Thoughts From A Conservative Mom

Posts Tagged ‘Welfare’

Economics is a subject that dominates public life and important policy discussions these days, but most people who rely on what they’ve learned of it in the schools are entering the intellectual battle unarmed.

Economics courses in high school are few and far between and often deal with little more than “consumer” issues: how to balance a checkbook, how to find the best deals in the market, or how to borrow money at the lowest interest rate. Those are all useful things to know, but the mental tools and essential principles needed to analyze and evaluate the paramount issues of the day are too often missing.

Moreover, even a cursory examination of textbooks used in high school economics courses reveals a dismal level of understanding or outright bias by the text authors themselves. Students are sometimes reading, for instance, that citizens are under-taxed, that government spending creates new wealth, and that politicians are better long-term planners than private entrepreneurs. It is not uncommon for texts to portray free market competition and private property in a suspicious light while presenting government intervention with little or no critical scrutiny. It therefore may actually be a blessing rather than a curse that so few students are exposed to what passes these days in the schools as “economics.”

When people have little or no economic understanding, they embrace the “quick fix” and support impractical “pie-in-the-sky” solutions to problems. They may think that whatever the government gives must really be “free,” and that all it has to do to foster prosperity is to command it.

Economically illiterate people are easy prey for currency cranks who argue that manufacturing more money will make us wealthier. They may even think that trade is a bad thing, that if we shut the borders to the flow of goods our living standards will rise. They will be not only unable to identify economic snake oil, but also untrained to detect its harmful consequences.

Read more at the Center for Individual and Economic Liberty

Reality Economics

The Keynesian Fraud

Here we go again!

President Barack Obama has unveiled a $50 billion plan to expand and renew roads, railways and airports in a late bid to boost confidence in the economy and prevent the Democratic Party from suffering a landslide defeat in forthcoming polls.

The plan was one of several economic initiatives Mr Obama was due to unveil this week, when campaigning begins in earnest for the Nov 2 midterm elections.

Speaking in Wisconsin on the Labour Day holiday, which marks the end of summer in the United States, President Obama proposed building 150,000 miles of roads, constructing and maintaining 4,000 miles of rail and rehabilitating 150 miles of runway, as well as modernising the air traffic control system.

He also proposed setting up an infrastructure bank to coordinate private, state and local capital to invest in projects.

There is little appetite in Washington for a massive new round of government stimulus spending after the $814 billion Recovery Act, leaving the Obama administration scrambling for targeted solutions to a stubbornly high 9.6 percent unemployment rate.

Read more at the Telegraph

Infrastructure Bank Proposals Rely on Backdoor Deficit Spending

Obama’s team turn to EU bank for inspiration

The Stimulus Kicks in: Higher Unemployment

Obama’s “job creation” agenda favors union and government workers

Contractor: Obama Project Labor Agreement Preference Hurts Construction Industry

Never before has government spent so much and intervened so directly in credit allocation to spur growth, yet the results have been mediocre at best. In return for adding nearly $3 trillion in federal debt in two years, we still have 14.9 million unemployed. What happened?

The explanations from the White House and liberal economists boil down to three: The stimulus was too small, Republicans blocked better policies, and this recession is different because it began in a financial meltdown. Only the third point has some merit, and for a different reason than the White House claims.

On a too-small stimulus, this isn’t what Democrats or most Keynesian economists told us at the time. Even Paul Krugman, who now denies intellectual paternity for this economy, wrote on November 14, 2008 that “My own back-of-the-envelope calculations say that the package should be huge, on the order of $600 billion.” The White House raised him by 33% two months later, but now we’re told that wasn’t enough.

Given that the stimulus program was so poorly structured and so overtly politicized, how do we know that, say, $500 billion more would have made a difference even on Keynesian terms? The money for government spending has to come from somewhere, which means from the private economy. Our guess is that by ensuring even higher debt and implying higher taxes, a bigger spending stimulus would have done even more harm.

Stimulus godfather Mark Zandi and CBO have produced studies claiming that the stimulus saved millions of jobs and thus prevented an even deeper recession. But these are essentially plug-and-play economic models that multiply the amount of dollars spent by the assumed impact on jobs based on previous studies, and, voila, the jobless rate would have been higher without such spending. In the real world, the economy lost 2.51 million jobs.

As for blaming the Republicans, with only 40 and then 41 Senators they couldn’t stop so much as a swinging door. The GOP couldn’t even block the recent $10 billion teachers union bailout. The only major Obama priorities that haven’t passed—cap and tax and union card check—were blocked by a handful of Democrats who finally said “no mas.” No Administration since LBJ’s in 1965 has passed so much of its agenda in one Congress—which is precisely the problem.

Read more at the Wall Street Journal

The Obama Tax and Spend Hikes

The Audacity of Failure

Keynes vs. Hayek: The Great Debate Continues

The Keynesian Fraud

Keynesians need a recovery group called “Control Freaks Anonymous”.

As a culture, we like our reality on television, but seem to oppose it in economics.

For more than two years now, and even longer depending on your dating scheme, the federal government has waged war on the reality of the incredible Fed-fueled bubble that developed in housing with spillover effects on the rest of economic life.

That bubble had to explode to restore some sanity to the economic environment. There is no getting around that. The policies were all about trying to paper over what we did not want to deal with as facts. But the facts won’t go away.

Already the government has done everything in its power to override market signals, at the same time it is attempting to make market signals operate in a way that conforms to political priorities. The problem is that you can’t do both. You have to either defer to the market or abolish it.
The same is true with unemployment rates, which are stubbornly high. Now, what does it tell you when there is a surplus of workers relative to the number of job opportunities? It means that in some sectors, jobs are selling at too high a price. There are fixes for this. You can lower the minimum wage, reducing the cost of hiring, or workers can lower their reservation wage.

As it stands, Washington is doing nothing to encourage any of these fixes, so of course unemployment remains very high. Many young people have actually removed themselves from the market by going back to school to avoid paying their student loans. The state universities are glad to take their money.

A good indicator of future business conditions is commercial and industrial loans. They continue to fall as if off a cliff. How does the Fed deal with this? By keeping rates as low as possible on the short end, so that way banks have nothing to gain by lending and consumers have nothing to gain by saving. Not smart.

Meanwhile long-term rates are being held down by the existence of a too-big-to-fail doctrine for mortgage-holding companies like the nationalized Freddie Mac and Fannie Mae. In a real market, there is no telling where rates would be, but they would be high enough to compensate for risk. When there is no risk, or that risk is socialized, you see the absurd scenario of falling rates during the largest mortgage crisis in American history.

A major difference between now and the 1930s relates to the standard of living of consumers themselves. Everyone is still shopping, still living high on the hog, still going out to eat, still spending lavishly. But how and why? The answer is consumer credit, which is down but not nearly in proportion to the fall in economic prospects.

Such opportunities didn’t exist in the 1930s. People had to live within their means. Today we can all just go on fooling ourselves for as long as possible.

Do we even want to raise the ghastly subject of government finance? Let’s not go there.

Suffice it to say that the entire system today is shot through with artifice that just can’t last. What are we to do about it? The present course is going to drive us further and further into disaster. The only real answer was stated by Ludwig von Mises in 1931, in an essay in the book “The Causes of the Economic Crisis”.

Read more at Lew Rockwell

The Great Depression According to Milton Friedman: Government Failed, Not Capitalism

The United States faces overwhelming fiscal problems. Our current level of government spending and future entitlement obligations are simply unsustainable. However, as concerning as these fiscal matters are, the biggest problem America faces has nothing to do with economics, but rather psychology.

The strength of a nation reflects the character of its citizens. While America was once considered a nation of individuals fiercely independent and self-reliant, her citizens are moving closer to a state of dependence, characterized by irresponsibility and ambivalence. This change has been instigated by the politics of collectivism and the growth of the social welfare state.

F.A. Hayek, the famous Austrian-born economist and political philosopher, warned of the dangers of excessive government.

The most important change which extensive government control produces is a psychological change, an alteration in the character of the people.

To understand how this alteration occurs, one must first understand the psychological concept known as locus of control. In 1954, American psychologist Julian Rotter introduced the concept that describes how individuals could be divided into two basic groups, which represent two ends of a continuum (Figure 1): internals believe that their locus of control is within themselves, and externals believe that they are under the control of outside forces.

According to Lee Harris, author of The Next American Civil War:

[Internals] believe that they are the masters of their own destiny; they tend to be high-achievers, optimistic about their ability to improve their lot, and to discard bad habits. They believe in willpower and positive thinking. They are determined to control their own lives, for better or worse. [Externals] look on themselves as victims of circumstances, the playthings of fate. If they go to bed drunk, light up a cigarette, and burn their house down, they explain the disaster as another instance of their bad luck, and not their poor judgment, much less their bad habits.

Read more at American Thinker

Why the Left Despises Personal Responsibility

Paul Ryan: 70% of Americans Becoming Dependent on Government

Tax Day or Payday? How the Tax Code Is Expanding Government and Dependency

The Fall of Rome and Modern Parallels

To Reform Government, Reform the Culture

The Obama administration is “taking the first steps to confiscate retirement dollars,” according to Dr. Jerome Corsi who predicts that the end result will be retirees with 401(k) plans holding near-worthless government debt “that will be paid off in a devalued currency worth…pennies on the dollar.”

All of this is being promoted by the idea that individual citizens aren’t saving enough for their retirement, and that consequently government has to “do something.” Rep. Jim McDermott (D-Wash., above photo), Chairman of the House Ways and Mean’s Committee’ Subcommittee on Income Security and Family Support, is confused about whose money is in those 401(k) plans: the individual contributor, or the government. He said that “since the savings rate isn’t going up for the investment [Congress is making] of $80 billion [in 401(k) tax savings], we have to start to think about whether or not we want to continue to invest that $80 billion for a policy that’s not generating what we now say it should.”

The worldview of Rep. McDermott is revealing, and brings clarity to the point of view of many in the Washington establishment that the $4.5 trillion currently invested in 401(k) plans and other private pension plans that enjoy tax breaks actually belong to the government, and that when Congress loses $80 billion that would otherwise flow to Washington due to those tax breaks, it’s an “investment” that must “generate what we say it should”, or else it must be replaced with something else that works better.

The real “story behind the story” was revealed by Joe Wolverton here when he said,

…since the day of his inauguration, Barack Obama and his congressional co-conspirators have consistently and unapologetically set out to systematically nationalize the economy of the United States: first the banks; then the insurance companies; then the auto industry; then healthcare; and now the piece de resistance, the private savings accounts of millions of middle-class Americans.

But, thanks to the SEIU and their program “Retirement USA,” it’s all dressed up to look like a good deal for unsuspecting owners of retirement plans.

Read more at the Constitutionalist Today

Obama’s Pension Grab

Class Warfare’s Next Target: 401(k) Savings

This is a fantastic documentary!  I highly recommend that you get a copy and show it to your church, small group, and friends, whether believers or not!

View on YouTube – Part 1

View on YouTube – Part 2

View on YouTube – Part 3

View on YouTube – Part 4

View on YouTube – Part 5

Can Christians be Capitalists?

The 5 Big Lies About American Business: Combating Smears Against the Free Market Economy

Money, Greed, and GodThe Ugly Side of “Social Justice” Theology

Evangelical Left Twists the Gospel in ‘Social Justice’ Fervor

Barack Obama’s Marxist Spiritual Advisor

Is Socialism Biblical?

The Base Metal of Christian Socialism

TRUE Social Justice: Transforming Lives In Need

THIS is the kind of frightening ignorance we have to rescue our country from, and the reason why some are arguing that we’ll never get government off our backs until we bring back the culture of personal responsibility.   

If I didn’t know any better, I’d say this was a prank call.  But sadly, it wasn’t.  Wow!  I don’t know whether to laugh or cry!

View on YouTube

Healthcare or a Hummer? Life’s Tough Choices

Voter: Obama Is Going To Pay For My Gas And Mortgage!

Back on Uncle Sam’s Plantation

Something for nothing? Think again

Walter Williams: Good Intentions

To reform the culture, take back our children’s education from the socialist indoctrinators! 

Can all of America’s political problems be solved by returning to constitutional, limited government? The answer given by many conservatives and libertarians is a resounding yes. Reading the Founding Fathers, the answer would generate a more complex answer.

In the Federalist Papers, the authors dedicate considerable space to history’s failed experiments in self-government. John Adams wrote in 1798, “Our Constitution was made only for a moral and religious people. It is wholly inadequate to the government of any other.”

What Adams suggests is the people’s character impacts our government’s character. The early generations of Americans were independent-minded folks. Help for those in need came from the church, the family, or the community. Citizens expected only a few limited functions to be performed by the state.

In 21st century America, we expect the government to provide Social Security retirement and disability, unemployment insurance, Medicare, Medicaid, student loans, and Pell Grants. Parents expect their children to have a free public education through thirteen years of school.

Two tactics for dealing with this are popular. The first, the rationalistic approach, tries to challenge people with a debate about numbers and the effectiveness of government solutions. The second, the pragmatic approach, avoids taking on any popular program, other than fleeting attempts to reform Social Security. The last administration chose the latter tactic.

The pragmatic approach fails because the areas most in need of the reform are politically difficult to address. The rationalistic approach fails because it doesn’t address the culture. For example, many elderly Americans rely on Medicaid to take care of their long-term-care expenses once their net worth has dropped to nothing. The key problem here, however, is the culture that considers it acceptable for us to allow our parents to go into poverty so the government can step in.

Conservatives talk about the church and the community returning to its proper role of caring for the poor, but this effort is easier said than done. Pastors complain about the poor viewing churches as welfare agencies. Judging by donation reports, churches would be overwhelmed if they had to take on all the people dependent on the government. We cannot effect a permanent reduction in the size and scope of government, or meaningful government reform, unless we change our culture’s demand for the government to provide our every need.

Conservative icon Phyllis Schlafly identified how cultural issues impact voting with her politically incorrect declaration: “Seventy percent of unmarried women voted for Obama. And this is because, when you kick your husband out, you’ve got to have Big Brother government to be your provider.”

The statement angered liberals and embarrassed some conservatives, but CNN’s 2008 exit poll does show that 74% of unmarried women with children, and 69% of unmarried women without children, voted for Obama. In fairness, however, 68% of unmarried men with children also voted for Obama. And 56% of unmarried men without children voted for Obama; compare that to the 53% of married men who voted for McCain.

The poll also showed those who attended religious services at least weekly voted for McCain, while those who attended less frequently or not at all voted for Obama. A more religious, more marriage-minded America would have voted quite differently.

In the end, the majority of the world has little in common with the libertarian archetypes of Howard Roark or John Galt. We will either have strong families, strong houses of worship, and strong communities, or we will have strong government to take the place of all three.

This isn’t to say government must or can solve our culture’s problems. However, those on the right who think conservative goals for limited government can be achieved through passing economic legislation are spitting in the wind. We will never have a limited government until we have a culture that allows for one.

To change our culture, we must take a more holistic approach to the issues America faces. Even more than conservative candidates and activists, we have a great need for conservative writers, artists, schoolteachers, Boy Scout and American Heritage Girls troop leaders, ministers, and volunteers in organizations that seek to strengthen marriages.

Read more at Pajamas Media

TEA-Party Hypocrisy: How Much Socialism Is Acceptable?

Religion and Morality: Indispensable Supports

Principium Imprimis – First Principles

Dick Morris writes in the New Patriot Journal:

“The prospect we now face is not the intermittent up-and-down fluctuations of unemployment we have had since the Great Depression.  Thanks to Obama’s policies, we’re confronting the possibility of an unemployment rate that never comes down, just as they have in Europe.  If we stay on Obama’s course, lower joblessness in the United States will be a thing of the past.”

The recent rise in unemployment back up to 9.6% and the loss of 54,000 jobs in August, suggests that our prediction is – dismally – coming true.
    
The Obama stimulus plan has finally kicked in: The higher spending he brought to our nation and the debt levels that are accompanying it are the result.
    
Why is unemployment remaining so high?  Because the totality of Obama’s policies are dragging us into a depression.

•  The prospect of dramatically higher taxes next year is freezing consumer spending, particularly in the upper income ranges which spend a third of America’s consumption.

•  The huge changes that are looming in medical care brought about by Obama’s health care legislation are freezing new employment and expansion in the medical sector which accounts for 16% of GDP.

•  The financial reform legislation has so raised the prospect of a federal takeover of any bank that makes “imprudent” loans that financial institutions are afraid to lend, freezing new job creation.

•  The looming possibility of cap-and-tax legislation in the name of halting climate change is freezing any expansion in the manufacturing and energy sectors since these policies will force jobs to move overseas to locations that do not impose such a tax (e.g. India and China).

•  The massive expansion in the deficit and in the resulting debt has so eroded confidence in our nation’s future that Americans are now saving 6% of their income, up from 1% in the past, sapping consumer spending.

•  The threat of new rules for union elections that will spread private sector unionization is freezing business expansion plans.
      
Obama’s rush to spend, regulate, re-engineer, redistribute, and tax have stopped any recovery and are sending us back into recession.  In her wonderful book The Forgotten Man, Amity Shlaes notes how FDR’s policies in the late 1930s did the same thing.  She notes how the imposition of the Social Security tax in 1937 (benefits did not start until 1941) and the rapid wage hikes that accompanied the passage of the Wagner Act (steel worker wages rose 40% in 1937) sent a recovering nation back into a new depression that lasted until the war started in 1939.

In his haste to re-make America and to bring us the “fundamental change” he promised as he campaigned for president in 2008, Obama has torpedoed the recovery and sent us back into a double dip recession.
    
The answer is to cut spending back to pre-Obama levels, reduce taxes and eliminate the threat of tax increases, zero fund the changes Obama has legislated in health care (and repeal them in 2013), eliminate the threat of cap-and-tax, and lay the basis for solid economic growth.
          
We have left the recession that started in 2007 and entered a new recession caused by Obama’s policies.

Economy Caught in Depression, Not Recession

The Audacity of Failure

Today the Labor Department released the September jobs report, showing nonfarm payrolls decreased again by 54,000 and that the nation’s unemployment rate rose to 9.6%.

By every objective measure, President Barack Obama’s economic stimulus package has been a complete failure. When President Obama was selling his stimulus plan to the American people, he promised it would save or create 3.5 million jobs by the end of 2010. At the time, employment stood at about 134.3 million, according to the Labor Department’s most commonly used measure. That established an Obama jobs target for December 2010 at 137.8 million. According to the latest jobs report, total U.S. employment stood at 130.3 million in August, which means the cumulative Obama jobs deficit stands at 7.5 million.

Despite the mounting evidence of failure, the Obama administration is still completely unapologetic. Defending her tenure as chair of the President’s Council of Economic Advisers, Christina Romer told journalists at the National Press Club Wednesday: “The current recession has been fundamentally different from other postwar recessions. … Precisely because such severe financial shocks have been rare, there were no reliable estimates of the likely impact. To this day, economists don’t fully understand why firms cut production as much as they did, and why they cut labor so much more than they normally would, given the decline in output.” But after first admitting that the experts don’t understand the current crisis, she then confidently asserts:

It is clear that the Recovery Act has played a large role in the turnaround in GDP and employment. In a report that Jared Bernstein and I issued during the transition, we estimated that by the end of 2010, a stimulus package like the Recovery Act would raise real GDP by about 3½ percent and employment by about 3½ million jobs, relative to what otherwise would have occurred…. The nonpartisan Congressional Budget Office, CEA’s own estimates, and estimates from a range of respected private sector analysts suggest that the Act has already raised employment by approximately two to three million jobs relative to what it otherwise would have been.

Got that? Romer first admits that her magic Keynesian formulas were completely useless in predicting how bad the recession would be, and then she turns right around and uses those exact same formulas to justify the success of the stimulus. If that bootstrapping weren’t audacious enough, Romer then went on to claim that “the United States still faces a substantial shortfall of aggregate demand” and that “structural changes in the composition of our output or a mismatch between worker skills and jobs” having nothing to do with continued high unemployment. So instead of changing course, Romer wants us to double down with a second round of economic stimulus.

How much more stimulus does the Obama administration want to spend? Romer wouldn’t say, and the White House is desperate to avoid calling any new action “stimulus,” but The Atlantic’s Megan McArdle has crunched the numbers and come up with a ballpark size of how big the original economic stimulus package would have to have been if we take the left’s Keynesian economics as gospel: “Full employment is perhaps 4.5-5%. If we assume that stimulus benefits increase linearly, that means we would have needed a stimulus of, on the low end, $2.5 trillion. On the high end, it would have been in the $4-5 trillion range.”

Even the Obama administration doesn’t want to add another $5 trillion to our $13.5 trillion national debt. That is why the Obama administration is pushing a $921 billion tax hike set to take effect on January 1, 2011. There is only one word for proposing $981 billion in taxes to pay for trillions in failed stimulus spending in the midst of 9.6% unemployment: audacity.

Today the Labor Department released the September jobs report, showing nonfarm payrolls decreased again by 54,000 and that the nation’s unemployment rate rose to 9.6%.

By every objective measure, President Barack Obama’s economic stimulus package has been a complete failure. When President Obama was selling his stimulus plan to the American people, he promised it would save or create 3.5 million jobs by the end of 2010. At the time, employment stood at about 134.3 million, according to the Labor Department’s most commonly used measure. That established an Obama jobs target for December 2010 at 137.8 million. According to the latest jobs report, total U.S. employment stood at 130.3 million in August, which means the cumulative Obama jobs deficit stands at 7.5 million.

Despite the mounting evidence of failure, the Obama administration is still completely unapologetic. Defending her tenure as chair of the President’s Council of Economic Advisers, Christina Romer told journalists at the National Press Club Wednesday: “The current recession has been fundamentally different from other postwar recessions. … Precisely because such severe financial shocks have been rare, there were no reliable estimates of the likely impact. To this day, economists don’t fully understand why firms cut production as much as they did, and why they cut labor so much more than they normally would, given the decline in output.” But after first admitting that the experts don’t understand the current crisis, she then confidently asserts:

It is clear that the Recovery Act has played a large role in the turnaround in GDP and employment. In a report that Jared Bernstein and I issued during the transition, we estimated that by the end of 2010, a stimulus package like the Recovery Act would raise real GDP by about 3½ percent and employment by about 3½ million jobs, relative to what otherwise would have occurred…. The nonpartisan Congressional Budget Office, CEA’s own estimates, and estimates from a range of respected private sector analysts suggest that the Act has already raised employment by approximately two to three million jobs relative to what it otherwise would have been.

Got that? Romer first admits that her magic Keynesian formulas were completely useless in predicting how bad the recession would be, and then she turns right around and uses those exact same formulas to justify the success of the stimulus. If that bootstrapping weren’t audacious enough, Romer then went on to claim that “the United States still faces a substantial shortfall of aggregate demand” and that “structural changes in the composition of our output or a mismatch between worker skills and jobs” having nothing to do with continued high unemployment. So instead of changing course, Romer wants us to double down with a second round of economic stimulus.

How much more stimulus does the Obama administration want to spend? Romer wouldn’t say, and the White House is desperate to avoid calling any new action “stimulus,” but The Atlantic’s Megan McArdle has crunched the numbers and come up with a ballpark size of how big the original economic stimulus package would have to have been if we take the left’s Keynesian economics as gospel: “Full employment is perhaps 4.5-5%. If we assume that stimulus benefits increase linearly, that means we would have needed a stimulus of, on the low end, $2.5 trillion. On the high end, it would have been in the $4-5 trillion range.”

Even the Obama administration doesn’t want to add another $5 trillion to our $13.5 trillion national debt. That is why the Obama administration is pushing a $921 billion tax hike set to take effect on January 1, 2011. There is only one word for proposing $981 billion in taxes to pay for trillions in failed stimulus spending in the midst of 9.6% unemployment: audacity.

Read more at the Heritage Foundation

Economy Caught in Depression, Not Recession

Why Obamanomics Has Failed

The Jobless Obama “Recovery”

Repeating FDR’s Mistakes

Give Capitalism a Chance

Perhaps the most difficult economic lesson is that we live in a world of scarcity and everything has a cost. Scarcity exists whenever human wants exceed the means to satisfy those wants. For example, Rolls-Royce produces less than 4,000 cars a year, but it’s a safe bet that more than 4,000 of the Earth’s 6.5 billion people want a Rolls-Royce. That means Rolls-Royces are scarce. But it’s not just Rolls-Royces that are scarce. It’s clothing, food, land and most anything a human would want. There’s not enough to meet every single want.

Scarcity means there’s no free lunch. Having more of one thing requires having less of another. You might say, “Williams, that’s where you’re wrong. Someone gave me this newspaper and I’m reading your column for free!” Not true. If you weren’t spending time reading my column, you might have spent the time reading something else, chatting with your wife or children, or going out for a jog. You’re reading my column for a zero price but you’re not doing so at zero cost. You have to sacrifice something. There are zero-price services such as “free libraries,” “free public schools,” “free transportation” and free whatever. It doesn’t mean costs are not being borne by somebody.

Read more World Net Daily

Walter Williams: Good Intentions

Give Capitalism a Chance

Keynes vs. Hayek: The Great Debate Continues

The real costs of Social Security far exceed the taxes collected: The compulsory pay-as-you-go retirement system has denied people the choice of using those funds for private investment, diminished the culture of responsibility and strengthened the redistributive state. People have become more dependent on government, and the retirement decision has become politicized. Social Security now accounts for 20% of the U.S. budget, with expenditures of $686 billion last year.

Reforms in 1977 and 1983 increased payroll taxes and the retirement age, but made no fundamental changes to the system in terms of empowering workers by allowing them to put part of their Social Security taxes in personal accounts.

The U.S. system has accumulated surpluses, but they have been used to expand the size and scope of government. The so-called trust fund has no real assets, only IOUs that taxpayers must eventually pay.

In contrast, Chile’s Social Security Reform Act of 1980 allowed workers to opt out of the defined benefit plan and set up personal accounts. Today Chilean workers are no longer burdened with payroll taxes and no longer dependent on government for their retirement income.

The lack of private property rights in Social Security means that individuals have no secure claim to future benefits and cannot pass them on as part of their estates.

The Supreme Court has ruled that Congress has the power to change promised benefits or other terms of the “social contract” — that is, Congress has the power to break the contract and to renege on past promises.

Indeed, Social Security statements now state: “Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2037, the payroll taxes collected will be enough to pay only about 76% of scheduled benefits.”

What kind of a contract is that? Would anyone voluntarily sign such an uncertain agreement? Of course not! That’s why Social Security is compulsory.

The deal is bound to get worse. This year OASDI will run a deficit of $41 billion, with a smaller deficit in 2011, and surpluses in 2012-14. Beginning in 2015, revenues will be insufficient to pay full benefits, according to the just-released Social Security Trustees’ Annual Report to Congress, and the cash-flow deficit will rapidly increase.

Read more at the CATO Institute

Is the Welfare State a Ponzi Scheme?

The Entitlement Rip-Off

In the Red: Social Security to See Payout Exceed Pay-In This Year

300 Million, Social Security, and Solvency

Obama’s Pension Grab

U.S. Will be Like Greece in ‘Seven to 10 Years,’ Say Congressmen, Experts

Social Security Reform: A Free-Market Alternative

Last month, Speaker of the House Nancy Pelosi claimed that unemployment benefits “creates jobs faster than almost any other initiative you can name.”

Following Nancy Pelosi’s logic, she should be thrilled to hear that the number of first-time filers for unemployment insurance rose to 500,000 last week—the highest in nine months. However, paying more people not to work will not stimulate the economy or create any jobs. As Arthur Laffer explains in his Wall Street Journal column,

The flaw in their logic is that when it comes to higher unemployment benefits or any other stimulus spending, the resources given to the unemployed have to be taken from someone else….While the unemployed may spend more as a result of higher unemployment benefits, those people from whom the resources are taken will spend less. In an economy, the income effects from a transfer payment always sum to zero. Quite simply, there is no stimulus from higher unemployment benefits.

Unlike the private sector, government is unable to foster economic growth since it does not have any wealth of its own. Nancy Pelosi who claimed that “we could slip back and have another recession” if Congress didn’t pass an unpaid $34 billion unemployment insurance bill, fails to acknowledge the danger of excessive unemployment benefits.

Currently, unemployed American workers can generally collect unemployment benefits for up to 99 weeks—about 2 years. But how much further is Nancy Pelosi willing to extend these unemployment benefits? At what point is enough, enough?

Read more at American Majority

American reliance on government at all-time high

In a welfare state, how much is ‘enough’?

Pelosi to Aspiring Musicians: Quit Your Job, Taxpayers Will Cover Your Health Care

Anybody who’s studied FDR’s mistakes and the miserable historical results of Keynesian economics could see this coming a mile off. The question is, are we going to learn our lesson before we drag this out for another 8 years, the way FDR did?

Positive gross domestic product readings and other mildly hopeful signs are masking an ugly truth: The US economy is in a 1930s-style Depression, Gluskin Sheff economist David Rosenberg said Tuesday.

Writing in his daily briefing to investors, Rosenberg said the Great Depression also had its high points, with a series of positive GDP reports and sharp stock market gains.

But then as now, those signs of recovery were unsustainable and only provided a false sense of stability, said Rosenberg.

Rosenberg calls current economic conditions “a depression, and not just some garden-variety recession,” and notes that any good news both during the initial 1929-33 recession and the one that began in 2008 triggered “euphoric response.”

“Such is human nature and nobody can be blamed for trying to be optimistic; however, in the money management business, we have a fiduciary responsibility to be as realistic as possible about the outlook for the economy and the market at all times,” he said.

The 1929-33 recession saw six quarterly bounces in GDP with an average gain of 8 percent, sending the stock market to a 50 percent rally in early 1930 as investors thought the worst had passed.

“False premise,” Rosenberg said. “And guess what? We may well be reliving history here. If you’re keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%.”

Read more at CNBC

Dow Repeats Great Depression Pattern

Dow Facing Bouncy Ride Down to 5,000

Here Comes the Double-Dip Recession

A Kondratieff Winter?