ConservativeHome's Big Ideas blog

Haight-Ashbury meets Wall Street

By Lowman S. Henry

It is interesting how a dispirit group of malcontents with nothing better to do that hang out on Wall Street all of a sudden are branded by the media as a "national movement."

The "Occupy Wall Street" protest is the latest incarnation of the Haight-Ashbury gang transported from San Francisco to New York. Loosely gathering under a mutual distain for the nation's financial community, the group appears to be a hybrid between Woodstock and a college political science class. The lawlessness and arrests have it tilting more toward the former.

Since the rise of the Tea party movement two years ago the Leftist news media has been looking for a "spontaneous" citizen movement to counter the conservative wave that has swept the country. Thus, they have seized on "Occupy Wall Street" as a counter to the Tea party.  It is nothing of the sort. "Occupy Wall Street" is little more than a group gripe session Astro-turfed by the nation's labor unions which otherwise have lost their reason for being.

The news media’s handling of “Occupy Wall Street” is vastly different than the coverage given to the Tea party movement during its early days.  As public revulsion with the big government policies of the new Obama Administration began to surface, the media at first ignored, and then dismissed the Tea party movement.  When the Tea party became too big to ignore it was attacked as a bunch of racist, Right wing nut cases.

And then, the Tea party lifted Scott Brown – a Republican – into the late Teddy Kennedy’s Massachusetts U.S. Senate seat.  That began a string of Tea party-inspired electoral victories that culminated in a wave election last November sweeping Republicans into a majority in the U.S. House of Representatives.

All along the way the Left-leaning news media kept searching for a counter to the Tea party.  There was a glimmer of hope as a “coffee party” tried, but failed to gain traction.  Now, with President Obama looking like a cross between Herbert Hoover and Jimmy Carter, desperation has set in as the liberal agenda faces annihilation in 2012.

Enter a small group of dissidents who decided it would be easier to stage a sit-in on Wall Street than actually go out, get an education and look for jobs.  Before long they were joined by the professional protest elements of the Democratic Party’s ultra-Left wing.  Dressed as zombies, spouting rhetoric calling for a “change in America’s cosmic consciousness” (don’t ask me what that means), and egged on – in some cases even paid by – union organizers, “Occupy Wall Street” has been built-up by the media as a supposed spontaneous outpouring of Plebian anger aimed at the rich in America.

Now “Occupy Wall Street” protestors are digging in for months of demonstration. Assumedly during those months they won’t be looking for jobs.  Tea party activists don’t do that because they actually go to work.  And when they aren’t working, the Tea party is busy engaging in the type of political activism – registering voters, learning about the issues, working on campaigns – that actually does bring about real change. 

And that is why “Occupy Wall Street” will fail while the Tea party will continue to succeed.  This odd-ball collection of anti-war activists, environmental extremists and socialists will never jell because their stock in trade is protest and bluster, not actual work and activism.

Had these protestors approached the situation in a more mature way they might have made a valid point. In fact, they might even have common cause on a number of issues with the Tea party.  After all, the Toxic Asset Relief Program (TARP) and subsequent Obama “stimulus” – both of which were massive transfers of taxpayer dollars to the special interests “Occupy Wall Street” is protesting – are also reviled by many in the Tea party movement.  The lingering economic recession and unacceptably high national unemployment rate concerns all Americans, regardless of their political persuasion.

The difference, however, comes in the solution.  “Occupy Wall Street” seeks the soft Socialist “cure” of redistributing wealth.  The Tea party wants to empower individuals to create more wealth.  A glance over the pond at Greece and many European nations tells us the redistributionist approach will not work.  A look back at the history of our own nation demonstrates an economy based on growth and opportunity results in a higher standard of living for all.

While “Occupy Wall Street” fills the media’s need to cover something other than the Tea party, its patchwork collection of economic and political goals can never and will never work.  But, the protesters’ efforts have not been in vain.  At least they have really good costumes ready for Halloween.

(Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the weekly Lincoln Radio Journal.  His e-mail address is [email protected].)

 

 

Ohio Deserves a real Senate contest in 2012 (because it matters for America)

Dr. John Chapman, a dual resident of Canton, OH and Washington, D.C., is chief economist at Alhambra Investment Partners, a Miami-based investment management firm, and a research analyst at Hill & Cutler Co.

The media are prone to hyperbole in expression: every two years we are told that the upcoming election “is among the most crucial in history”.  With hindsight, we know that isn’t true: few elections were more important than the very first one in 1788, which set the tone for a new nation based on a radical precept of self-government.  1860 was a seminal election given the seething passions of the day: U.S. history would have been very different under a President Breckinridge.  And in the modern era, 1980 involved a major inflection point, as President Reagan offered a dramatically different policy mix than his predecessor, changing the course of American history in the offing.
 
However, 2012 is big – it’s a national referendum on the historic societal change initiated by President Obama.  Before voters is a simple question: should the federal government’s role in the economy and society be permanently enshrined as that of a European-style welfare state, as Mr. Obama intends; or should we return to a more free market model?  Specifically, 2012 is the last chance to preserve some aspect of a competitive market in health care delivery: the most significant legislative changes wrought by ObamaCare commence in 2013-14, and hence will be permanently enshrined as entitlements by 2016.  Among the consequences of this is the certain destruction of the private market for health insurance, as businesses “dump” employees into government-run pools of coverage to cut costs; once the single-payer model confers upon the federal government monopsony buying power, controls on every aspect of the entire health care industry, from research to provision to access to care, follow axiomatically.
 
While other Obama measures such as Dodd-Frank financial reform (which has led to increasing costs that will be fully passed on to bank customers over time in the form of higher fees, e.g., debit-card usage), energy production restrictions, and regulatory moves designed to benefit the labor movement all entail higher costs and lower profits for American business – and thus, slower economic growth and fewer U.S. jobs – it is the repeal of Obama’s health care law that is paramount.  For it is a canonical law of empirical economics that de facto government-run health care guarantees a permanently-lowered rate of economic growth.  Like high levels of government debt, government-run health care enervates an economy, and regardless of exact degree of causation, the correlation is indeed 100%.          
 
Given this, and myriad economic challenges now (viz., high unemployment, stagnant real incomes, rising consumer prices, incipient negative cash flow of entitlement programs, and outsized government debt-burden that will soon impel higher taxes on most Americans), Ohio voters deserve a vigorous contest of ideas in the U.S. Senate election next year, as the make-up of the Senate will crucially determine the degree to which real change is possible: remember, only with a 60th seat in the Senate did such radical legislation as ObamaCare or Dodd-Frank become possible.
 
To understand just how critical Ohio is next year, consider the current US Senate map:  in 33 contests next year, Republicans must defend their 10, and then take 13 of the Democrats’ 23 seats up for election, if they hope to get to a filibuster-proof 60 seat majority.  Pickups due to retiring or vulnerable Democrat incumbents in Nebraska, New Mexico, North Dakota, Montana, and (assuming a Republican year) Virginia and West Virginia would take the Republicans to 53 seats.  With good candidates, potential wins in Florida (against incumbent Bill Nelson) and Wisconsin (versus incumbent Herb Kohl) offer a “decently reasonable” chance to get to 55.  But then the climb to 60 gets harder: wins in Connecticut (likely only if it is a three-way race including Independent Joe Lieberman), Michigan, Pennsylvania, and Washington would have to be counted upon, again due to weak Democrats defending on a night when President Obama is led to electoral slaughter.  This would leave the number at 59; which state could provide the 60th seat?  Ohio seems most likely thanks to Senator Portman’s strong showing a year ago; otherwise, an unlikely win in Delaware, Hawaii, Minnesota, or New York would be needed – two from these states if Scott Brown cannot hold his seat in Massachusetts, as is quite possible. A look at this line-up shows how hard it will be to get to 60 without Ohio.      
 
But sadly, unless Ohio’s Republican Party fields a credible candidate to argue opposite the incumbent, Obama-acolyte Sherrod Brown, there will be no voice to counter Senator Brown’s ratifying defense of current economic policies.  And in such a critical year, Ohio is the poorer because of this.
 
Currently, GOP stalwarts in the state such as former Secretary of State Ken Blackwell or Congressman Jim Jordan have taken a pass at the race, which has only two likely entrants at this point: former State Senator Kevin Coughlin from Cuyahoga Falls, and the incumbent State Treasurer, Cleveland’s Josh Mandel.  Absent any change, Mr. Mandel, who’s already raised several million dollars, will win the nomination based on vastly superior fund-raising.
 
Barely eight months into his first term in statewide office, the 33-year old former Marine reservist and Iraq veteran may well have a bright future in politics.  But his deeply-limited experience in government is surpassed only by nonexistent time spent in the private sector in his young life.  And in a year in which jobs, economic growth, and the revival of Ohio’s moribund economy will be foremost among voter concerns, Mr. Mandel will be ineffective at best in persuading voters that he has the experience or a coherent vision for how to ignite an investment and job-producing turnaround in the Buckeye State, based on policy changes in Washington.  Additionally, Mr. Mandel enters the race ethically burdened: the Cleveland Plain Dealer’s Mark Naymik points out that Mr. Mandel has not been forthcoming about his own finances, even as he touts transparency as State Treasurer.  And sadly, Mr. Mandel has also evidently decided to embark upon a quest for high national office on the back of what in blunt terms was once called a lie: he is on record last fall as stating on several occasions that he will serve his full 4-year term as State Treasurer, and disavowed a Senate run.  In an era when voters are fed up with self-promoting politicians who lack authenticity, this alone guarantees he will be tuned out. 
 
Any Republican challenger faces uphill odds in a state carried by Mr. Obama by more than 260,000 votes, and where registered Democrats outnumbered Republicans by more than 10% in 2008.  Modern-era history also teaches that Americans demand the wisdom that comes from age in the U.S. Senate: in the nearly 1100 U.S. Senate elections held in the post-war era, roughly 3% were won by candidates under the age of 40, and only two were won by 35-or-under candidates in states where they were the minority-registration party: John Tower in Texas in 1961, and Joe Biden in Delaware in 1972 – though both states were tending toward the victors’ political party in those years.  Far more so than the U.S. House, voters insist upon a level of gravitas in U.S. Senators, and for this reason too, a Mandel candidacy has no real chance in 2012.  This will deprive Ohioans of a well-articulated debate about the future at a time it is most needed, which is a shame given the serious Republican talent in the state.  Congressman Jordan, or (wildly successful) Timken Co. CEO James Griffith, are you listening?
 
Senator Brown remains highly popular among Ohioans, and perhaps his victory next year is assured in any case.  But given the serious tenor of the times and seismic changes that have occurred in our economy and politics in recent years, the Buckeye State will be best served if a legitimate contender, ideally one with private sector depth and integrity, can oppose him in a high-octane debate about our future.  Post-script: It should be pointed out that at least one prominent Republican strategist, Karl Rove, thinks that ObamaCare can be repealed with only 51 votes in the U.S. Senate.  Others with Senate rules/parliamentarian and constitutional expertise tell me this is incorrect: it will take 60 Republican Senators to forestall a certain Democrat filibuster over any bill to repeal ObamaCare.

Americans are increasingly tuning Obama out

Matt Mackowiak is a Washington and Austin-based Republican consultant and president of Potomac Strategy Group, LLC. He has advised two U.S. senators and one governor, and has worked on two winning campaigns.

Someone needs to let President Obama in on a very big secret: the American people are not listening to him anymore.

Thursday’s address to a Joint Session of Congress, as the Washington Examiner reported, “received the lowest ratings he’s (ever) received for any address to a joint sessions of Congress of his presidency.”

That address included no new ideas, no bipartisan consensus (except for trade deals, which have languished due to unnecessary presidential intransigence) and felt like a campaign speech that was not worthy of national air time and the setting of the historic House chamber.

The public is tuning President Obama out for one very specific reason: while they like him personally, they do not like him professionally.

President Obama has proven that he was not ready to be President of the United States and his economic agenda has simply failed by anyone’s standard.

How does he turn it around?

Giving another teleprompter speech won’t do it.

President Clinton co-opted the Republican agenda in 1995 and triangulated between the parties to rise above politics.

President Obama needs a Sister Souljah moment.  He needs to surprise the silent majority of Americans who have stopped paying attention to him by doing what all good leaders do: take responsibility.

President Harry S. Truman once famously had a sign on his desk in the Oval Office that read “The Buck Stops Here.”  President Barack Obama has no such sign.

Americans want honesty and accountability in their Presidents.  Over time, without such personal characteristics on regular display, the public begins to tune out when a President speaks.

Mort Zuckerman recently wrote in the Wall Street Journal, “The President appears to consider himself immune from error and asserts the fault always lies elsewhere.”

After more than 960 days since President Obama’s stimulus bill became law, it is appropriate to review the rhetoric and promises of the Obama administration and the economic reality.

First, according to research by the Republican National Committee, President Obama and his Democratic allies promised the creation of more than 15 million jobs through his various policies:

• 3.5 million jobs “saved or created” from the stimulus (more than 90% “in the private sector”)
• 5 million jobs from the “Green Energy Economy”
• 4 million jobs, promised by President Obama’s top legislative enforcer, then-Speaker Nancy Pelosi (D-Calif.), by passing the health care reform bill, “almost 400,000 immediately”
• 2 million jobs from infrastructure spending
• 600,000 jobs in 2011 by extending unemployment benefits through the end of 2011

According to the ADP National Employment Report statistics, at the end of President Obama’s first month in office (February 2009), 110,299,000 Americans were employed (nonfarm private payrolls, seasonally adjusted).  Fully 30 months later, a net of 1.45 million fewer Americans are employed than when President Obama took over, according to the same statistics.

Just one year ago, President Obama said, “I want all Americans to remind themselves there are better days ahead.”

But there have not been better days.  Has he taken any responsibility whatsoever?  No.

The August national employment report found that, as CNBC reported, for the first time since World War II the economy had a net of zero jobs created for a month.  Economic analysts had predicted a net increase of 75,000 jobs.

Did President Obama speak to America to admit that this report was disappointing and unacceptable and that he was taking responsibility for 9.1 percent unemployment and 24 million Americans out of work, underemployed or who have stopped looking for work altogether?  No.

As Politico reported on the day the jobs report was issued, “It’s rare that President Obama doesn’t make some sort of statement on the one day each month that the jobs report comes out, but that’s what happened today.”

Better days are not coming.

But you don’t have to take my word for it – the White House made continued high unemployment their official prediction for the next 16 months.  The White House Office of Management and Budget recently predicted national unemployment will remain at nine percent through 2012 and be at 8.5 percent in 2013 and 7.8 percent in 2014.  No incumbent President has won reelection with unemployment above 7.2 percent since FDR.

The White House also decreased the predicted national gross domestic product growth for 2011 to 1.7 percent, a full point lower than their prediction earlier this year.  The U.S. economy grew by a paltry 0.7 percent in the first six months of the year, which the Associated Press reported was the slowest rate of growth since the recession ended two years ago.

As Kevin Bacon’s character in the film A Few Good Men concluded in his opening argument, “These are the facts of the case, and they are undisputed.”

Given the dramatic gulf between the administration’s lofty rhetoric and empty promises, and the persistently high unemployment expected through the end of President Obama’s first term, many Americans may wonder if anyone will take responsibility.

A recent CNN-ORD national survey found that 65 percent of respondents disapproved of President Obama’s handling of the economy.

But President Obama has a seemingly infinite string of excuses for the economic difficulty, offering at least 11 different reasons for why the economic recovery has been so slow.

In spite of his “jobs speech”, President Obama is facing a point of no return on the economy.  The blame game has not worked and a majority of Americans believe his policies have failed.

Whether he has the humility, leadership, courage and determination to admit mistakes, accept responsibility, and correct his course will likely determine whether he will be able to achieve a second term in office.

Mr. Obama: 'It's the unemployment, stupid'

By Lowman S. Henry

Barack Obama’s presidency is in deep trouble because he neglected to heed the maxim ineloquently stated by Clinton campaign manager Jim Carville in the 1992 Presidential campaign: “It’s the economy, stupid.”  In this case the saying might be refined a bit to: “Its unemployment, stupid.”

The nation’s stubbornly high unemployment rate threatens to become President Obama’s version of the Iran hostage crisis that brought down our last hapless chief executive, Jimmy Carter.  A group of Islamic militants stormed the embassy of the United States in Tehran on November 4, 1979 and took 52 Americans hostage. The regime of the Ayatollah Ruhollah Khomeini spent the next 444 days taunting the United States and frustrating the Carter administration’s ineffective efforts to free the prisoners. 

Fast forward to 2011 and we have the economic equivalent of the hostage crisis with the nation’s economy bound and gagged by massive federal government over-spending, an abundance of job-killing regulations, and historic levels of uncertainty created in no small part by the passage of the Obama health care “reforms.”

 At various points during the first three years of his presidency Barack Obama has given lip service to dealing with unemployment.  The situation is virtually all the policies he has implemented have made the problem worse and driven the American economy to the cusp of a double dip recession.  The so-called economic stimulus package proved to be little more than a pay-off to Democratic constituencies with even the president himself admitting there were no “shovel ready” projects to fund.  The administration’s signature legislative achievement – passage of Obamacare – is so complex businesses cannot figure out what they are required to do and what it will eventually cost.

Against this backdrop he appeared before a joint session of Congress to announce what was billed as a comprehensive new jobs program.  During that speech, as he often does, President Obama summoned the memory of Abraham Lincoln.  But Lincoln also once observed: “How many legs does a dog have if you call the tail a leg?  Four.  Calling a tail a leg doesn’t make it a leg.”  Likewise, calling another stimulus package a jobs bill doesn’t make it a jobs bill.

The President’s “new” jobs package is little more than a rehash of tactics that have been tried and failed, and others that may have some long-term impact but would fail to create jobs in the short term.  In what was a highly partisan speech the President essentially challenged Republicans in congress to yield to his will, or he would make them the issue in the upcoming Presidential campaign.

The day after the president’s speech the financial markets tanked. 

By failing to admit to past mistakes, craft a new plan in cooperation with both parties in congress, and put forth a new set of initiatives President Obama fed the one factor that is most responsible for the reluctance of businesses to create jobs: uncertainty.

 As a result of uncertainty, and a failure to attend to the core problems affecting job creators trillions of dollars in capital are going to remain on the economic sidelines.  This was evidenced by statements last July from Las Vegas casino tycoon Steve Wynn who called Obama “The Greatest wet blanket to business, and progress and job creation in my lifetime.”  He went on to say: “Those of us who have business opportunities and the capital to do it are going to sit in fear of the President.”

Steve Wynn is not alone.  Businesses large and small cannot risk their capital on the soft socialism promoted by the Obama administration.  Essentially their capital is being held hostage by his policies.  And that capital is not going to be released while Barack Obama sits in the Oval office.  If job creators won’t create jobs, the unemployment rate will not drop.  Thus joblessness will remain high through next year’s Presidential election.

On a clear January morning in 1981 Ronald Wilson Reagan raised his right hand and took the oath of office becoming the 40^th President of the United States. Half a world away the 52 Americans held hostage were put on a plane and sent home by an Iranian regime that wasn’t willing to risk a confrontation with the new leader of the free world.

A comparable scene will unfold in January of 2013 as the inauguration of America’s next president releases the shackles now stifling the nation’s economy setting free trillions of dollars in capital that will lift the clouds of recession now hovering over us.

 (Lowman S. Henry is Chairman & CEO of the Lincoln Institute and host of the Lincoln Radio Journal.  His e-mail address is [email protected].)

 

Anthony Dalke and Dustin Siggins: The Debt-Paying Generation has the most to lose if America doesn't start creating jobs; here is a list of proposals Washington should consider

Anthony Dalke is the Social Media Director for www.Race42012.com, and is also a regular contributor to Race42012.

Dustin Siggins is formerly a policy and politics blogger for numerous sites, including Race42012, and is co-authoring a book on the “Debt-Paying Generation” with William Beach of The Heritage Foundation.

With President Obama making a major speech about jobs this week, and the House GOP, Mitt Romney and Jon Huntsman putting forth their own plans in response, it appears employment will finally be on the forefront of the public debate. This year’s often vitriol-filled discussions of the United States’ bleak fiscal future, despite their intensive media coverage, have overlooked a stark reality: millions of Americans still sit out of work. Paul Krugman gets a rare cheer for a recent column in which he hammered Washington for replacing leadership with gamesmanship.

Let’s be clear: the national debt is the greatest issue facing America. However, to achieve long-lasting success, any plan to balance the budget must encourage job growth. A growing economy will do a great deal to shrink the deficit as it increases tax revenues, and it will enable more Americans to provide for themselves, control their own financial destinies and avoid government dependency. This especially matters to the 115 million Americans aged 5-30, who will become the Debt-Paying Generation (DPG) if our national debt continues to skyrocket.

With some ideas already on the table, and others still being hammered into actual plans, here are some proposals our leadership and potential leaders should embrace:

• Eliminate all tax loopholes and simplify the tax structure. Americans spent 6.1 billion hours and over $160 billion (equivalent to about 40 hours and over $1,000 per working American) complying with just the personal and corporate income tax code in 2010. Certainly, under a flat tax or the FairTax, taxpayers could redeploy these resources in productive activities that would expand the economic pie and thus increase tax revenues. Furthermore, such reforms would eliminate or at least shrink the IRS, taking up to a $13 billion dollar bite out of the deficit.

• Eliminate all subsidies from the government to private companies. The energy industries, for example, received direct subsidies of $37.2 billion in 2010, all at the expense of the American taxpayer— and some at the expense of the poor in this and other countries. Total corporate welfare totaled $92 billion in 2009. These and other subsidies only distort markets, essentially taking productive dollars out of the private sector and redistributing them at the whims of politicians and government bureaucrats.

• Utilize all of America’s energy resources without prejudice. Essentially, get the government out of the way and let each form of energy- from nuclear to oil to hydro to ethanol- stand on its own merits. This will create hundreds of thousands of new high-skill, well-paying, long-lasting jobs in the nuclear and oil industries alone. Additionally, allowing equal competition would create a smaller regulatory bureaucracy in Washington, and eliminate many of the above-mentioned subsidies. This would save the taxpayers money and increase tax revenues, creating a two-fold deficit reduction effect.

• Cut regulations with an axe. The size of the Federal Register, the official record of federal regulations, swelled to nearly 80,000 pages during the Bush administration. To name but a few egregious current examples:

o The infamous light bulb law, which effectively bans standard incandescent bulbs, has already begun to drive jobs and capital overseas. It also restricts the choices free, law-abiding Americans can make regarding their energy options. 

o According to a 30-year veteran of business ownership interviewed for this piece, the minimum wage is a significant job-killer. Instead of helping low-skill workers, it actually crowds them out of the job market by making their cost to an employer more expensive than the benefit to an employer.

o “Richard Gale,” a general contractor and member of the Debt-Paying Generation, told us a series of 2010 EPA lead regulations impose significant costs on his business. Formal estimates of the impact on businesses vary, but according to “Richard,” the “cost of training, licensing, lead testing and extensive precautionary measures make the cost of contracting services prohibitive to the customer,” and thus deprive “Richard” of approximately $20,000 in lost annual revenue.

o Myriad rules and restrictions on energy projects caused a natural gas pipeline, which stretches from Opal, Wyoming to Malin, Oregon, to finish four months late and 23% over budget.

Ours is the longest-lasting recession in several generations, and it is likely to continue for some time— despite the influx of government debt over the last 4 years. At the current pace of job creation vs. debt creation, the Debt-Paying Generation is in serious trouble: according to August 2010 Bureau of Labor Studies statistics, 16-24 year olds have an unemployment rate of over 20%. An entire subsection of young people is losing the opportunities necessary to garner job skills, grow their retirement savings and purchase their first home. And while the spending cuts we recommend won’t balance the budget, they represent a serious down payment that will grant politicians a little more time to tackle the “big four” expenses of our federal government: Social Security, Medicare, Medicaid and national defense.

It heartens us to see influential public figures finally returning their collective focus to unemployment. Now, we challenge them to take matters one step further and offer credible proposals on how to get America back on the path to recovery.

Herb London: From coming boom to the coming gloom

Herbert London is president emeritus of Hudson Institute and author of the book Decline and Revival in Higher Education (Transaction Publishers). 

In a book entitled the Coming Boom by Herman Kahn published in1982, Kahn argued that despite the double digit inflation of the Carter years and the “stagflation” that plagued the period from roughly 1976 to 1981, an economic boom was just over the horizon. As it turned out Kahn was right as the ensuing Reagan years ushered in a period of economic growth and vitality.

What Herman Kahn observed in the book was the following: tight monetary policies would lead to high interest rates and a decrease in inflation; deflationary trends lead inevitability to a more efficient use of energy; issuance of long term bonds will allow the government to tap into new markets; the demand for all commodities will increase dramatically due to pent up opportunities; debt relative to GDP is small; output of workers is likely to increase; the lag between invention of technology and commercial application is shortening; the US is emerging as the globe’s undisputed military power and, most significantly, a psychology of achievement and affluence is emerging that provides full confidence in the future.

These claims reinforced Herman Kahn’s view that boom times were coming. But I wonder what Kahn would say today? The recent congressional debt limit debate gave the country an opportunity to assess where we stand and by my lights, was a moment for gloomy predications. My chronic optimism serves as a modest counter weight, but the evidence provided in this piece speaks to conditions very different from 1982, most especially the sense of weltschmerz that dominates the present debate about the nation’s finances. But there is more, much more that should be considered.

The debt of $14 trillion is almost equal to GDP. Dollars put into circulation have increased by 50 percent since 2008, an obvious effort to monetize the debt. The unemployment rate at the moment is 9.1 percent; however if you include those no longer seeking employment, the rate is over 15 percent (13.7 million Americans are unemployed and 989,000 have given up looking for working.) Overall there are 6.4 million in the long-term unemployment category. The unfunded liability for Medicare, Medicaid and Social Security is $117 trillion, approximately $17 trillion for Social Security and $90 trillion for Medicare and Medicaid. That aggregate total is more than all the registered wealth on the globe. The CBO (Congressional Budget Office) predicts the debt in 2020 will be $20 trillion. The sum necessary to finance a debt of that magnitude is roughly equivalent to today’s defense budget.

The anticipated US fiscal budget for 2011-2012 has revenue at about $2 trillion and expenditures at $3.7 trillion with a deficit of $1.7 trillion, the largest in U.S. history. This deficit is four times greater than the one in 2008. Moreover, this figure does not take into account pension liability, which is unfunded at the state level, and accounts for another $1 trillion.

As of February 2011, the last date on which figures were available, 44.2 million Americans are on foodstamps, approximately one in seven people. Forty-seven percent of Americans do not pay personal income tax. Thirty-six percent of Americans, who file tax forms do not pay. About 142 million Americans who filed did not pay anything in 2009. Income level, nominal and actual, above $50,000 declined from 2008 to 2010, with the most precipitous decline in the $100,000 to $150,00 category. The number of those in poverty has increased 9.5 percent since 2009 with a total of 43.6 million total. China presently holds $1.14 trillion in American securities, a condition that could put American financial interests at risk.

There were 89,000 people who received checks from the Stimulus program who were dead or in prison, and 3,700 tax delinquents who received stimulus funds. The individual share of the national debt is $46,000. Gold has gone from $853 a troy ounce in 2009 to $1,800 today, a condition that bespeaks uneasiness with US markets. Household income has decreased by .7 percent since 2009 and there has been an increase of 17.1% in bank failures since 2009.

By any measure these statistics paint a gloomy picture, one that suggests the nation is at the crossroads. If you focus solely on the debt, it is easy to overlook the most fundamental problem. This nation faces a crisis not because taxes are too low but because government is too big, too intrusive, and too dominant.

If there isn’t any change in federal policy, if we continue down the road we are on, any extrapolation of the numbers leads to be a disastrous result. By 2050, according to the CBO spending will exceed GDP by 42 percent. How can our liberties remain intact when government controls such an extraordinary portion of the economy? Yet any discussion of entitlement program reduction is considered the third-rail in American politics. This disparity between political sensitivity and economic reality has to be addressed by a Congress that understands the problems but is resistant to real reform.

If the Tea Party movement stands for anything it is the belief that the growth of government imperils freedom. That is an understanding Americans must imbibe. However there is the danger the United States has reached a Platonic tipping point is which the number of takers, i.e. outliers is for greater than the number of givers i.e. tax payers. This is not a scenario for democracy’s survival. And yet, I maintain a faith in national resilience. At some point, I believe the public will awaken to the economic threat forcing the Congress to act appropriately.

As I see it, we’ve gone from the “coming boom” to the “coming gloom”, but what lies over the horizon remains undetermined.   

Fred Siegel: Historians in the not-too-distant future will be asking what happened to the middle class in America

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I always stop to read Fred Siegel when he writes something.

His new essay in City Journal opens ominously:

Forty years from now, politicians, writers, and historians may struggle to understand how America, once the quintessential middle-class society, became as socially stratified as Europe or even Brazil

He uses New York, which has experienced a dramatic drop in middle class families in just a generation, as a picture of what we see happening in pockets across the country.

He writes:

New York is the picture of what the Tea Party fears for the country at large. In the 1970s, liberal mandarins seized the high ground of American institutions in the name of managing social, racial, gender, and environmental justice on behalf of the disadvantaged. Their job, as they saw it, was to protect minorities from the depredations of middle-class mores.

The result of rule by elites has been a breakdown in social mores, expanding bureaucracies, and middle tier job loss as upper tier jobs grow. It's worth reading the article in full to get the statistics and claims he uses to substantiate his argument.

He then offers this lens through which to view the Tea Party:

The Tea Party is the national voice of the private-sector middle class—despite the demonizations heaped upon it by public-policy elites whose own judgment and competence leave much to be desired.

Key steps on Rick Perry's path to 2012

Between the Ames straw poll in Iowa and Rick Perry's anticipated announcement, August 13 is shaping up to be a pretty interesting day for GOP voters.

And as speculation only continues to swarm ahead of Saturday's events, Richard S. Dunham in the Houston Chronicle today offers an interesting look at the choices and challenges facing the Texas Governor in his possible path to the White House:

The tea party primary

For Perry to become the tea party favorite [and thus the Romney alternate], he must emerge from a pack of five possible candidates registering 12 to 16 percent among tea party Republicans in the Pew survey. His top rivals: Minnesota Rep. Michele Bachmann, Texas Rep. Ron Paul and Georgia businessman Herman Cain.

The money primary

Perry backers say [he needs] to go from zero to $10 million in a month, with a goal of at least $75 million to carry them through Super Tuesday.

Rudy-palooza

Three years ago, Perry endorsed an unlikely presidential candidate, Rudy Giuliani, and campaigned hard for the former New York mayor in Iowa. This time, Perry is counting on the moderate Yankee to reciprocate.

The Iowa caucuses

A major asset for Perry: Iowa's Republican electorate is very conservative on social issues. Meanwhile, the big field and his late start give him an opportunity to lower expectations for his performance.

The New Hampshire primary

Perry supporters will downplay his prospects in the scheduled Jan. 24 primary to minimize the political momentum generated by the expected victory of Romney.

The South Carolina primary

This very conservative, Southern state is fertile ground for Perry. Many of the state's most talented operatives have signed on with other contenders.

The sprint to Super Tuesday

Perry is counting on a political coalition including Christian conservatives and the remnants of Giuliani's 2008 campaign organization. The Texas governor hopes to sweep the Super Tuesday South [and California] to overcome any edge others might have elsewhere.

Bridges to the establishment

If Perry is standing after Super Tuesday, he'll need to make inroads with establishment Republicans to win a first-ballot majority at the Republican National Convention.

Target: Tampa

Perry would have several goals at the GOP convention in Tampa: Unifying his party, defining the stakes of the 2012 election and taking aim at key swing states, starting with host Florida.

Next stop: 1600 Pennsylvania Ave.

With the nomination in hand, Perry would focus like a laser beam on the economy, comparing his Texas record of job creation and balanced budgets with President Barack Obama's record of rising unemployment and deficits.

Dunham's full insight on each of the 10 steps is available to view here.

Paul Revere: The downgrade points to a dire economic and fiscal condition that hits the rising generation the hardest

Paul Revere is in his 20s, and is concerned about the impact of the growing national debt on his generation. He is a regular ConservativeHome contributor.

With the long-expected downgrade of America’s long-term expectations by Moody’s, and the immediate downgrade of America’s bond rating by S&P on Friday evening, politicians should have an interesting weekend. This downgrade could very well lead to higher interest payments- and an extra one percent rate hike would equal $150 billion in annual payments. That’s about 4% of the 2011 federal budget.

Of all the analysis at the link above, the takeaway is the following (paraphrased): the recent debt deal did not cut enough future debt; the political debacle surrounding the debt deal showed political weakness and political inability to address the problem; and neither tax increases or significant entitlement reforms are on the horizon.

Let’s look at a few items related to all of this:

• This year alone, the deficit— the annual payments by Congress that are spent with borrowed money— is expected to be $1.6 trillion. This means each of the 150 million workers in America will owe $10,667 above and beyond their own personal debt by the end of the fiscal year, September 30.

• Throughout 2011, Congress has debated how much to cut from that $10, 667. In the most recent debate, on whether or not to allow Congress to borrow more money, the final plan cut less than 10% of the expected debt per worker in 2021. Workers, you can thank your Member of Congress for bringing your portion of the public debt in 2021 from $161,637 to just over $146,000. This is in addition to any credit card, housing, car and college debt you may have incurred.

• Prior to the most recent changes to the government’s estimates on the life of Social Security and Medicare, payroll taxes were expected to rise from 15.3% of income to 25.07%. With the new estimates shaving a year off the life of Social Security, and five years off of the life of the hospital fund of Medicare, that expectation may have gotten much worse.

Of course, instead of paying extra Social Security taxes, you could just lose 22% of your scheduled benefits. Either/or.

• In fiscal year 2010, interest payments totaled $414 billion. Through five-sixths (83.333%) of FY 2011, interest payments have totaled $413 billion. While the year-end calculation of interest payments is not a straight-line calculation, if we end up with the $1.6 trillion deficit CBO estimated, our national debt will be about $15.1 trillion. This means our interest alone in 2011 will be $445 billion- fully 11.71% of the federal budget.

With the downgrade, of course, those payments could be about one-third larger.

When it comes down to it, old people won’t be catching the full fallout of America’s failed fiscal policies. It will be the young people who can’t get jobs and thus can’t invest, pay off personal debt or buy their first home prior to 30. It will be the young people who can’t afford to retire before 75 because higher taxes will decimate their paychecks. It will be the young people who will watch as America turns into the failed empires of Rome, Napoleonic France and the USSR— and who will be unable to pass along to their own children a better way of life.

Budget Showdown Lesson: The Old Clinton Playbook is Officially Out of Date

Tevi Troy is a Senior Fellow at the Hudson Institute and author of Intellectuals and the American Presidency: Philosophers, Jesters, and Technicians. He has previously served as a senior White House aide, and worked for the House Republican Policy Committee during the 104th Gingrich Congress.

Just after the election last November that brought back Republican control of the House, I predicted here that Republicans would do much better in a budget showdown with President Obama than the Gingrich Congress did against President Clinton in their own budget showdowns of the 1990s.

Obama and the Democrats thought otherwise, and he even prepared for a GOP Congress by reading books about the Clinton administration, and studying up on how Clinton outmaneuvered the GOP during the 1995-1996 government shutdown. The Democrats seemed to be counting on breaking out the old Clinton playbook to give the GOP another thumping and to regain political momentum. 

While partisans on both sides continue to argue over who won and who lost the recent debt ceiling face-off, it is quite clear that the GOP did not get their heads handed to them, as they did under Clinton. Each of the three reasons I mentioned last November played a key role in the establishment of a new script for budget confrontations.

The first reason had to do with leadership, as I predicted that House Speaker John Boehner “won’t be trapped into making the same kind of tactical and rhetorical mistakes that Clinton goaded Gingrich into making.”  The difference between Boehner and Gingrich was quite apparent over the past few months, as Boehner led his oft-unruly caucus with a steady hand, giving when he had to, but staying true to his party’s core principles throughout.  Most importantly, he never made any major public mistakes, as Gingrich did when he complained about Clinton’s treatment of him on Air Force One, which led to the infamous and iconic “cry baby” headline in the New York Daily News.  Boehner’s steadiness and mistake-free style prompted the Democrats to change tactics and aim their fire at Majority Leader Eric Cantor instead, which had only limited effectiveness.

Second, I noted that the GOP conference elected in 2010 was very different than the post-1994 caucus, and quoted Fred Barnes’ observation that “[m]ost of the 80-plus new members are spending hawks.”  This reconfigured caucus made a real difference in recent days, as it became abundantly clear that they would hold the line when it came to both insisting on spending cuts and resisting tax increases.  Democrats and other commentators have called them “terrorists,” “jihadists,” and the like for this stance, but they also now know that the GOP caucus is not from the go-along-get-along school of public officials.

Third, and most importantly, I noted that the change in the media over just the last decade and a half had given Republicans new outlets for getting across their message, and the Republicans made the most of these outlets. Tools like search engines, YouTube, and social media have leveled the playing field and improve Republicans’ ability to disseminate their message.  In the previous budgets showdowns, Republicans fought an uphill battle against media bias.  This time, Republicans still had to deal with media bias, but they also had sympathetic outlets on cable, in print, on the web, and over the airwaves that did not exist previously. 

Furthermore, the Internet helped keep the media honest. Republicans may not always agree with the decisions of a “neutral” judging site like PolitiFact, but PolitiFact judgments will call Democrats out for mis-statements along with Republicans. In the debt ceiling debate, for example, Politifact found that Obama’s statement that “a ‘clear majority’ of Republican voters think tax revenues should be included as part of a budget deal” was mostly false; that Harry Reid’s claim that the U.S. lost 8 million jobs during George W. Bush's years in office deserved a “pants on fire,” as did Nancy Pelosi’s chart minimizing the Obama administration’s role in national debt accumulation; and that Obama earned a Full Flop on the Flip-O-Meter for having switched positions on raising the debt limit.

This useful service, coupled with the growth of ombudsmen at such previously impregnable institutions such as the New York Times and the Washington Post, as well as legions of bloggers flyspecking every word from politicians and reporters alike, helped change the media equation for Republicans.  These factors do not eliminate media bias, but they sure make it harder for media to get away unchallenged with obvious displays of bias.

The changing face of the media can best be seen in the way the White House press corps challenged Obama and his communications apparatus on his lack of a plan for dealing with the debt ceiling hike.  Obama has used this tactic of lofty rhetoric coupled with elusive details before, particularly on health care, but in this instance, the tactic failed him, as reporters kept asking him and his representatives where their plan was.  At one point, NBC’s Chuck Todd pressed White House Press Secretary Jay Carney so hard on this point that Carney got flustered and asked “You need it written down?”  In the past, the answer might have been no, but this time around, thanks to the collapse of the mainstream media’s monopoly on the news, the answer was “yes.”

Unfortunately for the White House, none of these three factors are likely to change anytime soon.  Boehner has shown that he can remain cool under pressure, the Republican spending hawks are further emboldened by their show of resolve, and the media landscape is getting ever flatter. What all this means is that President Obama needs to throw out the Clinton playbook and come up with a new one.  1995-1996 version is now officially out of date.