Tag: schumer

Thirty Years of Deficit Disaster

The national debt has just passed $14 trillion. It’s approaching the so-called “debt limit” of $14.3 trillion, and members of Congress face a vote on raising the limit that doesn’t limit. President Obama will no doubt stress his commitment to reducing deficits in his speech tonight, but it’s unlikely that he will propose any actual budget cuts or any serious entitlement reforms. And we’re told that he will propose new spending on infrastructure, education, and research in the face of trillion-dollar deficits as far as the eye can see.

We’ve become so used to these stunning, incomprehensible, unfathomable levels of deficits and debt – and to the once-rare concept of trillions of dollars – that we forget how new all this debt is. In 1980, after 190 years of federal spending, the national debt was “only” $1 trillion. Now, just 30 years later, it’s sailing past $14 trillion.

Historian John Steele Gordon points out how unnecessary our situation is:

There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions. But while the national debt in 1982 was 35% of GDP, after a quarter century of nearly uninterrupted economic growth and the end of the Cold War the debt-to-GDP ratio has more than doubled.

It is hard to escape the idea that this happened only because Democrats and Republicans alike never said no to any significant interest group. Despite a genuine economic emergency, the stimulus bill is more about dispensing goodies to Democratic interest groups than stimulating the economy. Even Sen. Charles Schumer (D., N.Y.) – no deficit hawk when his party is in the majority – called it “porky.”

Annual federal spending rose by a trillion dollars when Republicans controlled the government from 2001 to 2007. It has risen another trillion during the Bush-Obama response to the financial crisis. So spending every year is now twice what it was when Bill Clinton left office. Republicans and Democrats alike should be able to find wasteful, extravagant, and unnecessary programs to cut back or eliminate. They could find some of them here in this report by Chris Edwards.

Tea Partiers and other taxpayers should listen carefully tonight, to both speeches. Is either party prepared to require the government to live within its means? Or will both parties continue to spend with abandon and raise the “debt limit” every few months?

Media Miss Real News in Latest Trade Report

This morning’s report from the U.S. Department of Commerce that the pesky trade deficit shrank unexpectedly in October is being hailed in the media as “good news” for the economy, while the real news behind the numbers remains buried.

According to the latest monthly trade report, exports of U.S. goods rose in October compared to September, while imports declined slightly. Rising exports are good news in anybody’s book, but according to the conventional Keynesian and mercantilist logic, falling imports must also be good for the economy because that means consumers are spending more on domestically produced goods, right? Wrong.

In the real world, that assumption is almost always false, as I did my best to document a few weeks back in an op-ed titled, “Are rising imports a boon or bane to the economy?”

The real news in the report is the spectacular rise of U.S. exports to China. Year to date, U.S. exports to China are up 34 percent compared to the same period in 2009. That compares to a 21 percent increase in U.S. exports to the rest of the world excluding China. China is now the no. 3 market for U.S. exports, behind only our NAFTA partners Canada and Mexico, and by far the fastest growing major market.

The politically inflammatory bilateral trade deficit with China is also up 20 percent so far this year, but our trade deficit with the rest of the world excluding China is up 38 percent.

Yet Sens. Chuck Schumer, D-N.Y., and Lindsey Graham, R-S.C., are still talking about pushing a bill during the lame-duck session that would authorized the same Commerce Department to assess duties on imports from China because of its undervalued currency. A cheaper Chinese currency relative to the U.S. dollar supposedly inhibits U.S. exports to China while tempting American consumers to buy even more of those useful consumer goods assembled in China. [For the record, U.S. imports from China so far this year have grown, too, but at a rate slightly below imports from the rest of the world.]

To anyone taking an objective look at the numbers, this morning’s trade report shows that whatever the wisdom of China’s currency policy, it has not been a real obstacle to robust U.S. export growth, nor has it fueled an extraordinary growth in our bilateral trade balance with China. Members of Congress should drop their obsession with China trade and move on to more urgent matters.

Wednesday Links

  • Is there a place for gay people in conservative politics? We’ll be discussing it today at Cato. Watch here live at 12 PM EST.

Congress Goes After Citizens United

Snowstorm notwithstanding, Sen. Charles Schumer and Rep. Chris Van Hollen introduced legislation in response to the Citizens United decision. A summary of their effort can be found here.

Some parts of the proposal are simply pandering to anti-foreign bias (corporations with shareholding by foreigners are prohibited from funding speech) and anger about bailouts (firms receiving TARP money are banned from funding speech). Government contractors are also prohibited from independent spending to support speech. We shall see whether these prohibitions hold up in court. The censorship of government contractors and TARP recipients will likely prove to be an unconstitutional condition upon receiving government benefits.

Despite Citizens United, Congress will try to suppress speech by other organizations.  Schumer-Van Hollen relies on aggressive disclosure requirements to deter speech they do not like. CEOs of corporations who fund ads will be required to say they “approve of the message” on camera at the end of the ad.

Citizens United upheld disclosure requirements, but it also vindicated freedom of speech. The two commitments may prove incompatible if Schumer-Van Hollen is enacted. This law uses aggressive mandated disclosure to discourage speech. We know that members of Congress believe this tactic could work. Sen. John McCain said during the debate over McCain-Feingold that forcing disclosure of who funded an ad will mean fewer such ads will appear. In other words: more disclosure, less speech. Just after Citizens United, law professor Laurence Tribe called for mandating aggressive disclosure requirements in order to “cut down to size” the impact of disfavored speech.

During the next few months the critics of Citizens United may well show beyond all doubt that the purpose of its disclosure requirements are to silence political speech. In evaluating the constitutionality of Shumer-Van Hollen, the Court could hardly overlook such professions of the purpose behind its disclosure requirements.

One other part of Schumer-Van Hollen is probably unconstitutional. They would require any broadcaster that runs ads funded by corporations to sell cheap airtime to candidates and parties. Several similar attempts to equalize speech through subsidies have recently been struck down by the Court. This effort would share a similar fate.

All in all, Schumer-Van Hollen is a predictable effort to deter speech by disfavored groups. Congress is reduced to attacking foreigners and bailout recipients while hoping that mandated disclosure will discourage speech.  The proposal law suggests a comforting conclusion. For most Americans, Citizens United deprived Congress of its broadest and most effective tools of censoring political speech.