The American Spectator

The Expansive View of Expansionary Fiscal Policy

Posted by Joseph Lawler on 7.30.10 @ 7:35AM

In a Wall Street Journal article earlier this week, Jon Hilsenrath quoted the Stanford economist Robert Hall as claiming that there hasn't been much stimulus spending because of state and local government fiscal contraction: 

Robert Hall, a Stanford University professor, says there hasn't actually been that much extra government spending overall, because the increased federal spending has been largely offset by a large contraction in state and local government outlays. By the third quarter of 2009, he notes, federal government spending added $66 billion to economic output, less than 0.5% of total output, offset by a $43.1 billion contraction in state and local government spending, he says. 

This passage gives a misleading impression of the size of the government's response to the crisis, because it omits much of Hall's analysis of the stimulus. In order to assess the impact of fiscal policy, Hall broke up all the government spending in response to the recession into the two parts that would have varying spending multipliers: direct purchases of goods and services (which in Hall's model have a higher multiplier), and increased benefits and tax cuts and rebates (which have a significantly lower multiplier).

Hilsenrath's description only accounts for spending on purchases. He leaves out the stimulus funds that flowed to benefits or tax rebates, which funds accounted for over half of the spending in the third quarter of 2009 (depending on how you count "spending." Tax rebates, for instance, would show up as lost revenue instead of increased expenditure). In his assessment, Hall includes all above-trend government spending, or fiscal expansion, as stimulus, and not just spending included in the 2009 stimulus bill. Hall's measurement of spending, which includes automatic stabilizers, is intended to give a better picture of overall fiscal stimulus.

Here, from a paper Hall sent to me, is a graph showing the the extra government purchases of goods and services, the portion of the stimulus spending that Hilsenrath refers to:

Clearly federal spending on purchases was elevated through the first quarter of 2010, while state and local spending on purchases steadily decreased. 

And here is the rest of the stimulus spending, composed of tax rebates and benefits. Continue reading…

Add a Comment

The Day Ahead: Friday, July 30, 2010

Posted by Max Brindle on 7.30.10 @ 7:10AM

Today on the Main Site:

Have the Republicans Learned Their Lesson? And do they deserve to win big this November? And if they do win, do they know what to do? Can they ever be trusted again? A pre-election symposium, from our Summer Issue. Contributors include Fred Barnes, David Boaz, Jim Geraghty, Jim DeMint, Grover Norquist, Dick Armey, and Michael Barone.

Sic Transit Tony Hayward: BP's Abused and Fumbling CEO by Andrew B. Wilson: But he committed far fewer gaffes than the august Obama administration.

Arizona Police and Tribal Police by James M. Thunder: Guess who our president prefers dealing with.

Leaving Sandpoint by Ben Stein: So long, small town America.

Lady Manningham-Buller Lets Down the Side by George H. Wittman: There was a time when security service chiefs retired and disappeared into the gentle night -- not anymore.

Contra Fabrizio: A Paean to My Book by Mark Goldblatt: ...and to the future of e-books.

Those '70s Show by Jay D. Homnick: A paternal guide to government at its most incapable.

What to Watch for:

BP's Hayward defends tenure, spill response (WSJ) 

July becomes deadliest month for U.S. forces in Afghanistan (AP) 

Rangel trial has Democrats nervous for November (NY)

SEC charges Texas billionaires with strong GOP ties to millions in security fraud (Wash Post) 

AZ governor files appeal to immigration law injunction (CNN) 

Clip of the Day:

Rangel Ethics hearing opening remarks

Add a Comment

Conservative Leaders Oppose Union Power Grab

7.29.10 @ 3:44PM

MEMO FOR THE MOVEMENT

Congress Should Oppose Labor Union Power Grab Legislation

RE: The misleadingly named "Public Safety Employer-Employee Cooperation Act" (originally H.R. 413; S. 1611, 3194). The bill would unconstitutionally abrogate all states' sovereignty, subject state and local public-safety workers to compulsory union "representation," eliminate local government control over the labor relations of their own workers, lead to a rise in labor strife, and further damage fragile state and local government economies by imposing unfunded federal mandates. The House approved the bill in 2007 with the support of 98 Republicans.

ACTION: Congress should reject the so-called "Public Safety Employer-Employee Cooperation Act" because the bill unconstitutionally abrogates each state's existing right to determine the labor relations of its own and its local governments' employees. And Congress should do so whether it is considered as a stand alone bill or as an amendment to another piece of legislation.

2 Comments | Add a Comment

Quick, Someone Tell Obama: They're locking up onshore oil, too!

Posted by Chris Horner on 7.29.10 @ 2:55PM

Today's Land Letter just arrived in my in box, with the following lead story:

1. OIL AND GAS: NPR-A could see new protections under pending Interior management plan

The Interior Department is preparing to develop its first comprehensive management plan for the National Petroleum Reserve in Alaska (NPR-A), a move environmentalists say could permanently remove large sections of the massive reserve from future energy development. The "integrated activity plan" for NPR-A would take a comprehensive look at the 23.5-million-acre reserve with an eye toward identifying areas suitable for oil and natural gas drilling as well as those areas that should remain off-limits, said Pat Pourchot, special assistant to Interior Secretary Ken Salazar for Alaska affairs.

So, we're only producing oil in deep water because we're running out of places to look onshore, are we Barry? As I've said...

3 Comments | Add a Comment

The Pain of the Danes, Coming Your Way

Posted by Chris Horner on 7.29.10 @ 2:41PM

After President Obama's repeated (eight times) assurance that Spain proved his "green" central planning was an economic boon was debunked (as was his contemporaneous citation of Germany's supposed success), the White House simply replaced "Spain" with "Denmark" in his stump speech.

That, too, was debunked. So now Obama no longer points to any country as a success. I wonder what that tells us.

Anyway, one (other) thing our apparently not overly worldly Obama White House apparently didn't  realize was that when a US political leader hails a small country it makes the newspapers there. And academics respond to such challenges, despite the flattery.

So it is again today, where we read "Profits of Doom" in, of all places, the Times Higher Education, including the following excerpt:

DENMARK'S WIND TURBINES: A DANGEROUS AMOUNT OF HOT AIR

Denmark is the wind capital of the world - that's one of the reasons why Copenhagen was chosen to host the great climate change conference last year. Between 1985 and 2005, more than 3GW of wind-turbine capacity was installed, of which about 15 per cent was sited offshore.

There are few areas on western Denmark's coast and in its flat or gently rolling countryside that are unaffected. Fortunately, the nation's agricultural community has learned to love the modern intruders - or at least the subsidies.

As the sector expanded, so did the size of the wind turbines. The latest idea is to build 20MW versions as tall as the Eiffel Tower. Each turbine requires an access road, massive concrete foundations and, of course, electricity pylons.

Wind turbines, despite being so very green themselves, are antipathetic to nature. On forested hillsides, they require the clear felling of woodland; on low-lying coastal sites, they necessitate the draining of wetland to facilitate the construction of access roads and enormous concrete foundations.

As independent energy consultant Vic Mason has pointed out, such side-effects could stimulate the oxidation of peat (releasing carbon dioxide) and damage many sensitive habitats essential for particular species of wildlife.

Until recently, the most important subsidy supporting the sector was that the Danish National Grid (and hence consumers) was obliged by law to buy all the electricity produced by wind-power projects - and to do so at prices determined by the government, not the market. That's why Danish householders must pay almost double the UK price for electricity.[NB: that's three times U.S. rates...you can mandate anything, and sometimes it can be done; but at great cost, despite the silly, free-ice-cream economics so fashionable among environmentalists and politicians]. Estimates of the costs of the subsidies differ - the Danish government says it is about DKr4 billion (£443 million) a year - but independent experts put it at about DKr10 billion a year. If the higher estimates are correct, it would mean that Denmark has been spending more on wind turbines each year than on education.

In spite of the cost, wind power generates only about 4 per cent of the electricity used in Denmark: the truth is that almost all of it is wasted.

Specialists believe that it is unrealistic to expect turbines to produce much more than 20 to 25 per cent of their potential annual output, and that has been the experience in Denmark. Sometimes there is too little wind, sometimes there is too much. Sometimes the machines are broken or being serviced and polished.

With wind turbines, a conventional power station must always provide back-up. For the Danes, traditional power stations with capacities equal to 90 per cent of the installed wind-power capacity must be permanently online to guarantee supply at all times. (emphases added)

Just in time Washington is preparing to cram down its Power Grab anyway. But it's nice to see that the mythologizing does not go unchallenged.

2 Comments | Add a Comment

The Roe v. Wade of Immigration

Posted by W. James Antle, III on 7.29.10 @ 11:41AM

Jim Pinkerton wonders if yesterday's federal court ruling will trigger a firestorm like Roe v. Wade did. The people have a funny way of not liking their will trampled on.

13 Comments | Add a Comment

Holder Favors Felons Over Soldiers

Posted by Quin Hillyer on 7.29.10 @ 7:29AM

At the Washington Times today, we have this jaw-drop-inducing story:

"The politically charged gang led by Attorney General Eric H. Holder Jr. is more interested in helping felons vote than in helping the military to vote.... The Justice Department is so unenthusiastic about military voting that its website still lists the old requirement for a shorter 30-day military voting window, rather than the current law mandating 45 days. On the other hand, the Justice Department has no legislative mandate whatsoever to involve itself with helping felons to vote, but its website devotes a large section - 2,314 words - to advising felons how to regain voting privileges."

What the editorial doesn't describe is the content of those 2,314 words. It's amazing. The time and effort required to compile all the information, and the obvious priority the Obamites made it, really show the highly politicized cast of mind of this administration. The section includes a state-by-state list of where felons can call or write in order to try to get their voting privileges back. Yet, I repeat, this should be NO business of the Justice Department. It has no statutory or constitutional role to play in helping felons regain voting privileges. But it DOES have a statutory requirement to help DoD ensure voting rights for the military, yet it can't even be bothered, with an entire year to do it, to post even a simple link to the new law requiring that ballots be mailed to military personnel 45 days before an election.

Along with former DoJ official Eric Eversole, who first broke this story at the Washington Times, J. Christian Adams has been way out front on this military voting issue, with all sorts of interesting information that is damning of the Civil Rights Division at Justice and especially its new Obamite overseers. (His Election Law Center blog is a treasure trove of information about all sorts of voting-related legal issues.) And Adams also is the one who blew the whistle on DoJ for its weird compulsion to help armed robbers and drug pushers and other felons gain voting privileges. The good news is that U.S. Sen. John Cornyn of Texas is fighting back on behalf of military voters.

Felons tend to vote for Democrats, like Barack Obama. The military tends to vote for Republicans. And Eric Holder's Justice Department isn't interested in justice, but in serving as a political arm of the White House and the Democratic Party. Hence the greater interest in helping felons vote than in ensuring that soldiers and sailors risking their lives for our country get a chance to exercise their rights of citizenship.

32 Comments | Add a Comment

The Day Ahead: Thursday, July 29, 2010

Posted by Max Brindle on 7.29.10 @ 7:06AM

Today on the Main Site:

The Cure for Political Dejection by Quin Hillyer: The worst of times don't have to last.

Swift Tax Dodgers by Andrew Cline: John Kerry's not alone in dodging Massachusetts taxes.

Bring Back the Duel by Christopher Orlet: Because drive-by shootings ain't what they used to be.

Cameron's Flotilla Folly by Aaron Goldstein: The new British prime minister chooses Turkey and Hamas over Israel.

Amongst the Gibbering Journalists by R. Emmett Tyrrell, Jr.: What's with the wretches and patheticos also known as Journolists?

How the New Beetle Got Old by Eric Peters: So long to the New Beetle and its miserable 12-year run.

A Prescription for Fiscal Discipline by Rep. Paul Broun, MD: It's one medicine Obamacare won't care to cover.

You Have Reached... by Reid Collins: Whenever storms knock power out, Pepco remains in the dark.

What to Watch for:

Judge's ruling on AZ law sets stage for legal fight (Wash Post) 

Obama on the View (ABC News) 

Insurers cheat dead soldiers' families (Bloomberg) 

Americans cut back on visits to doctor (WSJ) 

US Military scrutinizes leaks for risks to Afghans (NY Times) 

Clip of the Day:

Robert Gibbs tells media to "grow some skin thats a little thicker;" full briefing below talking about Obama's "beer picnic"

Add a Comment

Ron Paul and Liberal Republicans

Posted by W. James Antle, III on 7.28.10 @ 4:11PM

David Frum has a post talking about liberal Republican support for Ron Paul in a recent poll of New Hampshire GOP primary voters. Although Paul's conservative supporters would say the Good Doctor is self-evidently more right-wing than Newt Gingrich, that's pretty consistent with the exit poll results from the 2008 primary. I made note of the data in my review of Bill Kauffman's Ain't My America for Reason (skip to the third paragraph).

Of course, Ron Paul wasn't the top choice of liberal Republicans in New Hampshire. That honor went to the winner of the New Hampshire primary and the eventual 2008 GOP nominee: John McCain. (Incidentally, I think Mitt Romney's lead in the early New Hampshire polls probably reflects his roots as a New England governor and McCain's absence from the race more than it says anything about his perceived economic competence, though there could be some data that proves me wrong.)

89 Comments | Add a Comment

Federal Judge Blocks Key Parts of Arizona Immigration Law

Posted by W. James Antle, III on 7.28.10 @ 2:34PM

U.S. District Court Judge Susan Bolton issued a preliminary injunction preventing several sections of Arizona's new immigration law from going into effect tomorrow as scheduled, at least pending the court's ability to hear the full case. According to the Arizona Republic the provisions that have been supsended include:

• The portion of the law that requires an officer make a reasonable attempt to determine the immigration status of a person stopped, detained or arrested if there's reasonable suspicion they're in the country illegally.

• The portion that creates a crime of failure to apply for or carry "alien-registration papers."

• The portion that makes it a crime for illegal immigrants to solicit, apply for or perform work. (This does not include the section on day laborers.)

• The portion that allows for a warrantless arrest of a person where there is probable cause to believe they have committed a public offense that makes them removable from the United States.

The Obama administration has filed a federal lawsuit to have the Arizona statute overturned, at least partly on preemption grounds. They had hoped to win this injunction to keep it from being implemented first.

34 Comments | Add a Comment

New CRS Report Says ObamaCare Allows Federally-Funded Abortions

Posted by Philip Klein on 7.28.10 @ 1:16PM

A new report by the Congressional Research Service reveals that the national health care law allows for federally-funded abortions, despite Democrats' claims to the contrary.

Under one of the provisions of ObamaCare, before the new health insurance exchanges are set up in 2014, the federal government is funding state-based high risk pools to help cover those with pre-existing conditions.

But according to the CRS, the abortion restrictions contained in the new law "would not appear to apply specifically to the funds made available for high risk pools by section 1101."

The report says that President Obama's executive order on abortion "does not specifically address high risk pools and the funds provided under section 1101 of (the Patient Protection and Affordable Care Act)."

The Department of Health and Human Services sets the guidelines for the operation of the high-risk pools, but according to CRS, those guidelines "neither explicitly provide the authority to cover elective abortions with federal funds, nor do they specifically prohibit the use of federal funds."

In response, 13 Republican Senators have sent a letter to HHS Secretary Kathleen Sebelius, urging her to issue regulations that would prohibit federal tax dollars from covering abortion through the high risk pools. You can view the PDFs of the CRS report and the letter below.

9 Comments | Add a Comment

Virginia NAACP Slams Jim Webb

Posted by W. James Antle, III on 7.28.10 @ 1:10PM

The executive director of the Virginia NAACP did not like Sen. Jim Webb's (D-VA) Wall Street Journal op-ed questioning the need for exclusively race-based affirmative action. (Titled "Diversity and the Myth of White Privilege," it acknowledges a debt to the descendants of slaves but innocently points out that not all whites are very privileged.)

King Salim Khalfani of the NAACP's Virginia Conference asked Webb in a letter if he was "pandering to the divisive, conservative, Tea Bagger types whose votes you will need in 2012" and told the Virginia senator that he and Rand Paul are "kith and kin." Though Webb is greeted as a "fellow member of the NAACP," Rush Limbaugh, Glenn Beck, and Bill O'Reilly were also thrown into the mix to keep Webb company.

As I said yesterday, this probably is indeed about 2012. But it could nevertheless get interesting.

33 Comments | Add a Comment

The Day Ahead: Wednesday, July 28, 2010

Posted by Max Brindle on 7.28.10 @ 7:09AM

Today on the Main Site:

The Timeless Principles of American Prosperity by Peter Ferrara: This should be the central argument and theme for this fall's elections.

The Democrats' Redistricting Nightmare by David N. Bass: The most far-reaching effect of the 2010 midterm elections will be felt at the state level.

Employment School by RiShawn Biddle: Or call them permanent unemployment schools -- because those who attend won't ever acquire the skills work in a modern economy requires.

Buffett, the Times, and the Weeping Abortionist by Ken Blackwell: Proud billionaire sponsors of the culture of death.

Obama's Double-Down Gamble by James Srodes: The White House has served notice that it will continue to apply both monetary and fiscal stimulus through the rest of this year if not longer, the $2 trillion yearly federal overruns be damned.

Corn vs. Coronary Bypass Surgery by Daniel Oliver: All you can eat, according to the Obama socialist in residence, Dr. Ronald Werrbick, MD.

A Paean to the Printed Page by Lisa Fabrizio: What child will ever experience a love affair with Kindles?

What to Watch for:

Obama heads to New York for fundraising; will be interesting indicator of Obama's current clout with the financial community (WSJ) 

Pakistan plane crash kills 152 (BBC News) 

BP probe focuses on 3 firms and their ties to regulators (Wash Post)

DNC to promote "Republican Tea Party" plan to try and conflate Tea party with GOP agenda (DNC)  

Part of financial reform creates agency to enforce hiring of women and minorities (Politico) 

Clip of the Day:

Sen. John Thune talks to Van Susteren about 2012 presidential run exclusively on Fox News 

Add a Comment

Tea Party Express Endorses O'Donnell in Delaware

Posted by Robert Stacy McCain on 7.27.10 @ 8:38PM

On the heels of my feature today about Christine O'Donnell's Senate campaign, the Tea Party Express endorses the conservative in the Sept. 14 Republican primary against Rep. Mike Castle:

"Christine O'Donnell has established a reputation as a strong voice for conservative constitutionalist principles consistent with the ideals of the tea party movement," said Amy Kremer, Chairman of the Tea Party Express and one of the founding activists of the modern tea party movement.
In contrast, Mike Castle has proven himself to be one of the most liberal establishment Republicans who has repeatedly turned against conservatives and those in the tea party movement.
"We're so excited to see the strength behind Christine O'Donnell's campaign," said Joe Wierzbicki, Coordinator for the Tea Party Express.
"We long ago announced our intention to hold Mike Castle accountable for his failed record in Congress, and now we have an excellent shot to make sure he is defeated by a solid conservative candidate," Wierzbicki said. . . .

CNN notes that backing from the Tea Party Express helped Sharron Angle score a come-from-behind win in the Nevada GOP Senate primary. Meanwhile, O'Donnell's trip to Vegas for the Right Online conference definitely helped boost her name recognition among conservative bloggers, generating coverage by Hot Air and Gateway Pundit, as well as an interview with Tammy Bruce.

Mike Castle's Republican supporters -- including Delaware State GOP Chairman Mike Ross -- are dismissing O'Donnell as "unelectable," citing her 2008 challenge to Joe Biden, who ran simultaneously for Senate re-election while campaigning as Obama's running mate. The back story on that campaign, however, actually points toward O'Donnell's potential to upset Castle in the primary. Without significant financial backing from national Republicans, O'Donnell was outspent nearly 50-to-1 by Biden, yet she got more than 140,000 -- 35% of the vote in a high-tide year for Democrats. Turnout in this mid-term GOP primary is unlikely to exceed 30,000, so if O'Donnell can mobilize just one out of 10 of her 2008 voters to turn out Sept. 14, that might be enough to beat Castle.

Robert Costa at National Review mentions that Sen. Jim DeMint is keeping an eye on the Delaware primary, considering an endorsement of O'Donnell. Of course, many of O'Donnell's supporters are also hoping for Sarah Palin's endorsement, but notice how the Democratic firm Public Policy Polling is spinning last week's Palin endorsement of Kelly Ayotte in New Hampshire as a detriment. Of course, this is outweighed by the hitherto decisive benefit of Palin's support in a Republican primary. If Ayotte wins the nomination -- like Delaware, New Hampshire's primary is Sept. 14 -- that momentum will carry over into the general election, and the "Palin Factor" can't be isolated and analyzed until the votes are counted on Election Day.

In a mid-term election year like this, it strikes me as foolish for Republicans to base decisions about Republican primaries on the hope of wooing moderates in the general election. It's exactly that kind of ill-considered "strategic" thinking that led to Newt Gingrich's embarrassing endorsement of Dede Scozzafava last year, and to John Cornyn's blunder in prematurely backing Charlie Crist in Florida.

21 Comments | Add a Comment

CBO Warns of Increased Risk of U.S. Fiscal Crisis

Posted by Philip Klein on 7.27.10 @ 5:24PM

The Congressional Budget Office today released a new report on the risk of a fiscal crisis occuring in the United States due to our long-term debt, and its conclusions largely echo points that I've been trying to make repeatedly.

The bottom line is that the longer we prolong dealing with our debt problem, the greater the risk of a fiscal crisis, and the more unattractive the options become for digging ourself out of the mess.

Some of the report undermines arguments that conservatives are trying to advance -- the CBO says, for instance, that largely extending the Bush tax cuts will significantly add to the deficit. But broadly speaking, the report presents a reality that is quite constistent with arguments conservatives have been trying to advance for years.

It outlines several consequences for growing debt, including crowding out of private investment and the need for higher taxes and/or spending cuts. Of higher taxes, however, it warns that, "To the extent that additional tax revenues were generated by increasing marginal tax rates, those rates would discourage work and saving, further reducing output and incomes."

The CBO also makes another point -- one which I constantly emphasize to conservative friends who say they're mainly interested in national security -- that a failure to address our fiscal situation will undercut military readiness.

"Having a small amount of debt outstanding gives policymakers the ability to borrow to address significant unexpected events such as recessions, financial crises, and wars," the CBO writes. "A large amount of debt could also harm national security by constraining military spending in times of crisis or limiting the ability to prepare for a crisis." It also notes that, "increased dependence on foreign investors that would accompany a rising debt could weaken the United States’ international leadership."

While the CBO notes that it's hard to predict with any degree of accuracy when or if the U.S. would encounter a fiscal crisis, it says that, "all else being equal, the higher the debt, the greater the risk of such a crisis."

Once a fiscal crisis actually occurs, the options get even worse. They include restructuring debt or causing inflation, both of which would run the risk of raising interest rates for government to brorrow money. Inflation would not only have negative economic consequences, but it would also increase future deficits. As an example: "if inflation was 1 percentage point higher over the next decade than the rate CBO has projected, budget deficits during those years would be roughly $700 billion larger."

The response to the fiscal crisis, the CBO anticipates, would likely include an austerity program with a mixture of tax increases and spending cuts. Yet those emergency measures will have to involve much more severe actions than what would be required if we were to address our debt problems now.

8 Comments | Add a Comment