The near collapse of our financial institutions and the overall economy and the misguided notion that a few trillion dollars of additional federal spending would return us to prosperity moved us in early 2009 to suggest an alternate approach.  We proposed in an essay published in The American, the on-line journal of the American Enterprise Institute, a fifty percent tax credit up to a fixed limit for every taxpayer who purchased any consumer goods anywhere in the United States.

Our theory was that a robust economic recovery would be fueled by increased retail purchases, and that every dollar of cost to the treasury represented a prior retail purchase within the American economy. This, by definition, would have produced an immediate increase in revenues to our struggling business and manufacturing sectors.  That essay and the positive feedback it engendered provided the impetus for the establishment of the Of Thee I Sing 1776 website, the goal of which has been to produce weekly, timely, and hopefully, thought provoking essays.

This week we return to the subject of economic stimulus as more and more politicians from both sides of the aisle and columnists from left to right have pronounced the stimulus a disappointment, at best, and a disaster at worst.  More likely, given the nation’s accumulated debt, the latter may be the more apt description.

So is there a Plan B, so to speak, in the works?  The answer so far, based on bills recently considered and rejected by members of both parties in Congress, is that Mr. Obama would prefer to double down on the discredited Keynesian approach which didn’t work during the great depression and which failed miserably through the recently “ended” (at least by common definition) great recession.  Tell the 9.5% of the workforce who are still unemployed that the recession is over.  Tell that to those who have watched the average time the unemployed are out-of-work grow from six weeks to 12 weeks, to 25 weeks to 35 weeks.

The number of unemployed is essentially the same percentage of people who were unemployed before the Administration and the huge Democratic majority in Congress, in the name of “job creation”, started shoveling our tax money out the door (or as some might say burning it in a bonfire).  And just why won’t President Obama, Majority Leader Reid and Speaker Pelosi wake up and smell the fire that continues to burn?  The answer can be found in two very telling and, now, very familiar utterances of the president and his senior staff in the early days of the new Administration.  The president said he wanted to “fundamentally change America” and his chief of staff, Rahm Emanuel, when economic disaster was around the corner, famously said, “Never waste a crisis.”

(more…)

Office of Management and Budget Director, Peter Orszag is one of the first major players of the Obama administration to call it quits.  Orszag was touted as one of the most brilliant minds in number-crunching, especially by Ezra Klein, who deemed Orszag as the most influencial bureaucrat:

In the coming years, no bureaucrat will be as decisive as Peter Orszag — the former director of the Congressional Budget Office who is now the head of Barack Obama’s Office of Management and Budget — and few bureaucracies will be as important as the CBO and the OMB. For every major policy and legislative fight, those organizations will decide the Number: the official price tag of a government program. And you can’t do anything without the Number.

But while everyone was so enamoured with the heartbreaker, stud, and hottie Orszag and his economic brilliance and wisdom to sound alarms of repeated financial unsustainability as the CBO director, what did the USA really get?  Patterico has a quick outline on Orszag which touches on some key points, but with Orszag’s background, people should wonder how he ever got to hold the keys to the budget.

If you look a bit closer at his education, background, and experience, Orszag was everything that the Keynesians/progressives/Democrats could have dreamed of in a budget director.  Let’s explore.  Aside from being the former CBO director, Orszag  was a senior fellow and Deputy Director of Economic Studies at the Brookings Institution, where he directed The Hamilton Project. His education is impressive having studied and receiving two degrees from the London School of Economics (LSE). While all Orszag’s education and experience appears impressive, it should have been more alarming than comforting to Americans.

Orszag’s policies are heavily influenced by his days at the LSE, and Obama has placed others from the LSE in his administration. As prestigous as the LSE may be, it is concerning because of the school’s founding and history, and continual ideological path it has taken since its inception. But how does all of this translate into effective economic policy specific to the capitalistic US economy? It doesn’t.  Although it may not have been apparent, but Orszag’s ideology shaped the US economic policy into exactly what the Obama administration had planned.

(more…)

Kaiser Permanente (KP) would appear to be the frontrunner to head up the government-administered Medicare buy-in plan devised by Senate Democrats, especially since the company was ranked as the number one Medicare plan in November. In addition, KP–in compliance with the Obama agenda to have all medical records electronic by 2014–has heavily invested in electronic medical records (EMR) and has even linked two of the largest electronic medical record systems in the country—allowing doctors and nurses at Kaiser and VA hospitals and clinics in San Diego county to access certain information about patients who receive care from both health systems. KP’s merging of the two systems also can be thought of as the flagship model for EMR convergence, leading to an EMR platform under a single-payer, universal health system.

With this type of progress and plan ratings, KP would be a natural fit and even help facilitate the transition to a single-payer system. Even the Democrats in the Senate seem to think that, after demonizing the insurance companies, they could overlook the insurance industry’s greed and other flaws and have them run their new compromise “non-public” option plan.

Furthermore, KP’s chairman and CEO George Halvorson, who took the helm in 2002, has met with Obama and has had several meetings with key figures in the health care debate, including:

March 27–Meeting with Keith Fontenot, who manages the financial resources of government agencies related to health. He oversees funds for Medicare, Medicaid, all U.S. public health agencies, and the entire Health and Human Services Department, from the Food and Drug Administration to the National Institutes of Health.

June 5–Meeting with Peter Orszag, director of the CBO.

July 23–Meeting with Kathleen Sibelius, Secretary of Health and Human Services (HHS)

July 24–Meeting with Sarah Fenn, who is a $36,000-a-year White House assistant. Fenn is an attorney and also served as the state legal Voter Protection Director for the Obama campaign in Indiana, Kentucky, and New Hampshire, as well as campaign field staff in Iowa, Idaho, Texas, and Florida.

Halvorson was the only insurance executive to meet with Sebelius.

(more…)

Just came across some rather grim analysis of the economic impact of massive, ongoing federal budget deficits from a group of prominent economists. It’s a little dated (2004) but still highly relevant considering that the deficit situation has dramatically worsened since then. Some highlights:

Substantial ongoing deficits may severely and adversely affect expectations and confidence, which in turn can generate a self-reinforcing negative cycle among the underlying fiscal deficit, financial markets, and the real economy:

• As traders, investors, and creditors become increasingly concerned that the government would resort to high inflation to reduce the real value of government debt or that a fiscal deadlock with unpredictable consequences would arise, investor confidence may be severely undermined;
• The fiscal and current account imbalances may also cause a loss of confidence among participants in foreign exchange markets and in international credit markets, as participants in those markets become alarmed not only by the ongoing budget deficits but also by related large current account deficits;
• The loss of investor and creditor confidence, both at home and abroad, may cause investors and creditors to reallocate funds away from dollar-based investments, causing a depreciation of the exchange rate, and to demand sharply higher interest rates on U.S. government debt;

(more…)