October 16, 2006

The Skeptical Optimist Is Not a Happy One

Filed under: Economy,News from Other Sites,Taxes & Government — Tom @ 1:24 pm

How can that be?

Skeptical Optimist Steve Conover thinks the deficit is coming down too fast. He wants the deficit to stay at about 65% of GDP, where it is now. He’s mad at himself for calculating the “tax/spend crossover date,” the date when federal spending will consistently start being the same as or less than federal receipts, because most of his readers have been thinking that getting there would be a good idea (he doesn’t think it is). Currently it’s March 8, 2009, which is consistent with BizzyBlog’s post last week projecting that the budget for fiscal 2009 will show a slight reported surplus (while still siphoning off the Social Security surplus). Conover’s crossover estimate is smack dab in the middle of fiscal 2009.

You’re right, Steve. From your perspective, you’ve created a monster. But I don’t agree with you for a number of reasons:

  • Your approach virtually mandates additional federal spending, no matter how useful it is. Yes, I know that you want to target it towards defense and homeland security, which is noble. But if you think Congress is going to look at the opportunity to spend more money and that their first reaction will be “Good, let’s spend it on defense and homeland security,” you don’t know Jack (Murtha), or Harry (Reid), or Duke (ex-congressman Cunningham), or BizzyBlog’s alltime favorite, Waste Ted (Stevens).
  • More important, you’re overlooking the significance of the demographic time bombs known as Social Security and Medicare. If the government had to financially report as a private company does, it would have to carry as a liability the actuarial present value of accumulated retirement-related benefits. That number is in the tens of billions of dollars.
  • To draw a parallel, if Spain, where the average female has way, way less than 2 children during her child-bearing years, had exactly the same per capita economy, the same economic growth, the same deficit as a percentage of GDP, and the same Social Security and Medicare systems as we do (our comparable children per female is just over 2), would you also tell Spain that its deficit is too low, and that it has as little to worry about as you think we do? I don’t think so. The level of future entitlement commitments per future worker matters, a lot, and simply has to be considered.

Once the deficit, including those little “trifles” known as Social Security’s and Medicare’s actuarial liabilities, comes down to your target of 65% of GDP, we can talk again. That will be a while.

Quote of the Day: Larry Lindsey

Filed under: Quotes, Etc. of the Day,Taxes & Government — Tom @ 8:06 am

Mr. Lindsey, president and CEO of the Lindsey Group, was President Bush’s chief economic adviser from 2001 to 2002, and had this to say in a subscription-only Wall Street Journal editorial last Friday:

Mr. Bush has every reason to be proud of his tax cuts. Granted, he shouldn’t expect a chorus of bipartisan praise based on the numbers just released. But he should rest assured that economic historians will credit the tax cuts as having been a model of the successful application of economic theory to the real world.

Instapundit Doesn’t Do a Lot of Long Posts

Filed under: News from Other Sites,Taxes & Government — Tom @ 8:01 am

So when he does, pay attention.

This one is on the state of the 2006 congressional elections. Much of the opinion is his, but a lot, if not most, is from e-mailers.

He starts out by identifying six key GOP missteps (pork comes later), and it goes from there.

No matter your political persuasion, there will be a lot to agree and disagree with, but it’s all thought-out and well-written.


UPDATE: Don Luskin thinks the GOP will hang on to the Senate, barely lose the House, and that it won’t have a lot of impact on the economy. Wish I agreed; if the tax cuts don’t get extended at least three more years (preferably five), all bets on future growth, tax receipts and deficit reduction are off.

UPDATE 2: Rush was on a roll about this yesterday in hard-drive saver of a post that will only be up until about 6 PM Tuesday. His point is that if anyone “deserves” defeat for various offenses (undermining war, economic myopia, political/electoral gamesmanship), it’s Democrats:

I’ll tell you, there’s so much — well, not “so much,” but there’s enough — negativism out there on our side that it frosts me. With all due respect to these people, to the extent that they’re read, I don’t know that they’re aware that they are contributing to the problem.

….. The latest Battleground poll, ladies and gentlemen. Get this. October of this year, the Battleground poll found 61% of American voters identify themselves as very conservative or conservative. Thirty-four percent of American voters describe themselves as liberal or very liberal.” Also, in the generic ballot in polling, 60% of those polled say: Yeah, “I like my guy. I like my incumbent.” The New York Times has an interesting website that shows the House and Senate races and who’s got solid chance to return, which seats are leaning in what direction, which are still up for grabs, and I’ve got that printed out. I’ll share this with you as the program unfolds.

….. Instant Pundit? I’m not sure, but here’s his analysis: “If the GOP Goes Down, It’s Because It Had It Coming.” Once again, let me ask: if the Republicans win, is it because they had it coming? What kind of a fool reason is it to suggest that if the Republicans lose, it’s because they had it coming? Do Democrats have nothing coming? Why is it that we still can’t focus on, beyond me and the USA Today columnist who picked up this thread, why is it that we can’t focus on what happens to the Democrats if they lose?

You know, the Republicans are expected to lose. The way the bar has been set it really isn’t going to be news, is it? If the Republicans lose, because that story is already been written, and it continues to be written every day. But if the Democrats lose, then is that not a huge story? It seems to me that people that have an interest in the outcome of events ought to be looking at that side of this as well. I’m trying to take the lead on this, but this whole idea of a premortem and analyzing why the Republicans are going to lose simply because they had it coming? Even if you believe Republicans deserve to lose, let me ask you, do you deserve to lose?

Does the country deserve a cut-and-run policy in the war on terror? Do the 3,000 brave souls who have lost their lives in the war on terror deserve to have the rug pulled out from under their mission? Do they deserve that? Do you deserve higher taxes? Do you deserve increased gasoline prices? Do you deserve two years of probable investigations into so-called war crimes and potential impeachment hearings, do you deserve that? Do the people of the country deserve what we would get with a liberal Democrat triumph? You know, we look at this, there’s some people apparently look at this as a game in Washington that doesn’t affect us, and the people who go to Washington, if they screw up, well, then the hell with me with them. They deserve to lose. It’s good. They’ll learn a lesson by losing.

Hard not to disagree, but there’s no crime in pointing out your team’s warts, esp when your team still has time to make case that they are serious about fixing them. Still, as much as many of us resist it, we still partially swallow the tripe coming out of the 527 Media that the GOP is doomed, when the situation is far from that.

Rush’s position is also in stark contrast to his on-air defense of George Will 10 years ago. After the final Clinton-Dole debate that year, Will wrote a column that essentially said “it’s over.” Callers wanted to pile on Will for writing it, but Rush said in defense of Will that “he doesn’t see it as his job to be a cheerleader.” Believe it or not, Rush, neither do most of us.

Sorry, Peter Beinart (and US Taxpayers): Federal Spending HAS Exploded

Filed under: Economy,Taxes & Government — Tom @ 7:56 am

Amy Ridenour has an important post reaching the unfortunate conclusion that an October pre-election meme being floated by the New Republic’s Peter Beinart (TNR link requires registration) isn’t true.
Beinart claims that the Bush Administration has been chintzy when it comes to “discretionary spending” that isn’t related to homeland security. That is, he’s trying to bring through the back door the always-bogus “balancing the budget (or reducing the deficit) on the backs of the poor” argument. Beinart even says that non-homeland security-related spending has gone down as a percentage of GDP.

It would be nice if spending were being controlled a bit, but it’s not. Notes Amy:

I was able to calculate the increase in what Congress actually spent from 2001-2005 (final numbers on outlays for 2006 are not yet available). When controlling for both inflation and population, the increase was about 13%, not 2%. Nor did it decline as a percentage of GDP. Indeed, it rose from 3.1% in 2001 to 3.6% in 2005.

Something’s Rotten in Frankenland

Filed under: Business Moves,Corporate Outrage — Tom @ 7:51 am

Bankrupt Air America Radio is being kept on the air by a newly incorporated entity whose major officials include some of its current investors.

I’ve seen situations before where the same management forms a new company and walks away from the old company — and its debts. Is that what’s happening here? The unhappiness of this guy supports that notion.

As would be expected, Brian Maloney at Radio Equalizer has the details (HT Michelle Malkin).

Positivity: Jim Leyland’s Shining Moment Is Richly Deserved

Filed under: Positivity — Tom @ 6:03 am

The Detroit Tigers are, improbably, going to The World Series, having gone from worst to first in three short years.

Their manager, Jim Leyland, is one of the special people in sports. This opening excerpt from a January 1993 Sports Illustrated article (link is to a library database that won’t be available without appropriate library subscription), written during the winter after his Pittsburgh Pirates lost a heart-breaking 7-game series to the Atlanta Braves in the bottom of the 9th inning, illustrates just how special:

Glad to be in the game

He sits in a rocking chair. He wears a black-and-white hounds-tooth-check jacket over a red turtleneck. The cigarettes on his desk are in a black-and-white-and-red package. As he goes about his work, the package is always within reach, as if the Marlboros were a matching handbag.

“Most of these are very nice,” Pittsburgh Pirate manager Jim Leyland says as he sorts through hundreds of letters in his office at Three Rivers Stadium. “Some are holiday cards. Some are ‘Congratulations on Manager of the Year.’ Some are ‘Why the hell didn’t you bunt in the playoffs?’” Behind the desk is a low end table. On the end table is a battered telephone. Hunched over the telephone as if at a child’s tea set, Leyland cold-calls Pittsburghers to explain why he didn’t bunt in the playoffs.

“The people who include their phone numbers, I put their letters off in a pile and call them up,” he says. “Some people are shocked. Some people will not believe it’s me. And some people tell me, ‘I appreciate the call, but you still screwed up.’”

This is the right way to handle it, he likes to say of the letters or whatever it might be. I’m not anybody’s boss, I’m an employee of the Pittsburgh Pirates, he likes to say. Bill works for A.P. Parts, Tom’s the pastor at St. Aloysius, Jim works for the Pittsburgh Pirates, Danny works for Permatex, Larry works for Mercy Hospital, and Judy and Sharon are both in nursing, he likes to say, lumping himself in with the rest of the labor-intensive Leyland family of Perrysburg, Ohio.

He is one of seven children. His wife is one of 11 children. His father was one of 16 children. His father worked the swing shift at the Libbey-Owens-Ford glass factory in Toledo for 48 years. From his father, Leyland learned to be professional, which is another favorite phrase, and to bust ass, which is yet another.

“To be honest,” says Leyland, eyeing a multicolored pile of envelopes, “I get a lot of letters where people are just chewing me out. They’re pissed off about everything. ‘The —– players make too much money. You’re the worst —– manager I’ve ever seen.’ Those, I throw away. You can’t reason with those people.”

More often, though, it is a letter like the one he got from a little girl who enclosed her grade-school essay, an essay about the man she so likes to watch on TV in the summer, the doleful stick figure in the black baseball cap. The subject of the essay called the author and invited her and her father to be his guests at a Pirate game.

“You get a lot of requests,” says Leyland, his right hand on another stack of correspondence as if he’s taking some kind of postal oath. “Obviously, you can’t answer them all. You can only donate so much equipment. But you know, maybe somebody would like you to call their dad in the hospital and just talk to him. That’s all. Just talk to him, but it might make him feel better. And it’s nice to be able to do that, you know? That’s life. That’s the real world, you know?”