One never notices what has been done; one can only see what remains to be done.
Marie Curie
Sloppy Thinking, Stupid Politicians, And Special Interests
I must admit to getting more intolerant and impatient with staggering stupidity. In 1992, one of the most famous campaign mottoes of all was "it's the economy, stupid". I feel like I'm the boy noticing the emperor is wearing no clothes. Let me give a simple example: the Fed has been flooding the economy with cheap dollars. We FINALLY see the Fed suggest that it might defer any future quantitative easing (while retaining a ludicrous, below-historical-norm near-zero interest rates). De facto, the Fed has essentially been monetizing massive federal deficits: I know how economists are going to quibble about inflation given ambivalent consumer spending in a tough economy and slack global demand, but we know that the moral hazard of the Fed backing the federal budget, i.e., the "Big Government Spending Bubble", is not going to end any better than earlier Fed easing resulting in the stock market (particularly high tech) bubble and the subsequent real estate bubble. It was blatantly obvious during the Internet craze that bidding unprofitable companies sky-high was not going to end well; the same was true of housing prices increasing over the rate of real wage growth. As to the Big Government bubble, when we are raising only $2.1T in government revenue and we are stubbornly spending north of $3.5T and we have $50T in unfunded entitlement liabilities, there is no way this ends well. It's no longer a matter of 'if' but 'when'.
I mean, take into account the morally reprehensible AARP ad rejecting any shared sacrifice for entitlement spending, pulling a deliberate misleading bait-and-switch by pretending that a few thousands or millions dollars (including the infamous shrimp-on-a-treadmill study) should be the target for reducing a $1.6T deficit, not the almost 60% of the $3.6T spending budget. Why is the AARP worried about literally less than 2 cents on the dollar? Very easy: it's political catnip. It's a distraction. We've been there, done that. The Democrats tried to sell de facto nationalization of health care based on a few million people, many of whom prefer to self-insure for minor health care expenses. We see no compelling evidence that self-insuring individuals are responsible for health care inflation (the emperor is wearing no clothes), we have no evidence that the federal government can do better than the states in regulating as traditionally health insurance and in fact the very necessity of federal government involvement. We don't see the Democrats seriously looking at the cost of gold-plated special interest mandates or morally hazardous policies, e.g., requiring coverage of preexisting conditions, which violates the very heart of insurance. You are basically forcing private sector companies to write insurance at a loss from day one; that's essentially unconstitutional. Do we hear, for instance, the federal government garnishing wages for anyone having the costs assumed by the federal government? Of course not. Instead of guaranteeing coverage of catastrophic expenses within, say, some Medicaid-like concept, we have a takeover of over 17% of our economy.
But going back to the 2008 general election campaign, even if it wasn't widely recognized by others, I was disappointed by McCain's debate performances. I don't think Obama won them, but McCain was so predictable, it was literally like watching a tennis match were the opponent comes to the net too soon, and the opponent would easily drill the ball past a flat-footed McCain. McCain constantly harped on earmarks. Obama responded in predictable ways: he decided to co-opt McCain's earmark pledge by making one of his own while he focused on the relatively trivial percentage of earmarks as part of the federal government. The general impression was that McCain was more interested in symbolic fiscal conservatism versus, say, a Christie type, seeking to cut the budget in real terms. In one sense I understand McCain's reasoning: voters' eyes would probably glaze in the details of cost-plus, fixed-cost outlays, zero-based budgeting, business process engineering, etc. What he needed to talk about were big numbers, e.g. the costs of regulation, and the relative increase in the business regulation burden. He needed to talk about "use-it-or-lose-it" dysfunctional budget processes, the high costs of redundancies of military bases or federal office complexes. He needed to discuss ongoing and early project cost reviews, reducing federal headcounts, bonuses or increases (particularly for compensation packages beyond the national mean). But here's the key point: most of McCain's cuts come from a very small percentage of federal spending (just like Obama's). You aren't going to get there by only finding cuts on a puny fraction of the federal budget.
I will leave it to reader to review Glenn Kessler's compelling critique of the AARP ad. Personally, I would be more pointed: AARP is suggesting any cuts to well-to-do retirees benefits are unacceptable from the get-go but it's more acceptable to cut, say, military or domestic federal programs (many of which benefit lower-income Americans). What we are not hearing from the AARP folks is how retaining an unsustainable cost structure at present--which is their current position--is in the best long-term interest.
Let me hint where I think we eventually have to go: consolidating lower-income safety nets on a consistent basis across the American people, not separate ones for older people.
Then there's Michele Bachmann, whom I think was at least a tolerable populist, unlike the intellectually vapid Sarah Palin. But in a preposterous red meat speech, she pointed out the black and Latino voters how the Obama Administration has failed them. (Yes, we know: Bachmann is not really aiming her message to minorities: she's simply preaching to the choir, i.e., "you know, Obama's policies are hypocritical in effect".) It's not a good idea to lecture ethnic groups they aren't smart enough to know whom to vote for. It is true that President Obama's policies have been devastatingly bad for lower-income Americans in general, not simple black or Latino. Pro-growth policies rise all boats, but Obama deliberately tries to thread a nuanced path so companies he thinks have unduly profited get zero breaks: you might as well just go ahead and shoot yourself in the foot. In short, he's running on ideology, not economics.
Why not bring up Clinton, whom simply lucked in serving during a time when we got a windfall benefit of a defunct Cold War while benefiting from an American high tech revolution and unsustainable capital gains income. So Clinton came up with a suggested game plan for Obama in Newsweek; I have not read Clinton's plan yet, but here's what we know: most of the same "sharp-minded" top economists serving under Clinton have also worked Obama. Do we honestly believe that Clinton has proposed something like his own advisers didn't already suggest? The emperor is wearing no clothes (and no, I'm not talking about former Congressman Weiner).
Obama's 6/22/11 Afghanistan Address:
Selective Comments:
Thumbs DOWN!
This is really an extension of my rant above. It's a typical Obama speech: very little substance, same old same old rhetoric. We had to be in Afghanistan to get UBL (oh, by the way, in case you didn't know, we got UBL a few weeks back). He does some implicit Bush bashing by pointing out far fewer casualties in Afghanistan than Iraq (the facts that we don't have three major sectarian rivalries in a mostly tribal Afghanistan and our ground troops really weren't involved in the downfall of the Taliban government are inconvenient to Obama's points, of course). And we have our usual dose of Obama's hubris:
Over the last decade, we have spent a trillion dollars on war, at a time of rising debt and hard economic times. Now, we must invest in America’s greatest resource – our people. We must unleash innovation that creates new jobs and industry, while living within our means. We must rebuild our infrastructure and find new and clean sources of energy. And most of all, after a decade of passionate debate, we must recapture the common purpose that we shared at the beginning of this time of war. For our nation draws strength from our differences, and when our union is strong no hill is too steep and no horizon is beyond our reach.Here, his purpose is to show, unconvincingly as usual, there is a zero-sum relationship between defense spending and his special interest domestic policy agenda. This is, of course, nonsense. Roughly $700B of our $3.7T or so budget, roughly 20%, involves defense. I don't know whom he thinks he's fooling by discussing a figure, say, $1T, over a decade, e.g., $100B or so a year, when he himself had added over $4T in 3 years to the national debt. Let's say, we are "underinvesting" because the $300B or so of Iraq/Afghan involvement over 3 years (out of nearly $10T in spending). NO, WE DON'T NEED TO FLUSH GOOD MONEY AFTER BAD THROUGH COST SAVINGS IN THE GULF REGION BY WRITING CHECKS TO DEMOCRATIC SPECIAL-INTEREST CONSTITUENCY PROGRAMS; WE NEED TO PARE DOWN THE $4T PORTION OBAMA HAS ALREADY ADDED TO THE NATIONAL DEBT.
Political Humor
A few originals:
- Mike Rawlings, a former Pizza Hut CEO, just won the mayoral race in Dallas. When asked why he has done so much better than former Godfather's CEO Herman Cain's recent stagnating ratings in the GOP Presidential nomination after his own CNN debate, Rawlings points out in his debate he chose thin-crust (versus deep dish) pizza.
- As a way of demonstrating the effectiveness of Obama's Keynesian economics, Obama proudly notes the way that the American investment of blood and treasure in the nation building of Afghanistan over the past decade has enabled Afghanistan to firmly establish its growing global production dominance in opiates and hashish.
Chicago, "Look Away". The last Chicago #1 hit and the only one not written by Cetera (up to now)
