Saturday, February 1, 2014

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Self awareness is supposed to be a good thing, so I’m going to openly acknowledge that I have an unusual fixation on the size of government.

I don’t lose a wink of sleep thinking about deficits, but I toss and turn all night fretting about the overall burden of government spending.

My peculiar focus on the size and scope of government can be seen in this video,
which explains that spending is the disease and deficits are just a symptom.

Moreover, my Golden Rule explicitly targets the spending side of the budget. And I also came up with a “Bob Dole Award” to mock those who mistakenly dwell on deficits.

With all this as background, you’ll understand why I got excited when I started reading Robert Samuelson’s column in today’sWashington Post.
Well, there’s a presidential whopper. Obama is right that the role of the federal government deserves an important debate, but he is wrong when he says that we’ve had that debate. Just the opposite: The White House and Congress have spent the past five years evading the debate. They’ve argued over federal budget deficits without addressing the underlying issues of what the government should do, what programs are unneeded, whether some beneficiaries are undeserving… The avoidance is entirely bipartisan. Congressional Republicans have been just as allergic to genuine debate as the White House and its Democratic congressional allies.
By the way, I have mixed feelings about the final sentence in that excerpt. Yes, Republicans oftentimes have displayed grotesque levels of fiscal irresponsibility. Heck, just look at the new farm bill. Or the vote on the Export-Import Bank. Or the vote on housing subsidies. Or…well, you get the point.

On the other hand, GOPers have voted for three consecutive years in favor of a budget that restrains the growth of federal spending, in large part because it includes much-needed reforms to major entitlement programs such as Medicareand Medicaid.

But Republican inconsistency isn’t our focus today.

I want to address other parts of Samuelson’s column that left a bad taste in my mouth.

He argues that you can’t balance the budget merely by cutting discretionary programs. That’s technically untrue, but it’s an accurate assessment of political reality.

I’m much more worried about his assertion that you can’t balance the budget even if entitlement spending also is being addressed.

Let’s look at what he wrote and then I’ll explain why he’s wrong.
Eliminating many programs that are arguably marginal — Amtrak, subsidies for public broadcasting and the like — would not produce enough savings to balance the budget. 
The reason: Spending on Social Security, Medicare and other health programs… But even plausible benefit trims for affluent retirees would still leave deficits. There would still be a need for tax increases. 
This is wrong. Not just wrong, but demonstrably inaccurate.

The Ryan budget, for instance, balanced the budget in 2023. Without a single penny of tax hikes.

Senator Rand Paul and the Republican Study Committee also have produced balanced budget plans.

Even as scored by the statists at the Congressional Budget Office.

By the way, you don’t even need to cut spending to balance the budget. Spending cuts would be desirable, of course, but the key to eliminating red ink is simply making sure that government spending climbs at a slower rate than revenues.

And since revenues are expected to grow by about 6 percent per year, it shouldn’t take advanced knowledge of mathematics to realize that the deficit will fall if spending grows by less than 6 percent annually.

Indeed, we could balance the budget as early as 2018 if spending merely was restrained so that the budget grew at the rate of inflation.

But never forget that the goal of fiscal policy should be shrinking the size and scope of the federal government, not fiscal balance.

Ask yourself the following questions. If $1 trillion floated down from Heaven and into the hands of the IRS, would that alter in any way the argument for getting rid of wasteful and corrupt parts of the federal leviathan, such as theDepartment of Housing and Urban Development?

If the politicians had all that extra money and the budget was balanced, would that mean we could – or should – forget about entitlement reform?

If there was no red ink, would that negate the moral and economic imperative of ending the welfare state?

In other words, the first part of Samuelson’s column is right. We need a debate about “the underlying issues of what the government should do, what programs are unneeded, whether some beneficiaries are undeserving.”

But we’re not going to come up with a good answer if we don’t understand basic fiscal facts.
It’s been a truism for as long as I’ve been alive that Washington, DC is out of touch with the lives of the rest of us who don’t live in New York or Los Angeles.

Unfortunately, it’s never been as more true either.

And it has had great consequences for the rest of the country.

When you spend more than half of your private sector output on government, then unfortunately, as the government goes, so goes the rest of the country.

The government believes that the policy of taking income from you to give to the government is addition by subtraction.

I say it’s the cutting edge of the disconnect between the “us” that just wants to live our lives and the “them” who uses our lives as punctuation in their fictionalized tome that can generically be called My Struggle Against Lies, Stupidity and Cowardice.

You see, there is a Great Disconnect in this country.

There’s a disconnect between earnings and GDP, the stock market and wages, housing and homeownership, doctors and patients, blacks and whites, students and parents, men and women, common sense and ideology.

And yes, some of that tension has always existed, but this is the first time in my lifetime that the government has set about deliberately to exacerbate those tensions.

Generally governments try to do things to make life more orderly, not, you know, the obverse.
As Wall Street reported record earnings in January-- again—the stock market recorded it’s worst monthly performance since August.

Expect the disconnect to continue.

Since the official numbers for GDP have indicated an economy performing better than it has in recent memory, the market has reversed course and moved down, as seen in the three month chart below.

^SPX Chart  
^SPX data by YCharts

Financing is still hard to come by for Main Street, and in another case of disconnection, financial services companies lead the S&P 500 in earnings growth.

“Total earnings for the Finance sector are expected to be up +25.3%,” Zacks analyst, Sheraz Mian writes. “Excluding Finance, total earnings growth for the S&P 500 drops to +6.4%.”

This goes along with the strange, disconnected numbers we are seeing in the job market.

According to a recent estimate from the union run Economic Policy Institute (EPI) the numbers of missing worker has grown to 5.9 million people. It’s worth noting that only 1,374,000 jobs have been created since Dec 2012, while an additional 1,500,000 workers have left the workforce according to the EPI estimate.

5.9 million workers would imply a population of around 9.4 million people or a state the size of New Jersey, North Carolina or Michigan. These states have GDPs of between $350 billion and $500 billion. If the trend just stops now, we’ll only loose between $1.7 trillion and $2.5 trillion in GDP over the next five years.


Yet the Great Dividers cry about a $24 billion hit to GDP because of a government shutdown. That’s only one percent of the GDP that we’ll be missing in the next five years due to plunging labor force numbers.

It’s so bad that many people believe the government is deliberately ruining the economy.

“They can’t be this stupid,” it’s said. “This must be a deliberate plan.”

Unfortunately, I wish that were true.

Certainly the plan to divide us is deliberate.

It’s about the only thing they seem to know how to do well.

But as the Obamacare debacle clearly shows, these guys couldn’t manage their way out of a wet paper bag even if equipped with razor blades.

Which gives me a really good idea.

Does anyone know where I can get a humongous paper bag?

Top Islamic Leader Calls on U.S. to Wage ‘Jihad for Allah’

A video of Dr. Yusuf al-Qaradawi calling on the U.S. government to wage jihad for Allah in Syria, is currently making the rounds on Arabic media and Facebook, to mockery and dismay.

In the recorded speech, Qaradawi—one of the most influential Islamic clerics in the world, spiritual leader of the Muslim Brotherhood, author of over 100 books on Muslim doctrine, and head of the International Union of Muslim Scholars—sarcastically thanks the U.S. for supporting the “freedom fighters” in Syria, adding that “Allah willing, your [U.S.] aid will increase.”

Then, while working himself up because the U.S is only providing weapons to the jihadis in Syria, as opposed to directly intervening, Qaradawi declares in frustration: “We want America to take a manly stand—a stand for Allah!

Needless to say, all Muslim Brotherhood opponents in the region are pointing to this as yet more proof that Qaradawi and the Brotherhood are mercenaries who interpret jihad any which way, so long as it helps them consolidate power: otherwise, how can “infidel” America take “a stand for Allah” by waging jihad on fellow Muslims?

It should further be noted that the classic formulation of the Arabic word jihad, as in “fight,”  appears in the Koran with the addition fi sabil Allah, that is, “fight in the cause of Allah.”

In other words, calling on the U.S. to strike Syria’s Bashar Assad—and calling it “a stand for Allah”—is essentially synonymous with calling on the U.S. to fight “in the cause of Allah.”

Amazingly, then, Qaradawi employs classical jihadi rhetoric to incite American leadership to action.
As one televised political commentator in Egypt discussing this anecdote put it,
Sheikh Qaradawi of course is the great and prominent Sheikh of Jihad, who issues those famous fatwas we all know of to kill and destroy on his orders.  Really, the man has reached the point where he is now calling on America to wage jihad and take a stand for Allah.  No comment; what’s there to say at this point?…  Now jihad is being asked of America and to be waged against Muslims.
Nor is it any secret that this administration does act on the calls of  Qaradawi.  As Clare Lopez summarizes for the Gatestone Institute:
[T]he current administration consistently and repeatedly appeared to respond eagerly to the calls for revolution from the Muslim Brotherhood’s senior Islamic scholar, Yousef al-Qaradawi. When al-Qaradawi said that Mubarak had to go, the U.S. waited a whole three days before throwing America’s key ally in the Middle East for over three decades under the bus. When al-Qaradawi called for Libyan rebels to kill Muammar Qaddafi (so the al-Qa’eda jihadis in his jails could get out and join the revolution), the U.S. led the Western military campaign that brought al-Qa’eda, the MB, and chaos to Libya. And when al-Qaradawi issued a call for jihad in Syria, in early June 2013, the U.S. quickly issued an invitation to Abdullah bin Bayyah (al-Qaradawi’s vice president at the International Union of Muslim Scholars), who told an Al-Jazeera reporter that, “We demand Washington take a greater role in [Syria].” It took the U.S. less than one week after al-Qaradawi’s fatwa to announce authorization of stepped-up military aid to the al-Qa’eda-and-Brotherhood-dominated Syrian rebels. The White House announcement came just a single day after bin Bayyah met with National Security and other senior administration officials.
The problem, then, is not that Qaradawi has in desperate senility confused the U.S. with the jihadis, but rather that he may know that prominent elements of U.S. leadership are committed to struggling “in the cause of Allah”—and so he unwittingly employed jihadi rhetoric to remind them of their duty.

Unfortunately, in today’s surreal climate of U.S. politics, no interpretation is so absurd as to be implausible.
Christie Denies Former Pal's Claim He Knew About Bridge-gate Closings
By Newsmax Wires

New Jersey Gov. Chris Christie denied allegations by a former friend that he made inaccurate statements during a news conference about the lane closures near the George Washington Bridge,

A lawyer for former Christie loyalist David Wildstein, who ordered the closures and resigned amid the ensuing scandal that has engulfed the New Jersey governor's administration, made the allegations in a letter released Friday. 

Wildstein's lawyer, Alan Zegas, wrote that his client "contests the accuracy of various statements that the governor made about him and he can prove the inaccuracy of some."

Attorney Alan Zegas' letter also said evidence exists suggesting the governor knew about the closures as they happened in September. The letter does not say what the evidence is and Zegas did not return calls to The Associated Press.

The Republican governor's office said the letter's key allegation — that Christie knew about the closures when they happened — does not contradict what the governor has said.

"He had absolutely no prior knowledge of the lane closures before they happened and whatever Mr. Wildstein's motivations were for closing them to begin with," Christie's office said in a statement.

"As the Governor said in a Dec. 13 press conference, he only first learned lanes were closed when it was reported by the press, and as he said in his Jan. 9 press conference, had no indication that this was anything other than a traffic study until he read otherwise the morning of Jan. 8."

At a nearly two-hour news conference Jan. 9, Christie gave responses open to interpretation about when he first learned about the closings while saying flatly he knew nothing about an apparently political motive until months later.

Asked if he had authorized the retribution, Christie said: "Oh, absolutely not. No. And I knew nothing about this. And until it started to be reported in the papers about the closure, but even then I was told this was a traffic study."

Story continues below video.

In another instance, when asked if he understood why people would have a hard time believing "you didn't know about this thing," he responded:

"So what I can call tell you is if people find that hard to believe, I don't know what else to say except to tell them that I had no knowledge of this — of the planning, the execution or anything about it — and that I first found out about it after it was over."

"And even then, what I was told was that it was a traffic study," he said.

Zegas' letter to the Port Authority of New York and New Jersey requests that the agency pay his legal bills. Wildstein was Christie's No. 2 man at the Port Authority, the agency that runs the bridge, before resigning in December.

The letter is unclear about whether Wildstein is suggesting he has material that has not been made public previously or whether he is referring to information that has been reported in recent weeks.
Christie had adamantly denied staff members were involved until private emails that were subpoenaed and released showed otherwise. Besides Wildstein, three others connect to Christie aides have been fired or resigned.

New Jersey legislators are investigating whether Christie aides engineered the lane closures in the community of Fort Lee to send a message to the town's Democratic mayor. The U.S. Attorney's office is also investigating. Twenty subpoenas for documents and correspondence related to the lane closings are due to be returned to the legislative panel on Monday.

No subpoenas target Christie himself, a possible 2016 presidential candidate who has just begun a yearlong chairmanship of the Republican Governors Association.

Some Democrats pounced on Friday's letter. Milly Silva, a union executive who ran for lieutenant governor last year issued a statement saying, "If these allegations are proven, it raises serious questions about how New Jersey can continue to move forward under Gov. Christie's leadership."

Wildstein, who attended Livingston High School with Christie, appeared under subpoena before a legislative committee on the same day as Christie's news conference. But he refused to answer any questions from lawmakers about the lane closures.

He even refused to say whether he had previously worked at the Port Authority, though just weeks earlier, he publicly resigned from his post there.

Wildstein, who previously was a political blogger, said Zegas advised him to remain silent for fear of being prosecuted. Zegas has said Wildstein would be willing to talk if granted immunity from criminal investigators.

The committee found him to be in contempt and referred the case to a prosecutor.