$100,000 a year: the new poor?

January 23, 2009

Jim Geraghty has this little jaw-dropper (bold emphasis added):

The Department of Health and Human Services announced today in the Federal Register its calculation of the poverty level for 2009. In 49 states and the District of Columbia, for a family of one, HHS puts the poverty level at an income of $10,830 or below.

2 persons: $14,570
3 persons: $18,310
4 persons: $22,050
5 persons: $25,790

For Alaska, it is a few thousand dollars more at each level. The rest of the chart can be found here.

I mention this because the House of Representatives has passed  legislation allowing states to offer government-funded health insurance to children who live in families that have incomes up to 400 percent of the federal poverty level. The Senate is expected to pass this legislation, and President Obama is expected to sign it.

In other words, barring the unforeseen, the President and Congress will allow state governments use your tax dollars to pay for the health insurance of households making $100,000 a year ($103,160 for a family of five, to be precise).  Given the experience we’ve had in Virginia, odds are most, if not all, of the states will sign up as many beneficiaries as they can, taking credit for it before the next election only to raise our taxes to pay the bill for it all after the next election.

Meanwhile, $100,000 – long the tripwire salary of “the rich” is now the new poor.  Who knew?


Leading economists OPPOSE the stimulus bill

January 23, 2009

Now it’s getting interesting.  For the first time that I can ever remember, the leading lights of academe in economics are coming out against a major government spending package (in this case, the Obama stimulus bill, or as it will be known here from now on, the Obamnibus).

Larry Kudlow has the details on his NRO blog (emphasis added):

In today’s Wall Street Journal, distinguished Harvard economist Robert Barro estimatedthat the so-called government-spending multiplier for GDP associated with peacetime government purchases would be “insignificantly different from zero.” While left-wing economist Paul Krugman rants on about opponents to Keynesian stimulus — calling them quacks — a growing list of prominent academic economists oppose the Keynesian approach. In yesterday’s Journal, economists Alberto Alesina of Harvard and Luigi Zingales of the University of Chicago rejected the Keynesian spending approach while suggesting that a capital-gains tax holiday would bring private investors back into the market.

Stanford economist John Taylor also opposes the stimulus package. So does University of Chicago’s Eugene Fama. So does University of Chicago Nobelist Gary Becker. So does New York University professor Thomas Sargent. And Harvard economist Greg Mankiw, who similarly opposes the Keynesian stimulus, has used his highly popular blogsite as a clearinghouse of opposition.

Why did I highlight Professor Sargent?  I did so because he was one of the pioneers of post-Keynesian economics.  It was his work that broke and then shattered the Keynesian consensus that Krugman, Obama, et al would like to believe is still in place.  Outside of the economist/academic community, he is little (if at all) known, but inside the community, he is practically a living legend.

In fact, the debate among economists in the academic sphere may have a lot to do with why I never managed to get so outraged about the PC takeover of American universities – because I so the exact opposite in my academic field – but that’s for another post.

Of course, it’s not just about saying “no”; Kudlow also offers the following prescription:

It really is time for the congressional Republicans to come up with a tax-cutting alternative that includes slashing the marginal tax rate for large and small businesses and individuals, and brings the investor class back into play. Not only with a cap-gains tax holiday, but also with a much larger capital loss deduction. Add to this immediate cash expensing for all businesses.

Right now capital is on strike. So are investors. Supply-side incentives will bring them back. This is where the GOP must go.

The last paragraph says it all.

The one reason I have not been willing to slip into gloom and doom mode is because I have noticed the economic “consensus” about government finally start coming apart.  There is actually a revisionist school of economic historians for the New Deal, the first time this has ever happened.  Now, with the above economists speaking out, the government-is-not-the-answer school has a reach and a depth that is frankly unprecedented.  Ronald Reagan could have had the political support to cut the budget in half if Harvard professors had been talking in his time the way Barro and Mankiw are now.

As it is, the new president really is in unprecedented political territory; for the first time, the pillars of left-wing economic thought are under serious attack from part the nation’s “elite”.  It probably won’t stop the Obamnibus, but it could mean future big-government boondoggles don’t have the political support everyone thinks they will.

The question is, can the national Republican Party get out of its crouch, shake off the hangover from the drunken spending binge, and do its part to build and represent the new limited government coalition?


Bolling puts House GOP transportation plan and budget transparency on his agenda

January 22, 2009

Lieutenant Governor Bill Bolling released his legislative agenda today.  Two things stood out amongst the list:

Online Budget Transparency- (HB 2285 – Cline / SB 936 – Cuccinelli) – This legislation would require the Commonwealth of Virginia to design and implement a budget website that displays a clear, detailed and understandable issue level budget.  The state budget is currently posted on-line, but citizens can only obtain very general information about budget expenditures, as opposed to detailed and specific information.

I haven’t harped on this as much as Rick Sincere or the folks at TQ, but transparency is the first step to moving from accounting to accountability in budgeting.  It’s good to see Bolling agrees.

 

The other one that caught my eye was the Oder transportation bill:

Transportation funding and administration for Hampton Roads, Northern Virginia, the Richmond Highway Construction District, and the Staunton Highway Construction District.  (HB 1579 – Oder)   This legislation would provide additional funds for transportation in Northern Virginia and Hampton Roads by capturing a portion of the economic growth attributable to the marine terminal for Hampton Roads or Dulles International Airport and the Ronald Reagan National Airport for Northern Virginia and dedicating these funds for transportation projects in these regions of the state.

This is the creative Republican plan that not only funds transportation without new taxes, but actually ties transportation funding to economic activity (a critical way of ensuring a necessary funding stream).  Again, to see the Lt. Gov. put this on his agenda means the Republicans in Virginia are serious about proposing real alternatives to the taxaholic Democrats.

 

The Republicans are building on the progress made in the special session (when this idea first came up as the new and very improved HB6055), and Bill Bolling is leading the way.


. . . And so it begins

January 22, 2009

Two days into the Obama Administration, the first call for a withdrawal from Afghanistan hits the Op-Ed page of the Washington Post, courtesy of George McGovern.

What the former South Dakota Senator says is almost irrelevant, in no small part because it’s almost entirely incoherent.  By the time one reaches the end of the piece, the mystery of how Richard Nixon could ever win 49 states is solved.

No, what matters here is that the opponents of the Afghanistan war, which polling has shown include a majority of Democrats, are finally bold enough to speak out.  No doubt this is due to President Obama’s ascension to the White House; the president himself couldn’t even use the word “victory” in his inauguration when discussing Afghanistan, preferring instead the wobbly “hard-earned peace.”  The Democrats pulled a similar move on Iraq in 2006, keeping the desire to end (and, if necessary, lose) the Iraqi conflict under wraps until all the votes were in.

McGovern will be the first of many doves to come out of the woodwork; the president all but sent them an engraved invitation in his inaugural address.  Unless I seriously miss my guess (as well as my previous six guesses on this subject), President Obama will bring our commitment in Afghanistan to a premature end, with a resurgent Taliban and a reinvigorated al Qaeda in its wake.


Call it the stimu-late bill

January 21, 2009

The Congressional Budget Office throws cold water on the Great Stimulus (National Review Online - The Corner):

A report by the Congressional Budget Office found that only about $136 billion of the $355 billion that House leaders want to allocate to infrastructure and other so-called discretionary programs would be spent by Oct. 1, 2010. The rest would come in future years, long after the CBO and other economists predict the recession will have ended.

To be fair to the new president, this would run counter to his desire for all the spending to be done before 2011.  Still, this is looking more and more like a massive big-government spending spree.

Because, well, it is.


On Obama’s Inaugural

January 21, 2009

Honestly, there isn’t much to say.

As a fellow who is more obsessed with substance and policy than anything else, I tend to take little out of inaugural addresses.  The only memorable ones were Carter in 1977 (he of the “inordinate fear of communism,” which broadcast his weak foreign policy) and Reagan in 1981 (“Government is the problem”).

Obama 2009, by contrast, was what one would expect: a cacophony of centrism and leftism, with some historical references sprinkled in (unusual for any Democrat except the President) and wrapped in the high-flying rhetoric for which he is already famous.

I’m guessing Obama’s first or only term will be measured by the actions of the remaining 1,460 days, not the words of the first.


One last thing about President Bush

January 20, 2009

As the Bush Administration comes to an end, Peter Wehner (NRO - The Corner) reminds me of something that we should never forget – and for which we should always be grateful to George W. Bush:

 Cutting taxes several times and never, not even once, raising them.

As a reminder, this makes George W. Bush the first President since Jack Kennedy never to propose or enact a tax increase (Ford proposed a tax increase, but it was never enacted; even Ronald Reagan proposed tax increases in 1982, and agreed to them in later years).

George W. Bush will be criticized heavily for excess spending – and rightly so – but as bad as things are, they would have been much worse with a tax increase.  Bush refused to do that, and we all owe him a debt of gratitude.


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