Tag Archives: government

Democracy and the Senate

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Here are some interesting statistics and behaviors, courtesy of Brian Reardon and Eric Ueland in a recent Wall Street Journal op-ed.  They quote a Politico article:

[S]ince Democrats seized power in fall 2006, Republicans have turned to the filibuster far more frequently. The majority has averaged about 140 cloture motions in both the 110th and 111th Congress. And Democrats are on pace to repeat that feat again this Congress.

Then they look behind those numbers.

Consider this example.

On March 19, Robert Menendez (D, NJ) introduced legislation (S2204) to promote renewable energy with the cost offset by a tax hike on large oil producers.  The normal process would have been for this legislation to be referred to committee for action.

Majority Leader Harry Reid bypassed the committee process, however, and using something called Rule 14 had the bill placed directly on the Senate calendar.  Two days later, he started the process to call up the bill by moving to “proceed to it” and immediately filed a cloture petition to end debate on that motion.

The following Monday, the Senate then voted 92-4 to curtail debate on the motion to proceed to the bill.  The next day, as soon as the bill was before the Senate, Mr Reid offered five consecutive amendments and one motion in order to effectively block the consideration of any competing amendments or motions.

He then filed a cloture motion to close out debate on the bill.  Two days later, the Senate rejected cloture on a party-line vote and moved on to other business, leaving the Menendez bill adrift.

They continued:

The very first bill considered by the Senate after the election of President Obama and a filibuster-proof Democratic majority was adopted under exactly the same truncated process used for S2204—Rule 14, cloture, block out any competing amendments, cloture.  Since that time, the Senate has voted on cloture repeatedly, yet has very little to show for it:  by some measures, 2011 was the least productive session in modern congressional history.

And 2012 is shaping up the same way.  Meanwhile, there are 27, or so, jobs-related bills passed by the House that Reid won’t even let his cloture system bring to the floor to be voted down by his fellow Democrats.

Hmm….

The Economy

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Two purchasing managers indexes for China fell in May, and Indonesia had its first trade deficit in nearly two years, while the Republic of Korea’s exports fell for a third straight month.  Nomura Securities’ chief Asia economist, Rob Subbaraman, attributed this in part to “The crisis in Europe.”  The debt crisis is having two effects in Asia: European banks are husbanding their resources for domestic and European commitment, and so they are only able to extend less credit  in Asia—including for trade finance.  Moreover, the crisis is reducing European demand for Asian goods and services directly.

Within Europe, the debt crisis is becoming a self-fulfilling prophecy.  Heineken NV, for instance, worried about its euro holdings in a Greece that might leave the euro zone (and convert those euros to drachmas of sometime value), is taking its cash out of Greece and the euro zone altogether, which creates liquidity problems for Greece and the euro zone.  Of course, Heineken isn’t that big, but their move is typical of a whole lot of businesses that, in their aggregate, approach being big enough.  Additionally, Greek companies are starting to max out their existing credit lines and then expatriating the cash.  Other businesses, in both the non-financial and the financial arenas, are making similar moves in anticipation of a Greek departure.  This caution by everyone is part of the pathway through which the debt crisis is contributing to a slowing European economy—and to a reduced demand for Chinese and US exports.  That slowing European economy is evidenced by sustained unemployment of 11% and a falling purchasing managers index (to 45.1—a level that means actual shrinking) in May.

Coincident with Europe’s reduced demand, our own economy, whose cyclic business recovery is being held back, has suppressed our business’ health and thereby reduced American demand for Asian exports.  The poor US economy, not helped by our reduced exports, is indicated by the recent job creation number—69,000—for May that is the third straight month of falling job creation rate, and by an unemployment rate holding above 8%—8.2% in May.

Our economy is at the core of the global economy, and so much of the rest of world depends on an economically healthy US for their own prosperity.  Yet our health depends on their economic health, too.  It’s not quite a chicken and egg thing, though; we really are the engine, and so we really do need to right ourselves rather than wait on Europe, for instance, to right itself.  The foregoing just shows the integration of the global economy; it is not an excuse for our own government’s policy failures.  The buck stops—and starts—with this administration.

Our path is amazingly simple, too, except that politicians are artificially complexifying things.  Our government needs to get out of our business’ way.  It needs to stop spending—and borrowing—at its current profligate rate.  It needs to reduce spending and tax rates in real terms, not just with accounting gimmicks and a promise to pay us Tuesday for that hamburger today (which, if Mayor Bloomberg were to have his way, won’t be for sale soon, anyway [/snark]).

Some Thoughts on Government Surveillance

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Here’s the nose of the camel, courtesy of (here’s a surprise) the EPA, as reported by Fox News.  The EPA is flying drones over private property in order to “inspect” that property for government averred purposes.  Apparently, the EPA has been doing this for nearly 10 years over, among other regions, an area the EPA calls Section 7 (an area containing Nebraska, Iowa, Kansas, and Missouri).

A large concern has to do with jurisdiction.  Nebraska, for instance, has the responsibility for environment questions in its part of Section 7 through its Department of Environmental Quality; the EPA has only an oversight role.  Nevertheless, the EPA insists on conducting this surveillance with its own airborne resources—ostensibly as a cost-efficient way for it and state governments to reduce the number of on-site inspections and focus on “areas of the greatest concerns.”  Hmm….

Nebraska Congressmen Adrian Smith, Jeff Fortenberry, and Lee Terry (all Republicans) and Nebraska Senators Ben Nelson (D) and Mike Johanns (R) sent a letter expressing concerns about this hidden searchsurveillance to the EPA by that said, in part

Farmers and ranchers in Nebraska pride themselves in the stewardship of our state’s natural resources.  As you might imagine, this practice has resulted in privacy concerns among our constituents and raises several questions[.]

There’s another concern, also, though.  It’s better for us to have the on-site inspectors.  At least then the property owners/lessors know when the government’s surveillance is occurring and can accompany the government’s men.  And they can make sure, at least on the particular trip, that the government’s inspection is limited to the claimed purpose.

The convenience of the government can never be an excuse for abridging our individual liberties.

Déjà Vu All Over Again Cont’d

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In this post I continue a discussion of the advice to Reagan memo that The Wall Street Journal excerpted a few days ago.

On the matter of budgeting, the memo advised, in the context of fighting then-high inflation

Many question whether you are serious about a sizeable cut in budget outlays.  Credible FY 1981 and 1982 budgets which do that clearly and unambiguously would evoke an extraordinary response in the financial markets, and set the stage for a successful assault on inflation and a decline in mortgage and other interest rates.

This is sound advice for the next President, also.  Credible FY2013 (since the Progressives in the Senate and White House have variously refused to offer a serious budget or any budget at all for the last three years, a 2013 budget for the fiscal year then in progress will remain a necessity), FY2014, and FY2015 budgets will be as critical in demonstrating resolve in cutting irresponsible spending as it was in fighting inflation.  And it will be critical in reducing the impact of the inflation time bomb the Fed is creating, should that go off before it can be defused.

Those advisors continued in their section on the Budget:

Off-budget financing and government guarantees mount and expand programs through the use of the government’s borrowing capacity, draining the nation’s resources without being adequately recorded in the formal spending totals.

Pop quiz time: what off-budget financing and government guarantees are present today?  Bonus question: what does the continued existence of off-budget financing and government guarantees of any sort say about the sense of responsibility felt by incumbents of a Big Government?

The Reagan advisors also warn of this:

In addition, the mandating of private expenditures for government purposes has gained momentum as the spotlight has [i]lluminated direct spending. These mandates are also a clear call by government on the nation’s resources.

Boy, has it ever gained momentum.

Closely related to budgeting is tax policy.

Tax policy is properly the province of your Secretary of the Treasury.

Indeed.  And the inability of the present Treasury Secretary to pay his own taxes says far more about the unnecessary scope and complexity of current tax law than it does about his intelligence or sense of responsibility.  If we assume Geithner isn’t a tax scofflaw—and I believe he is a fundamentally honest man—his mistake should be a clarion call for simplification.  That it is not speaks poorly of the incumbents on both sides of the aisle.

Reagan’s advisors continue:

We consider that the key ingredients should be your proposals for the Kemp-Roth cut in personal income tax rates, simplification and liberalization of business depreciation and a cut in effective taxes on capital gains….  Consistent with your proposals earlier this year, the effective date for these reductions should be January 1, 1981.

Other key proposals are…reductions in…inheritance taxes and the taxation of Americans living abroad….

Again, these are remarkably prescient.  The Obama tax increase is set to take effect on January 1, 2013.  That increase, aside from raising income taxes on ordinary Americans smack in the middle of the present recession, will include jumps to usurious rates on what those same ordinary Americans would otherwise leave to their own children and other heirs of their choice—not of government’s choice.  Moreover, most sub-Federal jurisdictions only tax income earned within their jurisdiction.  Why should the Federal government be any different?

The Obama tax increase also includes major increases in business-related taxes: investment taxes on capital gains and increasing the double taxation present on dividend payouts.  These will serve only to reduce investment in American businesses, to the detriment of our already suffering economy.

I’ll have more in the coming days.

A Lack of Understanding

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Earlier this week, the Congressional Budget Office projected that if Congress fails to act [on tax policy], the U.S. economy will enter a recession next year, with a 1.3% annual rate of contraction in the first half of 2013.  It also said that if Congress extended current policy without “comparable restraint in future years,” federal debt levels would balloon, leading to negative consequences [that] include higher interest payments and less ability to use tax and spending policies to respond to economic challenges. [The CBO’s report is here.]

This is a fundamental lack of understanding—by the CBO, yet—of the role of government.

The Federal government has no business using “tax and spending policies to respond to economic challenges.”  This is nothing less than the government’s attempt to centrally manage the economy.  The Federal Reserve Bank has the goal—the responsibility—to seek price stability in our economy.  The Federal government has a responsibility to maintain a stable environment within which a free market can operate without Federal interference.  The optimal way—the only real way—for the government to achieve this is through low, and stable, tax rates that have no loopholes for special interests, and through low, and stable, spending rates that have no exceptions for special interests.  Indeed, that is the only economic challenge to which the Federal government must respond.  Moreover, answering this challenge enables the free market economy to achieve the full employment that is another claimed goal of the Fed.

And that, thereby, answers the question of what the government must do about the looming Obama tax increase.