Category Archives: Fiscal Policy

Why The Big, Dumb Spending Cuts Nobody Wants Are A Good Idea

Ezra Klein’s believes that it’s a horrible thing that the big, dumb spending cuts that nobody wants might actually happen:

The initial idea was that if the supercommittee failed, there would be automatic spending cuts and automatic tax increases. This way, both parties would have an incentive to reach a deal. But Republicans refused the tax increases side. So instead, the two sides settled on automatic spending cuts to domestic programs to hurt Democrats and automatic spending cuts to defense to hurt Republicans. And thus the big, dumb spending cuts that no one wants came into being.

…snip…

You might wonder why Republicans and Democrats, both of whom agree we should cut spending, are so dead-set against these particular spending cuts. The answer is that they are very, very dumb. A certain number of programs — Social Security, Medicaid, Medicare beneficiaries and nearly all spending directly benefiting low-income Americans — are exempt, but beyond that, everything gets pretty much the same size cut.

As a senior administration official said on a conference call today: ”The administration has no discretion in deciding the cuts identified in this report. The exempt versus non-exempt determinations are based on the requirements in the law. The administration can’t choose which programs to exempt or what percentage cuts to apply.” You can see exactly where those cuts would fall here.

In other words: Spending we consider essential gets the same size cut as spending we consider wasteful. There’s no ability to make the cuts to farm subsidies a bit bigger and the cuts to, say, the FBI a bit smaller. It’s $1.2 trillion in deficit reduction in which we pretty much don’t make a single choice about what is and isn’t worth funding.

I think that Ezra is right: these cuts are dumb. After all, that was the point. The point was to ensure that we’re going to get $1.2T of spending cuts, come hell or high water. And the fact that they’re dumb is a great incentive to find better ones.

So the options are:

  1. Get $1.2T in spending cuts that we don’t really want, but which are better than not cutting spending at all.
  2. Get $1.2T in nice, targeted spending cuts that make a lot of sense.

Contrast this to what would have happened if the sequester didn’t get put in place:

  1. Don’t get $1.2T in bad spending cuts.
  2. Don’t get $1.2T in good spending cuts, because Congress has no incentive to do anything.

I personally believe that cutting spending by $1.2T over 9 years is a good thing. I would prefer that Congress actually try to figure out where cutting that spending is most effective, slashing unnecessary and outmoded programs and departments while leaving the necessary stuff (assuming it exists!) untouched. But I’d still prefer $1.2T in “bad” cuts over not cutting spending at all.

Failure to make a deal on finding $1.2T in “good” cuts only serves as more evidence that Congress is a bunch of morons and that their collective approval rating should dip from the low teens to single digits. Frankly, that should bother them, but it doesn’t bother me.

Either way, the American taxpayer wins.

Ron Paul Will Never Be President But He HAS Made a Difference

Those who support the establishment of the Republican Party tend to be irritated that Ron Paul’s supporters kept trying to put his name up for nomination against Mitt Romney at the convention in Tampa even though Paul had no realistic chance of winning. Even very early in the campaign, establishment whores such as Hugh Hewitt were arguing that Ron Paul along with Herman Cain and Gary Johnson should be “exiled” from the debates because they didn’t have “a prayer of winning” the nomination. But are political campaigns, especially presidential campaigns, only about winning the nomination and ultimately, the presidency?

As someone who supported Ron Paul in the primary, I believed his winning the nomination would be the greatest upset in political history to say nothing about becoming the next president. When Terry Moran asked Paul the question: “When you lay your head on your pillow at night, do you see yourself in the Oval Office?” Paul replied “not really.” This is not a typical response of someone who is making a serious run for president.

This isn’t to say in any way that Ron Paul was not making a serious run for president, I think he was. Paul made three unsuccessful runs for the presidency but has succeeded in changing the political conversation. He advanced the ball in ways that he otherwise would not have had he not made these runs for the White House.

The most obvious example of how Paul has changed the political debate would be his call for a full audit of the Federal Reserve. As recently as 2006, the following was written about the Federal Reserve in a book by Richard Brookhiser entitled What Would the Founders Do (Our Questions, Their Answers)*

Everyone likes the Federal Reserve System these days, partly because it seems to work so well. (Not one person in a thousand ever thinks of it, a rough definition of working well.) But suspicion of public banks could revive at any time, for the same reasons that many of the founders were suspicious of them — most people (the founders included) do not understand banks or banking, and some bankers are in fact crooks. (p.92)

Back when this paragraph was written, I don’t think the Federal Reserve was even on my radar and I don’t think I was alone. Maybe the Fed isn’t the top issue for the average voter even now but I do think it’s safe to say more people are skeptical of the Fed especially in the era of bailouts and quantitative easing (i.e. printing money out of thin air). The mere mention of Ben Bernake or the Fed, especially at Ron Paul or liberty oriented rallies bring about boos and chants of “End the Fed!” “End the Fed!” This in of itself isn’t that big of a deal; these are true believers. What is a big deal, however; is that language to audit the Fed has made its way into the 2012 Republican Party Platform. Even more importantly, Paul’s Audit the Fed bill passed the House by an overwhelming 327-98 vote margin. Every single Republican but one supported the legislation along with 89 Democrats.

The bill wasn’t brought to a vote in the Senate but pressure will mount on Harry Reid if the Democrats maintain control to schedule a vote. If the Republicans take the Senate, a vote is even more likely to happen and Audit the Fed would be more likely to pass. If it gets to the president’s desk, the president – be it Obama or Romney will sign the bill, I believe.

A bipartisan bill authored by Ron Paul – who would have thought?

Ron Paul, one man who prior to the 2008 campaign wasn’t a household name, has changed the conversation within the G.O.P. concerning the Fed, spending, constitutional government, taxation, and civil liberties. Though his delegates were mistreated in Tampa, the RNC saw fit to at least try to mollify them with this tribute to the congressman’s career.

Missing from the tribute video was Paul’s anti-war/anti-interventionist views that he has espoused throughout his political career. Paul challenged people to do their own research concerning American foreign policy, particularly in the Middle East. He openly challenged the notion that policing the world trying to “make the world safe for democracy” and nation building was in America’s national security interest. Though the Neocons and war hawks are still firmly in control of the G.O.P., more voices in the party are challenging the prevailing view and cautioning Americans about blowback – a term invented by the C.I.A. but popularized by the Texas congressman.

Most important of all, Ron Paul is leaving a legacy behind him as he retires from congress. What will become of the rEVOLution in his absence? A small but growing number of individuals are being elected to the House and the Senate who share many of Paul’s small government/pro-liberty views. Ron Paul’s son Sen. Rand Paul along with Sen. Mike Lee, Sen. Mark Kirk, Rep. Justin Amash among others will lead the movement into the future. If the Paul activists continue to fight the establishment from inside** the G.O.P., there is at least a chance that the party will actually live up to its more small government ideals it purports to stand for.

*Basic Books, New York.

**While I understand why some Paul supporters might be tempted to leave the party due to how they have been treated by the party establishment, I would advise against this. The G.O.P. is ripe for a hostile takeover BUT the establishment isn’t going to give up control so easy. If you drop out, you are allowing them to win; this is precisely what they want you to do. Don’t give them the satisfaction. Focus on the Senate, House, and races at the state and local levels and vote your conscience for president (the wonderful thing about voting is that you don’t have to tell anyone who you voted for). After this election, regroup and continue to fight for liberty.

Recovered from the Memory Hole: Rep. Paul Ryan Urges Congress to Pass TARP

Mitt Romney has selected Rep. Paul Ryan (R-WI) as his running mate with great fanfare among conservatives. Paul Ryan, someone with some fiscal sanity on a major political ticket who can offer an alternative to President Obama and his big government, big spending ways.

Well, not so fast. Not too long after the news of Ryan being selected as Romney’s running mate hit the wires, this little gem was recovered from the memory hole:

Well, maybe this is an anomaly. I wish it were. In addition to supporting TARP, Ryan supported the auto bailout, Medicare Part D, and voted against repealing Davis-Bacon. Ryan is also a war hawk and his record on civil liberties isn’t any better. Extending the Patriot Act, supporting the indefinite detention of American citizens provisions of the NDAA, and voting to create the Department of Homeland Security are but a few examples.

To put it another way, Paul Ryan is no Ron Paul, or even Rand Paul for that matter.

The rEVOLution After Paul

With Congressman Ron Paul’s third presidential run and career coming to an end, what will become of his rEVOLution he inspired? Prior to the 2012 campaign, some suggested that former New Mexico Gov. Gary Johnson would be the “next” Ron Paul but with Johnson running as the Libertarian Party nominee after being mistreated by the GOP establishment in the primaries, it appears to me that that bridge has been burned and will likely never be rebuilt. Johnson’s activities in furthering the liberty movement will be done outside the Republican Party.

The new heir apparent to lead the rEVOLution appears to be the congressman’s son Sen. Rand Paul. Rand Paul has been one of a handful of voices of reason in the senate voting against renewing the Patriot Act, the NDAA*, standing up to the TSA, and speaking out against President Obama’s unconstitutional “kinetic military actions” in Libya and elsewhere to name a few. For the most part**, Sen. Rand Paul has been a consistent champion of liberty much like his father. Speculation abounds that Sen. Paul will make a presidential run of his own in 2016.

The rEVOLution and the greater liberty movement must be much larger than one person***, however. According to Brian Doherty, author of his new book Ron Paul’s rEVOLution: The Man and the Movement He Inspired, Paul’s movement will continue long after Paul himself has left the political stage. Doherty summarizes the thesis of his book in the Cato forum (video below); David Boaz and Sen. Rand Paul also offer their thoughts on the future of the liberty movement after Ron Paul.

Milton Friedman on Libertarianism and Humility

On August 14, 1990, Milton Friedman gave a speech at the International Society for Individual Liberty’s 5th World Libertarian Conference on the subject of libertarianism and humility. There are many adjectives which can be ascribed to libertarians but “humble” usually isn’t one of them. Among the quotable parts of the speech, Friedman said the following:

On the one hand, I regard the basic human value that underlies my own beliefs as tolerance based on humility. I have no right to coerce someone else because I cannot be sure that I am right and he is wrong. On the other hand, some of our heros…people who have, in fact, done the most to promote libertarian ideas, who have been enormously influential, have been highly intolerant as human beings and have justified their views, with which I largely agree, in ways that I regard as promoting intolerance.

In searching for the above transcription of what I thought was very profound and wise, I found a couple of bloggers who thought this particular quotation as “an inadequate defense of liberty” or one of the “failures” of Milton Friedman.

I happen to disagree with these notions.

Maybe because I have been humbled in realizing that I had been wrong on some issues of great importance. By far the most difficult (yet ultimately liberating) post I have ever written was the post in which I declared that I was wrong about my support for the war in Iraq. I was so certain that regime change in Iraq would bring about peace in the Middle East and freedom would take hold. I thought the Ron Paul and big “L” Libertarian position on preemptive war was naïve and dangerous but now I believe the opposite to be true (for reasons I stated in the aforementioned post).

Having experiencing this, I can’t help but think that Friedman was right to say that each of us should be open to the possibility we may be wrong. If we aren’t open to this possibility, what is the point of debating an issue? Obviously, if I argue that X is correct and my opponent says Y is correct, I’m going to do my best to convince my opponent that I am right and s/he is wrong (meanwhile, my opponent is doing the same).

But what if I realize in the course of the debate that my opponent is at least partially right about Y being correct and/or that my reasoning is flawed or the facts do not support X? As a normal human being, I might not concede right away but if I am being intellectually honest, I’ll revise my thinking based on new information or new reasoning I hadn’t considered.

If Milton Friedman was willing to be open to the possibility of being wrong, how could I, someone whose mind will never in the same league as his, be so stubborn?

One thing I notice in watching Friedman debate people who are diametrically opposed to his positions was how patient he was with them. Something that many of us libertarians seem to forget is that much of what we believe to be true is counterintuitive to at least half of the people we encounter on a daily basis because many of these people have not been exposed to our philosophy. Friedman understood this. He knew that much of what he was saying was new territory for many who would hear his lectures or read his books.

Before he could make the case about any of his ideas to others, he had to be satisfied that the facts backed up his theory. These two sentences from the NPR obituary for Friedman summed up his approach beautifully:

Friedman was an empiricist, whose theories emerged from his study of the evidence, not the other way around. He also was a champion of the free market and small government.

We are supposed to believe this to be a weakness? I find this to be so refreshing!

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