Who is going to pay for this?

Senator Tom Coburn (R-OK) is facing criticism for his insistence that any federal disaster relief money for the victim’s of yesterday’s storms in his home state be offset by cuts somewhere else in the federal budget.

Online commenters are outraged.  One said:

“It does indeed take a special person to look at the situation in Oklahoma and immediate wonder “Who’s going to pay for this?”

While I’m pretty sure that “special” was intended snarkily, it does indeed take a special kind of person to wonder who is going to pay for this.  And thank goodness Senator Coburn is that kind of person.

The immediate response to any tragedy is to want to help.  And when you are the keepers of nearly $4 trillion budget, it is very easy to wish to throw a few billion at the problem as a genuine gesture of good will.  But the fact is that someone is going to pay for this.  And it very much matters who that someone is.

Should it be the taxpayers, who then don’t have that additional money themselves to spend on their own necessities of life?  A billion dollars of new spending paid for by taxes adds approximately $12 to the tax bill for a family of four.  That doesn’t seem like much, but that’s a billion dollars less spent on food, transportation, and clothing.  Not to mention, what do you do for the next tornado, hurricane, or wild fire.  Is it the taxpayers who should pay for this?

Should the cost be borne by more debt?  That saddles generations to come with the expense, since they will be paying back the billion dollars.  Or since we rarely retire debt, we just roll it over, it might be more accurate to state that future generations will make infinite recurring payments on the billion dollars of debt.  In effect, then, the cost will be diminished future spending and investment.  Is that who should pay to recover from the tornado damage?

Should the burden fall upon current recipients of government spending as Senator Coburn suggests?  If you ask me, that’s a less sympathetic lot than the other two choices of higher taxes or larger debt.  You can’t tell me that any sentient being (which means, apparently, the majority of Americans other than most of Sen Coburn’s colleagues) couldn’t find a billion dollars somewhere in the federal budget that couldn’t stand to be trimmed.

It’s easy to want to throw money around willy-nilly at problems but it really does take a special person to ask the uncomfortable but important question:  ”Who is going to pay for this?”

Congress to restore the power of impoundment to the President?

As I read this story about Senate Republicans considering giving the President the power to decide which budget cuts to make, I’m reminded of how much this sounds like impoundment.  If so, it’s a wonderful idea, as it would restore executive spending power to the nation’s chief executive.

The anti-impoundment act passed with the 1974 budget.  Like so much legislation that came out of the immediate post-Watergate era, this attempt to neuter Nixon left long term negative consequences for the nation.  From 1803 to 1974 presidents had the power to spend UP to what was budgeted by Congress.  They couldn’t spend more, but if circumstances dictated, the could spend less.  Thomas Jefferson was the first president to use the power when he decided not to buy boats that Congress had authorized to patrol the nation’s western frontier on the Mississippi River after his purchase of Louisiana made naval riverine patrols unnecessary.  For the next seventeen decades presidents underspent their budgets.  Even big spending presidents like Lyndon Johnson routinely spent only 95% of what was authorized.

Since 1974, however, every dime is spent.  Anyone who has spent a late September working for the federal government knows the rush to spend wastefully as the waning hours of the fiscal year wind down.  That is because Presidents can no longer spend less than what was authorized by Congress.  No business would dare operate in such a manner.  So why does government?

You might remember that two years ago, I advocated that President Obama seize the opportunity to challenge impoundment.  My advice still stands.  This is a good thing for the nation if the chief executive has it within his power the ability to properly execute a budget.

The sequester is a bad plan . . . except compared to the alternatives

Let me first stipulate that the best plan would contemplate cuts across the entire budget:  to so-called entitlements as well as to defense and discretionary spending.  (BTW, it’s all discretionary spending as no Congress can obligate a subsequent Congress to its laws.)

That being said, for all the sturm and drang over a paltry 2% cut that leaves 2013 budget still greater than was spent in 2012, the secquester isn’t that bad.  Yes, the brunt of the cuts falls on defense.  So?  Quite frankly, it’s not nearly enough.  And if there’s that much waste in DoD where I work, I’m sure I could find even more in the other departments.

Here’s the problem for those on both sides of the aisle.  Nearly everybody to the right of Paul Krugman acknowledges that federal spending has to come down.  But when it comes down to making actual cuts, it’s always going to be easier to find 51% support for any program than there it is to just make across-the-board cuts.In a perfect world, we would target entire agencies and programs for closure.  (I propose a LIFO rule:  last-in, first-out; first to go Obamacare, Homeland Security, Medicare Part D, then the Departments of Energy and Education . . . )  But we don’t live in a perfect world.

I’ve seen this drama play out in a small way at EUCOM where we tried to trim staff, but in doing so, actually added bodies.  Cuts only came when they were mandated across the board.  It’s just the nature of bureaucracy that every department, agency, or directorate can argue successfully for more, even while it recognizes the existence of excess across the entire enterprise.

So let sequestration happen.  Who cares who gets the blame.  If anything, I’m blaming Republicans for not making the sequester cut deeply enough.

MORE:

Similar thoughts at NRO.

For those who advocate a VAT . . .

For those who advocate a value-added tax . . . beware the unintended consequences.

As an American servicemen stationed overseas, I am exempt from the host-nation’s taxes.  (Yes, that makes Germany’s $8 dollar-a-gallon gasoline much more palatable than it is for the Germans.)

This evening I was in an antique shop about to make a purchase and I asked if they would remove the tax from the price, when the proprietor told me that antiques are not subject to a VAT.

It dawned on me what should have been obvious.  Re-sellers of finished products add no value to the item for sale, and hence, there is no value-added tax.  Duh.  The second thing that dawned on me was that under a VAT regime, used items retain quite a bit of value, while new items have to be that much better to garner a sale.  In other words, a VAT is a sure way to reduce the production of new manufactures, because while there is a tax on the new, the used item that it replaces isn’t subject to a tax.

Here in Germany the VAT is 19.5 percent!!!  Yes, anything new is marked up by a fifth by the government.  Now imagine how much more expensive a car would be in America under such a confiscatory tax arrangement.  Do you think that used car sales would spike under such circumstances?  And that consequently new car sales might fall?  Of course they would.  Duh.

Beware the unintended consequences:  a VAT may raise tax rates for the government, but it will also reduce the manufacture of new items.  And that means fewer American jobs.

Time for a third party

“House Republicans abandoned their effort to add spending cuts to the Senate’s budget legislation and . . . Oklahoma Representative Tom Cole said he expects the House to pass the Senate bill unchanged with a ‘substantial’ bipartisan vote.”

If this is true . . . if House Republicans and their leadership support a bill that raises taxes and spending as opposed to the status quo that raises taxes and lowers spending, then it is time for a third party.  I don’t care how many Democrats win House seats in 2014.  I really don’t.  If this is what Republican style fiscal conservatism looks like, then I am done with the GOP.

UPDATE:

I’ve received lots of criticism for my post.  Let me tell you why you’re wrong to think that this bill was anything less than a complete catastrophe.

1.  There were NO spending cuts.  None.  Not a single dime.  In fact, there were spending increases.  Massive ones.  If the Republican Party believes that spending is the problem–and it is–then this deal is a complete betrayal of that belief.  Going over the cliff, as imperfect as that option was, at least sends the strong message that without spending cuts, the GOP will not be on board.

2.  Along those lines . . . seeing that, Barack Obama going forward would know that every time he has a wish, he would have to come to the table with something he is willing to cut.  Now he knows that when bargaining with the GOP, it’s just a matter of how BIG future spending increases will be.

3.  Under the fiscal cliff, the biggest spending cuts would have been to DoD–which is as it should be.  The Defense Department is bloated and wasteful as a result of twelve years of unshackled restraint.  The GOP, by making defense spending the center piece of its opposition to the cliff says loud and clear that they are exactly the same as the Democrats:  we want spending cuts–as long as they aren’t cuts to our spending programs.  The cliff was a cut to every program.  We need that.  Big time.

4.  Nickel and dime tax victories over a few tax cuts pale in comparison to what was lost in new taxes.  We’re still going into a recession because of this tax increase (I actually think that it will be back-dated to the third quarter of 2012, so we’re probably already there anyway.)  So if you thought that this is going to save us from a recession, you should think again.

5.  Republicans will be portrayed by the media as having lost.  That was going to be the case no matter what happened.  The GOP will always get the blame and will always be losers–at least in the eyes of the media.  So if you’re always going to get the blame no matter what you do, you might as well do what is right.  Any attempt to play nice with the media will not work.  So stop trying.

6.  Any political victories were tactical in nature.  Strategically, the GOP ceded the long game.  Spending is the enemy.  Politically, spending creates addicts for government dollars.  Those addicts will always vote for the party of more spending.    By voting for more spending while giving lip service to restraint, the GOP has created more Democratic voters over the long term.  Congratulations.

7.  Still on the subject of strategic failures, and perhaps most importantly, the GOP has not positioned itself for the time when math finally catches up.  The only thing enabling our spending binge is a prolonged period of historically low interest rates.  Rates are only that low because of (A) a slutty Fed that’s just giving it away for free, and (B) there are no other investment options because the worldwide economy sucks.  (A) is obviously inflationary in the long term.   And as for (B), it does not benefit the party in power to maintain a crappy economy so that the government can continue to borrow at low rates.  Eventually something gives, and when it does, the party out of power–IF IT HAS BEEN MAKING THE PRINCIPLED CONTRARY CASE–is perfectly poised to make changes of historic magnitudes.

From 1912 until 1930 Democrats were largely out of power.  They aligned themselves with progressivism, and in the 1920s especially, national Democrats paid a huge political price for it.  But once the collapse came, they were perfectly poised to cement in place progressive rules that are with us to this day.  Those very rules are the foundations of the next failure.  Last night the GOP decided that it didn’t want to offer the nation a different path.  It has become just a Dead Elephant Walking.

Things I’d like to see in 2013

Now that the Supreme Court has ruled with Obamacare that the federal government is limited in what it can mandate that the states legislate, I’d like to see one or more of the states lower the drinking age back to 18 this year.  If you are old enough to vote and old enough to serve in the military, you should be old enough to buy a drink.

Still on the subject of alcohol, I’d like to to see more states join Washington’s lead and remove the mandatory second tier of alcohol distributors that serve as legally required monopolies that raise prices and reduce the selection available to the  wine-buying public in the other 49 states.

Not that I would like to see continued violence in the Middle East, but since it is a near certainty anyway, I’d like to see it happen in 2013 without any hint that America will get even remotely involved.

I’d like to see no calls this year for any sort of extension to American involvement in Afghanistan.

I’d like to see Congress and the White House continue to be at loggerheads throughout all of 2013.  Since every meaningful compromise in recent decades has resulted in higher taxes, greater spending, bigger debt, and diminished freedom, doing nothing is Washington’s best course of action.

I’d like to see the Department of Defense deal seriously with sequestration by eliminating commands, agencies, directorates, and staffs instead of reducing either the number or effectiveness of ships, wings, and brigades.

I’d also like to see DoD kill a few hideously expensive major weapons programs this year–especially the F-35.

I’d like to continue to see the collapse of the legacy broadcast and print media.  CNN, NBC, Time, and the New York Times each have brands far larger than their real contemporary influence; it only follows that the economics of that untenable situation will catch up to them–hopefully in 2013.

I’d like to see 2013 produce no viral videos that spark any more line-dancing crazes.  The Chicken Dance, the Electric Slide, and the Macarena were each bad enough before Gangnam Style.  Please, let’s not do this again.  Ever.

And since I will have a college student in 2014, I’d like to see the higher education bubble burst in 2013.

Leave us alone

In doing some housecleaning, I found this forgotten essay that I wrote in February and never got around to posting.  With only a few changes for the sake of grammar, and clarity, here it is:

For the first time in over two years I’m afraid that Republicans could actually lose the race for the White House in 2012.  Should they do so, especially in light of the enormous advantages they have over a dysfunctional Democratic Party in 2012 (high unemployment, stagnant growth, unpopular programs foisted upon the public, and an unlikable mob–OWS–as the face of liberal activism, just to name a few) it should disqualify the GOP from ever holding the presidency ever again.  If the GOP loses the presidency, it will be the biggest victory of an outclassed mismatch since Aesop’s rabbit blew the race with the turtle.

So how could this be?  Simple, there isn’t a candidate who can unite the opponents of Barack Obama.  That alone would probably be enough to win in November.

Comparisons with Reagan, just as comparisons with FDR or JFK, almost never measure up.  That’s not because those three men were supermen–they weren’t–but because in retrospect each of them is bigger now than they ever were at the time.  Nonetheless, Reagan’s genius was in recognizing that politics is the art of addition, and not about subtraction or division.  That is still true.

The most recent not-Romney is Rick Santorum.  He is most closely associated with the “social conservative” wing of the Republican Party.  This is an important member of the family of conservatism, but like its siblings–Fiscal, Defense, Libertine, and Law N. Order–none of the conservative brethren are capable of striking out on their own.  Still, that’s what Santorum did, when he linked his opposition to the recent Obama decision to force abortificants upon churches to the canard of “birth control isn’t safe.  That is the message of subtraction.  It is a position that attracts none but the already converted.   Even worse, it is a message so offensive to so many (not to mention, so factually incorrect) that it repels those who might otherwise be attracted to his position were it couched in different terms.

What I mean bythat is this:  a Republican must unite the whole party around a simple message that resonates with all its wings.  And that message is the same now as it was in 1980 when Ronald Reagan put all conservative factions under the banner of “Leave Us Alone.”

“Leave us Alone” applies to Catholics justifiably outraged by the government trampling upon their First Amendment rights.  After all, even if you disagree with the Church’s religious position, you must admit, the First Amendment accords to all religions the right to be wrong, otherwise, the right is not a right at all if its only protection is to protect popular positions.  Had Santorum cloaked his argument in “Leave Us Alone,” he would have acknowledged the freedom of churches to decide what medical procedures they would pay for, but would do so without appearing to compromise the right of people to choose to do otherwise with their own money.  It is a message consistent with (or at least, not in opposition to) the other conservative brothers. 

Rick Santorum is hardly the first to make this blunder.  Newt Gingrich, Rick Perry, and Michelle Bachman, each fell by failing to embrace a logically coherent message.  The problem, I suspect, is that “Leave Us Alone,” or at least its implications, is not a message that any of the current Republican candidates really embrace.  For if you truly wish to be left alone, it implies a reciprocal obligation to leave others alone as well.  For defense conservatives that means that if you want others to leave America alone, you must let be those military threats that are non-existental in nature:  Libya and the Taliban, for example.  To the law and order conservative, it implies a level of tolerance to at least some of those activities, like prostitution and minor drug abuse, that are distasteful, but are not a threat to any but those who engage in them.  To the fiscal conservative, “Leave Us Alone,” requires that we not fund any good ideas with public moneys, since, if they realy were ”good ideas,” they would find ample private funds.

You see, it’s not simply about “messaging” your support for or opposition to programs.  It’s about actually believing your message and all its implications.  And when you believe in your message, you are consistent with your message.   If there is a Republican killer this year, consistency will be its name.  That’s why it’s time to unite the Republican brand around the simple message of LEAVE US ALONE.

Run, don’t walk

If the deal is $1.2 T in new taxes and new spending now in exchange for $400 B in cuts ten or more years away, then Republicans shouldn’t walk away from “fiscal cliff” negotiations.  They should run.

The alternative is to just let sequestration take effect. The biggest hit is to the Department of Defense.  And I can tell you that the hit won’t be nearly deep enough.*

*Usual caveat about this being my view and not DoD’s, blah, and blah.

No cake for you

Sara Hoyt:  We’ve come to the end of cake

Read the whole thing.

Unemployment drops! (But did it really?)

The headline unemployment rate fell below 8% percent for the first time in nearly four years to 7.8%.  Good news, right?  Not really.  Buried in the report is the reason for the decline:

” . . . total nonfarm payroll employment rose by 114,000, the U.S. Bureau of Labor Statistics reported today.

But:

“The number of unemployed persons, at 12.1 million, decreased by 456,000 in September.”

Wait:  How can unemployment fall by an amount equal to four times the number of newly employed people?  Simple.  If you stop looking for work, you’re not unemployed. 

Because of population increases America needs to see between 150,000 and 180,000 new jobs added each month just to stay even.  We’re nowhere near that:

“In 2012, employment growth has averaged 146,000 per month, compared with an average monthly gain of 153,000 in 2011.”

September job growth is below this year’s average, which has fallen slightly from last year’s average.  Simply put:  new jobs aren’t being created at a rate that sustains a vibrant economy.  This is not a recovery.  And it never has been.