Archives: 10/2013

Keynesian Economics, Government Shutdowns, and Economic Growth

Keynesian economics is the perpetual motion machine of the left. You build a model that assumes government spending is good for the economy and you assume that there are zero costs when the government diverts money from the private sector.

With that type of model, you then automatically generate predictions that bigger government will “stimulate’ growth and create jobs. Heck, sometimes you even admit that you don’t look at real world numbers.

This perhaps explains why Keynesian economics has a long track record of failure. It didn’t work for Hoover and Roosevelt in the 1930s. It didn’t work for Nixon, Ford, and Carter in the 1970s. It didn’t work for Japan in the 1990s. And it hasn’t worked this century for either Bush or Obama.

Jury Nullification in DC

Interesting story in today’s Washington Post about a jury nullification billboard in the subway station below the local courthouse.  As usual, prosecutors and judges are scrambling to find out what jurors might know about jury nullification–the prerogative of jurors to vote their conscience.

John Adams, our second president, once said, “It is not only [the juror’s] right, but his duty … to find the verdict according to his own best understanding, judgment, and conscience, though in direct opposition to the direction of the court.” Prosecutors and judges are hostile to such views today.

Cato is just now releasing a handsome new hardcover edition (and e-version) of our book, Jury Nullification: The Evolution of a Doctrine, by Clay Conrad. Whether you want to order and read the book, or not, use social media to spread the word about jury nullification and the right to vote one’s conscience.

For more info, go here and here.

When Allies Get Angry with America: Tell ‘Em to Pound Sand

Saudi Arabia is angry with Washington. In Riyadh’s view, the U.S. government isn’t doing enough to support tyranny and war in the Middle East. The Obama administration should tell America’s foreign “friends” that Washington acts in the interests of the American people, not corrupt dictators.

Repressive Riyadh long has been an embarrassment for the United States. Some Americans worry about access to oil, but as I observed in my latest article on Forbes online, the Saudis are even more dependent on Washington:

If the money stopped flowing, members of today’s pampered elite might find themselves hanging from lamp posts.  So Riyadh is going to ship oil to Americans even if Washington acts in America’s rather than Saudi Arabia’s interests.  (Never mind new energy discoveries elsewhere in the world, including in the United States, are steadily diminishing Riyadh’s relative energy role.)

Washington’s increased willingness to resist Saudi Arabia’s demands has led to reports that the King Abdullah is “angry.” More dramatically, the Saudi government decided not to take one of the ten elected term seats on the Security Council to send a message to the United States.

Water Infrastructure Bill: Bipartisanship Lives!

Last week, the Republican-controlled House overwhelmingly passed a water infrastructure bill with only three members (two Republicans and one Democrat) voting against. In what must have been a moving scene for beleaguered supporters of unabated big government, tea party “radicals” joined hands with Democrats to support special interests at the expense of taxpayers. 

The Water Resources Reform and Development Act (H.R. 3080) authorizes $8 billion for U.S. Army Corps of Engineers projects like dam construction and river dredging that will benefit parochial constituencies and commercial interests. It’s called a “reform” bill, but a study of the bill by Taxpayers for Common Sense completely undermines that claim (see here). 

From Reuters: 

Survey Says: Public Wants to Know the Total Per Pupil Cost of Public Schooling

A new public opinion survey commssioned in Rhode Island by the Friedman Foundation reveals that people want to know the honest-to-goodness total per-pupil cost of public schooling.

Unfortunately, the full cost is regularly omitted from state education department websites, as revealed in a recent Cato study by Jason Bedrick. What’s more, the full figure is seldom reported by the media. Instead, newspapers and local TV news outfits usually report just a portion of the cost that excludes things like construction spending, interest on debt, and pensions. Education officials obviously have an incentive to make their operations look as frugal as possible, so it’s no surprise that they would offer reporters these partial spending figures (known as “operating” or “current” spending).

Don’t Confuse Immigration “Style” with “Substance”

Some are making a lot of hay over Senator Rubio’s (R-FL) supposed flip-flop on immigration reform whereby he now supports a House strategy of piecemeal bills as opposed to one large comprehensive package that he helped push through the Senate. Rubio has even stated that he opposed going to conference with his Senate immigration reform bill and any individual bill passed by the House. 

Rubio’s statement is not a flip-flop—it is a public acceptance of the way immigration reform will work in the House and not a repudiation of immigration reform. For a long time the word “comprehensive” has been a dirty word among Republicans and this is just a loud public statement by a pro-reform Senator—arguably the leader of immigration reform this year—moving against that word and the strategy it represents. Piecemeal bills were going to be the strategy in the House—as has been known for months. There is no surprise here.    

But his change is purely strategic, and not very substantive. As a spokesman for Senator Rubio stated:

The point is that at this time, the only approach that has a realistic chance of success is to focus on those aspects of reform on which there is consensus through a series of individual bills … Otherwise, this latest effort to make progress on immigration will meet the same fate as previous efforts: failure.

If There’s a Grand Bargain, Taxpayers Should Get a Tax Cut Rather than a Tax Hike

The Washington metropolitan area has become America’s wealthiest region because trillions of dollars are taken every year from the productive sector of the economy and then divvied up by the politicians, bureaucrats, lobbyists, and interest groups that benefit from federal largess.

But there’s always an appetite in Washington for even more money. Former senator Kent Conrad (D-ND) just wrote in the Washington Post that “Our country needs more revenue to help us get back on track.”

I guess that means back on track to becoming Greece, though I suspect he would have an alternative explanation. All I can say for sure is that he probably wasn’t paying attention when I testified to his committee last year about pro-growth tax policy.

But it’s not just Democrats who are greedy for more of our money. Republican Congressman Tom Cole of Oklahoma joined the Charlie Brown Club by stating, “we’re willing to put more revenue on the table.”

If you ask politician why they want more revenue in Washington, they invariably state that America’s long-term fiscal challenges are so large that you need a “balanced” package.

But why should there be “balance” between tax hikes and spending cuts (which would merely be reductions in planned increases) when more than 100 percent of America’s long-run fiscal problem is because of a rising burden of government spending?

Does that sound like an exaggeration? Well, check out this data from the Congressional Budget Office’s 2013 Long-Term Budget Outlook.