An elderly man suffered a massive heart attack. The family drove wildly to get him to the emergency room. After what seemed like a very long wait the ER doctor appeared wearing his scrubs and a long face.
Sadly, he said, "I'm afraid Grandpa is brain-dead but his heart is still beating."
"Oh, Dear God," cried his wife, her hands clasped against her cheeks with shock. "We've never had a Democrat in the family before!"
Thursday, December 30, 2010
Tuesday, December 21, 2010
GOP pick up seats and pop for 2012
WASHINGTON – Republican-leaning states will pick up a half dozen House seats thanks to the 2010 census, which found the nation's population growing more slowly than in past decades but still shifting to the South and West.
The Census Bureau announced Tuesday that the nation's population on April 1 was 308,745,538, up from 281.4 million a decade ago. The growth rate for the past decade was 9.7 percent, a slower pace than the 13.2 percent population increase from 1990 to 2000.
Only one state, Michigan, lost population during the past decade. Nevada, with a 35 percent increase, was the fastest-growing state.
The new numbers are a boon for Republicans, with Texas leading the way among GOP-leaning states that will gain House seats at the Rust Belt's expense. Following each once-a-decade census, the nation must reapportion the House's 435 districts to make them roughly equal in population, with each state getting at least one seat.
That triggers an often contentious and partisan process in many states, which will draw new congressional district lines that can help or hurt either party.
Texas will gain four new House seats, and Florida will gain two. Gaining one each are Arizona, Georgia, Nevada, South Carolina, Utah and Washington.
The Census Bureau announced Tuesday that the nation's population on April 1 was 308,745,538, up from 281.4 million a decade ago. The growth rate for the past decade was 9.7 percent, a slower pace than the 13.2 percent population increase from 1990 to 2000.
Only one state, Michigan, lost population during the past decade. Nevada, with a 35 percent increase, was the fastest-growing state.
The new numbers are a boon for Republicans, with Texas leading the way among GOP-leaning states that will gain House seats at the Rust Belt's expense. Following each once-a-decade census, the nation must reapportion the House's 435 districts to make them roughly equal in population, with each state getting at least one seat.
That triggers an often contentious and partisan process in many states, which will draw new congressional district lines that can help or hurt either party.
Texas will gain four new House seats, and Florida will gain two. Gaining one each are Arizona, Georgia, Nevada, South Carolina, Utah and Washington.
Monday, December 13, 2010
Obama's obsession with settlements proven and dumb
the mainstream media has been completely silent about one significant revelation from the Wikileaks release- that the Administrations' approach to linkage in the Middle East has had it completely backwards- dealing with the Iranian nuclear program, and their aggressive interference in many areas in the region, was on the minds of all area leaders. That should have been the focus of U.S policy. Instead the Obama team chose to make Israeli West Bank settlements the issue arguing the following:
1. Israel needs to completely halt all "settlement construction" beyond the green line.
2. With that step, the Palestinians and Israelis will meet for fruitful negotiations, and solve all their problems
3. The Arab states will then back the U.S in getting tougher sanctions against Iran.
4. Iran will abandon its nuclear weapons program.
Of course, as for #2, there has been almost no progress in 63 years, but hey, time is not really a factor when we are discussing the Iranian nuclear program, is it? As for sanctions, do they appear to have done the job (#4)? My conclusion is that the two year obsession with settlements reflects something more than a "strategy" for dealing with Iran. Put quite simply, the Obama administration has an obsession with settlements.
http://tinyurl.com/387ppda
Barry Rubin on the same subject: http://tinyurl.com/35d2mfv
1. Israel needs to completely halt all "settlement construction" beyond the green line.
2. With that step, the Palestinians and Israelis will meet for fruitful negotiations, and solve all their problems
3. The Arab states will then back the U.S in getting tougher sanctions against Iran.
4. Iran will abandon its nuclear weapons program.
Of course, as for #2, there has been almost no progress in 63 years, but hey, time is not really a factor when we are discussing the Iranian nuclear program, is it? As for sanctions, do they appear to have done the job (#4)? My conclusion is that the two year obsession with settlements reflects something more than a "strategy" for dealing with Iran. Put quite simply, the Obama administration has an obsession with settlements.
http://tinyurl.com/387ppda
Barry Rubin on the same subject: http://tinyurl.com/35d2mfv
Thursday, December 9, 2010
T Party pro Israel
Tea party
The myth of the anti-Israel Tea Party
Jennifer Rubin, who recently moved from Commentary magazine to take a blogging seat at the Washington Post, writes that the idea that the Tea Party is anti-Israel is a myth:
The emergence of the Tea Party, a grassroots movement on the right dedicated to fiscal discipline, set up a potential conflict in the Republican Party between hawks and neo-isolationists. As things have panned out, however, the neo-isolationists have largely been routed. This is nowhere more in evidence than with regard to support for Israel.
In conversations with multiple Republican leaders and their advisors, I've detected not a whiff of neo-isolationism, nor, frankly, anything but robust support for Israel (coupled with criticism of the Obama administration's sometimes harsh public rhetoric about the Jewish state). A senior Senate aide tells me: "This is a freshmen class of Republicans whose pro-Israel credentials are beyond dispute by anyone except fierce partisan Democrats and liberal journalists with anti-GOP blinders. In fact, these new Republicans would make the Maccabees proud."
...The executive director of the Republican Jewish Coalition, Matt Brooks, told me this morning that it is "wishful thinking" by the left that the Tea Party is anti-Israel. He argues, "Survey after survey shows that grassroots Republicans are more pro-Israel than grassroots Democrats by a consistent margin of almost 2:1. The trouble going forward for Israel in the body politic comes from the progressive left, not the from the right." He adds that "it is clear to anyone who follows politics that Ron Paul is way outside of the mainstream of the GOP."
The myth of the anti-Israel Tea Party
Jennifer Rubin, who recently moved from Commentary magazine to take a blogging seat at the Washington Post, writes that the idea that the Tea Party is anti-Israel is a myth:
The emergence of the Tea Party, a grassroots movement on the right dedicated to fiscal discipline, set up a potential conflict in the Republican Party between hawks and neo-isolationists. As things have panned out, however, the neo-isolationists have largely been routed. This is nowhere more in evidence than with regard to support for Israel.
In conversations with multiple Republican leaders and their advisors, I've detected not a whiff of neo-isolationism, nor, frankly, anything but robust support for Israel (coupled with criticism of the Obama administration's sometimes harsh public rhetoric about the Jewish state). A senior Senate aide tells me: "This is a freshmen class of Republicans whose pro-Israel credentials are beyond dispute by anyone except fierce partisan Democrats and liberal journalists with anti-GOP blinders. In fact, these new Republicans would make the Maccabees proud."
...The executive director of the Republican Jewish Coalition, Matt Brooks, told me this morning that it is "wishful thinking" by the left that the Tea Party is anti-Israel. He argues, "Survey after survey shows that grassroots Republicans are more pro-Israel than grassroots Democrats by a consistent margin of almost 2:1. The trouble going forward for Israel in the body politic comes from the progressive left, not the from the right." He adds that "it is clear to anyone who follows politics that Ron Paul is way outside of the mainstream of the GOP."
Tuesday, December 7, 2010
pc fear of Islamiphobia destroying America
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Barry Rubin: How terrorists and their supporters infiltrate the US Government and influence policySunday, December 5, 2010 8:48 AM
From: "Ed Lasky"Add sender to Contacts
To: edlasky@att.net
There is a very important — one might even say life-and-death — distinction that should be made in considering U.S. counterterrorism policy. Certainly, U.S. forces have had many successes in stopping intended terrorist attacks against the United States. Yet there have also been a number of failures. How to distinguish what made the difference?
The successes in the post-September 11 era have come when the techniques of police and military work or intelligence-gathering were used against full-time terrorists. Indeed, an observer could sum up the handling of terrorism in the United States in the almost-decade since September 11 by saying there have been no major attacks, and the policy has been successful.
When it comes to organizations planning attacks, this approach works very well. But when the threat involves individuals or small groups being radicalized and perhaps joining or supporting terrorist groups, the record is much worse.
The weakness is in analysis, profiling, decision-making, and understanding the nature of the enemy ideology. As a result, there have been a number of smaller attacks, including some not counted at all by a government that wants to keep its batting average high, and some near-misses that were averted due more to luck than to skill.
In addition, a huge amount of money has been wasted and effort misdirected, as many are coming to see regarding the current methods of airport security.
In understanding these vital issues one can read no better work than Patrick Poole’s 10 Failures of the U.S. Government on the Domestic Islamist Threat. (Patrick Poole is a frequent PJM contributor.)
He provides ten case studies, each of which is hair-raising, and none of which, arguably, has led to major corrective action. At the root of each one is a failure or refusal to comprehend revolutionary Islamism or the bureaucratic fear of taking on the enemy. Moreover, some cases show how the other side has even gained political influence in America.
Consider Abdulrahman Alamoudi, the Muslim leader who most frequently visited the Clinton White House. Poole rightly describes Alamoudi as:
The most prominent Islamic activist leader in America at the time, he had infiltrated the highest levels of political power. … [He was asked] by the Defense Department to establish the military’s Muslim chaplain corps, and appointed by the State Department to serve as a civilian ambassador, taking six taxpayer-funded trips to the Middle East. … Just days after the 9/11 attacks, he appeared with President Bush and other Muslim leaders at a press conference at the Islamic Center of Washington, D.C. despite his public comments a year earlier at a rally just steps from the White House identifying himself as a supporter of the Hamas and Hezbollah terrorist organizations.
In July 2005 the Treasury Department revealed that Alamoudi had been one of al-Qaeda’s top fundraisers ….
Go back and reread the last two paragraphs. Shouldn’t this experience have created great skepticism about proclaiming Muslim leaders to be moderate without critically examining their record? Instead, the opposite has happened.
Then there was Ali Mohamed, a man who trained American soldiers on Arab culture and infiltrated the U.S. Army’s training program for intelligence officers in the Middle East. Simultaneously, he was teaching Islamist militants in the United States — including the cell that carried out the 1993 World Trade Center bombing — how to shoot and blow things up. Later, he became al-Qaeda’s chief military expert.
How might the Army have known to distrust this man? Well, he had been expelled from the Egyptian army because of his terrorist sympathies, and Egypt warned the United States about him.
We’ve heard a lot lately about al-Qaeda’s new star, Anwar al-Awlaki, who has been behind many of the recent terrorist attacks on America. But did you know, as Poole writes:
Despite being subject to a FBI investigation initiated in 1999, and having been interviewed by the FBI at least four times after 9/11 for his contacts with two of the hijackers, Al-Awlaki was leading prayers for congressional Muslim staffers inside the U.S. Capitol. … Al-Awlaki was also feted at a luncheon inside the still-smoldering Pentagon following the 9/11 attacks …
Poole also writes of:
… Anwar Hajjaj, a local Islamic cleric who still leads prayers for the Congressional Muslim Staff Association. Hajjaj headed the Taibah International Aid Association, which was designated a global terrorist organization by the Treasury Department in May 2004.
And about lobbyist Faisal Gill, appointed to a senior post in the Department of Homeland Security:
… a former aide to al-Qaeda fundraiser Abdurahman Alamoudi … [Gill] had omitted his previous employment as director of government relations for Alamoudi’s American Muslim Council on the Standard Form 86 required for Gill’s security clearance. Gill had been at the forefront of AMC’s political efforts to end the use of secret evidence in terrorism deportation proceedings. In his position in the Homeland Security Intelligence division, he had access to a wide range of top-secret information, including vulnerabilities of national critical infrastructure.
Gill was investigated and cleared at the time, despite the fact that he had lied.
Hesham Islam has been an especially powerful figure: the senior advisor for international affairs for Deputy Defense Secretary Gordon England and the Pentagon’s point-man for Muslim outreach. When one officer wrote a good study of revolutionary Islamist ideology, Islam campaigned to get him fired. Other officials told me that Islam tried to push them out also.
Islam’s autobiography on a Defense Department site contained clear contradictions and omissions, while his own academic work was rather shockingly radical. His father had worked for Iraqi dictator Saddam Hussein, while Islam claimed that he had survived a ship sinking that apparently never happened.
This study doesn’t include many other cases, most notably that of Nidal Hasan, the Fort Hood terrorist, where the Army’s negligence was responsible for the tragedy. At the time, I called Hasan the first terrorist to give an academic lecture with Power Point — to an Army audience — explaining his intention to commit a terrorist attack. Since then, things haven’t improved, including the Army’s report that didn’t even dare to talk about jihad.
Let’s be clear. There should be no witch-hunt of Muslims. This is about applying the same kind of scrutiny to Muslims that anyone else gets. The truth: bureaucrats are afraid to follow clear leads and point out obvious problems, lest their careers be injured by accusations of Islamophobia.
During the 1930s, it was regarded as impolite to look into whether there were Soviet agents in the U.S. government. Despite the lies and exaggerations of certain people later, there was a very serious Communist infiltration that damaged U.S. interests.
There is clearly a parallel effort — no matter how uncoordinated and individual in nature — today. Read Poole’s study, and then demand better media coverage and government response to this problem.
Barry Rubin is director of the Global Research in International Affairs (GLORIA) Center and editor of the Middle East Review of International Affairs (MERIA) Journal. His latest books are The Israel-Arab Reader (seventh edition, Viking-Penguin), the paperback edition of The Truth about Syria (Palgrave-Macmillan), and The Long War for Freedom: The Arab Struggle for Democracy in the Middle East (Wiley). The website of the GLORIA Center is at http://www.gloria-center.org and of his blog, Rubin Reports, at http://www.rubinreports.blogspot.com.
Barry Rubin: How terrorists and their supporters infiltrate the US Government and influence policySunday, December 5, 2010 8:48 AM
From: "Ed Lasky"
To: edlasky@att.net
There is a very important — one might even say life-and-death — distinction that should be made in considering U.S. counterterrorism policy. Certainly, U.S. forces have had many successes in stopping intended terrorist attacks against the United States. Yet there have also been a number of failures. How to distinguish what made the difference?
The successes in the post-September 11 era have come when the techniques of police and military work or intelligence-gathering were used against full-time terrorists. Indeed, an observer could sum up the handling of terrorism in the United States in the almost-decade since September 11 by saying there have been no major attacks, and the policy has been successful.
When it comes to organizations planning attacks, this approach works very well. But when the threat involves individuals or small groups being radicalized and perhaps joining or supporting terrorist groups, the record is much worse.
The weakness is in analysis, profiling, decision-making, and understanding the nature of the enemy ideology. As a result, there have been a number of smaller attacks, including some not counted at all by a government that wants to keep its batting average high, and some near-misses that were averted due more to luck than to skill.
In addition, a huge amount of money has been wasted and effort misdirected, as many are coming to see regarding the current methods of airport security.
In understanding these vital issues one can read no better work than Patrick Poole’s 10 Failures of the U.S. Government on the Domestic Islamist Threat. (Patrick Poole is a frequent PJM contributor.)
He provides ten case studies, each of which is hair-raising, and none of which, arguably, has led to major corrective action. At the root of each one is a failure or refusal to comprehend revolutionary Islamism or the bureaucratic fear of taking on the enemy. Moreover, some cases show how the other side has even gained political influence in America.
Consider Abdulrahman Alamoudi, the Muslim leader who most frequently visited the Clinton White House. Poole rightly describes Alamoudi as:
The most prominent Islamic activist leader in America at the time, he had infiltrated the highest levels of political power. … [He was asked] by the Defense Department to establish the military’s Muslim chaplain corps, and appointed by the State Department to serve as a civilian ambassador, taking six taxpayer-funded trips to the Middle East. … Just days after the 9/11 attacks, he appeared with President Bush and other Muslim leaders at a press conference at the Islamic Center of Washington, D.C. despite his public comments a year earlier at a rally just steps from the White House identifying himself as a supporter of the Hamas and Hezbollah terrorist organizations.
In July 2005 the Treasury Department revealed that Alamoudi had been one of al-Qaeda’s top fundraisers ….
Go back and reread the last two paragraphs. Shouldn’t this experience have created great skepticism about proclaiming Muslim leaders to be moderate without critically examining their record? Instead, the opposite has happened.
Then there was Ali Mohamed, a man who trained American soldiers on Arab culture and infiltrated the U.S. Army’s training program for intelligence officers in the Middle East. Simultaneously, he was teaching Islamist militants in the United States — including the cell that carried out the 1993 World Trade Center bombing — how to shoot and blow things up. Later, he became al-Qaeda’s chief military expert.
How might the Army have known to distrust this man? Well, he had been expelled from the Egyptian army because of his terrorist sympathies, and Egypt warned the United States about him.
We’ve heard a lot lately about al-Qaeda’s new star, Anwar al-Awlaki, who has been behind many of the recent terrorist attacks on America. But did you know, as Poole writes:
Despite being subject to a FBI investigation initiated in 1999, and having been interviewed by the FBI at least four times after 9/11 for his contacts with two of the hijackers, Al-Awlaki was leading prayers for congressional Muslim staffers inside the U.S. Capitol. … Al-Awlaki was also feted at a luncheon inside the still-smoldering Pentagon following the 9/11 attacks …
Poole also writes of:
… Anwar Hajjaj, a local Islamic cleric who still leads prayers for the Congressional Muslim Staff Association. Hajjaj headed the Taibah International Aid Association, which was designated a global terrorist organization by the Treasury Department in May 2004.
And about lobbyist Faisal Gill, appointed to a senior post in the Department of Homeland Security:
… a former aide to al-Qaeda fundraiser Abdurahman Alamoudi … [Gill] had omitted his previous employment as director of government relations for Alamoudi’s American Muslim Council on the Standard Form 86 required for Gill’s security clearance. Gill had been at the forefront of AMC’s political efforts to end the use of secret evidence in terrorism deportation proceedings. In his position in the Homeland Security Intelligence division, he had access to a wide range of top-secret information, including vulnerabilities of national critical infrastructure.
Gill was investigated and cleared at the time, despite the fact that he had lied.
Hesham Islam has been an especially powerful figure: the senior advisor for international affairs for Deputy Defense Secretary Gordon England and the Pentagon’s point-man for Muslim outreach. When one officer wrote a good study of revolutionary Islamist ideology, Islam campaigned to get him fired. Other officials told me that Islam tried to push them out also.
Islam’s autobiography on a Defense Department site contained clear contradictions and omissions, while his own academic work was rather shockingly radical. His father had worked for Iraqi dictator Saddam Hussein, while Islam claimed that he had survived a ship sinking that apparently never happened.
This study doesn’t include many other cases, most notably that of Nidal Hasan, the Fort Hood terrorist, where the Army’s negligence was responsible for the tragedy. At the time, I called Hasan the first terrorist to give an academic lecture with Power Point — to an Army audience — explaining his intention to commit a terrorist attack. Since then, things haven’t improved, including the Army’s report that didn’t even dare to talk about jihad.
Let’s be clear. There should be no witch-hunt of Muslims. This is about applying the same kind of scrutiny to Muslims that anyone else gets. The truth: bureaucrats are afraid to follow clear leads and point out obvious problems, lest their careers be injured by accusations of Islamophobia.
During the 1930s, it was regarded as impolite to look into whether there were Soviet agents in the U.S. government. Despite the lies and exaggerations of certain people later, there was a very serious Communist infiltration that damaged U.S. interests.
There is clearly a parallel effort — no matter how uncoordinated and individual in nature — today. Read Poole’s study, and then demand better media coverage and government response to this problem.
Barry Rubin is director of the Global Research in International Affairs (GLORIA) Center and editor of the Middle East Review of International Affairs (MERIA) Journal. His latest books are The Israel-Arab Reader (seventh edition, Viking-Penguin), the paperback edition of The Truth about Syria (Palgrave-Macmillan), and The Long War for Freedom: The Arab Struggle for Democracy in the Middle East (Wiley). The website of the GLORIA Center is at http://www.gloria-center.org and of his blog, Rubin Reports, at http://www.rubinreports.blogspot.com.
Thursday, December 2, 2010
stimulus waste
Why the Spending Stimulus Failed
New economic research shows why lower tax rates do far more to spur growth.
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By MICHAEL J. BOSKIN
President Obama and congressional leaders meeting yesterday confronted calls for four key fiscal decisions: short-run fiscal stimulus, medium-term fiscal consolidation, and long-run tax and entitlement reform. Mr. Obama wants more spending, especially on infrastructure, and higher tax rates on income, capital gains and dividends (by allowing the lower Bush rates to expire). The intellectual and political left argues that the failed $814 billion stimulus in 2009 wasn't big enough, and that spending control any time soon will derail the economy.
But economic theory, history and statistical studies reveal that more taxes and spending are more likely to harm than help the economy. Those who demand spending control and oppose tax hikes hold the intellectual high ground.
Writing during the Great Depression, John Maynard Keynes argued that "sticky" wages and prices would not fall to clear the market when demand declines, so high unemployment would persist. Government spending produced a "multiplier" to output and income; as each dollar is spent, the recipient spends most of it, and so on. Ditto tax cuts and transfers, but the multiplier is assumed smaller.
OpinionJournal.com Columnist John Fund on the tax debate within the Democratic caucus, and on the fight for key committee chairmanships in the House.
Macroeconomics since Keynes has incorporated the effects of longer time horizons, expectations about future incomes and policies, and incentives (including marginal tax rates) on economic decisions.
Temporary small tax rebates, as in 2008 and 2009, result in only a few cents per dollar in spending. The bulk (according to economists such as Franco Modigliani and Milton Friedman) or all (according to Robert Barro of Harvard) is saved, as people spread any increased consumption over many years or anticipate future taxes necessary to finance the debt. Empirical studies (such as those by my colleague Robert Hall and Rick Mishkin of Columbia) conclude that most consumption is based on longer-term considerations.
In a dynamic economy, many parts are moving simultaneously and it is difficult to disentangle cause and effect. Taxes may be cut and spending increased at the same time and those may coincide with natural business cycle dynamics and monetary policy shifts.
Using powerful statistical methods to separate these effects in U.S. data, Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago conclude that the small initial spending multiplier turns negative by the start of the second year. In a new cross-national time series study, Ethan Ilzetzki of the London School of Economics and Enrique Mendoza and Carlos Vegh of the University of Maryland conclude that in open economies with flexible exchange rates, "a fiscal expansion leads to no significant output gains."
My colleagues John Cogan and John Taylor, with Volker Wieland and Tobias Cwik, demonstrate that government purchases have a GDP impact far smaller in New Keynesian than Old Keynesian models and quickly crowd out the private sector. They estimate the effect of the February 2009 stimulus at a puny 0.2% of GDP by now.
By contrast, the last two major tax cuts—President Reagan's in 1981-83 and President George W. Bush's in 2003—boosted growth. They lowered marginal tax rates and were longer lasting, both keys to success. In a survey of fiscal policy changes in the OECD over the past four decades, Harvard's Albert Alesina and Silvia Ardagna conclude that tax cuts have been far more likely to increase growth than has more spending.
Former Obama adviser Christina Romer and David Romer of the University of California, Berkeley, estimate a tax-cut multiplier of 3.0, meaning $1 of lower taxes raises short-run output by $3. Messrs. Mountford and Uhlig show that substantial tax cuts had a far larger impact on output and employment than spending increases, with a multiplier up to 5.0.
View Full Image
Associated Press
Conversely, a tax increase is very damaging. Mr. Barro and Bain Capital's Charles Redlick estimate large negative effects of increased marginal tax rates on GDP. The best stimulus now is to stop the impending tax hikes. Mr. Alesina and Ms. Ardagna also conclude that spending cuts are more likely to reduce deficits and debt-to-GDP ratios, and less likely to cause recessions, than are tax increases.
These empirical studies leave many leading economists dubious about the ability of government spending to boost the economy in the short run. Worse, the large long-term costs of debt-financed spending are ignored in most studies of short-run fiscal stimulus and even more so in the political debate.
Mr. Uhlig estimates that a dollar of deficit-financed spending costs the economy a present value of $3.40. The spending would have to be remarkably productive, both in its own right and in generating jobs and income, for it to be worth even half that future cost. The University of Maryland's Carmen Reinhart, Harvard's Ken Rogoff and the International Monetary Fund all conclude that the high government debt-to-GDP ratios we are approaching damage growth severely.
The complexity of a dynamic market economy is not easily captured even by sophisticated modeling (an idea stressed by Friedrich Hayek and Robert Solow). But based on the best economic evidence, we should reject increased spending and increased taxes.
If anything, we should lower marginal effective corporate and personal tax rates further (for example, along the lines suggested by the bipartisan deficit commission's Erskine Bowles and Alan Simpson). We should quickly enact an enforceable gradual phase-down of the spending explosion of recent years. That's what the president and congressional leaders should initiate. Then let the equally vital task of long-run tax and entitlement reform proceed.
Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.
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New economic research shows why lower tax rates do far more to spur growth.
Article
Video
Comments (325)
MORE IN OPINION »
EmailPrint
Save This
↓ More
+ More
Text
By MICHAEL J. BOSKIN
President Obama and congressional leaders meeting yesterday confronted calls for four key fiscal decisions: short-run fiscal stimulus, medium-term fiscal consolidation, and long-run tax and entitlement reform. Mr. Obama wants more spending, especially on infrastructure, and higher tax rates on income, capital gains and dividends (by allowing the lower Bush rates to expire). The intellectual and political left argues that the failed $814 billion stimulus in 2009 wasn't big enough, and that spending control any time soon will derail the economy.
But economic theory, history and statistical studies reveal that more taxes and spending are more likely to harm than help the economy. Those who demand spending control and oppose tax hikes hold the intellectual high ground.
Writing during the Great Depression, John Maynard Keynes argued that "sticky" wages and prices would not fall to clear the market when demand declines, so high unemployment would persist. Government spending produced a "multiplier" to output and income; as each dollar is spent, the recipient spends most of it, and so on. Ditto tax cuts and transfers, but the multiplier is assumed smaller.
OpinionJournal.com Columnist John Fund on the tax debate within the Democratic caucus, and on the fight for key committee chairmanships in the House.
Macroeconomics since Keynes has incorporated the effects of longer time horizons, expectations about future incomes and policies, and incentives (including marginal tax rates) on economic decisions.
Temporary small tax rebates, as in 2008 and 2009, result in only a few cents per dollar in spending. The bulk (according to economists such as Franco Modigliani and Milton Friedman) or all (according to Robert Barro of Harvard) is saved, as people spread any increased consumption over many years or anticipate future taxes necessary to finance the debt. Empirical studies (such as those by my colleague Robert Hall and Rick Mishkin of Columbia) conclude that most consumption is based on longer-term considerations.
In a dynamic economy, many parts are moving simultaneously and it is difficult to disentangle cause and effect. Taxes may be cut and spending increased at the same time and those may coincide with natural business cycle dynamics and monetary policy shifts.
Using powerful statistical methods to separate these effects in U.S. data, Andrew Mountford of the University of London and Harald Uhlig of the University of Chicago conclude that the small initial spending multiplier turns negative by the start of the second year. In a new cross-national time series study, Ethan Ilzetzki of the London School of Economics and Enrique Mendoza and Carlos Vegh of the University of Maryland conclude that in open economies with flexible exchange rates, "a fiscal expansion leads to no significant output gains."
My colleagues John Cogan and John Taylor, with Volker Wieland and Tobias Cwik, demonstrate that government purchases have a GDP impact far smaller in New Keynesian than Old Keynesian models and quickly crowd out the private sector. They estimate the effect of the February 2009 stimulus at a puny 0.2% of GDP by now.
By contrast, the last two major tax cuts—President Reagan's in 1981-83 and President George W. Bush's in 2003—boosted growth. They lowered marginal tax rates and were longer lasting, both keys to success. In a survey of fiscal policy changes in the OECD over the past four decades, Harvard's Albert Alesina and Silvia Ardagna conclude that tax cuts have been far more likely to increase growth than has more spending.
Former Obama adviser Christina Romer and David Romer of the University of California, Berkeley, estimate a tax-cut multiplier of 3.0, meaning $1 of lower taxes raises short-run output by $3. Messrs. Mountford and Uhlig show that substantial tax cuts had a far larger impact on output and employment than spending increases, with a multiplier up to 5.0.
View Full Image
Associated Press
Conversely, a tax increase is very damaging. Mr. Barro and Bain Capital's Charles Redlick estimate large negative effects of increased marginal tax rates on GDP. The best stimulus now is to stop the impending tax hikes. Mr. Alesina and Ms. Ardagna also conclude that spending cuts are more likely to reduce deficits and debt-to-GDP ratios, and less likely to cause recessions, than are tax increases.
These empirical studies leave many leading economists dubious about the ability of government spending to boost the economy in the short run. Worse, the large long-term costs of debt-financed spending are ignored in most studies of short-run fiscal stimulus and even more so in the political debate.
Mr. Uhlig estimates that a dollar of deficit-financed spending costs the economy a present value of $3.40. The spending would have to be remarkably productive, both in its own right and in generating jobs and income, for it to be worth even half that future cost. The University of Maryland's Carmen Reinhart, Harvard's Ken Rogoff and the International Monetary Fund all conclude that the high government debt-to-GDP ratios we are approaching damage growth severely.
The complexity of a dynamic market economy is not easily captured even by sophisticated modeling (an idea stressed by Friedrich Hayek and Robert Solow). But based on the best economic evidence, we should reject increased spending and increased taxes.
If anything, we should lower marginal effective corporate and personal tax rates further (for example, along the lines suggested by the bipartisan deficit commission's Erskine Bowles and Alan Simpson). We should quickly enact an enforceable gradual phase-down of the spending explosion of recent years. That's what the president and congressional leaders should initiate. Then let the equally vital task of long-run tax and entitlement reform proceed.
Mr. Boskin is a professor of economics at Stanford University and a senior fellow at the Hoover Institution. He chaired the Council of Economic Advisers under President George H.W. Bush.
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Wednesday, December 1, 2010
Kerry is an enemy of Israel
1/29/wikileaked_john_kerry_calls_for_israel_to_cede_golan_heights_and_east_jerusalem
He has been characterized as Syria’s best friend in the Senate. He chairs the senate Foreign Relations Committee. Shocked by what he saw in Gaza (The luxury mall? The brutalization of Christians? The teaching of anti-Semitism? The indoctrination of children? I don’t think that is what he meant).
The hits keep coming, courtesy of Wikileaks:
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WikiLeaked: John Kerry calls for Israel to cede Golan Heights and East Jerusalem
Posted By Josh Rogin http://www.foreignpolicy.com/images/091022_meta_block.gifMonday, November 29, 2010 - 12:44 PM http://www.foreignpolicy.com/images/091022_meta_block.gifhttp://www.foreignpolicy.com/images/091022_more_icon.gifShare
On a February trip to the Middle East, Senate Foreign Relations Committee chairman John Kerry (D-MA) told Qatari leaders that the Golan Heights should be returned to Syria, that a Palestinian capital should be established in East Jerusalem as part of the Arab-Israeli peace process, and that he was "shocked" by what he saw on a visit to Gaza.
Kerry discussed the Israeli-Palestinian peace process in a visit to Qatar during separate meetings with Prime Minister Hamad bin Jassim Al Thani and the Emir of Qatar, Hamad bin Khalifa, as revealed by the disclosure of diplomatic cables by the website WikiLeaks.
The emir told Kerry to focus on Syria as the path toward resolution of the Arab-Israeli conflict. Kerry agreed with the emir that Syrian President Bashar al-Assad is a man who wants change but pointed out that his arming of Hezbollah and interference in Lebanese politics were unhelpful. Kerry said that Assad "needs to make a bolder move and take risks" for peace, and that he should be "more statesman-like." Kerry also agreed with the emir that the Golan Heights should be given back to Syria at some point.
"The Chairman added that Netanyahu also needs to compromise and work the return of the Golan Heights into a formula for peace," the diplomatic cable reported.
He has been characterized as Syria’s best friend in the Senate. He chairs the senate Foreign Relations Committee. Shocked by what he saw in Gaza (The luxury mall? The brutalization of Christians? The teaching of anti-Semitism? The indoctrination of children? I don’t think that is what he meant).
The hits keep coming, courtesy of Wikileaks:
What's This?Translate
What's This?Return
WikiLeaked: John Kerry calls for Israel to cede Golan Heights and East Jerusalem
Posted By Josh Rogin http://www.foreignpolicy.com/images/091022_meta_block.gifMonday, November 29, 2010 - 12:44 PM http://www.foreignpolicy.com/images/091022_meta_block.gifhttp://www.foreignpolicy.com/images/091022_more_icon.gifShare
On a February trip to the Middle East, Senate Foreign Relations Committee chairman John Kerry (D-MA) told Qatari leaders that the Golan Heights should be returned to Syria, that a Palestinian capital should be established in East Jerusalem as part of the Arab-Israeli peace process, and that he was "shocked" by what he saw on a visit to Gaza.
Kerry discussed the Israeli-Palestinian peace process in a visit to Qatar during separate meetings with Prime Minister Hamad bin Jassim Al Thani and the Emir of Qatar, Hamad bin Khalifa, as revealed by the disclosure of diplomatic cables by the website WikiLeaks.
The emir told Kerry to focus on Syria as the path toward resolution of the Arab-Israeli conflict. Kerry agreed with the emir that Syrian President Bashar al-Assad is a man who wants change but pointed out that his arming of Hezbollah and interference in Lebanese politics were unhelpful. Kerry said that Assad "needs to make a bolder move and take risks" for peace, and that he should be "more statesman-like." Kerry also agreed with the emir that the Golan Heights should be given back to Syria at some point.
"The Chairman added that Netanyahu also needs to compromise and work the return of the Golan Heights into a formula for peace," the diplomatic cable reported.
Desperate Obama wants Aipac to lobby for START
Jonathan S. Tobin - 12.01.2010 - 7:26 AM
The call by Democratic senators Chuck Schumer and Carl Levin for AIPAC to back passage of the stalled START treaty with Russia speaks volumes about the growing desperation of both the White House and its Senate allies.
The administration is reportedly going all-out to push Jewish groups to lobby for the treaty, but it is unlikely that AIPAC will succumb to the pressure. The group has been scrupulous about sticking to its agenda of working only on behalf of Israel-related issues, a policy that keeps it strictly neutral on arms control measures like START. Nevertheless, Schumer and Levin claim that friends of Israel are obligated to back a measure that is key to Obama’s “reset” of relations with Russia because it is the price the United States must pay to keep the Medvedev/Putin regime on board with the effort to stop Iran from obtaining nuclear capacity.
That’s an argument that the liberal-leaning Anti-Defamation League as well as Obama’s cheering section at the National Jewish Democratic Council and J Street have accepted, though the latter group seems to be backing it more out of a knee-jerk reaction to any appeasement measure rather than concern about Iranian nukes. But this selling point is based on a false assumption about both Russia’s intentions and its interests.
While the need to build an anti-Iranian coalition is something all friends of Israel care about, it is far from clear that Obama’s impulse to sacrifice America’s own defense interests in the cause of making the authoritarian regime in Moscow more comfortable is something that will tangibly impact the ability of the international community to confront Tehran. The Russians have exacted a high price from Obama for their half-hearted support for tepid sanctions on Iran that are clearly inadequate to the task, even though it is obviously just as much in their interest to stop Tehran as it is in the rest of the international community’s.
Moreover, once we strip away the talk about this treaty’s being essential to Iran policy, it is easy to see that its passage has more to do with Obama’s fetish about arms control agreements than anything else, and it is on the merits of that issue alone that this issue should be decided.
As for Jewish groups that might be tempted to wade in on START, they also need to understand that the push to pass the treaty before the end of the year in Congress’s lame duck session smacks of the sort of partisanship that groups like AIPAC and the ADL ought to avoid. While Jewish Democrats are fond of castigating the GOP for attempting to win votes by comparing its record on Israel to that of the Democrats, what’s going on here is a far more blatant instance of Jewish groups carrying the water for one side of the political aisle. The Senate ought to wait until January, when newly elected members are seated and will have a chance to consider this treaty. And Jewish and pro-Israel organizations should stay out of a fight that has everything to do with the Obama administration’s foreign policy obsessions and little to do with the defense of Israel.
The call by Democratic senators Chuck Schumer and Carl Levin for AIPAC to back passage of the stalled START treaty with Russia speaks volumes about the growing desperation of both the White House and its Senate allies.
The administration is reportedly going all-out to push Jewish groups to lobby for the treaty, but it is unlikely that AIPAC will succumb to the pressure. The group has been scrupulous about sticking to its agenda of working only on behalf of Israel-related issues, a policy that keeps it strictly neutral on arms control measures like START. Nevertheless, Schumer and Levin claim that friends of Israel are obligated to back a measure that is key to Obama’s “reset” of relations with Russia because it is the price the United States must pay to keep the Medvedev/Putin regime on board with the effort to stop Iran from obtaining nuclear capacity.
That’s an argument that the liberal-leaning Anti-Defamation League as well as Obama’s cheering section at the National Jewish Democratic Council and J Street have accepted, though the latter group seems to be backing it more out of a knee-jerk reaction to any appeasement measure rather than concern about Iranian nukes. But this selling point is based on a false assumption about both Russia’s intentions and its interests.
While the need to build an anti-Iranian coalition is something all friends of Israel care about, it is far from clear that Obama’s impulse to sacrifice America’s own defense interests in the cause of making the authoritarian regime in Moscow more comfortable is something that will tangibly impact the ability of the international community to confront Tehran. The Russians have exacted a high price from Obama for their half-hearted support for tepid sanctions on Iran that are clearly inadequate to the task, even though it is obviously just as much in their interest to stop Tehran as it is in the rest of the international community’s.
Moreover, once we strip away the talk about this treaty’s being essential to Iran policy, it is easy to see that its passage has more to do with Obama’s fetish about arms control agreements than anything else, and it is on the merits of that issue alone that this issue should be decided.
As for Jewish groups that might be tempted to wade in on START, they also need to understand that the push to pass the treaty before the end of the year in Congress’s lame duck session smacks of the sort of partisanship that groups like AIPAC and the ADL ought to avoid. While Jewish Democrats are fond of castigating the GOP for attempting to win votes by comparing its record on Israel to that of the Democrats, what’s going on here is a far more blatant instance of Jewish groups carrying the water for one side of the political aisle. The Senate ought to wait until January, when newly elected members are seated and will have a chance to consider this treaty. And Jewish and pro-Israel organizations should stay out of a fight that has everything to do with the Obama administration’s foreign policy obsessions and little to do with the defense of Israel.
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