Thursday,
May 22, 2003
DO DEFICITS MATTER?: Andrew
Sullivan tries to use Greenspan's
testimony yesterday to attack the wisdom of the President's
tax cuts:
GREENSPAN'S
WARNING: While the president and his party put another huge
hole in this country's future fiscal solvency, Alan Greenspan,
that notorious leftist, testified in Congress yesterday. Here's
how the Financial
Times put it:
Mr
Greenspan also expressed concern about the effect of plans
for further tax cuts and increases in government spending.
He warned "deficits do matter" and expressed dismay at what
he characterised as a breakdown in budget discipline in Washington.
He reminded lawmakers the US government was facing a "significant"
budget problem as the "baby boom" population ages and draws
on more healthcare and retirement benefits. "I'd like to see
that addressed more seriously than it is," he said. "I must
say the silence is deafening."
Worth
repeating that: deficits do matter.
First off,
the President and his party are not putting a huge hole in the
country's future fiscal solvency. Sullivan has slipped into classic
Hoover economic logic. Long-term fiscal solvency comes from economic
growth, not from short-term balanced budgets.
Does that
mean deficits don't matter? Of course not, deficits do matter.
But it is shortsighted to pursue deficit reduction irrespective
of the economic condition of the patient. Put another way, given
our current economic situation which is better for the long-term
health of the economy, deficits at 2%-3% of GDP for the next couple
of years and higher GDP growth or much smaller deficits with lower
GDP growth? Anyone who thinks we need less GDP growth today doesn't
understand the state of the current post-bubble economy.
The bottom
line is the economy needs stimulus. That stimulus, as far as the
federal government is concerned, can come from increased spending
or by giving money back to the American people in the form of
tax cuts. Economic history shows that the private sector is going
to allocate and use that money far more efficiently than the federal
government. In other words we are going to get more bang for the
buck from an economic stimulus that works through the private
sector versus the same dollar amount of stimulus that comes in
the form of increased government spending.
Sullivan
continues in his argument against the Bush tax cut to castigate
Bruce Bartlett:
Then
you read pieces like Bruce
Bartlett's at National Review Online. Money quote:
Voinovich
and Snowe are responsible for the $350 billion cap. For some
reason, they decided that this was the biggest tax cut we
can afford — even though it represents a trivial sum over
10 years in an economy that will generate well more than $100
trillion over this period. Chafee is simply a Democrat in
all but party registration. McCain, however, is a conservative
from a conservative state. He said there should not be any
tax cut as long as the nation was at war. Yet he continues
to oppose even a $350 billion tax cut despite the end of war.
So the
war is now over? Surprising to hear that from National Review.
But look at the assumption in Bartlett's piece: that it's absurd
for a conservative in a conservative state to actually worry
about the government balancing its books! The bottom line is
that the U.S. government is going to go seriously broke in a
few years because of demographic pressure and entitlement growth.
Yet the current administration is merrily adding to the national
debt by not one but two big tax cuts, while pushing spending
to heights unseen since LBJ opened the spigots. I'm sorry but
we saw the consequences of that kind of combination in the 1980s
and it took a decade to bring the budget back to balance. The
fact that the Democrats are no better is not an argument. It
makes Bush's negligence even worse.
Worrying
about balancing the nation's books is fine as long as in the process
of balancing the books you don't kill the economy. And I'm a little
confused by just what consequences Sullivan is referring to by
'that combination in the 1980's.' Reagan's deregulation and tax
cuts (coupled with the FED's war on inflation) set the foundation
for the great bull market of the 1980's and the 1990's. Maybe
I'm missing it, but I just don't see all those negative consequences.
Interest rates declined all through the '80's and '90's, economic
growth was solid, unemployment dropped and guess what happened
to all those nasty deficits, we grew out of them just like Reagan
told us we would.
The time
to have attacked our structural spending problems related to entitlements
and demographics was in the late nineties when surplus tax revenues
(from increased growth, not higher tax rates) were pouring into
the federal coffers. However, President Clinton had little interest
in leading and doing anything that might at all be unpopular so
nothing was done. (The Republican Congress was not much better.)
So we had a big party in the late nineties and Bush is left to
deal with the clean up.
Do we have
long-term problems related to demographics and entitlement spending?
Yes we do. But now is not the time to attack this problem and
that is the key difference the Voinovichs, Snowes and Sullivans
don't seem to get. Our number one priority today has to be the
maintenance of growth in this economy. For without growth this
country and economy is going to be in big trouble. The ability
to deal effectively with the long-term problems Voinovich, Snowe
and Sullivan are correctly worried about will in turn be significantly
degraded.
Interest
rates continue to plunge to modern-day lows, Europe teeters on
the edge of a deflationary recession, Japan teeters on the edge
of a deflationary depression, yet serious people in this country
are debating whether its wise to run deficits at 2-3% of GDP.
Do they understand the consequences of not providing stimulus
to the economy at this critical time? Thankfully the President
and most in his party do get it and do understand that we need
more tax cuts, not less. That we need more growth, not less.
If you want
to criticize the President's tax plan, criticize it for having
too little stimulus too soon. But harping on the deficit and suggesting
we need to be more focussed on balancing the budget given the
current economic and financial condition in the world today is
a proscription for disaster. J.
McIntyre 1:19 pm
Tuesday,
May 20 2003
AL-QAEDA MEMBERSHIP: About halfway through this
ominously-titled Washington Post story on Al-Qaeda you run
smack into an enlightening fact:
"The
Saudi official said there were at least three al Qaeda cells
with about 50 hard-core operatives in the kingdom before the
bombings. He acknowledged that there was a much wider circle
of sympathizers, and U.S. officials broadly agreed with his
analysis.
"We
don't believe there are tens of thousands of active al Qaeda
members here, but we believe the al Qaeda presence is more than
a single cell or two cells," a senior U.S. official told reporters
today."
Fifty hard-core
operatives. Does this number strike anybody else as mind-numbingly
low? We're talking about bin Laden's home turf, a
country of 23 million people where clerics publicly spew anti-American
invective daily and the government has more or less looked the
other way for years.
Eighteen
months after 9/11 and more than a year after dismantling the Taliban,
you'd think al-Qaeda's membership rolls in Saudi Arabia would
be higher. Weren't we told that aggressive American efforts to
fight terrorism around the world would create "a 1,000 new
bin Ladens?"
ROH MOO-HYUN,
S. KOREAN NEOCON: Encouraging dispatch
from Reuters detailing S. Korea's tough stance with the North
over the nuke issue.
Roh developing
a bit of public spine with Pyongyang couldn't possibly have anything
to do with his meetings
in Washington last week with Bush, Cheney, and Rumsfeld, could
it?
THE POT
& THE KETTLE: Jaw-dropping hypocrisy alert in Ron
Fournier's article on the resignation of Ari Fleischer yesterday:
"I think
he was the right person for the job and for this president,"
said Joe Lockhart, former White House spokesman for Democratic
President Bill Clinton. "The president wanted somebody who was
loyal, who was disciplined, someone who needed to keep a secret.
I think he was an articulate spokesman in a difficult situation,
working for a president who demanded secrecy beyond what was
really called for."
Talk about
your Freudian projection...
ILLINOIS
SENATE UPDATE: Jack Ryan is quickly emerging as the front-runner
for the GOP nomination in the race to replace Peter Fitzgerald.
Last Saturday at the Chicago Conservative Conference he handily
defeated other possible rivals in a straw poll.
This morning
Eric Zorn serves up a flattering
profile in the Chicago Tribune (Read a transcript of Zorn's
full interview with Ryan here).
I've met Ryan a number of times and I have to concur with Zorn:
he's the real deal.
But it's
still a long way out and there is plenty of intrigue to come.
Like this, for example: the Chicago
Sun-Times reports this morning that the Fitzgerald camp has
been urging RTA Board Chairman Thomas McCracken Jr. to join the
race. McCracken finished second to Ryan in the straw poll and
with the help of Fitzgerald's organization will mount a serious
challenge if he chooses to run. Businessman Andrew McKenna also
lurks as a legitimate competitor for the nomination and is favored
by some of the serious GOP power brokers in the state.
Meanwhile,
on the Democrats' side, the Teamster's
Union wasted no time in getting behind Comptroller Dan Hynes.
This looks like a well-orchestrated attempt by the Chicago machine
to try and scare off any serious competition to Hynes by potential
up-and-comers like Barack Obama.
- T. Bevan 7:51
am
Monday,
May 19 2003
MORE AND MORE BLAIR: Sheesh. I haven't seen such a deluge
of commentary on one subject since 9/11. Not even the War in Iraq
produced this much chatter. But I guess this is what happens when
our narcissistic media culture gets hold of a topic that combines
two issues they are totally infatuated with: diversity and themselves.
The wagon-circling
on the left is proceeding at a furious pace - especially by black
journalists eager to try and extract race from the equation that
produced the Blair catastrophe. Yesterday, it was Michel
Martin and Leonard
Pitts, Jr. Today it's Bob
Herbert - again.
Two quick
observations. First, the anger and frustration of African-American
journalists is completely understandable. They don't want to be
associated with or allow Jayson Blair's own immoral and deceitful
behavior to stigmatize them or other African-Americans. But no
one in their right mind believes that Jayson Blair lied because
he was black.
Second, African-American
journalists are quick to defend diversity and affirmative action
by pointing out that there are any number of white "schmoozers,
snoozers and high-powered losers" (to quote Bob Herbert)
in newsrooms whose behavior avoids scrutiny. But going around
pointing out all of the white miscreants inhabiting newsrooms
around the country deflects the central issue of the Blair scandal,
it doesn't diffuse it: was Jayson Blair's rapid rise at The Times,
despite a lengthy record of sloppiness, enhanced by the fact he
was black and was he held to a different standard?
Neither Pitts
nor Herbert choose to address this question. Here is how Pitts
handles it:
"They
offered him [Blair] a slot in an internship program that was
being used to help the paper diversify its newsroom. He rose
swiftly from there.
It is
upon this slim reed that critics have perched claims that diversity
has hurt The New York Times. The charge is otherwise unsupported."
Except that
Blair's advancement came despite a massive correction rate that
would have crippled most reporters. Except that there were direct
warnings from Blair's editors that he needed to be sent packing
as soon as possible. Except that Howell Raines himself said that
Blair's race influenced his decision making.
But here's
the real kicker from Pitts:
"I've
frequently said that to be a black professional is to be always
on probation, everyday expected to prove that you belong. People
always ask me what I mean. THIS is what I mean. This, exactly."
Does Pitts
feel this way because the entire corporate world is racist and
views him (and other blacks) as automatically and inherently inferior
to everyone else? Of course not. Pitts doesn't even realize that
the reason he feels like he's on probation every day is precisely
because of the insidious nature of the affirmative action programs
he's defending. The possibility that Pitts is where he is because
of affirmative action makes him feel inferior and makes him suspicious
of others' thoughts and assumptions about him. Would Pitts feel
this way if there was no such thing as affirmative action?
2 REASONS
JOHN KERRY WILL NEVER BE PRESIDENT: One.
Two.
SANTORUM
VULNERABLE?: It's probably a good thing for Rick Santorum
he won't
be facing voters next year. What he may face in 2006, however,
is a challenge
from Republican State Treasurer Barbara Hafer, who is considering
switching to a Democrat to make the run.
Yes, the
scenario is a little farfetched. Still, Santorum's reelection
may be less than a cakewalk. If you remember back to late 1999
and early 2000, Santorum was considered extremely vulnerable and
was high on the Dems hit list. By the time the election rolled
around, however, he seemed to be in total command: the last
two polls taken before election day had him up an average
of 16 points over Ron Klink. In
the end, he won by only 6 points.
Santorum's
next go round with voters will be much different than 2000. This
time it will be in an off-year and - at least as things currently
stand - most likely the second mid-term of a lame-duck President.
We'll have to wait and see whether the situation produces any
suspense. In the meantime, keep your eye on the Pat
Toomey primary challenge to Arlen Specter as a possible early
indicator of things to come. - T.
Bevan 8:08 am
