Sequester This. . .

LMAO! :D... The Democrats are not happy. When Obama proposed sequestration, the idea was that the Republicans would freak out and give him tax hikes. Not only did it not turn out that way, but it looks like Obama will be responsible for the first genuine cuts in American budget history. In fact, sequestration has turned into a rather interesting tale, which could become a watershed moment in American History.

Sequestration began when the Republicans and the Democrats were locked in a phony death struggle over the budget. They needed to find a way to reduce the deficit by about a trillion dollars, but neither side really wanted to propose anything. So they put off the deal with an agreement to agree in the future. BUT... that would not be enough to satisfy angry voters, so Obama came up with the brilliant idea of sequestration: “Uh, why not, uh, agree to reach an agreement in the future (after the election wink, wink), and to calm everyone we’ll slap a doomsday provision on this sucker. Basically, uh, if we can’t reach an agreement, then $500 billion in cuts will befall the favorite programs of each side.”

They shook on it and passed it into law.

Then the election happened and nothing really got resolved. So now it was up to both sides to reach an agreement to stop this doomsday device from going off.

But a funny thing happened on the way to doomsday. The Republicans discovered that this wasn’t really a doomsday device after all, at least not with their voters (I actually credit Rand Paul and some of the Tea Party people for breaking the Rasputin mindlock military spending has had on the Republican Party). So they started to realize that perhaps they were better off letting this thing happen.

For Obama, this was intolerable, because for the Democrats this was a true doomsday device. Not only would this actually cut programs they loved for real for once (the horror, the horror), but it gave the Republicans no reason to agree to the tax hikes the Democrats wanted. So Obama rushed out to try to pressure the Republicans to agree before anyone realized this doomsday device was really a Republican unicorn bomb. Oldbama hit the campaign trail and smeared the Republicans fiercely. Apparently, when these cuts kicked in, the world would literally end. The money in our wallets would melt away to ash, Yellowstone would be repo’d by China, old people would die of plague, and children would be eaten by the dinosaurs who escaped the Federal dinosariums. . . crunch crunch. Oh my!

But the Republicans held fast.

Then the cuts hit and the... world... didn’t... end... See, unlike prior shutdowns, this one didn’t result in chaotic things that could appear on the television. Doors weren’t looked, tourists weren’t stranded, and benefits didn’t stop coming. Few people will actually lose their jobs. Indeed, all that’s going to happen is that agencies will need to find ways to shave about 3% off their budgets for the year. In a federal government that wastes at least a third of all spending, this can be done quite painlessly. And since the public doesn’t really care about the fates of overpaid federal workers, it’s going to be very hard to upset the public with stories of one-day-per-week furloughs.

So the public yawned.

Actually, I would suggest the public not only yawned, but they smiled. The problem with cuts has always been that no one would accept having their own programs cut because they don’t want to be the only one whose programs get cut. So no one agrees to cuts. But people would accept across the board cuts that actually affect everyone equally. This sequestration feels like an across the board cut. Moreover, most people will find that nothing they want has actually been cut. So as far as the public is concerned, these appear to be ideal cuts because they happen to everyone else.

So now the Democrats are freaking out and you’re starting to see the first wave of articles about how horribly they’ve played this. In December, they were bragging how this would force the Republicans to agree to tax hikes and now they’re trying to explain how they could let the programs their supporters love get cut and why the Republicans no longer have any incentive to ever agree to tax hikes to cut the deficits. Ha ha. Basically, what the Democrats saw as the unthinkable nuclear option turned out to be everything the Republicans wanted in the budget deal and then some, and now they are struggling to explain how they missed this. Savor the sorrow of Rep. Gerry Connolly (Duh-Va), “We lost the bet on just how intransigent the Republican majority can be. We made a mistake betting on reasonable compromise ultimately prevailing. We bet on that and we lost.” Yep, sucker.

Now, I can’t really pin this on tactical brilliance on our part. To the contrary, I suspect our side was busy trying to find a way to hand a victory to Obama the whole time and just couldn’t find a way to do it. I also suspect some members of the party. . . looking at you McCain. . . are probably still struggling to find a way to hand Obama a victory in the days to come. But it’s still nice that we stumbled upon this and I do give Boehner credit here.

In any event, I would do the following at this point if I were running the Republican Party:

(1) Embrace these cuts as intentional, “genuine, across the board 3% cuts,” and point out how this is still less than normal people have taken in the way of pay cuts during the Obama years. Either way the media fights that we win. If they call these not genuine, they you say “so what’s the problem with sequestration?” and you demand more. If they call them draconian, then you pound away both on these being significant/real and you ask how the Democrats could object to a 3% cut.

(2) Attack Obama for the specific cuts he makes. Remember, we caused the 3% cut, but he picked what would actually be cut: “We didn’t want your stuff being cut, dude. Obama picked you. . . he’s a very bad man, a very bad man.”

(3) IF any particular cut(s) creates a problem that begins to sway the public, fund that cut and that cut alone. And when you send the funding bill, include other things you want and dare Obama to veto it. Also, I would challenge Obama to find an alternate cut.

Finally, here’s the watershed. The longer this goes on and the world doesn’t end, the more I think the public will feel at ease with cuts. That could well give us the ability to propose across-the-board cuts to get cuts in place, and that is a very good thing for us. Watch for signs of an attitude change in the public.

Thoughts?

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Please Stop Being Stupid

Have you ever watched someone planning to make a huge mistake? Of course you have, you’re a Republican. . . you see that every day from your party. The latest mistake-pending involves Grover Norquist’s tax pledge. I support the fact the party is finally planning to abandon Grover’s idiocy, but I can’t help feel that we’re just substituting another form of idiocy.

Ok, let me get this out of the way... “Grover”? WTF? Who names their kid “Grover”? And if that is your name, for the love of God, change it! Seriously, how ridiculous must Grover Norquist’s middle name be if he prefers Grover?

All right, here’s the deal. Grover came up with a pledge twenty years ago whereby anyone wanting to “prove their conservatism” would pledge never to raise taxes in any way shape or form. Everyone signs this. . . until recently. About two years ago, Grover ran smack dab into thinking conservative Sen. Tom Coburn of Oklahoma, who realized that Grover’s tax pledge was stupid. Rather than leading to lower taxes and an improved economy, this stupid tax pledge became a tool which Republicans used to justify supporting subsidies for big business because any attempt to cut those subsidies (like slashing ethanol subsidies and tax breaks) resulted in howls of betrayal from Grover, who claimed said Republicans were “raising taxes.” In effect, what sounds like a good anti-tax pledge became a pledge to protect the benefits cronies got for themselves.

We’ve talked about this before and I think this is ludicrous. The tax policy the Republicans should be pushing right now is exactly what Romney was pushing – lower rates across the board and wiping out all the distorting, crony industry and company specific deductions that people like Charlie Rangel have shoved into the code. Rip all that crony crap out of the code. . . breaks for filmmaking, breaks for whiskey makers to open plants in Puerto Rico, breaks for ethanol makers, etc. We also need to cap the home mortgage deduction and end the state income tax deduction because these just work as subsidies for liberal states.

Grover doesn’t like this, but who cares about him. . . the man is named after a dog, folks!

Moreover, right now, I’m all in favor of massive tax hikes on the rich (defined as anyone making $150,000 a year or more) because people need to feel the pain of Obama’s idiocy.

Again, Dogboy won’t like this, but who cares.

So I was quite happy to hear that Republicans were starting to abandon this idiotic pledge. Unfortunately, I’m not sure they’re doing this for the right reasons. I see two reason why this pledge should be abandoned (three if you count my opposition to pledges in general): (1) to end cronyism and move us toward a flat tax that doesn’t favor liberal states and rich, liberal voters, and (2) to make people pay for voting for Obama by giving them what they voted for.

Yet, the reasons given by reliable conservative Rep. Peter King (NY) and by Sen. Saxby Chambliss (Georgia) for abandoning the pledge sound like all the wrong reasons. In particular, they both have said that “the world has changed and the economic situation is different.” And they want a genuine deal to solve the debt crisis and the fiscal crisis for the good of the country.

Good grief.

There is a huge difference between letting the other side have the things that will explode in their faces and collaborating. It’s stupid to collaborate with someone who is not acting in good faith. . . like Obama. This is the same stupid impulse that the Republicans always fall for. They will go into the negotiations in good faith. Meanwhile, Obama will savage them for protecting the rich and wanting to kill the poor. They will murmur something about “for the good of the nation.” Then they will agree to all of Obama’s tax hikes on the middle class and small business, and they will demand some minor cuts that aren’t real cuts. Obama will demand tax hikes on the rich, the Republicans will refuse and Obama will agree. Then he’ll march out to the podium and accuse them of raising taxes on the middle class, while protecting the rich from tax hikes. He will dump all the cuts on their lap as well. He will then claim that they stood in his way of getting what he wanted, so they are to blame for the economic consequences to follow. And they will smile like baboons.

Pardon me for a moment. . . motherf*$#% goddam f%$#@^ idiots!!!!

I’m back.

Why is this so hard for Republicans? This is what the Republicans should be saying:

“The President won the election and we’re going to work with him to make sure President Obama’s economic policies are in place because that is what the voters wanted.

He is right that the deficit he created has put the country at risk of bankruptcy and must be fixed. He added more debt in his first four years than all other presidents combined and that needs to stop.

And he is right that the rich have not paid their fair share during his first term because Nancy Pelosi’s Congresses created too many loopholes which the rich and which multinational companies exploited. That’s how companies like GE, run by Mr. President’s job’s czar, could earn record profits and pay no income tax... zero dollars, as they shipped jobs overseas. We are glad that President Obama has finally found the courage to do the right thing and to close those loopholes and we stand with him. We want to remove all $4 trillion of these crony loopholes from the code.

We also agree that we need to raise rates on the rich. We have heard the President’s supporters calling for a 90% tax rate, but we don’t support that. We will, however, support a return to the 50% top tax rate under Reagan, and we would agree to a 25% surcharge on millionaires and billionaires like Warren Buffett and his businesses. It’s time the rich paid their fair share.

We’re also happy to make any cuts the President suggests. Name them and we’ll send you the bill, Mr. President.

Let’s do this Mr. President.”

Do you see what I’m doing here? I’m forcing Obama to either impose devastating tax hikes on his supporters or put him in the position of defending the rich and those very loopholes he ran against. . . and expose himself as a lying hypocrite to his supporters. I’m forcing Obama to take the blame for every cut that happens because they will all be things he proposed, cuts his supporters will hate. And I’m forcing Obama to take the full blame for what will happen economically. And I lay the blame for everything on the Democrats.

That is how politics needs to be played. Unfortunately, as seen above, the Republicans continue to do it backwards. They allow themselves to be blamed for everything while getting nothing they really want because they are playing by the wrong set of rules. Wake up idiots.

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A Glimpse of the Future

Now that we’ve had a day to digest the election, let me tell you why Obama won and why his followers won’t be happy with him.

● Why He Won: A lot of people are giving a lot of reasons why this election went the way it did. And to a degree many of them are right at the margins. But at its core, this election turned out the way it did for one simple reason: “short-sighted self-interest.”

Our government is a ponzi scheme. A ponzi scheme is a fraudulent investment where people are enticed into investing with promises of unsustainably high returns. Those returns are paid for with the money taken from new investors. Essentially A’s benefits are paid using the investment of B and C. B and C’s benefits are paid using the investments of D, E, and F. And so on. As long as enough new people keep entering the scheme, the benefits will flow. But the moment the new money slows down, the entire scheme collapses. That is how our government is structured, as a fraudulent investment that pays out way more than it can afford because it is stealing from the future to pay the present.

Many people don’t understand this. They only see the high benefits they get, so they want the scheme to keep going. To them, it is manna from Heaven and they don’t want it to stop. These are core Obama supporters – progressives, welfare cases, minorities. Others understand the nature of the scheme but still invest in the hopes that the system won’t fail until they have made more than they invested. These are suburbanite Obama supporters – soccer moms, professionals. Others know the system will collapse any day, but also realize that so long as everyone else will get these benefits, they might as well get them too until the system collapses. These are union workers and government workers.

Here’s the problem for Obama. He can’t keep the benefits flowing. Why? Consider these problems Obama now faces.

● The Deficit: In the past four years, Obama added more to the national debt than all prior presidents combined. Our debt ($16 trillion) now equals the size of our economy (102%), it was 51% in 1988. This means we can no longer spend money without risking a Greece-like meltdown. Moreover, we are still headed in the wrong direction. The deficit is now one trillion dollars per year. This means Obama cannot spend more because there is no more. But he has a problem. . .

● Interest: Because of the deficit, our credit rating was downgraded already and we are warned of worse to come. The cost of servicing the national debt is already $450 billion at 2.8% interest (historic lows). That’s 12% of the budget. If we continue on this course, we will be downgraded again and again and our interest costs will rise. Every 1% rise in rates adds $160 billion to the deficit each year.

● Military: Right now, the budget is balanced on the idea of taking about $200 billion a year from the military budget. This was always fake and will return to the budget. Moreover, war with Iran (or Syria) will add about $300 billion a year.

● Medicare: Obama faces two problems with regard to Medicare. First, he’s promised to steal $700 billion from it (about $150 billion a year). That is a fake accounting gimmick and will return to the budget. Secondly, Medicare is becoming a worthless benefit because doctors will no longer take it because it doesn’t pay enough. Fixing this will cost around $100 billion per year, increasing by 20% per year.

So if Obama does nothing else, the deficit will increase by between $350 billion a year to $750 billion a year, plus interest cost increases. We could be looking at $2 trillion a year in deficits by 2015. And that’s just the beginning.....

● Obamacare: If you assume a best case scenario, Obamacare is estimated to cost $1.76 trillion over ten years, or $176 billion a year. But you never get best case in government. The long-term reliable estimate for government spending is five times the initially estimated cost. That would be $880 billion a year. Moreover, this assumes most people will stay on private plans, but there’s no reason for employers to keep those plans. Also, health care costs, which were projected to go down, are going up 21% per year.

● Unemployment: There are 23 million unemployed after the prior jobless decade. Another 20 million jobs will be needed just to stay level with population growth. Obama’s policies kill jobs. Moreover, estimates are that if taxmaggedon happens, we are looking at another 6-10 million jobs lost. All of those unemployed people will need benefits. Even if we give only $10,000 a year to these people, you are looking at adding $480 billion a year in support payments, not to mention the lost tax revenue from them not working. Black unemployment will remain in the 20% range as will youth unemployment.

So now we’re looking at deficits of $3-$3.3 trillion a year. And it gets worse.

● Retirees: The federal government owes $2 trillion in unfunded retirement benefits to its workers. The state governments owe $5.2 trillion in unfunded retirement benefits to their workers. But that’s nothing compared to the coming Boomerpocalypse. The Boomers never bothered to save for retirement, choosing instead to rely on SSI. Over the next three decades, 81 million boomers will retire. That will create a $25 trillion unfunded liability in Medicare, plus another $21 trillion unfunded liability in Social Security. Moreover, these people will stop contributing to the tax base.

Further, there is strong evidence that all the economic bubbles we’ve experienced are actually the result of the boomer bubble itself. The boom of the 1990s appears to have been fueled with a massive spending binge by baby boomers. And now that the boomers have stopped spending, the economy may not recover. In fact, long term stock market trends predict that we are in a long term collapse nearly identical to the Great Depression. . . because of the boomers.

● State Bankruptcy: Several states, with California taking the lead, will go bankrupt in the next 2-4 years. They have committed to spending too much and cannot raise taxes enough to cover their debts. They are hoping for a Federal bailout, but that won’t come because there is no money to give them. Look for the shock of this to push the economy into depression and to result in court ordered (1) breaking of state employee union contracts, (2) massive across the board tax hikes, and (3) slashing of benefits, which will worsen the death spiral.

So this is what Obama faces, an economic and fiscal catastrophe caused by the actions of his party over the past twenty-plus years, actions his own policies made worse. He now faces stark choices: bankruptcy or letting Medicare die as an effective benefit, bankruptcy or killing Obamacare, bankruptcy or letting the unemployed starve. His supporters will now face (1) a likely depression or deep, jobless recession, (2) broken state budgets resulting in jobs cuts for union workers and benefit cuts for core Obama supporters, and (3) a federal government that has no power to spend money to save any of Obama’s supporters from the problems they will face. The ponzi scheme has run its course and his drones will not be happy when the money stops flowing.

Moreover, Obama will need to go to war with Iran or watch as London or New York goes up in smoke. He will need to turn his back on Eurozone requests for a handout to save them from their folly – not to mention, our economy still drives the world and our depression will drag down everyone else. He will need to spend vast sums on military preparations to face down a China made aggressive by their own economic malaise and by Obama’s perceived weakness. The falling dollar will crush Mexico, Germany and China, who rely on exports to us. His policies will make gas, food and electricity costs more expensive. And he can’t deliver on any of his legislative promises.

And all the while, his people will be wondering why the ponzi scheme has stopped paying out.

It’s going to be an ugly four years.


Also, let me stress... I am NOT predicting doomsday here. That is not what this is. Each of these issues can be overcome, but they can't be overcome with Obama's policies or in ways that will leave his supporters happy.

That is the real point here, Obama faces a dilema: let the country sink and outrage his followers when the money stops OR fix things and outrage his followers by taking away their benefits.

So don't read this as an end of the world prediction.... leave that to the Mayans.

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The Tea Party Effect

I’m rarely interested in what Joe Scarborough says. He’s one of those RINOs who is always finding fault with conservatives and typically whines “why can’t we be more like the Democrats?!” Leave Barack alone! Boo hoo. Anyway, he’s finally written something interesting and it’s about the Tea Party.

Joe starts his article by pointing out that all of his liberal pundit friends, all his friends in the MSM, and all the Democrats he knows keep asking him why the Tea Party is destroying the Republican Party. This is the point where Joe usually throws his hands up in the air and whines about our side. Instead, he rightly calls bullspit on this. In fact, he goes so far as to list the Tea Party’s accomplishments:

● They brought the largest legislative landslide in US history in 2010. This created the largest Republican majority in Congress since 1946.
● They grabbed six seats in the Senate.
● They elected six governors.
● They helped win 700 seats in state legislatures.
● They took Ted Kennedy’s seat, which seemed impossible.
● They led the resistance against Obamacare.
● “The energized a conservative movement battered by eight years of bloated Republicanism.”

This last point deserves clarification because I agree with Joe. By 2008, the Republican brand had become toxic. It was associated first with the Republican Congress obsessively and hypocritically going after Clinton over an affair. Then Bush came along and added questionable wars, open cronyism, the creation of new entitlements and massive spending.

Indeed, before the Tea Party came along, the GOP followed Bush’s lead and spent $700 billion bailing out Wall Street, sent the debt ($10 trillion/69.6% of GDP) and deficit ($450/7.1% of GDP) to record levels, created an unfunded $7 trillion Medicare drug plan entitlement, and fought two wars and was eyeing more. Moreover, Big Business was all over the White House, raping the Treasury time and again through subsidies, protectionist regulations, and no-bid government contracts to cronies. He also created the Patriot Act which stripped Americans of their rights and signed anti-piracy legislation which turned the courts into a cash machine for the recording industry, Hollywood, and agri-business.

Obama made this even worse, sending the debt to $16 trillion (101% of GDP) and the deficit to $1.7 trillion (11.4% of GDP), adding a $787 billion “stimulus” (read: payment to cronies), adding the $2 trillion Obamacare entitlement, adding one war and putting two more on the agenda, and adding more than 100 new major regulations at a cost of more than $50 billion a year. Obama also kept the doors open to Big Business and he tried to allow Big Business to shutdown the internet to stifle competition.

The Tea Party brought all of that to a grinding halt. Since the Tea Party came along, the spending has stopped (though it hasn’t reversed yet). Obama’s regulations are being targeted for repeal. SOPA was killed. Net neutrality was killed. Cap and trade was killed. The Tea Party is leading the charge to repeal Obamacare. The bloated and overpaid federal bureaucracy was exposed. And the public has turned against further wars, even as liberals have developed a taste for using the military to make Obama’s “whine from behind and bend-over” foreign policy look muscular.

There is no doubt that ALL of this should be credited to the Tea Party.

The Tea Party has changed the culture of the Republican Party. They are the part of conservatism that has been abandoned by “the establishment.” They are the people who bring the “small government” to the party of small government. They are the completion of the Reagan Revolution. They are the people who have upset the natural order of things in Washington.

This election will be interesting for several things. First, I genuinely see Romney as the first Tea Party candidate, even though he refuses to adopt the label, because his views on smaller, limited government, less spending and a focus on small business over Big Business combined with his attacks on cronyism, align perfectly with the Tea Party philosophy. So does his focus on economic issues. Secondly, we will need to watch to see if the Tea Party can deliver a follow-up victory to 2010. If they do, they will become the dominant party in Washington. I think they will, but we’ll see. Tune in to find out.

Thoughts?

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Government Dependence Is Killing America

America is in trouble, that’s clear. Our economy is creaking along and has produced no jobs in a decade. Unemployment is soaring. The middle class is shrinking. Inflation is crushing wages and people on fixed incomes. Our national debt is stifling and our deficit tells us the powers that be are running full speed ahead with the same old dysfunction. Now we have some interesting data from the Heritage Foundation which highlights the greatest threat this country faces. In a word: dependence.

According to the Heritage Foundation, dependence on the federal government rose 23% in the first two years under Obama. That’s the biggest rise since Jimmy Carter. What's worse, almost every year sees a rise, and the cumulative effects are staggering. In the last two years, the number of people dependent on the federal government has risen 7.5% to 67 million people. That means 22% of the population, one in five people, is a ward of the state. And that’s just the tip of the iceberg because more than 49% of all Americans, 152 million people, live in a household that gets a check from the government.

Think about that.

Half of all Americans look to the federal government as a source of income, and one in five look to it as their primary source of income. Do you think those people will support cutting government spending? Unlikely. At this point, these people eat up 70% of the federal budget -- they claimed 25% in 1962 and 48% in 1990.

Further, 49.5% of all Americans pay NO income taxes (it was 12% in 1960). Do you think those people have any incentive to stop the growth of government?

America has become a country where the many mooch off the labors of the few. This is a disaster because it gives millions of people a strong incentive to vote to keep taking from the rest. And that is highly destructive to the fabric of the country. Why? Because a culture of dependence is forming where a majority of Americans see the government as provider. They have essentially become useless. . . a drain on society. But they have political power because of their sheer numbers and they have no shame in using the government to steal from everyone else. Essentially, the unproductive are using the force of government to make the productive into their slaves.

This must end and it must end fast because dependence makes people unable and unwilling to change. So long as this continues, these people will entrench themselves further and they will ultimately destroy the country in an orgy of debt.

After I started this article, I ran across an article about Jim DeMint. DeMint is the real intellectual Godfather of the Tea Party and must be credited with shaking Senate Republicans from their slumber. DeMint has put out a new book in which he says what I am saying above:

“Dependent voters will naturally elect even big-government progressives who will continue to smother economic growth and spend America deeper into debt. The 2012 election may be the last opportunity for Republicans to win enough votes to win the presidency and a majority in Congress, and enact policies that might turn our nation around from the imminent threat of fiscal calamity.”

This is a significant point. So long as the GOP lets the Democrats (and fellow Republicans) keep adding people to the government dole, we are making it harder and harder to win future elections. It’s a vicious circle, and it needs to be broken.

Interestingly, when DeMint was asked about the presidential candidates, he deferred, but he made two points very clearly: (1) winning the election trumps everything else because of the need to stop this culture of dependence, and (2) the winner of the primary must adopt/focus on Ron Paul’s ideas of individual liberty, cutting the power of the Federal Reserve, and limited government. Said DeMint:

“If our nominee doesn’t pick up a lot of Ron Paul’s ideas, we’re missing the boat and we’re missing a lot of people who could help us build our party. These are not wild ideas.”

I have to agree. I think that a sane Ron Paul without a surrenderist foreign policy would be an unbeatable Republican candidate in almost any election, and especially in this election. The question is, who is this person? Jim DeMint is about the only name that comes to mind at the moment.

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Uncle Sam: The Gift That Keeps On Giving

Every year Tom Coburn puts out a list of the 100 most egregious examples of wasteful government spending. This year, he listed $6.5 billion worth. Let’s look at some of those. Then I’ll show you why our economy has stalled.

While $6.5 billion may sound like a lot, it really isn’t to a government that spends $3 trillion a year. Nevertheless, Coburn’s list is important because it shows our government’s attitude toward our money. And make no mistake, this is our money. When you go to work tomorrow, every hour you work, Uncle Sam is reaching into your pocket to fund these kinds of programs. What kinds of programs? Observe:

● $484,000 for a hippie-themed pizza restaurant in Arlington, Texas. This is part of a national chain called the Mellow Mushroom. Why are we giving money to a private business? And where is Commentarama’s grant dammit?!

● $764,825 to study the mobile phone and social media habits of college freshmen. Huh? Why should anyone pay for this? For one thing, we already know about their habits. Who needs this much money to study something you can look up for free on the net?!! And why does this require federal money at all?

● $136,555 to let a group of English teachers retrace Chaucer’s Canterbury Tales in England. W.T.F?!! Why are we paying for some a-holes’ vacations?!

● $175,587 to study how cocaine use affects the mating habits of quail. Yeah, you read that right. Cocaine + bird sex.... brought to you by you the taxpayer!

● A down payment of $130,987 on a million dollar study to determine whether “a dragon-shaped robot can enhance toddlers’ learning skills.” At least they’re not using cocaine this time. And wasn’t that a movie -- The Toddler With The Dragon Shaped Robot?

This stuff is mind-numbing. I don’t know if I should laugh or cry or sign myself up? I want a dragon or a federal-government supported pizza restaurant. Why can’t I have one? Heck, I'd even take a freezer full of blow-fed quail.

And this is just the tip of the largess iceberg. There’s money for a video game preservation center, salaries paid to dead employees, another bridge to nowhere, money to study online dating, money to pack butter, a Hawaiian chocolate festival, to build a magic museum, iPads for kindergarteners, and hundreds of billions of dollars to government employees who do nothing but grind the country to a halt.

I want my tax money back.

And while we’re talking about grinding the country to a halt, check this out. You know how regulations stall an economy just like higher taxes? Sure you do, unless you’re Paul Krugman.

Well guess who’s been burying the economy in regulation? According to George Mason University, the number of “economically significant” regulations being issued has been souring. An “economically significant” regulation, according to the government, is a regulation that imposes at least $100 million in annual costs on the economy. Clinton issued an average of 56 per year. “Conservative” George W. Bush issued on average 62 per year. And now his downgrade-ness is issuing on average 84 per year. Here’s a handy chart:


What this means it that during Clinton’s eight years, he added $44.8 billion in regulations to the economy. Bush added $49.6 billion. And Obama’s already added $25.2 billion in his first three years Add that up and we’re over $100 billion in new regulations in the past couple decades. If you’re a Keynesian, that’s half a trillion in damage to the economy every year. Using Krugman’s stimulus math, that means a loss of around six million jobs!

And keep in mind, these regulations actually cost well more than $100 million, we just don't know how much because that data isn’t available. These could well have been three, four or five times as expensive.

Also this is only the biggest regulations, this doesn’t count the thousands of regulations scored to stay just below the $100 million level. It’s likely those add up to way more than the numbers above. But let’s assume for the sake of argument those smaller regulations total another $100 billion. That’s another six million lost jobs for a total of twelve million lost jobs.

Now this may be purely coincidental, but you might remember that our economy is currently “missing” 15 million jobs over the past decade. Gee, I wonder where they went?

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The “Right” Tax Hikes

Before Turkey Day, Pat Toomey and Jeb Hensarling were taking a lot of heat for a tax proposal they made as part of their supercommittee work. Let’s talk about why their proposal actually is something conservatives should adopt. The proposal in question involves either capping or eliminating both the state tax deduction and the home interest deduction. Here’s why you should support this.

The arguments against this are that it would constitute a broad-based tax increase. In other words, most taxpayers would see their taxes go up as a result of this. And if you phase this out above a certain income, then you are playing into the Democrats’ class warfare arguments. Also, eliminating the home mortgage deduction would hurt the home industry by eliminating the incentive for people to buy homes, which conservatives see as promoting personal financial responsibility.

The MSM argument for this is that eliminating these deductions would result in a pretty massive increase in tax revenues, and something on this scale will be needed to reduce the deficit or pay off the debt.

Sounds like a loser, right? Well, not so fast. Consider these points.

● As a conservative, the idea of helping a particular industry through the tax code should be anathema to us. We should not be picking winners and losers no matter how much we like particular industries. And we should not look favorably upon social engineering.

● The complaint that this would broadly raise taxes can be offset by lowering rates as part of the agreement. Some people would end up paying more and some would pay less, but overall lower, flatter rates without distorting deductions should always be the conservative goal.

● The class warfare point doesn’t really support the idea of leaving the current system in place either. Instead, it argues against phasing out the deduction for the rich. But if we eliminate these deductions entirely or simply cap them at some amount, then everyone is treated equally and there is no support for class warfare.

● And in favor of capping these deductions, if not eliminating them entirely, consider this. The purpose of the home mortgage deduction is to encourage home ownership because that’s fiscally responsible, but does this argument still make sense when we are talking about people who are buying million dollar homes? Presumably, they don’t need the government trying to tell them where it’s best to put their money.

Those are the preliminaries. Now it gets interesting. See, it turns out that both the state tax deduction and the home mortgage deduction disproportionately benefit liberals and support liberalism.

By allowing state taxes to be deducted, lower tax states are essentially subsidizing higher tax states and making higher taxes more palatable. In other words, through the state tax deduction, the federal government will effectively pick up about a third of the tax burden imposed by the states. Thus, if State A taxes income at 6% and State B taxes income at 12%, the federal government gives State A a hidden 2% subsidy and State B a hidden 4% subsidy by reducing the federal taxes it demands from the taxpayers of those states. Because federal spending is a zero sum game, meaning it is finite, that extra 2% is basically money transferred from other states to State B, i.e. lower tax states are subsidizing higher tax states.

Why should a responsible state like Texas be forced to subsidize an irresponsible state like New York or California? If New Yorkers want to pay 12%, let them pay 12%, don’t let them pay only 8% with tax money from Texas going to make up the other 4%. Make these liberal states experience the full consequences of their stupid policies!

And make no mistake, liberal states are the ones benefiting from this.

Moreover, “the rich” who benefit the most from this deduction and the home mortgage deduction are disproportionately supporters of liberals. In fact, according to Michael Barone, voters in high-tax, high-income states overwhelmingly voted for Obama. Nationally, those with incomes over $200,000 voted for Obama by 6% more than voters below $200,000. And in the high-income-tax states, Obama blew McCain away: Connecticut (55%), New York (56%), New Jersey (52%), Maryland (55%), Illinois (54%), California (57%).

Why should a middle class worker in Kentucky be forced to send tax dollars to Washington so that Washington can support the spending habits of rich liberals and rich liberal states?

It’s time to eliminate these deductions or cap them at a low level which doesn’t subsidize liberal states.

Toomey and Hensarling are right in this. Eliminating these deductions is solid conservative economics and philosophy and it’s solid conservative politics.

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Austerity?! You're Kidding, Right?

It drives me nuts that everyone keeps claiming we’ve entered an “austerity” period in government. You can’t read an article in The Economist without them whining about this supposed austerity “endangering the recovery.” Seriously, every. . . single. . . article. And they aren’t alone. Most journalists now whine that “austerity” has “sapped growth” and hurt the economy. Noted liar Paul Krugman recently claimed “the turn toward austerity is a major factor in our growth slowdown.” This is demonstrably false.

In April, the White House and Congress agreed to a “draconian” $38 billion cut in the 2011 budget -- a whopping 1% of the $3.82 trillion leviathan. Oh my! Then in August they agreed to cut $2.4 trillion over the next decade. . . which would be 6% assuming the budget doesn’t increase for ten years (RFLMAO).

So there is austerity, right? It’s slight, but it is there, right?

Well, no.

Data from the Treasury shows that federal spending in 2011 is actually $120 billion higher than it was in 2010. In other words, spending is 5% higher than it was in 2010 and the supposed $38 billion in cuts has somehow morphed into $120 billion in additional spending.

That doesn’t sound like austerity to me.

Ok, so maybe we’re looking in the wrong place? Maybe the problem is really at the state level? After all, we keep hearing about belt-tightening and layoffs at the state level. Could that be where this supposed austerity is happening?

Well, no.

State budgets in 2010 were 8% higher than they were in 2008. And in 2011, they are 5% higher than they were in 2010. And in 2012, they’re estimated to be 2.6% higher again.

So where is this austerity? It’s made up. Liberals have spent like drunken sailors for the past decade. Federal spending is up 93% in 10 years and state spending is up 72% in 10 years, and there are no signs this growth is slowing any time soon. But they don’t want you knowing that, so they whine about austerity. And supposedly reputable magazines like The Economist prove they are too incompetent to even look up the truth. It’s a sad world.

Finally, let me point something out vis-a-vis the Democratic belief in stimulus spending. Federal spending increased 93% in ten years, yet the economy produced ZERO new jobs this decade. What gives? Maybe federal spending doesn't create jobs after all. . .

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Super Committee Not So Super

The debt ceiling agreement requires the formation of a “super committee” of twelve Senators and Congressmen, who will be charged with finding $1.2 trillion in additional deficit reduction. To approve anything, the committee needs 7 out of 12 votes. If it fails, or if Congress does not approve its recommendations, automatic cuts will kick in to make up the difference between what the committee approves and $1.2 trillion. So, how is the committee stacking up? It’s not horrible.



The Good

● Tax Pledge: Every Republican member has signed Grover Norquist’s pledge not to raise taxes.



● Leftist Anger: Leftist bloggers like the Daily Kos are furious at Harry Reid’s picks, which they consider unwilling to defend entitlements.



● Defense Sec. Leon Panetta: Democrat Leon Panetta just undermined the Democratic plan by saying that the super committee should not cut anything else from the defense budget. This will make it hard for Democrats to sell further defense cuts.



● Pat Toomey (R) (McConnell appointee): Toomey is the ultimate Tea Party guy. He’s the former head of the conservative Club for Growth and a Tea Party favorite. In fact, he tried to unseat Arlen Specter before there even was a Tea Party. He’s a solid conservative. Interestingly, he says he would be willing to eliminate deductions and subsidies in exchange for lower income tax rates, but will oppose any sort of “big tax increase.” That puts tax reform on the table.



● Jeb Hensarling (R) (Boehner appointee): Hensarling is a former chair of the conservative Republican Study Committee. He is also a member of the Budget Committee and works closely with Paul Ryan, who asked not to be appointed to this commission. His views are fairly similar to the Tea Party Republicans.



● Fred Upton (R) (Boehner appointee): You might recall Upton from the lightbulb debate. At the time, we weren’t sure if he would be willing to cast off his moderate environmentalism and do a good job of shifting the Energy and Commerce Committee to the right. He has. And he should be a good player here. He seems interested in ending energy subsidies, particularly for wind and solar: “Since I am sure that the industry will never give up its free money voluntarily, now is the time for us to slash it on our terms.” This has freaked out environmentalists.



● John Kyl (R) (McConnell appointee): Kyle is retiring at the end of the year, and wants to be Vice President. He has been a reliable conservative during his time in the Senate. He has a long record of pushing tax cuts and he walked out of the Biden talks because he felt the Democrats only wanted “job-killing tax hikes and new spending.” He also has suggested cutting deductions in exchange for lower rates.

The Bad

● Dave Camp (R) (Boehner appointee): Camp is the Chairman of the House Ways and Means Committee. I know nothing about him (which is a bad thing) except that he is a member of both the moderate Republican Main Street Partnership and the conservative Republican Study Committee. Being a member of the RSC is a good thing and he describes himself as a conservative on fiscal policy, but he has favored extending unemployment benefits and the auto bailout.



● Rob Portman (R) (McConnell appointee): Portman is a former Bush budget director, which is not a good thing. He’s a freshman Senator from Ohio and I know little about him, except that he’s considered the weak link on the Republican side. He too has signaled a willingness to reduce tax breaks, but says that those cuts should be used to lower rates.

The Ugly

● Max Baucus (D) (Reid appointee): Finance Committee Chairman Baucus is a wild card. He has shown an ability to act in a bipartisan manner when he worked with Chuck Grassley on a jobs bill which the Democratic left flank hated because it included tax cuts. But he also came up with Obamacare. He is likely to fight to protect farm subsidies and Obamacare. Interestingly, former Republican Senate Alan Simpson, who chaired Obama’s deficit reduction committee of which Baucus was a member, call him an awful choice. He described Baucus as being lazy, unhelpful and out of touch.



● John Kerry (D) (Reid appointee): Kerry is a troubling pick. First, he lobbied to get on the committee because he’s looking for a legacy. That’s always a bad sign. Secondly, he has proved to be a standard liberal ass. Third, he just accused the Tea Party of being the cause of the downgrade and he made the Orwellian suggestion that the media should ignore the Tea Party. That said, he was one of the first to attack Obama’s Afghanistan policy, claiming that we should not stick with a policy just because it exists. And Alan Simpson strangely suggests that: “Kerry will do good work, he really will. I know him well.” If he wants a genuine legacy, then he will need to move right, but we'll see.

The Ugliest

● Patty Murray (D) (Reid appointee): Patty Murray is the most cynical choice. She is the chair of the Democratic Senatorial Campaign Committee. This means that her job is to protect the 22 Democratic senators who are up for re-election in 2012. Their current campaign strategy is to scare old people by slandering the GOP by claiming Republicans are trying to destroy Medicare. Of this pick, one Republican official said: “It is shocking that Harry Reid appointed his chief fundraiser to a committee that will be the central focus of every lobbyist in town.”



● Pelosi: Pelosi has yet to appoint her three clowns, but you can pretty much guess they will be total losers.

At this point, Baucus and Kerry are where we will need to look to get a good deal. At the same time, we will need to watch Portman. My guess is that we end up with a little tax reform, the ending of some deductions and subsidies, a reduction in rates, a trimming of entitlement numbers without an actual plan to cause the cuts, and some minor discretionary cuts.



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Government Reform. . . The Fantasy Version

Let’s do a bit of fantasy government reform. These are reforms I’d like to see, even if there’s no chance they will happen. The problem as I see it, is that the Founding Fathers were very good at establishing a government that uses checks and balances to control the misbehavior of the branches, but they couldn't stop individual misbehavior. Here is what 200 years of experience tells me we need to do:

1. The Fiscal Discipline Incentive: Right now, Congress can bribe voters with no real consequence. Hence our budget problems. Let’s re-align that incentive with something Warren Buffet apparently suggested: any time there is a deficit of more than 3% of GDP, all sitting members of Congress and the Senate are ineligible for re-election.

This one would require a Constitutional Amendment to be implemented, but the effect would be dramatic as the things that Congress does now to buy votes would actually cost them their jobs. What’s more it gives Congress a powerful incentive to make the economy grow.

2. Banning Influence Peddling: Coincidentally, to keep them from profiting when they get tossed out, we need a lifetime ban from lobbying for any Congressman who serves more than two terms and any Senator who serves more than one full term. And Congressional pensions can’t begin until 15 years of service.

3. Pro-Growth Balanced Budget: We need a balanced budget amendment with spending capped at 15% of the prior year’s GNP. This would keep the government in check at an historically average size and would give Congress an incentive to put in place a pro-growth agenda. Using last year’s GNP prevents cheating.

4. Tax Discouragement: Raising taxes should require a 60% vote in both the House and Senate.

5. No Tax-Free Lunch: All lobbying gifts are now income to the Congress members/Senators and are personally taxable. . . every lunch, free flight or box of chocolates.

6. Separating The Fourth Estate: No Congress member or Senator may be married to any member of the media or any employee of any media company.

7. No Direct Self-Interest: Government employees may not vote in federal elections.

8. Tim Pawlenty’s Google Test: The government must privatize all services that are available in the private sector, i.e. can be found being offered to the public on Google. The government should be reformed so that only two types of people work for the government: (1) those administering private contracts and (2) government inspectors/law enforcement. Also, government pay should be set at the Dept. of Labor average for that job category in the region plus 10%.

9. Primary Improvement Act: Our primary system is skewed by the early primaries. We need to replace it with a rotating regional primary system, breaking the country into five or six regions and rotating the voting order each election. This will eliminate the overweight importance of early states while still making candidates address regional and state concerns.

10. The You First Act: Every law Congress passes must apply to Congress and all staffers.

Thoughts? What would you add?

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What's the Debt Dealio?

No doubt, some of you will be surprised to hear that Obama spoke to the nation last night. . . at least the part of the nation that still listens to him. No doubt, the MSM is full of articles (all written a couple days ago) that extol the brilliance of Obama’s speech and proclaim that the speech made the public cry tears of joy. . . it was joy, right? Also no doubt, many of you are totally confused about what is going with the debt ceiling negotiations. Here’s where we stand.

1. Why Obama Spoke: Obama went on television because he is losing the public relations war, despite media claims and fake polls to the contrary. Rasmussen reports that the public trusts Republicans over Democrats 45% to 35% on economic issues. Indeed, Republicans win 9 of 10 top issues -- education being the one Democratic “stronghold” (42%-38%). So Obama had no choice but to try to win the public over.

2. Obama’s Speech: Obama’s main line of attack was (1) failure to raise the debt ceiling until after the 2012 election will destroy our economy, (2) the Republicans are trying to cause a default because they are evil, and (3) why can’t we all just get along on my terms? His most effective line was: “If that happens, and we default, we would not have enough money to pay all of our bills -- bills that include monthly Social Security checks, veterans’ benefits and the government contracts we’ve signed with thousands of businesses.”

3. Boehner’s Response: Boehner’s main line of attack was (1) I gave it my all, but Obama wanted a blank check and has never negotiated fairly, and (2) he wants tax hikes that will destroy jobs. His best line was: “The president would not take yes for an answer. Even when we thought we might be close on an agreement, the president’s demands changed.”

4. The Reid/Obama “Plan”: Let’s start with the basics. First, Obama has finally given up on getting tax hikes.

Secondly, this proposal is a crock:

● They are calling it a $2.7 trillion debt “reduction,” but that’s a total lie. First, $1 trillion of that is from “winding down the wars in Iraq and Afghanistan.” This is essentially an accounting trick, like claiming you will buy a million dollar house next week and then saying you cut your budget by a million dollars by promising not to buy it after all. Even Joe Lieberman has said “I don’t think it’s a real cut. It’s like a bookkeeping cut.”

● The proposal then includes $400 billion in “interest savings,” which appear to be more accounting gimmicks. These are like the magic “everyone will be healthier” savings in ObamaCare.

● Next, it includes $100 billion which have already been negotiated. Those are the only legitimate cuts.

● Finally, the last $1.2 trillion come from a promise that a committee of 12 politicians will agree to find more cuts in the future. That and $18 gets you a Double Sugarmoccacrappe at Starbucks.

So what we have is $100 billion in cuts over ten years (i.e. $10 billion a year.... 0.0003% of the budget), some false accounting and a promise to find more cuts. In exchange for this, Obama gets an immediate $2.4 trillion hike in the debt ceiling.

5. The Latest House Plan: Boehner’s latest plan calls for a two-stage approach. Stage one involves $1.2 trillion in cuts over 10 years combined with an immediate debt ceiling hike of $900 billion. This would be followed by larger cuts to be agreed upon later. The Democrats object to this plan because it would likely result in the need for an additional debt ceiling hike before the next election.

6. Boehner’s Problem: There are 178 House Republicans who seem to be taking the position that they won’t vote for anything, and apparently oppose the new House plan. This is actually fairly stupid. The point where everyone is desperate to get a deal is the time to lay out your demands and get some good cuts. By simply refusing to vote for any plan, these Republicans make themselves irrelevant and will eventually force Boehner to seek Democratic support.

7. Reid’s Problem: Believe it or not, Reid has lost the left because of potential cuts to entitlements and a failure to tax the rich. Thus, he will need a lot of Republican support. . . support he doesn’t have. His ace in the hole is the 178 House Republicans who will force Boehner and McConnell to deal to find Democratic support. That will give him a chance to buy back his left flank.

8. Something You Should Know: Believe it or not, raising the debt ceiling has nothing to do with new spending. We need to raise the debt ceiling to cover amounts we already spent. Getting the public to see this as “new spending” has been a Republican PR triumph.

9. Who Loves You Baby?: A couple weeks ago, Boehner said that negotiating with Obama “was like trying to nail Jell-O to the wall.” According to certain leftist reporters, Democrats privately say “much worse” about Obama off the record (and no, the reporters haven't shared what has been said).

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Dancing On The (Debt) Ceiling

I MAY owe Mitch McConnell an apology. I’m not sure yet. I’ve been looking into this whole debt ceiling thing and I’m actually starting to see the cleverness in his plan, especially compared to the alternatives. Wanna talk about the debt ceiling? You know you do. Don’t worry, I’ll make this as painless as possible.

Ok, here are some basics.

1. The debt ceiling was first put in place by statute in 1939 by the Public Debt Act, which set the maximum amount the government could borrow. This number has been raised many times and currently stands at $14.294 trillion. . . roughly 4 trillion Big Macs.

2. The government will break through this ceiling on August 2 like a clown bursting out of a cake. . . hmmm, cake.

3. Everyone has a plan for dealing with this.

● the Do Nothing Plan: Do nothing. Kind of self-explanatory. Of course, this means that 80 million people won’t be getting their checks, and our cost of borrowing will go up, and a bunch of investment stuff with explode like a Congressman in a microwave.

● the Dumb~ss Plan: S&P and Moodys want Congress to eliminate the debt ceiling, which would be like parking your armored car at a thieves convention.

● the Double Dumb~ss Plan: Bill Clinton thinks Obama should just declare himself king and say that he has the power to raise the debt ceiling. Clinton also thinks yer kinda sexy.

● The Tom Coburn Plan: Tom Coburn is ready to do some serious cutting. He proposes $9 trillion in cuts over the next 10 years. This would include a trillion from the Pentagon budget, modernizing military health care, significant reforms of Social Security and Medicare, and the elimination of “corporate welfare” through the elimination of subsidies (e.g. ethanol and targeted tax credits) and many deductions. Grover Norquist (which I swear is the name of a Muppet) says: “it is now clear Sen. Coburn’s plan all along was a trillion dollar tax hike. . . [I have you now Coburn, there's no escaping the Grovernator]!”

● The Gang of Six: This group of reprobates are proposing a $3.4 trillion plan that isn't a real plan. It goes a little something like this.

(1) Find $500 billion in cuts now, mainly by reducing the cost of living increase for Social Security. Impose spending caps until 2015, freeze congressional pay and sell unused federal property. . . like Hawaii.

(2) Within 6 months come up with a plan to find more cuts.

They also suggest guidelines like simplifying the tax code by making three brackets (8-12%, 14-22%, 23-29%), setting the corporate tax at 23-29%, and eliminating the Alternative Minimum Tax (which sucks when it hits you. . . “what do you mean my deductions don’t count?! Alternative what?! Did I step into an alternative reality? If that’s true, then where’s my beard Mr. IRS ‘you owe us’ letter?! Where's my beard?!”).

Beyond that, this is just a plan to work on things... kind of like the Underwear Gnomes on South Park.

● the Tea Party Plan: The House just passed a really cool bill (Cut, Cap and Balance Bill) that does a lot of cutting ($5.8 trillion), would require a balanced budget amendment, and doesn’t raise taxes and it’s really cool and I like it a lot and stuff. . . but it’s D.O.A. at the Senate. Move along, nothing to see here.

● the McConnell Plan: Finally, we come to the McConnell Plan.

When I first heard the McConnell Plan, it sounded downright stooopid. As filtered by the press, McConnell was proposing to give Obama the power to raise the debt ceiling. If Congress wanted to stop him, they would need to pass a law stopping him. Since he could veto it, that meant Congress needed 2/3 support to stop him. . . and that ain't gonna happen.

The purpose of this plan seemed to be to let Obama get his debt ceiling increase, while claiming the Republicans tried to stop him, without actually stopping him. I was not pleased. And seeing Nancy Pelosi clapping her hands over this like one of those monkey toys with the symbols made me even more suspicious. If Pelosi likes it, it can’t be good.

Then I heard more details of exactly what McConnell is proposing. Apparently, to raise the debt ceiling, Obama also would need to recommend $1 of spending cuts for every dollar he wants to raise the debt ceiling. Now that is a horse of a different shade of green. That would mean for Obama to get a $1 trillion extension to the national credit line, he would need to propose $1 trillion in cuts. Wow! Me likely!

Not only would this mean Obama would be the one responsible for raising the debt limit (as he could avoid it by offering cuts instead), but he would also be forced to make cuts. Cuts which his peeps will absolutely hate! What’s more, the Republicans can vote against those cuts (claiming they would have made different cuts) because Obama has more than enough Democrats to let his veto survive!

Now, there are some caveats here. First, I think the Republicans need to send a series of budget cuts to him and have him veto those first -- as a showing to the public that they tried to get cuts. Secondly, they need to be very careful in how they write this. It better not include any chance of him raising taxes or this will go over like a lead balloon with the public (although... it might be a good way to let him do some of the dirty work of tax simplification to keep the Grover Norquists off Republican backs).

At this point, we don’t know exactly what the deal entails, but this may actually be a smart plan. Hence Obama and the monkey with the clap (Pelosi) are now rooting for the gang of six proposal instead (Reid doesn’t like it).

Stay tuned.

There... that wasn’t so bad was it? If you have any complaints, please leave them below.

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There Are Lies, Damned Lies, and CBS

My article is up at Big Hollywood! Go take a look: (Link)! I’ll wait right here for ya. :-)

Did you know the American people back Barack Obama on the current debt negotiations? It’s true. . . if you believe CBS. And why shouldn’t you believe CBS? I’ll tell you why.

According to the CBS poll 43% of the public approves of Obama’s handing of the debt ceiling crisis (48% don’t), but only 21% of the public approves of the Republicans (58% disapprove). Hence, Obama is winning the PR war.

But there's a catch. As is CBS’s history, the sample CBS uses is heavily skewed to the left. Indeed, CBS includes 11 percentage points more Democrats than Republicans in its final results (35% Democrats to 24% Republicans). If we back that out, Obama’s approval falls to 32%. That’s hardly resounding.

But there’s more. The poll doesn’t actually give us enough information to determine how valid their independents are. Specifically, there are no baseline questions that let us determine if these people lean left or right. All we know is they have self-identified as independents. And, frankly, we have no reason to think that CBS's collection methods were any less skewed for independents than they were for Democrats and Republicans. Thus, we have no reason to think the independents aren’t equally skewed 11% to the left because CBS's methods were clearly left-biased. And looking at the responses given by the independents, they mimic the Democratic responses far too closely for any set of genuine independents I’ve seen in a poll in the last three years.

Nevertheless, even if we accept them at face value, only 37% of independents approve of Obama’s handling of the debt ceiling crisis (52% disapprove). Those aren’t numbers that win you re-election. In fact, they are damning.

What's more, CBS is billing this as “just 21 percent backing the Republican resistance to raising taxes.” But that’s not the question that was actually asked in the survey. The survey asks whether people approve or disapprove of the Republicans’ “handling” of the negotiations. It never asks if they support raising taxes or not. Indeed, the “handling” question is meaningless as it will capture both those who want a stronger stance and those who want a weaker stance. That’s why you need to ask more (or different) questions to get useful results. Of course, CBS didn't do that. Can you guess why?

Now in truth, the Republicans don’t fare well with any group in this poll. So that is a concern. But there are two problems with drawing any conclusions from that. First, the poll never asked why people are upset at the Republicans. According to the poll 51% of Republican respondents disapprove of the Republicans, but does anyone really think that’s because average Republicans want tax hikes? Or is it more likely a response to a leadership that keeps undercutting each other and doesn’t seem to have a game plan? We can't say from this poll. But I can tell you that Rasmussen reports that 55% of the public (Democrats, Republicans and Independent combined) oppose tax hikes as part of the debt ceiling deal (only 34% disagree). Republican opposition is in the 80% range. So it’s more likely people are upset about Republican weakness than their opposition to taxes.

Also, none of the other polls out there support CBS's results. The Republicans lead the generic Congressional poll 44% to 38%. Obama’s approval ratings are a horrible 45% approval to 54% disapproval, with only 38% approving of his handling of the economy. Even in a Presidential race, TOTUS loses 48% to 43% to a generic Republican. That's really bad. And none of that is consistent with CBS’s findings.

So why were we supposed to trust CBS again?

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Not All "Tax Hikes" Are Bad

“What Boehner’s trying to accomplish will literally change the fiscal trajectory of the country.”

-- Rep. Tom Cole (R-Okla.)

Until he changed his mind yesterday, Speaker John Boehner was headed for trouble with the talk radio set: "He's a socialist! He wants to raise taxes by $1 trillion!!! He’s betraying us!" Unfortunately, that reaction is both wrong and highly destructive to conservatism. Let’s discuss.

Here’s what happened. With the government bumping up against the debt ceiling, Obama and the Republicans are busy negotiating a debt reduction deal. On the table were two possible deals. One deal involves $2 trillion in cuts over the next ten years. The other deal involves $4 trillion in cuts, including structural changes to Medicare and Social Security. But the $4 trillion deal would have include $1 trillion in tax hikes. Specifically, this would have involved an across-the-board reduction in tax rates, including corporate tax rates, offset by the elimination of tax “loopholes,” i.e. deductions.

Until last night, Boehner was working on the $4 trillion deal and most conservatives in Congress were waiting patiently to see what was on the table before commenting. But in the idiotsphere, talk radio went on the attack without having a clue what they were talking about. They heard that this would involve “tax hikes” because the elimination of deductions will result in an increase in taxes. Increased taxes are bad. Hence: “Boehner is a socialist! Get your pitchforks!” But this is stupid. . . there is no kinder way to put this.

For decades, most people on the right have advocated reform of the tax code -- usually a flattening of rates and a simplification of the code. Remember all the talk about doing your taxes “on a post card”? Even the current Presidential candidates (except Santorum) are advocating some form of “tax reform” to “simplify the tax code.” But you can’t simplify the tax code without eliminating parts of it. And if you eliminate parts of it, then you are by definition raising taxes on the people who can no longer use the deductions you eliminate. Thus, if we accept the argument of these self-proclaimed conservative purists on the radio, then basically all tax reform will result in tax increases and should be opposed. Who knew so many talk radio guys thought the IRS code was inviolate?

We should reject this stupidity and instead look at what is cut to decide whether a particular reform is a good one. Indeed, some deductions should be cut. For example, we should eliminate any deduction that is not a generalized deduction that any taxpayer can claim. In other words, if a deduction is industry specific (or company specific), then we shouldn’t be too troubled by this “tax hike.” These are deductions that were put into the code by well-connected lobbyists to benefit individual industries or companies and they are a distortion of the free market and an abuse of power. Eliminating them is a good thing and should not be attacked as a tax hike. Examples of this include ethanol-related deductions (though Norquist disagrees), or deductions which make it cheaper to shift jobs overseas, which let companies use pre-tax money to lobby, or which allow credit card companies to deduct faked bad debts from their profits.

A classic example of such deductions are the deductions put into the code by Charlie Rangel, who gave $2.8 billion in tax breaks to British alcohol giant Diageo and who created a deduction that only four companies in the USA can qualify for. . . all contributors naturally. (see Rangel, No. 9).

We also shouldn’t be troubled by the elimination of deductions that exist for social engineering purposes, such as the deduction for the purchase of electric cars or going solar. Indeed, the government should not be using the tax code to tell us how to live and should not be subsidizing products which the free market has rejected. Again, we should not be attacking the elimination of these deductions as “tax hikes.”

The problem here, as increasingly is becoming the case, is that people who don’t know what they are talking about react to the characterization of these reforms as “tax hikes” and throw a hissyfit. If we are to remake the government along conservative lines, we’re going to have to shut these idiots up or get people to stop listening. When conservatives like Rush Limbaugh can with a straight face claim that wiping out Charlie Rangel’s friends’ dirty tax break is an intolerable “tax hike,” conservatism has lost its way and all Rush is doing is doing the bidding of the Democrats and K-Street by leaving in place a corrupt and complex tax code that is packed with handouts for the well-connected.

This is very frustrating.

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Obama-conomy + Cluelessness Dooms Obama

Obama is in deep trouble, as shown by his sagging poll numbers. Even the biggest bounce he got from the killing of Osama bin Laden has faded, as we knew it would. So once again, the economy and his handling of the budget are front and center, as they will be throughout the election. But the American people don’t like what he’s doing and he has no idea what else to do. How bad are things? Dire.

Let’s start with the poll numbers (according to Reuters):

● 49% of Americans disapprove of his handling of his job. Only 47% approve. But that's the good news. . . read on.

● 59% of Americans disapprove of his handling of the economy. That's a career killer.

● Only 33% approve of his handling of the deficit. That’s down 6% since April.

● 89% of Americans think the economy is in bad shape. 57% say we are in recession.

● 66% say the US is on the wrong track.

These numbers are disastrous. This means that literally every conservative and independent disapproves of his handling of the economy and the deficit, and that even some Democrats are starting to disapprove as well.

Why would people be so upset? Well, for one thing, inflation is out of control. As we discussed before, inflation is officially in the 2% range, but that excludes food and gas. When we factor those in, our readers seem to think 15%-20% is more accurate. That’s worse than the worst moments under Carter.

Official unemployment remains around 9%, and real unemployment is closer to 16%. As Lawhawk pointed out the other day, no President since FDR has ever been re-elected when unemployment was above 7.2%. And no one is going to hire until Obama changes his policies wholesale.

Not surprisingly, personal consumption is falling. Consumer confidence dropped 10% last month, to an anemic 60.8. Durable goods orders, i.e. what factories are making, declined 3.6% last month (worst numbers since 1984). This means consumers and businesses expect trouble and are hunkering down. And car sales fell 3.7% to well below the level the car companies need to be profitable, and even The Washington Post is calling Obama a liar about his bailout success claims.

And, as anyone other than a Democrat would expect, home prices rose temporarily when the federal home-buying tax credit was in effect, and fell like a stone the moment the tax credit expired. Home values in big urban areas fell to their lowest level since 2002 as foreclosures depressed prices. S&P Chairman David Blitzer refers to this as a “double dip in home prices across much of the nation.” Home construction starts fell too, even though this is usually the start of the building season.

High gas prices, out of control inflation, crashing home values and massive unemployment. . . what’s not to love?

What's really interesting though, is that Obama should have had a good month. The Republicans lost in upstate New York apparently (if you believe the MSM) because of Paul Ryan's Medicare plan. Newt Gingrich attacked that plan too. The Democrats spent the month blasting the Republicans for playing chicken with the debt ceiling, a very serious charge. And a great many people complained that the Republicans were either too aggressive or too timid in budget cut demands. Yet, on the question of who would handle the economy better, congressional Republicans gained 11% points last month!

How can this be? I think the answer is simple: Obama has nothing to offer. He's added $4.6 trillion to our $14.3 trillion dollar debt -- that's 32.2% of the total debt in only three years. And he's offered nothing but token cuts to fix this. Even worse, he and his Democratic friends have opposed everything the Republicans have tried to do to fix this without ever offering their own plan. The American people aren't taking kindly to that. This is like the captain of the Titanic trying to blow holes in the lifeboats so that he can shift the blame to the guy who is trying to save everyone from the captain's mistake.

Similarly, after spending a greater amount than the GDP of all but 14 countries as a stimulus package, Obama has only lost jobs to show for it. How can you spend the Korean economy (which employs around 30 million people) and not produce any jobs? That's an incredible level of incompetence. What's worse, having tried the only thing he knew to do and failed, he now has no idea what to do next.

That is the problem for Obama. He's created an economic disaster on a scale somewhere between Jimmy Carter and the Great Depression and he has no plan to fix this except to play politics with every Republican proposal. That's why his numbers continue to fall and why they won't recover.

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It's Time To Exploit The Debt Ceiling

Sometime between May and June, our government will breach the federal debt ceiling. We have three choices: raise the debt ceiling, cut spending, or default. The third choice would be a disaster, but I’m thinking that it might be the right time to oppose raising the debt ceiling. Jim DeMint thinks so. Interestingly, the same Democrats who voted against raising the debt ceiling before are now attacking Republicans for toying with the same idea.

Let’s start by explaining why we can’t default. If the US doesn't cut spending or raise the debt ceiling, it will literally (legally) run out of money. That means entitlements won’t be paid, government workers will be sent home (not just the essential ones), government contracts will stop, and repayment on the debt will stop. The biggest of these consequences might be the defaulting on the repayment of our debt. This would tank our credit rating and raise interest rates. Right now we pay approximately $160 billion per year on interest to service the national debt. Much of that has been at incredibly low rates obtained during the financial crisis of 2008. If we default, we could expect our interest rates to double pretty easily. That would mean spending almost as much on payment of interest as we currently spend on Medicare. Moreover, the higher interest rates would hit home mortgages, consumer loans, credit card rates, and crush the stock market. So default would begin a horrible economic spiral that would lead to an economic depression.

This means we must not default. It also means that anyone playing with a possible default better be sure they are right, because the consequences could be very severe and could be fairly easy to explain to every American, as they would be personally hit by this.

But default won’t happen until at least June or more likely July. So at this point, as far as the public is concerned, default is just theoretical. Thus, now is actually the perfect time to use the threat of default to extract goodies from the Democrats. Why? Because it’s too early for the public to get too upset about the idea of the interest on their ARM or their credit cards doubling. But at the same time, anyone worried about the consequences of not raising the debt limit (i.e. Obama and Senate Democrats seeking re-election) will be getting increasingly nervous.

Thus, now would be the time for Tea Party Republicans to make serious demands in exchange for agreeing to raise the debt limit. I say Tea Party Republicans rather than the party leadership because (1) it will be harder for the Democrats to attack Republicans generally if this was seen as just a subset of Republicans, (2) the Democrats think these people are crazy and thus are much more likely to believe this threat than they would if it came from Boehner, (3) Jim DeMint doesn’t have to reveal how much support he has, which will prevent the Democrats from judging how credible the threat is, and (4) this allows Boehner to play the mediator, which is an ideal position for an advocate -- it's essentially the good cop/bad cop routine.

I would also suggest that the demand be substantial and consequential, and it should not be anything that can be characterized as being done in the name of a small group of people like “the rich” or “corporations.” Thus, I would say, don’t ask for a few more billion dollars or tax cuts, but ask for a reformation of Medicare along the lines of that proposed by Paul Ryan, i.e. a de facto privatization. Or demand statutory spending caps fixing the maximum percentage of GNP that can be spent by the federal government.

Finally, start running ads right now pointing out the hypocrisy of the Democrats on this issue. President Obama, House Minority Whip Steny Hoyer and Harry Reid each voted against raising the debt ceiling when Bush was President. They are claiming their prior votes were mistakes. But others aren’t being as "genuine." Sen. “Air” Claire McCaskill claims it would be “profoundly irresponsible” for the Republicans to vote against raising the debt ceiling, without ever mentioning that she did the same thing when Bush was President. To hide the contradictions in their own votes against it under Bush and for it under Obama, John Kerry and Joe Lieberman are trying to blame Bush for each of their votes -- then and now. Nancy Pelosi and Caucus Chairman John Larson are simply refusing to comment on their flip flops. And Assistant Democratic Leader James Clyburn actually said that his vote against raising the debt ceiling (something the Democrats now describe as “profoundly irresponsible”) was just a “protest” of Bush’s tax cuts, i.e. he did something profoundly irresponsible just to register his anger at Bush?

The point here is simple. It will be very hard for the Democrats to defend this issue. Either they were horrifically irresponsible under Bush or they are playing politics now. Either makes for great ads and should help defuse any idea that the Republicans are about to destroy the country. So long as Obama is simultaneously afraid that not getting the ceiling raised will destroy the country (and it would), the Republicans should be able to extract something significant for the public.

Fortunately, this may be in the cards. Even Eric Cantor has said: “Let me give notice to the White House that blindly raising the debt limit without implementing real reforms is irresponsible and will simply burden our children with more debt. We Republicans are not going to go along with it.”

Ok. . . go for it.

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Stop Attacking The Budget Deal

The moment the budget deal came out, large groups of conservatives started whining. Most were just poorly informed, but some are doing this intentionally because it gets them ratings or gets them noticed -- a recent crop has joined them because they don’t want to be on the wrong side of the crowds. So let me point out a few things:

1. Get Your Numbers Right: Let me state clearly a point that most of these pundit keep wanting to ignore -- this was not $38.5 billion in cuts, it was $78.5 billion in cuts. That means Boehner got 78.5% of the $100 billion sought, which is not bad given that he does not control the Senate or the White House.

2. 100% Is A Delusion: The idea that Boehner should have gotten everything is ridiculous. As someone who is accustomed to negotiating professionally, I can tell you that anyone who claims you can get everything you want in an adversarial negotiation has no idea what they are talking about. The amount you can get depends entirely on two factors: (1) how much the other side cares about a particular issue and (2) how desperate they are. The fact is, the Democrats weren’t desperate. Why? Because they are down and out and without momentum and without a way of regaining it. Their best chance is to introduce a wild card like a shutdown in the hopes of finding an issue that gives them respectability or hope the shutdown deprives the Republicans of momentum. Shutting down the government when the other side has nothing to lose is stupid because you can't win. Moreover, even if the Democrats did care, the closer you get to 100% the greater the resistance. By the time you get to 100%, the other side has nothing to lose by rejecting the deal and seeing how things play out.

3. Stop Ignoring The Riders: Look at the riders and you will see a tremendous amount of conservative influence won. Everything from forcing votes that will hang around Democratic necks to forcing Obama to keep Guantanamo Bay open to forcing the removal of the gray wolf from the endangered species list was included in this deal and represent clear conservative policy victories. So why do the pundits keep focusing only on the two big riders the Democrats never would have agreed to?

4. Stop The False Comparisons: This idea that more ($80 billion) was spent in two weeks than the cuts is a red herring. First, federal spending is not consistent week by week, thus you can easily find weeks where nothing gets spent. Does that mean the value of the budget deal depends on what week they sign it?

Secondly, this is false logic of the worst kind. A budget is a year-long endeavor and cuts are incremental. This criticism is like complaining that a dieter didn't stop eating until they’ve burned off all the calories they are trying to save throughout the year.

The complaint that the debt grew more than the cuts is similarly flawed. 88% of our budget is either defense spending or mandatory entitlement spending. Comparing the total spending cuts made to the remaining 12% against the debt caused by the 88% will naturally end up with the debt being greater because we haven’t touched entitlements yet. This is like complaining that someone who cuts their movie ticket budget in half hasn’t made any cuts because that amount is dwarfed by their spending on utilities.

5. Know What You’re Talking About: This idea that gimmicks were used seems to have sent people into hysterics, even though they had no idea what the gimmicks were. All budgets use “gimmicks.” That’s how you estimate anything that isn’t a precisely known amount, e.g. future tax revenues. Complaining about "gimmicks" without knowing what they are is irrational.

6. Stop Treating Spin As Fact: This idea that the cuts will only result in $300 million in savings is pure spin. It is a flat out distortion.

First, let me point out the irony that conservatives, who regularly attack CBO for blinding applying the assumptions it is given without ever asking if those assumptions are realistic, are suddenly accepting as true the spin placed on a CBO report.

Secondly, make no mistake, this is spin. If you look at the CBO report, it quite correctly notes that the 2011 budget will be reduced by $80 billion. The end. So how do we get to the $300 million figure? By making a false comparison. The $300 million number comes from comparing the actual spending after the budget deal against the amount spent in 2010. But that’s a false measure. When budgets are issued, they include automatic increases for each year. The 2010 budget was no different. Thus, had no budget deal taken place, the 2011 spending would have been $78.5 billion higher. To pretend that this somehow wouldn’t have happened and that therefore a comparison to the spending of 2010 is appropriate is factually wrong and entirely deceptive.

Further, this is where the supposed gimmick comes in. CBO is assuming that many of the spending cuts involve spending that isn’t likely to have happened based on the rate of spending so far during the year. In other words, based on what’s been spent so far, CBO thinks the agencies wouldn’t have needed this money anyway. Thus, the inclusion of these amounts as cuts in the budget deal is considered "a gimmick." But CBO knows this is false because agencies always spend their budgets. This is part of an ancient end-of-year ritual where agencies rush to spend everything they’ve been given so that their future budgets aren’t reduced. Also, large projects often get pushed off to the end of the year so the agency knows before it begins that there will be money available to complete the project in the following year. Thus, comparisons to the current rate of spending are a fraud.

7. Stop Aiding And Abetting The Democrats: Finally, this whole thing is really ticking me off. If people have a legitimate criticism then make it constructively. Don’t go throwing a temper tantrum and ignorantly attacking the Republicans. All these pundits are doing is helping the Democrats by making the Republicans seem fractured, disorganized and unsupported.

And let me point out a few facts about the pundits doing the attacking. First, most of these people rely on being loud and bombastic to get audiences. Outrage sells, whether it’s justified or not.

Secondly, the track record of these pundits is suspect at best. These are the same people who ran with every single anti-Republican rumor they heard over the last couple years. Many of these pundits are the same people who kept insisting the Republicans didn’t have the nerve to fight Obama/Pelosi even as they blocked most of the Democratic agenda in party-line votes and filibusters despite having NO power to block anything. These same pundits who now ignore the riders and the additional $40 billion in cuts and who have bought hook, line and sinker into the spin on the CBO report, are the same people who jumped on the Scott Brown for President bandwagon without having any clue what he stood for. They are the same people who jumped on the Christie bandwagon because of a youtube video, again without bothering to look into his RINO ways. These are the same people who jumped on Tea Party freshmen for a party that none of them attended, and a dozen other stupidities.

These arm-chair revolutionaries are Monday Morning Quarterbacks of the worst kind, because they are too lazy to do their research, they are front runners and bandwagoners, and because they know they are using false arguments and false logic to attack people they claim to support, all in an attempt to further their own careers.

It’s time we started asking them the hard questions, and tuning them out when they can’t answer.

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