Arthur Brooks nails it: what ails the GOP isn’t its policies, but in its approach to the less fortunate

Arthur Brooks writes in the Wall Street Journal an interesting piece analyzing what is really ailing the Republican Party. As you might imagine, he doesn’t put forth the issue of policies as the “number one” issue. His prescription is not to moderate Republican brand, but rather to reemphasize its attention to assisting the needy.

Conservatives are fighting a losing battle of moral arithmetic. They hand an argument with virtually 100% public support—care for the vulnerable—to progressives, and focus instead on materialistic concerns and minority moral viewpoints.

The irony is maddening. America’s poor people have been saddled with generations of disastrous progressive policy results, from welfare-induced dependency to failing schools that continue to trap millions of children.

Meanwhile, the record of free enterprise in improving the lives of the poor both here and abroad is spectacular. According to Columbia University economist Xavier Sala-i-Martin, the percentage of people in the world living on a dollar a day or less—a traditional poverty measure—has fallen by 80% since 1970. This is the greatest antipoverty achievement in world history. That achievement is not the result of philanthropy or foreign aid. It occurred because billions of souls have been able to pull themselves out of poverty thanks to global free trade, property rights, the rule of law and entrepreneurship.

The left talks a big game about helping the bottom half, but its policies are gradually ruining the economy, which will have catastrophic results once the safety net is no longer affordable. Labyrinthine regulations, punitive taxation and wage distortions destroy the ability to create private-sector jobs. Opportunities for Americans on the bottom to better their station in life are being erased.

Debt Hypocrisy Wins Obama Rare ‘Upside-Down Pinocchio’ | Washington Free Beacon

http://freebeacon.com/debt-hypocrisy-wins-obama-rare-upside-down-pinocchio/

Washington DC’s booming economy built on the backs of the country it leads

And interesting article in the New York Times details a recent development in and around our nations capital. During the past 10 to 15 years, there is been a massive economic boom within Washington DC, and the surrounding counties in Maryland and Northern Virginia.

How Washington managed this transformation, however, is not a story that the rest of the country might want to hear, because we largely financed it. As the size of the federal budget has ballooned over the past decade, more and more of that money has remained in the District. “We get about 15 cents of every procurement dollar spent by the federal government,” says Stephen Fuller, a professor of public policy at George Mason University and an expert on the region. “There’s great dependence there.” And with dependence comes fragility. About 40 percent of the regional economy, Fuller says, relies on federal spending.

Congress may have passed legislation to avert the middle-class tax increases of the so-called “fiscal cliff,” but it has only postponed what is known as the “sequester” — $1.2 trillion in budget cuts. And that’s on top of several hundred billion dollars in cuts that the Pentagon has already agreed to. The capital’s boom days, in other words, might be over. “Rather than leading the nation, we’re going to be lagging it going forward,” Fuller says.

The author goes on to explain why this came about, pinning much of the blame on the Reagan administration (curiously). Arguably, there are the multiple years of trillion plus dollar deficits that probably had an effect as well, though that is not emphasized very much in the article. The Cato Institute , in it’s usual clear style, add the following to say in the article:

David Boaz, executive vice president of the Cato Institute, told me: “Washington’s economy is based on the confiscation and transfer of wealth produced elsewhere. Out in the country they’re growing food, building cars and designing software — all these things that raise our standard of living. Here in Washington, everyone is writing memos to each other about how to take some of that money and which special interest should get it.” I asked him if he liked living in the city, which has become undeniably nicer. Boaz sputtered a bit. “I can’t walk to lunch from my office without having to avoid the construction projects!” he said. “For Washington, it does mean better restaurants and better entertainment, and the potholes get filled faster. But for the country as a whole? I don’t think it’s a good thing for America.”

A strategy for the looming debt ceiling fight

Karl Rove writes in the Wall Street Journal about how the GOP’s strategy should be in approaching the upcoming debt ceiling fight.  The core strategy that Mr. Rove argues for is for the coupling of debt increases and spending cuts.  We saw this strategy initially employed by John Boehner during the initial debt ceiling fight in 2011.

The GOP congressional leadership is right to say that they will not negotiate in private with Mr. Obama, and that tax increases are not on the table, especially after the president received $620 billion in new taxes to end the “fiscal cliff” crisis.

 

But this means House Republicans must pass a measure pairing specific spending cuts with a debt-ceiling increase that will have few, if any, Democratic votes. It would therefore be tactically wise for Republicans to draw many of these cuts from the recommendations of Mr. Obama’s own National Commission on Fiscal Responsibility and Reform (aka Simpson-Bowles).

 

It would be even better if much of the savings were achieved by moderating future spending increases or freezing outlays, rather than reducing them from today’s levels. Both are possible: Congressman Paul Ryan’s proposed budget plans—approved by House Republicans in 2011 and 2012—achieved most of their savings by restraining future growth.

 

Passing such a measure will require the GOP to accept less than total repeal of the Obama agenda, vote for spending cuts smaller than what they want, and support a debt increase all Republicans wish were not necessary. Republicans voting against a GOP plan because it’s not perfect would just be aiding and abetting Mr. Obama.

No deal is better than a bad deal on the fiscal cliff

Avik Roy writes in Forbes that the recalcitrant GOP representatives may be right in resisting the current “Plan B” as put forth by John Boehner. If we go over the “fiscal cliff” there are some aspects of the cuts and tax increases that, though painful, might be wise. First, he summarizes what are the main two components to the fiscal cliff:

Fiscal cliff component #1: Tax increases

The first aspect of the fiscal cliff is that taxes will go up. Income tax rates will revert back to the rates we had under President Clinton, leaving aside the additional $1.2 trillion in tax increases that Democrats passed under Obamacare. The top income tax rate will rise to 39.6 percent from 35 percent.

In addition, there are a number of other temporary tax provisions that will expire. Congress steps in every year to add an inflation adjustment to the Alternative Minimum Tax, because the AMT was not originally indexed to inflation. Without an inflation adjustment, more people will meet the income threshold for the AMT.

The deficit impact of extending these provisions, as people on both sides of the aisle want to do, is $330 billion in 2013, and $420 billion in 2014, according to the Congressional Budget Office.

If Congress were to extend all of these temporary tax provisions except for the lower tax rates on individuals with incomes above $200,000, as President Obama has advocated, the deficit impact would still be steep: $288 billion in 2013, and $382 billion in 2014.

Fiscal cliff component #2: Spending cuts

The second aspect of the fiscal cliff is that, if we go over it, spending will go down. Temporary payroll tax holidays, which reduce the Social Security and Medicare payroll taxes paid by employed individuals, will expire. In addition, the “temporary” extension of unemployment benefits undertaken during the recession will finally end. Continuing those temporary tax holidays and temporary unemployment benefits will increase the deficit by $108 billion in 2013, and $150 billion in 2014.

Importantly, Medicare’s Sustainable Growth Rate will take effect, reducing Medicare’s payments to physicians by tens of billions of dollars. This provision, and a few others, will reduce federal spending by $40 billion in 2013, and $61 billion in 2014.

In addition, the Budget Control Act—the law passed last year during the epic debt-ceiling fight—automatically sequesters, or reduces, defense spending by $24 billion in 2013 and $51 billion in 2014.

Next, he analyzes why it might be better to suffer through the above-outlined events rather than hash out a deal that Obamacare-esque in its integrity:

Much of the Republican behavior on Capitol Hill has been driven by fear of how the electorate will view Republicans if they don’t continue to pass temporary tax cuts. But reducing the deficit will have to happen sometime, and whenever it happens, it is likely to have some negative impact on the economy. If Republicans don’t want to reduce the deficit two years away from the next election, under a Democratic President and a Democratic Senate, they’ll never reduce the deficit. The time to reduce the deficit is now, before a real fiscal crisis emerges, one that makes Greece look like a picnic.

By leaving town and letting America go over the fiscal cliff, Republicans don’t have to vote for tax hikes that they justly oppose. Economically counterproductive spending, like the unemployment benefit extension, will come to an end. And an enormous amount of irresponsible accounting gimmickry, like the annual wrangling over the Medicare “doc fix,” will end also.

And once Democrats gain their generational victory—returning to the Clinton-era tax rates—what case will they be able to make for even higher tax increases next year? Instead, the conversation will move back to what it always should have been about: the fact that the government spends too much taxpayer money, money it doesn’t have.

To solve our debt crisis, just sell Alaska

In an opinion piece in the Washington Post, Steven Mufson puts forth a novel idea: have the federal government sell its 69% share of its land holdings in Alaska.

Absurd? No more absurd than the spectacle taking place right now as we skid closer to the “fiscal cliff.”

Selling real estate at top dollar is all about timing, and now’s a great time to unload the 49th state. The federal government, which owns 69 percent of Alaska, could cash in on the vast, resource-rich state at a time when oil prices are high and wild salmon is flying off the shelves at Whole Foods. Selling Alaska could fetch at least $2.5 trillion and maybe twice that amount, enough to lop off a huge chunk of the national debt and perhaps as much money as President Obama and House Speaker John Boehner hope to save or raise over the next decade.

The real question is who would be in line to purchase it.  The obvious folks would be Russian and China.  However, a private individual could assemble the investor funds to make the purchase as well.  How about The Donald:

How about an individual buyer? Donald Trump comes to mind. He could advertise on Mount McKinley — or just rebrand it Mount Trump, the highest peak in Trumpistan. He could even issue his own birth certificates to avoid any confusion about the national origin of public officials there. Of course, this 570,640.95-square-mile bauble would be a tad expensive for him, and he’d have to make it a very leveraged buyout, but he’s gambled big before.

Forbes: what the GOP should do regarding the fiscal cliff

http://www.forbes.com/sites/steveforbes/2012/12/06/message-to-gop-no-tax-increases-go-on-offense/

Bring Back the Ownership Society – SmartMoney.com

http://www.smartmoney.com/invest/strategies/bring-back-the-ownership-society-1323110888277/

The Political Risks of Cliff-Diving

In his latest piece, Karl Rove describes the political realities of going over the fiscal cliff.  His bottom line is that the result from such an event may harm both the President and Congress, however, the lasting effect could cripple Obama during his second term.

If negotiations stall and Washington plunges over the fiscal cliff, it will weaken Mr. Obama’s ability to bend Congress to his will, hasten the moment when congressional Democrats become more concerned about their standing than that of a lame-duck president, and further poison relations with Republicans.

On top of all that, a second-term president has total ownership of the economy. If the Congressional Budget Office is correct and going over the fiscal cliff causes the economy to shrink and unemployment to rise—while Americans see tax bills going up an average of nearly $3,500—then Republicans won’t escape blame but neither will the president. The damage to him may be long-lasting.

A weakened Mr. Obama makes recruiting and preparing for the 2014 midterms easier for Republicans and harder for Democrats.

 He also spells out the strategy that the GOP should follow in navigating the fiscal cliff issue:

The key for Republicans is to appear flexible rather than intransigent, willing to compromise rather than eager for a political smashup. This requires them to keep offering sensible alternatives and emphasizing that the country’s problem is too much spending. It will eventually sink in with many voters that Mr. Obama previously endorsed the GOP’s approach of generating more revenue through tax reform (not increased tax rates) and that his real goal is bigger government, not smaller deficits.

Republicans, therefore, must continue to volley.  Always put the ball back in the President’s court and make him decide that he’s out of ideas.

What Americans see in the fiscal cliff standoff

Perhaps the President thinks he has more political capital than he really does:

Americans who voted for Obama reflect that call for balance more than his ultimatums have: Politico reported Monday that a poll for a moderate Democratic think tank, Third Way, found 85 percent of Obama voters favoring higher taxes on the wealthy: “Yet 41 percent who supported the Democratic incumbent want to get control of the deficit mostly by cutting spending, with only some tax increases, while another 41 percent want to solve it mostly with tax increases and only some spending cuts. Just 5 percent of Obama supporters favor tax increases alone to solve the deficit, half the number who back an approach that relies entirely on spending cuts.”

via What Americans see in the fiscal cliff standoff – chicagotribune.com.