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This is the fourth in what is likely to be a record six post series of monthly political class insanity. In the three previous posts we reviewed such insanity as to what a corrupt U.S. Congressman (Jesse Jackson, Jr.) spends illegally obtained money on, how the political class flushed half a trillion dollars down the sink hole that is Afghanistan, how some politicians are using a Ulysses S. Grant era law to protect their mining company cronies, and other equally idiotic political doings.
Today’s latest insanity review starts with items from the April, 2013 issue of Reason magazine, a great publication in support of freedom and in opposition to political insanity:
1) Politicians and voters in Concord, Massachusetts voted to enact a law this past January 1, 2013 that banned the sale of water bottles less than one liter in size. The effort was a silly attempt to reduce the use of plastic and encourage the use of water from taps to improve the environment. Concord businesses caught selling these horrific bottles of water were subjected to fines.
So what has been the result of the environmental and political activist effort that restricted freedom of choice? Residents of Concord simply drive over to other nearby cities to purchase the bottled water in convenient sizes. Thus, the use of plastic bottles is not significantly reduced, if reduced at all, and the environment takes a hit as people burn more gasoline to drive to get their bottled water in convenient sizes. All the law did was reduce the revenue stream of local Concord businesses. Insanity.
2) The justification for the Obama administration to spend over $800 billion to stimulate the economy during the Great Recession is that somehow when government spends a dollar it miraculously results in more than a dollar of incremental economic growth. This so-called “multiplier effect” is measured to a breakeven basis of $1.00.
For example, if a government stimulus program had a multiplier effect of $1.50 it would say that the economy got a $1.50 increase in economic activity for that one dollar government investment, a 50% return and a good thing. If a government stimulus program had a multiplier effect of only $.50 it would say that for every dollar spent by the government, the economy got only a $.50 increase in economic activity, a net loss of $.50, a bad thing.
The flawed, theoretical reason behind this type of economic reasoning is that somehow the Federal government can take taxpayer wealth and spend it more efficiently than taxpayers. Given that antics, idiocy, and insanity of people like Harry Reid, Joe Biden, Nancy Pelosi, et al, this is seems like a very foolish assumption.
And now there is hard data to actually prove this is a foolish assumption. A major study by economists from the Federal Reserve Bank of St. Louis, the University of California at San Diego, and the Bank of Canada have definitively proven that in the United States, that government stimulus spending during recessions has a negative effect on the economy, i.e. the multiplier effect is substantially below $1.00.
This study entailed detailed analysis of economic activity from 1890 to 2010 and measured stimulus effects across various economic components including differing levels of unemployment. Their findings were worthy enough to be presented at the January meeting of the American Economic Association.
What were their findings based on real data and not political rhetoric:
- During hard times when unemployment was below 6.5%, government economic stimulus spending had a multiplier effect of only $.63 to $.78. In other words, in these periods, as much as $.37 was lost for every dollar spent.
- The interesting finding was that for unemployment levels higher than 6.5%, the multiplier effect was even worse, between $.54 and $.64. In other words, the higher the unemployment rate, the worst return the economy got on government stimulus spending.
- The authors’ main conclusion: “We find no evidence that multipliers are higher during periods of slack in quarterly U.S. date from 1890 to 2010.” In other words, the $800 billion that Obama spent in his economic stimulus program was an economic bust.
But Harry Truman could have told him that based on Truman’s handling of the economy after World War II. He proved conclusively that government spending does not make for a healthy economy, government shrinkage is the best way to grow an economy, the proof and details of which can be found at the following link:
http://loathemygovernment.blogspot.com/2012/08/economic-policy-why-truman-got-it-right.html
3) In 2008, the Federal government was given unprecedented leeway to to secretly monitor Americans’ electronic communications without the fuss of getting a warrant and proving probably cause as a result of the Foreign Intelligence Surveillance Act or FISA. This law is an obvious intrusion and violation of the Fourth Amendment of the Constitution, a detail that was lost on those in Congress who voted for the legislation.
But the law recently came up for renewal and four Senators actually took the heroic effort to reduce the intrusion into our rights. Unfortunately, the common sense ideas form these four Senators were soundly defeated and this atrocity against freedom was renewed in the Senate by a vote of 73 to 23.
4) We have already proven in a previous post the Community Reinvestment Act (CRA), which was passed during the Presidency of jimmy Carter and used and abused by Democratic politicians since then, was the primary cause and driver of the Great Recession:
http://loathemygovernment.blogspot.com/2012/05/who-really-caused-great-recession-part.html
Further verification of this conclusion has been proved by an article in Reason which summarized the analyses and findings of trained economists from Harvard, the Massachusetts of Technology, and the University of Chicago who took a detailed look at the impact and history of the Community Reinvestment Act.
Besides looking at the default rates of banks that made a lot of questionable mortgage loans as a result of the CRA, the article also documents how the Federal government, via Fannie Mae, was actually looking for and encouraging questionable loans via CRA requirements. In 2000, Fannie Vice Chairman Jamie Gorelick told banks that “We [Fannie] want your CRA loans because they help us meet our housing goal.” These CRA loans included mortgages with low down payments and questionable underwriting, i.e. bad loans.
Since 2000, Fannie Mae and its sister Federal entity, Freddie mac, have racked up well over $100 billion in taxpayer bailout expenses, Gorelick was forced to resign amid accounting improprieties at Fannie, the housing market collapsed, the Great Recession started, and the economy never really recovered.
Thus, politicians messing around with things they have no expertise in, mortgages, banking, and economics resulted in the worst economic disaster since the Great Depression, the effects of which (higher national debt, persistently high unemployment, anemic economic growth, etc.) that will be with use for years and decades to come.
Depressed yet after these four posts? Well, the insanity will continue to tomorrow where we will hear the actually words of the Washington political class, words that will confirm that the woes of the country and the insanity we as Americans endure every day are almost totally the result of the people that sit in Congress and the White House.
Their inane actions, their incompetence, their idiocy are the reasons why the country is in the state it is in today. Fortunately, we will also prescribe a set of steps that stop their voices of ineptness and fix what the ails the country, simply and easily with minimal pain to most Americans.
This is the third part of our series on the political class insanity for the month of March, 2013. Unfortunately, as time goes by, we have had to devote more and more time to the antics, idiocy, and wasteful spending of the political class every month. And this third post will not be the end of this month’s review, making March, 2013 the worst month for the volume of political class insanity we have ever reported on.
1) According to a USA Today article that was summarized in the February 8, 2013 issue of The Week magazine, almost 50% of working Americans with college degrees are overqualified for their current jobs. Around 15% of taxi drivers and 25% of retail sales clerks have at least bachelors degrees. Looks like the Great Recession was NOT followed by the Great Recovery. Or even the Mediocre Recovery.
2) The Boston Globe reported in late January, 2013 that Obama’s inaugural committee raised more than $53 million, mostly from 458 elitist donors who gave $50,000 each. Possibly a better use of that money would have been to provide a trained police officer in some of our schools to protect our kids from another Newtown school incident. That $53 million could have protect over 900 schools for a year rather than blowing it on a pompous and unnecessary set of political class parties and celebrations.
3) This set of bad inaugural priorities is not to be confused with the overall set of bad priorities when it comes to the amount of money spent on the November, 2012 elections. According to a Politico article that was summarized in the February 15, 2013 issue of The Week magazine, the total amount spent on all campaigns and advertising for the 2012 election cycle was a record $7.3 billion.
This is just one indication of how big money has corrupted our election processes. You can be sure that the voices of individual Americans was never heard in this onslaught of billons of dollars from corporations, unions, PACS, and lobbyist.
By the way, from a bad priority perspective, that $7.3 billion could have protected just about every American school with a trained police officer for a whole year.
4) As the U.S. prepares to withdrawal most of its military assets from Afghanistan, let’s review what a financial disaster this military incursion has been across the previous two Presidential administrations, as recently reported in the Tampa Bay Times based on Government Accountability Office analysis
- Total amount of taxpayer wealth spent on Afghanistan - Half a TRILLION dollars.
- Percentage of Afghanistan’s government spending covered by U.S. tax dollars - 64%
- Percentage of Afghanistan’s government spending that comes from Afghanistan - 10%
- Percentage of Afghanistan’s population that is illiterate - 72
- Percentage of Afghanistan’s women who can read and write - 13%
- Afghanistan’s security situation as measured by the number of daily attacks from the Taliban - Increasing over time
- Number of attacks on U.S. forces by Afghan security forces - Increasing over time, with 2012 seeing the most attacks ever, more than twice the number of attacks of any previous year.
Thus, when U.S. military forces went into the country over eleven years ago, the country was terrorist infested, poor, and illiterate with a dysfunctional and corrupt government. Half a TRILLION dollars later, through two Presidential administrations, Afghanistan is still terrorist infested, poor, and illiterate with a dysfunctional and corrupt government.
Not a great return on our investment, an investment that cost the average American household about $4,400 each, with those households who lost family members in the fighting paying a significantly higher cost.
5) Business Week had an interesting article in its February 11, 2013 issue regarding a Federal law that is still on the books even though it was passed during the Presidential administration of Ulysses S. Grant:
- This mining law was originally established to encourage the settlement of the West.
- It allowed prospectors to remove gold and other valuable minerals from government lands without paying any royalties.
- Since then, the West has been long settled and the age of the solitary prospector is long gone but the law still exists, allowing large corporate mining companies to mine Federal lands for free.
- Not only do the mining companies not pay anything for the privilege of mining on government land, the American taxpayer, not the mining companies, is responsible for any environmental cleanup that is needed as a result of the mining operations, a cost that the General Accountability Office estimates at $2.6 billion since 1998 but which the EPA estimates could be as high as $54 billion going forward, all paid by the American taxpayer.
- If these mineral mining efforts were assessed royalties at the same rate that royalties are assessed on oil, coal, and gas that is mined from government lands, the article estimates that $1 billion a year could be generated to offset government spending overall and government spending on cleaning up mining sites.
Sounds reasonable, wealthy mining companies paying their fair share just like their peers in the coal, oil, and gas industries. Also sounds reasonable that an 1872 law be repealed and replaced with something a little more in tune with today’s realities.
But, alas, when does logic and good sense every come into play when dealing with the Washington political class? Although there have been some half hearted efforts to fix the situation, powerful politicians, specificially Senate Majority Leader Harry Reid, have always succeeded in stopping reform. Want to bet that mining industry companies have been heavy donors to previous election campaigns for politicians like Harry Reid? Just a thought.
That’s enough for today, the third part of our March series on political class insanity. Underemployed Americans, bad priorities, half a trillion dollars wasted for no good in Afghanistan, and living with an 1872 law. The case for term limits for Federal politicians (Step 39 from “Love My Country, Loathe My Government) gets stronger every day.
Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at:
www.loathemygovernment.com
It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:
http://www.reason.com/
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com
http://www.youtube.com/watch?v=08j0sYUOb5w
