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In the WSJ, Martin Feldstein reviews the dismal economic numbers, and how the government is negatively impacting the economy. Feldstein, an econ prof, was Reagan’s economic advisory chair.
…Experience shows that the most cost-effective form of temporary fiscal stimulus is direct government spending. The most obvious way to achieve that in 2009 was to repair and replace the military equipment used in Iraq and Afghanistan that would otherwise have to be done in the future. But the Obama stimulus had nothing for the Defense Department. Instead, President Obama allowed the Democratic leadership in Congress to design a hodgepodge package of transfers to state and local governments, increased transfers to individuals, temporary tax cuts for lower-income taxpayers, etc. So we got a bigger deficit without economic growth.
A second cause of the continued economic weakness is the president’s emphasis on increasing tax rates. Although Mr. Obama grudgingly agreed to continue the Bush tax cuts for 2011 and 2012, his budget this year repeated his call for higher tax rates on upper-income individuals and multinational corporations. With that higher-tax cloud hanging over them, it is not surprising that individuals and businesses do not make the entrepreneurial investments and business expansions that would cause a solid recovery.
A third problem stems from the administration’s lack of an explicit plan to deal with future budget deficits and with the exploding national debt. This creates uncertainty about future tax increases and interest rates that impedes spending by households and investment by businesses. The national debt has jumped to 69% of GDP this year, from 40% in 2008. It is projected by the Congressional Budget Office to reach more than 85% by the end of the decade, and to keep rising after that. The reality is even worse since ObamaCare alone will cost more than $1 trillion in its first 10 years. The president’s boast that his health legislation would not “add a dime” to the national debt was possible only by combining that increased spending with proposed new taxes and with projected cuts in Medicare spending that will never occur. …
Jonah Goldberg is fed up with liberal spin.
…Consider that when President Reagan oversaw a huge jobs boom, the media recycled the untrue claim that these were all low-paying “hamburger flipper” jobs.
Well, McDonald’s alone may be responsible for a quarter to a half of the new jobs created in the last month. And that hiring probably wouldn’t have happened if Mickey D’s hadn’t been given a waiver from Obamacare.
And then there’s the stimulus, which the White House still touts as an unqualified success. Well, during Obama’s first year in office, more than half (119,000) of all the new jobs in the United States were created in business-friendly Texas, according to the Bureau of Labor Statistics. If Obama created those jobs, why’d he put so many of them in, of all places, George W. Bush’s home state?…
Jennifer Rubin comments on liberals’ version of events.
…Just when did Obama embrace deficit cutting? The centerpiece of his presidency has been the flurry of bailouts and stimulus plans. Are we to imagine that the itsy-bitsy savings obtained in the 2011 continuing resolution — budget dust in the grand scheme of things — is real“deficit cutting”?
…It is more accurate to say that Obama has never pivoted to effective pro-jobs policies. Feldstein suggests a few:
“The economy will continue to suffer until there is a coherent and favorable economic policy. That means bringing long-term deficits under control without raising marginal tax rates—by cutting government outlays and by limiting the tax expenditures that substitute for direct government spending. It means lower tax rates on businesses and individuals to spur entrepreneurship and investment. And it means reforming Social Security and Medicare to protect the living standards of future retirees while limiting the cost to future taxpayers.
All of these things are doable. But the Obama administration has not done them and shows no inclination to do them in the future.”
But for the left, such talk is an anathema, for implicit in that analysis is a rejection of the Keynesian economics that failed in the New Deal and failed again under Obama. Better to label the biggest spender in U.S. history as too frugal, than to own up to the failure of the liberal economic playbook. …
John Podhoretz comments on the truly frightening liberal explanation why the stimulus didn’t work: not enough money. Liberals apparently believe they can make up for their ignorance by increasing the amount of money they waste. Perhaps they also think they can fly, but only if they jump from a tall enough building. It reminds us of John Tamny’s excellent article in Friday’s Pickings, when government spending was cut in half during the 1920-21 recession and beyond, and the economy recovered. No point in politicians doing what works, though.
By now it is clear to everyone that the Obama administration bungled the 2009 stimulus package. The dispute now is over the reasons for its failure. The conventional wisdom is coalescing around a view crystallized in a column by Mr. Conventional Wisdom himself, Charlie Cook of the National Journal: “The administration’s initial response, the much-maligned economic-stimulus package, was far too modest and unfocused.”
Cook is a rational analyst, so it is striking that he is able to advance an argument that is, on its face, nothing short of demented. The idea that the 2009 stimulus, which cost $840 billion, could have been less “modest” and more “focused” does violence to the facts of very recent American history and to the arugments made for the stimulus by its advocates at the time.
…The growing consensus is that Obama’s economic policies have failed, and precisely in the ways that those skeptical of the stimulus predicted. The most expensive government intervention into the economy in this country’s history proved to have negligible macroeconomic impact. (UPDATE: A friend points out that if one adds together all the efforts taken by the administration to stimulate the economy directly, the number is not $840 billion but something like $2.1 trillion.) This fact should force supporters of the stimulus to acknowledge that the problem was not with the stimulus as it was implemented, but with the very idea of stimulus itself. And they just can’t.
John Fund notes that Representative Weiner may still lose his seat when NYC loses a congressional district.
New York Democrats are furious with Rep. Anthony Weiner over his fall from grace and his decision to remain in Congress, which will be a lingering embarrassment to them. But even if Mr. Weiner manages to survive a pending House Ethics Committee investigation, his district may not survive the redrawing of congressional district lines that is about to be conducted by state legislators in Albany.
New York must lose two House seats in 2012 due to slow population growth, and one of those districts is almost certain to be in New York City. Mr. Weiner represents a sprawling district in Queens and Brooklyn that borders six other congressional districts and thus could be an easy target for elimination. Due to the Voting Rights Act, none of the existing districts with a majority of black or Hispanic voters can be realistically rubbed out. But Mr. Weiner lacks that protection and already sits in a district where he is on shaky political ground, having won with only 59% of the vote in the Democratic landslide year of 2010. …
In Cato at Liberty, Ilya Shapiro has an exciting post on the litigation against Obamacare.
ATLANTA — In the most important appeal of the Obamacare constitutional saga, today (June 8) was the best day yet for individual freedom. The government’s lawyer, Neal Katyal, spent most of the hearing on the ropes, with the judicial panel extremely cautious not to extend federal power beyond its present outer limits of regulating economic activity that has a substantial aggregate effect on interstate commerce.
As the lawyer representing 26 states against the federal government said, “The whole reason we do this is to protect liberty.” With those words, former solicitor general Paul Clement reached the essence of the Obamacare lawsuits. With apologies to Joe Biden, this is a big deal not because we’re dealing with a huge reorganization of the health care industry, but because our most fundamental first principle is at stake: we limit government power so people can live their lives the way they want.
This legal process is not an academic exercise to map the precise contours of the Commerce Clause or Necessary and Proper Clause — or even to vindicate our commitment to federalism or judicial review. No, all of these worthy endeavors are just means to achieve the goal of maximizing human freedom and flourishing. Indeed, that is the very reason the government exists in the first place.
And the 11th Circuit judges saw that. Countless times, Judges Dubina and Marcus demanded that the government articulate constitutional limiting principles to the power it asserted. And countless times they pointed out that never in history has Congress tried to compel people to engage in commerce as a means of regulating commerce. Even Judge Hull, reputed to be the most liberal member of the panel, conducted a withering cross-examination to establish that the individual mandate didn’t help that many people get affordable care, that the majority of people currently without coverage would be exempt from the requirement (presumably due to their income level).
In short, while we should never read too much into an oral argument, I’m more optimistic about this case now than any other.
Jonah Goldberg is also fed up with Thomas Friedman; modern day Malthus.
As I already mentioned over at the Corner, Tom Friedman lets his inner Malthus out for a drive today:
…This is what happens when our system of growth and the system of nature hit the wall at once. While in Yemen last year, I saw a tanker truck delivering water in the capital, Sana. Why? Because Sana could be the first big city in the world to run out of water, within a decade. That is what happens when one generation in one country lives at 150 percent of sustainable capacity.”
…first a few easy shots. One of the standard complaints against Friedman is that he leaps from anecdotes and conversations…to sweeping conclusions about the state of the Universe. …
In today’s New York Times column, Friedman says that he saw a tanker truck delivering water in Sana. And this is supposedly a rich reportorial nugget suggesting that Sana may run out of water. Well it might. I confess to not knowing much about Sana. But I do have some experience seeing water trucks. I’ve seen them in lots and lots of places, from Mexico to Alaska. I’m pretty sure that if I jumped to the conclusion that Fairbanks, Alaska was running out of water because I saw a water truck, few reasonable people would find that persuasive.
I saw a taco truck setting up in downtown DC on my way into work today. Does that mean DC has reached “peak taco”? …
In Forbes, Joel Kotkin has an excellent article describing the fanatical ideology that is decimating California’s economy.
Ideas matter, particularly when colored by religious fanaticism, wreaking havoc even in the most favored of places. Take, for instance, Iran, a country blessed with a rich heritage and enormous physical and human resources, but which, thanks to its theocratic regime, is largely an economic basket case and rogue state.
Then there’s California, rich in everything from oil and food to international trade and technology, but still skimming along the bottom of the national economy. The state’s unemployment rate is now worse than Michigan’s and ahead only of neighboring Nevada. Among the nation’s 20 largest metropolitan regions, four of the six with the highest unemployment numbers are located in the Golden State: Riverside, Los Angeles, San Diego and San Francisco. In a recent Forbes survey, California was home to six of the ten regions where the economy is poised to get worse.
…But people involved in the tangible, directly carbon-consuming parts of the economy — manufacturing, warehousing, energy and, most important, agriculture — are those who bear the brunt of the green jihad. Farming has long been a field dominated by California, yet environmentalist pressures for cutbacks in agricultural water supplies have turned a quarter million acres of prime Central Valley farmland fallow, creating mass unemployment in many communities.
…Other key blue collar industries are also threatened, from international trade to manufacturing. Since before the recession California manufacturing has been on a decline. Los Angeles, still the nation’s largest industrial area, has lost a remarkable one-fifth of its manufacturing employment since 2005. …
Michael Barone reports that the federal government doesn’t think they’ve created a large enough deficit, and are currently shoving a high-speed train boondoggle down the throats of Florida’s taxpayers.
…The FTA wants state and local governments to put in $175 million to cover half the estimated costs for Sunrail. You might not be surprised to learn that, as three European researchers cited by Cox have found, the average fixed rail project costs 45% more than projected and that 80% cost overruns were not unusual. They also found that ridership estimates turn out almost always to be hugely inflated, which means either higher fares or bigger operating deficits or both, almost inevitably. And, as Cox points out, the feds require a giveback of some federal aid if ridership levels don’t meet certain standards.
…So why do the feds continue to push fixed rail? Partly because it’s an existing program and there’s an incentive to shovel money out of the door. But why was the program created in the first place? Because of some “progressive” notions. Europe has a lot of fixed rail, and everyone knows that Europeans are more progressive than we benighted Americans are (which overlooks the fact that population density is much greater in Europe than in almost any part of the United States except the inner portions of metro New York). Fixed rail takes people out of polluting cars into energy-efficient trains (except that the trains may not be significantly more energy-efficient if they don’t have many passengers). …
What I think is at work here is bossiness: planners yearn to make everyone else live in the patterns they think are progressive. …The fact that promoters of fixed rail almost inevitably produce hugely optimistic projections of cost and ridership indicate that we are dealing here with people who are less committed to rational argumentation than they are to the promotion of something which for them takes on the importance of a religious faith.
In the WSJ, Richard Vedder makes some brilliant suggestions to dramatically decrease the price of a college education.
In a study for the Center for College Affordability and Productivity, Christopher Matgouranis, Jonathan Robe and I concluded that tuition fees at the flagship campus of the University of Texas could be cut by as much as half simply by asking the 80% of faculty with the lowest teaching loads to teach about half as much as the 20% of faculty with the highest loads. The top 20% currently handle 57% of all teaching.
Such a move would require the bulk of the faculty to teach, on average, about 150-160 students a year. For example, a professor might teach one undergraduate survey class for 100 students, two classes for advanced undergraduate students or beginning graduate students with 20-25 students, and an advanced graduate seminar for 10. That would require the professor to be in the classroom for fewer than 200 hours a year—hardly an arduous requirement.
…much research consists of obscure articles published in even more obscure journals on topics of trivial importance. Mark Bauerlein, a professor of English at Emory University, once estimated that 21,000 articles have been written on Shakespeare since 1980. Wouldn’t 5,000 have been enough? Canadian scholar Jeffrey Litwin, looking at 70 leading U.S. universities, concluded the typical cost of writing a journal article is about $72,000. If we professors published somewhat fewer journal articles and did more teaching, we could make college more affordable. …