The art of leadership is saying no, not saying yes.  It is very easy to say yes.

-Tony Blair

Much focus has been on the National Government since the election of 2010.  Of course, the real story of that election remains the overwhelming victory of Republicans in the state legislatures.  88 chambers had elections with Democrats dominating 52-33 (2 equal and 1 non-partisan), and now Republicans dominate 53-32 (2 equal and 1 non-partisan), picking up nearly 700 seats.

The importance of these legislators lies in the fact that they represent the first crop of tea party candidates that will reform the political process from the bottom up.  Yes, there are tea party candidates nationally, but the access to our state legislators makes it easier to maintain influence.

Missouri remained red, but with term-limits, many new legislators have come to office.  The Senate has a veto-proof majority, and the House is near veto-proof.  However, the influx of tea party influence has not been all roses and butterflies.  Leadership, especially on the House side, seems more intent on horse-trading politics than accommodating the new tea party mentality.

On the other hand, 4 state senators seem to get it.  Senators Jim Lembke (R-St. Louis), Brian Nieves (R-Washington), Rob Schaaf (R-St. Joseph) and Will Kraus (R-Lee’s Summit) have taken a principled stance on a number of issues, but one in particular has earned them the ire of Missouri’s establishment media and Democrat governor.

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Economists and pundits, who contend that the Federal Reserve System has little room to maneuver in using monetary policy to jump-start our anemic economy, often have claimed that America is mired in a Keynesian “liquidity trap”, a situation in which the demand for money is unresponsive to changes in market interest rates.

After all, those commentators emphasize, the Fed has adopted a target for the federal funds rate (the interest rate charged on overnight interbank loans) of between zero and 0.25 percent. The implication is that further reductions in that rate will have little or no effect on the incentives of businesses to invest in new plant and equipment or of consumers to borrow in order to finance the additional spending necessary to raise GDP growth above the (recently downwardly revised) estimate of 1.6 percent during the second quarter of 2010.

But those commentators overlook or ignore the easily verified reasoning of John Maynard Keynes, who defined a liquidity trap in terms of long-term rather than short–term interest rates. The long-term (ten- or 30-year) rate on Treasury securities now runs at about three percent, meaning that the Fed still has arrows in its quiver. Unfortunately, however, those arrows, the use of which would demand the central bank engage in further “quantitative easing”, requires it to purchase more under-performing, “toxic” assets from banks and other financial institutions that lent money to homeowners who could not repay their mortgages. Engaging in such transactions places more bad debts on the Fed’s balance sheet, constrains its ability to conduct monetary policy in the future and raises the specter of higher rates of future price inflation.

In his recent speech at Wood’s Hole, Wyoming, Fed Chairman Bernanke was right to say that economic recovery cannot depend solely on the policies of the central bank over which he presides. But the fiscal discipline (spending and tax cuts) required to achieve that goal is incompatible with the vote motives of incumbent politicians or their challengers for political office.

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From the Associated Press:

A federal appeals court on Friday threw out a decision that had barred Congress from withholding funds from ACORN, the activist group driven to ruin by scandal and financial woes.

The ruling by the 2nd Circuit Court of Appeals in Manhattan reversed a decision by a district court judge in Brooklyn that found Congress had violated the group’s rights by punishing it without a trial.

Congress cut off ACORN’s federal funding last year in response to allegations the group engaged in voter registration fraud and embezzlement and violated the tax-exempt status of some of its affiliates by engaging in partisan political activities.

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Merry-Go-Round Museum receives federal funds

Federal funds pay to put on a ghostly journey to the most haunted places in Illinois

The shopping mall to nowhere; $5 million stimulus grant to heat an “almost-empty mall”

Stimulus grant pays to keep tabs on how often doctors and nurses wash their hands at hospitals in Maryland

Agency that misspent public funds on a casino junket and $700 worth of coffee and lost a child on a field trip slated to receive $159,000 in stimulus funds

Stimulus saves or creates jobs for illegal aliens; Company that the federal government knew was intentionally hiring hundreds of illegal immigrants awarded $6.7 million in federal contracts—including nearly $1million in stimulus money—during the past year

Many of the jobs counted as being “saved” by the federal stimulus program “definitely wouldn’t have been lost in the first place, and others might not have been lost at all”

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Last night, 83 members of the United States Senate went on record to prohibit ACORN from collecting any federal funds. Tonight, over 130 members of the House of Representatives sent a letter to President Obama, asking him to disclose and terminate all federal funding to ACORN.

That leaves 305 members of the House who are silent. If you want to find out whether your Congressman has taken a stand against an organization whose employees are eager to facilitate a child prostitution ring, call the House switchboard at 202-224-3121.

As James O’Keefe noted in his latest post, “Keep on the pressure. Never let up.”

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