Romney's Stimulus Plan

I detailed some shortcomings of Obama's economic plan last week. Now let's talk about what should be done instead. Mitt Romney wrote a column last week, detailing his prescription for our economy, and most of it is pretty agreeable. The basic difference between Obama and Romney on the economy boils down to government spending vs. tax cuts (Keynesian vs. supply side economics).

Romney cites empirical research that indicates that a $1 increase in government spending (i.e. a stimulus check) will increase GDP by between $1 and $1.40. $1 in tax cuts, on the other hand, increases GDP by $3. This is a major blow to the Keynesian model.

Why do tax multipliers exceed spending multipliers? Here's the basic idea: tax cuts give people more money to spend, which stimulates demand (the essence of Keynesian prescriptions) but unlike increased government spending (which increases demand in the same way), lower taxes encourage investment, which generates jobs and more production. For example, let's say Obama lowered payroll taxes, effectively lowering the cost of employing people. Using our basic supply/demand curve, we know that lower labor costs will increase demand for labor. Workers will take home more of their pay, which they will spend, driving up demand for goods and services, and companies will hire more people.

Romney agrees that infrastructure projects should be a high priority, but notes that the economic benefits of these projects are no where near immediate because these projects take a while to complete. Romney warns against excessive regulation and the Employee Free Choice Act that would "virtually impose unions on small business by eliminating the right of workers to vote by secret ballot in the workplace. This 'card check' payback for the AFL-CIO’s support of the Democrats would devastate business formation and employment".

Romney does support government spending on "basic research" for technologies that will make us more energy dependent. I maintain my basic argument on this subject: while the impact on global warming is debatable and energy independence would be great, this government spending is not likely to help the economy in the long term and definitely won't help in the short term.

All choices in government require trade-offs:

There is a danger that new spending and deficits will lead to runaway inflation, flight from the dollar, and another economic crisis. It is essential, therefore, that Congress and the president commit to reform entitlement spending as soon as the economy recovers. With the footing of our long term economy at risk, with entitlements already reaching 60 percent of federal spending and with baby boomers nearing retirement, this can be delayed no longer.

Unfortunately, elections have consequences and Obama is likely to choose ideology over sound economics.

One-Hour Church Services

New post on Stuff White Christians Like: One-Hour Church Services. 

The Palins and the Kennedys

Apparently it's big news that Sarah Palin's daughter's boyfriend's mom was arrested for abusing Oxycontin. Why this is making headlines is beyond me. 

The highly qualified Caroline Kennedy ("I care about a lot of things") is also in the news, as she is likely to be appointed to Hillary Clinton's Senate seat. I haven't heard anyone mention recently that she has an uncle who, on a summer evening in 1969, left a party (completely sober, I'm sure) with a young female staffer in his car, "parked" for a while in a secluded area, and then drove off a bridge into a channel at Chappaquiddick Island, MA. He swam to safety and then did what any of us would have done: he waited until the next day (after the body was discovered) to tell the police. There were several houses with people home close by and it was later determined that she probably survived for about 25 minutes after the car was submerged. He probably reasoned that avoiding the damage that drunk-driving and adultery would do to his political career was more important than the life of Mary Jo Kopechne (he overestimated the Democratic voters of Massachusetts). Authorities declined to press charges for manslaughter. I'm sure that had nothing to do with the fact that Caroline's uncle was a United States Senator. A few years prior, his brother vacated the Massachusetts Senate seat to become President and arranged for Caroline's uncle to be appointed to the seat, where Ted Kennedy remains to this day. 

More Expensive Energy

President elect Obama's plan for the economy seems to center on two tactics: a huge ($1 trillion) stimulus package and "investment" in new energy sources and more fuel efficient technology. Neither encourages production and both are extremely inefficient uses of our tax dollars.

A big stimulus check, which will only go to low and middle-income Americans, is intended to stimulate demand for goods and services - "priming the pump", if you will. Classic Keynesian economics. Unfortunately, there are easily foreseeable problems with this plan. Economists favoring this approach are counting on a huge multiplier effect: you spend your check to buy x, the guy who sold you x uses the profits to buy y, and so on. The increased demand for goods and services caused by the stimulus is supposed to encourage more production of goods and services to meet this demand. However, in these economics times, low and middle-income people will likely save the money or use it to pay down debt instead of running to Best Buy. Saving and paying down debt eliminates the multiplier effect, does nothing to stimulate the economy and increases the national debt.

The trillion dollars has to come from somewhere and it is likely to come from higher taxes on people making too much to get a stimulus check in the first place and from higher corporate taxes. Aside from the injustice of this income redistribution, higher taxes on the most productive workers and corporations discourages production and job growth. Tax cuts also get more spending money in people's pockets, but have the added benefit of encouraging production and job growth.

Obama plans for huge spending increases on alternative fuels and green technology. He claims that these green jobs will boost the economy. Absolutely wrong headed. We can argue about the wisdom of spending billions on policies that will have zero effect on the climate another time. If Obama's green policies are about global warming, then he should sell them as such, but don't tell me they are good for the economy. Markets are very good at finding the best price for energy. For our cars, you can't beat gasoline. However, our government pays huge subsidies to add ethanol to the mix. Subsidies for alternative energy increase the amount we as a country pay for energy. Every extra dollar we spend on energy is a dollar we can't spend on education, health care, or a hat, a big ol' hat with a bill that goes buuuup (sorry, but this blog has been movie reference deficient of late).

Investing in green jobs is simply taking the tax payers' money and spending it on things they wouldn't choose to spend their own money on. Green jobs do nothing to add to the production or standard of living of the American people. Paying a researcher $100k a year to find new ways to increase our energy costs does not help the economy. It's little different (from an economic perspective) from paying someone to dig ditches and then fill them in again. Sure, you created a job, but you had to take money from other people to do it and you gave them nothing back in return.

Candlelight Ceremonies

New post today on Stuff White Christians Like: Candlelight Ceremonies.

Chicago Change

Ah, the change we can believe in. Obama didn't talk to Gov. Blagojevich about the Senate seat? Obama is unaware of anyone on his staff talking with Blago about the seat? Bull and more bull. Why wouldn't he talk with Blago about the seat? If Obama and his staff were completely uninvolved in this crime, they need to start talking, because it appears that Obama's chief of staff Rahm Emanuel has been recorded discussing the issue with Blago. Based on the reaction so far, as I see it there are three possible scenarios: 

1. Rahm talked with Blago about the seat, and the governor proposed a three way deal in which Obama favorite Valerie Jarrett would get the Senate seat, Blago would get a high paying job with a union, and Obama would do favors for the union once president. The Obama camp refused and contacted the department of justice but is holding off on telling everyone this for unknown reasons. 
   
2. Rahm and/or Obama talked with Blago and Rahm talked the deal over with Obama, who refused but didn't contact Patrick Fitzgerald. 
3. Rahm and Obama were continuing to negotiate with Blago, but he found a better deal with Congressman Jesse Jackson Jr., who held a fundraiser for Blago a week ago, raising him $1 million. 

One thing seems certain, Obama is lying. Good start Obama. Welcome to Chicago-style politics, America.

Newsweek and Gay Marriage

Newsweek makes "The Religious Case for Gay Marriage" with its cover story this week. In it, Lisa Miller argues that the Bible is ambiguous on the subject and that the Bible was intended for a different time, so it doesn't really apply today anyway. It hypothesizes that David and Jonathan were lovers, yet conveniently overlooks Ephesians 5 and Romans 1:26-27. 

It's not a big surprise that Newsweek would advance a liberal position on its cover without including any space for the other point of view. However, Newsweek's editor, Jon Meacham's response is noteworthy. Meacham argues in his "the Editor's Desk" column that resorting to "biblical authority is the worst kind of fundamentalism" and "to argue that something is so because it is in the Bible is more than intellectually bankrupt - it is unserious, and unworthy of the great Judeo-Christian tradition." He writes that people used to use the Bible to defend slavery, yet fails to note that abolitionists also used the Bible to rid the western world of slavery. 

Meacham says the religious case for gay marriage "begins with the recognition that sexual orientation is not a choice - a matter of behavior - but is as intrinsic to a person's makeup as skin color." Sexual orientation may not be something you choose, but it is certainly not a behavior. Sexual activity is a behavior and a choice. People who are attracted to their own gender can choose celibacy over a lifestyle prohibited by scripture. 

Meacham's comments are more offensive than the story. He makes it clear that Newsweek has a political and theological agenda on the issue of gay marriage and that alternate opinions are invalid and unworthy of discussion in the magazine. Meacham openly admits to promoting gay marriage without apology or seeing the need to include the other side of the story.

In related news, Newsweek is laying off a bunch of people and reducing the number of copies it guarantees to advertisers by over half. I am contemplating canceling my subscription. 

Obama and Blagojevich

My prediction about Blagojevich yesterday may come to pass even sooner than I expected. Everyone knew he was a crook, even before he was reelected governor in 2006 - he was already under investigation for his hiring practices (high paying jobs in exchange for big campaign contributions) and rumors of pay to play politics in state contracts were everywhere. At the time, U.S. Attorney Patrick Fitzgerald was already investigating what he called "very serious allegations of endemic hiring fraud" with a "number of credible witnesses." Everyone who voted for him, endorsed him, or supported him should be ashamed of the disservice they did to the state of Illinois, and that includes President-elect Obama.

Obama endorsed Blagojevich in 2002 and 2006 and served as a top adviser to him in 2002. Many Democrats found this crook so unpalatable that they refused to work with him on his campaign for governor, including former Blagojevich adviser and now top Obama adviser David Axelrod, but not Obama. In August of 2006, Obama stumped for Blagojevich: "We've got a governor in Rod Blagojevich who has delivered consistently on behalf of the people of Illinois."

As a State Senator and as a US Senator, Obama never shied away from aligning himself with some of the dirtiest politicians in all the land. He never once crossed anyone in the Chicago Machine. Even when he had the opportunity to support a liberal Democrat, Forrest Claypool, for Cook County Board President, a candidate that pledged to end the cronyism, corruption and extortion, he instead backed Todd Stroger, the son of the previous president. With Obama's support, Stroger won the primary by 7% of the vote. Stroger has wasted no time, he's increased the sales tax to 10.25%, laid off hundreds of nurses, and cut 43 prosecutors, all so he can hire more friends and family to high paying, do-nothing jobs.

One of the most serious charges facing Blagojevich is that he attempted to auction off Obama's vacated Senate seat to the highest bidder. There is evidence that Blagojevich attempted negotiations with Obama and a labor union, offering the seat to an Obama adviser in exchange for a high paying job at the labor union, whom would receive political favors from Obama once he's president. To his credit, Obama turned him down, but not to his credit, it doesn't appear that he or his camp reported this to authorities.

Today, when asked if he had any contact with Blagojevich about the Senate seat, Obama said "I had no contact with the governor or his office and so we were not, I was not aware of what was happening." However, a few weeks ago, Axelrod discussed the candidates to replace Obama in the Senate on Fox News Chicago saying, "I know [Obama has] talked to the governor and there are a whole range of names many of which have surfaced, and I think he has a fondness for a lot of them." Hmmm.

Government Knows Best

Laid off workers at a Chicago window manufacturer have made national news for their protest, demanding severance and vacation pay. Politicians and would be castrators have come out of the woodwork to show their support for the workers, who have come to symbolize the unemployed. The company shut its doors after losing its line of credit with the Bank of America.

Governor Blagojevich has decreed that the state of Illinois will not do business with the Bank of America until they loan the company enough money to pay for severance and vacation pay, arguing that the $25 million that BOA receieved in the bailout is meant to be doled out to companies that are no longer solvent.

If the company is contractually obligated to pay severance, then it should do so. However, this is in no way the bank's problem. Why on earth would they loan their depositors' money to companies that can't pay it back? If the company has to declare bankruptcy, so be it. Then the courts figure out how to reorganize the company or distribute its assets to its creditors, including, in this case, its employees.

This is what happens when liberals meddle in business. Soon-to-be-convicted-felon Blogojevich should not be telling Bank of America how to run its business. If the state can save money by doing business with BOA, he has no right to forfeit those savings to score political points. This is exactly the kind of thinking that led to the financial crisis - liberal politicians determining who should get loans. Unfortunately this idea that the government knows best how to run businesses will soon be coming to Detroit in a big way.

Mormons and Prop 8

Gay rights activists are furious in California over the passing of Proposition 8, an amendment to the state constitution that overrules a state supreme court decision that legalized gay marriage. Gay civil unions are still legal in California, giving gay couples every legal right afforded heterosexual couples. Prop 8 passed largely because 70% of blacks voted for in favor. Predictably, the left is instead focusing their rage on a different group: Mormons.

The Catholic church and scores of other Christian churches also opposed Prop 8, but perhaps Mormons are an easier target. Gay rights activists are angry that Mormon individuals (not any churches, mind you, but individual people) gave $20 million to promote Prop 8, as if no liberals spent any money opposing it. They even ran this campaign ad, showing two Mormons storm into a lesbian couple's home to steal their wedding rings. As Jonah Goldberg points out, you can imagine the outrage had any other group been similarly targeted. The reaction from the LA Times? Too little, too late.

Barack Obama weighed in decisively: he is against gay marriage, but also against Prop 8. Huh? Gay marriage isn't a real hot button issue for me, but it does alarm me that in New Mexico a wedding photographer was fined $7,000 for refusing to shoot a gay marriage ceremony and the state of New Jersey is forcing eHarmony to create a new website for gays.

As Thomas Sowell argues, this is not a civil rights issue. Marriage laws don't discriminate against people, they discriminate against behavior, as laws should do. Gay marriage advocates are really seeking to force everyone else to approve of their behavior. If the marriage laws should be rewritten for them, why not for polygamists (speaking of Mormons)?

The success of Prop 8 in California, and similar measures that passed with overwhelming support in Arizona and Florida should send the message to the GOP that this country has not taken a hard left turn. Social conservatism is still a winner at the ballot box.