Category Archives: Economics

Wake up. We are in crisis. We must save our country – Noonan

Where the Leaders Are.

Couldn’t help myself. Here’s the whole article.

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There were two big speeches this week, and I mean big as in “Modern political history will remember this.” Together they signal something significant and promising. Oh, that’s a stuffy way to put it. I mean: The governors are rising and are starting to lead. What a relief. It’s like seeing the posse come over the hill.

The first speech was from Mitch Daniels, the Indiana governor who is the answer to the question, “What if Calvin Coolidge talked?” President Coolidge, a spare and serious man, was so famously silent, the story goes, that when a woman at a dinner told him she’d made a bet she could get him to string three words together, he smiled and said, “You lose.” But he was principled, effective and, in time, broadly popular.

The other speech was from a governor newer to the scene but more celebrated, in small part because he comes from a particular media market and in large part because he has spent the past year, his first in office, taking on his state’s most entrenched political establishments, and winning. His style—big, rumpled, garrulous, Jersey-blunt—has captured the imagination of the political class, and also normal people. They look at him and think, “I know that guy. I like that guy.”

Both Mr. Daniels, who spoke Saturday at the Conservative Political Action Conference, and Chris Christie of New Jersey, who spoke Wednesday at the American Enterprise Institute, were critical of both parties and put forward the same message: Wake up. We are in crisis. We must save our country, and we can. But if we don’t move now, we will lose it. This isn’t rhetoric, it’s real.

Here’s why response at both venues was near-rapturous: Everyone knew they meant it. Everyone knew they’d been living it.

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Mr. Daniels began with first principles—the role and purpose of government—and went to what he has done to keep his state’s books in the black in spite of “the recent unpleasantness.” He turned to the challenge of our era: catastrophic spending, the red ink that is becoming “the red menace.” He said: “No enterprise, small or large, public or private, can remain self-governing, let alone successful, so deeply in hock to others as we are about to be.” If a foreign army invaded, we would set aside all secondary disputes and run to the ramparts. We must bring that air of urgency to the spending crisis. It is “our generational assignment. . . . Forgive the pun when I call it our ‘raison debt.'”

He argued for cuts and sunsetting, for new arrangements and “compacts” with the young. What followed has become controversial with a few conservatives, though it was the single most obvious thing Daniels said: “We have learned in Indiana, big change requires big majorities. We will need people who never tune in to Rush or Glenn or Laura or Sean,” who don’t fall asleep at night to C-Span, who are not necessarily engaged or aligned.

Rush Limbaugh, who is rightly respected for many reasons—lost in the daily bombast, humor and controversy is that fact that for 20 years he has been the nation’s most reliable and compelling explainer of conservative thought—saw Mr. Daniels’s remarks as disrespectful. Radio listeners aren’t “irrelevant or unnecessary.”

Of course they’re not. Nor are they sufficient. If you really want to change your country, you cannot do it from a political base alone. You must win over centrists, moderates, members of the other party, and those who are not preoccupied with politics. This doesn’t mean “be less conservative,” it means broadening the appeal of conservative thinking and approaches. It starts with not alienating and proceeds to persuading.

The late Rep. Henry Hyde, he of the Hyde amendment, once said to me, “Politics is a game of addition.” You start with your followers and bring in new ones, constantly broadening the circle to include people who started out elsewhere. You know the phrase Reagan Democrats? It exists because Reagan reached out to Democrats! He put out his hand to them and said, literally, “Come walk with me.” He lauded Truman, JFK and Scoop Jackson. He argued in his first great political speech, in 1964, that the choice wasn’t right or left, it was up or down.

That’s what Mr. Daniels was saying. “We can search for villains on ideological grounds,” but it’s a waste of time. Compromise and flexibility are necessary, “purity in martyrdom is for suicide bombers.” We must work together. You’ve got to convince the other guy.

Mr. Christie covered similar territory in a way that was less aerial, more on-the-ground. He spoke of making change in Jersey.

Pensions and benefits on the state level, he said, are the equivalent of federal entitlements. They have powerful, “vocal” constituencies. He introduced pension and benefit reforms on a Tuesday in September, and that Friday he went to the state firefighters convention in Wildwood. It was 2 p.m., and “I think you know what they had for lunch.” Mr. Christie had proposed raising their retirement age, eliminating the cost-of-living adjustment, increasing employee pension contributions, and rolling back a 9% pay increase approved years before “by a Republican governor and a Republican Legislature.”

As Mr. Chrisie recounted it: “You can imagine how that was received by 7,500 firefighters. As I walked into the room and was introduced. I was booed lustily. I made my way up to the stage, they booed some more. . . . So I said, ‘Come on, you can do better than that,’ and they did!”

He crumpled up his prepared remarks and threw them on the floor. He told them, “Here’s the deal: I understand you’re angry, and I understand you’re frustrated, and I understand you feel deceived and betrayed.” And, he said, they were right: “For 20 years, governors have come into this room and lied to you, promised you benefits that they had no way of paying for, making promises they knew they couldn’t keep, and just hoping that they wouldn’t be the man or women left holding the bag. I understand why you feel angry and betrayed and deceived by those people. Here’s what I don’t understand. Why are you booing the first guy who came in here and told you the truth?

He told them there was no political advantage in being truthful: “The way we used to think about politics and, unfortunately, the way I fear they’re thinking about politics still in Washington” involves “the old playbook [which] says, “lie, deceive, obfuscate and make it to the next election.” He’d seen a study that said New Jersey’s pensions may go bankrupt by 2020. A friend told him not to worry, he won’t be governor then. “That’s the way politics has been practiced in our country for too long. . . . So I said to those firefighters, ‘You may hate me now, but 15 years from now, when you have a pension to collect because of what I did, you’ll be looking for my address on the Internet so you can send me a thank-you note.‘”

It can be a great relief to turn away from Washington and look at the states, where the rubber meets the road. Real leadership is happening there—the kind that can inspire real followership.

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The Cee Lo Green Budget

Review & Outlook: The Cee Lo Green Budget – WSJ.com.

The liberal press will never target this…

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This was supposed to be the moment we were all waiting for. After three years of historic deficits that have added almost $4.5 trillion to the national debt, President Obama was finally going to get serious about fiscal discipline.  … Hosni Mubarak was more in touch with reality last Thursday night.

The White House actually touts as tight-fisted a budget proposing a record $1.645 trillion deficit for fiscal 2011, due largely to a new surge in spending to 25.3% of GDP. That’s more spending than in any year since 1945. Federal debt held by the public—the kind we have to pay back—will rise to 75.1% in 2012, which is the highest since 1951 and more than double what it was as recently as 2007.

This $3.73 trillion budget does a Cee Lo Green (“Forget You,” as cleaned up for the Grammys) to the voter mandate in November to control spending. It leaves every hard decision to the new House Republican majority. And it ignores almost entirely the recommendations of Mr. Obama’s own deficit commission. No wonder the commission’s Democratic co-chairman, Erskine Bowles, said Monday that this budget goes “nowhere near where they will have to go to resolve our fiscal nightmare.” And he’s an ally.

How unserious is this budget? Although the White House trumpets $2.18 trillion in deficit reduction over the next decade, those savings are so far off in the magical “out years” that you can barely see them from here. More than 95% of the savings would happen after Mr. Obama’s first term in the White House is over, and almost two-thirds of the promised deficit reduction would arrive after 2016. Pretending to cut deficits by pushing all real cuts into the future is Budget Flimflam 101.

From hard experience, we know that what matters are the cuts and reforms a White House is willing to make now. The Obama budget doesn’t cut a penny from the deficit in the last seven months of fiscal 2011. Over the next three years—through 2013—the spending reductions in this budget add up to a paltry $20 billion net, out of a projected $3.5 trillion deficit. That’s a 0.57% reduction in red ink and less than what the feds spend every two days.

As for Medicare, Medicaid, Social Security and other entitlements, which account for roughly 60% of federal expenditures, the proposed savings are close to zero. The President would allow these programs to continue on automatic pilot, meaning they nearly double to $2.7 trillion in 2021 from $1.4 trillion in 2010.

Every serious analyst agrees that the time to fix these retirement programs is before 75 million graying baby boomers start collecting the benefits and voting as beneficiaries rather than as net payers. Meanwhile, Medicaid spending would grow by 115% over the next decade thanks to that renowned deficit reducer, ObamaCare.

The proudest White House boast is that its budget would cap domestic discretionary spending at current levels for five years. These are programs ranging from NASA to the Washington Metro to school lunch programs to wind turbine grants, which overall and including stimulus expanded by more than 80% in Mr. Obama’s first two years. This spending freeze would cut these programs from 2011-2013 by a grand total of $14 billion.

By contrast, the plan now emerging from House Republicans would cut about $80 billion immediately, and nearly $280 billion over three years—some 20 times the White House savings. Mr. Obama’s budget also assumes annual economic growth of more than 4% from 2012-2014. That’s far more robust than anything this recovery has produced so far, and it is at least a percentage point higher than most private economists or the Congressional Budget Office predict.

We’d love to see that happen, because deficit reduction depends above all on economic growth to generate more tax revenue. But those growth targets would be undermined by the sizable tax hikes in Mr. Obama’s budget. After 2013 the capital gains and dividend tax rates would rise to 20% from 15%, and the highest income tax rate, paid mostly by noncorporate businesses, would rise to 39.6% from 35%. The Administration foresees a $700 billion windfall, but history shows that higher rates are unlikely to yield anywhere near that amount. . . .

This will go down as canny politics in Washington, as the President lies in wait to ambush Republicans when they propose their real spending cuts. Then he hopes he can cut them to ribbons on his way to re-election. That may be the White House game plan, but we wonder if the politics will play out that way. The American people also want a President to lead, and this budget is so transparently cynical it may help Republicans make their case that if they don’t lead, no one will.

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DB-NYSE: It’s even worse than we thought

DB-NYSE: It’s even worse than we thought – MarketWatch.

” …The NYSE isn’t alone. A multitude of U.S. companies have miscalculated and lost muscle on the global stage: Anheuser-Busch and Lehman Brothers for two, and even Facebook has significant foreign ownership after Goldman Sachs Group Inc. bungled its private fund-raising effort.

But the NYSE stands out because its mythical status towers above those names. Losing the Big Board and its iconic trading floor, even if it’s become a symbolic relic, is a painful reminder that U.S. institutions have lost their edge in the global marketplace. Not that they’re not players, but they no longer dominate….

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