe at this idea, they vow to unseat any politician foolish enough to suggest it.  The problem with that approach is that while they may live long enough to collect, their children and grandchildren will not, even while facing crushing new taxes.

A better way is for each generation to take a hit—mine by some sort of means test for Social Security payments. The Boomers could delay their retirement to say, age 70.  Those still paying Social Security taxes could pay in a higher percentage of their salary. We are the only country in the world without age limits on medical procedures, an enormous drain on our Medicare and Medicaid, as health care costs grow by nine percent per year.  The potential list of reductions is virtually as endless as the nature of “entitlements” themselves.

When Social Security began, the oldest US generation was the poorest.  In part by taking mortgage interest rate deductions on their income taxes for thirty or more years, Septuagenarians are now the richest.  Can that continue?

Our parents were called the “Greatest Generation” for getting the US through the Great Depression and World War ll.   One can argue about that title, but they did get themselves out of their own jams.  My generation won’t even come close to doing that. Septuagenarians must understand that our world, its mores, beliefs, facts and fictions are irrelevant.

We septuagenarians are very opinionated.  We caused the problems we now face.  Yet, we expect the 50 year olds now in public office to jump at to our solutions. Perspective is the only thing we have to contribute.  Experience yields perspective and is what you get while you are looking for something else. Our perspectives will help those younger generations understand that if they do what we did, they will get what we got.  They can ignore our advice. However, they will live with their decisions and we will not.

With the wisdom of experience and perspective, my generation should lead the way.  If, however, we are unwilling to sacrifice some of what was heretofore promised, we will deserve to be called what we will have become: the “Selfish Generation.”

Special Report for the Northern Nevada Network.

Frank Partlow is a Nevada veteran since 1964 who now lives in downtown Reno

“Chaos,” “a headache,” “turmoil,” “craziness,” “confused,” “wild,” “uncontrolled” are just a few of the words the Washington press corps has used to describe the ensuing late-night debates. There’s a far better word for what happened: democracy. It has been eons since the nation’s elected representatives have had to study harder, debate with such earnestness, or commit themselves so publicly. Yes, it is messy. Yes, it is unpredictable. But as this Presidents Day approaches, it’s a fabulous thing to behold.”

Exercising their foremost and ancient power, descended from England, the power of the purse our elected representatives did their jobs. “There were amendments to prohibit funds for the mortgage-modification program (Darrell Issa, R., Calif.), for wasteful broadband grants (Jim Matheson, D., Utah), for further TSA full-body scanning machines (Rush Holt, D., N.J.), for the salaries of State Department envoys tasked with shutting Guantanamo Bay (Tim Huelskamp, R., Kan.). And amendments designed to cut off funding for IRS agents enforcing ObamaCare.”

Contrast this with the Pelosi-Reid-Obama RAILROAD. Bills drafted in back rooms by power brokers, put to a vote without reading or debate. Democrats offered amendments last night, something Republicans could not do under Pelosi. One such Democrat amendment was to continue funding road signs bragging about the stimulus. Republicans disagreed with one another, unheard of among Democrats in Pelosi’s House. Boehner even lost a major defense project for his own district, the second engine for the F-35 Joint Strike Fighter. Again, unheard of under Pelosi.

I received an email this afternoon announcing the results of a heated two hour part of that debate on an issue of concern to me, my taxpayer dollars going to fund abortions indirectly by grants to Planned Parenthood. “And today, the U.S. House of Representatives — by an
overwhelming majority vote of 240 to 185 — voted to DEFUND PLANNED PARENTHOOD!” Not exactly what you think of when you list the proper functions of government!

One might have asked long ago, why do our hard earned dollars pay for a lot of non-governmental functions. Things like NPR, ACORN and the National Endowment for the Arts. The point is that now, at least, our representatives are asking and as Kim Strassel concludes, “Long may that last.”

Ever since the New Deal, Congress has delegated authority to regulatory agencies. Those agencies are an amalgamation of legislative, executive and judicial functions. This long recognized governmental process has enabled the regulation of commerce, health, labor relations and any number of governmental and non governmental functions. Normally, the statutory delegations to administrative agencies have been sufficiently subscribed as to pass judicial muster.

Historically, both Democrat and Republican administrations have issued between 30 and 40 major rule-making regulations per year. These are laws, laws made by bureaucrats, not elected representatives. According to a WSJ editorial, The Congressional Accountability Act, the Obama administration issued 59 major regulations in 2009 and 62 in 2010 and has another 191 in the works!

The problem here is several-fold: The statutory delegations are too vague. The congressional political-cover cop-out is too tempting and easy. And the leftist, control-freak regulators exceed even their vague statutory authority. See for example some of the posts treating the FCC or Obamacare under “Government Regulation” in the “Topics” list on the right side of this page.

“The Dodd-Frank financial reform is a tabula rasa that the law firm Davis Polk & Wardwell estimates requires no fewer than 243 new rules by 11 agencies over a dozen years. In the mere 10 months since ObamaCare passed, HHS has engineered rules that impose both a ceiling on insurance industry profits and de facto price controls on private premiums. The EPA is abusing the clean-air laws of the 1970s to raise carbon energy prices as a cap-and-tax surrogate. Only last month, the Federal Communications Commission imposed “net neutrality” despite a federal court ruling that the action was outside its purview. There are many other examples.”

The WSJ editorial discusses a potential remedy, the Congressional Accountability Act, or the Regulations from the Executive In Need of Scrutiny (Reins) Act, sponsored by Kentucky’s Geoff Davis in the House and South Carolina Senator Jim DeMint. “The bill guarantees an up-or-down vote (no Senate filibuster) on $100 million-plus economic regulations, which would only take effect if Congress passed a joint resolution and the President signed it. Such a procedural change would revolutionize government in practice and help restore the representative democracy the founders envisioned.”

“Such a bill wouldn’t be necessary if Congress did a better job of writing laws that specify what they mean and aren’t as open to interpretation. But with unelected bureaucracies now determining the fate of entire industries and dictating individual behavior, the Reins Act is a constitutional way for Congress to hold itself and regulators accountable for what they do.”

One would wish that even the leftists would have the moral courage to put their recorded votes behind regulations they support. But then again, “if wishes were horses, beggars would ride!”

Frankly, the liberals don’t like the Constitution. When faced with it, it tends to restrain them. And they don’t like restraint. They don’t really admit of a higher law. They have become a law unto themselves. Something akin the the divine right of kings.

Neomi Rao treats this in today’s WSJ, The Constitution: Not Just for Courts. In years past presidents and legislators considered the constitutionality of actions that were proposed; they consciously considered whether those actions stood up to that higher law.

“So who, precisely, is supposed to protect the Constitution? Article VI provides that all of our elected and appointed officials in both federal and state government “shall be bound by Oath or Affirmation, to support this Constitution.” The president takes a special oath to preserve, protect and defend the Constitution. These oaths reaffirm the constitutional language and structure that require each branch to take seriously the constraints of the Constitution.”

“Contrary to popular belief, and the beliefs of some lawyer-congressmen, the Supreme Court does not maintain a monopoly on constitutional interpretation. The court has an important role to play in reviewing the constitutionality of legislation and executive branch action, of course. But it cannot and should not exercise this power alone.”

Speaker Boehner’s demand that new bills offered to the 112th Congress cite their Constitutional authority should help return the Republic to a government of laws and not one of men, not even elite men!

They who make it their mission to steal from our grandchildren are claiming the high ground and claiming that repeal of this monstrosity will increase our grandchildren’s indebtedness. If the public believes that they will buy bridges in Brooklyn!

Yesterday’s WSJ editorializes against their lies with ObamaCare’s Reality Deficit. The article treats the phony assumptions given to the CBO, and the real assumptions withheld from the CBO, and shows how the CBO can do the math correctly and say that the deficit will increase. Given the real assumptions and complete picture, the CBO would say that the deficit will be reduced by repealing Obamacare.

“Among the worst Democratic abuses was gaming the CBO’s budget conventions to make it seem as if ObamaCare “saves” money.”

“The accounting gimmicks are legion, but we’ll pick out a few: It uses 10 years of taxes to fund six years of subsidies. Social Security and Medicare revenues are double-counted to the tune of $398 billion. A new program funding long-term care frontloads taxes but backloads spending, gradually going broke by design. The law pretends that Congress will spend less on Medicare than it really will, in particular through an automatic 25% cut to physician payments that Democrats have already voted not to allow for this year.”

“The CBO budget gnomes are required to “score” what’s on paper in front of them, no matter how unrealistic, and that’s the method its Congressional masters prefer. The political class makes believe that CBO’s forecasts are carved into stone tablets through divine revelation, but all they really show is that politicians have rigged the budget rules to hide the true cost of entitlements.”

“The government can’t subsidize coverage for tens of millions of new people and simultaneously reduce the deficit, as most Americans seem to intuitively understand. The real offense Republicans are committing in the eyes of Washington is exposing its illusions.”

A quick review of some of the posts on Nationalized Health Care on the right side of this page may refresh any memories that need refreshing. Suffice it to say that the House should repeal the damn law and let the Senate go on record after the November results as favoring it; and let Obama veto any repeal that gets to his desk! 2012 is just around the corner!