Ever wondered what it would be like if you lived in a world where there were no police, no laws, and no mandates from legislators? For the last five days I was in such an environment in Lancaster, New Hampshire. This event, called PorcFest, is a weeklong celebration of freedom, liberty, and a rebellion against crooked governments and statist legislation. This event is hosted each year by the Free State Project, a non-profit organization that seeks to create a libertarian community within New Hampshire, considered by many, including the prestigious Mercatus Center at George Mason University, to be the freest state in the country both economically and socially. The goal is to get 20,000 liberty activists to agree to move to New Hampshire to make it even freer than it already is. PorcFest is a yearly event that brings together people from around the world to join together under the cause of “liberty in our lifetime”, and also to be able to do the kinds of things that are illegal in their hometowns.
Tag Archives: finance
Our national debt crisis is serious, we all know that. Where many disagree is how serious the crisis really is. People like Robert Reich insist that it’s “ridiculous” to concern ourselves with the debt right now, when we can deal with it five years from now, and various Keynesian economists believe that spending will fix our current economic conditions, and tackle the deficit and debt when we’re on more stable financial footing.
Unfortunately for this side of the argument, the time to tackle debts and deficits is now, and the days are numbered. A recent Moody’s report, one of the most influential debt rating agencies in the country, stated that a downgrade on America’s debt rating “is likely” by mid-July if there isn’t a “credible agreement on deficit reduction”. This is the second such warning in two months, coming on the heals of the S&P’s threats of a downgrade amidst the debt ceiling discussions currently taking place in Washington.
Yet while the seriousness of this situation can’t be understated any longer, Congress doesn’t seem to be too concerned. President Obama set a deadline for a debt ceiling deal to be ready by the end of June, with Vice President Biden leading the talks. However, the Senate is in recess this week, the House will be in recess next week, and Biden is in Italy, making it unlikely a proposal will be ready at that time. You’d think given the severity of the situation, Congress would hold off on their vacations until a proposal could be agreed upon. It’s their job, right? But alas, it is becoming clear that if there is one thing Congressmen value more than anything, it’s frequent vacations, even in times of national importance such as this.
America’s perfect credit rating hangs by a thread, our deficit has grown to unacceptable levels, and important budget reforms have been subjected to fear-mongering and childish insults. Maybe instead of taking a week off, our representatives should commit to staying in Washington to fix this fiscal nightmare. Otherwise, break out the gyro stands and pop the Ouzo, it’s going to look an awful lot like Greece.
Man, the world has gotten depressing recently.
Every time I read the news or flip on a cable news channel, it’s the same dreary stories day in and day out: Oil prices are skyrocketing, the dollar is plummeting, commodities prices are soaring, and Lady Gaga still wears ridiculous clothing in her music videos. Usually one looks to our President for answers, but he’s been too busy raising money for his re-election campaign to stop and give us any answer that doesn’t involve partisan rants or false promises. So rather than listen to the same old chatter, I decided to listen to another perspective on our current economic woes, one that is rarely heard outside of Congressional hearings, and an individual that is often shrouded in a fog of confusion and frustrating mystery. Today was Federal Reserve chairman Ben Bernanke’s first news conference of his tenure as chairman, a rarity for someone of his position. I was hoping that watching this news conference would shed some light on our fiscal and monetary problems we are suffering from right now. Why is the price of oil so high? What is causing the dollar to fall to such lows? Why are commodities like beef and corn getting more expensive? I thought all of these questions would be at least partially answered by the Fed chairman today, but alas, all I got was more of the same old chatter with no answers or substance.
Up until now, the Federal Reserve’s answer to our fiscal woes has been to print more money. The way the Fed does this is by buying government bonds and securities from banks and the Treasury, or by lowering the amount of money banks are required to keep in reserve, which puts greenbacks into circulation. This strategy, termed “Quantitative Easing”, is intended to make credit easier to come by, and give businesses money to pay their employees and take out loans. A few months ago, Ben Bernanke authorized $600 billion worth of bonds to be bought, which has caused inflation. Essentially, what has happened is that since more dollars are in circulation, they are being devalued, which means goods suppliers want more money for their goods, causing inflation to occur. In addition to these policies, the revolutions throughout the Middle East have caused oil prices to jump to record highs, making transportation of goods more expensive. Since oil prices are determined in US dollars, it makes the dollar look weaker and weaker. Hoping to hear about a new direction from the Fed chairman, I tuned in, but all I got instead was Bernanke saying his policies were going to remain the same.
When asked about the rising gas prices, he admitted that there isn’t much the Fed could do to stem the rise. While I agree that he can’t magically make them go lower, and we shouldn’t expect him to take any drastic action, there are still policies that he could enact that would help consumers at the pump, like selling government bonds to take dollars out of circulation and keep the prices somewhat controlled. Since the United States has an import-driven economy, it is imperative that we have a strong currency so imports, like oil, remain affordable. Bernanke went on to say that he can’t lower the rate of inflation right now because the economy is still fragile, and doing so would cause a second recession. He conveniently forgot to mention that persistent inflation is still not good either, and if the 2% inflation rate (which he has set right now) holds for much longer, it would put American jobs at risk by making goods harder to afford. I know 2% doesn’t seem like much right now, but as time goes on, it has a bigger and bigger impact on the economy than previously.
The press members that were present today did a pretty good job at asking tough, poignant questions regarding the state of the economy, and I only hoped that Bernanke would be able to respond with more than just vague answers that the Federal Reserve is famous for. Since such public statements by a man in his position are rare, I was hoping that he was going to announce some bold new plan of his to keep the economy going, or what he thought would keep the economy going but instead made the dollar weaker and weaker. Unfortunately, the much hyped news conference was just Bernanke telling the nation that he’s continuing the same policies and that he might alter them when the economy gets better and more people become employed. He still deserves some applause for having a big enough pair of moneybags to go in front of the cameras, but I just wish I got some real answers as to why the country is on a slow, depressing decline.
Back to the depressing drone for me, I suppose.
Just before midnight on Friday, April 8th, Congress pulled off the equivalent of a last-minute field goal in the realm of government: they got a long-term spending deal done and are able to fund the government for the rest of the fiscal year. Although there is still no real budget, the spending plan promises to cut a record $39 billion, the largest one-year cut in history. President Obama and John Boehner both claimed victory for this negotiation, and in a rarer moment, the Tea Party praised Boehner rather than criticized him. Democrats and Republicans, in usual partisan fashion, each hit the airwaves trying to claim credit and heap blame on the other side for stalling on the proposal. The tough battles lie ahead, and the battle over the FY2012 budget will be as intense if not more so than the battle to keep the government going. One thing we say about this deal though is that Boehner went toe-to-toe with Obama and Reid, and got what he was elected to the Speakership to do: cut spending.
On numbers alone, Boehner won the poker match. Considering he is dealing with the most spend-happy President and Senate Majority Leader we’ve had, it was an accomplishment to win any sort of spending reduction, especially considering the Democrats didn’t want to cut anything. Yes, $39 billion isn’t going to bring down the deficit at the rates the country needs, and it’s a far cry from the $61 billion some Tea Party leaders were calling for, but it’s more than half that number, a good result in what were some very tough negotiations. It also shows the American people, as I mentioned in my previous article “Countdown to Shutdown”, that the GOP means business when it comes to cutting spending. It also puts the budget fight in Paul Ryan’s court for the next six months, and the promise of $6.3 trillion in cuts will win over some on the fence legislators. It’s unrealistic to think the Ryan budget will get to the President unaltered, after all, Democrats control the Senate and the White House, but it gives Republicans the upper hand in negotiations because they can act with the confidence that they can get serious spending reforms passed, even ones President Obama might not be comfortable with. The downside of the negotiations is that the defunding of Planned Parenthood and NPR and the reining in of the EPA’s extra-legal powers are going to a Senate vote, which will result in certain defeat, but hey, that’s negotiating for you, although these are proposals that should be given serious consideration in the months ahead.
Round one of what might be the biggest spending battle in American history has been decided, and the result was a $39 billion cut that may be miniscule in the face of a $1.6 trillion deficit, but it was a strong first step in the quest to rein in government spending. The next round will feature a real budget that may very well determine the 2012 presidential elections, as well as who controls Congress come 2013.
Fasten your seat belts, kids, it’s going to be a wild ride.
We’re closing in on the month of March, and that means budgets are being prepared by state governments as well as Washington. Still on a post-election high, Republican leaders across the nation are taking it upon themselves to cut spending and get the nation on level ground. Nowhere is this struggle more encapsulated than in Wisconsin, and Governor Scott Walker is the face of the movement. In an effort to carve a chunk out of a projected $3 billion budget shortfall, Governor Walker is proposing a strong budget that will reign in the runaway public sector unions by asking them to pay more for their pensions and health care benefits, as well as restricting their collective bargaining to wages. These proposals have been met by protests launched by unions and supported by liberal action groups like Organizing for America and MoveOn.org, some almost as large as the many Tea Party protests over the last two years. These events have triggered a nationwide battle over what should and shouldn’t be cut, and every lobbyist inside and outside the Beltway is trying to protect their special project or giveaway that might face the ax. One trend that seems to be true in all cases is that Republicans are more willing to cut spending and reduce the size of government than Democrats.
The situation is Wisconsin is currently ground zero in the battle over spending cuts. Governor Walker’s proposal to limit the power and influence of public sector unions has drawn anger from nearly every left-leaning action group in America, and caused 14 Democratic senators to flee the state rather than give the budget the up-or-down vote it deserves. This mass exodus by the Senate Democrats is shameful and cowardly, and proves that they don’t want to have a serious discussion about spending, even when the state is in fiscal disarray. When the Democrats in Washington passed the health care law last year, the Republicans could have walked out at any point during the debate, but they stayed and fought because they know that walkouts are not the way to negotiate. Also, it is expected that if the GOP did walkout, you could count on the mainstream media doing everything they could to paint them as obstructionists, if they didn’t do that enough already. When the Democrats in Wisconsin walked out, though, they were lauded as heroes by many liberal media outlets. Some even called Governor Walker an obstructionist, despite the fact that it’s his bill that he wants to get passed.
What is more, many of the protests’ leaders are making this out to be far worse than it actually is. Even without many bargaining privileges, the unions will still be able to negotiate over pay, probably the most valuable chip to have at the table. Also, they unions will still be better off than their private-sector counterparts, who don’t get the same lavish pensions and benefits. The more one reads about the facts of the debate, the more clear it becomes that the public sector unions, once praised as the champion of the working man, are now becoming more and more greedy and protective of their taxpayer benefits, even when states like Wisconsin are in fiscal distress and can’t afford to keep paying them.
Governor Walker’s proposals to limit the bargaining privileges also demonstrate his commitment to keeping his promise to cut spending. The only way to cut spending is for him and his government to have a more hands-on approach when it comes to dealing with government employees. After all, it is his government that has to write the checks and hand out the pensions, so why not have more power to determine what the rules are? Although I am an advocate for smaller, limited government, I am strongly in favor of this increase in power because it amounts to less government spending and a reduction in the influence of public unions and their taxpayer-funded giveaways. If one works in the public sector, he or she is doing so not for the pay or the benefits, but because he or she wants to work in the public sector. Teachers, police, and firefighters should all be professions filled by people who desire to be these professions, not because they want to cash in on the benefits. Ever since public sector unions started clamoring for these benefits, it seems that many employees are in it for the benefits, not for the love of the job, which is a shame because America could have the best teachers and law enforcement in the world if their ranks were filled with people who desire to be teachers or law enforcement. I understand the pay structure is not very high, but working in the public sector will always have that drawback, as it should. That is what makes public service so admirable: the people who serve do it because they want to serve the people of their community, not because they want to be wealthy. Public sector unions cheapen this line of work because it then becomes a struggle over getting benefits that private sector unions wish they could have, and people sign up for public service for the benefits. If these unions’ powers were to be restricted, it will lead to more determined employees who would gladly trade the larger wages of private sector work in favor of serving the community. Also, the quality of services would be greatly improved because the workers would gladly come in every day to a job they love, and would perform better than a person who was just there for the money.
The next scenes in this budget fight are yet to be played out. Governor Walker’s budget proposal is a welcoming sign that there are politicians that were elected in November that took their campaign promises to heart, and are determined to cut spending and restore fiscal sanity to the states and to Washington. Riding Walker’s coattails, Indiana Governor Mitch Daniels and Ohio Governor John Kasich have taken up similar budget plans to address their states’ fiscal health, and are being met with the same protests from unions, though nowhere close to the ones in Wisconsin. Even though there is still a long and challenging road ahead, if more governors will follow Walker’s example, the era of big government could finally be over.
To my faithful readers, you are all in for a treat. Starting Thursday, February 10th and going to Sunday February 13th, I will be bringing you day-by-day recaps from the Conservative Political Action Conference in Washington, DC!!! Don’t miss my reports on speeches by potential presidential candidates, the number of people I got a picture with, and of course my response to the CPAC Presidential Straw Poll. Also, who made their case to be the GOP nominee for president? Whose stock fell? All of this coming up later this week!!!
What I thought would never get done has gotten done. Last week, a compromise was struck, and the Bush tax cuts will be extended for two additional years, closely mirroring the bipartisan Ryan-Conrad proposal from the summer (see ‘Bush Tax Cuts: To extend or Not to Extend?’ in the August Archives). The compromise extended the tax cuts for every American, and in exchange, unemployment benefits were funded as well for an extended period time. This is one of President Obama’s biggest victories in office, as he was able to bring the GOP to the discussion table and dictate his terms.
One problem: This compromise was met by a legendary 8-hour filibuster…by three Democrat senators, and scathing criticism from the left for caving so readily to the Republicans, and from the far-right for extending unemployment benefits, or as they put it “welfare”. The tax deal finally went through with the 60 votes necessary to invoke cloture, but Obama came away from this trying to justify himself to an angry Democratic base, and even dragging Bill Clinton to back him up. For the Republicans, this was a massive victory because it exposes President Obama for what he really is: a weak leader with no ability to push his agenda against a party that is still technically the minority until January, and they were able to walk away with what they, and much of America wanted, the continuation of low taxes until the economy is out of the ditch and on stable ground. Think about this: if President Obama couldn’t hold his line on taxes now, what do people expect him to do when the Republicans move into the majority in the House? President Obama, of course, tried to portray this as a “me against the machine” battle, saying the GOP was holding the tax cuts “hostage”, and he had to do what he had to do to ensure everyone would have the same tax rate that they’ve had the past 10 years.
According to Obama, the best way to deal with hostage-takers is to…give them all that they want? Not only is calling the GOP a gang of hostage takers a ridiculous smear, it’s also a sign that he doesn’t know how to deal with those who have opposing policy decisions as him, a big problem when he’ll have to negotiate with a less friendly Congress for the next two years. This was a test of his ability to show power and authority, and he failed miserably. Nobody is buying his charade anymore, and it is becoming clear to him that tough words and using Bill Clinton as a crutch can only get him so far.
As conservatives, this is a golden opportunity to really make him squirm, not by shutting down government as some policy experts suggest, but by passing in the House some of the most conservative pieces of legislation ever, packing with cuts in spending, cuts in taxes, and a scaling back of the government, particularly with the health care law. This will create a backlog in the Democratic Senate, put pressure on Senate Majority Leader Harry Reid to pass these pieces of legislation and President Obama to sign them into law. If they don’t, then all of a sudden, the Democrats become the “Party of No”, and the age of Obama will come to an end in 2012.
Hey, maybe I’m wrong, maybe those two comrades learned something from November, and will work with Speaker Boehner to create smart solutions to get America out of the tailspin it is currently in and all will be hunky-dory inside the Beltway, but I’m not holding my breath.