Click on WORD or PDF for full content

WORD

PDF

We start today with Thomas Sowell addressing the “tax the rich” theories of the left. Sowell starts by writing about actual events in the 1920′s and then shows how the same ideas moved President Kennedy to call for, not new and higher taxes, but tax cuts. The point of these efforts is to recall a time when the country was not treated to such a large contingent of diehard Democrat doctrinaire demagogues.

… high tax rates that many people avoid paying do not necessarily bring in as much revenue to the government as lower tax rates that more people are in fact paying, when these lower rates make it safe to invest their money where they can get a higher rate of return in the economy than where they can get a higher rate of return in the economy than they get from tax-exempt securities.

The facts are plain: There were 206 people who reported annual taxable incomes of one million dollars or more in 1916. But as tax rates rose, that number fell to 21 by 1921. After a series of tax-rate cuts in the 1920s, the number of individuals reporting taxable incomes of a million dollars or more rose again, to 207 by 1925.

It should not be surprising that the government collected more tax revenue under these conditions. Nor is it surprising that, with increased economic activity resulting from more investment in the private economy, the annual unemployment rate from 1925 through 1928 ranged from a high of 4.2% to a low of 1.8%.

The point here is not simply that the weight of evidence is one side of the argument rather than the other but, more fundamentally, that there was no serious engagement with the arguments actually advanced but instead an evasion of those arguments by depicting them as simply a way of transferring tax burdens from the rich to other taxpayers. …

… President Kennedy, like Andrew Mellon decades earlier, pointed out that “efforts to avoid tax liabilities” make “certain types of less-productive activity more profitable than other more valuable undertakings” and “this inhibits our growth and efficiency.” Therefore the “purpose of cutting taxes” is “to achieve a more prosperous, expanding economy.”

“Total output and economic growth” were italicized words in the text of Kennedy’s address to Congress in January 1963, urging cuts in tax rates. Much the same theme was repeated yet again in President Reagan’s February 1981 address to a joint session of Congress, pointing out that “this is not merely a shift of wealth between different sets of taxpayers.”

Instead, basing himself on a “solid body of economic experts,” he expected that “real production in goods and services will grow.”

Even when empirical evidence substantiates the arguments made for cuts in tax rates, such facts are not treated as evidence relevant to testing a disputed hypothesis, but as isolated curiosities. Thus, when tax revenues rose in the wake of the tax-rate cuts made during the George W. Bush administration, the New York Times reported:

“An unexpectedly steep rise in tax revenues from corporations and the wealthy is driving down the projected budget deficit this year.”

Expectations, of course, are in the eye of the beholder. However surprising these facts may have been to the New York Times, they are exactly what proponents of reducing high tax rates have been expecting, not only from these particular tax rate cuts, but from similar reductions in high tax rates at various times going back more than three-quarters of a century.

John Taylor, econ prof at Stanford shows in WSJ how the left’s governance has given us stagnation and high unemployment.

… In my view, the best way to understand the problems confronting the American economy is to go back to the basic principles upon which the country was founded—economic freedom and political freedom. With lessons learned from the century’s tougher decades, including the Great Depression of the ’30s and the Great Inflation of the ’70s, America entered a period of unprecedented economic stability and growth in the ’80s and ’90s. Not only was job growth amazingly strong—44 million jobs were created during those expansions—it was a more stable and sustained growth period than ever before in American history.

Economic policy in the ’80s and ’90s was decidedly noninterventionist, especially in comparison with the damaging wage and price controls of the ’70s. Attention was paid to the principles of economic and political liberty: limited government, incentives, private markets, and a predictable rule of law. Monetary policy focused on price stability. Tax reform led to lower marginal tax rates. Regulatory reform encouraged competition and innovation. Welfare reform devolved decisions to the states. And with strong economic growth and spending restraint, the federal budget moved into balance.

As the 21st century began, many hoped that applying these same limited-government and market-based policy principles to Social Security, education and health care would create greater opportunities and better lives for all Americans.

But policy veered in a different direction. Public officials from both parties apparently found the limited government approach to be a disadvantage, some simply because they wanted to do more—whether to tame the business cycle, increase homeownership, or provide the elderly with better drug coverage.

And so policy swung back in a more interventionist direction, with the federal government assuming greater powers. The result was not the intended improvement, but rather an epidemic of unintended consequences—a financial crisis, a great recession, ballooning debt and today’s nonexistent recovery. …

Tony Blankley has a proposal for the debt limit negotiations.

… Now, as summer 2011 reaches its steamy zenith, it falls to the only group of Washington politicians still trying to actually fix the debt problem – the House Republicans – to deny those political nihilists in both parties and in both branches the realization of their truly abhorrent plans.

This is a moment for both principle and cool realism on the part of the House Republicans. The principled part still requires them to use the debt ceiling requirement to make real cuts in the deficit in the current fiscal year.

Here is the realism part: 1) Is Aug. 2 the real date? Truth is, the American system is so big and complex that no one knows when and whether the borrowing runs out on any given day; 2) could the president use the actual tax revenues to pay interest, Social Security, Medicare and armed services salaries? He doubtlessly could, but Congress probably cannot compel him to do so without a Supreme Court decision, which would take many months to obtain; 3) would fully rational international bond and equity markets react dangerously to Aug. 2 without the debt ceiling being raised? No, but we do not have fully rational markets currently. Misleading headlines, unsupported rumors about unnamed bankers in Europe have driven world equity and bond markets careening all over the place in the past two years.

The reality that House Republicans have to deal with is that between the words coming out of the executive branch and the mainstream media and given the general nervousness of the markets, we cannot rely on rationality to win the day on Aug. 2.

So here is my proposal for principle and realism. The House should pass a debt ceiling rising for 190 days that raises the ceiling by about $1 trillion. The president said he would not sign a short-term bill less than 180 days. Give him something he can sign without contradicting himself.

Attach to it about $1 trillion in discretionary spending cuts as identified by Vice President Joseph R. Biden Jr.’s negotiations. That gets real cuts and doesn’t let Washington kick the can past the next election. …

Commentary at Market Watch says we’ll see 10% unemployment soon in the Obama Depression.

After the nationwide unemployment rate peaked above 10% in late 2009, we saw a fairly rapid decline in jobless rolls during the next 12 months. By March of this year, the headline jobless number had crept back under 9% and renewed optimism in the economic recovery and equity markets.

Well, we’ve been reading a much different story in the last month or two, with disappointing job creation and a rise in the overall unemployment rate as the meager number of new positions can’t keep up with the sheer volume of folks looking for work.

To make matters worse, we are now seeing a disturbing new spate of layoff announcements — not just a dozen or so workers here and there, but pink slips issued by the thousands at some of the biggest blue chips on Wall Street. Read about 6,500 jobs cut at Cisco.

In short, there aren’t enough jobs to go around now and there will be even fewer jobs a few months down the road. All this points to significantly higher unemployment in the near future, possibly over the 10% mark.

So where will the biggest damage be done? I think these three sectors top the list: …

Victor Davis Hanson reminds us there was a time when our country could get something done.

… For the way things used to be, consider the Big Creek hydroelectric project, begun here in the central Sierra Nevada mountains of California 100 years ago. It was the nation’s first large effort to generate electricity from falling water — spurred by the need to provide electric power for a growing Los Angeles nearly 250 miles away.

Industrialist and entrepreneur Henry Huntington conceived the gargantuan effort, begun in 1911. In just 157 days, a supply railroad up the mountains was built by thousands of workers struggling at over 6,000 feet in elevation with picks, shovels, and horse-drawn scrapers. In just two years, electricity was flowing southward from a new powerhouse at Big Creek that harnessed San Joaquin River water released from the new Huntington Lake reservoir. …

… Quite simply, Big Creek could not be built today in the United States. Environmentalists would claim that the pristine nature of the San Joaquin River would be unnecessarily altered, citing a newly discovered colony of spotted newts or dappled dragonflies in the way of the proposed penstocks. Unions would demand blanket representation without elections — and every imaginable compensation for such hazardous duty. Workers would apply for stress-related disability benefits given the dizzying heights and the dank subterranean digging. Government regulators and inspectors would outnumber project engineers. Private entrepreneurs world never risk such a chancy investment without ironclad government guarantees of profits despite enormous cost overruns. And the public would be as skeptical of the risky project’s success as they would be eager to enjoy its dividends when completed.

The Big Creek project, like the Panama Canal, the Hoover Dam, the San Francisco Bay and Golden Gate bridges, and the interstate highway system, was the work of a less wealthy but confident bygone generation. They understood man’s ceaseless elemental struggle against nature to survive one more day, and they did not have the luxury of second- and third-guessing the work of others before them. ..

Our cartoons today come from an International Liberty blog post that sums up all of today’s Pickings with a modern day version of Aesop’s “Ant and the Grasshopper.”

Click on WORD or PDF for full content

WORD

PDF

Steve Wynn, Dem businessman from Vegas has strong words for the administration.

… And I’m saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime. And I can prove it and I could spend the next 3 hours giving you examples of all of us in this market place that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right. A President that seems, that keeps using that word redistribution. Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they are frightened of this administration.And it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America.

You bet and until we change the tempo and the conversation from Washington, it’s not going to change. .. 

Editors at Investor’s Business Daily say Wynn is not alone.

… In such a climate, it’s no surprise that executive outbursts are erupting like lava from scorched earth. Wynn’s remarks echo those on a lengthening list of CEOs including:

• 3M’s George Buckley, who blasted Obama last February as anti-business. “We know what his instincts are,” Buckley said. “We’ve got a real choice between manufacturing in Canada or Mexico — which tends to be more pro-business — and America,” he told the Financial Times.

• Boeing’s Jim McNerney, who in the Wall Street Journal last May called Obama’s handpicked National Labor Relations Board’s suit against his company a “fundamental assault on the capitalist principles that have sustained America’s competitiveness since it became the world’s largest economy nearly 140 years ago.”

• Intel’s Paul Otellini, who told CNET last August that the U.S. legal environment has become so hostile to business that there is likely to be “an inevitable erosion and shift of wealth, much like we’re seeing today in Europe — this is the bitter truth.”

• Home Depot co-founder Bernie Marcus, who observed to radio host Hugh Hewitt last month that Obama “never had to make payroll,” that “nobody has ever created a job in this administration” and that the president is “surrounded by college professors.” …

John Tamny says there is a real cost to our economy when there are fewer start-ups.

… First up is the loss of innovation that results from reduced startups. Though Reaganomics is 30 years old, Bartlett made a point that likely remains true today that “the largest proportion of important new inventions are still the result of individuals working virtually alone, rather than by big corporate laboratories.”

At first glance we can see that a reduction in the formation of companies formed in the proverbial garage means less exciting inventions down the line. Reduced startups mean less innovation. Simple as that.

Sarbanes-Oxley also comes to mind here in that an ill-conceived law that turned public company CEOs into accountants has surely poured gasoline on the above fire. To put it very simply, Sarbanes-Oxley has made going public far less attractive to smaller, innovative companies lacking the infrastructure to comply with the law.

As a result, some have chosen to be purchased by larger companies over floating their shares to investors. Given a first pass we can see that what we’ve all lost here is the ability to put our savings into exciting companies, only to watch them hopefully grow.

Secondly, big companies, by virtue of being large, are more bureaucratic, and they’re understandably more careful given how much they stand to lose if they fund egregious errors. So in swallowing existing startups that are less eager to navigate the jungle of being public, we as individuals lose for the larger acquirers to varying degrees snuffing out the risky dynamism that characterizes startups, along with startups that eventually go public. …

Harvard econ prof says Boeing is right to take flight from high cost locales. His article was in Bloomberg.

Americans, and their companies, have long benefited from their freedom to move throughout our country.

In the 19th century, we moved in search of natural resources, exchanging the stony soil of New England for the rich soil of Iowa. In the 20th century, Americans were more likely to migrate in search of better political environments, like the blacks who fled the Jim Crow states of the South.

The profound role that mobility has played in our country, enabling repeated reinvention, causes me to be deeply worried about the possibility that a National Labor Relations Board complaint will prevent Boeing Co. (BA) from moving plane production from Washington state to South Carolina.

I am an economist, not a lawyer, and I have nothing to say about the legal issues surrounding the NLRB’s complaint. I am sure the NLRB is doing what it understands to be its legal duty, preventing retaliation against union activity.

Yet I also dearly hope that the judicial process will affirm the right of companies, and people, to freely choose their locations. The U.S. economy — especially our challenged manufacturing sector — needs more, not less, freedom to adapt and innovate.

The story of America is one of constant geographic movement. In 1816, before DeWitt Clinton had dug his ditch, it cost as much to move goods 30 miles over land as it did to ship them across the Atlantic, and Americans remained tethered to the Eastern Seaboard. …

John Podhoretz says relax on the polls.

The big news Wednesday in Washington was a Washington Post-NBC News poll that shows both a pox on all your houses attitude toward the president and Democrats and Republicans on the handling of the debt issue, but a particular shadow over Republicans because while 58 percent of respondents said Obama was being inflexible in negotiations, 77 percent of them said Republicans were. Also startling is the fact that those who identify themselves as Republicans say Republican lawmakers are being too intransigent–and that 46 percent of Republicans say they believe a mix of tax cuts and spending cuts is the way to go, basically in a statistical tie with the 50 percent who say spending cuts only.

Such a poll is a dagger in the heart of the rejectionist stance of the Tea Partiers in Congress, no? No, actually. Why? Because this is a poll of adults. Not registered voters. Not likely voters. Adults. As a practical matter, a politician judges the danger to himself from a political stand based on how actual voters will respond. In this case, the poll offers no guide to that. Turnout in the 2010 midterm election that brought 63 new Republicans to the House was 41 percent of registered voters. Registered voters make up 61 percent of all adults. Therefore, the actual constituents to whom Republican House members must respond constitute something like 20 percent of the universe of adults who make up the respondents of this poll.

There are two reasons to do a poll of adults only on a complex matter involving Congress in a non-election year. One is cost; it is more expensive to do a rigorous poll of registered or even likely voters. The other is to skew the debate. I report. You decide.

Washington Post reviews a biography of Barack Obama, Sr. 

… When Obama (Sr.) flew to Hawaii in August 1959, he left behind a young Kenyan wife already pregnant with their second child. At the university, he pursued a demanding course load and a highly active social life. In the fall of his second year, hardly six weeks elapsed before one new female classmate, 17-year-old Stanley Ann Dunham, became pregnant with their child. The university’s foreign student adviser told U.S. immigration agents, who took an active interest in foreign students whose visas required annual renewal, that she already had cautioned the married Kenyan about his dating habits. When Obama informed her in April 1961 that he and Dunham had married two months earlier, Obama also asserted that he had divorced his Kenyan wife. The adviser told the immigration agency she was dubious of that claim, but that Obama had told her that “although they were married they do not live together and Miss Dunham is making arrangements with the Salvation Army to give the baby away.” That sentence is redacted in the copy of Obama’s immigration file viewable on the Web, but Jacobs, working from a differently processed version, is unable to fully capture the emotional impact of the memos’ tale of ongoing official enmity.

Given Obama’s seeming lack of interest in parenting his offspring, adoption may have appealed to him, but no other evidence suggests that Ann Dunham actually considered giving her firstborn child away. Within weeks of Barack Jr.’s birth, Dunham and the baby left Honolulu for her previous home town of Seattle, leaving behind the husband with whom she had never lived. When Obama prepared a resume just before leaving Hawaii for graduate school at Harvard in 1962, he listed “a wife and two children in Kenya,” Jacobs reports. “He made no mention of Dunham or Barack Jr.”  …

Another book on Obama’s parents has received a lot of interest because it turns out one of the president’s constant refrains during the campaign, and the health care debate was false. His mother was not denied coverage “for a pre-existing condition” as Obama claimed time and again. Makes one wish he followed in his father’s footsteps and made women the destination of his serial lies, rather than voters. Of course, if we had a press in this country we might have had these facts when the country had a chance to avoid 2008′s mistake. Byron York has the story.

During the 2008 presidential campaign, Barack Obama often discussed his mother’s struggle with cancer. Ann Dunham spent the months before her death in 1995, Obama said, fighting with insurance companies that sought to deny her the coverage she needed to pay for treatment.

“I remember in the last month of her life, she wasn’t thinking about how to get well, she wasn’t thinking about coming to terms with her own mortality, she was thinking about whether or not insurance was going to cover the medical bills and whether our family would be bankrupt as a consequence,” Obama said in September 2007.

“She was in her hospital room looking at insurance forms because the insurance company said that maybe she had a pre-existing condition and maybe they wouldn’t have to reimburse her for her medical bills,” Obama added in January 2008.

“The insurance companies were saying, ‘Maybe there’s a pre-existing condition and we don’t have to pay your medical bills,’ ” Obama said in a debate with Republican opponent Sen. John McCain in October 2008.

It was a simple and powerful story, one Obama would tell many more times as president during the national health care debate. But now we’re learning the real story of Ann Dunham’s health coverage is not quite what her son made it out to be.

So, how is wind power working in Denmark? American.com has some answers.

… Not surprisingly, Denmark, like other early adopters of renewable power, is finding it unsustainable, and is backing away from the technology. As Andrew Gilligan reports in The Telegraph, the Danish state-owned power industry will no longer build onshore wind turbines, and consumers are complaining about high energy rates and environmental despoliation:

“Earlier this year, a new national anti-wind body, Neighbours of Large Wind Turbines, was created. More than 40 civic groups have become members. “People are fed up with having their property devalued and sleep ruined by noise from large wind turbines,” says the association’s president, Boye Jensen Odsherred. “We receive constant calls from civic groups that want to join.”

Danish GDP is approximately $270 million lower than it would have been if the wind-sector workforce was employed elsewhere.” …

John Tierney looks at playground design.

When seesaws and tall slides and other perils were disappearing from New York’s playgrounds, Henry Stern drew a line in the sandbox. As the city’s parks commissioner in the 1990s, he issued an edict concerning the 10-foot-high jungle gym near his childhood home in northern Manhattan.

“I grew up on the monkey bars in Fort Tryon Park, and I never forgot how good it felt to get to the top of them,” Mr. Stern said. “I didn’t want to see that playground bowdlerized. I said that as long as I was parks commissioner, those monkey bars were going to stay.”

His philosophy seemed reactionary at the time, but today it’s shared by some researchers who question the value of safety-first playgrounds. Even if children do suffer fewer physical injuries — and the evidence for that is debatable — the critics say that these playgrounds may stunt emotional development, leaving children with anxieties and fears that are ultimately worse than a broken bone.

“Children need to encounter risks and overcome fears on the playground,” said Ellen Sandseter, a professor of psychology at Queen Maud University in Norway. “I think monkey bars and tall slides are great. As playgrounds become more and more boring, these are some of the few features that still can give children thrilling experiences with heights and high speed.” …

Click on WORD or PDF for full content

WORD

PDF

Steve Wynn, Dem businessman from Vegas has strong words for the administration.

… And I’m saying it bluntly, that this administration is the greatest wet blanket to business, and progress and job creation in my lifetime. And I can prove it and I could spend the next 3 hours giving you examples of all of us in this market place that are frightened to death about all the new regulations, our healthcare costs escalate, regulations coming from left and right. A President that seems, that keeps using that word redistribution. Well, my customers and the companies that provide the vitality for the hospitality and restaurant industry, in the United States of America, they are frightened of this administration.And it makes you slow down and not invest your money. Everybody complains about how much money is on the side in America.

You bet and until we change the tempo and the conversation from Washington, it’s not going to change. .. 

Editors at Investor’s Business Daily say Wynn is not alone.

… In such a climate, it’s no surprise that executive outbursts are erupting like lava from scorched earth. Wynn’s remarks echo those on a lengthening list of CEOs including:

• 3M’s George Buckley, who blasted Obama last February as anti-business. “We know what his instincts are,” Buckley said. “We’ve got a real choice between manufacturing in Canada or Mexico — which tends to be more pro-business — and America,” he told the Financial Times.

• Boeing’s Jim McNerney, who in the Wall Street Journal last May called Obama’s handpicked National Labor Relations Board’s suit against his company a “fundamental assault on the capitalist principles that have sustained America’s competitiveness since it became the world’s largest economy nearly 140 years ago.”

• Intel’s Paul Otellini, who told CNET last August that the U.S. legal environment has become so hostile to business that there is likely to be “an inevitable erosion and shift of wealth, much like we’re seeing today in Europe — this is the bitter truth.”

• Home Depot co-founder Bernie Marcus, who observed to radio host Hugh Hewitt last month that Obama “never had to make payroll,” that “nobody has ever created a job in this administration” and that the president is “surrounded by college professors.” …

John Tamny says there is a real cost to our economy when there are fewer start-ups.

… First up is the loss of innovation that results from reduced startups. Though Reaganomics is 30 years old, Bartlett made a point that likely remains true today that “the largest proportion of important new inventions are still the result of individuals working virtually alone, rather than by big corporate laboratories.”

At first glance we can see that a reduction in the formation of companies formed in the proverbial garage means less exciting inventions down the line. Reduced startups mean less innovation. Simple as that.

Sarbanes-Oxley also comes to mind here in that an ill-conceived law that turned public company CEOs into accountants has surely poured gasoline on the above fire. To put it very simply, Sarbanes-Oxley has made going public far less attractive to smaller, innovative companies lacking the infrastructure to comply with the law.

As a result, some have chosen to be purchased by larger companies over floating their shares to investors. Given a first pass we can see that what we’ve all lost here is the ability to put our savings into exciting companies, only to watch them hopefully grow.

Secondly, big companies, by virtue of being large, are more bureaucratic, and they’re understandably more careful given how much they stand to lose if they fund egregious errors. So in swallowing existing startups that are less eager to navigate the jungle of being public, we as individuals lose for the larger acquirers to varying degrees snuffing out the risky dynamism that characterizes startups, along with startups that eventually go public. …

Harvard econ prof says Boeing is right to take flight from high cost locales. His article was in Bloomberg.

Americans, and their companies, have long benefited from their freedom to move throughout our country.

In the 19th century, we moved in search of natural resources, exchanging the stony soil of New England for the rich soil of Iowa. In the 20th century, Americans were more likely to migrate in search of better political environments, like the blacks who fled the Jim Crow states of the South.

The profound role that mobility has played in our country, enabling repeated reinvention, causes me to be deeply worried about the possibility that a National Labor Relations Board complaint will prevent Boeing Co. (BA) from moving plane production from Washington state to South Carolina.

I am an economist, not a lawyer, and I have nothing to say about the legal issues surrounding the NLRB’s complaint. I am sure the NLRB is doing what it understands to be its legal duty, preventing retaliation against union activity.

Yet I also dearly hope that the judicial process will affirm the right of companies, and people, to freely choose their locations. The U.S. economy — especially our challenged manufacturing sector — needs more, not less, freedom to adapt and innovate.

The story of America is one of constant geographic movement. In 1816, before DeWitt Clinton had dug his ditch, it cost as much to move goods 30 miles over land as it did to ship them across the Atlantic, and Americans remained tethered to the Eastern Seaboard. …

John Podhoretz says relax on the polls.

The big news Wednesday in Washington was a Washington Post-NBC News poll that shows both a pox on all your houses attitude toward the president and Democrats and Republicans on the handling of the debt issue, but a particular shadow over Republicans because while 58 percent of respondents said Obama was being inflexible in negotiations, 77 percent of them said Republicans were. Also startling is the fact that those who identify themselves as Republicans say Republican lawmakers are being too intransigent–and that 46 percent of Republicans say they believe a mix of tax cuts and spending cuts is the way to go, basically in a statistical tie with the 50 percent who say spending cuts only.

Such a poll is a dagger in the heart of the rejectionist stance of the Tea Partiers in Congress, no? No, actually. Why? Because this is a poll of adults. Not registered voters. Not likely voters. Adults. As a practical matter, a politician judges the danger to himself from a political stand based on how actual voters will respond. In this case, the poll offers no guide to that. Turnout in the 2010 midterm election that brought 63 new Republicans to the House was 41 percent of registered voters. Registered voters make up 61 percent of all adults. Therefore, the actual constituents to whom Republican House members must respond constitute something like 20 percent of the universe of adults who make up the respondents of this poll.

There are two reasons to do a poll of adults only on a complex matter involving Congress in a non-election year. One is cost; it is more expensive to do a rigorous poll of registered or even likely voters. The other is to skew the debate. I report. You decide.

Washington Post reviews a biography of Barack Obama, Sr. 

… When Obama (Sr.) flew to Hawaii in August 1959, he left behind a young Kenyan wife already pregnant with their second child. At the university, he pursued a demanding course load and a highly active social life. In the fall of his second year, hardly six weeks elapsed before one new female classmate, 17-year-old Stanley Ann Dunham, became pregnant with their child. The university’s foreign student adviser told U.S. immigration agents, who took an active interest in foreign students whose visas required annual renewal, that she already had cautioned the married Kenyan about his dating habits. When Obama informed her in April 1961 that he and Dunham had married two months earlier, Obama also asserted that he had divorced his Kenyan wife. The adviser told the immigration agency she was dubious of that claim, but that Obama had told her that “although they were married they do not live together and Miss Dunham is making arrangements with the Salvation Army to give the baby away.” That sentence is redacted in the copy of Obama’s immigration file viewable on the Web, but Jacobs, working from a differently processed version, is unable to fully capture the emotional impact of the memos’ tale of ongoing official enmity.

Given Obama’s seeming lack of interest in parenting his offspring, adoption may have appealed to him, but no other evidence suggests that Ann Dunham actually considered giving her firstborn child away. Within weeks of Barack Jr.’s birth, Dunham and the baby left Honolulu for her previous home town of Seattle, leaving behind the husband with whom she had never lived. When Obama prepared a resume just before leaving Hawaii for graduate school at Harvard in 1962, he listed “a wife and two children in Kenya,” Jacobs reports. “He made no mention of Dunham or Barack Jr.”  …

Another book on Obama’s parents has received a lot of interest because it turns out one of the president’s constant refrains during the campaign, and the health care debate was false. His mother was not denied coverage “for a pre-existing condition” as Obama claimed time and again. Makes one wish he followed in his father’s footsteps and made women the destination of his serial lies, rather than voters. Of course, if we had a press in this country we might have had these facts when the country had a chance to avoid 2008′s mistake. Byron York has the story.

During the 2008 presidential campaign, Barack Obama often discussed his mother’s struggle with cancer. Ann Dunham spent the months before her death in 1995, Obama said, fighting with insurance companies that sought to deny her the coverage she needed to pay for treatment.

“I remember in the last month of her life, she wasn’t thinking about how to get well, she wasn’t thinking about coming to terms with her own mortality, she was thinking about whether or not insurance was going to cover the medical bills and whether our family would be bankrupt as a consequence,” Obama said in September 2007.

“She was in her hospital room looking at insurance forms because the insurance company said that maybe she had a pre-existing condition and maybe they wouldn’t have to reimburse her for her medical bills,” Obama added in January 2008.

“The insurance companies were saying, ‘Maybe there’s a pre-existing condition and we don’t have to pay your medical bills,’ ” Obama said in a debate with Republican opponent Sen. John McCain in October 2008.

It was a simple and powerful story, one Obama would tell many more times as president during the national health care debate. But now we’re learning the real story of Ann Dunham’s health coverage is not quite what her son made it out to be.

So, how is wind power working in Denmark? American.com has some answers.

… Not surprisingly, Denmark, like other early adopters of renewable power, is finding it unsustainable, and is backing away from the technology. As Andrew Gilligan reports in The Telegraph, the Danish state-owned power industry will no longer build onshore wind turbines, and consumers are complaining about high energy rates and environmental despoliation:

“Earlier this year, a new national anti-wind body, Neighbours of Large Wind Turbines, was created. More than 40 civic groups have become members. “People are fed up with having their property devalued and sleep ruined by noise from large wind turbines,” says the association’s president, Boye Jensen Odsherred. “We receive constant calls from civic groups that want to join.”

Danish GDP is approximately $270 million lower than it would have been if the wind-sector workforce was employed elsewhere.” …

John Tierney looks at playground design.

When seesaws and tall slides and other perils were disappearing from New York’s playgrounds, Henry Stern drew a line in the sandbox. As the city’s parks commissioner in the 1990s, he issued an edict concerning the 10-foot-high jungle gym near his childhood home in northern Manhattan.

“I grew up on the monkey bars in Fort Tryon Park, and I never forgot how good it felt to get to the top of them,” Mr. Stern said. “I didn’t want to see that playground bowdlerized. I said that as long as I was parks commissioner, those monkey bars were going to stay.”

His philosophy seemed reactionary at the time, but today it’s shared by some researchers who question the value of safety-first playgrounds. Even if children do suffer fewer physical injuries — and the evidence for that is debatable — the critics say that these playgrounds may stunt emotional development, leaving children with anxieties and fears that are ultimately worse than a broken bone.

“Children need to encounter risks and overcome fears on the playground,” said Ellen Sandseter, a professor of psychology at Queen Maud University in Norway. “I think monkey bars and tall slides are great. As playgrounds become more and more boring, these are some of the few features that still can give children thrilling experiences with heights and high speed.” …

Click on WORD or PDF for full content

WORD

PDF

David Leonhardt reviews the consumer strike for the NY Times.

… The auto industry is on pace to sell 28 percent fewer new vehicles this year than it did 10 years ago — and 10 years ago was 2001, when the country was in recession. Sales of ovens and stoves are on pace to be at their lowest level since 1992. Home sales over the past year have fallen back to their lowest point since the crisis began. And big-ticket items are hardly the only problem. … 

… If you’re looking for one overarching explanation for the still-terrible job market, it is this great consumer bust. Business executives are only rational to hold back on hiring if they do not know when their customers will fully return. Consumers, for their part, are coping with a sharp loss of wealth and an uncertain future (and many have discovered that they don’t need to buy a new car or stove every few years). Both consumers and executives are easily frightened by the latest economic problem, be it rising gas prices or the debt-ceiling impasse.

Earlier this year, Charles M. Holley Jr., the chief financial officer of Wal-Mart, said that his company had noticed consumers were often buying smaller packages toward the end of the month, just before many households receive their next paychecks. “You see customers that are running out of money at the end of the month,” Mr. Holley said.

In past years, many of those customers could have relied on debt, often a home-equity line of credit or a credit card, to tide them over. …

Michael Barone liked Leonhardt’s piece, but begs to differ in one important place.

Even good journalists can make mistakes, based on commonly held assumptions which are simply wrong. Take the New York Times’s economics reporter David Leonhardt. In an insightful and well written article about the huge drop in consumer spending, Leonhardt writes,” If governments stop spending at the same time that consumers do, the economy can enter a vicious cycle, as it did in Hoover’s day.”

The only problem is that, as Megan McArdle pointed out in a July 8 blogpost on The Atlantic website, “the evidence is not ambiguous: Hoover did not tighten up on spending.” She goes on to provide the facts: …

Weekly Standard explores some of the contradictions in the president’s speeches.  

‘I’m the president of the United States, and I want to make sure that I am not engaging in scare tactics. And I’ve tried to be responsible and somewhat restrained so that folks don’t get spooked.” So said President Obama at his June 29 debt ceiling press conference. Two weeks later, CBS Evening News anchor Scott Pelley asked Obama whether he can “tell the folks at home that, no matter what happens, the Social Security checks are gonna go out on August 3?” President Obama replied that whether it was Social Security checks, veterans’ checks, or disability checks, “I cannot guarantee that those checks go out on August 3 if we haven’t resolved this issue, because there may simply not be the money in the coffers to do it.”

These statements are representative of Obama’s contradictions, in word and deed, over the course of the entire deficit debate. Gelatinous is an apt description (to paraphrase Speaker John Boehner) of the president’s rhetoric, for Obama has been slippery and irresolute—the opposite of the responsibility and restraint he touts.

To be responsible, a leader should express ideas to the American people in clear and informative language. Yet the deficit debate has been marked by Obama’s fondness for referring to “revenues” (taxes), “investments” (spending), the need to “reduce spending in the tax code” (increase taxes), and the importance of “further improving Medicare” (cutting Medicare) by further empowering the Independent Payment Advisory Board, whose cuts—at least under current law—would go to fund Obamacare, not cut the deficit. …

Mark Tapscott says there is one place the president excels.

Here’s an interesting couple of numbers that emerged during this past week: According to Jim Messina, his campaign manager, through the second quarter of 2011, President Obama now has 552,000 contributors to his 2012 re-election campaign.

And the Bureau of Labor Statistics announced that during the same two quarters, the U.S. economy generated 260,000 jobs.

In other words, Obama attracted twice as many campaign donors as his economic policies created new jobs. That probably explains a great deal about yet a third number that received a great deal of attention this week: Gallup’s finding that a “generic Republican” leads Obama by eight points in voter preference for 2012.

Jonah Goldberg wants to know who’s the ideologue?

… The president, we are told, is a pragmatist for wanting a “fair and balanced” budget deal. What that means is tax increases must accompany spending cuts. Any significant spending cuts would be way in the future. The tax increases would begin right after Obama is reelected.

Now keep in mind that tax hikes (or what the administration calls “revenue increases”) are Obama’s idee fixe. He campaigned on raising taxes for millionaires and billionaires (defined in the small print as people making more than $200,000 a year or couples making $250,000).

During a primary debate, he was asked by ABC’s Charles Gibson if he would raise the capital gains tax even if he knew that cutting it would generate more revenue for the government. The non-ideologue responded that raising the tax, even if doing so would lower revenue, might be warranted out of “fairness.” As he said to Joe the Plumber, things are better when you “spread the wealth around.” …

Todd Zywicki, George Mason law prof outlines the disasters of the auto-bailouts.

Last month, President Obama barnstormed through Ohio, unveiling his surprising decision to claim credit for the success of the multi-billion dollar government bailouts of General Motors and Chrysler.

Why surprising?

Because despite the efforts of the administration and its willing accomplices in the media, the belief that the auto bailouts were a success is simply a myth. Leave aside the obvious point that the government still stands to lose billions of dollars on its investment as well as many billions more from the preferential tax treatment of the reorganizations. Not only was the bailout unnecessary to save the American automotive industry but the politicized bankruptcy process left both General Motors and Chrysler in a weaker competitive position than if they had simply reorganized in a standard chapter 11 process.

First, the belief that the bailouts were a success rests on a central misunderstanding: the belief that GM and Chrysler would have collapsed had the government not intervened. Yet large corporations reorganize in bankruptcy routinely in the United States and GM in particular is the prototype of the type of firm for which chapter 11 was designed: a firm with strong going-concern value, specialized labor and capital investments, but plagued with decades of bad management decisions and a need to fix crushing labor agreements, eliminate underperforming lines, and streamline an overgrown dealership network. Given the obvious viability of a leaner, more-efficient GM there is little doubt that it would have successfully reorganized. …

Thomas Sowell points out how anti-business actions and rhetoric hurt the very people the administration should want to help.

… Blithely piling onto American businesses both known costs like more taxes and unknowable costs — such as the massive ObamaCare mandates that are still evolving — provides more incentives for investors to send their money elsewhere to escape the hassles.

Hardly a month goes by without this administration coming up with a new anti-business policy — whether directed against Boeing, banks or other private enterprises. Neither investors nor employers can know when the next one is coming or what it will be. These are unknown unknowns.

Such anti-business policies would just be business’ problem, except that it is businesses that create jobs.

The biggest losers from creating an adverse business climate may not be businesses themselves — especially not big businesses, which can readily invest more of their money overseas. The biggest losers are likely to be working people in America, who cannot just relocate to Europe or Asia to take the jobs created there by American multinational corporations.

Andrew Malcolm with the best of late-night.

Leno: Obama’s latest economic recovery plan: He told Treasury Secretary Geithner to take the little money we have left and buy lottery tickets.

Leno: Democrats warned today that if the debt limit is not raised by Aug. 2, the federal government will cease to function. How do you tell?

Letterman: So CNN has canceled the TV show of ex-Gov. Eliot Spitzer. And you have to wonder how will the poor guy spend an hour now.

Leno: CNN has canceled Eliot Spitzer’s show, “In the Arena.” Apparently network executives made the decision after realizing it was still on.

Fallon: Illinois schools are dropping the written parts of their standardized school tests. Asked why, a spokesman said, “We simple does not needs them.

Click on WORD or PDF for full content

WORD

PDF

Craig Pirrong at Streetwise Professor says the only game that counts is 2012. As far as trying to get a deal with Obama now – fuhgeddaboudit.

… Obama operates under the ratchet theory of government.  Once ratcheted up, spending cannot ratchet down.  Spending that was not missed yesterday is imperative tomorrow, once it has been adopted today.  Which means that doing any deal based on Ratchet Man’s promises that he will cut future spending is a mug’s game.

Addressing the nation’s long term–and not really that long term, actually–danger of government insolvency cannot be done in the context of annual budgeting.  The crux of the problem is entitlements, and attacking that problem requires fundamental restructuring of the programs, where this restructuring will likely require features (e.g., supermajority requirements) that make it difficult for future Congresses and administrations to renege on the commitments inherent in the legislation mandating the restructuring.

That will not happen while Obama is in office.  Period.  Which is exactly why 2012 is the only thing that matters, and that doing a deal today or forcing a triggering of the debt ceiling that will have extremely unpredictable economic and political consequences is foolhardy.   Unfortunately, those who desire most ardently to cut back on government and its growth are those who most ardently press for a deal or a showdown that could lead to a shutdown.  Although the frustration is understandable, this is short sighted and counterproductive.  It is vital to keep the big things in mind, and to avoid battles that risk the war.

Roger Simon posts on America The Broken.

… Our country is being led by an individual seemingly incapable of thinking beyond his own interest or beyond an ideology as shopworn as a 1962 television set with a blown tube. Is there anybody left who still believes in Keynesian economics? I mean really believes in it with our now prodigiously escalating debt spiraling off into an unknowable future.

Well, our president appears to with his endless references to “fairness” — a fairness that most hurts the very people it pretends to help. Obama has trapped himself in a ideological oxymoron. He wants us to believe, wants himself to believe, that government is the solution when we all know that government is the problem. The more government tries to create jobs the worse the economy gets. The history of the twentieth century has demonstrated that for us from the Great Depression to the sorrow of the Soviet Union.

Someone finally has to cut this Gordian knot. We are living at a time when we need a man or woman in the presidency of true courage and what we have is a smug coward — the worst possible combination. …

David Brooks has been at the NY Times long enough to have gone native. At least, that is what we can surmise from this post by Jennifer Rubin.

David Brooks of the New York Times likes to fancy himself as a truth-seeker, bringing social and hard sciences to the masses. But in his Friday column on health care and death, he makes some shocking and inaccurate assertions. Given his coziness with the Obama administration one has to wonder if he is test-driving some Obama administration rationalizations for rationing.

Brooks is enamored of Dudley Clendinen’s “splendid” essay, as he describes, “The Good Short Life.” Brooks thrills to this definition of a life worth living:

‘ Instead of choosing that long, dehumanizing, expensive course, Clendinen has decided to face death as one of life’s “most absorbing thrills and challenges.” He concludes: “When the music stops — when I can’t tie my bow tie, tell a funny story, walk my dog, talk with Whitney, kiss someone special, or tap out lines like this — I’ll know that Life is over. It’s time to be gone.” ‘

Well that “dehumanizing, expensive course” allows millions of Americans who would have died in past years to “kiss someone special.” But is someone confined to a wheelchair (no dog walking) or who needs help dressing not living a life of value? Clendinen, and in turn Brooks, begin down a slippery slope as they decide that, really, is it worth it to keep grandpa around for years if he can’t tie his tie?

Brooks then embarks on a flight of misinformation to suggest we’re wasting much of that money. He finds other useful sources: …

Noemie Emery says we have had our fling with the welfare state.

The intentions of Democrats are only the best. They want all of the old to have lavish retirements, all of the young to have scholarships, verse-penning cowboys to have festivals funded by government, and everyone to have access to all the best health care, at no cost to himself. In the face of a huge wave of debt swamping all western nations, this is the core of their argument: They want a fair society, and their critics do not; they want to help, and their opponents like to see people suffer; they want a world filled with love and caring, and their opponents want one of callous indifference, in which the helpless must fend for themselves. (“We must reject both extremes, those who say we shouldn’t help the old and the sick and those who say that we should,” quips the New Yorker’s Hendrik Hertzberg.) But in fact, everyone thinks that we “should” do this; the problem, in the face of the debt crisis, is finding a way that we can. It is about the “can” part that the left is now in denial: daintily picking its way through canaries six deep on the floor of the coal mine, and conflating a “good” with a “right.”

Ever since Franklin D. Roosevelt linked “freedom from want” to “freedom of speech” and “freedom of worship,” the left has been talking of everything that it thinks would be nice to have in terms of an utter and absolute right: a right to a job and a right to an income, a right to retire in comfort in Florida, a right to the most advanced health care without paying much for it, and a right to have your children taken care of while you work all day at your job. The problem is that these are all goods and services, though of varying importance, and goods and rights are not the same things. …

… In the United States, the states patterned most on the Old Europe model—those with high taxes, high spending, and strong public unions—suffered the same plight as Europe, while those with free-market models did not. “The eight states with no state income tax grew 18 percent in the past decade,” Michael Barone tells us. “The other states grew just 8 percent.” The 22 states with right-to-work laws grew 15 percent in the past decade, the 28 others grew 6 percent. The 16 states that don’t require collective bargaining with state employees grew 15 percent, the others grew 7 percent. The most rapid growth—21 percent—was in the Rocky Mountain states and Texas, which have low taxes, weak unions, and light regulation. 

Among the states with high taxes, strong unions, and heavy public employee pension burdens are those in the Rust Belt around the Great Lakes. As Matt Continetti writes in the Washington Post, “Five of the eight states that border the Great Lakes now have Republican governors working to limit union power,” while one Democrat, New York’s Andrew Cuomo, son of a much revered liberal icon, has been praised by New Jersey’s Chris Christie as his cost-cutting twin. And to everyone’s shock, the Democratic legislature in Massachusetts has voted to rein in unions, too. …

Jeff Jacoby shines some light on another of government’s overreaches.

… Washington oversteps its legitimate bounds all the time and usually gets away with it. But every now and then a federal encroachment is so egregious that the public rebels against it. Outlawing the light bulbs that illuminate 85 percent of American homes strikes me as such an encroachment – one that even Democrats should be embarrassed to defend.

The use of efficiency mandates to snuff out the standard light bulb was an exercise of unadulterated crony capitalism. It came about after big bulb manufacturers, frustrated by their customers’ refusal to switch from cheap throwaway incandescents to the far more profitable compact fluorescents touted by greens, decided to play hardball.

“So some years ago,’’ The New York Times Magazine noted last month, “Philips [Electronics] formed a coalition with environmental groups, including the Natural Resources Defense Council, to push for higher standards. ‘We felt that we needed to . . . show that the best-known lighting technology, the incandescent light bulb, is at the end of its lifetime,’ says Harry Verhaar, the company’s head of strategic sustainability initiatives.’’

Other corporations joined the plot, lobbying Congress to croak a product Americans overwhelmingly like and compel them to buy the more expensive substitute the industry was eager to sell them. The entire scheme, a lobbyist for the National Electrical Manufacturers Association testified candidly in 2007, was “at the industry’s initiative.’’ Unable to convince consumers to voluntarily abandon Edison’s light bulb, Big Business got the government to force the issue. “Of such deals,’’ remarks Bloomberg columnist Virginia Postrel, “are Tea Parties born.’’ …

Click on WORD or PDF for full content

WORD

PDF

Mark Steyn on negotiating with Barack O’Bluffer.

… For the Most Gifted Orator in Human History, the president these days speaks largely in clichés, most of which he doesn’t seem to be quite on top of. “Eric, don’t call my bluff,” he sternly reprimanded the GOP’s Eric Cantor. Usually, if you’re bluffing, the trick is not to announce it upfront. But, in fact, in his threat to have Granny eating dog food by Labor Day, Obama was calling his own bluff. The giant bluff against the future that is government spending.

How many of “the wealthy” do you require to cover a one-and-a-half trillion-dollar shortfall every single year? When you need this big a fix, there aren’t enough people to stick it to. “We are not broke,” insists Van Jones, Obama’s former “green jobs” czar and bespoke communist. “We were robbed, we were robbed. And somebody has our money!”

The somebody who has our money is the government. They waste it on self-aggrandizing ideologue nitwits like Van Jones and his “green jobs” racket. How’s the “green jobs” scene in your town? Going gangbusters, is it? Every day these guys burn through so much that they can never bridge the gap. By that, I don’t mean that an American government that raises two trillion but spends four trillion has outspent America, but that it’s outspent the planet. …

UVA prof with nice things to say about the effects of the Tea Party.

With the breakdown of negotiations on a so-called grand bargain on the debt limit demanded by President Obama, liberal commentators have sought a convenient scapegoat to account for the impasse. Not surprisingly, they have begun by rounding up the usual suspect: the Tea Party. Its intransigence, so the line goes, has sunk this great deal.

For two years now, “Blame the Tea Party First” has been the Democrats’ favorite mantra. “Firsters” invoke the Tea Party to make sense–for themselves–of the otherwise inexplicable fact of large-scale public opposition to President Obama, and they hold the Tea Party responsible for many of the nation’s deeper problems, from incivility in our discourse to an inability to set aside intransigent partisanship.

Generosity in describing one’s foes is a rarity, especially among conspiracy theorists. But Firsters have carried their animus against the Tea Party to unprecedented heights by failing to credit it with what is today right before everyone’s eyes. Without the Tea Party, there would be no debt limit negotiations going on, just as there would have been no budget reduction deal last December. Without the Tea Party, President Obama would not be posing as the judicious statesman, but would be pushing –as in truth he still is–for more stimulus and further investments in high-speed rail. Whatever pressure now exists to treat the debt problem derives directly or indirectly from the explosion of energy that has been generated by the Tea Party.

In lambasting the Tea Party movement for its stubborness, Firsters have silently acknowledged what for two years they had all but denied. Instead of being in fact a front for racism or opposition to abortion, the “baggers,” as they have been derisively called, are genuinely insistent on cutting spending and containing the growth of government. Everything is less complicated than it seems. Supporters of the Tea Party are who they said they were. …

James Pethokoukis looks at Goldman’s new numbers and the effects on the administration.

Last night in a new report, Democrat-friendly Goldman Sachs dropped an economic bomb on President Obama’s chances for reelection (bold is mine):

“Following another week of weak economic data, we have cut our estimates for real GDP growth in the second and third quarter of 2011 to 1.5% and 2.5%, respectively, from 2% and 3.25%. Our forecasts for Q4 and 2012 are under review, but even excluding any further changes we now expect the unemployment rate to come down only modestly to 8¾% at the end of 2012.

The main reason for the downgrade is that the high-frequency information on overall economic activity has continued to fall substantially short of our expectations. … Some of this weakness is undoubtedly related to the disruptions to the supply chain—specifically in the auto sector—following the East Japan earthquake. By our estimates, this disruption has subtracted around ½ percentage point from second-quarter GDP growth. We expect this hit to reverse fully in the next couple of months, and this could add ½ point to third-quarter GDP growth. Moreover, some of the hit from higher energy costs is probably also temporary, as crude prices are down on net over the past three months. But the slowdown of recent months goes well beyond what can be explained with these temporary effects. … final demand growth has slowed to a pace that is typically only seen in recessions. .. Moreover, if the economy returns to recession—not our forecast, but clearly a possibility given the recent numbers …”

In Forbes, Peter Ferrara says they have tried everything in Washington except Reaganomics.

President Barack Obama, Congressional Democrats, and the Washington Establishment have now tried everything to revive America’s moribund economy…except Reaganomics.  We have seen over a trillion in Keynesian stimulus spending, record shattering deficits, easy money, bank bailouts, mortgage bailouts, low interest rates, even fake, Keynesian, “tax cuts” (based on tax credits rather than reduced rates).

Yet, at no point in the last 70 years, going back to the Great Depression, has the American economy suffered unemployment this high for this long, or such extended stagnation without a rebound or recovery.  The American economy does not lie flat on its back for years and years like this, except during the Depression.  Even in the 1970s era, the economy persistently rebounded after four worsening recession cycles.

Moreover, the historical record in America is the deeper the downturn the stronger the recovery.  Based on this history, America should be in the second year of a booming recovery by now.  Instead we have yet another failure of Keynesian economics.

Last Friday’s unemployment report showed that 3.5 years after the last recession started, still virtually no new jobs were being created, and unemployment was persistently rising again.  Prior to this, since the Great Depression recessions in America have lasted an average of 10 months, with the longest previously being 16 months.  But in June, 42 months after the last recession began, unemployment rose again to 9.2%.

The Depression has already arrived for blacks, with unemployment at 16.2% persisting for two years now.  The same is true for Hispanics, with long term double digit unemployment persisting at 11.6%, teenagers at 24.5%, black teenagers 40%. …

WSJ tells us about architecture students at Auburn with a fascinating project – a modest 500 square foot home built for $20,000. So, the cost is different, but rural Alabama residents have caught up to the life styles of those in New York City.

For many people with modest incomes, trailers are the only real option for home ownership. But trailers deteriorate quickly and depreciate over time. Six years ago, the Rural Studio, a program based in western Alabama and run by Auburn University’s architecture school, launched the $20K House Project, with the goal of producing a model home for $20,000. (At that cost, the resident’s monthly payment would be about $100 under the federal Section 502 Direct Loan program.) Last month, a team of four postgraduate students completed the latest home, the 10th one developed by the project.

The process starts each fall with research, as the students debate the pros and cons of previous designs. After months of planning, most of the construction is done within seven weeks, with $13,000 budgeted for materials and $7,000 for labor. “We’re very close to a buildable model,” says outreach instructor Danny Wicke.

The structure is a 26-by-26-foot square, with 530 interior square feet. .. 

Click on WORD or PDF for full content

WORD

PDF

Veronique de Rugy graphs federal spending and borrowing.

… Today, 43 cents of every dollar spent is borrowed; this amount is about 4 times the rate in 1980. Between 2007 and 2011 alone, the rate has increased 38 cents per dollar. At this pace, the historical trend of deficit spending continues at a distressing rate. …

Spengler compares our debt to Euro debt.

… The crisis came in 2008, when leverage collapsed. Today’s euro zone debt drama is not a crisis, but a negotiation. There is an instructive comparison between the municipal debt crisis in the US and the sovereign debt crisis in Europe. The most corrupt city in the US is a refuge of angels compared to any political venue in southern Europe.

The voters who also are the taxpayers have given a mandate to politicians to ruthlessly cut expenses. In Wisconsin and Minnesota, where Republican governors (and/or legislatures) confront public-sector unions, it has come to open confrontation. In fits and starts, the system is working, because states and cities must raise money from their residents, and taxpayers vote directly for those responsible for taxes and spending.

State and local government employment is falling sharply, with 21,000 layoffs in June alone. During the past year, US cities have shed 124,000 education jobs. Borrowing by US states and cities has fallen by half this year, and municipal debt performed better than any other fixed-income asset class.

In Europe, where national governments and the bureaucrats in Brussels control spending by localities, and voters have little to do with local government budgets, there is no such responsiveness. The result is a battle between Greek recipients of government largesse and German taxpayers. There is no incentive for local constituencies to throw the bums out, for it is not the tax money of the Athenians that pays municipal salaries in Athens. Europe’s laggards must look deeply into the abyss before doing what US states and cities have done proactively.

That’s where the similarity ends. America has enough taxpayers to fund its obligations at all levels of government. The euro zone will lose 30% to 40% of its potential taxpayers by mid-century. And at some point, today’s Italian and Spanish government bonds will have about as much value as obligations signed by Emperor Romulus Augustus in the year 475 CE.

Charles Krauthammer issues a challenge.

President Obama is demanding a big long-term budget deal. He won’t sign anything less, he warns, asking, “If not now, when?”

How about last December, when he ignored his own debt commission’s recommendations? How about February, when he presented a budget that increases debt by $10?trillion over the next decade? How about April, when he sought a debt-ceiling increase with zero debt reduction attached?

All of a sudden he’s a born-again budget balancer prepared to bravely take on his own party by making deep cuts in entitlements. Really? Name one. He’s been saying forever that he’s prepared to discuss, engage, converse about entitlement cuts. But never once has he publicly proposed a single structural change to any entitlement.

Hasn’t the White House leaked that he’s prepared to raise the Medicare age or change the cost-of-living calculation?

Anonymous talk is cheap. Leaks are designed to manipulate. Offers are floated and disappear.

Say it, Mr. President. Give us one single structural change in entitlements. In public. …

Jennifer Rubin says listen to Paul Ryan.

… Ryan reiterates what House and Senate Republicans have been complaining about: “During the daily deficit talks the President has been hosting at the White House, the President has yet to offer any real spending reductions that would result in meaningful changes to our nation’s fiscal path. Until the President publicly offers a detailed spending reduction plan, all we can judge him on is his record.”

He then takes us through the numbers, which make clear that Obama has run up the bill and now wants the taxpayers to pick up the check. (“Democrats’ appropriation bills increased non-defense discretionary spending by nearly 25 percent – an 84 percent increase when you include the stimulus. The Republican House took the lead in bringing an end to this out-of-control spending and reduced non-defense discretionary spending by 7 percent.”)

He makes a critical point: The president says everything should be on the table, but Obama’s pet ideas aren’t. “The President has refused to put on the table the trillions of dollars in new spending from his health care law. The President has refused to revisit his high-speed rail boondoggles or the array of special interest ‘green energy’ spending projects. After adding trillions of dollars in new spending since he first took office, the President’s only specific policy demand is to raise taxes on American families to pay for Washington’s profligacy.”

Ryan is often the indispensable man for the Republicans, explaining in a clear and concise way the current state of our finances and how to undo the damage of runaway spending. Once it is laid out, the Republicans’ position becomes far more persuasive; Shouldn’t we undo the rampant spending before we even think about raising taxes in an economy this weak?

Scott Johnson reports on the GOP win in Minnesota.

I started following the story that I called Minnesota Cage Match for two reasons: I thought, given the constellation of forces at work, that events here would foreshadow events in Washington, and I found the slant of the incompetent media coverage driven by the Minneapolis Star Tribune to be sickening. As in the national mainstream media, Democrats here control what Glenn Reynolds calls “the master media narrative,” only more so. Let us briefly review the state of play.

In the mighty storm of the 2010 elections, Republicans won control of the Minnesota House and Senate. How long has it been since this happened? Time whereof the Memory of Man runneth not to the contrary.

At the same time, Minnesota’s three-way gubernatorial election served up disgraced Democrat Mark Dayton. Dayton inherited great wealth from the family business that he shunned. As I recall, Dayton met his first wife (a Rockefeller) in something like group therapy for guilty millionaires. Now Dayton has the whole state of Minnesota with which to work through his feelings of unworthiness.

Dayton believes in increasing taxes on “millionaires” the way most of us believe in God. It’s an article of faith that is the centerpiece of his creed. Minnesota is a state that features high income taxes, but those damned “millionaires” are somehow always escaping payment of their “fair share.” When will it ever end?

Facing a projected biennial deficit of billions of dollars, Dayton demanded an increase in income taxes. To the great annoyance of the Minnesota media, it’s a demand that was a non-starter for the Republican majorities in the state legislature. …

The Institute for Justice has another win. This time in St. Louis in a neat confluence of IJ interests; eminent domain abuse and first amendment rights.

The 8th U.S. Circuit Court of Appeals today handed down a major First Amendment victory for the right to protest government abuse.  The case is a victory for a St. Louis housing activist who grew so fed up with the government’s abuse of eminent domain that he painted an enormous protest message on the side of one of his buildings facing the interstate calling for the end of eminent domain abuse.  The city had required him to either remove the mural or get a permit to display his protest, but then it refused to issue him a permit when he applied

Jim Roos runs a nonprofit housing ministry, which works to provide housing for low-income residents of south St. Louis.  Roos became a vocal critic of the city’s use of eminent domain for private development after the city took away several of his housing ministry’s buildings not for a public use, but for private development projects. ..

Shikha Dalmia looks at immigration reform Obama style.

… The great hope from President Obama when he took office was that, having spent his formative years abroad, he’d understand—and use his bully pulpit to help the American public understand, too—that immigration is not a zero-sum game: Immigrants seeking a better life make America better off, just as his family made the countries where they lived better off. Instead, he has pandered to Republicans’ parochialism and labor’s protectionism to advance his own political prospects.

This is change, but there isn’t much hope in it—for immigrants, American workers, or the American economy.

Jeff Jacoby explains why public employee unions cannot work.

… collective bargaining in the public sector is in reality not reasonable at all. It is emphatically not like bargaining in the private sector, where unions representing labor contend with management representing owners for a share of the profits that labor helps create.

In the public sector, there are no profits to share. There are only taxpayers’ dollars, which neither government employees nor government managers create. As for the taxpayers who do create those dollars, they have no seat at the table when public unions negotiate over wages and benefits. Instead, government sits on both sides, negotiating with itself over how to spend the people’s money.

So unlike their counterparts in the private sector, public-sector unions are rarely constrained by market forces. There are limits to what labor can demand from private employers. Corporations have to make a profit to stay alive, and both sides know that if costs rise too high, the results may be lost sales, eliminated jobs, or bankruptcy. Consequently, union negotiators cannot insist on the moon, and corporate managers dare not lose sight of the company’s bottom line.

That check and balance doesn’t exist in public-sector collective bargaining. …

Click on WORD or PDF for full content

WORD

PDF

John Podhoretz acquiesces with the McConnell move.

… It is, of course, a guessing game, trying to figure out who would be blamed for bad stuff. But peddling the “narrative” in which the GOP gets blamed for irresponsible and unreasonable negotiating tactics has a long history of working for Democrats. McConnell’s sense that seeming to be recalcitrant about raising the debt ceiling is more perilous than the alternative is sound pessimistic politics, which takes into account that very danger. He could be wrong. I could be wrong. But even Bill Kristol’s creative three-option plan doesn’t get to the question of the PR damage. That Obama might come to seem like a sane person in a sea of crazies may be galling to all of us who know he bears a great deal of responsibility for the severity of the current debt-ceiling crisis, but that doesn’t mean it won’t happen exactly that way.

More from Podhoretz. Seems the president is handing out more of his Netanyahu treatments.

Word is that President Obama either stormed out of budget talks today or left abruptly or spoke sharply and ended the meeting—or something. The Democrats say they’ve put $1.7 trillion in cuts on the table, and all they want is some new revenue. The Republicans say those cuts aren’t real and they’re not going to be suckered into agreeing that the cuts are real. Watching from the outside, liberals believe the White House and think that Republicans are, at best, insane and at worst, cravenly negotiating in bad faith. Watching from the outside, conservatives believe Obama has demonstrated unseriousness and petulance because he is bluffing and he is having his bluff called and he feels cornered and is lashing out.

How can these people make a deal? They can’t, not on anything substantive. And so, in the end, the much-reviled McConnell option or something very close to it—some series of temporary debt-ceiling increases that take us past Election 2012—will almost certainly be what happens.

Joel Kotkin sees the 2012 GOP opportunity.

… Some Republicans, like former Bush aide Ryan Streeter, understand this opportunity. Streeter argues for the GOP to become more economically populist approach.  He calls for an “aspiration agenda” based on policies to spark private sector economic growth and a wide range of entrepreneurial ventures. To succeed, the GOP needs a viable alternative to middle and working class voters who are losing faith in Obama-style crony capitalism but who do not want to replace it with policies focused on enhancing the bottom-lines of the top 1% of the population.

Yet at a time when people are worried primarily about paying their bills and prospects for their children, many Republicans seem determined to campaign on social fundamentalism, something that is already distressingly evident in the Iowa primary race. This may have worked in the past, in generally more prosperous times. Right now what sane person thinks gay marriage is the biggest issue facing the nation?

Neither right-wing ideology nor mindless support for corporate needs constitute a winning strategy in a nation plagued by a sense that the system works only for the rich and well-connected.  Only by focusing on working and middle class concerns can the GOP permanently separate the people from the party which pretends to represent them.

Tony Blankley makes a case for restoration. 

Some people can spot a slight in every compliment while others — the happy ones — find a compliment in every slight. So last week, as a free-market, low-tax, constitutional conservative, I happily found an apparently unintended compliment from the liberal New Republic.

It is not often that I agree with the central attack line of my sometimes media sparring partner, the New Republics’ Ed Kilgore. But in his attempt at a hit piece last week on Michele Bachmann and her stand for “constitutional conservatism” — what he thinks is an effective attack on us constitutional conservatives — I take as a badge of honor.

Putting aside his reflexive accusations against us conservatives that we are secret segregationists (making that hoary, false charge against conservatives has become an inherent part of the moral squalor of contemporary liberalism) his basic charge is that those of us who consider ourselves constitutional conservatives are really constitutional restorationists. What we really want, he charges, is the radical policy of returning to the pre-1930s view of the Constitution with its strict interpretation of the federal government’s limited powers, the originist view of individual and property rights and the removal of Franklin D. Roosevelt’s New Deal legislation. He also charges us with wanting to return to pre-Keynesian economic policies.

Well, yes. Guilty as charged m’Lord. …

New York Magazine has a good piece that explains commercial fishing regulations.

Back in the middle aughts, I took a job fishing on a commercial dragger out of Montauk. I was running a tab at a local pub when in walked a fisherman I knew. He was looking to fill out the crew for a trip leaving the following day and knew I’d been making noises about wanting to give offshore commercial fishing a try. I joined the crew as resident greenhorn, and the fisher, who knew of my eco-boy proclivities, warned me that we would be throwing back a lot of fish on the trip—the “bycatch”—and not just low-value “trash” fish, either. My friend explained that owing to the regulations we were compelled to abide, there would be fish coming onto the deck that were out of ­season, that we did not have permits for, and that we would have no choice but to throw back or we’d risk crippling fines at the dock, should fish cops from the New York State Department of Environmental Conservation greet us at trip’s end to check the fish hold. The fisherman’s admonition was, “You’re going to see a lot of stuff out there that’ll knock you back on your heels, but there’s not much we can do about it. Do your job, shut your mouth, collect your money.”

While concerned consumers fret over which fish are correct to order at their favorite seafood restaurant, heading to websites maintained by groups such as the Environmental Defense Fund for guidance on the “eco-best” and “eco-worst” fish to purchase, the truth about commercial fishing in the United States is that a regulatory framework designed to limit overfishing results in vast numbers of fish per year being scooped up on boats and dumped right back off, dead, never consumed by any ­human. Concerned about “endangered” bluefin tuna? Tell it to the tuna long-liners who’ve had to cut loose untold numbers of dead bluefins in recent years, owing to the restrictions that come with winding up on the endangered-species list. A recent ­bycatch-reduction report issued by the National Marine Fisheries Services says that “bycatch is considered to be one of the greatest threats to the sustainability of the marine environment, and bycatch affects practically every species in the ocean.”

On this early-spring trip, the quarry would be whiting, a commercial food fish that goes into lots of frozen-fish products—fish sticks and fish cakes and the like. The crew mustered on the dock at twilight, cast off the lines, and started to sail out to the edge of the continental shelf. At daybreak, the crew dropped the net into the Atlantic for our first “dip.” We towed the net for a couple of hours before “hauling back,” and that air of anticipation you apprehend on Deadliest Catch as the crab pots come up was exactly the sentiment on deck as the gears groaned under the stress of what would be a cod end bulging with fish. …

National Journal article helps you understand why Jon Huntsman should have stayed home.

… The Republican Party has nominated plenty of moderates in the post-Reagan era, including George H.W. Bush (1988), Bob Dole (1996) and John McCain (2008). One could even argue that the current GOP front-runner, Mitt Romney, fits in that category.

There’s nothing in Huntsman’s record or resume that would make it impossible for him to win the Republican nomination. All candidates have serious vulnerabilities in the primaries, including his rivals.

The challenge is how a candidate overcomes such weaknesses. Those who adapt and grow tend to do well. But all signs suggest that Huntsman has not only failed to highlight his conservative bona fides, he is doubling down on his vulnerabilities.

The biggest problem with Huntsman’s campaign isn’t his centrist ideology; it’s his campaign’s tactics. Huntsman has decided to ignore the fundamental rule of politics—a campaign is about contrasting your record against those of your opponents. Instead of taking on President Obama, he’s praised Obama’s good intentions and avoided outlining many areas of disagreement. He’s run to the left of the president on Afghanistan, calling for faster and deeper troop withdrawals. And at a time when voters are hungry for solutions, he offered a platitude-filled kickoff speech that barely touched on the economic problems that Americans want solved.

This is a Republican Party that wants head-on confrontation with Obama, but Huntsman is selling détente and civility. It’s an electorate that wants a candidate who identifies with the struggles that Americans are dealing with. Instead, his introductory campaign video focused on his love of motocross—an image of recreation at a time when the country is facing major economic pain. Huntsman is also courting independents in the New Hampshire primary, whom he assumes are in the mold of Michael Bloomberg but are as disaffected as any group out there. (In the latest July Granite State poll, 61 percent of independents said the nation was headed in the wrong direction, with a 47 percent plurality disapproving of Obama.) …

WSJ has historian Andrew Roberts review a new book on Truman’s bomb decision. At the end of World War II, our kill ratio when fighting Japanese was 10 to 1. If 500,000 Americans would be killed invading Japan and the ratio held, 5,000,000 Japanese would be killed if Truman failed to use the bomb. Roberts did not make this argument and there is no indication it exists in the book. The War is Pickerhead’s wheelhouse, so just saying Truman saved Japanese lives using the bomb. 

In the last few weeks of the Truman administration in 1953, the president attended a dinner at the British embassy in Washington in honor of Winston Churchill, who had recently been returned to the prime minister’s post. At one point in the dinner, Churchill posed a question to Truman: Would he have an answer ready when the two men stood before Saint Peter and had to account for their role in dropping atomic bombs on Japan? The scene is described in “The Most Controversial Decision” by the Rev. Wilson Miscamble, who notes that President Truman understandably didn’t much appreciate this line of conversation. The subject was swiftly changed, but if Truman ever did have to offer up an explanation at the Heavenly Gates, it could hardly have been more persuasive or succinct than the one rendered in this quite superb little book.

At the time when the atomic bombs were dropped in August 1945, Truman’s decision was anything but controversial—it was supported by almost everyone on the Allied side, since the attacks had brought to an immediate end a war that had cost the lives of more than 50 million people. It was only after the war was safely won that the morality of killing 140,000 Japanese in Hiroshima and a further 74,000 in Nagasaki started to be questioned. An article in the New Yorker in 1946 touched off the second-guessing, followed by an avalanche of criticism in the 1960s. The “it wasn’t necessary” crowd has kept up a steady drumbeat ever since …

Click on WORD or PDF for full content

WORD

PDF

Jennifer Rubin treats us to Mitch McConnell’s speech from yesterday.

“Incredibly, for those of us who had been calling for action on this issue day in and day out for about two years, the President tried to put the burden on us. With the nation edging closer to the debt limit deadline, the President retreated behind the poll-tested rhetoric of class warfare.

“At a moment when we needed leadership the most, we got the least. The financial security of the nation was being gambled on the President’s wager that he could convince people our problems would be solved if we just all agreed to take it out on the guy in the fancy house down the street.

“In my view, that was the saddest commentary on the status of the leadership at the White House.

“And I’m proud of the fact that Republicans refused to play along.

“We stood our ground. We know that what Americans need right now is for government to make job creation easier, not harder. And we said so. At a time when 14 million Americans are looking for work, we refused to support a tax hike. We supported jobs and economic growth instead.

“For more than two years now, Republicans in Washington have stood united in the belief that America would never recover from the economic crisis that struck our nation three years ago, so long as some in Washington persisted in the mistaken belief that government had the cure.”

Wall Street Journal Editors like Mitch McConnell’s debt limit plan.

Republican Senate leader Mitch McConnell said yesterday he’s concluded that no deal to raise the debt ceiling in return for serious spending restraint is possible with President Obama, and who can blame him? We’ve never thought the debt ceiling was the best leverage for a showdown over the entitlement state, and now it looks like Mr. Obama is trying to use it as a way to blame the GOP for the lousy economy.

This may have been the President’s strategy all along: Take the debt-limit talks behind closed doors, make major spending cuts seem possible in the early days, but then hammer Republicans publicly as the deadline nears for refusing to raise taxes on business and “the rich.”

This would explain the President’s newly discovered fondness for press conferences, which he has rarely held but now rolls out before negotiating sessions. It would also explain why Mr. Obama’s tax demands have escalated as the August 2 deadline nears. Yesterday he played the Grandma Card, telling CBS that seniors may not get their August retirement checks. Next he’ll send home the food inspectors and stop paying the troops. …

Neal Boortz on the jobs numbers.

… Here’s a little factoid about our unemployment levels.  The recession began 38 months ago.  In all previous recessions since WWII employment has risen by an average of 3.7% over that 38-month period; that’s 3.7% above the employment level at the beginning of the recession.  Under Obama employment is now 5% below what it was at the start of the recession.  That’s a swing of almost 9%.  But remember — it’s all Bush’s fault, and if it’s not Bush’s fault it’s because of the weather and gas prices.  And of course Obama’s moves to pretty much halt all exploration and expanded production on domestic oil sources hasn’t had a thing to do with gas prices. …

James Pethokoukis says don’t blame Boehner.

President Barack Obama could have done two things that might have saved his Mother of All Budget Deals.

First, he could have embraced market-centered, consumer -focused reforms to Medicare. That was about as likely as him accepting an Obamacare rollback.  Second, he could have agreed — as House Speaker John Boehner and Republicans suggested —  to sharply reduce tax rates in return for fewer special tax deductions/breaks/loopholes/subsidies. Recall that is what his own debt commission recommended. …

… Obama sees a need for a permanently bigger government and a lot more tax revenue to fund it.  Had Obama agreed with his own debt commission and Republicans, a big agreement was possible. Or he could have proposed real reforms to entitlements. But he declined and there wasn’t a mega-deal. Don’t blame Boehner for that.

John Steele Gordon on the Ignorant One.

President Obama’s press conference yesterday—in which he only took questions from left-leaning reporters apparently–contained an amazing statement. It should be noted the first two instances of the first person singular pronoun in the sentence refer to Barack Obama, President of the United States. The second two refer to Barack Obama, taxpaying citizen:

“And I do not want, and I will not accept, a deal in which I am asked to do nothing, in fact, I’m able to keep hundreds of thousands of dollars in additional income that I don’t need, while a parent out there who is struggling to figure out how to send their kid to college suddenly finds that they’ve got a couple thousand dollars less in grants or student loans.”

There is, of course, nothing whatever stopping Barack Obama, taxpaying citizen, from donating his excess income to the United States Treasury. But his statement demonstrates an astonishing economic illiteracy. To be sure, someone earning a great deal of money has an income greater than what he spends. You can only spend so much on luxurious living however hard you try, a reality so rich with comic possibilities that a 1902 novel called  Brewster’s Millions has been made into a movie no fewer than nine times.

But, unlike Scrooge McDuck, the rich do not put the excess in a vast money bin and frolic about in it. They invest it. What a concept! Where does Obama think new capital comes from, the tooth fairy? It’s nothing more than the excess of income over outgo. Take away the income the rich “don’t need” and spend it on social programs, and capital formation in this country drops to zero.

James Pethokoukis wants to know when the government will eat its peas, shows us the unemployment rate they don’t want us to know about, and says default is unlikely.

Niall Ferguson on the fire this time.

… What all the Indignant have in common is the refusal to address squarely the problem that nearly all Western countries face. That problem is that the welfare systems that evolved in the mid-20th century are unaffordable under the demographic and economic circumstances of the 21st century. The financial crisis has merely exacerbated what was already a severe structural crisis of public finance, boosting deficits while slowing growth.

The scale of the challenge ranges from the really, really hard to the absolutely impossible. According to the Organization for Economic Cooperation and Development, just to stabilize its debt the U.S. government needs to turn its current primary deficit of 7 percent of gross domestic product into a primary surplus of 1.4 percent. That’s roughly double the fiscal squeeze Greece needs to make. …

Click on WORD or PDF for full content

WORD

PDF

Mark Steyn spots the motto of the nanny state.

I think we ought to be harder when minor functionaries of a failed leviathan reveal themselves to have a defective understanding of the role of government in free societies. Steven Chu, the Energy Secretary who came into office saying “we have to figure out how to boost the price of gasoline to the levels in Europe“, has now offered up another soundbite for our times. On Friday, he defended the ban on Edison’s iconic incandescent in economic terms:

… “We are taking away a choice that continues to let people waste their own money.” …

Krauthammer says the president’s position is farcical.

… All of a sudden he is a man who wants to be the one to cut the deficit and the debt. Its a farce. You can see it in the threat he made where he said I will not sign short-term extension. Let’s say we are in negotiations and we are approaching and we want something real like tax reform which takes a few months. And Republicans pass a tax reform — pass a debt ceiling increase for say three months to allow negotiations. He says he will veto it because he is acting in the national interest; has to be a big deal.

I think the Republicans ought to call the bluff on this. …

Jennifer Rubin noticed Obama agrees with Paul Ryan about Medicare.

At his news conference President Obama explained:

“The vast majority of Democrats on Capitol Hill would prefer not to have to do anything on entitlements. Would prefer, frankly, not to have to do anything on some of these debt and deficit problems. And I’m sympathetic to their concerns, because they are looking after folks that are already hurtin’ and are already vulnerable. And there are a lot of families out there and seniors who are dependent on some of these programs. And what I’ve tried to explain to them is number one, if you look at the numbers, Medicare in particular will run out of money, and we will not be able to sustain that program no matter how much taxes go up. I mean, it’s not an option for us to just sit by and do nothing.”

Gosh that sounds sort of like what Rep. Paul Ryan (R-Wis.) has been saying while the Democrats have been conducting the Mediscare offensive. I asked Ryan’s office for the congressman’s reaction to the president’s admission that Medicare as we know it is going away. A spokesman replied, “As the President made clear — and the Congressional Budget Office has confirmed — Medicare is on an unsustainable path. …

We devote a lot of space today to John Tamny’s review of “Reckless Endangerment.”

… The grotesque rise of Fannie Mae, along with Washington and Wall Street’s bipartisan and politically correct worship of homeownership figure prominently in Gretchen Morgenson and Joshua Rosner’s Reckless Endangerment: How Outsized Ambition, Greed and Corruption Led to Economic Armageddon. The story they tell is surely revolting, but not very well reasoned, however. Worst of all, the authors mostly missed the real story behind the most recent rush to housing.

The book will appeal to extremes. The hard right will love Reckless given their belief – despite basic evidence – that the recessionary rush to housing was caused by Fannie, Freddie, and Democrats in thrall to both. The hard left will be cheered by Reckless owing to their equally dim view that Wall Street and greed drove the housing boom. Both sides will finish the book bursting with facts and quotes that will merely confirm views already held deeply. As for those still searching for answers to explain what just happened, they still won’t know. …

… Indeed, it should be made clear that despite the myriad problems with Reckless, the idea of government subsidizing housing is truly horrifying. From a growth perspective, an investment in housing doesn’t make us more productive, won’t cure cancer or lead to efficiency-enhancing software innovations, nor will it open up foreign markets. Housing on its best day is an item of consumption – albeit a necessary one – that has little to do with real economic growth.

More to the point, housing subsidies, particularly for the poor, are quite simply cruel. In a world where capital moves at the click of a mouse, the last thing governments should be doing is subsidizing a purchase that renders those who take advantage of it less mobile in pursuit of work. …

… it’s probably worth it to lay out a few choice utterances from our politicians. When asked if the Fannie/Freddie subsidies would ultimately trap individuals in properties they couldn’t afford, Rep. Barney Frank responded with “We’ll deal with that problem if it happens.” When presented with the idea that Fannie and Freddie’s business practices might be less than safe, Frank responded with “I think we see entities that are fundamentally sound financially.” During congressional hearings about Fannie and Freddie in 2003, Frank concluded that “there has been more alarm raised about potential unsafety (sic) and unsoundness than, in fact, exists.”

Of course Frank was but one of many Democrats who carried the GSEs’ water in Congress. Rep. Maxine Waters, seeking to avoid “fundamental change” for Fannie and Freddie similarly observed in 2003 that “frankly, we were trying to fix something that wasn’t broke.”

To be fair, it should be said that the two GSEs had their Republican defenders too, including Newt Gingrich and Robert Zoellick. Zoellick, once general counsel at Fannie, regularly twisted arms in Congress to make sure the company that employed him didn’t face tougher oversight, while Newt Gingrich once stated that “Fannie Mae is an excellent example of a former government institution fulfilling its mandate while functioning in the market economy.” How anyone could claim affiliation with either party after reading this book is a mystery. …

… Throughout the book the authors spoke ill of “predatory” lending (borrowers were apparently always naïve, and never in the wrong), but as evidenced by their description of Countrywide’s actions in poorer communities, Mozilo’s firm knew well that the risks to lending in less prosperous areas were greater, and naturally his firm charged higher rates. The authors paint Mozilo’s actions with the poor as having to do with company systems that “were designed to increase costs precisely for these borrowers”, but then if they’d not done exactly as the authors describe in a negative light, they would have run into trouble much sooner than they did.

And there lies the greatest problem with Reckless. Though it will once again serve well those with political agendas on the left or right, the analysis underlying the reporting was just so weak. This showed up most notably in the authors’ frequent snarky comments about “deregulation” as the driver of so much that went wrong.

There are so many examples in a book full of major contradictions, but the basic narrative from the authors was that a “free market philosophy that had taken hold during the Reagan years and became even greater during the Clinton administration” led to a deregulatory mindset that created the mess they set out to write about. That’s a nice bit of rhetoric, but the problem for the authors was a lack of evidence supporting their claims.

Sure enough, and as the authors reported early in the book, “Because housing finance was heavily regulated, government participation was vital to the homeownership push.” Far from an episode of deregulation, it was precisely because housing finance already had the government’s fingerprints all over it that so many errors were made. Much as many may want to blame the private sector for all that’s occurred, does anyone think all these egregious errors would have been made in an unregulated environment marked by the all-important natural non-regulation that is the freedom to fail? …

… As for the individuals who choose the life of a regulator, it would be fun to hear the authors explain how those with such low ambition might credibly oversee some of the brightest financial minds in the world. After that, their very own book shows time after time (see above) how very unequal and late regulators were to every financial calamity that they describe.

In defense of those same regulators, for them to achieve what the authors’ desire they would have to possess hotlines to the future that, if they utilized them in the private sector, would make them the most brilliant and wealthiest money managers in the world. Those who support the mere notion of regulation as the cure to what ails us ascribe to those charged with implementing them superhuman powers that quite simply don’t exist.

In that case, what we face is something utterly lost on the authors, but that their book made plain if they or their editors had bothered to notice the myriad contradictions within. Simply put, the mortgage debacle they describe was the result of too much regulation, and the only way to fix what they deem problematic is to reduce regulation to one line: if you fail, you die. …

… What’s interesting is that while the authors at the book’s beginning laid out the ”cast of characters” that allegedly brought us to the brink, they oddly left out the man and his Treasury Department that played a bigger role than any of the admittedly worthless people that comprised their cast. Specifically, the authors left out President George W. Bush, and his Treasury Department that reversed the Reagan/Clinton strong-dollar policies in favor of extreme dollar weakness.

As history has regularly shown, from post-WWI Germany, to England and the U.S. in the ‘70s (despite skyrocketing rates of interest), to the decade just completed, when money loses value commodity-like assets including housing tend to rise, particularly in nominal terms. Housing is not gold-like in the sense that gold priced in all currencies tends to rise when currencies decline in value, but the historical correlation between commodity spikes and nominal housing health is very real, and was there during the Bush years for all to see. ..

National Journal says youth unemployment is at historic highs.

Here’s a fact that should give economists—and maybe President Obama’s political team—heartburn: Two years after the Great Recession officially ended, job prospects for young Americans remain historically grim. More than 17 percent of 16-to-24-year-olds who are looking for work can’t find a job, a rate that is close to a 30-year high. The employment-to-population ratio for that demographic—the percentage of young people who are working—has plunged to 45 percent. That’s the lowest level since the Labor Department began tracking the data in 1948. Taken together, the numbers suggest that the U.S. job market is struggling mightily to bring its next generation of workers into the fold.

This is a dangerous proposition, economically (for the United States as a whole) and politically (for the president). …