A pair of conservative groups founded with the help of Republican political guru Karl Rove raised more than $70 million since their inception last spring.…

“After a successful 2010, we are shifting toward our goals for 2011 and beyond,” Collegio said, adding that the Crossroads duo will be “active throughout 2011 in support of a conservative, free-market legislative agenda.”

–Washington Post

Writing about the meeting between President Obama and congressional leaders — where some hoped to find some agreement on taxes and spending issues — Dana Milbank quotes two skeptics:

“There’s a reason why we have Democrats and Republicans,” incoming House speaker John Boehner said at his news conference. “We believe in different things.”

“We have two parties for a reason,” Obama said a few minutes later. “There are real philosophical differences.”

No doubt there are. But it’s hard to find the differences on this chart of the upward march of government spending, handily provided by the Heritage Foundation:

To the naked eye, it looks like a pretty steady climb through the Johnson-Nixon-Ford-Carter-Reagan-Bush-Clinton years, with a bit of acceleration under Bush II and then a sharp jump in 2008 and 2009. Heritage’s color-coding refers to Congress only, so you can’t see that the slight slowdown in the Clinton years occurred under divided government. And of course the TARP and other 2008 spending was proposed and forced through by the Republican White House, even though Congress was indeed Democratic at the time.

But the bottom line is: If we have two parties for a reason, because they believe in different things, why don’t we see some real differences in the growth of federal spending?

Although the Bowles-Simpson deficit reduction commission has come up short of the 14 votes among its members that it needs to force Congress to vote up-or-down vote on implementing its recommendations, the debate over ways to cut spending will certainly continue. Of particular note is the emerging consensus that military spending cannot be held sacrosanct in the search for savings.

Over at The National Interest Online, I try to shed some light on the actual scale of the cuts proposed by various deficit reduction reports. Kim Holmes and others affiliated with the Defending Defense alliance claim that the cuts are deep, indisciminate, and dangerous. I show that the proposed cuts, even if they were to materialize, would bring U.S. military spending back to 2006 or 2007 levels, and this would still be more than we spent on average during most of the Cold War.

But the more relevant point pertains to why military spending can safely be cut, not merely in Washington’s “slower growth” terms, but in real terms; historically, military spending comes down when our perceptions of threats change.

I predict a similar scenario playing out in the next decade. As the wars in Iraq and Afghanistan draw to a close (and that should move more swiftly than currently planned), recent increases in the ground forces could be rolled back to pre‑9/​11 levels. Additional savings can be realized if the United States were to terminate its outdated deployments in Europe. We could also revisit the role played by U.S. troops in South Korea and Japan. The Pentagon’s civilian workforce could be cut, chiefly through attrition, and save tens of billions of dollars. Finally, tighter scrutiny over the Pentagon’s spending, beginning with an audit, would allow taxpayers to realize additional savings, while ensuring that our men and women in uniform are provided with the highest quality equipment at the lowest possible price.

You can read the rest here.

With Republicans taking control of the House in January, long-time Federal Reserve critic Rep. Ron Paul is in line to take over chairmanship of the House Financial Service Committee’s Subcommittee on Domestic Monetary Policy and Technology. This is the subcommittee with direct oversight of the Federal Reserve.

The thought of having some actual oversight of the Fed is apparently making Wall Street and the rest of the banking industry nervous. Recent disclosures of Fed lending to foreign banks and Wall Street did not help the public image of either Wall Street or the Fed. With Congressman Paul pushing for a full audit of the Fed, it is likely even dirtier secrets of the Fed may come to light.

So where have the Fed and Wall Street turned for protection? According to Bloomberg, the Fed’s new protector might be incoming House Speaker John Boehner. Next week, House Republicans meet to select their committee and subcommittee chairs. Bloomberg sources report that, at the request of the major banks, Boehner is looking for avenues to either deny Paul that subcommittee chair or to restrict his ability to oversee the Fed. 

While I always expected the House Republicans to eventually revert back to their old ways, I did think they’d at least wait until 2011. I believe this will be a real test of Boehner: Does he choose to rein in Ron Paul or rein in the Federal Reserve?

The Bureau of Labor Statistics announced this morning that the unemployment rate jumped to 9.8 percent last month. As you can see from the chart, the White House claimed that if we enacted the so-called stimulus, the unemployment rate today would be about 7 percent today.

It’s never wise to over-interpret the meaning on a single month’s data, and it’s also a mistake to credit or blame any one policy for the economy’s performance. But it certainly does seem that the combination of bigger government and more intervention is not a recipe for growth.

Maybe the President should reverse course and try free markets and smaller government. After the jump is a helpful six-minute tutorial.

The fiscal disintegration of Europe is bad news, though I confess to a bit of malicious glee every time I read about welfare states such as Greece and Portugal getting to the point where they no longer have the ability to borrow enough money to finance their bloated public sectors (I have mixed feelings about Ireland since that nation at least has been a good example of low tax corporate tax rates, but I still think they should get punished for over-spending and bailouts). This I‑told-you-so attitude is not very mature on my part, but one hopes that American politicians will learn the right lessons and something good will come from this mess.

I have not written much about the topic in recent months, in part because I don’t have much to add to my original post about this issue back in February. All the arguments I made then are still true, particularly about the moral hazard of bailouts and the economic damage of rewarding excessive government. So why bother repeating myself, particularly since this is an issue for Europeans to solve (or, as is their habit, to make worse)?

Unfortunately, it appears that all of us need to pay closer attention to this issue. The Obama Administration apparently thinks American taxpayers should subsidize European profligacy. Here’s a passage from a Reuters report about a potential bailout for Europe via the IMF.

The United States would be ready to support the extension of the European Financial Stability Facility via an extra commitment of money from the International Monetary Fund, a U.S. official told Reuters on Wednesday. “There are a lot of people talking about that. I think the European Commission has talked about that,” said the U.S. official, commenting on enlarging the 750 billion euro ($980 billion) EU/IMF European stability fund. “It is up to the Europeans. We will certainly support using the IMF in these circumstances.” “There are obviously some severe market problems,” said the official, speaking on condition of anonymity. “In May, it was Greece. This is Ireland and Portugal. If there is contagion that’s a huge problem for the global economy.”

This issue will be an interesting test for the GOP. I think it’s safe to say that the Tea Party movement didn’t elect Republicans so they could expand the culture of bailouts — especially if that means handouts for profligate European governments. Some people will argue that American taxpayers aren’t at risk because this would be a bailout from the IMF instead of the Treasury. But that’s an absurd and dishonest assertion. The United States is the largest “shareholder” in that international bureaucracy, and there’s no way the IMF can get more involved without American support.

In some sense, this is a corporatism vs. free markets battle for Republicans. Big banks and Wall Street often support bailouts since they like the idea of somebody else saving them from their bad investment decisions (though American financial institutions fortunately are not as exposed as their European counterparts). Economists despise bailouts, by contrast, since they subsidize risky choices and lead to the misallocation of capital.

Which side is John Boehner on? Or Mitch McConnell? And what about Mitt Romney, or Mike Huckabee?

Supporters have gone to great lengths to make ObamaCare appear popular or to make repeal seem impossible. But this op-ed by my friend Jonathan Cohn made my jaw drop.

First, Cohn notes that the Senate recently voted down two efforts to repeal one of ObamaCare’s more unpopular provisions: the “1099 reporting tax,” which will place an enormous burden on small businesses. “Neither provision,” Cohn obliquely reports, “got enough votes to pass.” He concludes:

Critics of health care reform [sic] this week thought they would get their first win in the campaign to repeal the Patient Protection and Affordable Care Act. Instead they got a lesson in just how politically challenging a wholesale repeal might be.

If opponents can’t even repeal the unpopular parts of ObamaCare, how can they repeal the whole thing?

Cohn neglects to mention a few important details. The reason neither amendment received “enough votes” is because, due to procedural considerations, each would have needed a 2/3 majority to pass — i.e., 67 votes. The Republican amendment actually received 61 votes. (The Democratic amendment received only 44 votes.) Reading Cohn’s account, though, you might think — and Cohn might think, or just want you to think — that both failed because they lacked majority support. In fact, the Republican amendment received a filibuster-proof majority. Even though it included $19 billion of spending cuts. And in a chamber with only 41 Republicans. (Another six arrive next month.) And the mere fact that Democrats offered an amendment to repeal part of ObamaCare is notable in itself. Cohn’s spin aside, the skirmish over the 1099 reporting tax shows that Democrats are divided and ObamaCare supporters are on the run.

Second, Cohn writes, “advocates of repeal have one extra liability that the law’s architects did not — a lack of majority support even before the wrangling begins.” As evidence, he cites a single Gallup poll from July 2009 that found 50 percent of the public supported “comprehensive health care reform.” Oy, where to begin. First, by Cohn’s own single-poll standard, he is just flat wrong. Advocates of repeal can point to the latest Rasmussen poll, which shows that 58 percent of adults support wholesale repeal. (Polls have clocked support for repeal as high as 61 percent.) Second, support for “comprehensive health care reform” is not the same thing as support for ObamaCare. If Gallup were to ask Cato employees whether they support comprehensive health care reform, my guess is that at least 50 percent would answer yes. (Presumably, Cohn would then write an oped titled, “Even Libertarians Support ObamaCare!”) Advocates of repeal have something else going for them, too: 17 months of consistent public opposition to ObamaCare.

No one is saying that getting repeal through the Senate is likely in the next two years. But the fact that supporters have to shade the truth like this suggests they are nervous.