1. ‘Obama’s Approach Is Not How to ‘Live Within Our Means’ – Jeffrey Anderson, The Weekly Standard

This piece is a friendly reminder that President Obama’s recent talk of cutting spending and decreasing our nation’s debt is large departure from his policies and very recent past priorities. President Obamas’s budget for 2011 (rejected in the Senate 97-0 and the last time he actually put his plan down on paper for judgement) showed his true colors; Ever increasing government spending and deficits that grow and grow:

But even if our levels of taxation had stayed at that postwar high of 20.6 percent, that wouldn’t have come anywhere near covering Obama’s unprecedented appetite for spending. Obama’s budget calls for spending an average of 24 percent of GDP across ten years. Pre-Obama, the last time the federal government spent 24 percent of GDP was during World War II (see table 1.3).

Obama disingenuously suggests that if he had been faced with a surplus in 2000, he would have used it to help pay off the debt. Yet three straight $1 trillion-plus deficits haven’t lessoned his appetite for “investments” (particularly in Obamacare, fast trains, and “green energy”), nor his desire to borrow another $2.4 trillion for the next year and a half.

In addition, Obama once again falsely implied that he somehow has a plan to reduce deficit spending by $4 trillion. That’s a phantom $4 trillion from a phantom plan. The only real plan Obama has put forward is his budget, and deficit spending under his budget would be $1 billion a day higher than under the Paul Ryan-authored House budget. In all, Obama’s 10-year budget calls for raising our national debt to a staggering $27.6 trillion — from $14.5 trillion today and $9.986 trillion shortly after he was elected.

2. ‘China’s Military Flexes Its Muscle‘ – Tom Vanden Brook and Calum MacLeod, USA Today

A medium-length article detailing some of the latest developments of the Chinese military and how the US military is reacting to them:

The United States has far more ships and warplanes worldwide, but in just two decades China has created the largest force of submarines and amphibious warfare ships in Asia. Its air force has added hundreds of fighter jets comparable to U.S. F-15s and F-16s. This year China’s military announced it had successfully tested a military fighter jet — the J-20 — that based on video appears to have radar-evading stealth characteristics.

China also announced it is about to launch its first aircraft carrier and is developing an anti-ship missile that can strike from 900 miles away, according to the Pentagon report.

3. ‘If a Law Doesn’t Work, Waive It Away?‘ – John E. Sununu, The Boston Globe

Former Senator John Sununu lucidly explains how the Obamacare waiver campaign showcases the Health Care Reform law’s haphazard and reckless nature. It may not seem like much to ask, but I would like our democratically elected leaders to know what is in a law before they pass it and force us citizens to live under its yoke:

HHS began shutting down the waiver program – an action it announced on a Friday afternoon, the customary way to bury bad news in Washington. Companies now face a September deadline to apply for protection. After that, they’re out of luck. According to the administration, without the special treatment, health care premiums for 3 million workers would have gone up by 10 percent or more. A note to social engineers of all parties: If you have to protect 3 million people from a brand-new law, it probably wasn’t very well written in the first place.

That this was an unintended consequence is clear from the fact that the law never contemplated a need for waivers in the first place. In a stroke of bureaucratic magic, HHS simply granted itself the power, and started dispensing the passes. Only when independent groups started pressing for transparency did things begin to shut down.

The broader lesson here is that the constant need for special waivers is symptomatic of poorly written public policy. It’s a signal that the cost of compliance is unreasonably high; the benefits are hard to measure; and either legislators or regulators have failed to do their homework.

4. ‘The Independent Payment Advisory Board Could Be Obama’s Achilles’ Heel‘ – Doug Scheon, Huffington Post

Speaking of Obamacare failures and unintended consequences, even the Huffington Post has come out against the Independent Payment Advisory Board (IPAB), which empowers unelected bureaucrats to determine medicare coverage:

For conservatives, Independents and a growing number of Democrats, the Independent Payment Advisory Board (IPAB) that was created with the passage of last year’s health care law represents the worst of health care reform. IPAB would allow an unelected board to singularly enact spending cuts in the Medicare program through binding recommendations to reduce Medicare spending.

Last weekend, Reps. Tim Bishop of New York and Eddie Bernice Johnson of Texas were the latest Democrats to join the increasing bipartisan effort that opposes IPAB as they signed on as co-sponsors of Rep. Phil Roe’s bill to repeal it. Quite simply, IPAB has so many opponents because it embodies centralized planning from Washington, D.C., and enables unelected bureaucrats to make decisions about people’s health care. The contrast couldn’t be more clear: a new government body (IPAB) charged with taking resources away from the beloved Medicare program.

5. ‘Why Is the Left So Frustrated with Obama?‘ – Jay Cost, The Weekly Standard

For many conservatives, it is difficult to understand that many liberals are unhappy with President Obama. Leave it to the always enlightening Jay Cost to explain why many liberals have good reasons to be upset with the man they held such hope for:

Between 1968 and 2004 liberals did not win a single presidential election. Republicans won seven of the ten elections held during this period, and Southern, moderate Democrats won the other three. Worse for liberals, both Jimmy Carter and Bill Clinton regularly governed without much regard for the liberal flank of their own party – as can be seen in Carter’s opposition to a universal health care bill sponsored by Ted Kennedy, and Bill Clinton agreeing to NAFTA, a balanced budget, and welfare reform…

Then along comes Barack Obama, an extremely appealing candidate for liberals. For starters, his background as a state senator in Hyde Park indicated pretty clearly that he was on the left-hand side of his party. Yet at the same time Obama proved himself extremely adept at avoiding the kind of entanglements that undermined candidates like Dukakis and Kerry. There was no Willie Horton furlough flap. No Kerry moment – “I voted for it before I voted against it.”  And, unlike Al Gore, Obama could articulate traditional Democratic themes without sounding like an over-rehearsed imitation of William Jennings Bryan.

Thoughts? Questions? Recommendations?

I would like to recommend that you watch this fascinating and poignant interview with Ken Langone, co-founder of Home Depot. Mr. Langone discusses the debt ceiling debate, President Obama’s damaging class welfare rhetoric, and America’s poor job market. Mr. Langone’s words and advice should be heeded in Washington. Enjoy

1. ‘Give Greece What It Deserves: Communism‘, Bill Frezza, Forbes

No real need to provide an introduction to this bitingly fun take down of modern Greece. Just read it!:

What the world needs, lest we forget, is a contemporary example of Communism in action. What better candidate than Greece? They’ve been pining for it for years, exhibiting a level of anti-capitalist vitriol unmatched in any developed country. They are temperamentally attuned to it, having driven all hard working Greeks abroad in search of opportunity. They pose no military threat to their neighbors, unless you quake at the sight of soldiers marching around in white skirts. And they have all the trappings of a modern Western nation, making them an uncompromised test bed for Marxist theories. Just toss them out of the European Union, cut off the flow of free Euros, and hand them back the printing plates for their old drachmas. Then stand back for a generation and watch.

2. ‘Some Federal Workers More Likely to Die Than Lose Jobs‘, Dennis Cauchon, USA Today

A major indictment of the efficiency of our Federal government bureaucracy is found in this study done by USA Today. In the study, it was found that only .55% of federal employees were fired in the 2010 calendar year. So we tax payers are supposed to swallow that our federal bureaucracies are having a 99.45% success rate in finding effective and worthy employees? It seems that if a department wants to replace someone, they just have to wait for them to die, that’s all:

Death — rather than poor performance, misconduct or layoffs — is the primary threat to job security at the Environmental Protection Agency, the Small Business Administration, the Department of Housing and Urban Development, the Office of Management and Budget and a dozen other federal operations.

The federal government fired 0.55% of its workers in the budget year that ended Sept. 30 — 11,668 employees in its 2.1 million workforce. Research shows that the private sector fires about 3% of workers annually for poor performance, says John Palguta, former research chief at the federal Merit Systems Protection Board, which handles federal firing disputes.

3. ‘Home Depot Co-Founder: Obama Is Choking Recovery‘, John Merline, Investor’s Business Daily

An informative interview with a man who built a small business into a giant, hiring thousands of Americans along the way:

IBD: What’s the single biggest impediment to job growth today?

Marcus: The U.S. government. Having built a small business into a big one, I can tell you that today the impediments that the government imposes are impossible to deal with. Home Depot would never have succeeded if we’d tried to start it today. Every day you see rules and regulations from a group of Washington bureaucrats who know nothing about running a business. And I mean every day. It’s become stifling.

If you’re a small businessman, the only way to deal with it is to work harder, put in more hours, and let people go. When you consider that something like 70% of the American people work for small businesses, you are talking about a big economic impact.

IBD: President Obama has promised to streamline and eliminate regulations. What’s your take?

Marcus: His speeches are wonderful. His output is absolutely, incredibly bad. As he speaks about cutting out regulations, they are now producing thousands of pages of new ones. With just ObamaCare by itself, you have a 2,000 page bill that’s probably going to end up being 150,000 pages of regulations.

4. ‘Obamacare’s Raid On the Medicine Cabinet‘, John Graham, Washington Times

HHS Secretary Kathleen Sebelius testified before the House Energy and Commerce Committee last week. The subject was the impact the new Independent Payment Advisory Board (IPAB) will have on doctor’s reimbursement rates and whether that would lead to denied care for seniors on Medicare. She denied that there would much impact because savings would be found elsewhere in Medicare Parts C (Medicare Advantage) and D (prescription drug plans).

John Graham provides hard figures showing even if you took all the “savings” from these other programs, the Board would still be far short of reaching it’s cost-cutting mandate. All this to mean that the Board WILL have to cut physician reimbursement rates significantly because it simply has no where else to look:

Although IPAB can theoretically cut Medicare Advantage, the private program used by one-quarter of Medicare beneficiaries, Obamacare has already subjected Medicare Advantage to $145 billion in cuts this decade. This analysis suggests that IPAB will have to carry a lot more weight than expected. In 2019 alone, Medicare spending will likely be about $75 billion higher than officially estimated – or 7.5 times greater than what IPAB is called upon to save in the official estimate. For the entire decade, Medicare spending will be more than $400 billion greater than Obamacare estimates.

5. ‘The Half-Trillion Plan‘, Charles Krauthammer, Washington Post

With the debt ceiling THE issue in national politics right now and several plans floating around, Charles Krauthammer has an interesting (and in my view, most persuasive) take on the options facing Congress and the President. He calls it the Half Trillion Plan:

— The G6, proposed by the bipartisan Gang of Six senators, reduces 10-year debt by roughly $4 trillion. It has some advantages, even larger flaws.

— The Half-Trillion raises the debt ceiling by that amount in return for an equal amount of spending cuts. At the current obscene rate of deficit spending — about $100 billion a month — it yields about five months’ respite before the debt ceiling is reached again.

If you have other articles you want to recommend or have an opinion on our choices, let your voice be heard in the Comments.

The Washington Post chart above (H/T Cato) clearly lays out three key truths: 1. The United States government has a structural problem controlling it’s level of debt and spending 2. The growing size of the federal government and its debt has been a bipartisan affair 3. President Obama’s tenure has greatly exasperated America’s short and long term financial situation.

In 30 years the United States’ debt has increased from $1 trillion dollars to $14 trillion and if the chart continued into the projected future, well, you would have had to scroll even further down to read this. I may not be an economist or an expert on Congressional budgets, but I don’t have to be to know we are on the wrong track. The past few weeks we have constantly heard the President and numerous other political leaders strongly defend the status quo. Sure there is much talk about ‘cutting spending’, but where are the details?

We need much more than gimmicks and baseline budgeting tricks to solve our real problems. We need leaders to tackle the transparent challenge shown in the aforementioned chart and we just aren’t getting it from this White House and Senate. For gosh sakes, the US Senate has put a constitutionally mandated budget in over two years! Why haven’t they? It’s pretty simple: If you never take a stand, you never have to take responsibility. I’ll finish with the first and last entries on Congressman Paul Ryan’s (a man who put out a budget all by himself, are you listening US Senate?) timeline of the Obama administration’s financial stewardship:

January 20, 2009
President Obama sworn into office

• President tells the American people in his Inaugural Address: “Those of us who manage the public’s dollars will be held to account, to spend wisely, reform bad habits, and do our business in the light of day, because only then can we restore the vital trust between a people and their government.”
• Debt Held By Public = $6.31 trillion

……..

July 15, 2011
President Holds Press Conference: “We’re Running Out of Time” to Deal with Debt

• President Obama tells reporters: “I’ve got reams of paper and printouts and spreadsheets on my desk, and so we know how we can create a package that solves the deficits and debt for a significant period of time.  But in order to do that, we got to get started now.”
• The American people have still not seen any “paper” or “printouts” of what specific spending cuts the President supports.  The American people have still not seen any “spreadsheets” from the White House to corroborate their claims of having offered a deficit reduction plan.
• While it’s long past time for Washington “to get started now” on tackling our debt problems, President Obama has still not proposed a credible budget, and Senate Democrats have still not proposed any budget.
• Debt Held by Public = $9.75 trillion

Saturday’s lead editorial in the Wall Street Journal poignantly identifies the problem with the President and the liberal elite’s mindset in today’s politics: let’s focus on new programs and bury any discussion of how we’re going to pay for them or the current ones we already can’t afford. The WSJ says it best:

“Maybe the most unknowing moment from President Obama’s debt-limit press conference the other day was when he said that, ‘I’d rather be talking about stuff that everybody welcomes, like new programs.’ Define everybody—and, please, let us know when the new programs are going to stop.”

Yes, Mr. President, please tell us when we can finally start addressing the record debt and deficits. Or the impending bankruptcy of Medicare. Or the several trillion dollar shortfall in the Social Security Trust Fund. Or the rising interest that we have to pay to service our massive debt to foreigners (41 cents of every dollar we spend is borrowed!). Or a handful of other disastrous budgetary issues we have ignored over the past several years (like pensions, for starters).

In light of this deep hole we are in as a country – and the very real display in Greece of what our future might look like if we stay on this current path – it is absolutely stunning to think we are still pondering new government programs. Just a cursory look at the several thousand federal programs and agencies that we have now should put to rest the thought that we need any more government or that the government we currently have is somehow cost-effective.

Yet this is the guiding light of modern day liberalism. As Thomas Sowell recently put it when discussing President Obama’s advocacy for a new high-speed rail program, “One of the most successful political ploys is to promise people things without having the money to pay for them. Then, when others want to cut back on the things that have been promised, blame them for lacking the compassion of those who wrote the checks without enough money in the bank to cover them.”

Nevertheless, with an ever increasing percent of the American population paying no federal income taxes, receiving government-run health care and cashing in on welfare programs (e.g., unemployment benefits, food stamps), the argument for a fiscally sane federal government is becoming a more difficult sell.

Sadly, it might take a default on the national debt before Americans realize we are on an unsustainable path. In the meantime, it appears the conductor (President Obama) will be sitting in the caboose figuring out how to add more cars to the train.

Senator Barack Obama, March, 2006:

“The fact that we are here today to debate raising America’s debt limit is a sign of leadership failure,” he said. “It is a sign that the U.S. Government can’t pay its own bills. It is a sign that we now depend on ongoing financial assistance from foreign countries to finance our Government’s reckless fiscal policies. … Leadership means that ‘the buck stops here.’ Instead, Washington is shifting the burden of bad choices today onto the backs of our children and grandchildren. America has a debt and a failure of leadership. Americans deserve better. I therefore intend to oppose the effort to increase America’s debt limit.”

Senator Obama was right. Too bad, he’s now the President and appears to have not meant a word of that statement above. Too bad for all of us. President Obama has tried to portray himself as the adult in this debt ceiling debate, but when it comes to taking care of our nation’s fiscal well being his administration has made a drunk teenager in love look responsible and mature. Just months ago he released a budget so unserious that his own party and the entire Senate disowned it 97-0. He came into office to lead a country facing massive debt and managed to make the situation even worse as our debt has sky rocketed in the past 3 years. He not only has failed to do anything to rectify our coming entitlement crisis, he has actually made them even worse by passing a new health care entitlement and vilifying anyone who is willing to address Medicare, Social Security, and Medicaid, all of which are facing major funding shortages.  Barack Obama is many things, a good leader, he is not.

Why the Jobs Situation Is Worse Than It Look2. ‘Obama’s focus on visiting clean-tech companies raises questions‘ – Carol D. Leonnig, Joe Stephens and Alice Crites, Washington Post

1. ‘Why the Jobs Situation is Worse Than It Looks‘ – Mort Zuckerman, US News and World Report

Zuckerman details how our economy and job situation is worse than even an unemployment rate of 9.1% make it appear. Plain and simple, America’s job market has been faltering for three years and is not currently showing signs of significant improvement that one would expect during a recovery. Zuckerman, an Obama supporter in 2008, believes this administration’s fiscal and economic policies have failed greatly:

The Great Recession has now earned the dubious right of being compared to the Great Depression. In the face of the most stimulative fiscal and monetary policies in our history, we have experienced the loss of over 7 million jobs, wiping out every job gained since the year 2000. From the moment the Obama administration came into office, there have been no net increases in full-time jobs, only in part-time jobs. This is contrary to all previous recessions. Employers are not recalling the workers they laid off from full-time employment.

The real job losses are greater than the estimate of 7.5 million. They are closer to 10.5 million, as 3 million people have stopped looking for work. Equally troublesome is the lower labor participation rate; some 5 million jobs have vanished from manufacturing, long America’s greatest strength. Just think: Total payrolls today amount to 131 million, but this figure is lower than it was at the beginning of the year 2000, even though our population has grown by nearly 30 million.

2. ‘Obama’s focus on visiting clean-tech companies raises questions‘ – Carol D. Leonnig, Joe Stephens and Alice Crites, Washington Post

A thorough report on some of the winners and losers of the Obama administration’s green job promotion. The stimulus package was full of giveaways to companies doing green projects and when the government gives away money or tax breaks there are inevitable winners and losers. This report details how many of the ‘winning’ companies had connections to Obama’s campaign and many of the losers did not. When one company making electric car batteries gets federal money and another one doing the same thing doesn’t it’s called crony capitalism:

There was intense competition for clean-tech stimulus dollars. Energy Secretary Steven Chu said his agency reviewed 50,000 applicants and chose 5,000, a 90 percent rejection rate.

For the winners, there was an added bonus when Obama or his Cabinet secretaries dropped by to tout progress. “You couldn’t get that kind of publicity if you devoted all your advertising budget to it,” said Brendan Doherty, an assistant professor at the U.S. Naval Academy who has studied and written about presidential travel.

Obama began his clean-tech travel in March 2009. At a number of companies the president visited, there were connections — not all of them close, to be sure — to his 2008 campaign. Over the months, Obama touted a Florida’s utility’s electric grid project (a company in an Obama fundraiser’s portfolio was doing extensive business with the project) and a Nevada company that generates emission-free power from waste heat, the warmth radiated by machines or industrial processes (an Obama fundraiser is a partner in a venture fund that has a small stake in the company).

3. ‘The McKinsey Health Insurance Survey Was Rigorous, After All‘ – Avik Roy, Forbes

FMFP recommended this article which details the methodology behind the McKinsey Health Insurance Survey which concluded that tens of millions of working Americans would be dropped from their current employer’s insurance and forced onto Obamacare rolls. Commentator S O brought to our attention that McKinsey did not release how they came to their numbers, but hopefully this will clear things up:

Because McKinsey had refused to release details of the methodology used in their work, Democrats and left-of-center writers accused the company of having something to hide. A “keyed-in source says McKinsey is unlikely to release the survey materials because ‘it would be damaging to them,’” asserted Brian Beutler in Talking Points Memo. Senator Max Baucus (D., Mont.) wrote a letter to McKinsey demanding they release the survey’s methodology, with three House committees intending to follow suit.

Well, lo and behold, McKinsey decided to release the details: the full questionnaire used in their survey, along with a 206-page report detailing the survey’s complete results. Accompanying these details was a thoughtful discussion of the survey’s methodology, one that pops the balloon of those who tried to tar McKinsey as some sort of careless, partisan outfit. Despite reporting which implied that McKinsey wanted to distance itself from its own work, the company declared, “We stand by the integrity and methodology of the survey.”

4. ‘The U.S. and E.U.: Have They Ever Been in Such Terrible Shape?‘ – Josef Joffe, The New Republic

Joffe sheds light onto how the Greek crisis is hurting both the EU, Germany and France, and the United States and that the situation is likely to get worse. Europe and the United States have been the saviors for so many facing tough or critical fiscal crisis, but as Joffe asks ‘who will save them?’:

Europe will inevitably buy time by handing over a few more slices of bail-out money to Greece, even though, one day, the country will default. With 50 cents of the euro, it will halve its debt as well as its repayments and thus buy more time. The E.U., meanwhile, still won’t have any idea where it’s going or how to handle the crisis long-term. But what else is new? Twenty-seven governments do not a “more perfect union” make. Certainly not when the natural leader, which is Germany by dint of wealth and weight, sounds such an uncertain trumpet as it has under Chancellor Merkel. Yet what, exactly, is she supposed to do when the chickens of an ill-designed monetary union have finally come home to roost? Neither she nor Sarkozy can undo the mismanagement of the PIIGS in one fell swoop.

Meanwhile, back to the United States—to its still-sinking dollar and rising unemployment. It is hard to think of a time when both the U.S. and the E.U., the two biggest players in the international economy, were in such miserable shape. We are talking about two giants with a total of 50 percent of global GDP. Who will save them?

5.’The Local Government Pension Squeeze‘ – Steve Malanga, Wall Street Journal

We all know that the US federal government and numerous state governments (Illinois, California, Wisconsin a few months ago) are facing rising fiscal crisis. Basically, these entities are spending far more than they are bringing in and they have structural issues (entitlements for the federal government, pensions for the states) that are the wolf at the door. Well, our nation’s city governments are also facing fiscal crises that are already coming to a head. You can’t have libraries, police, and no pot holes when half your budget is going toward retired city workers:

While the national media has focused on state budget face-offs between government unions and governors such as Wisconsin’s Scott Walker, municipal officials like Mr. DeStefano are engaged in their own budget warfare. Wages and benefits account for 30% of state general fund expenditures, according to data from the National Governors Association. But U.S. Census surveys show that in the typical town or school district, employee pay and benefits can consume from 70% to 80% of the budget.

Pensions are an enormous part of the problem. While pension payments now consume about 4% of state budgets, many municipalities are already spending 15% to 20% of their finances on pension costs. Earlier this year, California’s Little Hoover Commission, a government oversight agency, observed: “Barring a miraculous market advance and sustained economic expansion, no government entity—especially at the local level—will be able to absorb the blow [from rising pensions] without severe cuts to services.”

Costa Mesa, Calif. (population 110,000) made news earlier this year when it sent layoff notices to 43% of its employees. In 10 years, the city’s annual pension bill increased to $15 million from $5 million and now consumes 16% of the city’s $93 million budget. In nearby Anaheim, pensions already account for 22% of its $252 million budget. San Jose’s pension costs for police and firefighters have quadrupled in a past decade. Without reform, the city estimates that its yearly pension costs, $63 million in 2000, will swell to $650 million in 2015.

1.’The ‘Anti-Christie’ Agenda Driving Connecticut‘ – Steven Malanga, Real Clear Markets

This is the story of the new Democratic governor of Connecticut, Dannel Malloy, who apparently fancies himself an anti-Gov. Chris Christie. Good luck Connecticut, as it seems likely you are just speeding up the time when you’ll need your own Chris Christie:

But despite proclamations in the press and the statehouse that Dannel Malloy, the state’s first Democratic governor in 20 years, was seeking to distinguish himself from anti-tax governors like Chris Christie and also from Connecticut’s past, the new ruling regime in Hartford is merely taking the state in the same direction it’s been heading for decades, albeit at a quickening pace. Under previous joint rule by Democrats and Northeastern Republicans, Connecticut became one of the nation’s most heavily taxed, heavily indebted, and economically struggling states. The new Connecticut looks suspiciously like the old one, maybe just on steroids.

Back when those ‘tax-cutting’ Republicans were in control of the governor’s office in 2009, for instance, Connecticut already had the highest per capita state and local tax burden in the country, according to the Tax Foundation. The state’s commercial taxes, the foundation estimated, amounted to the third highest burden on businesses in the country.

2. ‘China’s Cyberassault on America‘ – Richard Clarke, Wall Street Journal

Clarke, former head of American counterterrorism, warns that cyber attacks from the Chinese government are becoming more and more threatening to American national security:

Senior U.S. officials know well that the government of China is systematically attacking the computer networks of the U.S. government and American corporations. Beijing is successfully stealing research and development, software source code, manufacturing know-how and government plans. In a global competition among knowledge-based economies, Chinese cyberoperations are eroding America’s advantage.

The Chinese government indignantly denies these charges, claiming that the attackers are nongovernmental Chinese hackers, or other governments pretending to be China, or that the attacks are fictions generated by anti-Chinese elements in the United States. Experts in the U.S. and allied governments find these denials hard to believe.

3. ‘Nobel Prize Winner Analyzes the Obama Growth Gap‘ – Daniel Mitchell, CATO Institute

Mitchell provides us with some telling graphs of the US economy by economist Robert Lucas. These graphs show a sharp fall in GDP growth for the US during the current recovery, a troubling sight to see when many expected a strong turnabout after the recession ended:

I’ve explained before that one of the most damning pieces of evidence against Obamanomics is that the economy is suffering from sub-par growth, something that is particularly damning since normally one expects to see faster-than-average growth following an economic downturn.

In a recent presentation, Robert Lucas of the University of Chicago included a couple of graphs that illustrate this phenomenon. This first chart shows the history of U.S. economic growth over the past 140 years. As you can see, the growth rate was remarkably constant over time, and there were always periods of rapid growth following economic downturns.

4. ‘GOP shifting on anti-tax policy‘ – Lisa Mascaro, Los Angeles Times

This article details the internal debate within the GOP regarding closing tax holes and deductions, highlighted by the recent ethanol subsidy vote in Congress:

The ethanol tax credit provided a glint of a breakthrough for Coburn. But other tax breaks are more complicated. For example, an oil company tax break long in the crosshairs of Democrats also applies to countless other industries nationwide.

Even more politically fraught are tax breaks for individual earners: tax-free employer-sponsored health benefits, the tax-deferred 401(k)-style retirement accounts, and the sacred mortgage interest deduction. Republican congressional leaders have flatly declared that taxes will not be on the table during the summer’s negotiations over increasing the nation’s $14.3-trillion borrowing limit. But proposals to raise revenue are being pushed onto the table over GOP resistance. Both the Obama administration and congressional Republicans want to streamline the tax code, an issue that could come be up for debate later this year or next.

5. ‘Who Is James Johnson?‘ – David Brooks, New York Times

In short, he’s a crook who made a fortune for himself and many other powerful political friends while helping collapse the American housing market, a devastating result for millions of families:

The most devastating scandal in recent history involved dozens of the most respected members of the Washington establishment. Their behavior was not out of the ordinary by any means.

For that reason, the Fannie Mae scandal is the most important political scandal since Watergate. It helped sink the American economy. It has cost taxpayers about $153 billion, so far. It indicts patterns of behavior that are considered normal and respectable in Washington.

The Fannie Mae scandal has gotten relatively little media attention because many of the participants are still powerful, admired and well connected. But Gretchen Morgenson, a Times colleague, and the financial analyst Joshua Rosner have rectified that, writing “Reckless Endangerment,” a brave book that exposes the affair in clear and gripping form.

The United States has suffered through unserious leadership for years now. Besides a flawed, but well-intentioned effort to reform our faltering social security entitlement system, President George W. Bush did little to curb the relentless government spending that is putting our remarkable country in peril. In his three years so far in office, President Barack Obama has not only done absolutely nothing to contain our out of control deficits and spending, but actually put them on an even more unsustainable path.

The numbers don’t lie; the American financial system and economy is in deep trouble:

Obama’s ten year budget projections, which include optimistic GDP growth estimates, contain over a trillion dollars in debt annually. Our dire situation is not just for policy wonks or Chicken Littles. One only has to look to what is happening in Greece this very day to remind us how bad things can become. How did we get here?

Walter Russell Mead attempts to answer that question in a piece called ‘When Government Jumps the Shark‘. He brings his readers along the progressive path to a growing government with more and more responsibilities. The first few stages usually have gone well with small government programs providing services that the American people want and can use, but then comes trouble….

The fourth stage of life comes when the Great White Elephant morphs into a Great White Shark: a man-eating terror of the deep that ruthlessly attacks anyone who gets in its way.  At this stage the government program has moved beyond being wasteful and has become unsustainable.  Fannie Mae goes from providing mortgages to creditworthy households to providing vast numbers of mortgages to uncreditworthy households, poisoning the financial system with bad loans.  Medicare is unsustainable in the medium term and hugely expensive day to day — even as the procedures and regulations of Medicare warp investment decisions across the entire health care system.

But even as these programs become unsustainable, they have become so powerful — there are so many interests and industries that grow rich on these programs, and so many families for whom these programs have become the cornerstone of what little financial security they have — that they cannot be touched.  One way to tell when an elephant has morphed into a shark: when pundits and politicians start describing a government program as a ‘third rail’: you touch it, you die.

The Great White Shark is a menace that cannot be controlled.  The program has gone rogue: the Army Corps of Engineers isn’t just building pointless dams.  It is building bad dams.  The agricultural subsidies aren’t just encouraging farmers to plant wasteful crops; by subsidizing corn ethanol they are contributing to food price inflation that threatens political stability in countries like Egypt.  But just as the programs are most in need of reform, reform becomes impossible.  If you try to stop Fannie Mae from tempting poor urbanites into ruinous mortgages..

The problem today is that we are looking not just at one or two government programs that have succumbed to elephantiasis or turned into sharks; the progressive complex of social and economic policy as a whole has reached this point.  Today many of our New Deal and Great Society programs are either elephants or sharks.  They either lead us to misallocate scarce resources in ineffective ways or they threaten us with ruin by becoming politically untouchable budget busters.

Progressivism itself, and not simply the individual government programs it spawns, is moving through the same cycle of life.  The most urgent social problems that progressivism set out to solve have been dealt with.  Child labor and lynch mobs are no longer common in the United States.  The greatest natural and scenic treasures of the country are protected by the National Park system.  Food is much less dangerous, buildings are better built, cars are safer, the air and water is in better shape and the charismatic megafauna (big interesting animals) have been saved from extinction.  Many more people have much more access to education today than was true 100 years ago; ditto for lifesaving medical treatment.

The progressive vision morphed from Great White Hope and Great White Father into Great White Elephant over the years.  Early progressives picked the low-hanging fruit; they addressed the most important problems that were most susceptible to progressive interventions.  Increasingly they are left with more expensive, less effective approaches to big problems (like Obamacare) or the agenda moves from issues of great moral and political significance like equal rights for African-Americans to less consequential issues like wider social acceptance of the transgendered.  To raise the percentage of young Americans attending college from 2 percent to 20 percent is a significant achievement; to extend it from 40 percent to 60 percent will likely cost much more and accomplish much less in terms of raising social productivity.

We now see the progressive agenda dealing with issues like high speed rail, where the gains are so small and the rationale are so weak from the beginning that the program is a white elephant before it is fully set up.

If you aren’t already shaken, beware, as there’s one final stage and it isn’t pretty. Think Greece, but on a massive scale. Instead of jumping the shark we might be eaten by a whale.

(Chart: Courtesy of Keith Hennessey)