Click on WORD or PDF for full content
In the NY Times, Ross Douthat thinks it’s time to stop giving tax breaks to the politically connected.
…All of this ought to be grist for a kind of “small-government egalitarianism,” in the economist Edward Glaeser’s useful phrase, that seeks to shrink government by attacking Washington’s wasteful spending on the well-connected. And sometimes conservative politicians make moves in this direction. President George W. Bush’s Tax Reform Commission proposed sharply reducing the mortgage-interest deduction. House Minority Leader John Boehner, to his great credit, recently floated the possibility of means-testing Social Security. Many Republican senators have been staunch critics of corporate welfare.
In the age of Barack Obama, many rank-and-file conservatives have been more upset about redistribution of a different sort — the kind that takes money from the prosperous and “spreads the wealth” (as Obama put it, in his famous confrontation with Joe the Plumber) down the income ladder.
This kind of spending can be problematic. But conservatives need to recognize that the most pernicious sort of redistribution isn’t from the successful to the poor. It’s from savers to speculators, from outsiders to insiders, and from the industrious middle class to the reckless, unproductive rich.
Thomas Sowell discusses the anti-business climate in Washington, and how this is stopping the recovery. As for the stimulus dollars? They will cause inflation once money circulation (velocity) picks up.
…The current issue of Bloomberg Businessweek has a feature article about businesses that are just holding on to huge sums of money. They say, for example, that the pharmaceutical company Pfizer is holding on to $26 billion. If so, there should not be any great mystery as to why they don’t invest it.
With the Obama administration being on an anti-business kick, boasting of putting their foot on some business’ neck, and the president talking about putting his foot on another part of the anatomy, with Congress coming up with more and more red tape, more mandates and more heavy-handed interventions in businesses, would you risk $26 billion that you might not even be able to get back, much less make any money on the deal?
Pfizer is not unique. Banks have cut back on lending, despite all the billions of dollars that were dumped into them in the name of “stimulus.” Consumers have also cut back on spending. For the first time, more gold is being bought as an investment to be held as a hedge against a currently non-existent inflation than is being bought by the makers of jewelry. There may not be any inflation now, but eventually that money is going to start moving, and so will the price level. …
In the WSJ, Brian Bolduc looks at the economy of West Virginia after years of too much government interference and too much pork. With Senator Byrd gone, we will see how West Virginia fares.
…In fact, 51.3% of the state’s economy relies on spending by the local, state and federal government—the highest level of any state. “We’ve created this culture of dependency,” warns Mr. Sobel, “Our human capital is not good at competing in the marketplace; it’s good at securing federal grants.” …
…Even worse, they found that pork actually pushes private investment out of a state. When the federal government intrudes, it raises demand for the state’s workers and real estate, jacking up prices. Often, companies can’t compete, so they flee.
But the West Virginia government scares away those investments with laws and taxes that smother private initiatives. …
…Unsurprisingly, West Virginia ranked dead last among the 50 states in the Fraser Institute’s Index of Economic Freedom of North America.
Stephen Spruiell, presents an excellent discussion of what could help the economy, and what the government has done instead, in the National Review.
…Keynesian economists also argue that scaling back stimulus spending might actually hasten a debt crisis. Cutting spending during a period of economic weakness, they say, would depress growth, which would depress tax revenues, which would make debt service even more difficult. The reason they are enchanted with this argument is that it never occurs to them to cut spending and tax rates simultaneously. To be clear, I am not claiming that tax-rate cuts would foster enough economic growth to pay for themselves, but there is strong evidence that they would foster more growth than deficit-financed government spending would — evidence that economist N. Gregory Mankiw recently summarized in the journal National Affairs. The incentive effects of tax-rate cuts would more than offset whatever harm (my guess is: very little) might accompany spending cuts of an equivalent size. Meanwhile, the spending cuts would offset the revenue lost to the tax cuts. …
…and at times over the past two and a half years various GOP members of Congress have put forward alternative solutions that make sense, such as House minority whip Eric Cantor’s 2008 proposal to enact a broad-based corporate-income-tax cut instead of the hodgepodge of temporary rebates and carry-backs that eventually passed. Republicans have been forced to work within the confines of what is politically feasible given their limited numbers. But it is not enough to say that “the stimulus failed.” It is necessary also to connect the dots from Stimulus I to Stimulus V — to argue that “temporary stimulus” is an oxymoron, one contributor among many to the destabilizing uncertainty that has made it impossible for businesses to make long-term plans. The stimulus machine will not run forever, because our creditors will eventually get tired of shoveling dollars into its furnace. But a vastly better outcome would be for the party ostensibly committed to limited government to find the political will to turn it off.
Michael Barone says that as long as the government threatens to steal more, taxpayers and corporations will keep their money locked up.
…Consider the plaint of Verizon CEO Ivan Seidenberg, head of the Business Roundtable, which has been playing footsie with the Obama administration for most of the last 18 months. “By reaching into virtually every sector of economic life,” Seidenberg recently wrote, “government is injecting uncertainty into the marketplace and making it harder to raise new capital and create new businesses.”
Or take a look at Obama backer Nate Silver’s fivethirtyeight.com website. “Why aren’t businesses hiring?” asks tax lawyer Hale “Bonddad” Stewart. “Uncertainty: There has been a tremendous amount of change over the last 12 months. Businesses are still trying to figure out what this means for their bottom line. Until there are firm answers, they will freeze hiring.”
In other words, the Obama Democrats’ vast expansion of the size and scope of government — and the threat that they may pass even more such legislation in a lame-duck session of Congress after the November election — has chilled the animal spirits that John Maynard Keynes said were the driving force for economic growth. …
Fred Barnes says that Congressman Paul Ryan’s Road Map for America’s Future is also the future of the Republican party.
For Republicans, the road map authored by Rep. Paul Ryan of Wisconsin is the most important proposal in domestic policy since Ronald Reagan embraced supply-side economics in the 1980 presidential campaign. It’s not only the freshest, boldest, and most comprehensive Republican thinking, it’s also the most relevant. …
…The plan would give everyone a refundable tax credit to buy health insurance, allow individual investment accounts to be carved out of Social Security, reduce the six income tax rates to two (10 and 25 percent), and replace the corporate tax (35 percent) with a business consumption tax (8.5 percent). And that’s not the half of it.
As ranking Republican on the House Budget Committee, Ryan was able to get the Congressional Budget Office to run the numbers in his plan. CBO concluded the plan would “make the Social Security and Medicare programs permanently solvent [and] lift the growing debt burden on future generations, and hold federal taxes to no higher than 19 percent of GDP.” …
In the Cato Institute, Nat Hentoff argues for repeal of Obamacare.
…Wesley Smith, an invaluable investigative reporter on the dangers of government-controlled health care, describes the consequences if Obamacare is not repealed by the next Congress after the midterm elections:
“Once the centralized planning of medical delivery is complete — with cost-containment boards controlling the standards of care and the extent of coverage for both the private and public sectors — insurance companies, HMOs and the government will be able to legally discriminate against the sickest, most disabled and most elderly in our country. In other words, those whose care is most expensive.”
…In the British Health Service Berwick loves, “750,000 patients are awaiting admission to NHS hospitals. …The latest estimates suggest that for most specialties, only 30 to 50 percent of patients are treated within 18 weeks. For trauma and orthopedic patients, the figure is only 20 percent. … Every year. 50,000 surgeries are canceled because patients become too sick on the waiting list to proceed.” …