Fourth Anniversary of My Blog; Blogger Hit Report

Between my last two posts, I observed the fourth anniversary of the launch of this blog.  Thank you for your patronage, which has made this endeavor worthwhile.

Also after Thanksgiving was the second anniversary of my observation of statistical tracking by the blog host, Blogger.  As I have noted previously, Blogger tracks far more pageviews than StatCounter (an average of 16 per day vs. 6 per day), for a total of more than 12,000 hits, not including my own, although the latter is far more specific.  The blog host’s statistics are nonetheless interesting. 

Blogger has continued to track pageviews of my blog on every day and on every post over the last two years.  It has tracked pageviews of 70 more posts than StatCounter, including several from the first two years, which were posted before the blog host began tracking.  For example, many more pageviews were tracked by Blogger than StatCounter especially of my posts in October and November about the United States general election.  The former has also tracked visits from 16 more foreign states from all six inhabited continents over the last two years than have ever been tracked by the latter since April of 2009.  I am thus aware of visits from at least 122 foreign states between the two trackers, as well as from other territories, as well as every American state and several U.S. territories.  Blogger continues to track far more visits especially from Europe than StatCounter, with Russia being the source of the most pageviews outside the U.S., with well over a thousand, followed by the Netherlands and Germany.

            Again, thank you for visiting, especially those of you who follow my blog or post comments.  Please continue to visit and comment.  

European Fiscal and Economic Notes

Europe has now plunged back into economic recession, despite the efforts of the European Monetary Union to end the crisis in the eurozone.  However, the promises by the European Central Bank to lend to member states that are reducing their debt significantly has continued to decrease the spread between the yields on Spanish and Italian sovereign bonds and the benchmark German bonds, thereby reducing interest payments for the governments of Spain and Italy.  

France’s credit rating has been downgraded, in a reflection of its new Socialist government’s policies of abandoning austerity by increasing spending.  The French government is also dramatically increasing taxes on businesses and the wealthy while threatening to nationalize businesses.

There was progress towards a new deal for Greece for its next tranche of bailout funds from the European Monetary Union and other institutions supporting it, as the Greeks have been agreeing to additional austerity measures (e.g. spending cuts).  Meanwhile, the Hellenic Republic cut a deal with its bondholders reducing the amount of debt it would default on and cause the bondholders to have to write off.

Italy is enjoying some success in cutting down on tax evasion, according to CNBC, something Greece needs to do more.  Apparently, not only did many southern Europeans receive much government largesse while not having to work many hours and days and while retiring early, some of them also did not pay their share in taxes.  It is shocking to many observers that they would react violently against austerity, which was necessitated because of their sloth and greed, but once people get accustomed to a lifestyle, it is apparently difficult to sacrifice even such ill-gotten gains.  Encouragingly, more Italians are informing on their fellow countrymen, especially business owners whom they suspect are evading sales taxes, in recognition that tax evaders cost everyone else, according to CNBC.  

The British newspaper, The Telegraph reports that after the United Kingdom’s liberal government raised its tax on million-pound earners to 50% in 2009, the number of millionaires decreased by two thirds, either because they fled the U.K. or found ways to reduce taxable income, according to a government report.  The paper reports, however, that the announced reduction by the Conservative-led coalition government, to 45% has already increased the number of millionaires significantly.  The report bolsters the government’s argument that the report proves that increasing taxes reduces revenue, The U.K. is a member of the European Union, but not of the Monetary Union. 

Conservative Arguments the Obama Campaign Effectively Used in Order to Win

I have identified three conservative arguments that United States President Barack Obama, Vice President Joe Biden and their fellow liberal Democrats used to win reelection in the 2012 election.

Rejection of the Liberal Argument of Accepting American Economic Decline

            President Jimmy Carter, a liberal Democrat, argued that Americans should accept that the U.S. economy would not be as strong as before because of post-war American decline.  Because of this argument and his explanation that there was a general “malaise,” he provided no hope for economic improvement.  Republican nominee Ronald Reagan defeated Carter in the 1980 presidential election by inspiring his fellow countrymen that because of freedom, America could do better economically and that “its best days were ahead.”  No one has followed Carter’s model of accepting decline.  Every nominee from either party has argued that the economy could get better. 

            Obama followed the optimistic Reagan model by arguing that America could get better economically – with Obama’s policies while simultaneously arguing that it would not by returning to the Republican policies he falsely blamed as responsible for the recession.  Now Obama’s belief that America could get better was not because he believes in the free market like Reagan, but because he believes he can transform the United States into a European-style socialist welfare state.  His optimism about the American economy does not extend to a rejection of the companion liberal argument of accepting a decline in U.S. military power or even diplomatic influence.  Nevertheless, the point is that the Obama campaign and other liberal Democrats recognized the lack of popular appeal of the old liberal notion of accepting economic decline.  The Democrats know that they must produce positive results because Americans expect to prosper.

Appeal to the Middle Class

            Liberal Democrats had been identified as representing the interests of the poor because they advocated policies that were intended to help the poor – often at the expense of the middle class.  The backlash from the middle class has led them to advocate increasingly for the middle class, as well.  For years, they have been claiming that Republican policies have hurt the middle class.

            During the 2012 campaign, liberal Democrats not only advocated further extensions of the “Bush middle class tax cuts,” but attempted to outflank the Republicans on their right by claiming that GOP presidential nominee Mitt Romney’s plans would amount to a tax increase on the middle class.  The liberal Democrats’ fiscal and economic ideas do not work and they are wrong to appeal to Americans as constituents instead of as individuals by promoting policies that that are beneficial to the economy as a whole, or at least do as little harm to it as possible.  Indeed, it is wrong for them to pander to voters by trying to bribe anyone into voting for their policies.  Nonetheless, the Democrats realize that they cannot win by appealing only to the poor.  Republicans have won the argument that tax cuts are good for the middle class, just as they had won the argument that welfare should be temporary, not a way of life.

The Recognition of Stock Prices as an Economic Indicator

           

            The third conservative argument used by the liberal Democrats during the 2012 general election campaign is implicitly related to the second one.  It was that their economic policies must be working because the Dow Jones Industrial Average of thirty blue-chip stocks was doing well, implying that the market was ratifying the liberal Democratic policies by demonstrating its confidence in them.  Indeed, the Left was actually boasting that stocks were doing well! 

            In the past, rising stock prices, particularly as reflected by the Dow average, were dismissed by the liberal Democrats as something that benefited only the wealthy.  Stock prices rose to record highs during the administration of President George W. Bush, a Republican, the significance of which they dismissed, but when they dropped after the Panic of 2008, liberal Democrats began to cite the decrease as an indicator of the severity of the economic recession.  Since Obama took office, they have increasingly pointed to rising stock prices as indicators of economic recovery, meaning that they recognize stocks as reflective of the economy as a whole, not only how the upper classes are doing.  Perhaps their attitude change has occurred because they realize now that a majority of Americans, including many middle class Americans, owns stocks, often through pension funds.

            The liberal Democrats are still a long way off from a mature economic view about stocks, as they still vilify some of the industries that comprise the mutual funds most Americans own, such as the energy, pharmaceutical or insurance sectors, or toward understanding that policies that adversely affect businesses in general or even particular sectors or industries can affect the whole economy.  Thankfully, many voters do understand at least in part because of the more widespread ownership of stocks because conservatives are winning the argument about the economic significance of stocks.

           

            If I think of more such examples of conservative arguments used by the Left, I shall post them.  In the meantime, I invite you, my dear readers, to post any other examples.

Happy Thanksgiving; Conservatives Have Much for which to be Thankful

         
          In my first substantive post after I launched this blog four years ago, I urged my fellow conservatives Americans to be thankful, despite the election (http://williamcinfici.blogspot.com/2008/11/be-thankful-despite-election.html).  A similar message applies today.

           We conservative Americans must always remain grateful to God for the liberty we enjoy and those who serve to keep us free, among the many other blessing we enjoy.

           We must remain confident that our principles are right and persevere in promoting them.  In fact, we must increase our efforts to educate our fellow citizens about the federal Constitution, basis civics, fiscal policy and macroeconomics, in addition to promulgating sound policies.  We start on a still-strong foundation, as the American electorate disagreed with few of our ideas and agreed with many, some of which are still under consideration in both federal and state government.

           As I noted in my last two posts analyzing the 2012 general election results, conservatives wield far more power in federal and state government than after the last election.  Unlike then, not only do conservative Republicans hold the majority of the United States House of Representatives, but hold several more seats than necessary to filibuster in the Senate.  The larger GOP congressional caucus is more conservative than before.  Meanwhile, conservative Republicans now hold a large majority of gubernatorial offices, as opposed to a small minority, and have also flipped a minority in state legislative seats to a majority.

           In addition, although they are never predictable and cannot be relied upon always to support our cause, the federal courts have given conservatives a number of landmark victories, such as upholding the right to keep and bear arms, state laws requiring voters to produce photographic identification and free expression for corporations.  Partial victories were also won in upholding states' rights in immigration and in President Barack Obama's federalization of health insurance.

           Indeed, the health insurance federalization law is being revealed as vulnerable both because of the way it is written, such as allowing states to opt out of creating health insurance exchanges and thereby to avoid employer mandates to provide health insurance or face penalties, and the Supreme Court ruling allowing states to opt out of Medicaid instead of being coerced into paying for the expansion by the federal government.  There may also be a public backlash against the plan once the more unpleasant features of it begin to be implemented.  Other issues, such as rising debt and entitlements going bankrupt, will present additional opportunities for conservative leadership.

           After a period of necessarily mourning the loss of the presidential election, we conservatives should return to offering ideas with the good cheer and optimism that reflect the confidence of our ideas and attract others to the cause of liberty.

           Have a Happy Thanksgiving!  May God bless America!

Analysis of the 2012 General Election across the U.S. and in Pennsylvania

           In my last post, I analyzed the elections for presidential electors across the United States in general.  I shall analyze all the other elections across the Union and the general election in particular in Pennsylvania in this post. 

The 2012 Election in the United States will be remembered largely as a close, status quo election, with little change either in the Executive or Legislative Branches of the federal government or in the states.  Nonetheless, there were some significant conservative consolations.

            Republicans lost only a few seats in the United States House of Representatives, where they retained a relatively large majority, and in the Senate, where they still have a minority robust enough to filibuster Democratic legislation or appointments.  These losses are relatively low for a party that simultaneously loses the presidential election.   In other words, President Barack Obama had few coattails. 

The win by the GOP in the People’s House, is a mandate for not raising taxes and for cutting wasteful spending and restoring the military, which thereby denies Obama a mandate for raising taxes and spending and gutting the military.  The Republican caucus in the Senate, with the retirement or loss of several moderates and the election of several conservatives, will shift rightward.  

            In the States, Republicans gained one governor, in North Carolina, which gives them 30, as well as a few more state legislative chambers across the Union, while holding onto most of the historic state legislative gains the GOP made in the 2010 Election.

            Indeed, wave elections, such as in 2010, include the winning of marginal races that are difficult for a party to defend, which makes the Republican holds in federal and state elections in 2012 significant.

            It is consoling to recognize that far more conservative Republicans hold federal and state office now than after the 2008 presidential election. 

            On ballot questions, despite some high-profile narrow losses for conservatives on a number of referenda in several states on gay marriage or the legalization of marijuana, as well as a few other losses on various issues in other states, there were several conservative victories among the states.  Michigan’s rejection of a referendum to amend the constitution to require collective bargaining and California’s rejection of a referendum to require the labeling of genetically-modified foods were among the most reported, but the Conservative News Service also reports several other wins for the conservative position on ballot questions: voters in Missouri, Oklahoma, Arizona and Washington, as well as in two California cities, approved referenda to limit various tax increases.  Missouri also approved a referendum against the creation of a health insurance exchange under Obama’s federalization of health insurance plan while New Jersey approved pension and health insurance reform for judges, according to CNS.

In Pennsylvania, Republicans lost all five statewide races: for presidential electors, U.S. Senate, and state Attorney General, Treasurer and Auditor.  Most of these losses were fairly close.

            In the campaign for Presidential electors, the Republican ticket of Mitt Romney and Paul Ryan lost the popular vote by 5% in Pennsylvania with over a million more registered Democrats than Republicans, instead of the 10% loss by the John McCain and Sara Palin ticket in 2008.  The 2012 GOP ticket lost statewide by less than 284,000 votes.  The Romney-Ryan ticket won the rest of the Commonwealth outside of Philadelphia by well over 180,000 votes. 

The Republican ticket won 54 of Pennsylvania’s 67 counties, as opposed to 49 by McCain/Palin.  I am proud to report that my county, Berks, was among those that flipped from the Democratic to the Republican ticket, thanks in small part to my local campaign effort.  The GOP ticket made noteworthy gains in the Philadelphia suburbs, where voters found Romney’s business experience and fiscal conservatism appealing, reversing the Democratic trend of the last several elections.  It especially made gains in Democratic southwestern Pennsylvania.  Pittsburgh’s Allegheny County was a single Democratic island in a sea of counties that voted Republican, several of which produced landslides for the Romney-Ryan ticket.  President Barack Obama’s hostility to coal and natural gas, the right to bear arms, moral issues and religious liberty were among the reasons for the GOP gains. 

            The Democratic win in the race for state Attorney General was the first since the office became elective in 1980.  The loss of all three state row offices is unprecedented for either party.  The Democrats also made gains in the state House of Representatives and Senate, but the Republicans retain the majority in both chambers.

            One significant consolation for the Keystone State Republicans was the defeat of an incumbent Democratic U.S. Representative from western Pennsylvania, giving the GOP a 13-5 advantage in the House delegation, up from 12-7 before reapportionment and the 2012 elections, which builds on the gains from the 2010 elections. 

            The 2012 general elections for president and other federal and state offices reflect neither a victory for liberalism nor a defeat for conservatism.   Although the Obama-Biden ticket won and the Democrats made some gains in Congress, voters kept the division of federal government they had created in 2010 and maintained or strengthened Republican rule in the States.

Conservative Analysis of the 2012 Presidential Elections

           In this post, I shall analyze the results of the 2012 elections for presidential and vice presidential electors across the United States.  I shall analyze all the other elections across the Union and the general elections particularly in Pennsylvania in my next post.  The election result was disappointing and disturbing for us conservatives, but there are a number of consolations.

            Compared to 2008, the 2012 popular vote for electors was even closer.  The Democratic ticket of President Barack Obama and Vice President Joe Biden lost ground by every standard: total popular votes, popular margin of victory, States won and Electors.  The Obama-Biden ticket won by less than 4 million votes, which represented a 3% popular vote margin of victory, 25 States and 332 Electors, as opposed to 9.5 million votes, 7% popular vote margin, 28 States and 365 electoral votes.  Indeed, the Democratic ticket won by only around 264,000 votes in four States (Florida, Ohio, Virginia and New Hampshire).  There was significantly less voter turnout than in 2008 because of a much larger drop in Democratic than Republican turnout.  Republicans gained a share of the votes of “independents” compared to 2008.

            Obama’s victory despite these decreases in popular votes and expected electoral votes are unprecedented for a candidate standing for reelection to a second term without a major third-party candidate on the ballot.  It is also unusual that his party simultaneously lost seats in Congress, meaning he had no coattails.  Thus, the election represented a moral victory for Republicans and means that there is no second-term mandate for Obama, especially when considered along with the Republican retention of its majority in the U.S. House.

The central premise of the liberal Democrats during the election campaign was that Republican policies, especially tax cuts, had caused the recession.  With a few exceptions, like this blog (See especially several of my posts shortly before the election), conservatives and Republicans hardly rebutted this oft-repeated claim, both during the end of the Bush Administration and throughout entire Obama Administration, even during the election. As a result, voters blamed the policies of former Republican President George W. Bush not only for causing the recession, but even for the continued economic weakness over the last four years more than they blamed the policies of Obama.  They gave the current President credit for the weak recovery which they optimistically expected to improve. 

Although the economy remains weak, it is not in the state of depression.  Eight percent unemployment means that 92% of the workforce is employed.  However, many have given up looking for work and do not count as part of the workforce while many others are underemployed.  Other major employment problems are the number of chronically unemployed and slow job growth.  The economy has also suffered from the loss of homeownership of many and the decrease in the value of the homes of everyone else.  As I have posted, Obama’s policies have not been helpful.

The difference in 2012 with the 1980 election when Republican Ronald Reagan defeated incumbent Democratic President Jimmy Carter, however, was that there was also high inflation at that time, which affected more people more adversely than now.  Moreover, there was a sense of “malaise” because Carter argued that Americans should accept decline.  He seemed unwilling or unable to provide hope for improvement.  By contrast, Obama followed the optimistic Reagan model that every presidential nominee of either party has since followed of arguing that the American economy could get better.  Obama also specifically argued that the economy would improve with his policies, whereas it would not by returning to Republican policies.  Furthermore, the overwhelming majority of the unemployed voted for Obama at least in part because of his extension of unemployment compensation.  Therefore, the higher the unemployment rate, the more votes of unemployed workers Obama would have won, notwithstanding any loss of votes of those who might blame him for higher unemployment. 

Conservatives see people as individuals; liberals seem them as members of constituencies.  As with the poor and the unemployed, and even the middle class, the Democratic campaign followed a campaign strategy of grouping people into constituencies, such as women, blacks, Hispanics, students and gays.  Many in these groups fell into the trap of being condescended to by voting for the candidate that pandered to their constituency, thereby suggesting that people do not think as individuals and reinforcing stereotypes about people based upon what group to which they belong.  Nevertheless, I disagree with the argument that the election suggests the demographics have shifted against the Republicans in regard to the population growth of Hispanics because they are not monolithic.  For example, Cubans vote Republican, while immigration is not an issue for Puerto Ricans, who are not immigrants, but American citizens.  Hispanics are generally pro-life and often establish small businesses, which makes them a natural constituency for conservative Republicans.

I also am not as certain as other disheartened conservatives that the tipping point has been reached whereby more voters receive money from the federal government than pay income taxes, which makes the majority willing to elect candidates who would increase income taxes on the minority who pays them.  Some of the 47% who currently do not pay a net amount of federal income taxes (in addition to various other federal taxes that nearly everyone pays) are veterans who receive benefits they earned, not “takers.”  Others are retirees or disabled people on Social Security or on Medicare who paid taxes on them on what is presented as a pension/disability insurance program.  They do not think of themselves as takers and disagree with raising taxes on “the makers.”  Even some of the others among the 47% disagree, too, because they aspire to be wealthy instead of opposing the rich out of envy or because they understand basic fiscal and economic matters or at least have common sense.  Nevertheless, the disturbing trend toward a minority paying income taxes is becoming increasingly dangerous for the Republic, as is as the bribing of constituencies through government largesse.

            Another factor in the election result was that Obama appeared slightly more likable and significantly more understanding and compassionate than the Republican nominee Mitt Romney, whom the Democratic campaign demonized with ad hominem arguments, even though these factors are irrelevant in choosing a Chief Executive of a limited federal Republic and Commander in Chief whom few Americans will ever have to work with personally.  Among other factors was the nomination by the Republicans of a candidate whose moderate record, despite his campaign as a conservative, failed to inspire enough conservatives to vote for him, as well as even more documented liberal media bias than usual and numerous election irregularities.  Yet the election was still close.

            Some of the factors in the Obama-Biden win were unique.  For example, the black vote for the Democratic nominee the last two elections for presidential electors was even higher than usual.  There was also the historic factor for other voters that weighed against voting to fire the first black president.  Obama lacked a comprehensive second term platform.  Although it was politically a disadvantage in not inspiring confidence, it was an advantage for him politically in not having to defend a position.  The next Democratic presidential nominee will be expected to have a platform in order to be elected Chief Executive. 

The lack of much of a platform is another reason Obama lacks a mandate.  Few liberal ideas were accepted by the voters, other than the one about taxes, while the Democrats effectively used several conservative arguments that I shall discuss in another upcoming post.

Indeed, Romney’s win of the first candidate debate suggests the conservative message was not rejected by the voters.  Some of his specific proposals are still under consideration by both parties in Congress.  Conservatives may have lost, but conservatism did not lose.

Election Advice for Conservatives

Conservatives, vote on Tuesday, November 6 for conservative candidates.  Vote not only for presidential and vice presidential electors, but for United States Senate and House of Representatives because the control of not one, but two Branches of government are at stake.

Here in Pennsylvania, there are important elections for Attorney General, Treasurer and Auditor General, as well as state Senate and House.  In other States, there are gubernatorial and state legislative races.  There are also referenda on the ballot in many States.  Even though the States are sovereign, independent political entities responsible for most domestic matters, these offices are often overlooked by voters in the voting booth.

All of these matters merit careful consideration by conservatives.  Choose the most conservative candidate with a realistic chance of winning the election, or at least the one who is least liberal.

In all elections for districts smaller than state-wide, like U.S. House or state legislative races, your vote counts more than in a statewide race because you are among a smaller electorate.  Even in those states that are not competitive for the presidential race, your vote for presidential and vice presidential electors is important in determining the popular mandate, but is even more important in the Congressional and state elections.

           Make plans for you and your family to exercise your privilege to vote and encourage your conservative friends, neighbors and co-workers to cast their ballots.  Fulfill your civic duty and vote morally.  Make sure your vote reflects your intent, especially if you vote by push-button machine.  Vote!


          May God Bless America!

Bush “Inherited” a Difficult Situation, Too

          When George W. Bush was inaugurated the 43^rd President of the United States, he faced a number of difficulties that we Americans would be well to recall at this time when President Barack Obama and his liberal Democratic supporters frequently complain about the challenges that he faced at the time he took office.

            Beginning before Bush took office in 2001, there was an economic downturn, brought on by the bursting of the technology bubble.  The downturn was exacerbated by a series of accounting scandals that necessitated legislation to deter such abuse, which he signed into law.  Despite budget surpluses that were projected to be temporary, federal debt, which was the accumulation of the annual deficits since the 1830s, exceeded $5 trillion at Bush’s inauguration.  The economic downturn threatened to increase the debt by decreasing revenue as people earned less and paid less in taxes.  After entitlements, the interest on the debt alone is one of the largest single federal expenditures.  Deficits were expected to return, despite massive cuts to defense and intelligence under the Clinton Administration.  Meanwhile, there was no Medicare prescription drug program, the lack of which incentivized surgery, which is costlier than medicine, and there was no accountability for federal money sent to the States for education.  There was still a marriage tax penalty and a more burdensome inheritance tax than after Bush cut income taxes across the board and decreased the death tax.

            Defense and intelligence had been weakened by the time Bush took office, in the face of repeated terrorist and other militant attacks, until he began to improve defense and intelligence, while there was no missile defense system until he successfully implemented one.  There were thousands more Russian nuclear warheads than after Bush negotiated a mutual reduction of them.  Since before Bush took office, Americans had been under attack not only from Islamist terrorists like al-Qaeda, but from the Baathist regime of Iraq’s Saddam Hussein: Iraq had been firing missiles at Coalition aircraft on a near-daily basis since the last year of the Clinton Administration, in violation of the 1991 cease-fire, while Iraq, along with Afghanistan and Libya were still listed by the State Department as state sponsors of terrorism until those regimes were either removed from power or renounced terrorism.  As a result, there were oil embargoes against Iraq and Libya.  Relations were poor with the largest free state in the world, India, as U.S. sanctions were still in place against it until the 43^rd President lifted them and Americans benefited from increased trade and cooperation from India against Islamist terrorism.

            Every president faces challenges when he takes office, some more than others.  The difficulties facing Bush, although by far not the greatest that have ever faced an American Chief Executive, were nonetheless daunting. 

            It is how presidents face these challenges that we historians judge them, as well as how they seize opportunities to implement beneficial policies.  It is worth remembering that Bush’s tax cuts were successful in stimulating prosperity, while his War on Terrorism prevented another attack like those of September 11, 2001.  The challenges he faced necessitated increased federal spending in certain areas, but the prosperity from 2002-2007/8 was reducing the deficit as a percentage of the gross domestic product.  It is also important to consider that Bush also had to overcome a series of misfortunes that occurred during his two terms, in addition to those already mentioned: the most damaging hurricane in American history, a sharp rise in oil prices sparked by increased demand because of global prosperity, and the financial crisis sparked by the bursting of the housing bubble, among others.

The last of these misfortunes threatened a depression which the Bush Administration’s policies helped avert.  The recession was predicted to be brief and mild, like the last two before it.  Indeed, the recession technically ended by the end of the second quarter of 2009, before Obama’s policies were fully in effect.  A number of political observers have noted recently, except for the recession, the overall positive situation as Bush left office. 

Finally, it is necessary and fair to acknowledge that every president, especially one who serves two terms, does some things that everyone recognizes as beneficial, and some things that everyone recognizes as harmful, some things well and some things poorly.  Neither Bush nor Obama are exceptions.  During this election season, when expressions of opinions tend to be exaggerated, it is worth noting the considerable difficulties George W. Bush faced at the time he took office, as well as those that occurred beyond his control during his presidency and his successes in dealing with them, in order better to judge his successor.     

Translating Obamaspeak: “Paying for” Something Means “Raising Taxes”

As during the presidential election campaign in 2008 and during his presidency, Barack Obama has been arguing that United States President George W. Bush and the Congress “spent money” on tax cuts, adding a prescription drug entitlement to Medicaid and two wars without “paying for” them, which he falsely blames for the recession. 

           What Obama means is not that the money was borrowed and not paid for with offsetting spending cuts, as he wants people to think, but simply that taxes were not raised to offset them.  His phrasing is another example of allowing the listener to read into the statement what he wants.  See also my June of 2010 post, The Clintonian Cynicism and Deception of Obama and His Supporters, http://williamcinfici.blogspot.com/2010/06/clintonian-cynicism-and-deception-of.html.  Obama wants his “paying for” phrase to be interpreted as “paying the bill,” which makes him seem fiscally responsible.  But what he really means by “paying for” something is raising taxes.  No other federal spending is “paid for,” either, except for those entitlements supported by payroll taxes.

First of all, a tax cut is not an expenditure (i.e. an outlay of money from the Treasury).  Therefore, it does not need to be “paid for.”  Second, the Bush income tax cuts increased revenue, like all other tax cuts (the income tax cuts of Presidents Warren Harding-Calvin Coolidge, John Kennedy-Lyndon Johnson and Ronald Reagan and the capital gains tax cut of Bill Clinton).   Reducing taxes not only allows people to keep more money to spend, but to work or invest more.  If a tax cut resulted in less revenue, then a less misleading expression would be that it is necessary that they be “made up for,” instead of “paid for.”  Nevertheless, tax cuts do not result in less revenue.

Regardless, Bush fulfilled his promise, just as Al Gore and the Congressional Democrats had made, to return the $200 billion surplus to the taxpayers.  Eliminating a surplus balances a budget as much as eliminating a deficit does.  Indeed, large surpluses are harmful to the economy because they result from overtaxation.  Obama retained all of Bush’s income tax cuts and has proposed to continue the middle class tax cuts.  Thus, he is blaming the deficit on tax cuts for wealthy and small businesses alone, despite the prosperity during the 2000s (which he wants everyone to forget).

It is important to note that although the annual budget was in surplus, the debt that had accumulated since the 1830s was over $5 trillion when Bush took office.  After entitlements, the interest on the debt is one of the greatest expenses of the federal government.  The surpluses were projected to be only temporary.  The deficit increased because of the following: Clinton’s cuts of defense and intelligence that Bush had to make up, the increase in federal spending on education and the prescription drug program, and the Democratic takeover of Congress in 2006, of which Obama was a member.  Indeed, Bush never enjoyed a supermajority of Republicans before then.  Nevertheless, the deficit as a percentage of the gross domestic product was declining because of economic growth.           

Moreover, if deficit spending is as good for the economy, as Obama and his liberal Democratic allies insist, then Bush must have been one of the best presidents for the economy.  If they are being consistent with their long-held Keynesian economic theory, they should credit Bush’s spending for the prosperity of 2003-2008, but they will not because they do not want to even acknowledge that period of economic expansion, lest it draw attention to the benefit of Bush’s tax cuts, which they intend to rescind, in part.  Instead, Obama and his allies blame Bush’s tax cuts for the Panic of 2008, as if they were not followed by several years of prosperity, despite September 11, but then suddenly stopped working.  Therefore, the liberal Democrats now blame deficits for the recession, arguing that deficits cause higher interest rates.  But interest rates reached record low levels under Bush, where they have remained.

As for the Medicare prescription drug program, the Democrats had proposed a prescription drug program that would have cost hundreds of billion dollars more – without any tax increase.  Because drugs are often less expensive than surgery, it is difficult to assess accurately the cost of the current program, which has been less costly than originally projected.  As for the wars, which many of the liberal Democrats supported, The War on Terrorism was beneficial for the economy by preventing another September 11-type attack.  As with the Medicare expansion, they only count one side of the ledger, as they also ignore the stimulative effect of war and post-war reconstruction, as well as the end of the oil embargoes on Iraq and Libya.  Obama singled out the wars for blame for the deficits and recession only because they are unpopular.

The Democrats Are Still Running Against Bush, Like Hoover, with the Same False Blame for the Economy

The Democrats’ central premise for the 2008 Elections was that Republican policies had caused the recession and therefore must not be allowed to retain the presidency.  Their premise for the 2012 Elections is similar: it would harm the economy to elect a Republican and return to the same policies.  The Democrats are thereby using the same old tactic they used during the Great Depression, for which they falsely blamed President Herbert Hoover.

Hoover had only been in office for seven months when the stock market crashed and the Depression began.  The Depression was caused by a number of factors, including the European economy that was pulled down by Germany, and exacerbated by a number of others, not by Hoover’s policies.  The Democrats also gave Hoover no credit for any of his policy attempts to mitigate the Depression.  Once elected, they continued to blame him and the Republicans for the continued depression, even though, despite their massive policy interventions, it lasted until the start of the Second World War.  The war stimulated economic growth by necessitating a buildup of armaments and materiel.  Indeed, the Democrats continued to run symbolically against Hoover for decades, winning five presidential elections consecutively and every congressional election but two from 1930-1994, except for the Senate from 1980-1986. 

Now, the Democrats have similarly been falsely attempting to blame President George W. Bush and the Republicans for the Panic of 2008 and the “Great Recession.”  As a result, they won the 2008 election.  However, their success was short-lived, as they lost the 2010 midterm congressional elections.  Nevertheless, they intend to continue to fool American voters uninformed about macroeconomics, fiscal and monetary policy, into wrongly believing that the Republicans are responsible not only for initiating the recession, but its continuation to this day. 

A key difference between Hoover and Bush was that the latter came into office during an economic downturn and the economy began to recover after the enactment of his policies.  It not only recovered after Bush cut income taxes, which stimulated economic growth, but prospered for several years, with numbers similar to those during the Reagan and Clinton booms, with even lower interest rates.  Millions of jobs were created, income increased and poverty decreased while inflation was held down, all despite the September 11 Terrorist Attacks that represented a trillion-dollar blow to the economy.  Prosperity was one reason why Bush was reelected, unlike Hoover. 

The Democrats are trying to make the American people forget the Bush boom or somehow to conclude that his tax cuts, which they themselves have extended, for example, caused a recession five or six years after their full enactment.  Indeed, there is another parallel between the Democratic campaigns against Hoover and Bush.  The Democrats use the end of the boom-and-bust cycle to stand for the entire period.  Thus, the Depression, which began in October of 1929, is meant to stand for the entire Roaring Twenties, as if to make people forget the prosperity under Republican Administrations of that decade.  Similarly, after the Reagan boom of 1982-1990, Bill Clinton and the Democrats did not limit their criticism of President George H.W. Bush’s record to his specific policies, but blamed the entire period of record-long prosperity on Republican policies in general, as if the 80s were something other than a period of growth.

Economists, except for Marxists, agree that income tax cuts stimulate the economy by allowing people to keep more of their money to spend, while supply-side economists also recognize that tax cuts incentivize more work and investment.  Income tax cuts have led to prosperity and increased government revenue every time they have been tried in American history: by Presidents Warren Harding-Calvin Coolidge, John Kennedy-Lyndon Johnson, Ronald Reagan and George W. Bush.

Even after the Panic of 2008, the Bush Administration’s bold policies, although controversial, are credited by economists for deftly avoiding a depression.  In fact, the economy was poised to recover by mid-2009 without further governmental intervention, and did by June of that year – before President Barack Obama’s policies were fully implemented and despite his early practice of undermining confidence in the economy.

See also my last four posts, in which I explain why presidents receive too much credit or blame for the economy and why Bush was not responsible for the recession, as well as how certain Democratic policies exacerbated it and that Obama has continued many of the Bush policies he and his liberal Democratic supporters criticize.  See also my post from April of 2009, Obama Did Not Inherit the Economy from Bush, http://williamcinfici.blogspot.com/2009/04/obama-did-not-inherit-economy-from-bush.html and from May of that year, The Economy, Deficit and Debt at George W. Bush’s Inauguration, http://williamcinfici.blogspot.com/2009/05/economy-deficit-and-debt-at-george-w.html.

Bush and the Republicans Are Not to Blame for the Recession, Part III: The Bush Policies Obama Continued and the Democratic Policies that Exacerbated the Great Recession

           In my first post in the series, I examined the prosperity that was unleashed by President George W. Bush’s tax cuts, despite the economic and security challenges he faced.  The point was to refute the argument by liberals and Democrats that Bush was responsible for the current economic recession, the origins of which I explained in the second post in this series as having been caused by natural economic and global factors that were exacerbated by Democratic policies.  The purpose of this final post is to summarize and refute the specific liberal and Democratic arguments that the policies of Bush and the Republicans are to blame for the recession, especially by noting these Democratic policies and observing how the Democratic Obama Administration has followed most of Bush’s policies they blame for the recession.

I doubt that many people can even identify what specific policies of the Bush Administration allegedly caused the recession.  Presidents often wrongly receive too much credit or blame for the economy, as people assume not only that government, but particularly the federal government and especially the president is responsible.  I have identified four allegations that Bush’s policies caused the recession that are either wrong or exaggerated while the economically beneficial effects of the policies are ignored, as well as the degree to which external matters harmed the economy:

1) Tax cuts.  Bush’s across-the-board income tax cuts sparked the aforementioned economic recovery, despite September 11 and led to prosperity from 2002-2008.  The liberals’ and Democrats’ argument that tax cuts caused the recession is a novel one not supported by economists except Marxists.  Regardless, Obama extended the tax cuts in order to avoid a tax increase during a weak economic recovery, which even he recognized would have harmed the economy.

2) Deficit spending.  The argument that spending more than revenues, thereby causing a budget deficit, drives up interest rates, which, because of the over $5 trillion dollars of debt that had accumulated since the 1830s until Bush was inaugurated, cost the government even more because of interest it must pay to service that debt.  However, interest rates reached historic lows during this time.  The deficits were being reduced as percentages of the gross domestic product, despite the need to increase the defense and intelligence budget after the Clinton Administration – until the start of the recession, although the total is exaggerated, as some were in the form of loans with interest that have mostly been repaid during the Obama Administration or the purchases of stock that have been sold for profit.  Regardless, Obama increased the level of federal spending, which he argued was economically “stimulative” when he did it, which contradicts the argument that deficits caused the recession.

3) Trade.  Bush was one president out of the last five from Ronald Reagan to Obama who have negotiated free trade agreements.  In fact, Obama signed two major free trade agreements that were negotiated by the Bush Administration.           The increase in exports has contributed to economic growth, while the decrease in the cost of imports has helped mitigate inflation.

4) Deregulation or lack of adequate regulation.  The main causes of the financial crisis that led to the Panic of 2008 was the collapse of the real estate market, which was the result of regulations from the Democratic Carter and Clinton Administrations to encourage home ownership, but which encouraged lenders to make bad loans to those who were not creditworthy.  Although the Bush Administration added to this encouragement, it warned repeatedly about the dangers of adequate standards for credit for loans made by the federally-backed Fannie Mae and Freddie Mac mortgage entities, but the Democratic Congress, including then-Senator Obama, declined to act to protect the American taxpayer. 

Many bad mortgages had been bundled together with good mortages as investments by banks that were unable to distinguish which were good and which were not, which critics blame on a lack of adequate bank regulations.  Some liberals and Democrats blame the Bush Administration for the banking deregulation, but the most significant banking deregulation occurred during the Clinton Administration.  Regardless, the collapse of the real estate market did not cause the economic downturn that led to the recession, but it did exacerbate it.  Whether or not the economy would have recovered before going into recession is difficult to determine, but deregulation or lack of adequate regulation was not to blame.

In short, of the four Bush Administration policies the liberals and Democrats claim caused the recession, Obama has continued two of them and increased another while he and his party were heavily responsible for the other one.

Bush and the Republicans Are Not to Blame for the Recession, Part II: The Real Causes of the Recession and the Democratic Policies that Exacerbated It

           In my first post in this three-part series, I examined the prosperity of the Bush years that was stimulated by his income tax cuts.  The purpose of this post is to identify the true causes of the recession and the factors that exacerbated it.

What accounts for the current recession that ended the Reagan boom of 1982-2007/8 was not federal fiscal policy, but the natural business cycle of boom and bust.  Unless equilibrium is maintained, usually by artificial government intervention, economic growth causes inflation, which, in turn, slows down economic growth.  The recession that began in 2007 or 2008 was triggered by a rise in oil prices that began in 2005 for the first sustained period since before Reagan, which was the result of increased global demand (e.g. more factories producing more goods require more oil, more purchases of vehicles, etc.).  The rise in energy prices caused inflation, which, in turn, necessitated a rise in interest rates from central banks around the world like the U.S. Federal Reserve in order to counteract rising prices by reducing the money supply. 

The current recession might have been mild and brief like its 1990-1991 and 2001-2002 predecessors, but for the exacerbating factor of rising interest rates.  Many risky mortgages became problematic once debtors could no longer afford to make payments because of the higher interest rates.  Exotic investments based upon these mortgages were undermined in value and the entire credit system was poisoned, which nearly brought down the entire global financial system.  This financial crisis became known as the Panic of 2008. 

These risky mortgages were encouraged by the policies of the Democratic Carter and Clinton Administrations to increase home ownership, particularly among blacks and the urban poor.  The Bush Administration added only slightly to this policy, but warned repeatedly about the risk of these loans to the federally-backed mortgage lenders.  The Administration’s warnings to the Democratic Congress, of which Barack Obama was a Senator, were ignored.

A depression has thus far been avoided thanks to lower interest rates and other actions by the Fed and foreign central banks, as well as other aid provided by the Bush and Obama Administrations, but the Panic has left enough scars to make this recession the worst since the Great Depression.

In Part III of this series of posts, I shall examine the Bush policies for which liberals and Democrats blame him for the recession, refuting all their arguments and observing how all of policies they cite are either Democratic policies that exacerbated the recession or Bush policies that have been continued by President Barack Obama’s Democratic Administration. 

Bush and the Republicans Are Not to Blame for the Recession, Part I: The Bush Prosperity

           In my last post, I explained that presidents in particular, the federal government as a whole, or even government in general receive too much credit or blame for the economy, which is not even the responsibility of government.  Government is charged with the primary duty of protecting liberty, which itself necessitates some harm to the economy in the form of taxation, in exchange for the benefit of allowing commerce.  Nevertheless, it is possible to analyze the economic affects of specific government policies. 

As I noted in my May of 2009 post, The Economy, Deficit and Debt at George W. Bush’s Inauguration, http://williamcinfici.blogspot.com/2009/05/economy-deficit-and-debt-at-george-w.html the economy had been experiencing a downturn since 2000, during the Clinton Administration.  Bush took office in 2001. 

The tax cuts Bush signed into law began to stimulate economic growth, but before they could fully take effect for that tax year, the September 11 Terrorist Attacks occurred, which represented a trillion-dollar blow to the economy.  As expected, the economy went into a recession, although it was mild and brief.  By 2002 the economy was in recovery, on its way to five or six years of prosperity.  The 2002-2007/8 period of relatively robust economic growth was characterized by low unemployment (and the creation of 8 million jobs), low inflation (despite sharply higher oil prices since 2005) and low interest rates, which combined to increase personal income and decrease poverty. 

Then the current recession began in 2007 or 2008, which seems to have made people forget about the lengthy period of prosperity that immediately preceded it.  It is difficult to understand how Bush’s policies were responsible for several years of prosperity, and then suddenly could have been supposedly responsible for an economic downturn, if the apparently contradictory belief that presidents are chiefly responsible for the condition of the economy is true.

It should be noted that perhaps the most significant contribution Bush and the Republican Congress made for the economy were their policies that prevented any further terrorist attacks after September 11, in addition to fulfilling the primary government responsibility of protecting liberty.

In the next post in this series, I shall identify the real causes of the current recession and the factors that exacerbated it.

Presidents Receive Too Much Credit or Blame for the Economy

It is often stated that people give presidents receive too much credit or blame for the economy, but the popular misconception about presidential management of the economy is seldom ever corrected. 

As I have noted in earlier posts, presidents do not manage the economy, as they would in socialist systems, as the Constitution of the United States grants relatively little economic power to the federal government.  The economy is not the responsibility of government.  The responsibility of government is to protect the rights of the people.  Protecting the people from all enemies foreign and domestic is the primary economic benefit of government. 

There are mostly indirect economic aspects to other federal government policies, but not an economic policy, per se.  The federal government, like other governments, affects the economy through its fiscal policy (taxing and spending), but it only represents about one seventh of the economy.  The federal government also influences the economy through regulatory policy (e.g. it is illegal to steal or defraud).  Monetary policy affects the economy, but it is controlled by the Federal Reserve.  Although the Chairman of the “Fed” and its Board members are appointed by the president, they operate independently of the president and Congress and their terms of office overlap presidential administrations.  One area where the federal government does have an economic role is in promoting trade because trade is an aspect of foreign relations.  The government makes trade permissible and obtains favorable terms, but it is up to the people to make the trades themselves.  In short, although the federal government does not have economic responsibilities, its policies do have an impact on the economy.  Note I do not refer only to the president, but to the federal government as a whole because Congress shares responsibility for policies that affect the economy.

Contrary to the idea that government’s purpose is to promote the economy, the duty of protecting liberty necessitates that government harm the economy to some degree in order to allow commerce to occur freely.  For example, taxes are a drag on economic growth because they remove money from the entire economy for the operation of government.  Regulation is necessary, but burdensome, even if kept to a minimum.  The federal government must impose trade sanctions on foreign states as part of foreign policy.  It is the responsibility of government to harm the economy as little as possible in accomplishing its end. 

A lack of basic knowledge of economics, the purpose of government and the U.S. Constitution has led many people to give too much credit or blame to government, especially the federal government and to presidents in particular, for the state of the economy.  Also, they do not acknowledge sufficiently the affect of various external matters, such as the policy of other governments (e.g. the States), natural disasters, scientific discoveries, or foreign events that benefit or harm the economy, making it even more difficult to give all the credit or blame to the federal government, let alone the president.  See also my post from August of 2011,  External Influences on the Economy Are an Excuse for Obama, but not for Bush, http://williamcinfici.blogspot.com/2011/08/external-influences-on-us-economy-are.html.

It is a current popular misconception that somehow President George W. Bush is responsible for the current recession although few people could identify exactly which of his policies were supposedly harmful to the economy or why, just as few people could identify which policies of President Bill Clinton were supposedly beneficial to the economy until his later compromises with the Republican Congress to cut taxes. 

In my next three posts, I shall discuss how Bush’s fiscal and trade policies, which President Barack Obama has largely followed, are not responsible for causing the current recession, while identifying its real causes and those long-term Democratic federal government policies that exacerbated it.

Commentary on Andrew McCarthy's Analysis of the Islamist Enemy

Andrew McCarthy has written an outstanding analysis in National Review on defining the Islamist enemy in the War on Terrorism: http://www.nationalreview.com/articles/331787/real-foreign-policy-failure-andrew-c-mccarthy.  I cited McCarthy, the federal prosecutor of the blind sheik behind the first World Trade Center attack and other plots in my post from November of 2010, The Anti-Anti Terrorist Left, http://williamcinfici.blogspot.com/2010/11/anti-anti-terrorist-left.html.

McCarthy analyzes the religious motivations of the enemy and criticizes the use of such terms as “extremist” or “radicals” to describe them.  He identifies the Islamist enemy specifically as those who support sharia (Islamic law), regardless of whether they are themselves militant.  I have long made a distinction between non-militant Muslims and militant Muslims (Islamists engaged in Islamic holy war to spread Islam by conquest), regardless of whether the latter intended to impose sharia, but his identification of our particular enemy in the War on Terrorism as all those who support sharia also makes sense, as he observes such Muslims are the allies of the militants if they approve of violent acts in favor of imposing sharia.  McCarthy notes the incompatibility with liberty of sharia.

I would like to develop briefly a few of McCarthy’s points.  He is right that it is not useful to label the enemy as “extremist.”  This political label is empty, as it simply identifies one as having a polar opposite viewpoint from someone with the completely contrary viewpoint who thus necessarily is also an extremist.  Indeed, calling someone a “Muslim extremist” implies that he is extremely Muslim, meaning that he is a consistent, faithful Muslim, which does not seem to be what is intended by this label.  McCarthy is also correct that it is not accurate to describe the enemy as “radicals.”  A radical, from the Latin for root, is one who believes in tearing something up at its roots, whereas the Islamists believe that they are getting back to the roots of Islam.

Moreover, these expressions, such as also referring the enemy as “fanatics,” presuppose the requirement of non-Muslims to judge what is true Islam and what is not.  Even within Islam, although there are respected scholars, there is no longer any human authority (a caliph) to make such a judgment, let alone among non-Muslims, especially certain Western policymakers who insist they know what is true Islam and what is not.  Therefore, as I have posted repeatedly, it is necessary for us to recognize the express religious motivation of militant, including terrorist, Islamists, regardless of our opinion about whether or not it represents the true religion of Islam.

The Pennsylvania General Assembly Completes a Productive Session

           The Republican-majority Pennsylvania General Assembly has completed a productive legislative session.  The session is most notable for the passage of two balanced budgets – on time and without raising taxes.  The budgets closed a $4.5 billion budget shortfall leftover from Democratic Governor Ed Rendell’s Administration.

            Among the scores of bills the Commonwealth’s legislature passed that were signed into law by Governor Tom Corbett, a Republican, were the following significant measures, all of which I have posted about over the last two years:  renewal of the phase-out of the capital stock and franchise tax; elimination of the inheritance tax on family farms; imposition of a principled natural gas impact fee, as opposed to a tax; welfare reform; small business regulatory reform, tort reform (more fairness in seeking damages from lesser defendants whose liability was minor); educational choice (educational scholarships for businesses to award to parents); expansion of the Castle Doctrine; greater regulation of abortion clinics – equal to regular medical procedure clinics; banning bath salts and texting while driving; corrections reform and voter identification, requiring all voters to produce a photographic identification in order for their ballots to be counted. 

Democrats Heap Praise on Bush’s Economic and Fiscal Policies

The Democrats have been praising the economic and fiscal policies of former President George W. Bush, albeit tacitly, especially during the 2012 presidential campaign.

First, the Democrats at their convention recently compared the “Obama recovery” to the “Bush recovery.”  They are thus making an acknowledgement that there even was a Bush recovery.  The recovery was from the economic down-turn that had begun during the Clinton Administration and that was exacerbated by the September 11 Attacks, which resulted in a short, mild recession.  The Democrats’ comparison is also an implication that there was a period of Bush prosperity, despite all the Democratic and liberal criticism of the economy and of the policies of President George W. Bush and the Republican Congress.  That admission had first come in 2008 when Democrats began citing economic statistics, describing the figures as the worst in several years, meaning that the period of several years beforehand was necessarily prosperous.

Second, United States Vice President Joe Biden acknowledged in the vice presidential debate with Republican nominee Rep. Paul Ryan that the Bush income tax cuts were for the middle class.  Instead of the usual liberal Democratic references only to the “middle class tax cuts,” as if they came from someone other than Bush, or Bush’s “tax cuts for the wealthiest,” as if Bush did not cut tax rates for all income taxpayers, the Vice President acknowledged Bush’s responsibility for the popular tax cuts he referred to as the “Bush middle class tax cuts.”  Obama has extended all of the Bush tax cuts – for both the middle class and the wealthy – in order to avoid harming the economy during this weak economic recovery. Apparently, liberal Democrats believe that tax cuts by Republicans cause recession, but cause recovery when Democrats extend them.

Meanwhile, since the presidential campaign in 2008, Barack Obama and other Democrats have complained that Bush and the Republican-led Congress increased Medicaid by implementing a prescription drug program without raising taxes to pay for the program.  Nevertheless, the Democrats are acknowledging that the Republicans expanded the program they have argued repeatedly Republicans wish to destroy.

Of course, the main Democratic praise has come not from words, but from Obama’s actions.  Not only did he extend the Bush tax cuts, he submitted two free trade agreements that Bush negotiated to the Senate for ratification, which the Democratic-majority Senate provided.  Additionally, one could argue that Obama’s deficit spending is a continuation of Bush’s, although Obama has increased it significantly.  Apparently, liberal Democrats believe that deficit spending by a Republican is harmful to the economy, but economically stimulative when they do it.  They have to believe it or else they have little foundation for the central premise of the 2012 campaign: that Bush’s policies caused the recession that the Obama Administration has been unable to recover from sufficiently and therefore, a return to office of Republicans and the implementation of fiscally conservative policies like reducing spending, borrowing and taxes would be unwise. 

In an upcoming post, I shall treat in more detail on the subject of how the liberal Democrats are wrong to blame Bush and the Republicans for the recession.

Obama Is Wasting Billions of TARP Profits

         The Troubled Assets Relief Program (TARP) is predicted to cost $25 billion, not the $700 billion initially appropriated and loaned, as borrowers have been repaying the loans with interest or the government has been selling corporate stocks it purchased through TARP for a profit.

            The controversial TARP was proposed by the Bush Administration and approved by the Democratic majority Congress in response to the financial crisis of 2008.  The Administration, which feared the seizing up of the entire financial system that could lead to a depression, proposed the program of government loans in order to protect bank depositors from the mismanagement of financial institutions with whom they had deposited money (i.e. to whom they had loaned).  Those institutions had made bad loans when interest rates were low – often to borrowers who were not creditworthy who were then unable to make their payments once interest rates rose.  Depositors, therefore, would have been innocent victims of these institutions had they not been able to borrow from the government and collapsed. 

In other words, TARP was intended as a bailout for depositors, not, as liberals, libertarians and populists on the right have falsely portrayed, as having been done for the benefit of big banks and other “Wall Street” financial institutions.  The precedent of federal protection for depositors had already been set by the federal government during the Great Depression when the Roosevelt Administration established deposit insurance, instead of allowing the private sector to offer it, as it does every other kind of insurance.  Nonetheless, these big financial institutions did benefit by receiving taxpayer money.  Even if most of the money will be repaid, the cost to the taxpayers is staggering. 

The broader concern for the economy alone was also cited as a justification for the bailouts.  It could be argued that TARP prevented the recession from becoming a depression, which would have harmed the public economically even more and thereby decreased government revenue even further, but whether the program worked or not does not justify the expansion of federal power.  However, as I have noted frequently, the economy is not an appropriate concern for government, especially not the federal government of the United States, which, unlike Socialist regimes, has relatively little direct economic authority.  Indeed, bailouts became a habit as an economic policy, as the Obama Administration extended the practice under TARP to automobile companies – strictly on economic grounds.  Bailouts like TARP should have been an exception, necessarily only to clean up the mess from government intervention in the economy, not the rule as a new form of government economic intervention.

My point about the report that TARP will have cost the taxpayers far less than originally feared, albeit an enormous amount, is that the original $700 billion figure for these loans is counted in government accounting as part of the Bush era deficits and as a corresponding increase in the federal debt, as if it were strictly an expenditure like every other outlay from the Treasury, while the repayment of these loans is counted as revenue for the Obama Administration, which partially offsets its massive spending spree.  Thus, the report confirms my prediction (See my post from September of 2009, Analysis of Obama’s Economic and Fiscal Policies, http://williamcinfici.blogspot.com/2009/09/analysis-of-obamas-economic-and-fiscal.html) that TARP would make the Bush Administration’s spending appear higher than it actually was while making the Obama Administration’s spending seem less high than it is. 

In other words, Barack Obama is the president who is essentially spending most of the bailout money instead of using the revenue from the interest form or repayment of the loans or sale of corporate stock to reduce the federal debt.  Furthermore, the report is more evidence that disproves his contradictory argument that Bush’s deficit spending was responsible for the recession while Obama’s own significantly increased deficit spending is the solution, a topic upon which I shall treat in an upcoming post.

Benghazi, Arkansas and Ft. Hood: The Obama Administration’s Pattern of Failure in Identifying the Enemy

The purpose of this post is to tie together two earlier posts in recognition of a pattern I have discerned.  Last month, I posted about the Obama Administration’s unwillingness to label the attack on the United States Consulate in Benghazi, Libya as “a militant act of jihad (Islamic holy war),” in my post, The Attack on the U.S. Consulate in Libya Was an Act of Jihad, Not Anger, http://williamcinfici.blogspot.com/2012/09/the-attack-on-us-consulate-in-libya-was.html.  I had posted in February of this year about the Administration’s refusal to recognize the 2009 attacks on the military recruiting office in Arkansas and at Ft. Hood, Texas, both of which were similar militant acts of jihad, in my post, American Casualties of Jihad in the U.S. Homeland Should be Awarded Purple Hearts, http://williamcinfici.blogspot.com/2012/02/american-casualties-of-jihad-in-us.html. 

As I have noted repeatedly, the Obama Administration’s inability or unwillingness to label correctly who the enemy is in the War on Terrorism and recognizing what the enemy’s motivations are renders the Administration incapable of identifying who the enemy is and, therefore, of defeating it.

Romney Correctly Identifies Obama’s Weaknesses in Foreign Affairs

Republican United States Presidential nominee, Mitt Romney is right that the terrorists were solely responsible for the deadly attack on the U.S. consulate in Benghazi, Libya on September 11, a point I made in my post last month, The Attack on the U.S. Consulate in Libya Was an Act of Jihad, Not Anger http://williamcinfici.blogspot.com/2012/09/the-attack-on-us-consulate-in-libya-was.html.  But Romney is also right that the Obama Administration’s decisions not to provide adequate security and its general appearance of weakness emboldened instead of deterred the enemy and resulted in the murder of the U.S. Ambassador and three other Americans.  

The American diplomatic mission to Libya, which had been attacked on more than one occasion, had repeatedly requested additional security, but the Obama Administration declined the requests.  The Administration insisted for several days that the attack, which was committed with automatic weapons and rocket-propelled grenades, was part of a protest that was a “spontaneous response” to an anti-Islamic video, until it was forced by an accumulation of evidence to acknowledge that the attack by al-Qaeda-inspired militants had been planned well ahead of time and timed on the anniversary of the September 11 Terrorist Attacks and that there had been no protest at all.  Worse, the Administration knew from the first day the true nature of the attack and yet misled the American people about it, focusing on blaming the video and attempting to assure Muslims that it did not condone such perceived insults to Islam, which made it appear weak to all sides.  It appears that the Obama Administration politically wanted to maintain the false impression that because al-Qaeda’s leader was dead, the global terrorist organization was in decline and thus no longer posed a threat to Americans.

In his recent foreign policy address, Romney rightly pointed out other examples of the pattern of President Barack Obama’s weakness in foreign policy.  In Iran, the world’s leading sponsor of terrorism, the Administration has failed to deter the Iranians from developing enough material to make a nuclear bomb and declines to declare at what point Iran’s progress in its nuclear program would be an unacceptable risk. The Iranians do not appear to take Obama’s weak statements that he has not ruled out the military option seriously.  Obama failed to stand with the democratic opposition in Iran when the theocratic dictatorship stole the presidential elections, although it turned against other Muslim dictators who were friendly to the United States.  Meanwhile, Obama has not led adequately in standing against the brutal dictator of Syria, Iran’s only major ally and another sponsor of terrorism.  These failures are part of a pattern of not standing up for Israel, the best ally of the United States.

The Obama Administration, Romney noted, also abandoned Iraq without accomplishing its goal of concluding an agreement to allow some American forces to remain in order to assure Iraqi security, which has left Iraq vulnerable to increasing violence and influence from Iran while reducing American influence dramatically.  Indeed, Iran is able to overfly Iraq in order to send aid to Syria. 

            Another example that Romney identified of Obama’s weakness is Afghanistan, where the Administration announced a timetable for withdrawal for political reasons instead of following the advice of generals to follow the strategy of withdrawing only once the conditions were appropriate.  The announcement allows the enemy, the Taliban, to wait out the Americans until they withdraw and then return to power and establish Afghanistan as a safe harbor for al-Qaeda and other militant Islamist terrorists. 

           

            Moreover, Romney also points out that Obama’s severe defense cuts, which the Administration’s own Secretary of Defense recognizes would be devastating, invite attack instead of deterring it.  Obama hopes for peace, but Romney observes that “hope is not a strategy.”  As an opposite strategy from Obama’s liberal foreign policy, Romney proposes simply to oppose enemies of the United States while supporting its friends.  He observes that American allies look to the United States for leadership in standing up to threats from dictatorships like Iran, Russia, China and Venezuela. 

            I would add a point I have repeatedly made on this blog that although Obama deserves credit for continuing most of President George W. Bush’s successful policies in the War on Terrorism, he has weakened those policies in critical respects.  I had posted earlier the same day of the attack in Benghazi that Obama’s weakness in protecting Americans could result in an attack.  See my post last month, Reflections on the 11^th Anniversary of the September 11 Attack, http://williamcinfici.blogspot.com/2012/09/reflection-on-11th-anniversary-of.html.  Examples include softening interrogation methods and publicizing our methods which allows the enemy to train resistance to them (or either killing terrorists instead of capturing them or advising them of their right to remain silent) and Obama’s failure yet to prosecute the September 11 terrorists in a military court, after his attempt to prosecute them in a civilian trial, and his attempt to close the Guantanamo Bay detention center while releasing some of the detainees there who return to the battlefield to commit more terrorism.

Austerity Leads to Tax Cuts in Italy

The Italian government’s austerity program is bearing some fruit for the Italian people.  Because of the spending cuts by Prime Minister Mario Monti, in continuation of the efforts of his predecessor, Silvio Berlusconi, Italy can now afford to cut taxes.  The government announced another round of spending cuts and tax changes.

Monti’s government was unable to attain its goal of delaying an increase in the value added tax (a kind of salees tax), but will cut the increase in half, (1% instead of 2%).  But the surprisingly good news is that it will also cut income taxes for the two lowest tax brackets by 1% each.  Although the tax cuts are small, it is hoped that they stimulate economic growth, which has been anemic in Italy, as it has been in Europe generally.  With more growth, people earn more, which generates additional tax revenue that more than makes up for the cut.

There will be some eliminations of business tax loopholes, but also additional tax incentives.

The spending cuts, which are on track to eliminate the Italian government’s budget deficit by 2014, when it can then begin to pay down its massive national debt, have also lowered the state’s borrowing costs to more manageable levels.  The spread between benchmark German bonds and Italian bonds (i.e. the premium required by bondholders in interest payments in order to hold the riskier debt) is at a level of about half of what it was at the peak of the fiscal crisis.  The lower interest payments the government must pay helps further to eliminate the deficit.