I normally don't beat up on little girls, but liberals deserve no mercy

Check it out. Like most liberals, she ignores that I refute her every claim, debunk her junk science, justifiably dismiss her bad statistics, and expose her sources' liberal agendas.

But it's fun, and good intellectual exercise.

China says that we made a lot of bad loans?

A Chinese banking regulator actually used the word "ridiculous" to describe the status of loans in the U.S.. Nothing could more exemplify the pot calling the kettle black!

This imbecile should worry about his own house before decrying others. Recall that China is the country that's sitting on over a trillion dollars worth of bad debt, and those were Ernst & Young's calculations in 2006!

China's government encouraged its nationalized banking system to make bad loans as a matter of policy. Oh, wait a minute, actually the U.S. subprime mess is the result of loans also made as a matter of policy. Bad example.

However, the nature of the loans is different. E&Y calculated "non-performing" loans that will never get paid back. The federal government wants to blow $700 billion in this "bailout," when in fact that figure was simply chosen arbitrarily. As with all federal spending, the wrangling isn't over how much to spend, but how to spend it, and how to finance it (Democrats like taxes, Republicans like passing debt on to our children). Even combined with the $300 billion to bail out actual housing, the dollar value of actual "bad" securities and "bad" mortgages is far less than $1 trillion. So if China were to do a similar bailout, it would have to spend, what, $3 trillion?

I haven't talked about the housing bailout yet, but suffice it to say today that it's not as bad as the federal government claims -- nor would it be as bad if homeowners were held responsible (including prosecution for fraud) when they simply "walk away" from their debt obligations. But if the Bush Administration, Congress, rent-seekers and activists admitted the truth, then that means they couldn't get to spend as much of Other People's Money. As I've noted time and time again, government measures its success by the most money spent and the most people "helped," regardless of how efficiently the money is spent, or whether those "helped" legitimately needed it.

Meanwhile, it's China, not the U.S., that needs to hold a trillion dollars in foreign reserves as collateral for its banking system. And foreigners still look to the U.S. as the best place to invest.

And while I'm at it, we're not the ones putting 14-year-olds on our Olympics team, then faking all necessary documents to "prove" they're over 16. We aren't writing news stories about our spaceflights hours before lift-off, complete with astronauts' dialogue.

A tale of two thieves

In his unmitigatedly warped notion of "benevolence," George W. Bush signed legislation "to boost availability of student loans." It sounds great, but after you read how it's being done, it's a great deal for students, a great deal for Bush and bureaucrats who will brag about how much they're "helping" people, and a raw deal for the rest of us who pay taxes.

"The measure is intended to inject liquidity into the student loan market by allowing the U.S. Department of Education to buy federally guaranteed student loans that lenders haven't been able to sell to investors." Investors don't want to buy the loans because they're crap investments, relative to what else is available. It tells us something about this "non-crisis economic crisis" (the one the mainstream media wishes the U.S. were in) that, even though these student loans have the guarantee of repayment by the federal government should any borrowing students later default, most investors would still prefer investing in normal markets like stock exchanges!

But this still won't stop Bush and Congress from using our money to buy the loans, touting more of this "injecting liquidity" bullshit that we've heard too much about from the Federal Reserve. The federal government will buy these loans, using money coerced from the rest of us via taxation. If the students default, the federal government will then assume the payments to the loans' owner -- itself. And we won't even see a dime, because the repayments will simply go to the U.S. Treasury.

Such accounting practices in the private sector are called fraud. Bernie Ebbers received a 25-year prison sentence for what amounted to "merely" a few billion dollars. What, then, should politicians deserve when they do this all throughout a budget of $3 trillion dollars?

My Congressman, John Hall (former member of the band Orleans who found religion socialism and went into politics), sent me an e-mail with a subject line, "How to Combat Medicare Fraud Workshops this Friday." New York State spends nearly $48 billion each year on Medicaid, and it's been estimated that a tenth of it is "fraudulent," but the pure fact is that it's all theft. It is not theirs to give by any true sense of moral principle. If David Paterson, Joe Bruno and Sheldon Silver want to be charitable, or George W. Bush, John McCain, Barack Obama, Hillary and Nancy Pelosi and Harry Reid, let them give of their own money and encourage -- not force -- the rest of us to give. South of us, John Corzine would rather tax New Jersey residents every which way he can to fund state programs, instead of giving from his own extreme wealth. You see, when a liberal like Corzine criticizes "excessive executive compensation,"

That article at Empire Center talks about "market-driven reforms," when such a thing is impossible when government is behind it. As I tried explaining last year to my friend JK when talking about Medicare Part D, there is no "market" when government is involved, because government by definition will coerce at least one person into doing something he normally wouldn't do in a truly free market atmosphere. People can talk about "choice" all they want with some new "reform" in a social program, but ultimately it's "choice" at somebody else's expense.

This article talks a bit more about NYS Medicare fraud, and talking about how the New York State Legislature "agreed to only about $700 million in savings" for 2006. That's nonsense. When politicians talk about "savings," it doesn't mean they actually reduced the size of a program, but that they reduced the previously planned growth. The spending still increased. How long could you or I run our households this way when facing a financial crunch? "Honey, we have to cut back. Now, I had previously projected a $700 monthly increase in our car budget if we got that new car. But look, if we get that less expensive new car, it will cost us only $500 more per month. That saves us $200 per month!!!"

Such "logic" seems absurd, but that's how government operates. We normal folk must work for our wages, because we cannot use compel those who hire us or otherwise trade for our goods and services. But because government can take people's property by force, it need not worry about being "worthy" of what it takes. It simply takes, and ultimately it takes from you upon pain of death -- your death. I was starting to read "Your Money or Your Life: Why We Must Abolish the Income Tax" by Sheldon Richman, with a wonderful introduction by Dr. Richard Ebeling. Sheldon and Richard are true lovers of liberty, and I am proud to call them friends.

[Correction: I was blogging on vacation and didn't have the book with me. It was actually Walter Williams who wrote the following in his foreword, not Richard in his introduction.] Williams explains far more eloquently what I've said before, that all taxation is coercion, and so if government takes from you anyway, it's theft. But what do you do if you refuse, believing sincerely that you will not submit to thievery? Well, then the government will "fine" you, which is merely a declaration that if you don't surrender your property, you must give up more. If you resist enough, you must give up your freedom by going to prison. What if you will defend yourself, as is your God-given right against oppressors? Then the government will send in "police" and take you by force, killing you if necessary, all because it says you don't really own what you think you own, because a majority of your neighbors banded together and elected some "government":

Give us what we demand, cried out the multitude, lest we seize it by force.

And the merchant replied, Depart in peace while ye yet can, for ye have no right to my possessions save with my consent, and as I have done no wrong to any man, none of ye have any authority to seize any of my possessions.

Behold, cried out his neighbors with one voice, that we have declared ourselves a government, and as such we have given ourselves the authority.

The merchant replied, Ye have no authority, for one cannot give authority unto oneself.

That matters not, they replied and began to grumble, for we are a greater number than thee and thy family, and because of our greater numbers, we have decided that thou shalt pay us tribute.

Then did his neighbors, armed with swords and staves, seize a goodly portion of the merchant's possessions. The merchant did not consent in his heart, but for the sake of his wife and children, he did not resist in his actions.

Anyway, I'm blogging from Davao, the largest city in the world in terms of area. My fiancee and I were visiting her family here, and this afternoon we're going to Manila. We stayed in Davao longer than planned, because we couldn't get tickets to Bohol. This being "summer vacation" time in the Philippines, all the flights were fully booked. It's probably just as well, because Mindanao and the Visayas have been quite cloudy, and the beaches wouldn't have been as enjoyable.

Yesterday we went to "Paradise Island," a resort on Samal Island, just a few minutes off the coast of Davao. It's beach isn't one of beautiful white sand like Boracay's, and in some places a little pangit with the tide out, but it's a wonderful little getaway if you're in this part of Mindanao. Mr. Tungol, our host, was extraordinarily gracious. He was always checking on us and the other guests, ensuring our comfort. He also brought over the four-piece band to serenade us, inviting me to join in, which I couldn't resist when they did a Sinatra/Bennett/Elvis medley. Victor Heiser, an American doctor who spent a lot of time in the Philippines in the early 20th century, wrote that he believed you could give musical instruments at random to Filipinos and hear sweet music at once. Perhaps an exaggeration, but it was truly amazing to hear what bongo drums, two guitars, a bass and three voices could produce.

More mainstream media lies: Bush's budget is hardly cutting Medicare spending

I'm the first to say that Medicare and other socialist (not to mention unconstitutional) programs should be abolished completely, but let's continue debunking a common lie since the start of Bush's administration. My blogfather Don Luskin has pointed out for a long time that, regardless of whether you think the programs are right or Constitutional, Bush has increased spending so much that it ought to make any liberal happy. I'm still trying to find his very detailed analysis that proves my point here, that Bush is hardly cutting funding from health care to childrens' programs -- his proposals are to cut only the increase in spending, so spending still increases.

Update: check this.

To continue this tired old lie, HealthDay News, a socialist propaganda group masquerading as a news source (like pushing a survey claiming Canadians are healthier than Americans, ergo Americans need socialist medicine), "reported" today:

MONDAY, Feb. 4 (HealthDay News) -- President Bush's new budget proposal would cut $196 billion over five years from both Medicare and Medicaid -- programs that provide health care to millions of poor and elderly, federal officials announced Monday.

The proposed cuts are part of a plan to stop Medicare from running out of money in little more than a decade, Secretary of Health and Human Services (HHS) Mike Leavitt told reporters during a press conference. He said the savings would help keep premiums affordable, maintain the Medicare/Medicaid system, and balance the current Medicare budget.

"The Medicare portion of the budget should be viewed as a stark warning," Leavitt said. "Medicare on its current course is 11 years from going broke. Americans have become numbed to entitlement warnings as a repeated cycle of alarms and inaction," he said.

But President Bush and Leavitt are sure to face a Congressional showdown over the budget proposals.

"This administration ought to know that five years' worth of Medicare and Medicaid cuts totaling $200 billion are dead on arrival with me and with most of the Congress," Sen. Max Baucus, D-Mont., and chairman of the Senate Finance Committee, told the Associated Press.

But if you want the truth, read further into the article:

Under the president's plan, the annual growth of Medicare spending would slow to 5 percent instead of the 7 percent currently projected. Similarly, spending growth would slow from 7.3 percent to 7 percent for Medicaid.

If a spendthrift family were going to spend 7% more, but instead spent only 5% more, is it accurate to say they "cut" their spending? Of course not. The fact is, spending will continue at a record pace. Even at 5%,

Well, why not accuse Bush of cutting the programs by 10%, or 20%, or 100%? Why don't Democrats just accuse Bush of cutting $1 trillion from the programs next year, because he wouldn't go along with a plan to increase taxes by $1 trillion? After all, the federal government could have increased spending the money as much as tax revenues and borrowing permit, by their warped logic.

Again, this is regardless of what you think about the programs. My initial point is that the MSM is so rabidly infected with Bush Derangement Syndrome that reducing a proposed 7% increase to 5% is a "cut" to them, and they've always seized on that as a lie. The very purpose is to rile up voters who live off taxes the rest of us pay, of course, and the sad thing is that it works. People believe the half-truths and outright lies that the news throws at them, like in this article. It's correct to point out the huge deficits under Bush, but it's completely dishonest to imply that things were great under Clinton:

Seven years ago, Bush took over a government predicted to generate $5.6 trillion in surpluses over 10 years.

Such predictions were overly optimistic, it turned out, being based on the unsustainable economic growth of the very late 1990s. Furthermore, let's say the $5.6 trillion in surpluses was realized somehow -- that wouldn't have been because of any spending cuts, but because Congress taxed us $5.6 trillion more than what they spent.

Now, if we want to talk about whether the programs should exist, the bottom line is that they're morally wrong. It's not morally wrong to help people, but it's morally wrong to steal from one unwilling group of people, no matter how benevolent the intentions may be. People like Paul Krugman would have you think that not funding these programs from the poor, because you're giving tax cuts to the rich, is "Dooh Nibor" economics, "Robin Hood" backwards, i.e. what they claim is theft from the poor to give to the rich. As Don Luskin explained, that couldn't be less true:

In other words, by cutting taxes that robbed high-income earners of their income -- and cutting government spending that transferred that stolen income to low-income earners -- we have a "transfer of income from the middle class to the very affluent"? If we simply reduce the rate at which we are stealing from the rich, are we therefore stealing from the poor? We can certainly have an argument about whether there ought to be redistributive taxes. But it's nothing but sophistry to suggest that a move toward less redistribution in the future constitutes robbery.

But this feeling of "entitlement" will persist so long as people think that majority voting somehow gives them a right to other people's property. I was thinking about this "Monty Python and the Holy Grail" quote the other day: "Listen, strange women lying in ponds distributing swords is no basis for a system of government. Supreme executive power derives from a mandate from the masses, not from some farcical aquatic ceremony."

But is the second any less absurd, when your neighbors band together, call themselves a "government," and as "the masses" proclaim their inviolate right to seize your property against your will?

Federal "fiscal responsibility" nonsense

"Bush Warns He'll Veto Runaway Spending" proclaims the headline.

Let's see. In the aftermath of Hurricane Katrina, Bush couldn't wait to hand out $62 billion of other people's money. It didn't matter if they were able to work or if they weren't really victims in the first place: all Bush, Congress and the bureaucrats cared about was buying support from half of the voters who don't pay taxes, hoping more of them will vote than from the other half who do pay taxes.

Bush had no resistance whatsoever to signing "The Energy Policy Act of 2005". It had a price tag of "only" several billion dollars, depending on the extent of the "tax breaks": such "incentives" for specific people mean the rest of us just pay more taxes to compensate, and who knows how much government would give energy companies in the end? The problem with government spending is that it's almost always just an estimate, whereas the rest of us budget our lives within the confines of definite incomes.

Bush likewise was too eager to sign the 2005 transportation bill, which delivered pork to just about every Congressional district, not just "for [Bush's] right wing buddies" as certain morons believe. Bush initially said he'd veto anything over $284 billion, so what did he do? He signed one that's $286 billion. What's $2 billion? A lot. What's $2 billion of other people's money? Not a lot.

Lest you think I'm cherry-picking only specific examples, I'll remind you that Bush's only two vetoes were a stem-cell bill, not because of the spending but because of his "moral" opposition, and a military spending bill pushed by Democrats, not because of the spending but because it included a timetable withdrawal from Iraq. As one of my friends said when I sent him the link to the article, "What's he been doing the last fucking 7 years?!"

My blogfather and friend Don Luskin has said for a long time that we knew all along Bush is a "compassionate conservative" who isn't for limited government. Be that as it may, it doesn't mean we have to believe Bush when he starts talking like a limited-government conservative. Today's Day By Day is pretty accurate, and it would be completely spot-on if "on immigration" were excised.

Government's motto: "When it's not your money, why try to be careful?"

FEMA Wants Over $300M in Katrina Aid Back

NEW ORLEANS Feb 6, 2007 (AP)— In the neighborhood President Bush visited right after Hurricane Katrina, the U.S. government gave $84.5 million to more than 10,000 households. But Census figures show fewer than 8,000 homes existed there at the time.

Now the government wants back a lot of the money it disbursed across the region.

The Federal Emergency Management Administration has determined nearly 70,000 Louisiana households improperly received $309.1 million in grants, and officials acknowledge those numbers are likely to grow.

It wasn't the bureaucrats' own money they were handing out like candy, so why should they exercise even the least bit of caution?

Katrina's aftermath: $62 billion in fraud, and growing.

No more talk about a "war on poverty"? GOOD!

This ridiculous Reuters propaganda is more bleeding-heart tripe. Reporter writes about politicians who are ignoring the poor, reporter gets a soundbite from Jesse Jackson (yawn), reporter . Blah, blah, blah. Instead of all but asking what government can do, truthful reporting would have exposed what government has done.

Government has tried battling poverty by creating low-income housing. "The projects" originally was just the literal term, but today everybody knows it as a synonym for crime-infested neighborhoods where poor people have become trapped.

Government has tried battling poverty by giving cash handouts to the poor. This succeeded only in raising new generations of "Black America" to be dependent on the government dole, instead of on their own initiative and skills.

Government has tried battling poverty by raising the minimum wage. But instead of increasing the incomes of those at the bottom of the wage scale, that only made some of them too expensive to employ. Young people looking for first jobs would stay unemployed (and as poor as can be), and sometimes they would turn to crime.

Government has tried battling poverty by enacting social programs, whose innate bureaucratic red tape, corruption and fraud consistently waste more taxpayers' money than could ever be put to good use. Egged on by self-righteous pundits, bureaucrats redistribute other people's money and typically help the wrong people anyway.

Government has tried battling poverty by educating young people from poor families so they can get good jobs, except that the teachers unions care only about getting more teachers instead of good ones (bad teachers are more numerous than good ones). It's also hard to get a good teacher to commute into the projects that government created. Then the bad teachers, politically correct and wanting to make their students feel good, fills young people's minds with nonsense, convincing them that the rest of America left them behind, and that it's government's obligation to give them a living.

So you tell me: would you rather rely on government, whose track record I have laid out here, or would you rather follow Ted Nugent's idea? The latter has said some great stuff, including this on Sean Hannity's show a few years ago: "You want a cure for poverty? Get a job!"

I was thinking earlier today, before I read this article after coming home, that so many people think that 40 hours' pay each week should suffice for their living. So many people don't understand that if your labor does not earn you as much as you need, perhaps you need to labor more instead of using government to coerce your employer.

If a $5 per hour job isn't enough for a single mother to sustain her family, perhaps she needs to work a second job, no matter what that hypocrite John Edwards says is "unfair." And perhaps she shouldn't have gotten pregnant in the first place, or at least have fooled around with someone who'd be more responsible for his own children. Those notwithstanding, perhaps children when old enough need to get jobs to help out the family. My father was a promising track athlete in high school, but he had to give it up to work.

And even so, being "poor" in America today is hardly what poverty used to be. My father's family was poor and could afford only the cheapest food in scarce quantities. Once his mother told him, "I'm sorry, there's nothing to eat." That is poor. Today, poor Americans are considered "poor" because they can afford a place to live and enough food to eat, just not all the niceties of a middle-class lifestyle.

Blogging has been light again. In addition to my day job tiring me out again and writing my Intrade (aka Tradesports) newsletter on the side, I caught a very bad cold at the end of last week. I said good morning to one of my friends on Monday. Her back was turned to me as I entered the office pantry and greeted her, and she didn't recognize my voice at all.

However, this is not France, so for about $20 worth of cold remedies, I was able to go to work and be nearly as productive. Hopefully my latest Intrade newsletter will be published tomorrow: last week I talked a bit of economics, and this week I talk a bit about statistics.

Caught between Scylla and Charybdis

(Oops! I changed the time but forgot to change it to PM, and I didn't change the date either. Writing about the SOTU at 2 p.m. on Tuesday? Call me psychic.)

Transcript: President Bush's 2006 State of the Union Address

Transcript: Gov. Tom Kaine delivering the Democratic response

President Bush said some good things tonight in his State of the Union speech, but some bad things too. And as I fully expected, the Democratic response, instead of challenging President Bush on the actual Constitutional limits on the federal government, relied on partisan politics and new myths like "energy independence" and that the federal government should "serve us."

As I'm writing this up from my quickly typed notes, Fox News showed a clip that I didn't notice before. John Kerry turned to his left and said something to Dianne Feinstein. The side of his face was toward the camera, but Feinstein was facing it, and it wasn't hard to read her lips. She replied, "I know." Maybe he said something like, "That should be I up there!"

The President began well with a good indirect jab at the Democrats, criticizing the partisanship in Washington. The Democrats' behavior throughout Justice Alito's confirmation hearings was so disgusting that even Robert Byrd said, "The people of West Viriginia in no uncertain terms were, frankly, appalled by the Alito hearings." Byrd could have been stronger and said he was pointing fingers at unnamed members, but what would you expect from a partisan Democrat? Byrd could have a very tough campaign this time, so he needs to sound less extreme and more centrist. He's probably taking lessons from Hillary.

"We will choose to build our prosperity by leading the world economy or shut ourselves off from trade and opportunity. In a complex and challenging time, the road of isolationism and protectionism may seem broad and inviting, yet it ends in danger and decline." Take that, John Kerry. Wide and straight is the road of protectionist economics, and it leads only to impoverished economies.

"There is no peace in retreat, and there is no honor in retreat.... But our enemies and our friends can be certain: The United States will not retreat from the world, and we will never surrender to evil." As one who supported invading Iraq to topple Saddam and turn the most willing Iraqi people into friends, I'm naturally biased, but I rather liked that. Contrast Bush's refusal to surrender with the anti-war left who want to cut and run, come what may to Iraqis, and not because they have a sincere desire, but because it's to take the opposite position.

I was watching the speech on Fox News, which then cut to Charlie Rangel. He looked like he didn't particularly give a damn. Cut to John Kerry, whose countenance screamed, "Damn it, I should have been giving the speech tonight!"

"In less than three years, the nation has gone from dictatorship, to liberation, to sovereignty, to a constitution, to national elections." As I wrote last March, even the United States, after declaring independence in 1776 and formally gaining it in 1783, had much civil unrest (to the extent that George Washington thought a civil war was imminent) and an ineffective federal government until 1788. With our help, Iraqis have accomplished so much and so fast that it borders on miraculous.

"Fellow citizens, we are in this fight to win, and we are winning. The road of victory is the road that will take our troops home. As we make progress on the ground and Iraqi forces increasingly take the lead, we should be able to further decrease our troop levels. But those decisions will be made by our military commanders, not by politicians in Washington, D.C." Very good: peace through victory.

"...there is a difference between responsible criticism that aims for success and defeatism that refuses to acknowledge anything but failure. Hindsight alone is not wisdom. And second-guessing is not a strategy." Another good jab at the anti-war Democrats. God knows we've made tactical errors in Iraq, but that is the nature of war. My father reminded me more than once how we bombed our own troops in Italy during World War II. It's one thing to examine mistakes and try to improve our military -- it's another to say that because we made mistakes and will inevitably make mistakes, we should never go to war and simply surrender.

"...the leaders of Hamas must recognize Israel, disarm, reject terrorism and work for lasting peace." I fear that's just a pipe dream. Hamas is all about working toward the destruction of Israel, using terrorism against innocent civilians.

"Liberty is the right and hope of all humanity." A bit of a platitude, but good to inject.

"...Iran, a nation now held hostage by a small clerical elite that is isolating and repressing its people. The regime in that country sponsors terrorists in the Palestinian territories and in Lebanon, and that must come to an end." With all the focus on Iran's attempt to develop nuclear weapons, I'm glad Bush reminded us that Iran's very government has long since been a major sponsor of global terrorism.

"I urge members of Congress to serve the interests of America by showing the compassion of America." I sighed here, because this compassion is the false notion of government charity, which of course is paid for by other people.

"So to prevent another attack -- based on authority given to me by the Constitution and by statute -- I have authorized a terrorist surveillance program to aggressively pursue the international communications of suspected Al Qaida operatives and affiliates to and from America." I more than sighed here, because not only does the Constitution of the United States not give such powers to the executive branch, the Fourth Amendment requires warrants. In these days of instant digital communications, obtaining a warrant within minutes should not be difficult.

Gathering intelligence on terrorists is certainly essential. I and other libertarians (currently derided by many conservatives as "civil liberties Chicken Littles") do not oppose the intelligence gathering, but the methods. As someone recently asked me rhetorically, why won't the administration submit requests to FISA? Are there so many terrorist-connected calls coming out of America that it would overwhelm the system? Is the administration is trying to save taxpayer dollars by cutting down on paper usage? Or are they not wiretapping who they say they are, so no court (even FISA) would actually grant such warrants? I'll also add, in all fairness, the possibility of an overzealous and misguided attempt to protect Americans.

The camera cut to Hillary Clinton, the queen of state-worshippers, who was smiling insincerely and slightly shaking her head.

"Our own generation is in a long war against a determined enemy, a war that will be fought by presidents of both parties who will need steady bipartisan support from the Congress. And tonight I ask for yours. Together, let us protect our country, support the men and women who defend us, and lead this world toward freedom." The camera cut to Hillary again, who was no longer smiling and clapping just halfheartedly.

"In the last two-and-a-half years, America has created 4.6 million new jobs -- more than Japan and the European Union combined." That was a sobering statistic illustrating Japan's travails (and not from a lack of effort) and the EU's stagnation (which is from a lack of real effort in reforming their tax policies and welfare states).

"In a dynamic world economy, we are seeing new competitors like China and India. And this creates uncertainty, which makes it easier to feed people's fears. So we're seeing some old temptations return. Protectionists want to escape competition, pretending that we can keep our high standard of living while walling off our economy." I very much liked this. Bush can talk like a real free-trader when he wants, but he's disappointed me a few times with things like steel tariffs.

"We hear claims that immigrants are somehow bad for the economy, even though this economy could not function without them." Though our welfare state attracts many immigrants who want a free ride, that is all too true. Many illegal immigrants really do do the jobs that Americans won't, and they're people who simply want to come to this country peacefully and work hard.

"All these are forms of economic retreat, and they lead in the same direction: toward a stagnant and second-rate economy." The road goes in only two directions, and the other way is toward prosperity.

Bush touted his tax cuts, as he should have. "In the last five years, the tax relief you passed has left $880 billion in the hands of American workers, investors, small businesses and families. And they have used it to help produce more than four years of uninterrupted economic growth." That's $880 billion spent by people on what they judged was necessary and efficient, not politicians' latest projects.

I still maintain that the timing of Bush's tax cuts was a stroke of luck, otherwise our very mild recession (unemployment not even at 7%, when "normal" unemployment in a stagnant but "happy" economy like France's is 10%!) would have been much worse. Bush added, "I urge the Congress to act responsibly and make the tax cuts permanent."

I would like to add that I urge Congress and the President "to act responsibly" and cut federal spending -- by a lot. When Bush spoke of "another $14 billion next year," I could only laugh bitterly and say, "Big deal!" That drop in the bucket will make no difference in the deficit, let alone halving it by 2009.

Once Bush mentioned the word "earmarks," McCain vigorously applauded. Bush then called upon Congress to give him the line-item veto, which Clinton briefly had. I fear that, even with a Republican Congress, President Bush expressed the same hopeless desire that his father did.

Bush then turned to massive growth in "entitlements" (how I hate that term, because it implies obligation on government's part). By 2030, nearly 60% of the federal budget will be on Social Security, Medicare and Medicaid. To put it in perspective, our current entitlement spending is about $1 trillion out of a $2.5 trillion federal budget, and at 60% it would be an even more staggering $1.5 trillion. If you follow that link, one error I'd like to note in the newspaper article is that the $2.2 trillion figure is budgeted federal spending, but actual federal spending in 2005 was $2.47 trillion.

"Congress did not act last year on my proposal to save Social Security, yet the rising cost of entitlements is a problem that is not going away. And with every year we fail to act, the situation gets worse." Good, very good. Emphasize that the longer we delay, the more wealth we lose and the more painful we make reform.

Then Bush said, "So tonight I ask you to join me in creating a commission to examine the full impact of baby boom retirements on Social Security, Medicare and Medicaid." Oh, for the love of heaven, we already know the full impact! Numerous thinktanks of all political persuasions have all done projections and arrived at more or less the same figures about how many elderly will be retiring and how many workers will be supporting them. Where they differ is how to deal with it.

"One out of every five factory jobs in America is related to global trade, and we want people everywhere to buy American." It's a good statistic to show the regular American how free trade may send some of our jobs overseas, but we create new jobs to make things for our new trading partners.

But it really scares me Bush talks about "a level playing field." Is that a sly reference to China's alleged currency manipulation, which GM and Ford have recently used as an excuse for their failures?

Bush then got to the meat of his "compassionate conservatism": "Keeping America competitive requires affordable health care," and "Government has the responsibility to provide health care for the poor and the elderly." I again was reminded that he might sound Reagan-like in promoting tax cuts, but Bush is still a big government conservative.

"We will make wider use of health information technology to help control costs and reduce dangerous medical errors." If private companies could already use the technology to control costs, though, they already would have. Companies would jump at the chance because they could continue to charge the same prices, increasing their profits...at least until one company charged less to get more customers, and others followed suit.

He promoted "health savings accounts" as he did during the 2004 campaign, and that they should be "portable." But such accounts wouldn't be necessary if we didn't tax savings -- if we had a more sensible tax system that didn't discourage savings (which fuel investment), people could simply save that money without the need for more government regulations.

Medical liability reform is a must, but I have no confidence in this being passed anytime soon. It's been proposed for years, and nobody does anything significant.

What is significant is Bush's attempt to brag that, "Since 2001, we have spent nearly $10 billion to develop cleaner, cheaper and more reliable alternative energy sources." In other words, we've spent $10 billion so that we can use more expensive forms of energy, like wind, solar and water. If these were more efficient and cheaper than fossil fuels, then we'd already have been using them. The President sadly does not understand this aspect of the free market, because he continued in proposing his "Advanced Energy Initiative -- a 22 percent increase in clean-energy research at the Department of Energy to push for breakthroughs in two vital areas."

How much more of our money can the federal government spend so that we can use more expensive, less efficient ethanol? How much must we spend so we can use hybrid, electic and hydrogen-fueled automobiles, which, as our friend TKC pointed out, don't really save money overall?

Federal subsidies for ethanol are something I've criticized several times. When President Bush proposed federal funding for "additional research in cutting-edge methods of producing ethanol, not just from corn but from wood chips and stalks or switch grass," to "make this new kind of ethanol practical and competitive within six years," I wanted to tear my hair out.

What he said next sounds like a good idea, "to replace more than 75 percent of our oil imports from the Middle East by 2025," but as I pointed out here, it's not a bad thing to import something for cheaper than you can make it yourself. We could ban all imports of Middle East oil, but at what price? "By applying the talent and technology of America, this country can dramatically improve our environment, move beyond a petroleum-based economy and make our dependence on Middle Eastern oil a thing of the past." Again, at what price? When we've made oil so expensive with bad supply-limiting policies that we stifle our economy?

Next, the proposal of the "American Competitiveness Initiative," i.e. another big government program to skew the labor markets. "I propose to double the federal commitment to the most critical basic research programs in the physical sciences over the next 10 years." In other words, double the spending, but what exactly are the "most critical" programs? Who will determine them, business investors who carefully weigh what they're pouring their money into, or government bureaucrats who dole out other people's money while under the influence of industry lobbyists?

The "research and development tax credit" is a good start toward real tax reform, because it sounds general enough. Specific tax incentives are bad policy, simply because they skew markets by favoring one industry (or company) over another. What I want to see is a full repeal of all taxes on businesses, because they do not pay taxes. I explained toward the end of this entry that businesses merely pass taxes onto consumers, which requires overhead, so it's actually better to have individuals bear the full tax burden.

"We made a good start in the early grades with the No Child Left Behind Act, which is raising standards and lifting test scores across our country." Even conservatives like Michelle Malkin are more than dismayed at the huge mess and boondoggle of NCLB. With all those billions wasted, and schools in fact rarely left better off, how can we trust the federal government, as Bush called for tonight, "to train 70,000 high school teachers to lead advanced placement courses in math and science, bring 30,000 math and science professionals to teach in classrooms, and give early help to students who struggle with math so they have a better chance at good, high-wage jobs"? As I discussed here, schools cannot attract professionals who can make much more in the private sector, and many school districts are like NYC's, unable to pay those salaries because they're too busy paying so many bad teachers.

"I ask Congress to reform and reauthorize the Ryan White Act and provide new funding to states so we end the waiting lists for AIDS medicines in America." This is fundamentally redistribution of wealth, and it is self-defeating. Giving more money to states will encourage greater supply of the medicines, it is true, but it will divert pharmaceutical companies' efforts from other ventures that they'd have undertaken. They will make less medicine for influenza, less insulin, etc., so this is another example of government skewing the free market's determination of what is most important to people.

"Each of us has made a pledge to be worthy of public responsibility, and that is a pledge we must never forget, never dismiss and never betray." Actually, I thought he and Congress made pledges "to preserve and protect the Constitution of the United States."

And now for the Democratic response:

I was immediately suspicious when Tom Kaine began by mentioning his missionary experience. It's just like liberals to blur the important distinction between individual charity and government powers. Indeed, he wasted no time: "Our faith and values teach us that there's no higher calling than serving others. Our federal government should serve the American people."

Could there be any bigger poppycock in the world than liberals' belief in the nanny state?

"As Americans, we do great things when we work together." Perhaps he should ask, oh, Ted Kennedy, Chuck Schumer and most of the Democrats on the Senate Judiciary Committe, who disgraced themselves at Justice Alito's confirmation hearings.

"When there is a natural disaster, you expect a well managed response." A nice generality, but the federal government has no Constitutional authority to do what it has for Louisiana and Missippippi in Katrina's aftermath.

"...you have a right to expect government to be fiscally responsible, pay the bills and live within its means. Tonight we heard the president again call to make his tax policies permanent, despite his administration's failure to manage our staggering national debt...huge surpluses to huge deficits..." Again I ask, where was the Democrats' "fiscal austerity" were in the 1980s when they were refusing to go along with Reagan and cut non-military spending, when Democrats controlled Congress and produced several budget deficits higher than today (as a percentage of the economy)? Moreover, not only were Clinton's two "surplus" years achieved in teamwork with a Republican Congress, the surpluses were not that large as a percentage of the budget or the economy.

In fact, federal debt has increased but is not as bad many think. Forget the absolute numbers and look at Steve Conover's January calculations. U.S. federal debt as a percentage of GDP is quite favorable compared to other nations, especially those in our range but whose economies are performing dismally. I'll post more on this another time, but federal debt is actually quite manageable right now. How many people do you know have a high debt ratio, but also get consistent pay raises of nearly 4% a year, pay between just 4% and 5% interest on their loans, and can borrow all the money they want because there are so many who are offering to lend money?

Kaine's nonsense about the United States' "credit rating" reflects either his ignorance or his partisanship: a country's credit rating is reflected in the interest rates it pays on its government bonds. The still-low interest rates on Treasury bonds are why paying interest on the national debt no longer consumes a quarter of the federal budget, unlike in the early 1990s. Foreigners have become so eager to save their money by buying our bonds, and they earned the dollars by selling goods and services to us.

"Congressional Democrats have a plan to educate 100,000 new engineers, scientists and mathematicians in the next four years." Ah, Bush proposed 30,000, so the Dems will more than triple that to prove that they're still the premier party of big government!

"The White House has made efforts to cut Medicaid funds for our most vulnerable citizens. Our seniors were promised that the new federal Medicare drug plan would make it easier and cheaper to obtain their medication." The Medicare prescription drug plan was bad, but Democrats don't see why it really is. To them, it's bad because they were beaten to it by a Republican President and Republican-controlled Congress. In reality, it's bad because the drug plan, and in fact Medicare/Medicaid, are not part of the federal government's constitutional powers.

"In Virginia, we've worked to provide health insurance coverage for nearly 140,000 children who weren't covered four years ago." But the age-old question: at what cost? Who's paying for it, and what are the taxed people not buying (meaning jobs are destroyed all over, little by little) because they are paying for others' health care?

"...Republicans and Democrats alike have come together to fight the administration's efforts to slash Medicaid and push more costs onto the states." And that is why both parties can be so wrong. The federal government under the real U.S. Constitution, not Robert Byrd's revised edition that allows spending on whatever they damn well please, is one of specific, limited powers. The Tenth Amendment clearly states that everything else is reserved to the states or to the people.

Kaine drudged up the old "inaccurate information" accusation, a nicer way than some Democrats' claim that the President deliberately misled the American people, when Democrats (among whom were Bill Clinton, Al Gore, John Kerry and Ted Kennedy) since the late 1990s warned that Saddam was still pursuing WMD programs and couldn't be trusted. I look at the War on Terror this way: the Taliban are gone, a regime that harbored al Qaeda. Saddam has been toppled, a dictator who permitted al Qaeda and other terrorists to operate training camps in Iraq. Saddam also harbored Abu Nidal and gave money to Palestinian suicide bombers' families. Instead of two countries whose governments call for our destruction, Afghanistan and Iraq's governments are now friendly to the U.S., with about 50 million people now able to determine their own destiny. That sounds like pretty good success to me within four years.

What will be curious in the next while is the verifying of an Iraqi general's claims that Saddam sent chemical weapons to Syria on stripped-down civilian planes.

"Working together, we have to give our troops the tools they need to win the war on terror." Is that why John Kerry voted for the $87 billion before he voted against it?

"Last summer, I joined Democrats in Washington and in other states and called on oil companies to share in our sacrifice and return some of their record-breaking excess profits." The Democrats ignore the fact that if oil prices hadn't gone so high, oil companies and oil-producing nations wouldn't be working so furiously to develop new oil fields so that we don't run out of oil. For more on the Democrats' myth of energy independence, click here. For the reason that Hillary and other Dems' desire to tax oil companies to hell will backfire by causing even higher prices for consumers, click here.

Beware: the Democrats' plan for energy independence will only make everything more expensive for us all by reducing our access to less expensive fossil fuels, by increasing our use of expensive alternative fuels.

"But at the same time, we have to ensure that our homeland defense efforts begin with consistent federal action to protect our borders." After how many years, Democrats are starting to talk like Republicans on immigration.

"The administration is falling behind in other critical areas: preserving the environment, keeping our workplaces safe, protecting family farms, keeping jobs in America." The environment is doing quite well. Because of technological advancement that allows us to do more with less land, as well as conservation spurred by the free market, we don't need to cut down as many trees, and we thus have more forest today than at any time since the 1940s. How are workplaces not safe, other than post offices that seem to produce a lot of lunatics? "Family farms" tend to be old-fashioned and inefficient, and they should be allowed to go under or be bought out. And "keeping jobs in America" is the tired old Kerry line from the debates, which is ignorant economics.

When Kaine talked about "rights endowed by our creator," is he talking about what liberals claim as rights? The right to health care, i.e. getting medical care at others' coerced expense? The right to work, i.e. the right to force a business to continue your employment no matter how unfit you are? What liberals' "rights" come down to is using the government to help yourself to others' pockets.

If Kaine and other Democrats really do want to "replace the division that's been gripping our nation's capital," then absolutely "we need a change." But in no way, after watching their shameless antics since President Bush nominated Miguel Estrada, are "Democrats are leading that reform effort" like Kaine claimed. If Democrats are serious about eliminating the partisanship, then their leadership can start by obtaining Congressional resignations from, in no special order, Harry Reid, Nancy Pelosi, Hillary Clinton, Ted Kennedy, John Kerry, Barbara Boxer, Dianne Feinstein, Dick Durbin and Byron Dorgan (I include Dorgan for his belief in taxing oil company profits above $40 a barrel).

"...working to restore honesty and openness to our government, working to replace a culture of partisanship and cronyism with an ethic of service and results."

Before telling others to take the specks out of their eyes, Democrats would do well to remember names like Henry Cisneros, Ron Brown, Susan McDougal and Marc Rich.

How to cut taxes yet cost consumers in the same bill

My hand seems much better today, after my stupidity yesterday, good enough to type mostly normally. My friend and I never did get to Chelsea Piers last night, partially because we were in suits and dress shoes and not more suitable clothes, and he didn't want to aggravate my hand -- or was he afraid I'd lose my grip and send the club flying? We did go to Madison Square Park where, he's right, the Shake Shack serves a very, very good hamburger. At $7 for just a double cheeseburger (no fries or drink), it's more expensive than the fast food joints across the street, but there was no comparison in taste. To quote one of my favorite actors: "Mmhmm! This is a tasty burger!" (Go here for that sound clip and many others.)

That being said, here's something I'm surprised wasn't blogged about more yesterday. To mildly paraphrase Thomas Jefferson, were Congress to direct a marathon, runners would run backwards on moving sidewalks. Only in Washington, D.C, could a bill effectively nullify itself.

Senate Passes $60 Billion Tax Bill
Senate Passes $60 Billion Tax Bill Extending Tax Cuts, Raises Taxes on Oil Companies

WASHINGTON - The Senate passed a $60 billion bill early Friday that would extend expiring tax cuts and prevent roughly 14 million families from paying higher taxes through the alternative minimum tax.

It drew a presidential veto threat for raising taxes on oil companies.

Then again, President Bush threatened to veto this year's transportation bill, which I had criticized since March, if it exceeded the original plan of $284 billion. He then signed the final $286 billion package, because, well, some members of Congress wanted to spend as much as $400 billion...so $286 was more than originally wanted but a good "compromise" nonetheless.

Much of the bill, passed 64-33 after midnight, preserves tax cuts approved in previous years that are set to expire unless lawmakers keep them alive. "I call this bill the 'Tax Increase Prevention Act,'" said Sen. Rick Santorum, R-Pa.

Senate GOP leaders pledged that when the bill returns to the Senate for final approval, it will also extend the life of reduced tax rates for capital gains and dividends, scheduled to end when the calendar flips to 2009.

"Millions of Americans have benefited from these important tax policies either directly through lower taxes or indirectly through new and better jobs and greater economic security for families," said Treasury Secretary John Snow.

A good start. Now if only they'd do big tax cuts, and just as importantly, cut spending to match. Let's face it: $60 billion over five years is a drop in the bucket compared to federal spending just for this year alone. The federal government will spend $2.47 trillion just for 2005, and $14.3 trillion during fiscal years 2006 through 2010.

Democrats roundly oppose extending tax cuts for investment income. Senate leaders dropped an extension from their bill because a key moderate Republican balked at its inclusion.

Naturally! Democrats don't like it when any "rich" can actually keep money to invest in the economy, never mind that rich people's investment and consumption spending does trickle down to create jobs for everyone else. Democrats also dislike it when the middle class starts investing. After all, investing helps wean people from government's teat (especially regarding retirement), and worse, the mere act of owning a piece of a business transforms them into the mythical Democratic bogeyman of Evil Rich Capitalists. Exceptions, of course, are made for the likes of Ted Kennedy, John Kerry, John Edwards, Al Gore, et al.

The bill would stop a tax increase on about 14 million families in line to pay the alternative minimum tax next year. Originally a levy to prevent the wealthy from avoiding taxation, inflation causes the alternative minimum tax to reach into the pockets of more families every year. Lawmakers regularly enact walls to hold it back.

The AMT simply must go. Even if you believe in progressive levels of taxation, it's one of the stupidest ideas conceived, because there was no indexing for inflation.

Senate Republicans beat back Democratic attempts to use the bill to pinch oil and energy companies that have been reporting record profits while consumers pay high gasoline prices, efforts that reflected sensitivity on Capitol Hill to high gasoline prices and fears of skyrocketing home heating costs this winter.

The largest oil companies, nevertheless, would be hit with about $4.3 billion in taxes through a change in accounting methods. That provision drew a veto threat from the White House and upset some Western Republicans, who deemed it an unfair and political attack on the energy industry.

"Is it a windfall tax by another name?" said Sen. Larry Craig, R-Idaho.

So much for Republicans "beat[ing] back Democratic attempts to pinch oil and energy companies." When will both parties join Sen. Craig, and when will all politicians acknowledge the reality that businesses do not pay taxes, ever? Businesses are only tax collectors for the government: they necessarily pass along their taxes to the consumer.

While the most profusely bleeding heart "progressive" touts the idea of taxing businesses and redistributing the money to consumers, it will not happen because it does not account for incentive.

The Senate defeated a Democratic effort to impose a temporary windfall profits tax, 50 percent on the sale of oil over $40 a barrel, on profits not reinvested in increasing domestic oil and gas supplies. The money would have been returned to energy consumers through an income tax rebate. A 64-35 procedural vote defeated the effort.

"The major integrated oil companies have all of the gain. Who has all the pain?" asked Sen. Byron Dorgan, D-N.D., who then answered his own question: "All the American people who are trying to pay for the price of a tankful of gas or trying to figure out how they are going to heat their home in the winter."

The Senate also defeated an amendment to impose a windfall profits tax on oil companies and use the money to fund a low-income heating assistance program.

I initially debunked Dorgan's myth toward the end of this entry. His first error stems from the erroneous liberal misconception that companies hoard money. Increased profits for any company or any sector of the economy, no matter how great, never "take away" from or "deprive" the rest of the people, or the rest of the economy. Even if it's oil executives getting all the money, what will they do, sit on piles of it? No, they will by definition save and/or spend it. The money goes right back into the rest of the economy, so it's only a shift in spending patterns, with nothing lost.

Oil companies are simply in a cylical heyday, which will not last forever. In the late 1990s, it was technology companies. Once upon a time, it was horse breeders. In 17th century Holland, it was tulips. It's only a matter of which sector at the present time can best capitalize -- i.e. be the most competitive -- on consumer preferences.

In his economic ignorance, Dorgan doesn't understand the role of prices. Prices are critical (as I explained in "The power of markets") not just because they reflect a resource's scarcity and limit consumption, but because they encourage others to "get into the act" and thereby increase the supply. Prices cannot get so high, by definition, unless there are enough people willing and able to pay them. I think regular gasoline peaked at $3.43 down the road from me; today it was down to $2.49. If no one could afford it like some think, how could the station charge a dollar more only two months ago?

It's a nice-sounding progressive idea, certainly appealing to most people, that we can tax oil companies $5 per $50 per barrel oil, or $10 per $60 per barrel oil, then "rebate" the profits to people via income tax cuts. Oil companies could still make a profit, and people would effectively get part of the money back, right? As Gov. Schwarzenegger could say, "Wrong!" If oil is selling at $50 per barrel, oil companies would produce only the oil that's worth $45 to produce. This greatly restricts supply, because they won't bother to supply more expensive oil which certain consumers are willing to buy, and what happens when supply is reduced? The price goes up. Crude oil suppliers could also raise their prices to compensate for the taxes; do you think your grocery store would charge the same prices if it were hit with a 10% excise tax?

Either way, consumers will need that remitted money to cover the increased cost that federal controls produced. Ultimately this idea of "tax and rebate" is self-defeating: it does absolutely nothing, like a large part of federal spending, but establish additional Big Brother bureaucracy that brings consumers a step forward only to take them one (if not more) step backward. I still wonder how Dorgan proposes to rebate the money. How about someone like me, who spends very little on gas compared to my total income? My very situation demonstrates why an income-based rebate cannot work, and providing proof of purchase (like receipts) is logistically ludicrous.

Senators rejected other proposals that would have eliminated a tax incentive for major oil and gas companies that allows them a credit for exploration and development costs. An amendment to ban price-gouging during national energy emergencies declared by the president won the support of 57 senators but fell short of 60 votes needed to overcome a procedural hurdle.

Good and good. Removing a "tax incentive" is the same as increasing taxes, so once again, raising taxes on a business only means passing it onto the consumer. And have we still not learned from the 1970s that price controls lead to shortages?

The overall bill reduces taxes about $60 billion over five years, preserving many tax breaks scheduled to expire unless lawmakers keep them intact. Unlike a version scheduled for debate in the House on Friday, the bill would not extend reduced tax rates for capital gains and dividends. Congress lowered the maximum tax rate on that investment income to 15 percent in 2003, and many Republicans want to act this year to keep those rates in place in 2009 and 2010.

Investment in business allows them to expand and create new jobs, yet Democrats do their best to stymie any efforts to cut taxes on investment that encourage growth. It doesn't matter that the jobs go to lower income brackets; all the Democrats care about is that the tax cuts mean "rich people" can have more money.

The bill also would offer $7 billion in assistance to businesses and individuals hit by Hurricane Katrina and other storms, filling in details of President Bush's proposed Gulf Opportunity Zone.

Would this turn out to be anything like "Supplemental Terrorist Relief Act" loans that were supposed to be strictly for businesses affected by 9/11, some of which wound up at Dunkin' Donuts as far away as Vermont, Ohio and even Georgia? That's right: the New York Post has the full story, which I forgot to blog about last week. Now these were just loans: imagine how bad the grants might be. Would they compare to the infamous $2000 debit cards for Katrina victims, some of which were used to buy Louis Vitton and lap dances? What can I say: I predicted abuse from day one.

One Dunkin' Donuts franchise owner said he knew his business wasn't hurt by 9/11 but accepted the loan anyway. Another claimed his business, in Vermont, was hurt, giving an anecdote about people buying a coffee and two doughnuts before, but "probably" only a small coffee and one doughnut afterward. Then why didn't my aunt's wine store qualify for such a loan after 9/11, when people were buying less? Or was it actually that we were already in a recession, a very mild one which nonetheless influenced people to cut back on their spending?

Other owners claim they didn't know, that they simply borrowed the money for renovations. The banks claim they didn't know they were making STAR loans, just loans, but the article reveals their motive: "Banks had an incentive to hype the loans because the government reduced the traditional fee — saving some of the biggest lenders millions." So I guess nobody knew a damned thing, except the taxpayers who look at their paycheck stubs and wonder for what latest foolishness their earnings are appropriated.

Among many provisions extended in the bill are a deduction for state and local sales taxes, investment incentives for small businesses, a business research and development credit and a tuition deduction. Taxpayers would get new incentives to make charitable contributions at the same time that tax-writers put new curbs on charitable deductions deemed excessive.

As if this bill couldn't have anything more foolish: government wants to give people an incentive to donate to charity, but it will discourage the wealthy, i.e. those who have the most to give, from giving as much as they could. If a deduction is "excessive," how must government view the donation? Badly, as is the nature of big government: to tax you to hell and back, denying you the freedom to dispose of your earnings yourself, and spending on the money on what it says is best for you.

People in need of an appointment with reality, part II

Update: oops! I inadvertently switched the time from AM to PM. That has been corrected. The actual post time was indeed 3:47 this morning. (Yes, I was up too late. No, I don't really sleep much during the week.)

Previous: People in need of an appointment with reality

[Update: I originally said Paul Krugman continues to republish his columns on his personal site, which is incorrect. A couple of columns were published on pkarchive.org, but the Times stopped that.] We can see that Paul Krugman's done it again in his latest Times column. I finally got around to it, and I must say, Krugman plays the race card so skillfully that he makes Al Sharpton's hand look like only two pair. Having run out of economic spectres, he must now play the part of a shameless race-baiter.

By three to one, African-Americans believe that federal aid took so long to arrive in New Orleans in part because the city was poor and black. By an equally large margin, whites disagree.

Based on a principal subject of my previous post, I'm calling this Kanye West Syndrome: the slanderous nonsense that "President Bush doesn't like black people," that it had anything to do with the speed of the federal response.

I'm not the first to point out that for supposedly being racist, George W. Bush has appointed Colin Powell, Condi Rice, Janice Rogers Brown, and even Alberto Gonzales. Nor am I the first, but permit me to remind you, that Bill Clinton's administration was far more "white" than GWB's, yet the Clinton's were never accused of "not doing enough" for minorities.

The truth is that there's no way to know. Maybe President Bush would have been mugging with a guitar the day after the levees broke even if New Orleans had been a mostly white city. Maybe Palm Beach would also have had to wait five days after a hurricane hit before key military units received orders to join rescue operations.

After being castigated in print by the Times public editor, Krugman needs to tread lightly -- at least for now -- and cut back on outrageous claims. He'll still make others so improbable that they can't be dignified as musing fantasies, with the caveat, "The truth is that there's no way to know." It's a nice verbal trick to dismiss his critics preemptively: "Well I can't know for sure, but you can't either."

But in a larger sense, the administration's lethally inept response to Hurricane Katrina had a lot to do with race. For race is the biggest reason the United States, uniquely among advanced countries, is ruled by a political movement that is hostile to the idea of helping citizens in need.

Two whoppers in a two-sentence paragraph. The first one has no logical or empirical basis at all, while the second is an evolution in his standard Marxist rhetoric (which are necessarily a distortion of reality when it comes to Krugman). It's no longer his standard definition of American society as rich versus poor, capitalist owners versus the workers. Now he's turned it into white, racist capitalist "haves" versus black, exploited "have-nots."

People are said to relive the 60s, but Krugman takes the cake. Just what "political movement" is he referring to? I don't know about anyone else, but I can't recall the last time I saw "Let 'em starve" marches. What I do know is that Americans all over are donating untold millions to the Katrina relief efforts, which is true charity and helping one's fellow man. Charity is not sitting at home, comforted by the thought that Congress will do the dirty work for us via automatic withheld taxes and $60 billion appropriation bills.

I've written before that we must do charity ourselves, getting our hands dirty, and witnessing just how bad life can be. This is not to brag or make myself out to be a saint, but I've helped out at food pantries, and I've seen how poor some people can be. So many of those families were depending on us for every meal, and the rest of us need to witness that first-hand. No amount of government social spending, with its bureaucratic overhead and inherent waste, can compensate for shocking people into voluntarily donating their time and money, once they see there are people in need. Now, I rarely bring up religion, but as a Christian, I worship a God who taught us to help each other directly, not call upon our leaders to tax us more and institute programs.

Imagine how much more we could donate were it not for all the taxes we pay, and how much more efficiently our money would be spent if we entrusted it to the Red Cross, Salvation Army, and others we know would use it competently. Don Luskin recently wrote about the $250 million that will be spent on "legal and mental health counseling." How many houses could have been rebuilt with that, or roads paved, or families fed? The reasoning behind that spending provision befits no one but a 21st century Marie Antoinette: families may have to ration their food, with public shelter their only refuge, but let them have good shrinks.

Notice that Krugman curiously used "citizens" instead of "people." If a Republican had said it that way, he'd be accused of racism, xenophobia, and ultra-radical right-wing fascist-nationalist extremism.

If any single political thought "rules" the country, it's the erroneous belief in government paternalism, that government's role is to protect and take care of us when anything goes wrong, and that we're "entitled" to government help. Though that didn't germinate with FDR, it certainly saw full flower once the New Deal got underway. So the reality is that the U.S. is hardly the unique example Krugman thinks -- most of Europe is far better at the welfare state than we are.

Race, after all, was central to the emergence of a Republican majority: essentially, the South switched sides after the passage of the Civil Rights Act. Today, states that had slavery in 1860 are much more likely to vote Republican than states that didn't.

And what about all those years, from after the Civil War to the 1960s, that formerly slave states were voting solidly Democratic?

Thank goodness Krugman doesn't teach history, although when you look at some of his bad economics and economic Armageddon predictions, you wonder how he can teach that. The South's period of Jim Crow, lynchings and other terrible crimes was principally while Southern states were Democratic strongholds. Political parties are quite irrelevant to the terrible crimes that were indeed racially motivated, but if Krugman wants to make this a partisan issue, let's be fair.

I should note that his second sentence is his common error of assuming that correlation is causation, like when he said "And don't forget that President Clinton's 1993 tax increase ushered in an economic boom." (I never noticed until now that Krugman violated the Times' stylistic standard, calling him President Clinton instead of Mr. Clinton.) The South became staunchly Democratic for decades as a reaction to the generally Republican North, but not entirely because of slavery, or that the Republican North had devastated much of the South. It was after several Southern states initially refused to ratify the Fourteenth Amendment. The Union Army was sent to occupy their capitals and effectively institute martial law, until the legislatures would "cooperate." I discussed this at length in my entry "Historical Revisionism" -- referring to Republican historical revisionism.

And who can honestly deny that race is a major reason America treats its poor more harshly than any other advanced country? To put it crudely: a middle-class European, thinking about the poor, says to himself, "There but for the grace of God go I." A middle-class American is all too likely to think, perhaps without admitting it to himself, "Why should I be taxed to support those people?"

I can honestly deny it, and I'm also unaware that I've treated any poor people "harshly."

Again, Krugman's pulling another "correlation equals causation" trick. Of the world's advanced economies, only the U.S. has a very racially heterogeneous population. So according to Krugman, since the U.S. has poor people, and some are minorities, their conditition must be the product of racism. Krugman will accept nothing else but some mythos to support his agenda. Instead of trying to find the spectre of Jim Crow, how about we take a cold look at the last 40 years of the "War on Poverty"? It's virtually reared black Americans in a new form of slavery: dependency on government.

To put it bluntly, a typical middle-class European doesn't have enough money left after taxes to think about giving significantly to charity, nor do most Europeans today grow up with a belief in private charity (see above where I talked about the necessity of getting your hands dirty). Meanwhile, the middle-class American thinks, "Why should I be taxed to support people who could support themselves?" Considering that Americans give $250 billion annually in private charitable donations, how can anyone even insinuate that we're stingy, let alone slander us like Krugman is doing?

Or would Krugman say I treat subway beggars "harshly" because giving them handouts is rarely a good idea? Remember the one who said "The government doesn't give me enough?" This can only demonstrate the superiority of private charity, because only the individual, in the actual process of giving money, can determine whether the recipient is worthy. Government, I've said before, only cares about enrolling the most people so the programs can appear successful, regardless of their efficiency or results.

Above all, race-based hostility to the idea of helping the poor created an environment in which a political movement hostile to government aid in general could flourish.

What poppycock! It's the same outright misrepresentation that Krugman used in the Great Social Security Debate. His statist attitude is that if government doesn't do it, nobody can. But like St. Paul said at the end of 1 Cor. 12, "yet shew I unto you a more excellent way": that people help themselves and each other. This is the love, the true love, that he talked about in chapter 13.

By all accounts Ronald Reagan, who declared in his Inaugural Address that "government is not the solution to our problem; government is the problem," wasn't personally racist. But he repeatedly used a bogus tale about a Cadillac-driving Chicago "welfare queen" to bash big government. And he launched his 1980 campaign with a pro-states'-rights speech in Philadelphia, Miss., a small town whose only claim to fame was the 1964 murder of three civil rights workers.

Krugman talks about the "welfare queen" as if such people didn't exist, but it's only natural, because he refuses to believe that big government can fail. There were three families on my block, when I grew up in a working-class neighborhood, that abused the system; I should know as much as anyone how government "charity" never bothers to scrutinize the recipients.

Under George W. Bush - who, like Mr. Reagan, isn't personally racist but relies on the support of racists -

Which is worse, to receive the support of a few people with whom you disagree, or the people of a certain state who consistently reelect a certain elderly veteran of the Senate with a horribly racist past?

I cannot grasp the convoluted logic of insinuating bad things about an elected official just because of the bad traits of an exceedingly few that voted for him.

the anti-government right has reached a new pinnacle of power. And the incompetent response to Katrina was the direct result of his political philosophy. When an administration doesn't believe in an agency's mission, the agency quickly loses its ability to perform that mission.

This is laughable at best. While Bush has a few policies I agree with, in all frankness, he's hardly the staunch anti-government crusader that Krugman makes him out to be, nor is the U.S. dominated by such an ideology. I'm not sure which Bush speech that Krugman heard the other night, but it certainly sounded to me like a speech about big government and why we should love it. Krugman won't support that kind of big government, though, as Don Luskin recently explained: "...he loves it when his party controls it, and hates it when anyone else does."

By now everyone knows that the Bush administration treated the Federal Emergency Management Agency as a dumping ground for cronies and political hacks, leaving the agency incapable of dealing with disasters. But FEMA's degradation isn't unique. It reflects a more general decline in the competence of government agencies whose job is to help people in need.

The real blame lies with Louisiana officials, who were the ones that delayed in asking for federal help (notwithstanding my opposition to a federal agency like FEMA).

However, while not speaking specifically, I won't deny that certain appointments are purely political. That's an unavoidable symptom of...big government.

For example, housing for Katrina refugees is one of the most urgent problems now facing the nation. The FEMAvilles springing up across the gulf region could all too easily turn into squalid symbols of national failure. But the Department of Housing and Urban Development, which should be a source of expertise in tackling this problem, has been reduced to a hollow shell, with eight of its principal staff positions vacant.

And like a good statist, Krugman is more worried about having enough bureaucrats, rather than qualified and good ones who will actually do something. Just what would these eight positions serve? Would they travel to New Orleans and physically help in the construction, or would they sit back in Washington, collecting paychecks while poring over superfluous paperwork?

But let me not blame the Bush administration for everything. The sad truth is that the only exceptional thing about the neglect of our fellow citizens we saw after Katrina struck is that for once the consequences of that neglect were visible on national TV.

And just how did we "neglect" them? Perhaps because big government was too slow to respond, while Louisiana officials turned away the Red Cross and Salvation Army from helping?

Consider this: in the United States, unlike any other advanced country, many people fail to receive basic health care because they can't afford it. Lack of health insurance kills many more Americans each year than Katrina and 9/11 combined.

But the health care crisis hasn't had much effect on politics. And one reason is that it isn't yet a crisis among middle-class, white Americans (although it's getting there). Instead, the worst effects are falling on the poor and black, who have third-world levels of infant mortality and life expectancy.

As Don Boudreaux so well pointed out last January, "...lack of health insurance is not the same thing as lack of health care – and much health care is readily affordable even without a shred of insurance; and losing a job in America doesn't mean starvation and death."

Far more people die each year than from Katrina and the 9/11 attacks not because they couldn't get health care, but because they failed to take care of their own health. Oh, there's yet another thing for which Krugman wants a big government solution. But I thought this "crisis" was not just among the "poor and black."

I suggest that Krugman look at page 6 of this PDF datasheet from the Population Reference Bureau, keeping in mind that American blacks' life expectancy is about 72 years. There are a few countries that might be considered Third World and have life expectancies around 70 years, but the truth is that blacks in the U.S. have far, far better life expectancies than practically all Third World nations.

I'd like to believe that Katrina will change everything - that we'll all now realize how important it is to have a government committed to helping those in need, whatever the color of their skin. But I wouldn't bet on it.

Do Americans give $250 billion to charity every year with any concern for the recipients' skin tone? Haven't virtually Americans, perhaps not to the recently projected extent and though big government isn't the way to do it, supported massive federal assistance to Katrina victims?

"We want to get them enrolled"

That's easy to say when it's not his money being spent.

Child Insurance Program May Face Crunch

A government program that provides health insurance for poor children could run into money problems in several states over the next two years unless Congress acts.

Six to 14 states will use up their share of federal money for the State Children's Health Insurance Program during the 2006 budget year, according to a report by the nonpartisan Congressional Research Service. By the next year, that number will range from 12 to 20 states.

The range occurs because analysts looked at two scenarios. One projected low demand for the program; the second factored in high demand.

Once states spend their federal share, they either have to use more of their own money to provide insurance coverage or find ways to reduce expenses by cutting services. Neither is a particularly attractive option for state legislatures.

Sen. Ted Kennedy, D-Mass., said on Friday that he planned legislation that would seek to add $1 billion to the program, known as SCHIP. The money had been allocated, he said, but was not spent by a deadline, so it reverted to the treasury on Sept. 30.

"It is unconscionable that children will go without health care because funds meant for the SCHIP program were not kept in the program," Kennedy said.

The program, created in 1997, now serves about 6.1 million people who would not otherwise have health insurance. Enrollment has increased steadily, though the pace has begun to slow in the past year....

The children in the health insurance program typically come from families whose income is too much to qualify for Medicaid but who cannot afford private health insurance.

When lawmakers created the program, they set aside $40 billion over 10 years. Most states have been unable to spend their share, which was particularly true in the program's earliest years.

After three years, states must return any unspent federal dollars so the money can go to states that have used up their federal share.

So far, the redistribution has prevented any widespread shortfalls. Only Rhode Island has exhausted all of its federal money coming through the program.

Soon, however, the redistribution will not be enough to cover the shortfalls in some states. That is because the pool of unspent money is shrinking as the program takes hold and enrollment expands, according to the report....

Ron Pollack, the executive director of Families USA, said he hopes the program's bipartisan support in Congress would lead to an expansion.

"I don't know of any Republicans or Democrats who don't like the program," he said. "I think they all like it." ...

"Remember, there are 6 million children eligible for this program who are not getting it," he said. "We want to get them enrolled."

This illustrates so many things gone wrong with big government that it's hard to decide where to begin.

First, notice how Pollack's concern is expanding the program and increasing enrollment, but not the quality of assistance the program provides. That's because bureaucrats and social activists measure social programs' success by participation levels and dollars spent -- volume, not results. Many such programs, especially if they cost "only" a modest few billion per year, enjoy support from both major political parties. Nobody wants to run for re-election against charges of cutting funding for poor children's health care.

But that's another thing people don't understand: as Don Boudreaux so well put it, lack of health insurance is not the same thing as lack of access to health care. Now, insurance by definition is a huge moneymaker for the insurers, not the policyholders. Even if big government "charity" were constitutional, paying for insurance policies is truly wasteful. Government would do better to pay for direct expenses, instead of wasting money on insurance premiums.

The next problem is how some states greatly benefit from the rest. This Tax Foundation report shows how uncontrolled federalism has created huge imbalances in how much certain states' citizens pay in federal taxes versus how much they receive back in federal spending.

The final problem is that government is trying to be charitable at all. By indoctrinating most of us in its public schools, government makes us feel entitled to others' money when we're faced with financial hardships, because we supposedly all pay our taxes. "I pay my taxes too," however, is not a good enough excuse, particularly when you receive more from the government than you pay in. Sadly, as Dr. Richard Ebeling, president of FEE, once explained to me, it's practically impossible to live without government making you the recipient of others' money: "Government makes criminals of us all."

The utilitarian argument against government charity is that it often fails miserably by giving to the wrong people, including giving Viagra to convicted sex offenders, and even when it gives to the right people, it's far less efficient than private charity would have been. Like many others, this insurance program encourages as many families as possible to sign up, even if they may not need it. Because the social program seems to be "free" when it actually is not, those enrolled will tend to use it unnecessarily. A doctor visit will be mandatory for the tiniest bump or ache, because, after all, the enrollees don't have to foot the entire bill.

As I explained toward the end of this entry, I do not argue at all against charity. I simply state that government has no right to dispose of anyone's money even for the most charitable of purposes, pointing to several decades of government social programs that have produced failure after failure. Charity should be the individual's decision, and there is no reason why it can't work better than government. When a child is sick and the family cannot afford proper medical care, whatever happened to the American ideal of the community taking up a collection for them? This has the advantage of the community determining that the child actually needs such care, and that the family genuinely needs it. Government, though, only wishes to dispose of the money because it makes the program appear successful. I've said before that government charity does the dirty work for us, sanitizing the process of caring for each other, and blinding us to how bad life can be. Government makes it too easy for us to be charitable. Private charity, though, makes us directly share each other's pain, and strength too, that part of community tradition which was once a very strong element of the American character.

The umpteenth failure of government charity

"Your tax dollars at work." "The fleecing of America." If I could paint, I'd create an image akin to the classical paints depicting Zeus carrying off Ganymede. I'd call mine, "The rape of the 9/11 Victims Fund."

The New York Post had this story yesterday:

BURNING UP 9/11 MONEY

June 12, 2005 -- Sept. 11 widow Kathy Trant has turned her Long Island home into a $2 million showcase, traveled from the Vatican to Las Vegas, blown $500,000 on shoes, and bought breast jobs for pals and even strangers.

In the 3 1/2 years since her husband, Dan, died in the World Trade Center attacks, she has burned through nearly all the more than $5 million she received in compensation and donations. She says she treated the millions "like Monopoly money."

The mother of three has become a self-described "shopoholic" - and her compulsive buying has left her with intense guilt, shame and sadness.

And this follow-up story today:

LIKE MOM, BUY-BINGE DAUGHTER SQUANDERS 9/11 CASH

June 13, 2005 -- The daughter of a 9/11 widow who has burned through $5 million in victim compensation money is battling the same destructive shopping addiction as her mom.

Jessica Trant, 22, said she stays up all night buying clothes, designer handbags and other goodies online because she has suffered from insomnia since losing her dad on Sept. 11.

"If you're feeling upset, this stuff looks good — it makes you feel good inside because you're battling so many demons," she said.

Call it what you will, but this is an outright travesty. As with all successful scams, like the old saying goes, we the taxpayers might as well "kiss the money goodbye." Did we the taxpayers "donate" money to "help" the victims so that they can squander hundreds of thousands of dollars on designer shoes and handbags? Did we the taxpayers act "with charity" toward them so that they can fund boob jobs for friends and even strangers?

Private charity would have never failed like this. Or as I blogged about before, private charity would have never given Viagra to sex offenders, which Medicaid did. Private charity carefully scrutinizes each applicant, and it knows the temptation to squander one huge lump sum.

Update: before someone accuses me of being cold-hearted and callous toward the Trants, let me add this. Like most, I have grieved heavily for the 9/11 victims. Clearly no amount of money could replace Mr. Trant, but it is still wholly irresponsible for them to squander the money that we the taxpayers were coerced into giving them.

In the aftermath of the 9/11 attacks, ignorant of economics and the Constitution, I thought the federal "help" to the victims' families was a good idea. I thought that it was only right that "society" help them out. I reasoned, "Why not government, since it has the power?" Fortunately, I changed in the interim; I can't be sure when, but it was before graduating a year ago with my economics degree. The Keynesian-progressive path, espoused by a couple of my professors, touted the power of government. Another professor championed the libertarian path, which I eventually chose.

My error, I came to realize, was to confuse society with government. They're not the same, of course, but big government would have you believe otherwise (and many today do). Big government claims that it's merely "an agent of society" in taking money from most taxpayers money and giving it "charitably" to a relative few. Then when government "charity" fails, which it frequently does (most notably the War on Poverty), it excuses itself by claiming, well, at least it helped more people than private charity could have.

This is indeed fallacious. Russell Roberts quoted Bastiat, who wrote in The Law that if no law compels people to act charitably, "Does it follow that we shall then cease to associate with each other, to help each other, to love and succor our unfortunate brothers, to study the secrets of nature, and to strive to improve ourselves to the best of our abilities?" Of course not. People hardly need law to force them to do good acts, and Adam Smith expressed a great deal of optimism in individual charity:

How selfish soever man may be supposed, there are evidently some principles in his nature which interest him in the fortune of others and render their happiness necessary to him though he derives nothing from it except the pleasure of seeing it.

True charity is about extending a helping hand to truly deserving recipients, until they can support themselves; it's not about enabling a family to live more luxuriously than 99% of society. What about the widows and children who had a nice house but no life insurance, no income of their own, and no net worth apart from the house? Private charity would consider that, but it would also insist that the recipients live more frugally. True charity is about short-term assistance so that a widow can sell the expansive home and move the kids into a house they can afford. It's not about scaling benefits proportional to income so that the kids can still go to posh private schools and horseback riding lessons.

That paragraph is so obvious, isn't it? Then why do we persist with a government that does so poorly when acting "charitably"? Why did government give millions of dollars to millionaire families who already had tremendous wealth and generous life insurance policies?

I've linked to this before, but it's worth linking to again. What I especially appreciate about Dr. Williams is that his wisdom includes a deep understanding of the Constitution and our Founding Fathers.

Walter Williams: Not Yours to Give