The Congressional Budget Office is admitting that the $800 billion stimulus package will indeed hurt the economy in the long run.
In his testimony to the Senate, CBO Director Douglas Elmendorf conceded that the stimulus package would have “a net negative effect on the growth of GDP over 10 years.” In an exchange with Senator Sessions, Elmendorf added that the economic drag from the stimulus will continue in the following decade:
SESSIONS: And in the next 10 years, since you’re carrying that debt and paying interest on it and the stimulus value is long since gone, it would be a continual negative of some effect?
ELMENDORF: Yes, it would represent a drag on the level of GDP beyond that, if no other actions were taken.
As Reason magazine’s Peter Suderman notes, this is a disturbing indictment of the Obama administration’s eagerness to waste money, since the CBO gave the administration similar advice before passage of the stimulus, yet it went ahead with the stimulus anyway: ”even the mildly Keynesian congressional scorekeeper agrees that borrowing $800 billion dollars ultimately creates a drag on the economy and a net loss in economic performance relative to what otherwise might have been. And yet the administration went ahead with the legislation anyway, arguing that it would be more or less a free lunch in the long run.”
This decision is a welcome victory against the phenomenon known as “in-sourcing,” which involves government taking over functions that could performed by private contractors and handing them over to government employees.
Thus, in-sourcing fuels government growth directly by increasing the number of government employees. It also fuels government growth indirectly, by providing new potential members for government employee unions, which in turn can use the increased dues revenue to lobby for bigger government.
The decision is also sound because it promotes the sort of private-public partnership that makes economic sense. As CEI’s Marc Scribner notes in an Issue Analysis on the topic, not all private-public partnerships are created equal. In the real estate sector, they have led to undue government encroachment upon the market. In the transportation sector, on the other hand, they have brought market forces into government projects.
In the case of surface transportation infrastructure, innovative new private-sector ? nancing, management, and ownership regimes have much to offer in terms of minimizing taxpayer exposure, capturing user revenues, and creating an ef?cient transport network. In contrast, government’s recent expanded role in real estate development has increased taxpayer exposure to risk, socialized costs, and concentrated the bene? ts into the hands of select private developers and special interests.
The New York Times had a disturbing article Sunday about how most law schools are utterly failing to teach their students the basics of how to be a lawyer, despite collecting tens of thousands of dollars in tuition. (I wrote about this previously in The New York Times and legal blogs, discussing how little I learned at Harvard Law School despite paying a fortune in tuition, and how students should no longer be required to attend law school before sitting for the bar exam.)
The Timesdescribes three newly-hired corporate attorneys at a big-name law firm whose law-school educations were so worthless that they don’t know the basics, such as what a merger is, and how to draft the simplest legal forms needed for a merger. So their law firm has to teach these basic skills, even though they’ve already spent up to $150,000 on law school for a legal “education”:
But the three people taking notes are not students. They are associates at a law firm called Drinker Biddle & Reath, hired to handle corporate transactions. And they have each spent three years and as much as $150,000 for a legal degree. What they did not get, for all that time and money, was much practical training. Law schools have long emphasized the theoretical over the useful, with classes that are often overstuffed with antiquated distinctions, like the variety of property law in post-feudal England. Professors are rewarded for chin-stroking scholarship, like law review articles with titles like “A Future Foretold: Neo-Aristotelian Praise of Postmodern Legal Theory.”
Hey Joe and Jane Citizen, concerned about the future of your country and your family. Please step away for five minutes from the nonstop TV coverage of the supercommittee. You are being told that if the House-Senate committee, created as a compromise in the debt ceiling fight, doesn’t reach a ”solution” by Thanksgiving, there will be dire consequences as government spending has to be “sequestered” from the budget in 2013.
But the real dire consequences you should be worried about in 2013 is the permanent sequestration of your flexible spending account due to the stealth tax hikes of Obamacare. Back in 2010 when she was Speaker of the House, Rep. Nancy Pelosi said Congress had to pass the health care bill into law, so the public could know what’s in it. And it won’t be until the beginning of 2013 that most of the public will know that one of the things in the bill was a cap on flex account deductions, which are currently unlimited, to just $2,500 per year. Especially for large families, this is in effect a marginal tax hike on health expenses of as much as 40 percent!
This is one of the gimmicky “revenue enhancements” that allows Obamacare supporters to say it reduces the deficit. Other accounting trick include the now-repealed 1099 mandate, which required firms to report to send a form to the IRS everytime they bought a good or service valued at $600 or more. Starting in 2011, the “medicine cabinet tax,” which applies to both flex accounts and health savings accounts, put in the additional headache of getting a prescription for every over-the-counter medicine bought with the account. This short-term tax saving will almost certainly end up resulting in higher costs in the long run, as more patients needlessly visit the doctor for OTC prescription or just buy more expensive prescription medications.
So this competition for new jobs and businesses and middle-class security, that’s the race I know we can win. But you don’t win it by saying every American is on their own. We’re not going to win it if we just hand out more tax cuts to people who don’t need them, let companies play by their own rules without any restriction, and we just hope somehow that the success of the wealthiest few translates in the prosperity for everybody else.
We have tried that, by the way. We tried it for 10 years. It’s part of what got into the mess that we’re in. It doesn’t work. It didn’t work for Herbert Hoover, when it was called trickle-down economics during the Depression. It didn’t work between 2000 and 2008, and it won’t work today.
Obama is dead wrong. Data from the White House’s own website shows that Hoover increased, rather than cut, spending in the Great Depression, and ran up deficits that were huge by historical standards.
When he was 20 years old, [Bruce] Reilly beat and stabbed to death a 58-year old English professor at Community College of Rhode island, capping off his crime by stealing the professor’s car, wallet, and credit cards. . . . Reilly is an admitted student in Tulane’s law school . . . The Louisiana Bar, like all other states, requires proof of good moral character and fitness to be admitted to the bar, a requirement that almost always excludes felons – particularly those who have been convicted of a violent crime as heinous as Reilly’s. . .It is next to impossible for him to become a licensed attorney even if he graduates, as Tulane University officials must surely know. . .As at least one student complained to The Times-Picayune, Reilly is taking up “another’s space in the law school even though he may never be able to practice as a lawyer because of his conviction.” But it gets worse.
Reilly is attending Tulane on an NAACP scholarship and a Dean’s Merit Scholarship. . . .Now, we know that the NAACP (and apparently the dean of Tulane) thinks it is appropriate to give a scholarship to a convicted killer
Earlier, a left-leaning British government paid the college costs of the “Crossbow Cannibal,” enabling him to take more lives after he had previously been incarcerated for attempted murder and many violent crimes. “While pursuing a PhD in “homicide studies” at the British taxpayers’ expense, a man with a long history of criminal violence became a serial killer, noted Theodore Dalrymple in City Journal. After Stephen Griffiths’ release from prison — and a mental hospital, in which he was diagnosed as an incurable psychopath — he was accepted by the University of Bradford; the government paid his fees and living expenses. Griffiths “killed and ate three women, two cooked and one raw, according to his own account.” He’s now serving a life sentence, giving him time to complete his doctorate on 19th-century murder practices, notes education expert Joanne Jacobs.
Over the last four decades, the study finds, the number of high and low income neighborhoods have both increased, while “mixed income neighborhoods have grown rarer.” Since 1970, in fact, “the share of families living in middle-income neighborhoods dropped from 65 percent to 44 percent.”
A New York Times story highlighting the study sums it up:
Much of the shift is the result of changing income structure in the United States. Part of the country’s middle class has slipped to the lower rungs of the income ladder as manufacturing and other middle-class jobs have dwindled, while the wealthy receive a bigger portion of the income pie. Put simply, there are fewer people in the middle.
The Times, of course, ties all of this into the demands/grievances of the Occupy Wall Street movement: “The study comes at a time of growing concern about inequality and an ever-louder partisan debate over whether it matters.”
But as much as lefties want to blame this disturbing trend on the evils of capitalism, in fact Big Government is a big culprit. Why has manufacturing declined in the U.S.? Because labor and environmental regulations — both payoffs to Democrat Party constituents — have made it virtually impossible to profitably manufacture in America, forcing companies to ship production to low tax, low regulation areas overseas.
NICK GILLESPIE – “Dems and Reps Agree: Let’s Spend Tons More on Defense!” “Heritage Foundation, like most groups on the right, is quick to announce that the government is generally inefficient and incompetent when it comes to spending money. Except for Defense, one of the most obviously bloated, inefficient, and unsupervised parts of the governments. That’s a bit of a contradiction now, isn’t it? Which is why so many cons wrap themselves in the flag to exempt military spending from the same sort of penny-pinching scrutiny that, say, school-lunch programs deserve. ”
FRANK MINITER – “Is the Right to Privacy Dead?” “Defining what constitutes an “unreasonable” search, and therefore requires a warrant, is a question courts have long debated. It’s a fundamental question. It’s also a difficult question that will never be fully answered. But the answer isn’t evolving with technology. The Founders might not have foreseen the Internet, but they did outlaw warrantless invasions of our privacy. The principle remains the same.”
WENDY KAMINER: “The Hypocrisy of Occupy Wall Street” “It’s too soon to tell whether Occupy Wall Street’s drive to appropriate public spaces will entirely obscure its protests of economic injustice, but the dangers of its morphing into an ineffectual Occupy Whatever movement are already evident. Occupation is more exhilarating and instantly gratifying than the hard slog of advancing political and social change, and so far, one of the movement’s primary achievements has been a remarkable judicial ruling implying a new First Amendment right of occupation. ”
As Thanksgiving quickly approaches many hosts and hostesses are scratching their heads about what drinks to pair with their meal items. The Washington Post has a great interview with the District’s own “beer wonder” Greg Engert on how to pair beer with your meal. If you live outside of the Midatlantic though, many of his beer recommendations may not be in your local shop. This is another reason to advocate for an end to the mandatory three-tier system and allow producers to distribute their beer, wine, and liquor on their own.
Colorado: Coloradans are wondering if the recent vote in Washington State that ends the state monopoly on liquor distribution could spread to their state.
Georgia: The modern age slowly comes to Georgie. After voting to end the many decade’s long ban on Sunday alcohol sales, some counties are antsy to see sales actually begin.
Maryland: While the federal ban on alcohol sales ended in 1933, not much has changed in Damascus — the last dry town in Montgomery County, Maryland. However, state legislators are reported planning to introduce a bill in January that would allow residents to vote whether or not to keep the ban at the next election. The change would allow the sale of bee and table wine in restaurants. Well, it’s not much, but it’s something I guess.
Massachusetts: A bill approved by both the state House and Senate would allow Massachusetts food stores sell beer and wine at more of their locations. The bill was intended to replace a proposed ballot measure that would have allowed voters to decide if their town should have the right to offer licenses to more food stores. Of course, the current holders of licenses, fearing competition, would rather increase the number of licenses they can have among their chain stores rather than allowing other companies to get into the game.
Also in Massachusetts: An Alderman in Beacon Hill is pushing a proposal to repeal the city’s self-imposed liquor license cap. If it passes the city would have an unlimited number of beer, wine and liquor licenses to give to bars and restaurants like some surrounding cities. The hope is that the proposal will stimulate the city’s economy.
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