CROWLEY: “I want to read for our viewers something that Sen. Harry Reid, the Democrat Majority Leader in the U.S. Senate, who said, ‘We do not need to bring a budget to the floor this year. It’s done, we don’t need to do it.’”

LEW: “He’s not saying that they shouldn’t pass a budget. But we also need to be honest. You can’t pass a budget in the Senate of the United States without 60 votes and you can’t get 60 votes without bipartisan support. So unless… unless Republicans are willing to work with Democrats in the Senate, Harry Reid is not going to be able to get a budget passed.”

This is patently false.

You can’t filibuster the budget. The Congressional Budget Act of 1974 stipulates that debate is automatically cut off after 50 hours of debate. At that point, a budget can be passed by a simple majority, 51 votes. Democrats currently hold 53 seats in the Senate. They can pass a budget on a simple party-line vote.

Lew, a former director of the Office of Management and Budget, surely knows this. While the Obama Administration has regularly plumbed the depths of managerial incompetence, even they can’t be this incompetent.

That Lew prefaced this whopper with the tell-tale “let’s be honest” canard only highlights the cynical political maneuvering that is at the heart of the Administration.

So, let’s really be honest here. The latest Obama budget contains what virtually every proposed Democrat budget has for the past few decades; tax hikes, increased spending now and illusory budget “savings” some time in the ill-defined future. The Senate could pass Obama’s proposed budget within a couple weeks. The White House’s real problem is that Democrats don’t want to vote on his proposed budget.

Present at the Creation: Adam Hasner, with Marco Rubio Against the Florida GOP Establishment

“A day in politics is like an eternity. A lot of recent events have altered the political landscape,” Adam Hasner told me by phone. Until last week was running for the U.S. Senate, but he is now running for the congressional seat vacated by Allen West.

Though Hasner hesitates to compare himself to West, the two have a lot in common. They are both principled, “minorities of minorities” who have to make  the case to groups not necessarily receptive to the conservative message. “When you are a black Republican or a Jewish Republican, you have to be even more firm in your beliefs and more principled,” Hasner explains.

The past year Hasner, the former majority leader of the Florida House of Representatives, has been running in a crowded primary to unseat Bill Nelson, the senior U.S. Senator from the Sunshine State.

Though Hasner was endorsed by talk show host, Mark Levin, the Family Research Council, and won the Florida straw poll, Hasner struggled to get the attention he needed. He blames the presidential race for “sucking all of the attention out of the room.” There were 350 articles about the Rubio-Crist race in 2010, but less than fifty about the 2012 contest. Hasner had been leading in the polls against George LeMieux, who Governor Charlie Crist appointed before deciding to run in the Senate contest only to lose to Marco Rubio, but Hasner’s lead collapsed when Rep. Connie Mack joined the race in late October and was endorsed by Mitt Romney.

Now Hasner’s hoping to be Allen West’s reinforcement, not replacement, in Congress. Hasner, who raised $1.3 million in his bid for U.S. Senate still has $666,000 cash on hand and has West’s support. West, in turns, plans to run in a friendlier Palm Beach County-based congressional seat after redistricting made his swing district much more Democratic. All within forty-eight hours, Rep. Tom Rooney moved to a new district in the west; West moved to Rooney’s old district up north.

The son of two New York teacher union members and liberal Democrats, Hasner came of age during the Age of Reagan. ”I didn’t inherit conservatism in the bloodstream,” he says, but he paid attention, becoming a lifelong Republican at age 18. “I grew up during the Morning in America. That’s where my politics were shaped.”

Hasner’s bona fides among Jewish conservatives are the genuine article. He likes to joke that he is married into the Jewish conservative movement. His wife, Jillian, worked for the Palm Beach chapter of the Republican Jewish Coalition.

Though the district has gotten more Democratic in redistricting, Hasner is confident that he can win in November. “Every election that I won, I over performed,” says Hasner, the first Jewish majority leader of the Florida house of Representatives. “When John Kerry got 51% I got 58%. I got 60% of the vote, Obama got 52%.”  He adds: “The district I represented [in the Florida House of Representatives] is compromised in the new district. I know this people, people know me, where I lived my whole life.” Hasner, running in one of the most Jewish congressional districts in the country, might be buttressed by a new poll by the Pew Forum on Religion and Life showing that Jewish-Americans are turning from the Democratic Party. Jewish identification with the Democrats slipped from 72 to 65% between 2008 to 2011.

Hasner’s likely opponent is Lois Frankel, the former mayor of West Palm Beach. She is, for all intents and purposes, a morph of Debbie Wasserman Schultz, the leader of the Democratic National Committee. Wasserman Schultz was Frankel’s protégé.

Hasner understands his role clearly.  ”This is going to be a battleground seat in the sense,” he promises. “Whoever is running for president, whoever is running for U.S. Senate, well, the way you a state election is just don’t get too badly beaten in Palm Beach and Breyer County,” he promises.

Hasner made a name for himself in Tallahassee, Florida. “You are constantly outnumbered and being challeneged by the status quo and what everybody expects you to believe. I’ve proven that that’s the type of individual I am. I’ve called out the Republicans as many times as I’ve called out the Democrats.” He took on Charlie Crist. Hasner pushed to eliminate property taxes; Crist opposed it. Crist wanted to take stimulus money; Hasner opposed it. Crist supported Cap and Trade; Hasner opposed it with Marco Rubio, then Speaker of the Florida State House.

Hasner promises to take on the Republicans in Washington, too. He rattles off the issues where the GOP establishment has been disappointing, among them  ”our debt and the payroll tax cut.” ”What people are looking for are candidates and representatives that are going to work hard, tell it like it is. I’m unafraid to do things when it doesn’t poll well.”

You can get a sense of Hasner’s leadership from this video, taken on April 16, 2011.

“We want our leaders to tell it like it is. And if you’re not going to get the job done, we are going to find somebody else who will.  We need to tell them: cut the spending, stop the borrowing, balance the budget, and attack the debt. And we sent that message in 2010, but it was only the beginning. In 2012, we need to send principled, conservative reinforcements to Washington D.C. to get the job done.”

It’s up to the voters of Palm Beach to decide what seems evidence: Adam Hasner is Marco Rubio’s and Allen West’s conservative reinforcement.

And as I listened to Lee speak recently, February 8th, on Ed Schultz’s radio show, it dawned on me anew that responsibility for many of our nation’s current woes can be directly traced to the fact the we’ve placed congressional members and senators in power who know little to nothing about recent American history, much less events surrounding our nation’s founding.

For example, when Schultz asked Lee why anyone would think Congressional Republicans wanted to better the economy when their chief focus appears to be defeating the president, Lee concurred, in a round-about way, then said:

As I have scanned the annals of history, during the tenure of many presidents, obviously the recent presidents of JFK and Lyndon Baines Johnson, of Richard Nixon who was impeached, and subsequently Ford and Carter. I cannot find in the statement of a message of a minority leader, majority leader, or speaker, whose message has been defeat the commander-in-chief.

Wow. The “recent presidents” Lee referenced were JFK, Johnson, Nixon, Ford, and Carter. JFK died in 1963 and Carter left office in January of 1981. In other words, “recent” to Lee is somewhere between 31-to-49 years ago? Moreover, Lee said Nixon was impeached. Seriously folks, Nixon made history by becoming the first president in U.S. history to resign the office, and of course he resigned before charges of impeachment were brought against him.

(For the record, the only two presidents in U.S. history who were impeached were Andrew Johnson and Bill Clinton. And both of these presidents share a common denominator: their party affiliation was Democrat.)

But Lee kept going:

This is the most unusual historical period in our lifetimes. I frankly believe that it will be tainted, it will be known as the three ring circus, and it will be a shameful period. Because most times, no matter whether we are a divided government, which I’m arguing for vigorous take-back of the House by Democrats and the win of the president, because we have proven, in the 21st century by those who are elected by the Republicans, you can’t have an effective democratic divided government under the likes of this thinking.

What? The last time I heard something as broken and incoherent as this was when Miss Teen South Carolina tried to explain why a fifth of Americans can’t locate the U.S. on a world map: “U.S. Americans are unable to do so because some people out there in our nation don’t have maps, and I believe that our education, like such as in South Africa, and the Iraq, everywhere like, such as.”

Seriously folks, maybe Miss Teen South Carolina should secure a place in congress so she and Rep. Lee could talk about our recent presidents JFK and Lyndon Baines Johnson.

That was November 14, 2011.

Now, with news that the Office of Congressional Ethics has launched an insider trading investigation of Rep. Bachus, among possible others, I once again call on the Alabama Republican to do the right thing and leave Congress for good.

At the historic moment when the American people were looking to their elected leaders to protect them and their families’ portfolios, Rep. Bachus was busy using nonpublic information to enrich his own portfolio. In the summer and fall of 2008, Spencer Bachus’s position as the ranking Republican on the House Financial Services Committee gave him access to high-level private meetings and conversations with the then-Treasury Secretary Henry Paulson and other senior officials. The meetings Bachus was privy to were so secretive that those in attendance were not even allowed to bring cell phones into the meetings so as to prevent sensitive information that could threaten our nation’s financial system from leaking out.

And what did Congressman Bachus do with such trust and responsibility?

From July to November 2008, Bachus executed at least 40 well-timed, highly risky options trades throughout the turbulent period that netted him as much as $50,000 in capital gains. As Americans were losing their life savings, Bachus was padding his.

What Congressman Spencer Bachus did was wrong, vile, and an affront to the decency of the American people and the principles of honesty and fairness upon which our system rests.

I have received criticism from some Republican quarters who think I should never have spoken out against such an influential Republican member of Congress. But the conservative movement has a long tradition of ousting forces that stand to threaten the principles we fight for, regardless of party. We must do so again now—especially now.

I seldom call for resignations. Even at the height of the Anthony Weiner scandal, I remained silent on whether Rep. Weiner should leave office. But what Spencer Bachus did was egregious and fundamentally unethical.

On November 17, 2011, the Tea Party’s commitment to principle, not party, compelled them to organize a protest at Rep. Bachus’s Alabama office and call for his ouster. They were right then, and they are right now.

Our Founding Fathers believed political leadership was a call to stewardship, not self-enrichment. We must protect the principles that made America great. And that starts with throwing out those who smirk at fair play and shrug at the laws of our land.

Spencer Bachus: it’s time for you to go.

And when I discuss my work on the economic impact of government spending, I often get the same reaction.

This is why it’s important that a growing number of establishment outfits are slowly but surely coming around to the same point of view.

• The European Central Bank published a study showing “…a significant negative effect of the size of government on growth.”
• A study by two Harvard economists found that “large adjustments in fiscal policy, if based on well-targeted spending cuts, have often led to expansions.”
• The Organization for Economic Cooperation and Development noted in recent research that welfare programs are economically destructive because they lure people into dependency because “net disposable income would increase despite putting in fewer hours.”
• A study from the International Monetary Fund concluded that “Cuts to pension and health entitlements had the most beneficial effect on economic growth.”

This is remarkable. It’s beginning to look like the entire world has figured out that there’s an inverse relationship between big government and economic performance.

That’s an exaggeration, of course. There are still holdouts pushing for more statism in Pyongyang, Paris, Havana, and parts of Washington, DC.

But maybe they’ll be convinced by new research from the World Bank, which just produced a major report on the outlook for Europe. In chapter 7, the authors explain some of the ways that big government can undermine prosperity.

There are good reasons to suspect that big government is bad for growth. Taxation is perhaps the most obvious (Bergh and Henrekson 2010). Governments have to tax the private sector in order to spend, but taxes distort the allocation of resources in the economy. Producers and consumers change their behavior to reduce their tax payments. Hence certain activities that would have taken place without taxes, do not. Workers may work fewer hours, moderate their career plans, or show less interest in acquiring new skills. Enterprises may scale down production, reduce investments, or turn down opportunities to innovate. …Over time, big governments can also create sclerotic bureaucracies that crowd out private sector employment and lead to a dependency on public transfers and public wages. The larger the group of people reliant on public wages or benefits, the stronger the political demand for public programs and the higher the excess burden of taxes. Slowing the economy, such a trend could increase the share of the population relying on government transfers, leading to a vicious cycle (Alesina and Wacziarg 1998). Large public administrations can also give rise to organized interest groups keener on exploiting their powers for their own benefit rather than facilitating a prosperous private sector (Olson 1982).

In other words, government spending undermines growth, and the damage is magnified by poorly designed tax policies.

The authors then put forth a theoretical hypothesis.

…economic models argue that the excess burden of tax increases disproportionately with the tax rate—in fact, roughly proportional to its tax rate squared (Auerbach 1985). Likewise, the scope for self-interested bureaucracies becomes larger as the government channels more resources. At the same time, the core functions of government, such as enforcing property rights, rule of law and economic openness, can be accomplished by small governments. All this suggests that as government gets bigger, it becomes more likely that the negative impact of government might dominate its positive impact. Ultimately, this issue has to be settled empirically. So what do the data say?

These are important insights, showing that class-warfare tax increases are especially destructive and that government spending undermines growth unless the public sector is limited to core functions.

Then the authors report their results.

Figure 7.9 groups annual observations in four categories according to the share of government spending in GDP during that year. Both samples show a negative relationship between government size and growth, though the reduction in growth as government becomes bigger is far more pronounced in Europe, particularly when government size exceeds 40 percent of GDP. …we provide new econometric evidence on the impact of government size on growth using a panel of advanced and emerging economies since 1995. As estimates can be biased due to problems of omitted variables, endogeneity, or measurement errors, it is necessary to rely on a broad range of estimators. …They suggest that a 10 percentage point increase in initial government spending as a share of GDP in Europe is associated with a reduction in annual real per capita GDP growth of around 0.6–0.9 percentage points a year (table A7.2). The estimates are roughly in line with those from panel regressions on advanced economies in the EU15 and OECD countries for periods from 1960 or 1970 to 1995 or 2005 (Bergh and Henrekson 2010 and 2011).

These results aren’t good news for Europe, but they also are a warning sign for the United States. The burden of government spending has jumped by about eight percentage points of GDP since Bill Clinton left office, so this could be the explanation for why growth in America is so sluggish.

Last but not least, they report that social welfare spending does the most damage.

Governments are big in Europe mainly due to high social transfers, and big governments are a drag on growth. The question is whether this is because of high social transfers? The answer seems to be that it is. The regression results for Europe, using the same approach as outlined earlier, show a consistently negative effect of social transfers on growth, even though the coefficients vary in size and significance (table A7.4). The result is confirmed through BACE regressions. High social transfers might well be the negative link from government size to growth in Europe.

The last point in this passage needs to be emphasized. It is redistribution spending that does the greatest damage. In other words, it’s almost as if Obama (and his counterparts in places such as France and Greece) are trying to do the greatest possible damage to the economy.

In reality, of course, these politicians are simply trying to buy votes. But they need to understand that this shallow behavior imposes very high costs in terms of foregone growth.

To elaborate, this video discusses the Rahn Curve, which augments the data in the World Bank study.

As I argue in the video, even though most of the research shows that economic growth is maximized when government spending is about 20 percent of GDP, I think the real answer is that prosperity is maximized when the public sector consumes less than 10 percent of GDP.

But since government in the United States is now consuming more than 40 percent of GDP (about as much as Spain!), the first priority is to figure out some way of moving back in the right direction by restraining government so it grows slower than the private sector.

(Reuters) – The House of Representatives overwhelmingly passed on Thursday a bill to curb insider trading by lawmakers and other government officials, despite objections from both Democrats and Republicans that it was weaker than a version passed by the Senate last week.

The House voted 417-2 to pass the Stop Trading on Congressional Knowledge (STOCK) Act, even though it did not include a provision to impose new regulations on Washington insiders who collect “political intelligence” from lawmakers and sell it to Wall Street. The Senate version included this proposal.

House and Senate members are now expected to haggle over the differences between the two bills before sending the legislation to President Barack Obama, who has promised a swift signature.

Read at Reuters

“The unemployment rate would be even higher than it is now had participation in the labor force not declined as much as it has over the past few years….Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 11⁄4 percentage points higher than the actual rate of 8.7 percent.”

2.  Ezra Klein, The Washington Post (January 6, 2012)

“Unemployment is 8.5 percent — and, if not for the millions of discouraged workers who have left the labor force since 2008, it would be nearer to 11 percent. It’s nice to add 200,000 jobs in a single month, but, as this graph from the Hamilton Project shows, at that rate, it will take well over a decade to fully recover from the Lesser Depression.

3.  Jay Cost, The Weekly Standard (February 8, 2012)

“The job growth over 2011 only kept up with population growth, so if the labor force had remained constant (relative to population) over the last year, the unemployment rate would have stayed the same. But we all know that didn’t happen, meaning the number of people in the labor force, as a share of the adult population, declined. The result is that the unemployment rate gives the false impression that the labor market is actually getting better, when in fact it has only stopped getting worse.  If we correct this by assuming a constant level of participation in the labor force, we get a very different picture. The following graph holds labor force participation constant, as it was in January 2009 (when Team Obama produced that infamous graph showing the unemployment rate never rising above 8 percent). That is the ‘shadow’ rate, which is compared to the official rate.”

4.  Hamilton Place Strategies (January 2012)

“How is labor force participation looking today? At 64 percent, it is well below the peak of 67 percent during the dotcom bubble, and significantly below the steady state of 66 percent we saw during the 2000s. Given the Baby Boom retirement and other demographic shifts, CBO projections expected it to be declining – 65.3 percent at the beginning of 2012. We are now 1.3 percentage points below that demographic estimate, the equivalent of 3.2 million “missing” workers. If the “missing” people were in the labor force, the unemployment rate today would be 10.4 percent, not the current 8.5 percent.”

5.  Nomura Global Economics (January 2012)

“In the grey line, Nomura economists have adjusted the unemployment rate for the number of discouraged workers who have left the labour force and therefore count as unemployed in this alternative measure.”

6.  Joint Economic Committee Republicans (January 24, 2012)

“The unemployment rate declined to 8.3% in January from 8.5% in December.  However, much of the recent decline in the unemployment rate can be attributed to a decline in labor force participation.  Labor force participation dropped to 63.7% in January.  This is the lowest labor force participation rate in nearly three decades.  Labor force participation stood at 66.0% at the beginning of the recent recession.  If the participation rate had remained at the pre-recession level, the unemployment rate would be approximately 11.4%.”

7.  Ways and Means Committee Republicans (February 2012)

The chart above, frequently updated by Ways and Means Committee Republicans, shows the current 8.3% “official” unemployment rate compared with the 10.9 percent rate including the “invisible unemployed” who have “stopped looking for work,” as former Obama economic advisor Austan Goolsbee put it in 2003.   Meanwhile, as shown in the blue line, the Administration in January 2009 predicted that under its 2009 stimulus plan the official unemployment rate today would be 6.1 percent, or effectively at full employment.