With yesterday’s announcement from the Congressional Budget Office that the fiscal year 2009 federal budget deficit is projected to be $1.2 trillion dollars, Republicans in the House and Senate should realize that the time has come for them to pull their support for any economic stimulus package proposed by the incoming Obama Administration. The CBO’s budget numbers don’t include the as yet unseen stimulus bill, which is rumored to carry a price tag of anywhere between $600 billion and $1.2 trillion on its own. By this time next year, the government could be carrying a balance sheet that is as much as $2.5 trillion in the red. As the once and future party of fiscal responsibility, Republicans should not want to be anywhere near those numbers.

Senate Minority Leader Mitch McConnell and House Minority Leader John Boehner were making conciliatory noises on Monday after President-elect Obama went to Capitol Hill to lobby for his stimulus bill. Obama said that the deal would include $300 billion in “tax cuts” with which he hoped to buy Republican support. McConnell and Boehner expressed pleasant surprise at the alleged size of the tax relief in the plan – alleged because some of the tax relief is slated to go to people who don’t pay federal income taxes in the first place – and hinted that they could support a stimulus bill this focused on reducing taxes.

But more than their support for passage, which he does not need, Obama was attempting to buy political cover from Republicans, which he wants. Obama wants to insulate hmself from blame when the post election afterglow fades away, his stimulus plan inevitably fails, and the American people get stuck with the bills. McConnell and Boehner doubtlessly know this; but they lack the political courage to stand athwart the new Administration and yell “Stop!” If they want to rebuild the Republican Party’s image as the party of fiscal restraint, however, that is exactly what they must do.

Right now, Republicans generally are operating on the theory that they must appear to be working with President Obama to avoid the wrath of the voters, who elected Obama to change Washington. The hope is that in being nice to Obama, Republicans will share in some of the credit for his initiatives, and win back the trust of the voters. The problem is that Republicans have played this game before, and it never ends up the way they hope. Americans don’t want a Democratic Party and a watered down Democratic Party, which is what Republicans who counsel going along to get along would have the party become. Americans want choices, and conservatives want a Republican Party that stands on principle. That is why Republicans should walk away from the proposed economic stimulus completely.

If they do, they will catch criticism in the short term for their lack of “caring” and their “obstructionism.” But the fact is that the Democrats don’t need a single Republican vote to pass the stimulus. So let them do it on their own. The Senate should not filibuster, but not one Republican should vote for the deal. Only in this way will Republicans be properly positioned when the stimulus fails. Of course, the risk is that the stimulus will not fail, and Republicans will not have had a hand in crafting it. But that is not really much of a risk at all. As the minority party, Republicans will not receive any credit for a successful turnaround in the economy. If they go along with Obama’s plans, Republicans will not be able to criticize Democrats if the stimulus fails. That is a risk that Republicans simply cannot take if they wish to get back in the majority anytime soon. No amount of temporary tax cuts Democrats may offer is worth mortgaging the Republican Party’s future.

Since Republicans cannot lead on the stimulus, they should not follow. It’s time to get out of the way. Let Obama and the Democrats be responsible for the results of the massive increases in government spending their plan envisions; and don’t sell out principles just to stand in Obama’s aura.

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Republicans push back against turning a stimulus package into a bloated boondoggle.

Republican Senators spent the day at a retreat at the Library of Congress with three distinguished economists–Martin Feldstein, Larry Lindsey, and Peter Wallison–talking about how to get the economy going.

At the conclusion of the retreat Senators McConnell and Alexander spoke about what an economic stimulus ought to contain:

Senator Alexander: We — as the leader said, we want to be full participants in any kind of stimulus package that actually helps our economy grow, helps create jobs, helps stabilize housing.

We’re not interested in just spending money that we don’t have for projects that we don’t have to have at a time of such high deficits.

Watch the video:

The “spending money that we don’t have for projects that we don’t have to have” line sounds much more reasonable than talking about as much as a $1.3 trillion boondoggle on top of what is already a $1.2 trillion deficit.

According to the Associated Press, Feldstein and Lindsey support a big bailout:

Feldstein recommended a $400 billion investment in one year, Obama aides said, and Lindsey said the package should be in the range of $800 billion to $1 trillion.

So why did not the Senators hear from an economist like Harvard’s Greg Mankiw, who served on Bush’s Council of Economic Advisers, and is reported to be skeptical about the need for an economic stimulus?

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<a href=”http://www.qando.net/details.aspx?entry=9970″>This post</a> needs to go viral. Quickly. And it definitely needs to land in some Congressional and soon-to-be White House e-mail inboxes.

Since Barack Obama became president-elect, many in the mainstream media have claimed he will inherit the greatest economic crisis since FDR.

Interestingly, many in the media made similar claims before Ronald Reagan was sworn in as president. For example, according to the January 19, 1981 issue of Newsweek, “When Ronald Reagan steps into the White House next week, he will inherit the most dangerous economic crisis since Franklin Roosevelt took office 48 years ago.”

Is Obama really facing an economic crisis greater than Reagan faced 28 years ago?

The misery index (the sum of the inflation rate and the unemployment rate) was 21.98 in June 1980. It was down to 10.07 when Reagan left office in January 1988. The misery index was 7.77 in November 2008.

Given that the misery index was nearly three times as high when Reagan became president than it is today, it appears the claim that Obama will inherit the greatest economic crisis since FDR is quite an exaggeration.

Source: http://www.miseryindex.us/raw_data.asp

As we have learned from the past, the best way for the government to “rescue the economy” is to  let go of the power they have over it. I’m not an expert on the economy by any stretch of the imagination, my experience in economic matters amounts to a semester in Macro and Micro economics, both of which I barely attended. But based on what I know about the laws of supply and demand and the way the market works, isn’t the best thing the government can do is to but out further? 

I think we should cut corporate taxes down to a flat 15%, which would give us one of the lowest corporate tax rates in the world. This would give corporations more money to hire new employees. It’s sad when the United States is competing with South Africa, ran by the far left African National Congress, in terms of low corporate tax rates, it’s time we make the United States friendly to business once again. I would love it if we enacted a flat tax or The FairTax (I like both ideas), but if we’re going to keep a graduated income tax system, we need to drastically cut all brackets  or suspend income tax for a while. This would give the American people some confidence to go and spend the cash. Finally, I think the US government should completely cut the capital gains tax, which would rally the markets and help the housing market (and might actually give banks confidence to renegotiate people’s loans.) 

Finally, the government needs to get it’s house in order. A rapid bout of government spending directed properly could spur temporary economic growth, but it is seriously going to make it difficult for America to move forward in the future and continued borrowing holds us hostage to countries we borrow from like China, who as we all know doesn’t like us that much. For a political party who claims to be so concerned about the future of the weather and that we must do whatever we can to try and curb it, they certainly don’t care much about the tangibles. We need real action on real issues. We need to drastically cut spending in 

Doing these four things would eliminate the need for stimulus packages and bailouts and would really stimulate our economy.

President-elect Obama predicts “trillion-dollar deficits for years to come.”

“We’re already looking at a trillion-dollar budget deficit or close to a trillion-dollar budget deficit, and that potentially we’ve got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point,” Obama said.

The federal deficit was about $455 billion for fiscal year that ended on Sept. 30, 2008.

If the Democrats keep the deficits to a trillion-dollars a year that will at least slow the rate at which the Democrats increase the national debt.

A round up of the recent news from the twenty fourth state.

Coleman Madness

For those of you who have been following the strange events in the Minnesota Senate race between Al Franken (D) and Senator Norm Coleman (R), St. Louis apparently wanted in on the hype surrounding the name Coleman.

Just about an hour or so before outgoing State Sen. Maida Coleman, another Coleman — attorney Denise Watson-Wesley Coleman – threw her name into the contest.

Maida Coleman then abruptly took her name out of the running for the March primary, claiming that someone put the other Coleman in as ruse to confuse voters.

Who does Coleman (er, Maida that is) think put Coleman (er, Watson-Wesley Coleman) on the primary ticket?  None other than Democratic Mayor Francis Slay.  I guess he is hoping to one up Franken by beating two Colemans in this election.  [After dropping her name from the primary, Coleman (Maida this time) plans on running for Mayor as an independent in the April general election.]  Although, it is pretty clear that Coleman (yeah, confusing…Maida) wasn’t picking up much support in her primary campaign.

She has not, according to the state Ethics Commission, formed a fundraising committee. She has reserved the website name maidaformayor.com, but, to date, the page has no content.

It should be noted that the Democrats have controlled this office since 1949.  That’s 60 years of gloriously stupid policy that has St. Louis among the most dangerous cities in the country (and other wonderful such distinctions).

ACORN Cracking

A former ACORN (you do remember who they are, right?) employee has been charged with voter registration fraud.

Deidra Humphrey, 44, of East St. Louis, is expected to appear in U.S. District Court in St. Louis this week after a federal grand jury indicted her on the charges Dec. 31, according to the U.S. Attorney’s office.

Humphrey is accused of submitting forged and false voter registration cards for the November general election, including forging cards for nursing home residents, U.S. Attorney Catherine Hanaway said Monday.

Humphrey worked for the Association of Community Organizations for Reform Now (ACORN) and the Missouri Progressive Vote Coalition, not-for-profit organizations that conducted voter registration drives.

I’m guessing she wasn’t so good at this.  She actually got caught.

Recall that eight ACORN workers were also indicted back in December of 2007 for similar activities in the St. Louis area.

If Too Many Cooks Spoil the Meat, What Do Too Many Lawyers Spoil?

Governor-elect Jay Nixon (D) has announced his senior staff and communications team:

• John Watson, Chief of Staff - Lawyer
• Ted Ardini, Counsel to the Governor - Lawyer
• Jeff Harris, Policy Director - Lawyer
• Mary Nelson, Director of Boards and Commissions - Lawyer
• Mayme Young Miller, Director of Constituent Services - Lawyer
• Dustin Allison, Deputy Chief of Staff - Lawyer
• Nichole Loethen, Deputy Counsel - Lawyer
• Scott Holste, Press Secretary - Not a lawyer, but his wife is
• Jack Cardetti, Communications Director - Wow, not a lawyer either!
• Sam Murphey, Deputy Press Secretary - Three non lawyers!

Sigh!  I’m betting we’ll see lots of nuanced legislation and communication coming from the Governor’s office over the next four years.

State Running Out of Unemployment Money

But don’t worry, we can always borrow what we are short on from the federal governement.

But state labor director Todd Smith says Missouri has been through this several times before, and it has never missed sending out benefit checks. That’s because the state can borrow money from the federal government, and will borrow it until unemployment taxes come in.

…

The last time the state had to borrow federal dollars to keep the checks flowing, it borrowed more than 400-million dollars. Employers already are paying a 30-percent surcharge on their unemployment withholding taxes to pump more money into the fund. Smith says that helps, but increasing taxes on employers at a time when they are cutting jobs seems counterintuitive. He says the legislature needs to take some action this year to ease the problem.

Ugh.  Increased federal debt and more money coming out of workers’ pockets (where do you think that payroll tax comes from?).  Sounds like a great way to improve the long-term health of the economy.

As always, whatchoo got?

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My thoughts. In the event that the link does not work, just click here and look for my post–it should be the first one on the top since I appear to have been the last person to enter in my post.

From Bloomberg:

Obama’s advisers are looking at including a “buy American” provision in the economic-stimulus legislation that the incoming administration has made its first priority.

“We are reviewing the buy American proposal and we are committed to a plan that will save or create 3 million jobs, including jobs in manufacturing,” said Jen Psaki, a spokeswoman for Obama’s transition team.

So, economic nationalism is back with a vengeance. I guess the steel industry is not the only group that has not read its Bastiat.

They told me that when the “reality-based community” takes over on the policymaking front, things will get a whole lot better. Pardon me for not believing this line of hooey in light of reports that the Obama Administration is engaging in the economic policy equivalent of believing the Earth is flat.