It can’t go on forever so when will it stop?
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The insanity of the CBO’s approach shows in a chart in which they suggest, much as Nancy Pelosi has, that increasing unemployment benefits is the biggest employment booster of all their policy suggestions. Any economic model paradigm that can reach this conclusion should be jettisoned without further ado — but won’t be because this Keynesian approach is the keystone holding up the rotting edifice of big, Progressive government against the weight of decades of failure.
On the other hand, reducing corporate tax rates and allowing a trillion dollars of capital to return to our shores are precisely the foundation on which long-term business investment could be built. (An income repatriation “holiday” is not without critics, even on the right, some of whom prefer a permanent change in taxation of U.S. companies’ foreign-earned income.)
If you’re a corporation or entrepreneur with cash sitting idle in bank accounts earning zero percent interest, you are motivated to do something to generate returns on that capital. The way to do that is to grow your business by a combination of hiring and increasing productivity.
You’ll be deterred from doing so if the risks are so high that simple preservation of capital is more attractive than your risk-adjusted returns of doing business. And few things increase those risks more than a government that tries to borrow its way to prosperity while implementing economic policies with short-term benefits but long-term costs. We have a government addicted to the rush of redistributing the earnings of Americans (whether working today or not yet born) while ignoring the DTs the rest of us suffer for their profligacy.
Despite how obvious it is to any businessman that long-term incentives for growth and capital formation are the key to economic success, the CBO estimates that cutting corporate income taxes will generate only one sixth as many jobs as raising unemployment benefits (per dollar cost to the government.) Again, any government operating on a model that could reach this conclusion is so economically ignorant it’s remarkable we’re not in even worse shape than we are.
To be fair, Mr. Elmendorf points out that his policy suggestions “might be considered to promote economic growth and increase employment in the near term.” But thinking near term is exactly what has gotten us into this mess. And unless we do in fact live on Big Rock Candy Mountain, it’s time — far past time — to start thinking about economic policies for the long-term and the real world.
The real world is now a $15 trillion federal debt and a Republican Party — as represented by its negotiators on the “Super Committee” — drifting toward Democratic positions, just as efforts at “bipartisanship” always do. It’s time to put our foot down, to scream from the rooftops that we have a spending problem, not a revenue problem, that we are stunting long-term growth by focusing on short-term false solutions due to lack of political courage and economic wisdom.
In terms of both economics and politics, no deal is better than a bad deal when it comes to the not-so-Super Committee and Republican votes in Congress. Economically, as Wesbury makes clear, “every extra dollar of tax revenue the Committee might agree to, will limit spending reductions.… No agreement and a complete breakdown of the committee — which forces automatic sequestration — is better for the economy than a compromise that includes large tax hikes.”
And politically, it’s time for Republicans to recognize that voters want authenticity. Few things will bode better for GOP electoral hopes than their being authentic, consistent champions of cutting budgets. Good policy will be good politics a year from now. Republican Super Committee members Jeb Hensarling (TX) and Pat Toomey (PA) need to back away from “getting along” for its own sake, stand up for economic rationality, and remind the world that the spending-addicted Democrats’ only answer — just like the answer from almost every addict — is to inject more drugs rather than to get our nation into a desperately needed fiscal 12-step plan.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?