Pollution from the Bully Pulpit

Aside from disastrous policies and a poorly veiled socialistic legislative agenda, perhaps the most insidious and unglamorous aspect about Barack Obama's comportment as president is his unrelenting reliance on low rent snipes aimed at stoking the flames of class warfare. The division and civil infighting among classes is, in Obama's mind, the best opportunity for political survival. We are talking about Obama's own political survival. He could give a rip about his own party unless it somehow affects him.

The damage, the strife, and the contentiousness that his trash talk engenders is harmful to the nation and a hinderance to our economic recovery - to the extent that economic recoveries are boosted and made possible amid an environment that focuses on the business of America rather than causing harm with ceaseless sophomoric taunts.

Obama's use of class warfare is not novel. It was on national display during the presidential campaign (see FW November 5, 2008 post). What is disturbingly disappointing is the incessant drumbeat and pedestrian quality of Obama's finger-pointing shrieks. The man appears not to have matured while in office. His conduct has degenerated. On that note, he would do himself a favor by losing the Mussolini style narcissistic head gestures -- chin juts up, eyes dart down.

There is a saying that "patriotism is the last refuge to which a scoundrel clings". In that vein, perhaps it is fitting to state that "tawdry fulmination is the first shield (and sword) that a demogogue grasps". Saul Alinsky would be proud of his Sancho Panzaesque disciple. Obama promised a different tone in Washington. He delivered.

Change

Meet the Press (McConnell and Armey)

Senate Minority Leader Mitch McConnell appeared on Meet the Press this morning. He is inept and relies on tired political talking points to argue the economic vision of the GOP. When pressed by David Gregory to answer a simple question: Would the extension of the Bush tax cuts be "unpaid for" and therefore be paid via added US debt?, McConnell dodged the easily rebuttable question and kept mumbling about "raising taxes is not a good idea in a recession". Although McConnell's assertion is true, it is cannot be inspiring to voters and simply not good for the GOP if it's Senate leader cannot articulate a more pointed response than that.

What McConnell should have said (with conviction and purpose) is: David, the premise of your question is that an extension of the tax cuts will lead to a bigger deficit. That premise is absolutely wrong. In fact, the opposite is true. Certainty that the tax cuts will be extended, including NOT raising the capital gains tax, will lead to a reduced deficit precisely because these measures will accrue to elevated economic activity, more jobs, and consequently more tax revenue. Moreover, Mr Gregory, we should be looking at steeper tax cuts as a direct means to get this economy going, an economy that is at best stuck in neutral and at worst, going in reverse. Lastly, David, following the wrongheadedness of your premise, we should raise taxes across the board to close the deficit. Seriously David, do you think that would be good economic policy?

Contrast McConnell's feebleness with former GOP House Majority Leader's Dick Armey's performance on the same show. When questioned about extreme views by fiscal hawks about radical changes to Social Security and Medicare, Dick Armey's riposte was that he, following Rep. Paul Ryan (R), favors a policy that would allow people to choose between staying in the current Social Security or Medicare program or opting to save and provide for their own well-being. To paraphrase Armey: "If these programs are as good as claimed by its supporters, why do its same supporters fear allowing people a choice?"

Free to Choose = Economic and Political Liberty.

The Times Are Always A'Changin'

One recent morning, a Fox & Friends host exclaimed that "most kids these days have never used a phone with a cord". The comment's purpose implied a dig at the lack of worldliness that today's kids possess. The comment was unwise, unfair, and generationally challenged.

There are several ways to rebut what Mr Doocy insinuated. First, kids use the tools, equipment and electronics that are at their disposal today. It is the technology of the time. They can't easily operate a loom to make clothes. All generations do this. Mr Doocy did this. I wonder if he felt unworldly because he didn't have to churn butter, wash clothes on the riverside, use an outhouse, or upkeep his lawn with a scythe like those before him had to do. Moreover, only a few generations before, there were NO phones. So I guess, following Mr Doocy's logic, the only enlightened youth were those that were around during the wonderful and fabled "cord era".

Mr Doocy's comment was most likely a sweeping broadside like the ones that many of us make, with no harm intended. However, to be clear, kids today have a lot on the ball and will have skills and tools at their disposal that we "older kids" did not have. That's how progress works. We develop better tools. It's true that we always lose a little something as we move from one tool to the next, but in the larger picture we gain much more and are progressing.

No carping necessary because you had to get up and manually change channels and kids today find that alien. No, there is no inherent wisdom found in having used a phone with a cord. Wisdom is wisdom. Technology is technology. Don't conflate the two. Don't begrudge the youth because their world is different from ours. Ours was also different.

I Spend, You Pay

In his eight year presidency, George Bush increased the national debt from $5.7 Trillion to a whopping $9.8 Trillion. That amounts to a sickening $43 Billion per month. To personalize the amount, it is $1,700 per year for each resident in the United States.

Enter Barack Obama who scoffed at Bush's spending and so got himself elected. But what Mr Obama has done makes Bush appear to be a world-class tightwad. In the eighteen months since Obama swore the oath, our national debt has been jacked up by $178 Billion per month. Poor Georgie is chopped liver next to Barry.

Now let's personalize what Obama has done. The average American household amounts to 3.14 people. Obama, behaving like a giddy teenager with his first credit card, has racked up NEW debt that amounts to $1,850 per month for that average sized American household! That is $22,200 per year. With the median household income at $52,000, the mad spender's unpaid bill is 42% of that income. Put another way, the debt increase is equal to the median household's gross income earned from January 1st to June 7th.

Recently, Mr Obama used the metaphor of (the Republicans) running the car into the ditch and now wanting to re-take control of the keys to the car. A more accurate use, and an extension, of the metaphor still has the Republicans driving the car into the ditch. Then, into the car jump Barack, Nancy and Harry. These three wild-eyed "progressives", evoking memories of Thelma and Louise, crazily zig zag the car until it goes over a cliff.

However, unlike Thelma and Louise, the trio of spendthrifts bail out of the car before it actually flies off of the cliff. Who's in the car? Our children and grandchildren -- the ones that pay the tab that Obama rang up. Charge it, baby.

Change.

And then we have Blathering Barney

Here's another jewel from the recent past. Good thing America has Barney overseeing the House Financial Services Committee.

Barney Take 1 (2005)

The guy knows his stuff. Then he tells us where he really stood on the subject of home ownership:

Barney Take 2, (after the bubble splattered)

I'm sure Big Barney would say that we just don't get the nuance behind his non-contradictory comments. Being on tape is a tricky thing. Tricky.

April 17, 2008 (Oh, What a Night)

The venue was Philadelphia. The occasion was the ABC News organized Democratic presidential debate between Clinton and Obama. Charlie Gibson questions Candidate Obama on tax policy. The transcript is available on the internet. Retrospectively, this one is a gem.

Charlie Gibson presses Obama on his intention to raise the capital gains tax, citing historical evidence that lower capital gains tax actually lead to increase tax revenue because lower taxes propels economic activity. Unflinchingly, Obama says that he would raise the tax for "purposes of fairness". When I heard him say this that night, my immediate thought was that here's a guy whose ideological bent easily trumps national economic prosperity.

Obama went on to ramble that Wall Street executives are burdened with a lower tax rate than their secretaries, brazenly ignoring the fact that the income tax rate paid by the "fat cats" (a moniker that Obama did not officially unveil until nice and comfy in the oval office) is actually much higher than their secretaries' and that the capital gains tax is just an additional tax. Not to mention that 50% of Americans pay $0 income tax. Obama was telling us that what really matters is his hell-bent desire to spread the wealth regardless of the best economic calculation.

And there's more: Obama said that he wanted to be "...able to finance health care for Americans who currently don't have it. And you can't do that for free". Okay then, but when ObamaCare was being peddled to us, we were told it would pay for itself, and even save money. Square that one, President Obama.

Wait, there's more: Candidate Obama donned the mask of a fiscal conservative and exclaimed that the country "can't take out a credit card from the Bank of China in the name of our children and grandchildren". Really now?

And, yes, still more: "I believe in the principle that you pay as you go ...and you don't increase spending unless you're eliminating some spending or finding some new revenue". That's good to know.

Last one now, and it's a doozy: "That's how we got an additional $4 trillion worth of debt under George Bush. That is helping us to undermine the economy. And it's going to change when I'm president of the United States".

With regard to the last comment, Candidate Obama spoke the truth. Our national debt has indeed changed.

Change. Yes he did.

Big Bad Profits

A resurgent economic rationale for rapacious government intervention in the delivery of consumer goods and services is the unfounded claim that government can provide said goods and services at a lower price to consumers. This is because government does not have a profit motive; there is no mark-up. To some, this convenient argument may initially make sense. In the real and lucid world, it is senseless.

For example, let's assume that a product costs $100 to produce. Cheerleaders for big government would want you to believe that if the government produced that product you would be able to buy it at the same $100 cost. However, if a private business made the product, the cost would still be $100 but you would need to pay, say $120, with the extra $20 representing the businesses' profit margin. If this were only true, then government should produce everything and sell at cost. Social utopia. Rejoice Karl Marx!

The hallucinogenic logic craters when one considers the reality of a competitive marketplace where demand/supply dynamics give rise to price elasticity. Price elasticity dictates the limit to which the price of a product can be elevated and still be acceptable to consumers. The freer, or more competitive the market, the more forceful are the constraints of price elasticity. In pure monopolies, where there is no competition, a seller can charge exorbitant prices because the consumer has little alternatives. Monopolies must be regulated because they bypass the demand/supply characteristics found only in a dynamic free market.

Given the price constraints imposed by demand/supply forces, it is imperative for a private sector business to become effective and efficient in order to lower its cost structure, sell the product, and still make a profit. Hence, price levels are tight (inelastic), creating a ceiling. The cost needs to be safely below the price ceiling if a merchant intends to render a profit.

The key here is cost. Government, not having shareholders that demand profits, allows inefficiencies and waste that consequently drive up the cost of any good or service it produces. Government cannot, simply due to its political nature, produce at costs lower than what economic driven private business can achieve. If made to compete with private business, the government will kill business profit by excessive regulation. Businesses then fail. Farewell private sector employment.

In more extreme cases, government will legislate that it is the only "permitted player" with respect to a good or service and therefore nationalizes the product/service altogether. The government creates a monopoly that it gets to regulate. Foreign competitors? These get thwarted by raised tariffs that jack up their cost structure.

The government payroll swells and the cost of our hypothetical product soars from $100 to $225 and we consumers can only be comforted by knowing that although we are now paying exceedingly more, big bad greedy private business is not making a profit.

But, hey, Mr. Obama would look at that $225 cost and proudly defend it by saying: "It could have been worse, it could have been $375. Be thankful that I limited it to $225. Now let's increase unemployment benefits for those who used to work for now defunct companies that produced the same product at $100."