Why is slavery wrong?

Byline: | Category: Above the Fold, Culture, Economy, Ethics, Government, Taxes & Spending | Posted at: Tuesday, 12 November 2013

Over at the Daily Beast Jamelle Bouie accuses Sarah Palin  of rhetorical overreach by recently likening the national debt to slavery.

It just so happens that the introductory chapter of a book I’ve been working on doesn’t just employ slavery as a simile, but actually asserts that a central feature of modern government is slavery.  Undoubtedly, Mr. Bouie will take umbrage at the equivalence.  But I challenge him and you to refute the assertion on logical grounds.  I look forward to critiques and encourage discussion if you dare to proceed . . .

(more…)

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Was it personal? Or is it incompetence?

Byline: | Category: Above the Fold, Government, Regulations, Taxes & Spending | Posted at: Saturday, 2 November 2013

A month ago I postulated that the President did not give into Republican demands to delay Obamacare, even when it was becoming obvious that Obamacare was not ready for rollout, because of his arrogant, personal hatred for the GOP (It’ not business; it’s strictly personal).

Jonah Goldberg offers a more damning alternative.  (Hat tip: Glenn)

“Why Obama didn’t do this and why it didn’t occur to him are good questions. Hubris obviously played a role, as it does in nearly everything this White House does. But the best answer is he didn’t know how terrible things were over at HHS.”

Occam’s Razor tells us that the simplest explanation is usually right.  And in this case, the simplest explanation may be that the President really didn’t know just how screwed up was the execution of his signature legislative accomplishment.  That he really did think that just by passing the law that America’s health care would be better.  That he thought that just by throwing $600 million at a software system was enough to guarantee success.   The simplest explanation, therefore, may be that the man is just incompetent.

That is also the scariest explanation.

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Doom it by making it go forward

Byline: | Category: Above the Fold, Economy, Regulations, Taxes & Spending | Posted at: Tuesday, 22 October 2013

Remember a couple weeks ago I said that it was purely for personal reasons that the President would not compromise by asking for a one-year budget deal in exchange for giving Republicans a one-year delay in Obamacare?  Well  the President only got a 90-day budget deal and it looks like it is his side that now needs an Obamacare delay.

If Republicans really want to destroy Obamacare, they would assure the Administration that there is no chance that Congress will obstruct the President’s signature plan.

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All is proceeding as I have foretold

Byline: | Category: Above the Fold, Culture, Economy, Government, Taxes & Spending | Posted at: Wednesday, 9 October 2013

If you’re not scared off by two-thousand word essays, read this to understand why Washington, DC Democratic Mayor Vincent Gray staged a photo-op stunt to beg Senate Democrats to end the standoff over Obamacare, while the usually Republican-leaning National Chamber of Commerce pleaded with Congress to add some more headroom to the debt ceiling.

Shorter than 2,000-word version:

DC Mayors represent government workers who are the major casualties of temporary government shutdowns, while business groups represent big business, which depends on government spending fueled by even deeper debt.

UPDATE:  (Delegates representing DC too.)

ALSO:  Establishment GOP lashes out at Tea Party

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The negative multiplier effect defined

Byline: | Category: Above the Fold, Economy, Government, Taxes & Spending | Posted at: Wednesday, 9 October 2013

Economists like to talk about the multiplier effect of government spending.  The theory is that if the government spends a dollar buying products, services, or even spending it on welfare, the money is transmitted through the economy many times over when the original recipient buys things which then put extra money in the pocket of another recipient, who then buys things, and so on.

Keynesian estimators of the multiplier effect often focus on the spending and thus only predict a positive multiplier.  This, however, analyzes only one half of the equation:  “that which is seen,” in the words of Frederic Bastiat.  That which is unseen is where the money came from. In the case of government spending, it can only come from higher taxes, meaning that someone else is unable to spend himself that which the government spent, or from higher borrowing, meaning that someone else in the future is unable to spend the amount of money borrowed plus interest.  The multiplier effect, therefore, can only be positive when viewed through the double entry accounting method, if the government spending today has a higher multiplier than the multiplier effect of private spending, whether today or in the future.  Depending on their political stripes, economists latch onto data that buttress their belief that government spending is more or less efficient than private spending.

Today comes data that point substantially in the direction of anti-Keynesians who argue that government spending is a bigger drag on the economy than if the spending decisions were to be left in private hands.

Senator Sessions Debt GDP Chart

The ranking member of the Senate Budget Committee produced this chart showing that over the last two years, the government added $2.4 trillion in debt and saw GDP increase by only $1.2 trillion.  Keep in mind that government spending is part of the equation used to calculate GDP.  So this chart implies a negative multiplier of 50%–meaning that for every government dollar spent through debt, the economy shrank 50 cents.  Even if we were to use the pre-2009 deficit of $400 billion a year as a baseline, this would mean that the extra government deficit spending of $1.6 trillion over the last two years resulted in a GDP increase of only $1.2 trillion and a negative multiplier effect of 25%.

No company in the world would borrow money if they expected a negative return on investment as this chart implies.  And yet we are told again and again that the economy will collapse if we don’t extend what is clearly counterproductive deficit spending.

MORE:  This chart dovetails nicely with John Tamny’s column from yesterday:

“First off, there’s no such thing as fiscal stimulus of the spending kind. Though it’s well known at this point, governments can only spend money they’ve first taken from the private sector. In short, governments can at best merely steal demand from certain economic sectors in order to fund generalized waste and a bigger state. There’s no economic growth to speak of, rather there’s decline.”

Read the whole thing.

UPDATE:  Thanks to John Tamny’s RealClearMarkets for the link.  While you’re here, take a look around.

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Unenforceable sovereign debt

Byline: | Category: Above the Fold, Culture, Economy, Government, Taxes & Spending | Posted at: Wednesday, 9 October 2013

To be “sovereign” means that there is no higher legal authority.  This is why, historically, sovereign debt is a bad risk:  if the sovereign doesn’t want to pay back the debt, there is no authority that can order the debt repaid.

Francis Menton briefly describes Argentina’s journeys through the United States court system as the South American company attempts to evade debt issued in New York.  The end game is near and Argentina’s lawyer told the judge what it will be:  “We would not voluntarily obey such an order [to repay the debt].”  The Argentinians are essentially echoing Andrew Jackson’s rebuke of the Supreme Court: “They have made their decision, now let them enforce it.”

I suppose that the courts could seize whatever meager assets the broke country might have in American banks, but American courts have no real means to force Argentina to repay the debt.  What the court can do is to deny Argentina access to future New York credit markets, which causes Menton to remark:

” . . . getting cut off from credit would probably be the best thing that could ever happen to Argentina, finally forcing a reduction in its wildly bloated state sector and out-of-control crony capitalism.”

The same would be true for the United States, but I fear that we’re going to have to get a lot closer to Argentina’s miserable state of affairs before we accept it.

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It’s not business; it’s strictly personal

Byline: | Category: Above the Fold, Ethics, Government, Regulations, Taxes & Spending | Posted at: Tuesday, 8 October 2013

Republicans want a delay in Obamacare.  Because of the many significant problems with the rollout of Obamacare, and because he has delayed parts of the law himself some 19 times, President Obama should want a delay in Obamacare too.  One year gives Democrats an opportunity to fix systemic errors in the software, the regulations, and the law.  One year gives nothing at all to the Republicans–nothing–except the opportunity to crow a little bit.

That the President can’t compromise in a way that gives him everything he wants, plus the extra time he needs, is not about business.  It’s strictly personal.

UPDATE:  Thanks to Glenn for the link.  While you’re here, take a look around.

MORE:  Allahpundit  and Evan McMurray dissect Wolf Blitzer’s wonderment that it isn’t the Democrats who are the ones begging for a year’s delay.

Exit question:  Do national Democrats hate the Tea Party so much that they would take all the (well-deserved) negative reaction over the Obamacare Follies rather than to give in on just the delay even while it benefits them more than Republicans in the long run?

ALSO:  Thanks to Ed and Moe.

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Zey ver just followink orders

Byline: | Category: Above the Fold, Culture, Government, Taxes & Spending | Posted at: Tuesday, 8 October 2013

‘Gestapo’ tactics meet senior citizens at Yellowstone.

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The inevitable cataclysmic collision

Byline: | Category: Above the Fold, Economy, Government, Taxes & Spending | Posted at: Friday, 4 October 2013

How is it possible that both President Obama and the “Tea Party” hold an advantage in the budget standoff?  It isn’t a contradiction if you understand that one side has a tactical and operational advantage, while the other side has the long-term strategic advantage.

For the next two weeks President Obama is at a tactical disadvantage as he is sacrificing the interests of his own forces in order to secure a greater goal.  So far those most hurt by the government shutdown are government workers who are denied a paycheck.  They are, in effect, on strike.  But unlike an ordinary strike, where a union’s rank and file walk off the job and accept a temporary loss of income in exchange for a negotiating advantage to secure a bigger benefit, in this strike the workers out of work don’t want the benefit that their union’s leadership (national Democrats) want to secure.  That’s because the benefit in question is Obamacare, which no government worker wants and many actual unions have exhaustively tried to avoid. (more…)

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The 14th Amendment canard won’t fly

Byline: | Category: Above the Fold, Economy, Government, Taxes & Spending | Posted at: Thursday, 3 October 2013

Every time the United States gets ready to bump up against another debt ceiling limit, the old 14th Amendment canard seems to make an appearance.

I’ve previously devastated that argument.  So too have others.  But let me sum up why usurping powers supposedly granted by Section 4 of the 14th Amendment is not just unconstitutional, but counter-productive:

1.  Section 8 of Article I exclusively grants to Congress the power “to borrow money on the credit of the United States.”

2.  The obligation to repay all debt supposedly set by Section 4 of the 14th Amendment only exists if you leave out three significant words in that very amendment:  “The validity of the public debt of the United State, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned.”  The debt ceiling is the authorization that allows the Treasury to issue more debt.  Without it, there is no “authorized by law.”

3.  Even if that isn’t clear enough, Section 5 of the 14th Amendment re-emphasizes that point:  “The Congress shall have power to enforce, by appropriate legislation, the provisions of this Article.”

4.  The whole reason purportedly given for arguing that the President should use this non-existent power is so that the world’s bond markets won’t be spooked and call into question whether or not debt issued by the Treasury is valid.  However, the Constitutional uncertainty of debt issued under such circumstances induces the very market spookiness that those making the argument supposedly wish to avoid.

5.  In a contest between violating a law and violating the Constitution, the Constitution wins.  The Constitution demands that only Congress can authorize debt.  The Constitution also demands that the President must repay debt.  It is a mere law (and a relatively recent one) that requires the President to spend every dime that Congress authorizes.  The Constitution, therefore simply demands that the President simply prioritize debt repayment over other spending.  Sure, that means that he has to violate the 1974 Anti-impoundment act, but it would now be unconstitutional to follow that law without an increase in the debt ceiling.  (Plus, it was a stupid law in the first place.)

There’s more from the way-back-machine here and here.  Plus this three-year-old anti-anti-impoundment piece from Daniel Henninger.

MORE:  From John Hinderaker: “The Federal Government Can’t and Won’t Default on its Debt Obligations.”  My five points above tell you why the federal government can’t.  To understand why the President won’t default, read this long piece to understand how operationally dependent the Democratic Party is upon debt.

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