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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. …