Remember that balanced budget we were going to get?  Not so fast.

President Barack Obama’s budget would generate deficits averaging almost $1 trillion a year over the next decade, according to the latest congressional estimates, significantly worse than predicted by the White House just last month. The Congressional Budget Office figures, obtained by The Associated Press Friday, predict Obama’s budget will produce $9.3 trillion worth of red ink over 2010-2019. That’s $2.3 trillion worse than the White House predicted in its budget.

A trillion here, a trillion there . . .

Worst of all, CBO says the deficit under Obama’s policies would never go below 4 percent of the size of the economy, figures that economists agree are unsustainable. By the end of the decade, the deficit would exceed 5 percent of gross domestic product, a dangerously high level.

The latest figures, even worse than expected by top Democrats, throw a major monkey wrench into efforts to enact Obama’s budget, which promises universal health care for all and higher spending for domestic programs like education and research into renewable energy. The dismal deficit figures, if they prove to be accurate, inevitably raise the prospect that Obama and his allies controlling Congress would have to consider raising taxes after the recession ends or paring back his agenda.

As Dave Schuler likes to say, that which is unsustainable won’t be sustained.   Of “raising taxes” and “paring back his agenda,” I think we all know which a Democratic president and Democratic Congress will pick.  Hell, it’s what a Republican president and Republican Congress picked for six years.

But without referencing the figures, Obama insisted on Friday that his agenda is still on track. “What we will not cut are investments that will lead to real growth and prosperity over the long term,” Obama said. “That’s why our budget makes a historic commitment to comprehensive health care reform. That’s why it enhances America’s competitiveness by reducing our dependence on foreign oil and building a clean energy economy.”

Asked and answered.

To be sure, these long range estimates are absurd flights of fancy.  Even the most honest and expert forecasters couldn’t tell you with any accuracy what 2019’s revenue is going to be within half a trillion dollars. So, we’re working with fantasy numbers either way.

Still, the best guess from the beginning has been that Obama was operating from budget numbers that were complete BS incredibly optimistic.  He isn’t the first president to do so nor will he be the last.

I attended a breakfast this morning with Newt Gingrich as part of the rollout for the American Solutions Winning the Future effort.  As usual, he was an extremely forceful speaker and passionate strategist.

Newt Gingrich CPAC 2009 Bloggers Breakfast

He opened by saying that he is an optimist and that “President Obama is doing us a huge favor” by showing how “radically different” the Left’s ideas are from those of conservatives.

He noted, for example, two polls showing that between 77 percent and 80 percent of Americans oppose “giving one more penny to GM.”  He said that it was a foundational idea of the country, articulated by Captain John Smith to the aristocrats at Jamestown that “He who will not work will not eat” and that the current policies are trying to overturn that basic ethic.   The Declaration of Independence articulates “the right to pursue — an active, responsible verb — happiness,” not a guarantee of achieving it.

Gingrich dubbed the current bailout ethic “the Bush-Obama” plan and argued that conservatives must articulate an articulate vision.  Republicans’ job is not to simply be an opposition party but rather a “better solutions party.”

He believes the massive stimulus plan gives us an opportunity for a “clarifying national dialog.” To win, the Speaker argued, we need ideas that are both popular and that work. Given how many issues there are to fight about, then, it makes sense to pick ones where there’s already a strong reservoir of good will — “tripartisan” ideas that 80 percent of people listening to drive time radio would agree with.

Here’s his 12 point alternative plan:

1. Payroll Tax Stimulus.  With a temporary new tax credit to offset 50% of the payroll tax, every small business would have more money, and all Americans would take home more of what they earn.
2. Real Middle-Income Tax Relief. Reduce the marginal tax rate of 25% down to 15%, in effect establishing a flat-rate tax of 15% for close to 9 out of 10 American workers.
3. Reduce the Business Tax Rate.  Match Ireland’s rate of 12.5% to keep more jobs in America.
4. Homeowner’s Assistance. Provide tax credit incentives to responsible home buyers so they can keep their homes.
5. Control Spending So We Can Move to a Balanced Budget.  This begins with eliminating Congressional earmarks and wasteful pork-barrel spending.
6. No State Aid Without Protection From Fraud.  Require state governments to adopt anti-fraud and anti-theft policies before giving them more money.
7. More American Energy Now. Explore for more American oil and gas and invest in affordable energy for the future, including clean coal, ethanol, nuclear power and renewable fuels.
8. Abolish Taxes on Capital Gains. Match China, Singapore and many other competitors. More investment in America means more jobs in America.
9. Protect the Rights of American Workers. We must protect a worker’s right to decide by secret ballot whether to join a union, and the worker’s right to freely negotiate. Forced unionism will kill jobs in America at a time when we can’t afford to lose them.
10. Replace Sarbanes-Oxley.  This failed law is crippling entrepreneurial startups.  Replace it with affordable rules that help create jobs, not destroy them.
11. Abolish the Death Tax. Americans should work for their families, not for Washington.
12. Invest in Energy and Transportation Infrastructure. This includes a new, expanded electric power grid and a 21st century air traffic control system that will reduce delays in air travel and save passengers, employees and airlines billions of dollars per year.

This, certainly, would have been a more compelling alternative than we had last November.

Patrick Ruffini thinks one way out of our national fiscal nightmare is to adopt, like 49 of the 50 states, a balanced budget amendment. Recognizing that this has had the perverse effect of profligate spending in flush years and irresponsible cuts in lean years, he suggests a five year cycle:

In bad times, states could deficit spend — by no more than the surpluses of the previous four years. In good times, states would be forced to bank surpluses — particularly if the past few years were economically tough.

Given that legislators are mostly elected on two-year cycles, the most likely effect of this would be to exacerbate the problem.  They’d still spend like drunken sailers when the money’s available, deficit spend when allowed, and then have draconian cuts if necessary in the fifth year.  Or come up with cute budgetary tricks to create a budget that’s “balanced” on paper by shifting the spending to January 1 of the next year or somesuch.

Andrew Sullivan has a powerful piece on the state of American conservatism, especially its alliance with the Republican Party.  Two key excerpts from a very long piece:

In contemporary America, the right is now in an almost parodic state of ideology. There isn’t just a rigid set of beliefs, indifferent to any time or place (e.g. tax cuts are right in a boom and a recession, in surplus and debt); it is supported by a full-fledged organization or “movement”; this “movement” generates journals and magazines and blogs designed fundamentally to buttress the cause; and the most salient distinction discussed in these circles is between those who are for the cause and those against it (with particular scorn for any dissidents).

[...]

One reason I admire Oakeshott is simply his understanding that the two deepest impulses in Western political thought – the individualist and the collectivist – need each other to keep our polities coherent. He, like me, preferred the individualist, and so my own leanings are toward smaller government, lower taxes, balanced budgets, individual freedom and prudent strength in foreign policy. But I also see when the alternative might be needed. There are times when the government does indeed need to make a big infrastructure investment or beef up its security technology or address an emergent and vital threat to a settled way of life, like climate change or Jihadist terror. Finding the best way for government to act at those times is a pragmatic and often difficult task; but I have no issues with such action. Government exists in some measure to provide a collective response to a newly felt need.

The first part of that strikes me as exactly right. Too much of today’s conservatism is based on litmus tests stuck in the 1980 campaign against Jimmy Carter.   If conservatism is about preserving a precise set of policies now thirty years out of phase, then it’s a dying movement.

The flip side of that, though, is in the second paragraph cited above and Andrew’s general sense of issue-and-time-dependent policy analysis.  Yes, hard choices must be made and desperate times sometimes call for desperate measures.   Still, if conservatism is nothing more than a Potter Stewartesque “I know good policy when I see it” feeling, then it’s neither an ideology nor in any sense conservative.

While conservatism, like any ideology, should be organic and evolve over time, avoiding being mired in programatic dogma, it should still hue to principles that abide over time.  Andrew’s list — smaller government, lower taxes, balanced budgets, individual freedom and prudent strength in foreign policy — isn’t a bad one, so long as they’re considered preferences or instincts rather than absolutes.

Some examples from the longer essay:

[A] conservative should have no objection to major pragmatic attempts to prevent this depression taking on a life of its own and perpetuating pain more than necessary.

True. But a conservative should 1) be incredibly skeptical of government’s ability to do so and 2) be mindful of longer term consequences of policies enacted in the effort.

[I]t might even be the case that the vastly growing social and economic inequality of the last three decades could justify redistribution via spending or taxes. The point is to sustain social order by buttressing the middle class – a conservative objective if ever there was one – not to construct an abstract notion of a just society.

Helping the poorest amongst us is a conservative value.  Socially engineering a leveled society?  Not so much.

I don’t see the attempt to roll back all legal abortion after forty years of Roe as a conservative move. It’s a counter-revolutionary one.

As a pragmatic matter, I don’t see abortion rollback as feasible, let alone a smart plank around which to try to win elections.  But working to protect innocent lives is absolutely a conservative principle — if not its most fundamental one.   This doesn’t mean dogmatic insistence that a fertilized egg is a human being, crass behavior towards desperate teenagers trying to enter abortion clinics, or, goodness knows, murdering doctors.  Conservatism is about behavior, not just policy outcomes.

Andrew’s larger essay is well worth the read. It includes a bevy of links to debates and other writing on the subject, too.

In commenting about John McCain’s budget plans, Matthew Yglesias threw out this comment:

Given the present circumstances, I can’t think of any good reason for a presidential candidate to be promising to that we’ll be at balanced budgets in four years. It would be nice to see the deficit on a decreasing trajectory rather than an increasing one, but achieving short-term balance isn’t necessary or even necessarily desirable.

While it’s true that a balanced budget probably isn’t possible in the next four years, getting the deficit back on a decreasing trajectory is an absolute necessity. Why? Because it’s one of the easiest steps we can take towards strengthening the dollar, which as of today is now trading at an all time low against the Euro.

A weak dollar right now is part of the cause of high oil prices, and is causing a cascading effect of higher prices everywhere else in the economy, too. Wholesale prices rose 1.8% last month alone, and are up 9.2% over the past year. When you consider that the U.S. is a large net importer of goods, it’s impossible to think that a weak dollar isn’t behind this rise in prices.

Now, with our credit markets in crisis, the last thing this country needs is for foreign investors to get scared off by a weak dollar. As this excellent post at Information Arbitrage explains, we need those investments if we’re going to carry through this problem in the credit markets, and that ain’t gonna happen if investors don’t have confidence in the dollar.

One of the best ways to stengthen the dollar and bolster U.S. credit is to show that we can get our spending under control. In other words: we can cut spending and put ourselves on a trajectory towards a balanced budget. Alas, this is Presidential campaign season–which means that all investors can see right now are promises of tax cuts and spending increases from both candidates.

That’s not the message we need to be sending.

Image: Market Preview blog.

UPDATE: One thing that needs to be made clear, as my colleague Dave Schuler points out in the comments below, that part of “balancing the budget” means we need to stop accounting federal expenditures as “off-budget.” It’s easy to make it look like you’re doing something about the deficit when you “don’t count” large expenditures. The reality is that ALL federal spending needs to be in balance with ALL federal income, period.

Sara Robinson has an interesting examination of the question of Barack Obama’s cult of personality.

She begins by a look at the literature on actual cults and shows why the Obama campaign doesn’t qualify. While worthwhile from a technical standpoint, though, that’s not really what the debate is about. Perhaps “cult” is a poor word choice but people understand the shorthand: He’s running on personality rather than issues.

Her retort to that, though, is well taken:

As I pointed out my very first week on this blog, the GOP didn’t come to power by talking about plans and policies; they did it by using strongly emotional appeals that grabbed people by the gut and didn’t let them go. Theirs was never a movement based on reason. It was, from the very beginning, a movement of hearts and souls. And it was that deep, emotionally sustaining commitment that drew people in so deeply that they were willing to give 25 years of their lives to bringing about the New World Order their leaders promised them. We may hate what they’ve accomplished — but we’re never going to be able to do better until we can inspire that same kind of passion for change.

And Obama’s doing just that. He’s tapped into a deeply pressurized seam of repressed fury within the American electorate, and he’s giving it voice, a focus, and an outlet. Are the results scary? You bet: these people want change on a scale that much of the status quo should find terrifying. Are they unreasoning? The followers may be — but as long as their leader keeps a cool head, that’s not as much of a problem right now as we might think; and the heat will dissipate naturally in time. Is this kind of devotion even appropriate? You bet. You don’t get the kind of deep-level change we need without first exposing and channeling people’s deep discontent. Obama’s change talk may be too vague for most people’s tastes (including mine); but the fact is that if we’re serious about enacting a progressive agenda, rousing people’s deepest dreams and desires and mobilizing that energy is exactly how it’s going to happen. And Obama’s the first candidate we’ve had in a generation who really, truly gets this.

At some level, I disagree with the oversimplification of the appeal of the campaigns waged by Ronald Reagan and Newt Gingrich to bring Republicans to the presidency and control of the Congress. There were indeed rational policy platforms front and center in those campaigns.

Fundamentally, though, Robinson is right. Movements are based largely on appeal to people at the instinctual, visceral level rather than on the plane of platform.

Gingrich was a policy wonk’s policy wonk. But he was also a master of focus group-tested language. Take a look at the Republican Contract with America. Its legislative agenda combined wonkery with gut level rhetoric masterfully:

1. THE FISCAL RESPONSIBILITY ACT: A balanced budget/tax limitation amendment and a legislative line-item veto to restore fiscal responsibility to an out- of-control Congress, requiring them to live under the same budget constraints as families and businesses.

2. THE TAKING BACK OUR STREETS ACT: An anti-crime package including stronger truth-in- sentencing, “good faith” exclusionary rule exemptions, effective death penalty provisions, and cuts in social spending from this summer’s “crime” bill to fund prison construction and additional law enforcement to keep people secure in their neighborhoods and kids safe in their schools.

3. THE PERSONAL RESPONSIBILITY ACT: Discourage illegitimacy and teen pregnancy by prohibiting welfare to minor mothers and denying increased AFDC for additional children while on welfare, cut spending for welfare programs, and enact a tough two-years-and-out provision with work requirements to promote individual responsibility.

4. THE FAMILY REINFORCEMENT ACT: Child support enforcement, tax incentives for adoption, strengthening rights of parents in their children’s education, stronger child pornography laws, and an elderly dependent care tax credit to reinforce the central role of families in American society.

5. THE AMERICAN DREAM RESTORATION ACT: A S500 per child tax credit, begin repeal of the marriage tax penalty, and creation of American Dream Savings Accounts to provide middle class tax relief.

6. THE NATIONAL SECURITY RESTORATION ACT: No U.S. troops under U.N. command and restoration of the essential parts of our national security funding to strengthen our national defense and maintain our credibility around the world.

7. THE SENIOR CITIZENS FAIRNESS ACT: Raise the Social Security earnings limit which currently forces seniors out of the work force, repeal the 1993 tax hikes on Social Security benefits and provide tax incentives for private long-term care insurance to let Older Americans keep more of what they have earned over the years.

8. THE JOB CREATION AND WAGE ENHANCEMENT ACT: Small business incentives, capital gains cut and indexation, neutral cost recovery, risk assessment/cost-benefit analysis, strengthening the Regulatory Flexibility Act and unfunded mandate reform to create jobs and raise worker wages.

9. THE COMMON SENSE LEGAL REFORM ACT: “Loser pays” laws, reasonable limits on punitive damages and reform of product liability laws to stem the endless tide of litigation.

10. THE CITIZEN LEGISLATURE ACT: A first-ever vote on term limits to replace career politicians with citizen legislators.

One can argue, certainly, that this is very policy driven. Without question, clicking through and reading the legislation (available at the link) gives you detail and substance. But there were no hyperlinks in TV Guide.

But look at the names: Responsibility, American Dream, Fairness, Common Sense, Job Creation, Family, etc. Brilliant, emotive appeal. What decent person could be opposed to these things?

From my standpoint, Obama is doing the emotive part without as much substantive backing as Gingrich and Reagan. But maybe that’s just a function of selective memory.

Photo: The Daily F.O.S Blog via Google

While there are plenty of cases of McCain Derangement Syndrome, the irrational belief by conservatives that John McCain is to the left of Teddy Kennedy, evidence is mounting that the malady can be treated by a steady dose of reflection about the prospect of President Hillary Rodham Clinton.

Romney supporter Dr. Rusty Shackleford describes the symptoms:

What drives MDS? Some people are just so partisan and ideologically driven, that you think of John McCain as a traitor. You’re blinded by your outrage that he’s betrayed conservatism, or that he has the audacity to say nice things about Democrats. You just can’t see the truth because you can’t see past McCain’s “betrayal”.

John Cole, who has himself fallen out with the Bush-Cheney Republican Party, is befuddled by the phenomenon — especially when Mitt Romney is the “conservative” around whom the infected are rallying:

For as long as I can remember, McCain has been anti-abortion, for fiscal conservatism and balanced budgets and against wasteful spending, and an avowed and committed hawk and ardent military supporter. By my count, that is, or at least used to be, the trinity for the modern GOP. Those were the issues that, at a glance, defined conservatism, and McCain was on the “right” side of every one of them. Mitt Romney, not so much.

Jim Henley, who has not claimed to be a Republican, responds that modern conservatism seems to have replaced the Reagan-era trinity with “support for torture; opposition to non-Anglo immigration; [and] hatred of campaign finance reform.”

While there’s no doubt that these issues serve as a litmus test for some, so that nonsense like we “ought to double Guantanamo” or implausible scenarios for rounding up millions of illegal aliens get rousing applause, I continue to believe the reaction to McCain is more visceral than substantive. McCain’s cozy relations with the hated Librul Media and his obvious enjoyment at being the “maverick” who poked Republicans in the eyes with sharp sticks didn’t win him many friends in the base.

I think he’s horribly wrong on campaign finance, find his seeming antipathy to big business troubling, and think he’s too found of Big Government solutions to problems. On the other hand, he’s stood for principle against ambition on the war, on torture, on Rumsfeld, and on immigration.

He didn’t start out the race as my preferred candidate and he’s never going to be my ideal president. He is, however, an honorable patriot who I trust to put the best interests of the country first. And he is, without any question, the most conservative person who can realistically take the oath of office next January 20.

Abe Greenwald contends that,

The rabid strain of anti-McCain sentiment among media conservatives is, in fact, a betrayal of one of the most important principles of conservatism itself: the willingness to work with the concrete facts of a situation. The great strength of a politically conservative mindset is that it’s predicated on seeing the world as it is.

In a similar vein, Rachel Lucas (via Glenn Reynolds) writes an amusing rant that defies unredacted excerpting on a family blog. Here’s a G-rated taste:

I know some say that they’d rather “have the country ruined” by a real liberal than by a RINO. You know what that sounds like? Something you’d read on DailyKos.

Quite right. Indeed, quite a few commenters on even the more intellectual Democrat-leaning blogs are saying they will sit out the election if Hillary Clinton, rather than Saint Obama, gets the nomination.

My guess is that, once people get used to the idea that McCain and Clinton are the only real choices this cycle, people will settle down and make a sober choice. For conservative and liberal ideologues, certainly, it should be an easy one.

Neither Clinton nor McCain are likely to spark the intense enthusiasm that an Obama or a Reagan would engender. Some young people brought into the fold by excitement over Obama or Ron Paul will undoubtedly be demoralized and stay home; then again, that’s what they’d have been expected to do.

The rest of us will muddle on to the polling place and realize that we’re choosing a president, not a messiah. Which, really, isn’t such a bad thing.

Images: Rick Roberts, New Republican Party Blog, and Moonbattery via Google.

Amidst fears of a recession and a jittery stock market Bush has signaled that he is open to a larger fiscal stimulus package–i.e. larger deficits.

Jolted by global recession fears, the Federal Reserve slashed interest rates Tuesday, and President Bush and leaders of Congress joined in a rare show of cooperation in promising urgent action to pump up the economy with upwards of $150 billion in tax cuts and government spending.

One of my big problems with “fiscal stimulus” is that I see it as somewhat better than simple re-arranging the deck chairs on a sinking ship, and not much more. After all, how does a government run a deficit? By borrowing money. Now if that money could be used for productive purposes such as investment, or spent, then the impact of deficit spending is reduced. Further, there is the work of Robert J. Barro on deficit spending. Under certain assumptions, such as intergenerational altruism–i.e. you care about your kids, grandkids, etc., then any increase in the deficit is precisely offset by increased savings in the terms of government bonds, and there is no net increase in output. Of course, not everyone has kids, or in some cases they may prefer to spend their kids inheritance on themselves, so the strong conclusion above is mitigated somewhat.

Further, another problem with fiscal policy is the concept of time inconsistency. For example, a president might say, “We are on the brink of a recession, so we should increase government spending and run a deficit to avoid the recession and the pain they cause. Latter, when the economy recovers we’ll increase taxes to pay down the debt that was incurred. Since economic expansions are typically longer than contractions, the tax increase will be modest and we will be able to afford it.” Sounds eminently reasonable. Now imagine you have are that politician in the future and you are looking at the debt and the prospect of raising taxes. People don’t like higher taxes generally. Further, you have an election coming up. So, do you keep your promise you made earlier or do you renege and come up with a reason why raising taxes during an economic expansion is imprudent? Even if you are a benevolent dictator, by delaying paying back the debt¹ social welfare can be enhanced, so even in that case of dictator there is an incentive to deviate from what was, earlier, perceived to be the optimal policy.

When you look at the last 50 years of how the government has handled its finances you see that deficits are pretty much a constant. Running a surplus is actually the exception to the rule. Factor in that politicians have even less incentive to work towards a balanced budget or paying down the debt and fiscal policy could become geared towards running permanent deficits which could end up having an adverse impact on growth if the debt gets to be large enough.
_____
¹Note this does not mean not paying back the debt. Delaying could merely be paying the interest on the debt vs. paying the debt off. If the economy is growing this could be seen as a choice that enhances social welfare since you can avoid raising current taxes and the burden of the debt in the future diminishes as a ratio of GDP.

James has graciously asked me to guest-blog at OTB for a few days and I accepted with joy. I’m a constant reader and frequent commenter here.

I have an advanced degree in my field and have owned my own small business for more than 25 years.

I’m a Democrat but I think my politics are best described as eclectic. I opposed the invasion of Iraq, the Bush tax cuts, Medicare Part D, and the privatization of Social Security. I favor a balanced budget and maintaining a substantial military presence in Iraq until asked to leave by the elected representatives of the Iraqi people or until the Iraqi government is able to maintain order in the country.

I think that major Social Security and Medicare reform are necessary and inevitable but I despair of that being done before the catastrophe is already upon us.

I think that the most dangerous law in the history of the Republic was the Federal-Aid Highway Act of 1956.

I think that, like fire, government is a useful tool and not intrinsically evil but, again like fire, we should be wary of it and keep it under control.

I’m an associate poster at Dean’s World and I edit the Carnival of the Liberated, a (mostly) weekly round-up of posts from Iraqi and Afghan bloggers which you can check out most Tuesdays there. This Tuesday was a rare exception because I was tied up all day working as an election judge in a Chicago precinct.

I have my own modest blog, The Glittering Eye, and I hope you’ll drop by occasionally. I usually have something to say.

Jacob Sallum argues that the Republicans deserve to lose control of Congress because they’ve been so abysmal at controlling the size of the federal government. He cites AEI’s Kevin Hassett’s finding that the number of federal employees “shrank by 200,000 under Bill Clinton but have grown by 79,000 under George W. Bush.”

But that’s a pretty stupid metric unless one controls for events. Ceteris haven’t exactly been paribus over the last fourteen years. Clinton presided over a post-Cold War drawdown in the size of the Defense Department whereas Bush is presiding over a post-9/11 expansion in defense and homeland security spending. Indeed, the creation of the Department of Homeland Security, the decision to go to war in Iraq, the passage of No Child Left Behind, and various other decisions that have created this growth occurred during the period when the Democrats controlled the Senate.

Bush and the Republican Congress turned Clinton’s budget surpluses into deficits that peaked at $413 billion in fiscal year 2004. Federal spending as a share of GDP, which fell under Clinton to 18.5 percent, is again above 20 percent. Discretionary spending has increased faster under Bush than it did under Lyndon Johnson, no slouch in doling out taxpayer dollars. Earmarks have reached record levels, and the abuse of emergency spending bills is rampant.

Far from reforming entitlement programs, the Republicans compassionately created an exorbitant Medicare drug benefit that will add trillions of dollars to the program’s long-term shortfall–the gift that keeps on taking. Far from reducing the federal government’s scope, they have extended its reach into state and local
matters such as education, abortion, marriage law, and end-of-life medical decisions.

All true, sadly. Some of this is explainable by demographics (an aging population sucks up more medical benefits, especially as the cost of same is exploding due to a variety of factors outside the control of government) and some by the war. Most of it is just plain politics, though: Elected representatives catering to popular demands in hopes of getting re-elected.

Again, though, many of these decisions were being made during the post-Jeffords defection period when the Democrats seized control of the Senate. And, anyway, does Sallum really believe that a Congress controlled by Democrats would be less likely to pass increases in social welfare programs? Or that they’d suddenly stop inserting outrageous earmarks into the budget? Really? Thought experiment: Imagine a world where Robert Byrd was chairman of the committee in charge of allocating highway monies.

Sallum has a point here:

It takes no leap of faith to believe that a Congress run by Democrats would be more inclined to impose limits on the president’s surveillance, detention, and war powers. Or to suggest that Bush might suddenly find his veto pen when confronted by free-spending Democrats instead of free-spending Republicans.

Two minor problems, though. Even if the Democrats pick up a couple more seats than expected and thus regain a Senate majority, the Republicans would have the ability to filibuster legislation restricting the president’s war powers and such. Which they would absolutely exercise. And the veto power is virtually useless on spending bills in an era when budgets are passed at the last possible minute and so interlaced with unrelated items that presidents are forced to shut down the government or veto disaster relief or materiel support for troops in a war zone in order to stop unwanted spending on frivolous items. That’s not going to change, regardless of which party controls Congress.

As the Cato Institute’s William Niskanen points out, the only extended periods of fiscal restraint since World War II occurred during the Eisenhower and Clinton administrations, when different parties controlled the executive and legislative branches. “Government spending has increased an average of only 1.73 percent annually during periods of divided government,” he writes in the October Washington Monthly. “This number more than triples, to 5.26 percent, for periods of unified government.”

Ah, the joys of univariate social science analysis. Yes, there was divided government during much of the Eisenhower and Clinton presidencies. Also: Peace. The Korean War and Cold War, respectively, had just ended, meaning a massive decrease in defense-related spending.

One could certainly make a libertarian argument for divided government in general or ousting the Republicans currently in Congress in particular. But this ain’t it.

UPDATE: Robert Samuelson, himself a proponent of divided government, argues that it’s hardly a panacea.

The problem of American democracy is (of course) democracy. We are on the cusp of an election that commentators have already imbued with vast significance if Democrats recapture part or all of Congress — or if they don’t. But here’s something that no one’s saying: Regardless of who wins, it won’t make much difference for many pressing problems. We won’t have a major new budget policy, energy policy or immigration policy. The election might not even much affect the Iraq War.

[...]

The trouble is that public opinion is often ignorant, confused and contradictory; and so the policies it produces are often ignorant, confused and contradictory — which means they’re ineffective. The Catch-22 of American democracy is this: A government that mirrors public opinion offends public opinion by failing to do what it promises.

[...]

Occasionally, presidents and congresses get a free pass — some crisis or event fosters national unity. Bush had such a moment after 9/11; Lyndon Johnson had one after Kennedy’s assassination. Otherwise, politicians can deal with public opinion in three ways: Ignore it, change it or pander to it. Politicians who choose the first often become ex-politicians. The second is hard. The easiest course is to pander.

Bush and the Republican Congress happily cut taxes, enacted the Medicare drug benefit and praised deficit reduction. Anyone who thinks the Democrats set a higher standard should read “A New Direction for America,” the manifesto issued by House Democratic leader Nancy Pelosi. It proposes much new spending (bigger drug benefits, Pell grants and veterans benefits), new tax breaks, balanced budgets and no specific new taxes.

The alternatives to democracy being, as they are, worse, this is a set of problems we’ll gladly live with. But Samuelson is right: Public opinion is fickle, contradictory, and often, in the short term at least, wrong. And politicians fail to heed it at their peril.

UPDATE: See also my analysis of Niskansen et al from September, “Conservatives Call for Republican Ouster.”

Like Michael Cannon, this article in the Washington Post strikes me as a particularly bad case of reporting on economic policy. The article is on tariff suspensions and is caste in a typical fashion of domestic businesses being beaten by foreign competitors, Wal-Mart bashing and how it is bad for tax payers.

Lets take the last one first. The article repeatedly referes to how these suspensions cost tax payers money. How does this work? The reasoning goes like this: because tariffs are reduced or eliminated there is less money flowing into the U.S. Treasurey and as a result tax payers are on the hook for that decreased revenue. What the author of the article, Joe Stephens, apparently didn’t realize is that these tariffis also cost tax payers money as well. Tariffs make imported goods more expensive, which is why domestic businesses like them. Take for example the dog leash/collar tariff. That basically adds a 2.4% tax on foreign produced dog collars and leashes. Given the tens of millions of dogs that are owned in this country that means we are probably talking about millions of dollars. So, sure, reducing or eliminating the tariff does mean that there is less tax revenue, which if we are operating under a balanced budget assumption means higher taxes on tax payers. But at the same time it also means lower prices faced by consumers. And the population of tax payers and consumers are pretty much one and the same. By highlighting just the loss in revenues to the treasurery Joe Stephens is giving, in this case literally half the story.

As for the tariff suspensions being bad for domestic business, no kidding. But the history of protectionist policies (and tariffs are protectionist) is pretty grim from a populist stand point, IMO. Typically tariffs increase the prices and hence profits of domestic firms, but do little to raise domestic employment. Typically, a firm that faces less competition will produce less of the good. Consider the extreme case of a monopolist. The efficient level of production is to produce so that the marginal cost (cost of the last unit produced) is equal to the price. Monopolists select the profit maximizing level of production which is lower and equates marginal revenue (revenue on the last unit sold) to marginal cost. Hence less competition generally means less employment all other things being equal. To many this may sound counter-intuitive in that without tariffs there is more competition and some domestic firms in a given industry will shut down since they can’t compete. However, with free trade each country will shift factors of production (including labor) to those industries where it has a comparative advantage.

Basically this news story covers only half of the story and actually implicitly argues for higher prices for millions of consumers.

Mark Tapscott argues, persuasively, that the Republican “compromise” on spending is further alienating them from fiscal conservatives.

The reality is the compromise would preserve the bulk of the earmarks treasured by the Senate’s Old Bulls while reducing funding needed by the military in the War against Terrorism.

[...]

This is the kind of fundamental smoke and mirrors dishonesty that has helped fuel the biggest increase in federal spending and entitlements since World War II … under a Republican Congress and a Republican President, both of which were elected in great part because they promised to complete the job begun by Ronald Reagan in 1981.

Since George W. Bush took office in 2001, he and the Republican majorities in the Senate and House have talked the talk on cutting federal spending and reducing the power and influence of government but they haven’t walked it. In fact, they have run about as fast as their political legs would take them in the opposite direction, piling up thousands of special interest earmarks, adding the biggest expansion of entitlement spending since 1965, pushing failed federal programs in areas like education to record heights and increasing the national debt to previously unimagined levels.

Put another way, they’ve done pretty much what a Democratic president and Congress would have done had the election of 1994 not prompted Bill Clinton’s hollow 1995 State of the Union proclamation that “the era of Big Government is over.”

He’s right, of course.

The thing is, I’m not sure that it will much matter politically. There are several reasons for this:

1. Neither the Democrats nor any plausible third party (A chimera: Third parties are not plausible. -ed.) offer a better alternative on spending. My guess is that the Democrats would spend about the same amount of money, with perhaps less devoted to Defense and more devoted to national health care and other social programs. The earmarks would simply go to their Big Bulls rather than ours.

2. Most voters love big spenders. Sure, polls will tell you that people don’t want tax cuts and prefer a balanced budget. They tell pollsters that because it’s what they think they’re supposed to say as responsible citizens. They don’t vote that way, however. People hate pork barrel projects, which they define as spending on things they don’t support that benefits people from somewhere else. Simultaneously, they demand their congressmen bring their share of money back to the state/district to support much needed jobs and infrastructure development programs.

3. Few conservatives vote mostly on non-tax fiscal issues. The Barry Goldwater-Jack Kemp-Phil Gramm wing of the Movement has shrunk while the social conservative wing has grown. National security hawks are also back in ascendency after a short dormancy in the 1990s. Because of that, the first sentence of this trumps the second:

Yes, Bush has been tough on defense, he has put two excellent conservative jurists on the U.S. Supreme Court and he persuaded Congress to cut taxes. But the nation’s increasingly perilous financial straits sooner or later will undermine even those accomplishments.

Indeed, this is mostly because:

4. Ronald Reagan severed Republicans’ commitment to fiscal responsibility. Reagan got elected in 1980 for a variety of reasons, most important of which is that he was the anti-Jimmy Carter. He ran on a diverse platform that focused on three planks: Massive rebuilding of the military, cutting taxes, and shrinking the size of government. Because of all of the above plus a Democratic Congress, Reagan decided that he would settle for the first two.

Reagan presided over a doubling in the size of the national debt despite a booming economy that was bringing in record revenues. This was not, as critics allege, because the tax cuts let people keep too much of their money but because Reagan and the Congress were spending the money faster than they could count it.

Reagan was re-elected in a landslide and was one of the most beloved presidents in history. Conservatives, including Tapscott numerous times in this post, still think of him as an icon. So, incidentally, does George W. Bush.

Ironically, there was another guy called George Bush who ran against Reagan, calling his policies “Voodoo Economics.” He eventually got elected president and raised taxes in order to pay for a very popular war. He failed to get re-elected and Republicans don’t like him all that much.

There’s a lesson in there somewhere.

Duncan Black and Kevin Drum call B.S. on Andrew Sullivan’s statement that, “I’m in favor of Bush’s tax cuts, but want spending cuts to match them; I favor balanced budgets . . . .”

Black writes that, “It’s a nice little fantasy to fetishize ’small government’ and imagine that liberals fetishize ‘big government’ but that just isn’t the reality. Put up or shut up – what would you cut out of this budget?” Drum adds, “So: if you support the tax cuts, and you don’t want to cut defense spending, and you want a balanced budget, you need to slice about $400 billion out of the $500 billion that’s left.”

Sullivan responds, in part,

I’d prefer experts like Brian Riedl or Veronique de Rugy to propose detailed cuts. But my back-of-the-envelope wish-list is that I’d repeal the Medicare drug entitlement, abolish ear-marks, institute a line-item veto, pass a balanced budget amendment, means-test social security benefits, index them to prices rather than wages, extend the retirement age to 72 (and have it regularly extended as life-spans lengthen), abolish agricultural subsidies, end corporate welfare, legalize marijuana and tax it, and eliminate all tax loopholes and deductions, including the mortgage deduction, (I’d keep the charitable deduction). For good measure, I’d get rid of the NEA and the Education Department.

Aside from the fact that virtually none of these things are politically feasible and some of them are probably unconstitutional, an interesting list. I would say this wouldn’t come close to achieving the necessary cuts but I haven’t the foggiest idea (no pun intended) of the effect of a marijuana tax.

From a sheer preferences point of view–leaving aside all political considerations–I agee in principle with most of Sullivan’s cuts. The major exception is raising the retirement age to 72, which would be fine for white collar types such as myself but unthinkable for people in physically demanding jobs. We don’t want 71-year-olds trying to make a living mining coal, fighting fires, or flying commercial airliners.

In a larger sense, though, I am in favor of low taxes and relatively little non-defense spending on part of the federal government but have no fetish whatsoever for balanced budgets. Borrowing to pay for long term investments in the infrastructure or to provide for the national security strikes me as perfectly sound, conservative policy. So long as other spending is constrained–and that includes taking a hard look at defense spending, especially on the procurement side–the business cycle will largely take care of the budget.

Karl Rove has agents everywhere;

Democratic leaders on Capitol Hill are privately bristling over Howard Dean’s management of the Democratic National Committee and have made those sentiments clear after new fundraising numbers showed he has spent nearly all the committee’s cash and has little left to support their efforts to gain seats this cycle, ROLL CALL reports.

Congressional leaders were furious last week when they learned the DNC has just $5.5 million in the bank, compared to the Republican National Committee’s $34 million.

And to think that one of Howard Dean’s assets in his quest for the Democratic nomination was a proven track record of fiscal responsibility and 11 straight balanced budgets in his home state of Vermont.

The second call is with Rep. John Boehner, who represents Ohio’s 8th Congressional District.

Jon Henke has promised to once again provide an audio recording.

Boehner’s opening remarks: Need for reform. Easy to say but needs real leadership to happen. I have a written plan which actually outlines real steps to accomplish this goal. The document represents the model that I’ve relied upon and lived by since coming to Congress.

• Highlight of the plan is ending earmarks. I’ve refused to bring pork back to my District since coming to Congress, taking lumps from my own constituents for doing so for 15 years.
• Budget reform-fiscal responsibility.
• Ambitious agenda aimed at freedom, prosperity.

It comes down to one issue: Leadership.

A real-time “transcript” of the Q&A with bloggers is in the extended entry.

My impressions: Boehner was smoothe and knowledgable, although he evaded some basic questions. As discussed among the participants afterwards, his basic answer to a question on how to achieve limited government was “Unity.” One participant dubbed Boehner’s answer on the Medicare drug bill, explaining that he voted for it because it put much needed market reforms into the system, was “complete crap” since there are zero market forces introduced in the near term.

If I had a vote for Majority Leader–and I should emphasize, I don’t–Shadegg would be the guy. Boehner would hardly be a disaster but, I’m afraid, would not be a radical break with the status quo.

Other blogger reactions:

• Mike Krempasky:”I like John Boehner . . . but…the circle I cannot square is the Congressman’s explanation of his vote for the budget-busting Medicare Prescription Drug bill.”
• John Hawkins: “Overall Grade: D. Boehner was even less impressive than I thought he’d be. There were a lot of platitudes, he doesn’t come across as tough on illegal immigration, and anyone who supports the Medicare Prescription Drug Bill has no credibility in my book when he talks about the need to cut spending.”
• Ed Morrissey discusses all three calls in one post, endorsing Shadegg at the end.

Previously:Blogger Conference Call with John Shadegg

________

Blogger Questions:

LSB: Why did you vote against immigration bill? I oppose illegal immigration but voted against the bill on procedural grounds. More important, it had a huge unfunded mandate on employers to verify the citizenship status of their workers. I added amendment to take that out and it was not allowed to be voted upon.

NAB: Rules change requiring Members to affirm that they have actually read bills they vote for? I don’t know that it would help, because laws are written in a way that’s not very clear. WE should require 72 hour waiting period after conference to give time to review with staff help. Would have exceptions for emergency bills, like post-9/11.

Krempasky: You voted for largest expansion in 40 years with Medicare Bill. Nobody twisted my arm. There probably aren’t 5 bills in 25 years that I had to dwell on. This was one. Serious reforms to underlying Medicare program contained in the bill that made it worthwhile. Had to make a choice and picked market reforms even though it came with huge price tag for taxpayers.

Ed Morrissey: How to bring Democrats aboard on ethics reform? Democrats have right to participate but must be within the framework of Republican vision and ideals.

EM: BCRA sold as way to get money out of politics. Should we repeal since it didn’t work? Yes. I voted against it to begin with. Sunlight best disinfectant. Virginia state rules: Full disclosure on all giving and spending is the best approach. “The idea we are going to stop money going to power is laughable.”

Henke: Dissatisfaction from Right on how Bush has actually performed on limited govt. How to turn it around? Majority Leaders should lead the majority. I helped create the vision for 1994. What we need today is a common vision to show public who we are, why we’re here what we want to accomplish. Reagan’s City on Hill as model.

Hawkins: Would you support Term Limits and Balanced Budget Amendment, parts of Contract never implemented? I voted for both of them. I’ve changed my mind on term limits because of what has happened in Ohio state politics. It has moved power to lobbyists and been “an utter disaster.”

Hawkins: Do you support means testing of Medicare drug benefits? Yes. I support means testing of Medicare, period, as well as Social Security.

Krempasky: Which of your opponents would you endorse if you were not elected? There’s not much light between you and Rep. Shadegg, is there?

NZB: Foreign policy–do you believe Homeland Security going the right direction? There have been significant improvements. Rolling together 22 agencies and thinking you’ll have something operational quickly is “unrealistic.” It’ll take 10-15 years to integrate and make work properly.

Dale Franks: Close ties to pharmaceutical industry? I don’t have what I would consider close ties. Plus, they don’t have business before the ag committee. [It turns out Dale was confusing Boehner with Blunt on the Pharmaceutical issue.]