Principle, expediency & the Republicans

A handful of GOP governors, including Jindal of Louisiana and Sanford of South Carolina, are taking a courageous stand against the stimulus. Pressed with the threat of amending welfare laws in their states for years to come and violating the principles of good governance made this nation great, these governors are refusing to accept funding for new unemployment benefits, much to the chagrin of their Democratic counterparts. "This to me is not about philosophical theory, [but] about real people who through no fault of their own, are laid off because of a recession," argued Michigan Governor Jennifer Granholm on "FOX News Sunday" this past weekend.

Apparently Republican stances, based largely on core beliefs but even transcending them into the realm of good governance, particularly the issue of the dangers it sets for future welfare programs in their states, are inappropriate in a time of “crisis.”

This, Governor Granholm, isn’t just about philosophical theory, though that is certainly important. It is also about the people—“real people.” Consider: Three years from now, when federal funding dries up and the states are stuck with these laws, how are higher taxes to make up the difference going to help the people? When Dick and Jane decide to stay on welfare for five years instead of two, how is that helping to get them moving and making better lives for themselves, their family and their community?

The answer is, it’s not. Principles may be driving these stands, but underlying each principled governor is justified concern for the future of their state. They’re doing what leaders should be doing: looking toward the impact of their present decisions on the future, not just the effect of those decisions on the now.

Of course, while America’s greatest national interest has been at stake—its security—the Democrats had no problem crying “principle” and putting “philosophical theory” over effective interrogation procedures. But when their own political interests in appearing to be strong, firm leaders are being threatened, and their own agendas to expand government in unprecedented ways are on the line, they have no problem throwing principle out the window.

Terrorism is a different issue; most of the actions that were taken on the part of U.S. interrogators were not, in actuality, torture. Contrary to popular misconception, waterboarding has only been used three times—and in each of those three times it worked, and innumerable lives were saved. Early on some cases were questionable, such as Abu Graihb and early Guantanamo Bay practices, but by and large principle did guide the nation’s interrogation policy.

On the issue of warrantless wiretapping, the government was not wiretapping every phone in America without a warrant, converse to ACLU misinformation. Rather, if Abdul’s conversations are being monitored in Pakistan and he calls Ahmed in the United States, is the government supposed to put down the phone and say, “Oops, American citizen?” Of course not, and that’s what the policy ensured. Yet the Democrats made a big fuss about how this violated the “rights of the citizen.” They cried “principle,” yet none were actually violated.

But now the tide has turned and the Democrats are the one whose policies are being challenged. Their reckless willingness to throw up their hands and truly abandon our ideals is troublesome at best. If we can just casually say, whenever a new crisis arises, that principle is irrelevant, what will we have left? Can we pick and choose when to let core beliefs be our guide and when to ignore them?

Far too many leaders have given the same argument—we’re in a crisis, so let’s set aside our core beliefs. Such is the true test of leadership. Will our leaders stand by those convictions in troubled times, or will they set them aside because of the perceived ease in doing so?

If we refuse to allow our conscience of principle to be our guide in crisis, instead only permitting its surface in pleasant times, our ideals are rendered meaningless.

Thomas Jefferson’s statement that his “reading of history convinces [him] that most bad government results from too much government” no longer holds any meaning for the Democrats, as well as Republicans like Governors Charlie Crist and Arnold Schwarzenegger. That is, if it ever has.

“The spirit of resistance to government,” Jefferson once said, “is so valuable on certain occasions that I wish it to be always kept alive.”

One can only hope that more governors will have the courage to stand up and resist the temptation to cede more power and authority to government. The future of this country may depend on it.

Porkulus bill mocked transparency

1175 pages. That’s the length of the most massive-spending, government-expansive, pork-laden piece of legislation in U.S. history. And no one read it.

The “American Recovery and Reinvestment Act,” as it is so, ahem, inaptly called, was dispatched in its final, conference committee form at 12:00 AM on Friday the 13th.

Neither chamber was presented with a PDF copy of the bill, so the staffers, as video of a meeting in Senator Jim DeMint’s office reveals, had to go through it page-by-page the old fashioned way—by hand. Nearly 1200 pages. Normally they can search through the bill on the computer with greater ease, but the leadership would not allow it.

Furthermore, neither the Senate nor the House leadership permitted much time at all for debate and discussion on the bill in its final form, despite the fact that Republicans were essentially shut out of the conference committee process. Nor was the bill allowed to be read on the House and Senate floors.

And yet the bill was passed by the House after 2:00 PM, and the Senate followed suit later in the evening.

The public has a right to expect that, at the very least, the staffers in Congress have ample opportunity and means to read and review legislation before a vote and that their elected representatives have sufficient time to fully hash out and debate a bill before it becomes law. However, prior to the passing of the act, virtually no one got through it. And it wasn’t because they didn’t want to. With just 14 hours in the House, for instance, and no PDF copy, how could they?

Parts of the bill were even edited by hand. One line was crossed out, the number increased from $250 million to $500 million by hand. Such was the case with many portions of the bill.

Pork was thrown in casually, such as $1.4 billion tucked in for science. What kind of science? Nothing particular. Just science. So much for President Obama’s claim that the bill wasn’t stuffed with pork.

Welfare reform, the greatest success of the Clinton years, was subtly undone, as politicians in the backroom inserted provisions that would encourage states to keep the unemployed on the welfare rolls instead of take them off.

Here we have the single biggest spending bill in U.S. history, as well as the most massive solitary piece of legislation in U.S. history. Pork was unceremoniously injected. Staffers had no time to get through it all. It was forbidden to be read on the House and Senate floors. Debate and discussion were severely limited before the votes took place. Republicans were essentially shut out of the conference committee process.

The president claims to have tried to reach out to Republicans. After all, he did meet with them several times, didn’t he?

Yet when he met with House Republican leaders, he told them not to listen to Rush Limbaugh because, in doing so, “you can’t get things done.” In other words, he was telling them not to listen to Rush not because he’s a jerk, but because Limbaugh represents the antithesis of Obama’s left-wing agenda, one of the most powerful voices of opposition against Obama’s presidency. We can’t have that, now, can we?

And the Republicans will never forget Obama’s argument on taxes. “I won,” he said. True bipartisanship.

In his speech rallying the troops at the House Democratic Caucus retreat on the 6th, Obama labeled contentions against the stimulus bill “old,” “tired,” “worn-out” and “phony.” Clearly that’s the kind of bipartisan rhetoric that will get things done in Washington. That’s a new kind of politics right there, a “fresh” way to reach out across the aisle.

Sarcasm, of course. Does that sound like hope and change to you?

Obama promised on the campaign trail that a waiting period would pass during which all legislation is online for the public to view before it’s passed, yet he didn’t even attempt to hold to that pledge.

Call me crazy, but the jive I’m getting is that the Democratic Congress and Obama administration are acting out the “same old, petty politics” that the President decried in his campaign.

The bill has been passed by Congress and signed by the President. We needn't beat this drum anymore, pound something that is now law, but the way this bill was pushed through Congress less than 24 hours after its release tells us exactly what we need to know about and what we can expect from the next two to four years of Democrat dominance. As far as this observer is concerned, it puts a nail into the "openness" and "transparency" promised by the Obama administration and the Democratic Congress.

And we’re not even a full month into his presidency yet.

Four objections - and a better way

America is at a crossroads. Congress, pressed by President Obama to act quickly to prevent “catastrophe,” is on the verge of spending more than $800 billion on a “fiscal stimulus package” intended to jumpstart the economy, with roughly $300 billion in tax rebate checks and $500 billion in infrastructure spending. Hundreds of economists, however, have expressed their deep concerns about the government’s plan for dealing with the recession, and a review of the effectiveness of such policies as those proposed reveals the folly of tax rebates and government spending as fiscal stimulus.

1. Tax rebates do not boost consumer spending. According to economist Martin Feldstein, CEO of the National Bureau of Economic Research, when tax rebates went out as economic stimulus last spring, only around 16% of the checks were actually spent, with nearly five times that amount going into savings. Most of the rebates were used to pay off loans, not to buy new products and services, and the stimulus package utterly failed to preclude the recession.

In 2001, tax rates were reduced and tax rebates went out to make up the difference. While the economy improved after the tax changes, evidence suggests that the rate reductions, not the rebates, did the trick. A late-2001 study conducted by economists Matthew Shapiro and Joel Slemrod of the University of Michigan and NBER found that only 22% of those households receiving stimulus checks spent the money.

Furthermore, by the time the checks would be in the mail, the economy may be improving, as happened, according to Steven Weisman and Edmund Andrews of The New York Times, in the 1970s. If implemented now, the benefits of a tax rebate stimulus—a small burst in increased consumer demand—are minimal at best and will not outweigh the substantial costs.

2. Faulty policy is not worth the debt risk. While the value of the dollar has lately gained in strength, it still has the potential to continue its recent decline. As its value goes down and creditors like China see their own GDPs shrink, creditor concerns over their holdings of U.S. bonds will rise, resulting in the likely increase in interest as they rethink their holdings. By spending $800 billion on a stimulus package that will likely have minimal effect, the U.S. government is essentially assuming even more debt, which is already at $10.7 trillion, at greater national risk.

3. Infrastructure projects will not work. Obama intends to spend around $500 billion on infrastructure projects and public works programs, including transportation projects, intended to create jobs and boost consumer confidence. Yet when Herbert Hoover and FDR tried such programs in the 1930s to tackle the Great Depression, unemployment remained in the double digits up to World War Two, averaging at 17.2%.

According to the Heritage Foundation, federal spending rose from “3.4% of GDP in 1930 to 6.9% in 1932 and reached 9.8% by 1940. That same year—10 years into the Great Depression—America's unemployment rate stood at 14.6%.” In sum, massive increases in government spending did not result in noticeable economic improvements.

Even if infrastructure spending were to have positive effects, an early analysis of the Congressional Budget Office found that just 7% would be spent by next fall, with only 64% reaching the economy by 2011—likely after the country has entered into recovery.

4. Japan’s “lost decade.” Japan’s “lost decade” of economic growth of the 1990’s presents an excellent case study for the suggested package. Over a period of seven years, the government implemented eight different, large stimulus packages much like Obama has proposed.

According to The Wall Street Journal, during the 1990’s, the Japanese government, faced with many of the problems we are confronted with today, tried giving out loans to businesses, boosting infrastructure spending, buying bad assets off of banks and distributing tax rebates, among other Obama-esque policies.

These policies resulted in an increase in Japan’s debt-to-GDP ratio from 68.6% in 1992 to 128.3% in 1999. In essence, government spending in Japan skyrocketed in ways very similar to Obama’s proposals, yet the economy did not experience noticeable improvements until the current decade.

5. An alternative proposal. The government must instead institute wide-ranging, permanent, pro-growth tax rate cuts, starting with making the Bush tax cuts permanent and expanding them. Beginning in 2010, the Bush rate reductions on income, capital gains (investments) and the estate tax will start to dissipate. With the dire need for capital injections into the market, allowing the 15% capital gains rate to return to the 20% rate would discourage investment in the economy. Instead, the capital gains tax should at least be cut in half to 7.5%, if not temporarily expunged for all investments begun this year and kept for no less than two years, so as to incentivize greater investment.

Former House Speaker Newt Gingrich has proposed that the 25% income tax rate be reduced to 15%, thereby “establish[ing] a flat-rate tax of 15% for close to 90% of workers.” Such targeted tax cuts would give the economy the boost it needs to create jobs and increase consumer demand and investment. We must then slice the corporate tax rate from 35%, the second-highest in the world, to 25%, the average in Europe. This would expand incentives for businesses to create jobs in America and lessen the enticement to outsource.

If the Bush tax cuts expire, taxpayers will reduce spending in anticipation of the expirations, stunting the benefits of the rebates further. Alternatively, the knowledge that tax rates will be cut and individuals will be permitted to keep more of their income will give a sense of comfort to the beneficiaries.

By cutting marginal tax rates now, the short-term effect will be a rise in consumer confidence, resulting in a boost in consumer spending. The long-term relief that came in the form of broad-based tax cuts in 2003 resulted in the largest single-quarter GDP growth in 20 years, 7.2%, and the creation of 8 million new jobs through 2007.

The president has disappointingly labeled such contentions against his plan “old,” “phony,” “worn out” and “tired.” Yet history has shown that the net benefit of such stimulus packages is minimal, and he who does not learn from history is doomed to repeat it.

A fiscal stimulus of tax rate cuts, not tax rebates or infrastructure spending, would stimulate an economic recovery by putting more money in people’s pockets long-term and increasing demand in the short-term. That is the kind of economic policy that would do America the most good.

Jimmy Sengenberger is a political science student at Regis University in Denver, a 2008 honors graduate of nearby Grandview High School, a national organizer for the Liberty Day movement, online radio host, and a columnist for the Villager suburban weekly. He is also College Liaison for BackboneAmerica.net, working through the Backbone Americans group on Facebook.

Stimulate with tax cuts, not giveaways

The United States of America is deep in recession. Our new President, Barack Obama, intends to spend $800 billion or more on a “fiscal stimulus package” intended to jumpstart the economy. As part of this package, Obama talks of injecting $300 billion in government funds into the economy, direct to consumers in the form of tax rebates, in a belief that by sending taxpayers a check, it will increase consumer spending and stimulate aggregate demand, thus spurring a recovery. Yet a review of the effectiveness of such policies reveals the folly of tax rebates as fiscal stimulus. According to economist Martin Feldstein, CEO of the National Bureau of Economic Research, when tax rebates went out as economic stimulus last spring, only around 16% of the checks were actually spent, with nearly five times that amount going into savings. Most of the rebates were used to pay off loans, not to buy new products and services, and the stimulus package utterly failed to preclude the recession.

Furthermore, by the time the checks would be in the mail, the economy will likely be improving, as happened in the 1970s. If implemented now, the benefits of a stimulus package based in tax rebates—a small burst in increased consumer demand—are minimal at best and will not outweigh the substantial costs.

While the value of the dollar has lately gained in strength, it still has the potential to continue its recent decline. As its value goes down, creditor concerns over their holdings of U.S. bonds will rise, resulting in the likely increase in interest as creditors rethink their holdings. By spending $300 billion on a stimulus package that will likely have minimal effect, the U.S. government is essentially assuming even more debt, which has already increased 86% nominally in the last eight years, at greater national risk.

We must therefore institute wide-ranging, permanent, pro-growth tax cuts, starting with making the Bush tax cuts permanent and expanding them. Beginning in 2010, the Bush rate reductions on income, capital gains and the estate tax will start to dissipate. With the dire need for capital injections into the market, allowing the 15% capital gains rate to return to the 20% rate would discourage investment in the economy. Instead, the capital gains tax should be cut in half to 7.5% so as to incentivize greater investment.

Former House Speaker Newt Gingrich has proposed that the 25% income tax rate be reduced to 15%, thereby “establish[ing] a flat-rate tax of 15% for close to 90% of workers.” Such targeted tax cuts would give the economy the boost it needs to create jobs and increase consumer demand and investment. We must then cut back the corporate tax rate from 35%, the second-highest in the world, to 25%, the average in Europe. This would expand incentives for businesses to create jobs in America and lessen the enticement to outsource.

If the Bush tax cuts expire, taxpayers will reduce spending before the expirations take effect, stunting the benefits of the rebates further. Alternatively, the knowledge that tax rates will be cut and individuals will be permitted to keep more of their income will give a sense of comfort to the beneficiaries. By cutting marginal tax rates now, the short-term effect will be a rise in consumer confidence, resulting in a boost in consumer spending.

The long-term relief that came in the form of broad-based tax cuts in 2003 resulted in the largest single-quarter GDP growth in 20 years, 7.2%, and the creation of 8 million new jobs through 2007. The aforementioned cuts would especially aid America economically in the long term, opening the door to greater and more sustained long-run economic growth as we come out of the recession.

History shows that the net benefit of tax rebate stimulus packages is minimal, and he who does not learn from history is doomed to repeat it. A fiscal stimulus of tax rate cuts, not tax rebates, would stimulate an economic recovery by putting more money in people’s pockets long-term and increasing demand in the short-term.

Jimmy Sengenberger is a political science student at Regis University in Denver, a 2008 honors graduate of nearby Grandview High School, a national organizer for the Liberty Day movement, online radio host, and a columnist for the Villager suburban weekly. He is also College Liaison for BackboneAmerica.net, working through the Backbone Americans group on Facebook.</em

Campus concerns about 44th President

On my Regis University campus radio show the week after the election, a caller presented me with a striking question: He asked me to address the “fear” that some Regis students have expressed in the aftermath of the election—fear of an Obama presidency. This was not the first time I had been informed of or heard Americans expressing abject fear about President-elect Obama taking office. It seems that many are feeling that way.

As a supporter of Sen. John McCain’s and, even more so, an opponent of Obama’s candidacy, I sympathize greatly with those who are worried about the direction of this country. I, too, am naturally disappointed in the Nov. 4 outcome, as well as concerned for the direction of this country. The United States has elected the most liberal member of the U.S. Senate to lead the nation with a left-wing Congress eager to do his bidding.

I worry about what the Democrats will do with the economy, healthcare, spending, Iraq, climate change—the list goes on. There is much for a free market-minded conservative to be concerned about.

Obama’s recent comments that “when you spread the wealth around, it’s good for everybody,” gives great pause, especially in light of the way his tax plan is structured (taking from what he arbitrarily considers “rich” and redistributing it to 44% of American income tax filers who don’t pay income taxes).

Obama’s proposals to increase taxes on capital gains, corporations, Social Security and income would discourage the type of economic involvement required in a recessionary economy.

His intentions to negotiate with enemy nations “without preconditions” is certainly disconcerting, as is his support for FOCA, the “Freedom of Choice Act,” which would represent the most radical expansion of abortion rights since 1973, and “Card Check,” an act, which would revoke the right to a secret ballot in union elections, so radical that even George McGovern opposes it.

There is certainly justification for concern. Abject fear, however, is unwarranted, for politics and vigilance will provide the protection we need from extremely radical changes.

President-elect Obama is a very ambitious man, as evidenced in his rise to the Senate and then to the presidency after less than four years. Obama’s desire for reelection will help prevent against a sharp veer towards socialism due to his need to appeal to all sides.

That does not mean, however, that conservatives and Republicans can sit idly by as the Democrats use technology and Obama’s unrivaled communication skills to their advantage in introducing this country to institutions of yet bigger government, such as the President-elect’s healthcare plan. To do so would only embolden the liberal efforts.

As with FDR, who effectively secured four terms, anything Obama does can be tied to the economy—and he can succeed by using the Internet like FDR used radio. Therefore, in order to prevent some of the radical changes that might otherwise develop, conservatives need to remain active and vigilant in the fight for American principles. If we stand strong and ensure that our voices are heard, we will be a force to be reckoned with.

Those who did not vote for Sen. Obama must offer the “loyal dissent,” as Karl Rove put it. They must acknowledge when Obama is right, stand by him when it is required and respectfully hold him accountable when he does wrong. As Andrew Jackson said in his farewell address, “[Y]ou must remember, my fellow-citizens, that eternal vigilance by the people is the price of liberty, and that you must pay the price if you wish to secure the blessing. It behooves you, therefore, to be watchful in your States as well as in the Federal Government.”

President-elect Obama has said he will listen to those who disagree.

Let’s make certain that he does.

Jimmy Sengenberger is a political science student at Regis University in Denver, a 2008 honors graduate of nearby Grandview High School, a national organizer for the Liberty Day movement, aspiring radio host, and a columnist for the Villager suburban weekly.