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David Harsanyi believes in equal taxation.
…Many conservatives argued that lowering the tax burden would free up capital and induce job creation. “Washington would likely see increased revenues as prosperity grows,” they claimed. This must be a fact, as economists I choose to believe say it is. It’s unfortunate, though, that most Republicans won’t go further and argue that everyone, even the rich — even the super-filthy rich! — deserves to be treated equally by the government.
It is also too bad that these politicians won’t admit that revenue, whether we have more of it or less, is basically irrelevant. After all, doesn’t the federal government have enough money? We need spending caps and entitlement reform, not ways to generate more revenue — as if Washington’s expenditures ever match revenue anyway. …
Once again, Tony Blankley calls attention to the fact that our government has driven our nation to the brink.
If future historians look back on the ruins of the American economy after a U.S. bond crisis struck in the second decade of the 21st century, many causes will be noted. Obviously, it will be seen that for decades before the catastrophe, the United States was spending vastly more than it could afford on government health and retirement programs.
Just as after the Great Depression, Pearl Harbor and Sept. 11, 2011, blue-ribbon commissions will be incredulous that all the telltale signs of the coming disaster were in plain view yet were ignored.
…Even the Ryan plan, solid as it is, probably will be judged as not containing enough deficit reduction soon enough. The only proposal put forward so far that clearly deals with the danger is that of the Republican Study Committee, led by Rep. Jim Jordan of Ohio. Where Mr. Obama would reduce the deficit by $4 trillion – and never achieve balance – and Mr. Ryan would reduce it by about $6 trillion – and get to balance in the late 2030s – the Jordan plan would reduce it by $9.1 trillion and reach balance by 2020.
If the Jordan plan or something like it is not enacted into law in the next year and a half and the crisis hits, its non-passage may become one of the great, tragic “what-ifs” of history. …
In InvestorPlace.com, Jeff Reeves looks at the issues that will thwart an Obama second term.
…The average American consumer is poorer because of the financial crisis, according to a survey released by the Federal Reserve. How can this be, considering the market is off only about -13% from its 2007 peak?
Well, because housing values have fallen off a cliff – and if you’ve seen a 20% decline in the value of your $300,000 loan, that’s a cool sixty grand you’re in the hole on paper. Also, many folks had to tap 401k plans or savings to get through lean times due to a job loss. Lastly, while many savvy investors bought the bottom of the market in 2009 many others panicked and headed for the hills – or were left holding the bag on Lehman Brothers, Fannie Mae, AIG, Citigroup, GM or a host of other investments that could have crippled even a diversified portfolio.
Like the unemployment picture, a family’s rainy day fund or retirement nest egg can’t be replaced overnight. But unfortunately for Obama there is no wiggle room in the question, “Are you better off now than you were four years ago?” Considering that the worst of the financial crisis came to roost in 2009 via staggering unemployment and foreclosure trends, the answer for many voters will be a decided “no.”…
The WSJ editors place the negative US bond outlook on the president’s shoulders.
…S&P, as did many others, said it saw the Obama and Ryan budget proposals “as the starting point of a process,” but “That said, we see the path to agreement as challenging because the gap between the parties remains wide.” And: “We believe there is a significant risk that Congressional negotiations could result in no agreement.” And this stalemate will continue “over the next two years.”
S&P is simply connecting the political dots after last week’s un-Presidential tirade against the GOP.
S&P’s analysis also discussed fiscal conditions, most notably the scale of the deficit problem before and after 2008: “[I]n 2003-2008, the U.S.’s general (total) government deficit fluctuated between 2% and 5% of GDP. Already larger than that of most ‘AAA’ rated sovereigns, it ballooned to more than 11% in 2009 and has yet to recover.” This surely is one Bush comparison that the Obama team wishes to bury.
…The ratings agencies are hardly the last word on U.S. economic health. But the S&P outlook is a warning to the White House that financial markets have noticed that this President seems to have decided that his path to re-election lies in demonizing his opponents rather than seeing to the nation’s fiscal well-being.
Abe Greenwald notes the irony and tragedy of Obama’s vapid phrases.
Standard & Poor’s lowered its outlook for the United States from “stable” to “negative,” and said there is a one in three chance it will downgrade the U.S.’s triple-A credit rating in the next couple of years. We’ve enjoyed that credit rating since 1917. Barack Obama can cook up entitlement schemes as much as he likes, but if America loses its ability to borrow money on favorable terms there will be no safety net big enough to catch us all.
And what is the president’s message at this defining crisis moment? The New York Times reports, “Mr. Obama implored the crowd [in a speech today] not to lose heart, declaring that the vision of America he laid out in his fiscal speech — one in which ‘we are connected to one another; that I am my brother’s keeper, I am my sister’s keeper’— would animate his campaign and drive the debate in the 2012 election.”
The U.S. may lose its triple-A rating and the best Obama can do is peddle feel-good pop slogans in defense of suicidal entitlements. If only he believed what he was saying. Indeed, we are connected to one another. Which is why entitlements put all of us in debt, why taxing income for some of us will shrink our national tax base, and why every last one of us will go down with the ship unless the administration acquaints itself with reality. …
In Newsweek, Niall Ferguson writes about America’s choice.
…The most heartening thing about our road trip was the realization that such questions are not only on the minds of statesmen and professors. The students we met were also eager to discuss finance and politics. Even Joe Public now gets it: according to Gallup, 17 percent of Americans now see the deficit as the biggest problem facing the United States, compared with just 5 percent six months ago and practically zero a year ago.
Churchill had it right. The United States will always do the right thing once all the other possibilities have been exhausted. For a long time many people clung to the delusion that the United States could simply borrow $1 trillion a year for the rest of time. Now only two possibilities remain.
The first possibility is the one devised by Rep. Paul Ryan, which would eliminate the deficit largely through deep spending cuts and Medicare reform. Possibility two is President Obama’s bid to close the budget gap with more modest cuts and tax hikes on “millionaires and billionaires.”
It’s a bracingly binary choice. Shrink the government. Or squeeze the rich. …
William McGurn, in the WSJ takes a look at negative incentives created by government intervention in higher education.
…”Right now the incentives for our colleges and universities are all wrong,” says Ohio University economist Richard Vedder, who runs the Center for College Affordability and Productivity. “It’s wrong for colleges, who have no incentive to keep down costs. It’s wrong for students, whose needs are ill-served by loans and grants that go directly to the school. And it’s wrong for taxpayers, whose dollars are making education more expensive without expanding opportunity for those who most need it.”
Translation: If you are a mom or dad with college-age kids and you think the system is rigged against you, you’re right.
…A good start would be a new structure for college financing that promoted genuine opportunity without feeding the inflation it is supposed to solve. President Obama, alas, seems wed to the same government-heavy approach he had for health care. Indeed, the “reform” he signed last spring—restructuring federal grants and loans—will likely fuel rising costs as schools absorb that money, spend it on their own priorities, and continue to raise tuition at rates that outstrip the Consumer Price Index. ..