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Cato Dispatch for November 13, 2008

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(Links to outside sources were active as of the date of this dispatch; however, not all news sources maintain links to current stories indefinitely. Some links also may require registration.)

Bail Out the Auto Industry?

Appearing on almost every major news channel, including NBC, CBS and CNN, Daniel J. Ikenson explains why the auto companies should not receive a federal government bailout. Ikenson writes that there's nothing wrong with letting one of the "Big Three" go down:

The "Big Three" auto producers - Ford, Daimler-Chrysler and General Motors - want the public to believe their industry faces an existential threat. It doesn't. They want the public to believe they are innocent victims of circumstances beyond their control. They're not. They want the treasury secretary to authorize a fresh $25 billion bailout for the industry and the President-elect to pledge support for their parochial cause.

After appearing on TV against the bailout, Ikenson received a letter from a viewer who disagreed with him. Here is his reply.

The fact is that much of the Big Three's problem is self-made. The credit crunch and the contraction of demand is just the latest dark cloud, and a problem that affects all industries, not just autos. Thus, if there is a bailout for Detroit, where, how, and why do we draw the line to exclude other manufacturers, home builders, coal miners, and masseuses, who are all suffering from the same contraction in demand caused in part by the credit crunch? Don't tell me we should bail everyone out. For starters, we can't afford that.

Meanwhile, Daniel J. Mitchell debates in opposition to an auto industry bailout on NPR.org:

Consumers, acting in the marketplace, should determine which companies succeed or fail. Business success should not depend on which companies can hire the slickest lobbyists.

Where the GOP Went Wrong and the Future of Democratic Rule

With the election behind us-as well as eight years of big-government Republican rule-P.J. O'Rourke concludes, "we blew it."

None of this is the fault of the left. After the events of the 20th century--national socialism, international socialism, inter-species socialism from Earth First-anyone who is still on the left is obviously insane and not responsible for his or her actions....The financial crisis that is hoisting us on our own petard is only the latest (if the last) of the petard hoistings that have issued from the hindquarters of our movement. We've had nearly three decades to educate the electorate about freedom, responsibility, and the evils of collectivism, and we responded by creating a big-city-public-school-system of a learning environment.

Analyzing President Bush's policies over the past eight years, Michael D. Tanner writes, "Even before the Wall Street bailout, President Bush spent money in a way that would make any liberal proud."

David Boaz predicts how Obama and the Democrats will govern.

Prediction: Despite conservative fears, they won't move left enough to satisfy the bloggers, activists and permanent protesters who have been driven mad by the outrages of the Bush administration. ...[But] Obama might very well move too far left and create a Republican renaissance.

A Look at Barack Obama's Tax Policies

Chris Edwards analyzes Obama's tax promises. Find out how your taxes will be raised here. 

For the economy, for tax code complexity, and for the America ideal of equal treatment under law, Obama's tax proposals would be a disaster. With Obama's tax and spending proposals, government as Santa Claus has reached new heights.

Adding up Barack Obama's spending proposals, Alan Reynolds asks, "How's Obama going to raise $4.3 trillion?"

A trillion here, a trillion there, and pretty soon you're talking about real money. Altogether, Mr. Obama is promising at least $4.3 trillion of increased spending and reduced tax revenue from 2009 to 2018-roughly an extra $430 billion a year by 2012-2013.

How is he going to pay for it?

Reynolds also warns that yes, even if we were to face a recession, the government would still raise your taxes.

Those who imagine the government won't try to raise taxes during a recession have short memories. The Omnibus Budget Reconciliation Act was signed by George Bush Sr. on Nov. 5, 1990-14months after the economy slipped into recession that July.

Looking beyond next year, the biggest fiscal danger is not the tax increases Obama describes as such, but the tax increases he describes as "tax cuts"-namely, $1.3 trillion of unfunded entitlements to "refund" checks amounting to $500 to $4,000 apiece.

Chris Moody, editor, cmoody@cato.org