Author: Brett Malin (Page 1 of 2)

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Is President Obama a Low Information Voter?

With the latest revelation of the NSA spying on foreign leaders comes a now familiar response from the White House: President Obama knew nothing about it. As with the Fast and Furious scandal, the IRS harassing Tea Party groups, the reaction to the Benghazi attack, and the collapse of the ObamaCare website, are we to believe that the President was neither briefed nor inquired about any of these subjects? True, plausible deniability is a long established tradition in DC, as is covering one’s backside by pleading ignorance, but what if this is actually true?

A President is an executive with a literally (as VP Joe Biden would say) a million irons in the fire. He relies on his Secretaries to manage their departments, to pursue his policy objectives and keep him informed on their progress. What does it say about the President that he seemingly learns of every major development in his administration from the front page of the New York Times? President Obama is an intelligent man, but this would indicate a stunning lack of curiosity, as well as an alarming indifference to the responsibilities of the office.

How to explain the total lack of involvement in the debut of the ObamaCare website? This is the self-proclaimed signature achievement of his Presidency, yet he was by all indications completely unaware of the program’s progress as the website’s October 1st roll-out day approached. During the run-up to the government shutdown, he drew a red line ruling out any delay in implementing ObamaCare; now the disastrous performance of the website will likely force him to accept a considerable delay.

Pundits have noted Obama’s preference of campaigning over governing, and a propensity to consider a positive headline as a good, if not better, outcome to a problem than an actual solution. Syria comes to mind as a perfect example: the civil war goes on, thousands of Syrians are still dying, but the media is now focused on the work being done to inspect chemical weapons stockpiles. Of course, these are only the chemical weapons that the Assad regime has volunteered to report, and none are being destroyed as of yet, and one suspects that such weapons will inevitably be used again in the conflict, but now that the media is not active in demanding action, it is off his plate.

Obama’s winning margin in 2012 depended heavily on getting the low information voter to cast a ballot for him. The low information voter is not stupid, but they just have better things to do than worry about the governance of the nation. There are the demands of family, and work, and the distraction of sports; they just don’t have the time for current events other than a headline here or a sound bite there; only a general impression of the overall media reporting actually gets through to them.

With the demands of taking care of Michelle and the kids, all the travel for fund-raising speeches, and working on lowering his golf handicap, Barack Obama simply doesn’t have the time or the interest for all the details of actively managing the federal government. It’s time to admit it: we’ve elected a low information voter to the Presidency.

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Milton Friedman is Needed Now More Than Ever

Sadly, despite real life proving Dr. Friedman’s economic theories every day, it appears that America has done an about face and is marching in the opposite direction. Listening to Milton Friedman patiently and clearly explain on YouTube how more government equals less freedom and prosperity, how government spending is never free, and how free markets and decentralized control will always produce the best results, it is hard to imagine why the US would choose the path leading towards North Korea and not the one towards Switzerland.

The last few years have seen amazing examples of well intentioned policies that achieve the exact opposite of their intent. The Affordable Care Act was sold as a way to ensure affordable access to health insurance, yet has only caused health insurance costs to spike and driven millions out of coverage. The Dodd-Frank Act was supposed to curb the excesses of large financial institutions and prevent a recurrence of “too-big-too-fail” bailouts; but has only burdened smaller banks with more burdensome regulation while the big banks grow larger. And with the next financial crisis right around the corner, it is suspected that we will soon see that “too-big-to-fail” was not eliminated but actually codified into law.

After complaining in the 2008 elections about how the unrestrained spending of President Bush led to the financial crisis, the Democrats promptly took office and started a deficit spending spree that continues to this day. The government has wracked up an unprecedented series of trillion dollar deficits the name of stimulating the economy and improving the lot of the poor and middle class. Instead, the economy has still not recovered from the recession in 2009, and median income is still down. If Milton Friedman were here, he would remind us that there is no “free lunch”, that when the government spends money it is not increasing wealth it is simply redistributing it; and when the government spends money it does not have, it is committing to taxing us that much more in the future or through the “invisible tax” of inflation.

If only Milton Friedman were here today, and if only the American public would listen….

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U.S. Senate Amesty Bill is a Wasteful Diversion from Making Real Fixes to Immigration and Border Security

The Comprehensive Immigration Bill now being debated in the U.S. Senate is doomed to fail. We can only hope that it fails to pass in the House, so that its failure as a law will not be inflicted upon America.

We currently have a problem with 10+ million illegal immigrants now living in the United States, but the problem is not that they are illegal, that they lack the proper paperwork. The problem is that some are dangerous, and have slipped in through a porous border. The problem is that we had no control over the type of immigrants that have arrived; too many are unskilled and uneducated to benefit our economy. The problem is that they are not integrated into our employment and tax systems, and are paid “under the table” or have committed identity theft to get employment. The problem is that they overtax our social safety net; despite prohibitions they consume billions of dollars in educational, health care and social benefits.

Democrat supporters of the Senate bill promise that it will address all these problems, but all it is really designed to do is grant papers to illegal immigrants allowing them to remain in the United States. (These are the same people who promised that the Affordable Patient Care Act will make health insurance cheaper, won’t add to the deficit, will produce jobs, won’t force anyone to change their health insurance and will decrease the number of uninsured.) There is a reason why the Democrats insist the bill does this first, and negotiate fixes to the immigration system second: they know that once the aliens are given provisional legal status, all of the measures to correct our immigration system will be completely ineffective. The purpose of this bill is not an effective immigration system; it is to create a perpetual dependent underclass of voters to keep the Democrats in power.

What is needed to fix our immigration system is not a mystery: fence the southern border, implement the E-Verify system, re-vamp the visa system to keep track of those in the county on visas, enact more rational legal immigration policies, streamline the deportation of criminal and undesirable aliens, and restrict social benefits to those not in the country legally.

If the Senate bill passes, millions will flow across the border to take advantage of it, long before a fence can be built; and a visa to enter the United States will be the equivalent of a free pass to stay as long as you like. Criminal aliens will use the new law to evade deportation for years by claiming to apply for the new status. Any non-citizen will effectively have the right to stay here undisturbed for years while “their application is being processed”, even if they never actually applied. This new law would send the clear message to the world – “The US is not serious about controlling immigration, in fact you would probably be better served to slip into the country illegally rather than following the Byzantine legal process.”

As for social benefits, what legal reasoning allows the government to deny schooling, or health care, or welfare, or unemployment, or the Earned Income Credit to individuals that it has permitting to reside within our borders?

There is discussion right now in the Senate over whether the new provisional immigrants will be covered by ObamaCare. If they do, we’ve just added tens of billions of dollars a year to the costs. If not, employers will have incentive to fire Americans and hire the newly legal aliens and avoid the fines/taxes for not providing health insurance.

The debate over “triggers” controlling “a path to citizenship” is meaningless. Our immigration system is badly in need of reform, but if any provisional status is granted before the fixes are in place, it will effectively and permanently end any chance of immigration reform.

 

[featured image used under Creative Commons license, credit: jonathan mcintosh]

The Challenge: Transforming the GOP into the Growth Now Party (GNP)

Losing an election, even one as close as last November’s was, gives one cause for reflection. The “facts on the ground”, however, led many to believe that last year’s election should not have been close. The economy that had still not recovered, the Senate still refused to pass a budget, four straight deficits above $1 trillion, unpopular issues like Obamacare and tax increases supported by Democrats; if Republicans couldn’t win in this environment, when could they win?

Some have said that Republicans lost because they were not unified, because their candidates were not conservative enough, because our ideals are out-dated, because we did not get out our base. When an election is lost by two or three points, any or all of these should be enough to make up the difference. But at the end of the day, is our goal to get 50% plus one? We cannot compete with the Democrats in giving away free stuff, but we can do a better job of explaining how that stuff is not free; the voter is actually paying for it. Most of our policies are supported by a healthy majority of Americans; shouldn’t we be seeing that reflected in our vote tally at the polls?

There is no great disunity among Republicans. Every Republican I’ve ever met believes in the principles of smaller, limited government; greater personal freedom and responsibility, free market capitalism and property rights, and traditional family values. They most certainly will differ on strategies to enact policies based on those principles; Republicans in deep blue areas have been conditioned to expect that only the most marginal gains are possible, or are even resigned to playing a game of perpetual defense. But Republicans do agree on the direction we wish to go, even though we may argue about how to get there.

There can be no rethinking or modifying of our principles, and not just because we deeply believe them to be morally right. There is also the simple fact that they have been shown by experience to work, to provide positive benefits when applied; whereas the liberal solutions have inevitably lead not just to failure, but to the creation of greater ills than they purported to solve. There is no sense to changing our values, but we can learn to communicate them in a manner more attractive to that group of voters we need to win elections.

In today’s “50-50” America, Democrats and Republicans find themselves battling over an increasingly small group of unaffiliated voters. Both parties have their “true believers”, who will vote for their party regardless. Both have voters who are by-and-large faithful, but who may be swayed by an attractive candidate from the other party. While efficient GOTV programs are as vital as always, increasingly the margin of victory has come from independent voters in the middle. However, “independent voters” is a misnomer; they are perhaps better identified by the term “low-information potential voters,” because they really don’t have an interest in political issues (independent or otherwise) and the vast majority of them do not regularly vote.

This group of potential voters is immense, upwards of half of all those registered, and can be said to include many more who aren’t registered yet. Most will not vote, but even a small fraction is enough to change the balance of an election. Indeed, after George Bush’s “base” re-election in 2004, I believe this is the segment that has provided the deciding margin in each election since. Activate enough of this portion of the electorate and you have a “wave” election; but even a smaller turnout can out-poll the gains from a solid GOTV effort.

But how do you get a political message through to a group of people who by definition are not paying attention to political messages? Certainly not through political ads running a month or two before Election Day; Republican ads totaling several hundred million dollars seem to have been wasted to no effect last year. This group votes more on feelings, images and impressions than on facts and logic.

Where do these feelings and impressions originate, if not from political messages? They are birthed in the classroom, repeated by the Main Stream Media and reinforced by the Hollywood entertainment industry. This is the crux of our dilemma: all three are dominated by liberals. The message transmitted by union teachers, the newspaper headlines, even the popular shows and movies is relentlessly anti-Republican and anti-conservative. The falsehood that Republicans are old, rich white men who hate women, gays, minorities and poor people no longer requires any substantiation, it has been repeated over and over until it has become a truism.

This effort has been underway for decades; but it can be (and is being) defeated through breaking the union stranglehold on education with Right to Work laws, and through the emergence of conservative new media outlets in an environment where the old media of newspapers and broadcast TV is dying off. But this process will take decades to have effect. What do we do until then?

Already, several people in Republican leadership have come forward with new messaging plans, to re-brand the Republican Party. They are on the right path: we need to take a new message to the American people, starting today – not waiting until two months before the election. We need to focus on how the policies of the Republican Party can have an effect on improving their lives right now.

We cannot compete with the Democrats in giving away free stuff, but we can do a better job of explaining how that stuff is not free; the voter is actually paying for it. We cannot win over these low information voters with dire predictions of a national debt that will some day devour us all; but we can communicate how that debt is making their life worse today. Talking about the freedoms detailed in the Constitution is too abstract; we need to talk specifically about the freedoms that are being taken away from Americans right now. We need to tell people that Republicans care enough to promote policies that actually improve the lives of the poor, as opposed to the Democrat’s laws that perpetuate poverty.  And let them know the best way to end discrimination by race is to have the Federal government stop discriminating by race.

We need to communicate that the big spending, big borrowing, big regulating, big government of the Democrats is the reason why gasoline is going back above $4/gallon, why Grandpa isn’t making any income on his retirement savings, why your kid can’t find a job, why everything seems to be going up except your paycheck, why your mortgage is under water, and why your 401K is decimated. We need to focus on the damage Democrat policies are doing not just to the country as a whole, but to the individual American. We need to explain how a limited government encourages economic growth that makes all Americans wealthier.

Our message of personal responsibility and hard work (on display at the 2012 RNC Convention) doesn’t sell with low information voters; they’ve been told that government largesse is endless and without cost, and they choose to believe the lie.  But that doesn’t mean we can’t tout the economic rewards to the individual that our policies will bring. In the free market, everyone works for their own benefit and the whole society profits. We need to do a better job of reminding voters of the meaning of the term “American Exceptionalism”, and which party will really give them more for their vote.

 

[featured photo credit: depositphotos, used with license]

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Brett Malin: Disarming Liberals is a Skill Today’s Conservative Leaders Can Practice Better | Friedman Day 2012

One of Milton Freidman’s greatest skills was his ability to effortlessly disarm liberals when they trot out their standard, shopworn canards.

President Obama’s $1 trillion stimulus package went mainly to the hiring of government employees, so their continued spending would stimulate the economy. Many times Milton Friedman had lectured that this is a fallacy; there is no free lunch, every dollar the government spends is taxed, borrowed or taken by devaluation from the productive sector. More money is spent, but the overall production of goods and services is still the same; so how is the economy stimulated?

For those who believe capitalism a corrupt system, run by greed, Milton Friedman had a simple explanation. Greed, better identified as self-interest, is present everywhere; nowhere does there exists such perfect angels that do not act in their own self interest. What’s more, human history shows that our greatest successes have come in those countries with free markets and private property rights; it is in those countries that deny economic freedom that you find the same grinding poverty that plagued mankind for millennia.

Why shouldn’t the government use inheritance taxes to appropriate a man’s wealth when he passes? After all, he is dead and has no need for material goods. What’s more, would men not still work hard to improve their lot in life, even knowing the consequences once they are gone? Milton Freeman’s insight was convincing. The only human motivation as powerful as self interest is the desire to improve the circumstance of one’s children and family. The impulse to give your children a better life than yours is universal in the human spirit. Absent that, Friedman asks, what remains but to consume your life’s savings before you die? No assets accumulated or long-term investments made, just wasteful consumption. The destructive effect of this policy on the long term economic health of a society is obvious, with no long term growth, just the dispersal of all gains made with each generation.

If only today’s conservative politicians could demolish the left’s stale arguments so easily and completely.

Brett Malin is a noted political blogger with ConservativesClub.com.  His company, MR Data Corporation provides statistical analysis for Fortune 500 companies. (conservativesclub.com)

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Guest Op-Ed: I-1125 is a Needed Start Toward Restoring Trust Between Government and Drivers

[The following is the opinion of the author, not an official endorsement of Initiative 1125 by NW Daily Marker.]

While dismissed by some as another of Tim Eyman’s anti-tax initiatives, at its core Initiative 1125 is really about three very important principles of governance. The initiative’s main thrust is not whether this tax or that is raised, but about the relationship of citizen to State in regards to transportation funding.

The system of providing and maintaining our State’s roads has from the beginning been modeled after that used by public utilities. The citizen pays user fees, in the form of gas taxes, tolls and registration fees, and receives the construction and maintenance of State roads in return. The first principle that 1125 addresses is the use of transportation revenues for purposes not related to our State’s highways. When the State diverts highway funds to the General Fund (directly or through gimmicks like charging sales tax on road construction) it is breaking that contract with the citizen-users. Likewise, this compact is broken when highway funds are spent on mass transit or bike paths, subsidizing things that are actually in competition with the highway system that the citizens have agreed to fund with their gas taxes.  A good analogy would be if the local public electric power company was chronically short of funds, but used revenues to feed the hungry, or to provide subsidies to customers wanting to convert to natural gas. Regardless of the value of these actions, they should be outside the scope of authority for that government agency.

There is a second principle that 1125 seeks to enforce, that deals with equity of projects within the State. While all citizens pay the same State gas tax, and receive roughly the same value of road construction and maintenance, at times there are extremely large projects that are difficult to fund and benefit just one specific area. Tolls are legitimately used to increase the revenue available for these projects as well as to distribute the expense to those deriving the greatest benefit. But if tolls are imposed on already completed projects simply as a way to enhance total revenues, one set of drivers are being asked to pay twice for the same road, in order to benefit a different set of drivers. Using the power company analogy again, it’s like having another hook-up fee imposed on you in order to fund an expansion on the other side of town.

The third principle is one that dates to before the founding of our Republic: No taxation without representation. Initiative 1125 seeks to prevent the Legislature from granting the power to implement and raise tolls (a tax) to unelected commissions. If your legislators or Governor raise taxes against your wishes, you can vote them out of office. How do you respond to unpopular actions by bureaucrats who may have been appointed by someone no longer in office?

Now some may argue that these three principles are not hard and fast, set-in-concrete rules, that modern circumstances require a little flexibility, or that, as they say in the Pirates of the Caribbean, they are “more what you’d call ‘guidelines’ than actual rules.” But there are real-life consequences to ignoring these principles. An agency that acts outside its core mission will usually spend the money inefficiently, and suffer from both a lack of focus and accountability in performing their main function as a result. When the connection between who is paying for the service and who is benefiting from it is weakened, effective cost-benefit analysis goes out the window. And an electorate that feels powerless to affect some taxation will often react by rejecting out of hand those taxes they can influence.

We can see evidence of all these problems currently. Although the State’s gas tax and spending has risen dramatically in recent years, the State still seems to struggle to simply maintain our existing highways. Small projects become expensive and large projects unaffordable. Over $150 million has been spent just planning the replacement of the 520 Bridge, which only cost $153 million (in 2011 dollars) fifty years ago. Just building a 2 mile tunnel to replace the Alaskan Way Viaduct in Downtown Seattle will carry a price tag of over $4 billion (before cost overruns).  If so much is to be spent for such a short section of road, will there be any money left to maintain the many thousands of other miles of state highways? Mass transit in the Puget Sound area operates with massive subsidies, to the point that it would be almost as cost effective to give train commuters executive helicopter trips or downtown condos rather than cheap train rides. The Sound Transit boondoggle has become an unstoppable juggernaut, since the appointees running the system have no direct accountability to the voters.

Passing 1125 is essential to begin reining in Washington State’s out-of-control taxing and spending, to force the State to return to its original arrangement with the drivers of Washington: To maintain a safe and cost-effective highway system using the revenues approved by the voters.

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[photo credit: WSDOT]

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Baumgartner Said to Be Organizing Exploratory Committee to Run Against Cantwell in 2012

Washington State Republicans are being treated to a welcome bit of news this week.  To date, the Republican Party’s search for a high-value candidate to run against incumbent U.S. Senator Maria Cantwell in 2012 has come up empty, to the point that some have despaired of ever finding a suitable entrant. Others have resigned themselves to the idea of giving Maria a pass, suggesting that the lack of a contested Senate race might avert the specter of out-of-state DNC money hurting the chances of other Republicans running for state-wide offices.

But in Sunday’s Everett Herald came the rumor that State Senator Michael Baumgartner is considering entering the 2012 Senate race against Maria Cantwell. It now appears that it is more than a rumor, with an exploratory committee perhaps in the works.

Despite his relative youth (Baumgartner is 35) he already has compiled a resume that is diverse, international and impressive. A WSU economics grad who grew up in Pullman and Spokane, he holds a Masters in Public Administration in International Development from Harvard University and has been to more than 70 countries and worked extensively in both the private and public sector.

He has taught economics both as a volunteer in Mozambique after WSU, and as a Teaching Fellow in Economics at Harvard. Baumgartner is extremely knowledgeable about the Middle East, having served as an Economics Officer with the US State Department during the Iraq Surge, later worked as an embedded advisor to an Afghan Government counter-narcotic team helping farmers to grow wheat instead of opium, and he is frequently asked to advise senior members of the US military on the economics of counterinsurgency.

The Boston Globe dubbed Michael the “Architect of Hope” for his role in the Iraq Surge and those who have had heard Michael speak on his experiences working on the ground in Afghanistan trying to assist a feudal, tribal narco-state develop a modern economy know that this is not a man who finds our current fiscal difficulties particularly daunting. Michael has also displayed a natural talent at campaigning, winning the most expensive legislative race in Washington history by 7.5% against an extremely well-funded incumbent in his first run for office in 2010.

Baumgartner made the most of his first session in Olympia, serving as the Ranking Republican on the Economic Development Committee, and as a member of the Ways and Means and Higher Education Committees. Focusing on jobs, the budget and education sounds like a pretty good preparation for addressing the highest priorities of today’s voters. As a result of Republican gains in 2010, Democrats in the State Senate found it necessary to include the Republican minority in many negotiations; so despite being a freshman, Baumgartner had the opportunity to have real influence on the budget as well as passage of key reform bills.  He helped shape the bi-partisan state budget, and his bill to reform state government and allow more contracting of non-essential services was called the most significant reform of Washington government in the last 20 years by Gov. Christine Gregoire when she signed it into law.

While some might believe a few more years experience in Olympia might benefit Baumgartner, it’s important to keep in mind that he already has more legislative experience than 11 of the 13 Republican candidates in our last Senate contest in 2010. This may end up more a feature than a bug; considering the current ratings of Congress, 2012 might well prove to be even more anti-government and anti-incumbent than was 2010.

Taking the Senate seat from two-term incumbent Maria Cantwell will be no easy task.  But Baumgartner’s entrance into the race adds an element that has been sadly absent from Washington State contests in recent years: Excitement. Michael Baumgartner is exactly the type of extraordinary young candidate that has the potential to capture the imagination of voters, in the manner of a Scott Brown or Marco Rubio.  Principled/Pragmatic Conservative, WSU, Harvard, Volunteer with children in Africa, State Department Diplomat,  Iraq/Afghanistan, major government reform and a bi-partisan approach to fiscal responsibility – Baumgartner might be just what it takes for the Republicans to finally retake a U.S. Senate seat in Washington State.

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Boehner Moving the Battle Lines Forward While Taking Concentrated Friendly Fire

From the reaction of some conservatives, you’d think Speaker John Boehner had dug up and defiled the body of Ronald Reagan.  What exactly did Boehner do to earn such condemnation? His House passed Cut, Cap and Balance, which made modest cuts to spending in 2012, installed caps on spending going forward, required a revisit of the debt limit debate after a few months, and mandated a tough Balanced Budget Amendment. After Senator Reid tabled the bill, refusing to even discuss it, Boehner passed, after much wrangling, a bill that made smaller cuts to 2012, installed less restrictive caps, revisited the debt limit debate after fewer months, and required a BBA without the 2/3s requirement to raise taxes.  Compromising with himself? Yes, but hardly abandoning conservative principles.

The simple fact is that Speaker Boehner does not control the Democrats in the Senate. Howling that he has given Reid a vehicle to modify and return to the House for a vote is just silly; that is how legislation is done. Reid has always had the ability to send a bill to the House to vote on; he could have gutted and rewritten CC&B or used a host of other bills as a shell if he had wanted. What is telling is that he did not, just like he failed to produce a 2011 or 2012 budget, just like (despite all the negotiations) he has yet to produce a debt raising bill of his own. The reason why is obvious: the only bill consistent with the liberal principles of the Democratic Party is a “clean” debt limit increase of almost $3 trillion.

Reid may try to dress it up with spending cuts, but they will be all smoke and mirrors. He can break it into two or more tranches, but they must automatically be triggered. He can accept a pro forma vote on a BBA, but not a requirement for passage. And the debt limit increase must total at least $2.7 trillion, because since there are no real cuts to spending (in fact, they hope to spread around some more money in advance of the 2012 elections) and tax revenues are so iffy in this economy they have to make sure the well doesn’t run dry a month or two before November. What that means is a bill so shameful that it requires cover from the Republicans to even put down on paper, which is why Reid has been negotiating for months without a plan of his own. Just like President Obama’s 2012 budget, if they actually put down in writing what they want, without 2000 pages of fog and misdirection, without a deadline preventing anyone from reading it, they end up with a plan so profoundly politically indefensible that even the bluest Democrat can’t vote for it.

Likewise, Speaker Boehner has no control over the media. Complaints that he has given ammunition to the media are nonsense; the liberal MSM has never demonstrated any hesitation in attacking any Republican for any reason, often from multiple sides simultaneously. The same outlet that accuses him of caving in to right-wing Tea Partiers with this bill will gleefully report complaints from the same groups that he sold them out. Boehner has done what he could to prepare the media battle space. The facts on the grounds are that the House has passed two bills to deal with the debt limit crisis, the Senate and White House: zero. The House plans include modest spending cuts, a Balanced Budget Amendment, and don’t hand out a huge debt limit increase in one dollop; all broadly popular with the voters. The media and Harry Reid must convince the public that the Republicans won’t compromise (which they obviously have already preemptively done) and won’t budge off of unpopular positions (which are actually more popular).

I honestly don’t know how Senator Reid squares this circle, especially within the timeframe of a week or so. He might be able to bulldoze a few Republican Senators to cave on passing a thinly disguised “clean” debt limit increase, but can he expect more than two dozen House Republicans to go along with the charade and vote for a bill with none of the main requirements they just voted for? And even if those House Republicans exist, would Boehner allow it to come to the floor knowing that it has support among only a small minority of Republicans? More likely is that he will kick it back across Capital Hill with the same conditions re-attached.

I have no doubt that the debt limit increase will eventually get passed, but at this point no one can predict which side will cave on which of the three main issues (spending cuts, BBA, size of increase) in order for it to happen. What is safe to predict is a long, hot August.

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Seeing Economic Truth Requires Shattering the Illusion of a Free Lunch

Looking back at the lessons Milton Friedman was teaching decades ago, it’s hard not to be amazed by how closely they mirror the disputes of today, and saddened that such self-evident truths must still be argued all over again today.

Warnings of the excessive growth of government, with too many regulations, too much taxation, too much spending, and too much debt seem to have gone unheeded. The benefits of policies like school vouchers, free trade, and the elimination of regulations and bailouts (that only serve to profit one company over another and increase costs to the consumer) have gone unrealized.

The blame for this lack of progress can be laid at the feet of politicians. But as Milton Friedman correctly observed, politicians are not angels, they operate under the same rules of self-interest we all do. Dr. Friedman believed that we cannot improve things by voting in “better” politicians, since they are only following the wishes of those who elect them. What is needed, through persuasion and education, is “better” voters who reward politicians for decisions made in the public good. Only when voters stop rewarding the politician that promises them a “free lunch”, benefits paid for by others, will you get wise long term decisions. The politicians won’t be getting any nobler; they will just be getting more noble instructions from the voters.

As the debate rages this week over increasing the debt limit, and the deadline approaches, we need to redouble our efforts to spread Dr. Milton Friedman’s message to America’s voters. We have spent decades electing politicians to hand out “free” benefits. Hardly a man, woman or child in America does not directly benefit from some federal program, or receive federal payments, paid for with federal debt that threatens to bankrupt our nation. What is needed is to reward the elected officials that cut government spending we cannot afford (even if it is a program that we benefit from) and punish those that think they can continue indefinitely to bribe us with our own dollars. Let the politicians know that November 2012 is coming.

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Will Debt Ceiling Drama End as Comedy of Errors or Tragedy of Unintended Consequences?

With the drama over raising the debt limit in Washington DC reaching its final act this week, things are actually looking pretty good for Republicans. Despite the President’s bluster and demagogy in speeches and press conferences, the Republicans in the House have actually submitted and passed plans to deal with the debt crisis; the Democrats are too afraid of the public’s reaction to even write their position down on paper. Public sentiment is solidly behind cutting government spending, and the Democrats know it. And at the end of the day, if the Republican’s spending cuts aren’t accepted, the debt limit will be reached, and spending will be cut. While Speaker Boehner should eventually craft a compromise that raises the debt limit, it likely will disappoint many Republicans who would prefer him to hold out for more.

Other than for the concern that voters might blame Republicans for the shutdown, many conservative Republicans would actually welcome a partial government shutdown. Stymied by Democrat control of the Senate and White House, they have learned that even the smallest of spending cuts are going to be opposed ferociously, and a cap or a balanced budget amendment won’t stand a chance until 2013. Failure to allow additional borrowing essentially equates to an immediate balanced budget amendment, and conservative’s dreams of rolling back the growth of the federal government and eliminating extra-constitutional departments such as Education become suddenly within reach. If the deadlock last months much of the federal bureaucracy that has been added in the last 50 years could be permanently stunted from lack of funds.

Still, there are some very real risks to taking a hard line that have nothing to do with taking the direct blame for the shutdown or risking a debt default.

The movie “Cold Turkey” told the tale of an entire town that accepted a challenge to quit smoking all at once, and the mayhem that ensued.  Now imagine that the debt limit is not increased for a few weeks and the government concludes that food stamps are one of the things it just doesn’t have money for. What kind of disruption would we see when almost 50 million Americans have to give up food stamps “cold turkey”? I suspect the kind of voter fury that would be unleashed won’t be aimed rationally, but strike everything in sight.

The federal government currently borrows over 40 cents of every dollar, and sends out about 70 million checks a month. In rough terms, that means that if the debt limit isn’t raised, starting in August the government has to decide which 40 million checks to send out, and which 30 million to hold. Does anyone believe that the Obama Administration has teams of experts preparing the furlough notices, program alterations to the automated payment systems, and detailed lists of essential and nonessential positions, ready to implement in the event of a shutdown? Most likely we will see chaos on a scale never even contemplated, with millions of payments made that they meant to stop, millions of payments not made that were intended to be paid, and perhaps even bounced checks by the million. The possibilities for incompetence are limitless.

But these are just errors of commission; there are also errors of omission to be worried about. As we saw with the shutdown in Minnesota, there are impacts that no one even realizes can occur. MillerCoors found itself facing a requirement to pull all its beer brands off the shelves (almost 40% of all beer sold) because its brand license renewal was not approved before the shutdown. Hundreds of bars were running out of liquor because they couldn’t get their liquor purchase cards renewed. Fishermen couldn’t get licenses, but could still get fined for fishing without a license. Sure, these are small inconveniences, but what happens when this gets translated to the federal level? People won’t suddenly drop dead of food poisoning if the USDA inspector is off the job for a few weeks, but will food still get shipped to the stores without his sign-off? Airplanes won’t suddenly fall apart, but will they be allowed back into service if the FAA agent isn’t there to ok it? Or what if our nation’s air traffic controllers are inadvertently laid off, does the entire air transport sector come to a screeching halt? One consequence of an Interstate Commerce Clause that has expanded to include federal control over virtually every transaction (and in the case of ObamaCare, non-transaction) in America is that not a lot can happen without federal approval. When I was younger, people used a phrase to describe over-reacting – “You don’t have to make a federal case out of it!”  I don’t hear it used that much anymore; perhaps because we have realized that today, everything IS a federal case.

From what I’ve seen so far of this President’s administration, I’d be very reluctant to bet the US economy on expectations of their competence in a crisis. Best we take a small victory now and wait until 2013 for the big gains.

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[photo credit: flickr]

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