Consider the WSJ editorial, The Spenders Won in 2011. Republicans controlled the House yet failed to get any significant reduction in spending. Deficits generated by a Democrat controlled Congress were $2.98 Trillion in 2008, $3.52 Trillion in 2009, $3.45 Trillion in 2010; and even with a Republican House are $3.59 Trillion in 2011 and  projected to be $3.65 Trillion in 2012. We are over $15 Trillion in national debt. This is debt that we will pass onto our children and grandchildren. How moral is that? We take handouts that our grandchildren will pay for!

There must be a debate on the role of government. It does everything as Obama, Pelosi and Reid propose. Or is is limited as our constitution suggests. If the nation opts for the “free lunch,” our nation will become another Greece. If the nation chooses the moral course of eliminating the “free lunch” our children and grandchildren will have a chance to live productive lives in this country.

I was impressed with Ed Crane’s comment in a WSJ op-ed on Ron Paul that the U.S. spends more than the rest of the world on defense–in essence defense of the western world! ”…an overreaching military presence around the world is inconsistent with small, constitutional government at home. The massive cost of these interventions, in treasure and blood, highlights what a mistake they are, as sensible people on the left and right recognized from the beginning. Of course we want a strong military capable of defending the United States, but our current expenditures equal what the rest of the world spends, which makes little sense. It is futile to try to be the world’s policeman…”

My point is that to the extent we overspend on defense, Europe doesn’t need to spend. Their taxes to the extent paid go to increase statist expansions and welfare in countries like Greece, Portugal, Italy and Spain.

To top that off, our Fed seems to think it legitimate to help finance Europe’s profligate ways. Jerry O’Driscoll exposes Bernanke’s covert effort to bail out the ECB in his recent WSJ op-ed highlighted in our blog. This is clearly ultra vires, beyond the legal power of the Fed and against what its chairman has publicly stated.

In effect we have given Europe the leeway to expand its welfare state beyond its capacity to pay for that expansion. Our president who has no concept of economics admires the European model and seeks to expand our own welfare state beyond its capacity to pay for the expansion. His statist stimulus expenditures were nothing more than payments to increase the size and scope of government. His Obamacare takeover of medicine is nothing more than an unsustainable entitlement addition to the already unsustainable entitlements of Medicare, Medicaid, and Social Security.

We have enabled Europe’s welfare/statist addiction at a time when we can’t afford our own addiction. That latter addiction is theft from our grandchildren. Immorality par excellence! It must stop!

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.

Kyle Meintzer alerts us to this in Bill Whittle’s video Rich man, poor man?. Bill uses Heritage Foundation data to show that while the rich get richer, the “poor” get richer also. In fact, the definition of poor is suspect. But Obama and the Democrats need to expand the definition of poor just to keep up with those becoming non-poor, and this, just to buy votes. Enough said, here’s the video:

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!

Mark McKinnon in his Daily Beast post, End of the Privileged Class, argues that we do not need public employee unions. In that he agrees with FDR who said that unions have no place in the public sector. McKinnon makes four good points to support his case:

1. Public Unions Are Big Money. 10 of the top 20 political contributors in the last 20 years are unions and only four are corporations. The three biggest unions gave over $170 million in the 2010 election cycle.

2. Public Unions Redistribute Wealth:

“Unlike private-sector jobs, which are more than fully funded through revenues created in a voluntary exchange of money for goods or serv-ices, public-sector jobs are funded by taxpayer dollars, forcibly collected by the government (union dues are often deducted from public employees’ paychecks). In 28 states, state and local employees must pay full union dues or be fired. A sizable portion of those dues is then donated by the public unions almost exclusively to Democratic candidates. Michael Barone sums it up: “public-employee unions are a mechanism by which every taxpayer is forced to fund the Democratic Party.”

3. Public Unions Silence the Voters Voice:

“Big money from public unions, collected through mandatory dues, and funded entirely by the taxpayer, is then redistributed as campaign cash to help elect the politicians who are then supposed to represent taxpayers in negotiations with those same unions. In effect, the unions sit on both sides of the table and collectively bargain to raise taxes while the voters’ voice is silenced.”

4. Public Unions Are Unnecessary:

“The primary purpose of public unions today, as ugly as it sounds, is to work against the financial interests of taxpayers: the more public employees are paid in wages and uncapped benefits, the less taxpayers keep of the money they earn. It’s time to call an end to the privileged class.”

I would argue that the big union bosses have misled the public employee rank and file. The teachers, engineers, social workers in government are basically dedicated people who have been misled into thinking they will get pensions that are not funded, medical care that is excessive and salary and fringes that will continue to outstrip the compensation of the people who pay the taxes that fund their salary and benefits. So I condemn the fat-cat union bosses long before the good public servants.

In any case, the handwriting is on the wall and this basic element of run away government will stop. Voters can’t stand the smell!

Of course, it has done none of that. But it has added another Trillion dollar entitlement program that our grandchildren are going to be paying for with the meager compensation they receive from their Chinese employers.

It has also supplied the rulers with another discretionary plumb with which to grant waivers from its 2000 pages of rules and regulations. Until now, these waivers have been granted or denied on the basis of political pull. So the unions regularly get waivers as do those political organizations like AARP who supported Omabacare. But those gutsy or principled enough to oppose the Obamacare leviathan are denied these plumbs.

Part of the financial farce of the legislation was to expand Medicaid enrollment by 25% and push the costs of that expanded welfare onto the states, so the costs would not count against the financial costs charged against the unsustainable program. Apparently if you add a new unsustainable entitlement to an existing almost bankrupt entitlement, you get Obama’s dependent but bankrupt society.

Well the states are starting to squawk. Governor Mitch Daniels’ WSJ op-ed, An Obamacare Appeal From the States, sets it out pretty well. He correctly points out that the law is a massive mistake amplifying the big drivers of over consumption and excessive pricing. “Why not, it’s free? Reimbursement…and, The more I do, the more I get. Provider payments.

Daniels hopes for legislative repeal or judicial strike down of the monstrosity but as the governor of a state cannot rely on that. He and 20 other governors have written to HHS Secretary Kathleen Sebelius requesting relief from some of the law’s worst strictures. He correctly points out that the law not only increases Medicaid costs by 25% but also commandeers the states’ employees to enforce the new law with insurance exchanges and police powers. If a state refuses, the federal government will operate the exchange within the state. Thus opening Pandora’s box!

Daniels has written Sebelius conditioning Indiana’s participation of several conditions:
• Flexibility in deciding which insurers offer insurance in the state.
• Freedom of choice in coverage, thus not forcing only single costly policies.
• Elimination of discrimination against consumer driven plans, like HSAs.
• Freedom to move Medicaid beneficiaries into the exchanges.
• Reimbursement of the full costs of Indiana’s administration of the law.
• An independent projection of expected enrollment, given the law’s incentives to employers to off load employee insurance programs.

Daniels recognizes the chances are slim to none that Sebelius will grant this effective rewrite of the legislation. But he argues that she should recognize that the paternalistic, command-control nature of the legislation should be recognized as a failure. This because one small part of it, the high-risk preexisting condition pools, have been a failure. A majority of the states refused to participate in these pools, leaving the task to the Feds. Sebelius failed miserably at it with costs far above projections used to get the law passed. Daniels called it a “fiasco.”

Let’s pray that the Supreme Court accepts certiorari on an expedited basis from the various lower court Obamacare cases. Mitch Daniel’s op-ed only scratches the surface of all the wasted economic activity—public and private—attendant to this fiasco that is Obamacare.

Now we know President Johnson once called Detroit the model city of the Great Society. And we know that our current government bailed out the UAW of GM and Chrysler by subordinating the bondholders to the unions and transferring the bulk of the ownership in each firm to the U.S. taxpayers. So here’s the ad:

In reality, Detroit is the prime example of the progressive agenda. It is barren, deserted and bankrupt. In every important respect it is dependent on the federal government, the U.S. taxpayer.

Knowing that, how do you like your ad? Are you happy about the way your hard earned tax dollars are spent?

“The budget that Mr. Cuomo unveiled this week closes a gaping deficit with major budget reductions, calling for spending cuts in state hiring, education, health care, aid to universities and payments to cities. The plan would balance the Empire State’s $135 billion budget without a dime of new taxes or borrowing. Remarkably, if his budget passed, the state would spend $3.5 billion less than it did last year.”

“These cuts are impressive on their own, but Mr. Cuomo’s real conceptual breakthrough is to expose the rigged-game of “baseline budgeting.” This is a gambit by which spending increases automatically each year even before a Governor submits his budget. The “baseline” grows each year due to spending formulas that legislatures build into the law even before they take a single vote.”

Guess what? The United States, the State of California, the State of Nevada and many others use baseline budgeting! That’s right. The budgets are in deficit before they are submitted. Most if not all of those less than adequate, so-called public services have automatic ups built into their continuation.

Courageous political leaders proposing a zero-based look at these bureaucracies are accused by the left leaning media of “cutting” education, healthcare, tree-hugging or whatever. But with government growth at most levels out of control, cut they must.

As the Journal editorial points out, the Republicans should sieze the opportunity in Congress to start the budgetary reform. And soon.