SCHOOL CHOICE EDITORIAL

National School Choice Week--DWD editorial published in the Orange County Register Friday, January 28th. To read the text, select "NATIONAL SCHOOL CHOICE" under PAGES in the right margin of the screen.

Thank you.

U.S. SOCIALISM

Reacting to Obama's State of the Union speech, Roger Pilon of the Cato Institute said this:

With uncontrolled deficits well into the future and a debt exceeding $14 trillion, for Obama to propose saving only $40 billion per year in discretionary spending over the next five years, while “investing” in pie-in-the-sky things like high-speed rail, wind farms, environmentally destructive ethanol, and the like, is worse than unserious — it’s an insult to our intelligence. Like Obama, many Republicans too treat military spending, among other things, as sacrosanct, but at least they’re proposing more serious budget cuts.

The deeper problem, of course, is systemic. Socialism, a large dose of which we have in America today, brings out the very worst in people. In the name of collective responsibility, it saps and then destroys individual responsibility, leading to a war of all against all. No one wants “his” entitlement cut for fear that his neighbor might profit at his expense — because, after all, “we’re all in this together.” Suspicion and envy are the order of the day. Meanwhile, dreamers like Obama (at least that’s his pose), who promote our collective drift, either can’t or won’t grasp the hard reality until it crashes down upon them, and us, as it is doing now in several of our states and in Europe. For the “hard-hearted” realists among us, November 2012 can’t come soon enough.

The emphasis was mine (DWD)

STUDIES: RAISING TAXES DOESN'T REDUCE THE DEFICIT

This was taken from a blog post by the Cato Institute:

Two recent studies published by the European Central Bank unambiguously make the case for smaller government. These studies largely echo the findings of recent research by the International Monetary Fund.  The first study looks at real-world examples of debt reduction in 15 European nations and investigates the fiscal policies that worked and didn’t work. The report unambiguously concludes that spending restraint is the right way to reduce deficits and debt. Tax increases, by contrast, are not successful. The study doesn’t highlight this result, but the data clearly show that “revenue increases do not seem to have induced debt reductions, whereas cuts in primary expenditure seem to have contributed significantly in the case of major debt reductions.”

Here’s a key excerpt:

"First, major debt reductions are mainly driven by decisive and lasting (rather than timid and short-lived) fiscal consolidation efforts focused on reducing government expenditure, in particular, cuts in social benefits and public wages. Revenue-based consolidations seem to have a tendency to be less successful. Second, robust real GDP growth also increases the likelihood of a major debt reduction because it helps countries to “grow their way out” of indebtedness. Here, the literature also points to a positive feedback effect with decisive expenditure-based fiscal consolidation because this type of consolidation appears to foster growth, in particular in times of severe fiscal imbalances."

The last part of this passage is especially worth highlighting. The authors found that reducing spending promotes faster economic growth. In other words, Obama did exactly the wrong thing with his so-called stimulus. The U.S. economy would have enjoyed much better performance if the burden of spending had been reduced rather than increased. Equally interesting, the report notes that reducing social welfare spending and reducing the burden of the bureaucracy are the two most effective ways of lowering red ink:

The estimation results indicate that expenditure-based consolidation which mainly concentrates on cuts in social benefits and government wages is more likely to lead to a major debt reduction. A significant decline in social benefits or public wages vis-a-vis the overall decline in the primary expenditure will increase the probability of a major debt reduction by 31 and 26 percent, respectively.

The other study takes a different approach, looking at the poor fiscal position of European nations and showing what would have happened if governments had imposed some sort of cap on government spending. This report finds that restraining spending (what the study refers to as a “neutral expenditure policy”) would have generated much better results. 

The authors basically said that some sort of annual limit on the growth of government spending is a smart fiscal strategy. And such rules, depending on the country, would have reduced the burden of government spending by as much as 10 percentage points of GDP. To put that figure in context, reducing the burden of government spending by that much in the United States would balance the budget overnight.

THE CONSTITUTION AND CONGRESSIONAL AUTHORITY

Here's a portion of a good article from one of my favorite people--Walter Williams. (To read the full article, see "THE CONSTITUTION AND CONGRESS" under "PAGES" on the right side of this page.)

Here's the House of Representatives new rule: "A bill or joint resolution may not be introduced unless the sponsor has submitted for printing in the Congressional Record a statement citing as specifically as practicable the power or powers granted to Congress in the Constitution to enact the bill or joint resolution." Unless a congressional bill or resolution meets this requirement, it cannot be introduced.

If the House of Representatives had the courage to follow through on this rule, their ability to spend and confer legislative favors would be virtually eliminated. Also, if the rule were to be applied to existing law, they'd wind up repealing at least two-thirds to three-quarters of congressional spending.

Suppose a congressman attempts to comply with the new rule by asserting that his measure is authorized by the Constitution's general welfare clause. Here's what Thomas Jefferson said: "Congress has not unlimited powers to provide for the general welfare, but only those specifically enumerated."

Madison added, "With respect to the two words 'general welfare,' I have always regarded them as qualified by the detail of powers connected with them. To take them in a literal and unlimited sense would be a metamorphosis of the Constitution into a character which there is a host of proofs was not contemplated by its creators."

John Adams warned, "A Constitution of Government once changed from Freedom, can never be restored. Liberty, once lost, is lost forever." I am all too afraid that's where our nation stands today and the blame lies with the American people.

CATO AT LIBERTY WEB SITE

For those who don't already, I recommend subscribing to one of Cato at Liberty's newsletters. Their web address is: http://www.cato-at-liberty.org/ Check them out when you get a chance.

AMERICA'S NEW RALLYING CRY "TAX THE RICH!"

According to a new poll conducted by 60 Minutes/Vanity Fair, 61% of Americans say taxing the rich is the best method for reducing the deficit. The second most popular approach was to decrease the defense budget (20%). 4% would cut Medicare and 3% would cut Social Security.
In my opinion this is the exact WRONG order of preference. The priorities should be flipped. This thinking (i.e., that of the poll responders) is how we got into this mess in the first place. More of it will only sink us further into the deficit muck which ultimately will have to be paid for by our children and our grandchildren.
What do you think?