Economic Policies

After a six month hiatus from posting on this blog, the first entry on our return centers around a timely interview with Richard Epstein on income inequality.

The Occupy Wall Street movement and the Obama administration try to avert attention from runaway government spending and expensive regulations as the causes of our prolonged economic malaise by attacking capitalism. They focus on statistics about the growth of income over nearly thirty years that conveniently ends in 2007, right before a downturn that resulted in greater percentage drops in income among the top income earners. They want to tax higher income earners even more when they already carry the bulk of the tax burden and about half of Americans pay no income tax at all.

Richard Epstein, a law professor at New York University, explains why unequal outcomes are essential for motivating people in a free economy. American voters need to understand his argument if we want to change the direction America is headed in the election less than a year from now.

We hope that the eventual Republican presidential nominee will be able to make the case for economic freedom as well as Richard Epstein.

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Go See Atlas Shrugged!

April 18, 2011

In Theaters, April 15, 2011
In Our Hands, November 6, 2012
– FreedomWorks Video on Atlas Shrugged

Atlas Shrugged, Part 1 based on Ayn Rand’s famous novel about freedom and the people who make the world work was released in a limited number of theaters on April 15. Most mainstream media reviews about the movie were negative. No surprise there. One can hardly expect a critic with a leftist outlook to embrace the ideas in this movie.

For a more informative article about the movie read Mark Skousen in Human Events:

The message of the film (and the novel) is clear: If the government intervenes too much in the economy, things can only get worse. As Ludwig von Mises stated, “Middle of the road policy leads to socialism.” In the movie, the action takes place in 2016, when the Dow has fallen below 4,000, gas prices exceed $37 a gallon, and the infrastructure is collapsing. Naturally, government officials and statist economists (Paul Krugman types) blame the troubles on greedy selfish capitalists.

Parallels to America under Obama’s reign are unmistakable. FreedomWorks created a mash-up of the movie and the Obama & Co. speeches that shows the connection between the movie and our predicament today:

I saw the movie last weekend and I found it a worthy effort. Whether the second and third parts of the movie will be made will depend largely on the success of the first part. So go to the movie’s website and find a theater near you to go see Atlas Shrugged!

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President Obama today announced that he is running for a second term. No surprise there.

On the same day his Attorney General Eric Holder announced that 9/11 terrorist mastermind Khalid Sheik Mohammed would be tired in front of a military tribunal in Guantanamo Prison. A remarkable turnaround from Obama’s campaign promise to close Gitmo in the first year of his administration and his announcement in 2009 that Khalid Sheik Mohammed would be tried in New York City. On this point at least, Obama has had to face the foolishness of his position and reverse himself much to the fury of left wing of his party.

Obama kicks off his reelection campaign not only on the same day as the Gitmo trial announcement, but also in the same week in which House Budget Chairman Paul Ryan unveils the Republicans’ 2012 budget. Ryan proves that he is a leader by proposing reforms to Medicare, Medicaid and Social Security, reforms that are critical for these programs to survive. Republicans will soon move beyond the do-nothing President and Senate Democrats who call $60 billion in cuts for 2011 extreme. Ryan will propose trillions of cuts in federal spending, cuts proportional to the problem we have that, if enacted, will turn America back to fiscal sanity. The President, of course, as usual is unwilling to lead and wants to avoid discussion of real change in Washington.

Here is the National Republican Senatorial Committee’s spoof on Obama’s 2012 campaign:

At least, unlike the real announcement today this add shows the President.

And here is Republican presidential candidate Tim Pawlenty’s response to Obama’s announcement:

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Florida Pundit took a little break from blogging over the past month. I kept expecting that our politicians would start getting serious about cutting the size of government, but progress is slow and consist of tiny baby steps. House Republicans have proposed to cut $60 billion in discretionary spending. The Democrat-controlled Senate and our Spectator-in-Chief Barak Obama have not proposed any cuts. I guess that makes the House Republicans the better alternative, but when you cut $60 billion from a $3.7 trillion budget and a $1.6 trillion deficit, this looks less than impressive.

What happens if we don’t act? Congressman John Campbell (R-CA) asked just this question of Federal Reserve Chairman Ben Bernanke about a month ago. Watch this. It is scary:

Crisis could come quickly and precise timing is impossible to predict. On Tuesday everything could be ok and on Wednesday collapse could be upon us. So what do we do to demonstrate that we are serious about the problem?

Republicans now have shown with several two or three week extension that they are not the evil monsters who want to spoil your vacation by shutting down Yellowstone and other national parks. It is time to stop temporary extension and insist on Democrats to stop acting like spoiled brats.

We should insist on a few condition to any budget that is passed for the rest of the year: stop funding of the implementation of Obamacare, prohibit the EPA from regulating CO2, stop all funding of NPR and Planned Parenthood. Yes, the last two are relatively small amounts, i.e. just a few hundred million dollars – not even a rounding error in federal spending, but they are indicators if any government program can ever be stopped. If these conditions mean that Democrats will shut down the government, we need to be prepared to let them and make clear who the party to blame is.

Then Republicans need to get beyond working on remedies for the Pelosi-Reid Congress’s failure to pass a budget for 2011 last year. The next opportunity to put in place processes and conditions to shrink the government is when raising the debt ceiling comes up next month. Starting in April Republicans also need to focus on rolling a budget for 2012 that will cut spending all areas including entitlement spending.

I believe Americans are ready to support changes to Medicare, Medicaid and Social Security especially if Republican explain that if we don’t change these programs there won’t be anything left and the collapse of these programs will quickly become inevitable. Yes, there is the risk that not enough Americans will listen and voters will re-elect Obama and the Democrats in 2012. If that were to happen, at least we will know we have tried to save the United States from permanent long-term decline. If we do nothing, the end of the United States as we have known it is inevitable.

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While Republicans in Congress are falling short of their promise to cut at least $100 billion in spending for the rest of the fiscal year, Republican governors are starting to address the root cause of many of our states teetering on becoming the American equivalent of Greece. They are changing unsustainable terms for benefits and pensions of public employees.

Chris Christie of New Jersey has become just about the most popular politician in the country during his first year as governor by pursuing austerity in the state budget. Now, a new crop of governors including Rick Scott in Florida and John Kasich in Ohio are following similar paths. Rick Scott has turned down billions of dollars in federal taxpayer money to subsidize building of a high speed rail line which would ultimately cost the Florida taxpayers billions and for which there is no demonstrated economic need.

But the fastest rising star among the new governors is Scott Walker of Wisconsin whose challenge to public employee unions sparked protests by government employees in Madison, the state capital. All fourteen Democrats in the state senate have fled the state in order to deny Republicans a quorum to vote on Walker’s proposed bill. President Obama has again entered the debate on a state issue by attacking the side voted into office last November and defending public employee unions. Governor Walker’s response to Obama has been that the president should be focused on the deficit in Washington. Effectively he told the president to mind his own business.

Here is Governor Walker explaining what he is doing (via The Right Scoop):

Walker is standing by his proposal which still offers terms to public employees more generous than those enjoyed by most employees in the private sector. He also insists that there have to be some limits on the public unions’ collective bargaining rights so that state and local governments can meet the demands of the voters of Wisconsin and eliminate government spending they cannot afford.

We desperately need in Washington the clarity on the issues and resolve to address them that governors like Scott Walker and Chris Christie bring at the state level. Will Republican leaders in Congress join their freshman colleagues who were elected with Tea Party support and draw a firm line on cutting federal spending in every area including entitlements and defense?

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