Friday, June 01, 2012

History: The Obama version

Riffing on the re-election trail, President Obama often tells crowds that "We've got to move forward to the future we imagined in 2008." An imaginary future from the past—got it. Then there's the imaginary history of the past that Mr. Obama has been recounting lately, when his first-term spending and debt boom never happened.

Mitt Romney "warned about a 'prairie fire of debt.' That's what he said," Mr. Obama said on the Des Moines fairgrounds on Thursday, as if he couldn't believe it either. "He left out some facts. His speech was more like a cow pie of distortion," Mr. Obama continued, with the finely shaded eloquence for which he is known. "What my opponent didn't tell you was that federal spending since I took office has risen at the slowest pace of any President in almost 60 years."

Making this a new White House theme, press secretary Jay Carney chimed in to "make the point, as an editor might say" to White House reporters that they should not "buy into the B.S. that you hear about spending and fiscal constraint with regard to this Administration. I think doing so is a sign of sloth and laziness."

Mr. Carney the media critic deeply sourced his view to someone named Rex Nutting, who wrote an 856-word column for MarketWatch that argued "There has been no huge increase in spending under the current President, despite what you hear."

Mr. Nutting claims that spending is rising at 1.4% annually, versus 8.1% for George W. Bush's second term. How did he manage to suss out the insights that have eluded every other human being who has spent time with the historical budget tables? His accounting methods are, er, unusual.

Mr. Nutting claims that Mr. Obama is only responsible for $140 billion worth of spending in his hyperactivist first year in office because . . . the fiscal year technically begins on October 1, 2009. Therefore he says Mr. Obama had no control over the budget, though in February 2009 he did famously manage to pass an $800 billion stimulus that was supposed to be a one-time deal. Mr. Nutting then measures Mr. Obama's spending growth rate against an inflated 2009 baseline that includes the spending Mr. Obama caused but which he attributes to Mr. Bush.

This is like an alcoholic claiming that his rate of drinking has slowed because he had only 22 beers today and 25 beers yesterday. To extend the analogy, let's stipulate that Mr. Bush was no fiscal teetotaler, though that's even more an indictment of Mr. Obama.

Mr. Nutting also has some fun toggling among Congressional Budget Office estimates, CBO baselines, White House budget proposals and actual spending to make the Obama record look better. To anyone who really knows the numbers, Mr. Obama's spending has increased by closer to 5% a year. Comparing apples to apples, CBO says total federal spending was $2.98 trillion in 2008 and has risen every year to reach $3.72 trillion in Mr. Obama's fiscal 2013 budget.

The larger conceptual error of the Nutting-Obama-Carney troika is neglecting to compare the budget to the size of the economy. The best perspective on how outlays, tax receipts and deficits change over time is as a share of GDP. Those data reveal historical trends because they account for different inflation rates and include changes over society as a whole like population growth.

Prior to Mr. Obama, the U.S. had not spent more than 23.5% of GDP—that was in 1983, amid the Reagan defense buildup—since the end of World War II. Yet Mr. Obama has managed to exceed that four years in a row: 25.2% in 2009, 24.1% in 2010 and 2011, and an estimated 24.3% in 2012, up from a range between 18%-21% from 1994-2008.

Democrats try to explain this away by saying that the economy is lousy, so spending's share of GDP looks larger than it would be with faster growth. But that is hardly an endorsement of Mr. Obama's economic policies, and in any case the recession officially ended nearly three years ago, in mid-2009.

The economy has since been growing but spending has been growing too even from the stimulus-inflated baselines. Every time House Republicans have tried to cut more spending since 2010, Mr. Obama has fought them tooth and claw.

As for that prairie fire of debt, Mr. Obama can fairly blame $1 trillion or so of the $5 trillion debt increase of the last four years on Mr. Bush. But what about the other $4 trillion? Debt held by the public now stands at 74.2% of the economy, up from 40.5% at the end of 2008—and rising rapidly.

In Des Moines, Mr. Obama's reading of U.S. fiscal history—"what generally happens"—was that "Republicans run up the tab" and then blame Democrats for the bill. Meanwhile, Mr. Nutting floated and Mr. Carney cited the "fact" that even Herbert Hoover spent more than Mr. Obama. Oh great. That means the President may stop blaming George W. Bush for the problems he inherited and instead start blaming Bush, Bush, Reagan, Ford, Nixon, Eisenhower and Hoover.



Tragedy of unbridled self-interest


Our nation is rapidly approaching a point from which there's little chance to avoid a financial collapse. The heart of our problem can be seen as a tragedy of the commons. That's a set of circumstances when something is commonly owned and individuals acting rationally in their own self-interest produce a set of results that's inimical to everyone's long-term interest. Let's look at an example of the tragedy of the commons phenomenon and then apply it to our national problem.

Imagine there are 100 cattlemen all having an equal right to graze their herds on 1,000 acres of commonly owned grassland. The rational self-interested response of each cattleman is to have the largest herd that he can afford.

Each cattleman pursing similar self-interests will produce results not in any of the cattlemen's long-term interest – overgrazing, soil erosion and destruction of the land's usefulness. Even if they all recognize the dangers, does it pay for any one cattleman to cut the size of his herd? The short answer is no because he would bear the cost of having a smaller herd while the other cattlemen gain at his expense. In the long term, they all lose because the land will be overgrazed and made useless.

We can think of the federal budget as a commons to which each of our 535 congressmen and the president have access. Like the cattlemen, each congressman and the president want to get as much out of the federal budget as possible for their constituents. Political success depends upon "bringing home the bacon." Spending is popular, but taxes to finance the spending are not. The tendency is for spending to rise and its financing to be concealed through borrowing and inflation.

Does it pay for an individual congressman to say, "This spending is unconstitutional and ruining our nation, and I'll have no part of it; I will refuse a $500 million federal grant to my congressional district"? The answer is no because he would gain little or nothing, plus the federal budget wouldn't be reduced by $500 million. Other congressmen would benefit by having $500 million more for their districts.

What about the constituents of a principled congressman? If their congressman refuses unconstitutional spending, it doesn't mean that they pay lower federal income taxes. All that it means is constituents of some other congressmen get the money while the nation spirals toward financial ruin, and they wouldn't be spared from that ruin because their congressman refused to participate in unconstitutional spending.

What we're witnessing in Greece, Italy, Ireland, Portugal and other parts of Europe is a direct result of their massive spending to accommodate the welfare state. A greater number of people are living off government welfare programs than are paying taxes. Government debt in Greece is 160 percent of gross domestic product. The other percentages of GDP are 120 in Italy, 104 in Ireland and 106 in Portugal. As a result of this debt and the improbability of their ever paying it, their credit ratings either have reached or are close to reaching junk bond status.

Here's the question for us: Is the U.S. moving in a direction toward or away from the troubled EU nations? It turns out that our national debt, which was 35 percent of GDP during the 1970s, is now 106 percent of GDP, a level not seen since World War II's 122 percent. That debt, plus our more than $100 trillion in unfunded liabilities, has led Standard & Poor's to downgrade our credit rating from AAA to AA+, and the agency is keeping the outlook at "negative" as a result of its having little confidence that Congress will take on the politically sensitive job of tackling the same type of entitlement that has turned Europe into a basket case.

I am all too afraid that Benjamin Franklin correctly saw our nation's destiny when he said, "When the people find that they can vote themselves money, that will herald the end of the republic."



Alger Hiss is still betraying you

It was high political drama more than six decades ago—controversial and polarizing. A Harvard trained and highly ranked member of the Federal Government charged by a self-confessed former Soviet spy of being a partner in those very same nefarious enterprises.

On the one hand there was Whitaker Chambers, the somewhat frumpy-looking accuser, a man who had wandered in from the darkened cold years before, having seen the sinister reality behind the propaganda-driven hope and change promised by Communism. Then there was this other guy with poster-child-for-success looks, brains, friends in very high places, and a killer resume with seemingly endless references. His name was Alger Hiss.

Add to that mix a committee in the House of Representatives increasingly dominated by a young Congressman named Richard Nixon who was quickly climbing a ladder to somewhere—and no Hollywood writer or gifted novelist could devise a more compelling story. Along the way we learned about microfilm squirreled away in a pumpkin on a Maryland farm, one man’s dental challenges, and a President of the United States talking about something called a “red herring.”

The story simply won’t go away—nor should it. It contains the DNA of our current national political discussion and cultural divide. Ask people about the Hiss case today and many will predictably give you a deer-in-the-headlights stare. But those old enough to remember, or who have demonstrated a cultivating interest in the political history of our country for the past hundred years or so, tend to quickly reach animation. “Hiss was smeared,” or “Chambers was right,” or my favorite: “Well, that was just McCarthyism at its worst.”

Never mind that Senator Joe McCarthy didn’t even begin to make a name for himself until after Alger Hiss’s conviction on a couple of counts of perjury.

But as the saying goes—“Just because you’re paranoid doesn’t mean they aren’t out to get you.” And with the Hiss case it took years for a preponderance of evidence to come out proving that Whitaker Chambers was right and that Alger Hiss lied. He was a traitor and perjurer. And it still matters today, not just because of the idea of finding out the true story but because the philosophies the two men represented at the time are alive and well and every bit as distinct and diametrically opposed as the Tea Party is from the group purporting to Occupy Wall Street.

Even while denying his guilt throughout his life (he died in 1996 at the age of 92), Mr. Hiss maintained a steadfast belief in the liberalism behind all the manifestations of the New Deal. And this remains the salient talking point—the very real connection between the “progressive” political machinations and actual Marxist thought and methodology. “What Is To Be Done” gave way to what has been done. This is the story of American political liberalism from the heady days of the New Deal to the conjured euphoria of “Yes, We Can.”

In her new book, Alger Hiss: Why He Chose Treason, Christina Shelton, a retired U.S. intelligence analyst, refreshes our memory not only about the Hiss case itself, but why it indeed still very much matters:

“The story doesn’t go away, because it has become a symbol of the ongoing struggle for control over the philosophical and political direction of the United States. It is a battle between collectivism and individualism; between centralized planning and local/state authority, and between rule by administrative fiat and free markets…
Hiss firmly believed in a collectivist political ideology; he believed government was the ultimate instrument of power for solving problems and that the U.S. Constitution should be bent or bypassed to support this view. Hiss put his political belief into practice in his support for Communism and loyalty to the USSR, a state where government authority and power were not limited by the rule of law—in fact it would brook no limit.”

Whitaker Chambers, who died in 1961, never lived to see the fall of Soviet communism. In fact, he truly believed that it would never happen and that when he left communism to embrace the ideas and ideals of American freedom he was leaving the winning side for a losing cause. We know that he was wrong—at least in the short run. Having read his wonderful political tome, Witness, several times, I often wonder what Chambers would have made of the events of the late 1980s and early 1990s.

Yet, to sort of quote Ronald Reagan: “Here we go again.”

These days, the “constant vigilance” consistently needed to perpetuate liberty in the face of what often seems to be humankind’s default affinity for a clueless slouch toward tyranny (weeds grow naturally, flowers take work), seems to be in dangerously short supply. The Hiss case would be a great story for all Americans to revisit every few years—as a caveat and catalyst. Christina Shelton’s book is a great place to start. She reminds us that, “Hiss has become emblematic of the ideological divide that continues to this day in the United States…Hiss’s advocacy of collectivism and the need for government control over society and his support for international policies ahead of national security interests still resonate today.”

Toward the end of the book, Shelton tells the story of Vladimir Bukovsky, a man who spent a dozen years in Soviet prisons and labor camps as a dissident. He reflectively compared the former USSR and the European Union (EU), where “nationalism is suppressed in an attempt to establish a socialist European state.” He summarized his comments with words of warning:

“I have lived in your future and it didn’t work.”




TN: Judge’s ruling stops mosque construction: "A judge’s ruling has stopped construction of a Nashville suburban mosque that has been at the center of a rowdy debate for more than two years. Chancellor Robert Corlew ruled Tuesday that proper public notice was not given for the May 2010 meeting that approved the site plan for the mosque being built near Murfreesboro, a booming city of about 100,000 people southeast of Nashville"

Is commerce decent?: "Most people take it for granted that medicine, education and science have merit and those doing work in those fields are doing the right thing. They can claim credit for having chosen a fine calling or vocation. But the same is not so with business. A clear indication of this is that there is a great deal of talk about the social responsibility of corporations, and how companies should give back to the community in contributions, something few other professionals hear of. Are college professors being implored to do likewise? No, because their work is deemed to be worthwhile in and of itself."

Fascism is the real object of OWS wrath: "What so enrages OWS folk is actually State Capitalism, in which large enterprises operate under the guidance of and for the benefit of the State, which returns the favor by enacting laws to give each an effective monopoly. A better term for that is 'Fascism,' with every economic activity within the State and controlled by the State but not actually owned by the State; while it's an ancient idea -- 18th Century Mercantilism was one form of it -- it formed a more successful alternative to Communism in the 20th Century and seems to have been worked out first by Mussolini, who began adult life as a Communist and attracted the notice of Lenin as such, but who later recognized that it's much smarter to direct the cow and milk her, than to own her outright. What we see all around us, and what our OWS friends are protesting, is a well-developed version of such fascism."



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The Big Lie of the late 20th century was that Nazism was Rightist. It was in fact typical of the Leftism of its day. It was only to the Right of Stalin's Communism. The very word "Nazi" is a German abbreviation for "National Socialist" (Nationalsozialist) and the full name of Hitler's political party (translated) was "The National Socialist German Workers' Party" (In German: Nationalsozialistische Deutsche Arbeiterpartei)


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