“Austerity” is giving “unsustainable” strong competition for becoming the financial buzzword of the year.  However, within the Democratic Party and the political left, we seem still to have an abundance of something.  Unfortunately, that something is hypocrisy.  When we expect serious and mature leadership from our president to state publicly what he knows privately to be true, he ratchets up populist class warfare or chooses solutions aimed at placating the liberal allies on whose financial support his party depends.

Case in point.  Mr. Obama, three years after they were negotiated, finally acknowledges the jobs that would be created by Senate approval of the trade agreements with Korea, Panama and Columbia.  The president is now describing the agreement with South Korea, which will reduce Korean tariffs on U.S. cars and trucks and open what Ford Motor Co. described as “the most closed automotive market in the world” as one which will produce numerous jobs for Americans.  Last year South Korea imported 13,000 American cars while it exported 560,000 vehicles to the U.S.  White House spokesman, Jay Carney, stated “it is time to move forward [with the 3 agreements] which will support tens of thousands of jobs.”  Unfortunately, the president tied the approval of the treaties to spending close to a billion dollars on additional assistance to workers displaced from jobs, a program that has proven completely useless unless subsidizing unions is a national priority.  This at a time when the Administration is supposedly trying to reduce the deficit as a key element in the legislation it knows is vital as a precondition to raising the nation’s debt ceiling.

The president at a pre-July 4 press conference inveighed against millionaires, billionaires and owners of private jets, but intentionally ignored the real facts and distorted reality.  Or as one blogger, paraphrasing Charles Krauthammer stated it:

Never mind that in the grand scheme of things, the amount of tax that corporate jet owners are excused from paying is so minuscule that if the government collected it every year for 5,000 years, they would cover one year of the debt that the Obama administration has run up.  The point the president was trying to make, as he amps up his relentless class warfare argument, is that all over America children go to bed hungry while greedy fat cats get a tax break on the jets they buy.

This is a stunning reversal of reasoning.  The Wall Street Journal noted that the president’s 2009 stimulus plan specifically stated that “the aviation industry, which is cutting jobs as it suffers from declining shipments and cancelled orders, hopes the tax break in the economic stimulus bill . . . will persuade more companies to buy planes and snap a slump in general aviation.”

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In my speeches, especially when talking about the fiscal crisis in Europe (or the future fiscal crisis in America), I often warn that the welfare state reaches a point-of-no-return when the number of people riding in the wagon begins to outnumber the number of people pulling the wagon.

To be more specific, if more than 50 percent of the population is dependent on government (employed in the bureaucracy, living off welfare, receiving pensions, etc), it becomes rather difficult to form a coalition to fix the mess. This may explain why Greek politicians have resisted significant reforms, even though the nation faces a fiscal death spiral.

But you don’t need me to explain this relationship. One of our Cato interns, Silvia Morandotti, used her artistic skills to create two images (click pictures for better resolution) that show what a welfare state looks like when it first begins and what it eventually becomes.

These images are remarkably accurate.

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Somebody’s got to point out the ironies, hypocrisy, madness, and lies of President Obama, so here goes:

July 13, 2009: Obama speaks at a rally for ObamaCare, and in response to a question, claims that his plan won’t “pull the plug on Grandma.”  Hear it here.

Two years later, almost to the day:

July 12, 2011:  Obama threatens to withhold Social Security checks if a debt deal isn’t done by the Treasury’s artificial deadline of August 2.  He told CBS News’ Scott Pelley:  “I cannot guarantee that those checks go out on
August 3rd if we haven’t resolved this issue. Because there may simply not be the money in the coffers to do it,” he said.  Hear it here:

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Someone will have to explain to me how you can simultaneously be the only adult in the room, and yet storm out of such room like a petulant teenager:

“Don’t call my bluff,” the president said. “I am not afraid to veto and I will take it to the American people.”

If Moody’s downgrades the United States, “it will be a tax increase on every American,” he said.

There needs to be a long-term debt extension, the president argued.

“This may bring my presidency down, but I will not yield on this,” he said.

Then he abruptly ended the meeting, saying, “see you tomorrow.”

Apparently the President’s outburst was in response to a suggestion by House Majority Leader Eric Cantor that a shorter-term extension be pursued, reflecting only the $1-1.5 trillion in spending cuts that both parties have more or less coalesced around. With an annual deficit running in the range of $1.5 trillion, this would be enough for an 8-10 month extension.

The President’s reaction is understandable, I suppose, given that this would result in the need for another increase in the debt ceiling during (gasp)…an election year. All things being equal, the GOP would probably prefer to avoid this scenario as well. But if the only other viable options are default, or agreeing to a deal with the President which includes tax increases, I can understand why Cantor would put this option on the table.

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President Obama told the American people we have to “Eat our Peas” as encouragement for the nation to make the painful decisions to address our out-of-control federal deficits. To understand how many peas we would have to eat; a recent IMF report: “Who Will Pay and How?” determined that under a moderate growth “baseline scenario, a full elimination of the fiscal and generational imbalances would require all taxes to go up and all transfers to be cut immediately and permanently by 35 percent.”

Most Americans didn’t seem to mind if nobody’s taxes got raised or benefits got cut, but with Moody’s credit rating agency’s announcement that the United States of America is under review for a solvency downgrade, our nation is headed for a crisis and somebody needs to start eating their peas!

The IMF recognized that Americans were very willing to pile up massive amounts of debt for children to pay. Unfortunately as the charts demonstrate below; peak payroll taxes are spread out for all workers over their careers, but the much larger individual income tax payments start out low for young people and do not peak until their 50s and 60s. This makes the concept of the future generation debt transfers rather ineffective:

Most politicians assume when it comes to deciding the merits between raising taxes and cutting spending; men will tend to oppose higher taxes, because they already pay more taxes than women; and women will be more opposed to cutting spending, because they get more government transfers than men from food stamps and child support, since they are the main beneficiaries of such transfers themselves and on behalf of children.

It should not be surprising that President Obama idea of eating peas would prefer tax increases over spending cuts.

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As anticipated, the House vote on Tuesday to repeal the ban on the Thomas Edison standard incandescent light bulb failed, 233-193, primarily because the legislation was considered under a special rule which required a two-thirds majority of the House. However, Rep. Michael Burgess (R-TX) will offer a similar amendment attached to another bill which will likely be voted upon on Friday. This vote will only require a simple majority.

Freedom Action produced a short spoof which is, sadly, too close to the truth about the government’s level of overreach into the private lives of Americans.

According to Common American Journal, ten Republicans voted against the repeal of the light bulb ban. These ten are:

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On today’s edition of Coffee and Markets, Brad Jackson and Ben Domenech are joined by Francis Cianfrocca to discuss the possibility of QE3, Italy, and the latest on the debt ceiling negotiations.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

Optimism Fades As Bernanke Pulls Back QE3 Talk
Ben Bernanke: QE3 Might Be On The Table
Raw audio: Cantor describes Obama walking out of debt talks
Even If He Hadn’t Said So, We’d Know the President Is Bluffing
GOP Debt Ceiling Ace in the Hole: Obama’s Birthday Bash
Mad Men – Did you enjoy the Fuhrer’s birthday?

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Sen. Chuck Grassley (R-IA) and Rep. Darrell Issa (R-CA) have focused on the Justice Department in their investigation into Operation Fast and Furious, in which U.S. officials deliberately sold American guns to Mexican criminals that were later used to kill a U.S. border agent.

Questions have arisen about the involvement of Attorney General Eric Holder, as new evidence has arisen that Justice Department officials may have wanted not only to target Mexican druglords but also to create anecdotal evidence to support tighter gun control rules.

A look back at the early days of the Obama administration suggests that responsibility for Operation Fast and Furious. may go even higher.

Source: AP http://tinyurl.com/cj4lz3

In the spring of 2009, both President Barack Obama and Secretary of State Hillary Clinton blamed American gun-running for violence in Mexico’s drug wars.

On March 25, 2009, for example, Clinton stated in Mexico City: “Our inability to prevent weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians.” She also announced new efforts to stop gun-running.

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“What about the children?” they cried as tens of thousands filled the Wisconsin Capitol Square this spring.

The huge rallies filled with school-skipping teachers have come and gone and now a just-released MacIver Institute analysis of newly negotiated school contracts from this year shows that the leverage provided by Wisconsin Act 10 and the the new law’s ultimate passage has indeed given school districts the ability to find significant savings without firing teachers and without impacting class sizes or course offerings.

Requiring teachers to make modest contributions to health and pension benefits can cut the cost of education by $500 per student in Wisconsin.

Our analysis shows that the recent changes to state law has empowered school districts to secure better deals for their taxpayers. Without impacting class size or course offerings, and without massive layoffs, school districts have already saved $155 million here. thanks to modest concessions from the labor force.

A preliminary estimate based on an analysis of local reports conducted by the MacIver Institute suggests that, if adopted uniformly by every district in Wisconsin, local schools would stand to save $434,232,693.66 through new staff contracts that required the additional contributions to health and retirement benefits.

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The corporate media is panicking about the debt crisis. The politicians are squabbling over entitlement reforms and tax increases. The capitalist ratings agencies are warning about a downgrade in the U.S. credit rating. Americans are worrying about their jobs, their homes, their possessions–everything. The government wants to print more money, and the people can’t find enough money to buy basic goods. We are told to be afraid.

But those of us who have always struggled for social justice, for a truly free and humane society, know there is nothing to fear. FDR was wrong: we need not even fear fear itself! For the imminent collapse of the American economy is not just proof that the critique of capitalism was right all along. It is also an opportunity to replace an oppressive system with a revolutionary one–more efficient and democratic than last century’s attempts.

Lenin in Atlantic City. Source: Vernon Ogrodnek, AP

Comrades! This is our moment. The extraordinary confluence of the debt crisis in the U.S. and the debt crisis in the European Union is the surest sign that the globalized capitalist empire itself is crumbling, defeated by its own internal contradictions. Yes, the Soviet Union fell because it could not match capitalist production. But the United States will fall because it cannot afford capitalist consumption–neither private nor public. (more…)

This is one part of a running series entitled “Indoctrination Fridays,” a weekly review of leftist propaganda incorporated into public school curriculum and geared towards elementary students.  For more of the series, please visit PublicSchoolSpending.com.

The real targets of the Green Movement are free markets and capitalism, not theoretical global warming.  There is always another agenda.

Back in 2008, Detroit News columnist and WJR talk radio personality Frack Beckmann brought to light a series of lessons produced by Creative Change Educational Solutions, a non-profit outfit producing plans for teachers that want to instruct their students on environmental issues.

Beckmann decried the fact that the curriculum developed by Creative Change focuses on criticizing capitalism by having students compare “wages and working conditions in factories in China and Vietnam (to) corporate profits…and compensation for chief executive officers.”  In other words, the distribution of wealth is unacceptable and must be changed.  That will save the whales!

This curriculum is much worse than Beckmann lets on, however.  The lessons have spread throughout southeast Michigan.  One school district, Bloomfield Hills – which ironically serves one of the wealthiest communities in the state – purchased the curriculum for $750. Ann Arbor Public Schools paid $4,900 for a day-long seminar.  Similarly, Eastern Michigan University paid Creative Change $19,133.67 between 2007 and 2008 to “identify community groups and schools, help to develop, plan for, and facilitate Stakeholders Meetings, and collaborate writing the implementation proposal.”

Eastern Michigan University and Ann Arbor Public Schools, spent our tax dollars to spread this poison around the region.

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Today, in 1799, the Rosetta Stone was found. It was found as part of Napoleon’s expedition to Egypt.

A New York Times Bits blog post has some parts of the technology world buzzing– and not exclusively in a good way.  In the post, entitled “A Call to Take Back the Internet From Corporations,” NYT author Jennifer 8. Lee profiles a speech by Rebecca MacKinnon, an Internet scholar at the New America Foundation, urging Internet users to push back on Internet firms like the English pushed back on King John via the Magna Carta.

But the piece is not grabbing attention merely because it compares an urged expansion of government power to one of history’s leading efforts to constrain government.  In addition, the post just so happens to echo several grievances of Wikileaks, relating to Internet firms’ decisions to “constrain” (in Lee’s words) the organization:

Several companies constrained WikiLeaks, including Amazon, which kicked WikiLeaks off its servers after pressure from American lawmakers; PayPal, which suspended WikiLeaks’ account; and credit card companies, which refused to take donations for it.

Governments at this point rarely act directly to constrain the Internet; instead, their policies are mediated through privately owned and operated services, Ms. MacKinnon said.

Lee, it just so happens, has “been assisting” Wikileaks with their PR and social media strategy.  Last year, after some back-and-forth, she admitted to the Columbia Journalism Review that she had helped Wikileaks roll out video of a 2007 missile strike on a van in Baghdad.

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The White House

Office of the Press Secretary

For Immediate Release
July 14, 2011

Press Conference by the President

Fort Belvoir Golf Club Locker Room

1:03 P.M. EDT

THE PRESIDENT:  Good afternoon.  As you can see, we’re trying something different today.  You’re in the White House Briefing Room, and I’m here at the club.   Jay thought things would be more pleasant if he put some distance between me and all you bird dogs.

Anyway, I just finished eighteen holes and figured I’d do another presser to light a fire under McConnell and Boehner.  Also, I have several announcements to make before I evade your questions.

First, the putt I made on #3 had to be at least 40 feet, and I . . . . [looks off screen] Huh?  Ok, sorry Jay.

As you know, Republicans refuse to raise taxes on entrepreneurs who selfishly exploit the system to create non-green businesses for profit.  My pleas to House Speaker Boehner to punish these start-ups—uh, I mean upstarts—for chasing their dreams instead of saving the planet have been rebuffed.  I am still hopeful we can resolve this issue my way in a bipartisan fashion.

Secondly, next Wednesday I’ll be conducting a televised “Conversation with Older Americans” in senior centers and convalescent homes across the country.  Attendance is mandatory for those on Social Security, except for individuals not expected to live through November 2012. (more…)

After months of sitting on the sidelines, President Obama has injected himself into debt limit talks. Unfortunately, the president’s proposals are anything but novel—tax increases on oil and natural gas companies—and are unlikely to break the current impasse. Tax hikes are a non-starter for Republicans—the GOP has no interest in helping Obama fund his over-sized government that now consumes 25 percent of GDP.

Just a thought experiment, is raising oil and natural gas companies taxes a good way to address the deficit? Obama seems to think so. After all, the president decries oil and natural gas companies every chance he gets. Like yesterday, when he said:

“What we have talked about is that starting in 2013, that we have gotten rid of some of these egregious loopholes that are benefiting corporate jet owners or oil companies at a time where they’re making billions of dollars of profits.  What we have said is as part of a broader package we should have revenues, and the best place to get those revenues are from folks like me who have been extraordinarily fortunate, and that millionaires and billionaires can afford to pay a little bit more.”

But that might not be the case. A recent study by Louisiana State University finance processor, Joseph Mason, concludes that two of the president’s proposed tax hikes—repealing Sec 199 and amending the Dual Capacity foreign tax credit—in fact, exacerbate America’s ever increasing debt. While these tax hikes are projected to raise $29 billion over the next decade, they would actually cause a net loss of about $54 billion in tax revenues due to lost economic productivity.

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Remember that time the Department FOR Labor spent taxpayer money for a broken mobile app that actually could have shortchanged some workers? Well, their latest foray into mobile apps ought to be just as embarrassing.

This week the DOL, busy working to ensure small businesses can’t fight off union organizing drives, has shown off its flare for helping mobile developers create apps based on DOL data—as long as that data can be used to smear business but NOT Big Labor. (In fact, the Department is even putting $35,000 more in taxpayer money into prizes to spur more creation of anti-business, pro-union apps.)

But …. the data sets released by DOL so far have mysteriously failed to include anything from the Office of Labor-Management Standards, which gathers up information on union-boss pay and perks, political cash thrown to lefty groups like ACORN and anti-corporate campaigns, and tracks investigations into union-boss corruption and abuse of members.

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The United States has been on a decade-long spending binge. Thanks to the profligate policies of both Bush and Obama, the burden of federal spending has climbed to about 25 percent of economic output, up from 18.2 percent of GDP when Bill Clinton left office.

The political class tells us that more government is good for the economy since it an “investment” and/or a “stimulus.”

The academic research, however, tells a different story. Here are some brief excerpts from a recent study by two Swedish economists, including a critically important observation about the impact of bigger government on economic performance.

…most recent studies typically find a negative correlation between total government size and economic growth. …the most convincing studies are those most recently published. …In general, research has come very close to a consensus that in rich countries there is a negative correlation between total government size and growth. It appears fair to say that an increase in total government size of ten percentage points in tax revenue or expenditure as a share of GDP is on average associated with an annual lower growth rate of between one-half and one percentage point.

Let’s focus on the last sentence of the excerpt and contemplate the implications. The research cited above tells us that annual growth is 0.5 percentage point-1.0 percentage point lower if the burden of government rises by 10 percentage points of GDP. Well, the burden of federal spending has jumped by more than 5 percentage points of GDP during the Bush-Obama years, indicating that annual growth in America is now 0.25 percentage point-0.5 percentage point lower than it otherwise would be.

Now let’s take the best-case scenario, and assume that annual growth has only dropped by 0.25 percentage points, and consider what that means. It may not sound like much, but even small differences in growth rates become very important over time. For an average household over a 25-year period, the loss of 0.25 percentage points of growth means annual income will rise, but the total increase will be about $5,000 smaller by the 25th year.

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Congressman Issa,

Back on January 3rd of this year, you said the following in a video interview about the Pigford II settlement.

I have to use every asset I can get including all the other committees to do what they can. So, Pigford, we’ll participate but we’ll make sure other committees do their work.

Now we’re well into the heat of the summer with several major deadlines for Pigford II looming and the American people have yet to see an investigation into the scandal.

Congressman Issa, I’ll be direct — the issue that is most troubling to many people is that you recently voted to keep Pigford funding. I have no idea why you would cast a vote against representative Steve King (R-IA) and his efforts to stop both the fraudulent nature of the settlement and the legislative chicanery that created it. I have seen no explanation forthcoming and frankly I’m not imaginative enough to be able to come up with one that makes sense.

The burden of proof is now on you to show that you will actually ‘use every asset’ to get an investigation into Pigford II started in all due haste, despite casting a vote to continue its funding. In other words, Congressman Issa — you now own responsibility for the billion dollar plus political payback Pigford II settlement.

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