obama is failing, but can the gop succeed?

By now everyone has heard about the revolution (as my Dad likes to call it) that occurred in Massachusetts last week.  Scott Brown was elected Senator, taking away the Democrats filibuster proof majority in the Senate (which, by the way, they never should have had because Al Franken manufactured votes last year in the Minnesota recounts).  Everyone is proclaiming that Obamacare is dead and that the Democrats are going to get murdered in the midterm elections in November.

Well I do agree with the first point; Obamacare is probably dead in the water, at least anything close to its current form.  I am not sold, however, on the fact that Democrats will be wiped out in November.  I understand that it will be a tough year for Democrats, but unless the Republicans stop simply being the party of "no" (which I am completely fine with if they are the minority party) and put out ideas of their own, their gains will not be substantial enough to effect real change (i.e. for them to take control of one or both houses of Congress).

Well guess what GOP?  I am here to help.  I have identified FIVE issues that can lead the Republicans to the promised land.  These are issues that in my opinion can not only bring victory to the party, but would also put America back on the path of unbridled economic vitality and sustainability.  Although I think each of these issues is important, they are listed in reverse order of importance (at least in my opinion).  The first two deal with foreign policy, while the last three are domestic issues.  Here we go!


5.  Legal Status of Terrorists
Scott Brown showed that even in Massachusetts more of the public support the more conservative view of the rights of enemy combatants and other terrorists.  The attempted Christmas Day Bomber, however you say his stupid name, was taken into custody by the FBI immediately after he landed in Detroit, was read his Miranda rights, and then he immediately lawyered up.  He still isn't talking.  It's pretty hard to fight a "War on Terror[ists]" when you cannot legally get the best possible information on your enemy.  Look, I am about as libertarian as you can get, and even I don't think these murders are entitled to all the rights afforded by the Constitution.  These guys are (for the most part) not U.S. citizens and they entered this country solely to attack civilians.  That is an act of war, not crimes in an ordered society.  The protections of the Constitution are rights that U.S. citizens hold and that the government cannot encroach.  In my opinion, these foreign terrorists should be treated like the shits they are, and that Constitutional rights are reserved for U.S. citizens.  Now I understand there are many, many situations were non-U.S. citizens should be afforded Constitutional rights, but this is not the case here.  They kill indiscriminately and are no different than any other barbarians that have emerged throughout history.  They should be dealt with accordingly.


4.  Make Freedom, Liberty and Security, Rather than Climate Change, the Focus of Foreign Policy
Since Obama took office the overriding theme of his foreign policy has been that global warming is the most serious international threat of our time.  Guess what?  That simply is not true.  At least in my opinion.  And I think the majority of Americans would agree with me.  Nuclear proliferation is a much, much larger problem both now and into the future.  Rogue regimes like North Korea and Iran are pushing hard to develop weapons that could be used against the U.S. and its allies.  This should be the focus of foreign policy.  We should make it known that we support anyone in the world who shares our belief in freedom and liberty.  This includes dissenters in China and the Green movement in Iran.  Democracy and individual liberty are the greatest pacifiers our civilization has ever seen, and as those beliefs proliferate, the world will become a much safer place.


3.  Swear off Earmarks, and Cut Domestic Discretionary Spending
So apparently Obama is going express support for a cap on discretionary spending in his state of the union on Wednesday night.  Well it seems like a great idea, but in all reality it is nothing more than a political farce.  In his first two budgets Obama raised total federal spending from about 21% to 26% of GDP.  So after this huge hike, he is now trying to claim fiscal discipline.  Please.  What's more is that discretionary spending is only approximately one-sixth of the federal budget, so capping its growth will do little to stop the deficits.  It is however, a good start if it is done right.  The Republicans should go a step farther than announce their attention to not only halt, but to cut domestic discretionary spending.  Republicans need to stand up and say they will not support another pork-riddle farm bill or unproductive funding for the departments of energy, education or labor.  If that means we lose Iowa, then we lose Iowa.  Fuck em.  Pork is pork whether it is in farm subsidies, bridges to nowhere or other wealth distribution programs.


2.  Make the 2001 Bush Tax Cuts Permanent
Everyone is hoping that 2010 will be better than 2009.  And that 2011 will be better than 2010.  Guess what?  That probably won't happen if we allow the Democrats allow the Bush Tax cuts to expire.  All of the marginal income tax rates will rise, the capital gains tax will rise and the tax on dividends will close to double.  Is this smart policy during an economic recovery?  The bad consequences of such a policy have been chronicled in numerous sources, but check out this WSJ editorial by Peter Du Pont for some grim predictions.   I find Arthur Laffer's analysis in his January Economic Outlook very compelling as well (the analysis is also mentioned in Du Pont's editorial).  Obviously I think this issue is a self starter for the Republicans.  I'm not one for litmus tests, but any Republican who does not support this policy should not be running for federal office.


1.  Entitlement Reform
In my opinion this is the most important, most contentious and most difficult problem that the U.S. will face in my lifetime.  Everyone knows the narrative: These programs (Social Security/Medicare/Medicaid) were initiated originally to help the the poor and indigent.  Over time they expanded to cover more and more Americans.  They are now approaching fiscal disaster as payouts are increasing far more than revenue.  This is the one and only issue (barring any major wars, knock on wood) that could simple bankrupt our country and our currency.  Without this problem all other problems seem very solvable.  If we could kick the habit we could end our reliance on foreign financing, increase economic productivity by stopping this huge drain on our resources, and focus on more pressing domestic and international issues.  The problem is in the pudding (I don't know what that means).  The problem actually is that at this point so many people have been promised benefits and have paid into the system their whole lives that it would be fundamentally unfair to deny them their benefits.  However, a large chunk of the population is aging fast, and there soon will not be enough productive workers to pay for their benefits.  Do I know a politically feasible answer to this problem?  No.  Personally I am for a combination of benefit cuts, allowing young people to opt out of the program instead rely on personal savings accounts, and cutting spending in other areas to fill the gap.  We need to tell young people today that social security in its current form will not be around when they retire.  Unfortunately, because of the largess of their parents and grandparents, they will be forced to pay for the program while not benefiting from it.  There is no feasible way that last statement is not true.  We might as well own up to that fact now, and end any reason for a sane American to rely on these programs for retirement in 50 years.  Obviously I don't have all the answers, but it is at least time for Republicans to start the debate.

Quickie on Cap and Trade

I just wanted to quickly comment on a few aspects of President Obama's cap and trade program. Regardless of how you feel regarding global warming, cap and trade may be the most backhanded way redistributing income in America since the sixteenth amendment. What perplexes me the most is that the true effect of cap and trade will be that the poorest Americans will be hurt the most by its effects. Today's Wall Street Journal had an excellent editorial today entitled Who Pays for Cap and Trade? which outlined many of the costs that would be associated with such a program, and include a statistical analysis of how that cost would be distributed based on both income level and geographical region of the country. I highly suggest you read the article, and I don't want to repeat it all here, but I do want to emphasize a few of its key points.

First, and probably most importantly, cap and trade is in effect a regressive tax. Everyone admits that the goal of the program is to drive up energy prices that are fossil fuel based. However, poor Americans spend a higher percentage of their income on energy than do the more affluent, so they will see a larger portion of their income go towards the costs of financing cap and trade than will rich Americans. President Obama should begin qualifying his promise that 95% of Americans will not see a tax increase with the phrase "UNLESS YOU USE ENERGY."

Secondly, certain regions of the country will face a much larger burden than others. Coal rich areas like the Midwest, South and Mid-Atlantic will see their costs rise the most. For example, in my home state of Pennsylvania, over 50% of the electrical energy produced comes from coal. Many states in the Midwest such as Indiana generate over 90% of the energy from coal. The poorest people in these regions could see up to 10% of their annual after tax income go strictly towards electricity costs.

Where will this money go? Well President Obama will be auctioning off the permits, so the federal government will be getting it. The President has stated that he wants to use some of the money to re-invest in "green" energy sources. If this is the case, it will probably end up in the hands of Wall Street investors with the right connections who are financing new "green" initiatives and other special interest types. Hopefully a few democratic senators from states like Wyoming, the Dakotas and the rest of the midwest will stand up to President Obama and not allow their constituencies to bear the brunt of these self righteous policies. I knew President Obama would be in favor of a redistribution of wealth in America, I just never guessed that he would be taking money away from the poorest Americans under the guise of saving the environment. Isn't it ironic that the goal of ending global warming is designed to benefit all of human kind, but the policies proposed to reach that goal could end up up impoverishing the lower classes and lower the standard of living of the vast majority of the public?

Welcome and a Stimulus Intro

First of all, I'm not sure who is actually going to read this thing, but I've decided that I complain a lot about a lot of different issues, so in order to reach a larger audience I've decided to start my own blog. What I am actually going to write about is still very much up in the air, but I think it is going to be a mix of many different topics. I am passionate about sports, especially Philadelphia and Penn State teams, so I'm sure they will come up at some point. I am also very disgusted with the direction America is moving on the political front, both parties included, so politics and economics will also probably be a large source of potential posts. Lastly, everyday life, especially the stupidity of dumb people, tends to get me angry sometimes, so I'm sure there will also be some very random posts about some very random topics. I am hoping to update this thing at least once a week for as long as I can fit it into my schedule. Hopefully I don't burn out. Well, please add any comment with things you want to discuss or hear me rant about, but otherwise let's jump right into my first entry.

I read the Wall Street Journal on a daily basis, and I found an article from Monday's paper entitled How Government Prolonged the Depression by Harold Cole of the University of Pennsylvania and Lee Ohanian of UCLA extremely well researched and articulated. The main premise of the article is that FDR's New Deal programs actually lengthened the great depression by slowing private economic growth and creating an economic situation that maintained high unemployment.

Now I went to a very good public high school in a suburb of Philadelphia. I took American history in 8th and 11th grades and learned all about FDR and the New Deal. I was taught, as I'm sure many of you were, that FDR was one of our greatest presidents and that it was his policies that led us out of the great depression. What complete bullshit. It enrages me that this kind of stuff is taught with no other alternative explanations. This theory of the end of the great depression are based on the Keynesian theories that government deficit spending during a recession is good and will help spur new economic growth. I can say fairly certainly that in 2009 most respected economists (that communist Paul Krugman excluded) have rejected Keynes' viewpoint and adopted the Austrian and Chicago schools of economics expressed by Friedrich Hayek, Ludwig von Mises, Frank Knight and Milton Freidman. However, I never learned any of these names in school. Instead I was force fed the usual crap you hear about FDR creating new jobs and helping curb out of control capitalism that was rampant in the 1920's.

Well there are so many things wrong with the last statement that I won't address them all here, but I do want to address the idea that massive deficit spending by the federal government is good way to strengthen the economy and end a recession because it is directly relevant to the proposed $800 billion stimulus being debated by Congress and supported by President Obama. Once again the American people are being fooled into thinking that this will save the economy and "change" America. In reality this "stimulus" bill is nothing more than a massive spending bill for pet projects for special interest groups. For a more detailed breakdown of how the proposed bill will be spent see Highlights of $825 Billion Economic Stimulus Plan. Although the spending seems to most like it is being spent on worthwhile causes, as is true with 95% of government spending, it will surely be spent more on bureaucracy and greasing the chops of powerful lobby groups than going towards legitimate projects like roads and bridges. Due to administrative costs, government spending is inherently less efficient than private distribution of capital.

If Obama were serious about saving the economy he would issue an $800 billion tax cut that would cut the marginal tax rate, not issuing useless $500 rebates. For a tax cut to stimulate economic growth it must be at the margin. In other words, the tax cut must lower the rate that applies to the last dollar of the individual's taxable income. If tax cuts are not marginal, as in the case with so called "rebates," then there is no incentive for an individual to produce more and earn more income. As we saw with the Bush tax cuts, cutting marginal tax rates create the incentives necessary to create growth and actually increase government receipts even though the average tax rate is lower.

Instead of cutting the marginal tax rate, Obama wants to increase deficit spending to the highest levels in American history. I am going to address the effects deficit spending, the national debt, and the true cost of an entitlement society in a later entry. I am sure you are all very excited. Anyway, sorry for the length of this first post. I'm sure later updates will be much shorter. As I said comments are appreciated, whether you love or hate my ideas, so say what you want. Thanks for reading.