Higher Taxes and More Spending

Stephen Moore and Richard Vedder in The Wall Street Journal: Higher Taxes Won't Reduce the Deficit:

Using standard statistical analyses that introduce variables to control for business-cycle fluctuations, wars and inflation, we found that over the entire post World War II era through 2009 each dollar of new tax revenue was associated with $1.17 of new spending. Politicians spend the money as fast as it comes in—and a little bit more.

 Nothing short of a balanced budget amendment will fix this problem.

Budget Crisis

The Blue State Budget Crisis: "the blue-state financial misery continues and deepens the ideological crisis of American liberalism." Soon states like California and New York will be asking red-states like Texas and Indiana to bail them out.

At a Certain Point You've Made Enough Money

The day after the midterm elections, the Federal Reserve announced that it would begin a second round of quantitative easing: "the Committee intends to purchase a further $600 billion of longer-term Treasury securities by the end of the second quarter of 2011, a pace of about $75 billion per month." Quantitative easing is a term that was recently created to replace the more familiar term printing money. Because the historical record of printing money is so grim, that term developed a negative connotation. Of course, printing money was coined specifically to replace the older jargon debasing the currency for largely the same reason. All three mean the same thing: the government is going to create money to pay its obligations and, in so doing, your money is going to become less valuable.

China doesn't like this. Germany doesn't like it which is important because they're the ones responsible for making the term printing money so unfashionable. Brazil, Thailand, and South Korea are also opposed.

In a different context, President Obama has said: "at a certain point, you've made enough money." In the context of this second round of quantitative easing, I want to know have we reached that point?

Chuck Purgason Interview: Full Video Coverage

I interviewed Chuck Purgason (R-MO) last Friday. We talked about his race for the US Senate in Missouri and what his campaign is doing to beat Roy Blunt (R-MO)--the favored candidate in the primary. The winner of the GOP primary will likely face Robin Carnahan (D-MO) in November. Purgason and I also talked about his experience and policies for small business, TARP and banking, bringing jobs back to the US and Missouri, education, healthcare, term limits, and regulatory reform. You can learn more about Chuck Purgason at his campaign website: www.purgasonforsenate.com.

• 01 Chuck Purgason Introduction
• 02 Chuck Purgason on his first political race
• 03 Chuck Purgason on his race for US Senate
• 04 Chuck Purgason talks about his Primary Opponents
• 06 Chuck Purgason needs Volunteers
• 07 Chuck Purgason talks Small Business
• 08 Chuck Purgason on Jobs and Taxes
• 09 Chuck Purgason on Banking and Business
• 10 Chuck Purgason on TARP
• 11 Chuck Purgason talks about his marriage
• 12 Chuck Purgason on Lobbyists
• 13 Chuck Purgason on Smaller Government
• 14 Chuck Purgason on Education
• 15 Chuck Purgason on state budget deficits
• 16 Chuck Purgason on healthcare
• 17 Chuck Purgason on term limits
• 18 Chuck Purgason on regulatory reform

Previously:

• Chuck Purgason needs volunteers
• Chuck Purgason

Is There Enough Spending to be Cut?

Congressman Gerry Connolly (D-VA) had this great exchange with Federal Reserve Chairman Ben Bernanke. Connolly asked the Fed Chairman: "Is there enough spending to be cut?" to which Bernanke replies: "Of course!"

Voting out the Spenders

Michael Barone in the Washington Examiner: The gathering revolt against government spending:

This month three members of Congress have been beaten in their bids for re-election -- a Republican senator from Utah, a Democratic congressman from West Virginia and a Republican-turned-Democrat senator from Pennsylvania. Their records and their curricula vitae are different. But they all have one thing in common: They are members of an Appropriations Committee.

John Galt Reports for Duty in April

Reuters reports U.S. posts 19th straight monthly budget deficit:

The United States posted an $82.69 billion deficit in April, nearly four times the $20.91 billion shortfall registered in April 2009 and the largest on record for that month, the Treasury Department said on Wednesday.

It was more than twice the $40-billion deficit that Wall Street economists surveyed by Reuters had forecast and was striking since April marks the filing deadline for individual income taxes that are the main source of government revenue.

They seem surprised. Why? Unemployment was way up in 2009. Even those people who were only out of work for a little while, would likely have made less money than projected prior to their unemployment. As a result, their with-holdings early in the year would have been too high for their total yearly earnings resulting in a tax refund after they filed. Look. A progressive tax system only works well when the country is creating more and more top tax bracket wage slaves. That's the kind of behavior the present administration has endeavored to discourage.

The article goes on to note that the US Government's receipts for April 2010 were $245.37B, down from $266.21 in April 2009. Since quarterly taxes are also due April 15th, it stands to reason that a portion of that $21B fall in revenue was caused by people either going Galt or deciding that they've "made enough money."

China and the US Debt

Dougas Holtz-Eakin in the WSJ on The Coming Deficit Disaster: "And how will the resulting higher interest rates, diminished dollar, higher inflation, and economic distress manifest itself?" I've said before that China is not buying our debt, rather, China is purchasing future foreign policy concessions. They will eventually offer us debt forgiveness. And we will recognize they're sovereign claims to Taiwan and Tibet... maybe even give them a carrier battle group or three.

Cutting $17 from a $3,400 Budget

The Washington Post reports that President Obama will trim or eliminate 121 programs totaling $17 billion from his $3.4 trillion budget. Bloomberg adds projected deficit and domestic spending numbers. Reuters doesn't cut The Won any slack with the headline: Obama budget cuts have little deficit impact. I'll put the numbers in terms we can all understand:

$3,400 (2010 Budget)
$1,380 (2010 Projected Deficit-Bloomberg)
$81 (2010 Domestic Spending Increases-Bloomberg)
$17 (2010 Trimmings and Eliminations)
*All figures in $1,000,000,000

Here's Obama as quoted by the WaPo:

"We can no longer afford to spend as if deficits don't matter and waste is not our problem," he said. "We can no longer afford to leave the hard choices for the next budget, the next administration -- or the next generation."

Got that? Obama increases domestic spending by $81 billion while trimming $17 billion and talks about how "we can no longer afford to spend..." The WaPo continues:

In any case, [White House budget director Peter] Orszag said, "$17 billion a year is not chump change by anyone's accounting."

Hey Pete, $17 billion is irrelevant when you increase spending by $81 billion in the same budget! Why do I have to write that?

Keith Hennessey (via Instapundit) observes that Bush proposed more spending cuts and that Obama's cuts come largely from defense spending while Bush's came from domestic spending. Apparently the complaints about "out-of-control" spending during Bush's two terms were not about the quantity of spending, but about which votes our betters in Washington were buying with all that money.

Update: Eric Fry at Daily Reckoning nails it:

Here’s a news flash folks: Money you do NOT borrow does not constitute “savings.”