It really is Bush’s fault, Part 3: Spend-and-spend

December 7, 2012

Mark Shields once joked in 1992: “for years, the Democrats were the tax-and-spend party, and the Republicans were the borrow-and-spend party.” The 1990s in general clouded the issue, but, sadly, in the aughts that comparison came back with a vengeance.

The Congressional Budget Office detailed the disaster that was Bush the Younger’s domestic spending record a couple years ago. I noted it here. The trouble actually began long before 9/11, Afghanistan, or Iraq. In President Bush’s first three years… (CATO):

…real non-defence (sic) discretionary outlays will rise 18.0% in his first three years in office (FY2002-FY2004). That growth far exceeds the first three years of any recent presidential term, including Ronald Reagan’s first term (-13.5%), Reagan’s second term (-3.2%), George H. Bush’s term (11.6%), Bill Clinton’s first term (-0.7%), and Clinton’s second term (8.2%).

Keep in mind, this was just with the proposed FY2004 budget. The actual budget was worse.

It was in FY2004 (late fall of 2003, to be exact) that the President pushed Medicare Part D through Congress – a major expansion of the entitlement program that came as the warnings about Medicare’s sustainability even without Part D were growing.

Two years later, Bush added deliberate market intervention into the mix with an Energy Bill that vastly increased subsidies, tariffs, and regulations to favor corn-based ethanol – a policy that so badly skewed the corn market that it caused grain shortages throughout the world during his second term in office.

How bad did the spending binge get? Look at it this way: between FY2001 (Clinton’s last budget) and FY2007, federal revenue rose over 25% – yet we still fell from a surplus of over $100 billion to a deficit of over $150 billion, because spending rose by more than 40%.

The final year of the Bush Administration (2008) also included TARP, but that fiasco requires a s segment in this series all its own. Even by that point, however, the Keynesian high from temporary tax cuts, reckless spending, and monetary mayhem had run its course, leaving trouble in its wake.

Cross-posted to Virginia Virtucon

It really is Bush’s fault, Part 1: the temporary tax cuts

December 4, 2012

The 2012 election has led, in theory, to a large amount of “soul-searching” in the Republican Party. However, one datum from the electorate that has largely been unaddressed is the fact that a majority of voters still blamed former President George W. Bush for the current state of the economy than his successor. After a review of the economic situation over the last dozen years, I have come to the conclusion that the majority is correct, although my reasons for it are likely not theirs. This series will cover how I believe the former President earned the blame. I should note that I will only deal with economic policy here.

First and foremost, it is now clear that Bush the Younger’s strategy for reducing taxes in 2001 and 2003 – bigger, but time-limited, over smaller and permanent – was a mistake.

For much of the last four decades, argument over economics have been between Keynesians – those who believe aggregate demand for economic output (consumption, business purchases, and government spending) is the dominant force in the American economy – and, for lack of a better term, anti-Keynesians – who recognize numerous other factors, most affecting production. Monetarists focus on the dangers of uncertainty, the Rational Expectations school zeroes in on reactions and expectations of consumers and businesses, and Supply-siders emphasize the costs to businesses caused by government (taxes and regulations in particular).

The fact of the matter is this: from an anti-Keynesian perspective – any anti-Keynesian perspective – temporary tax cuts are a disaster. They add uncertainty, fuel expectations of a future tax increases (once the reductions expire), and do little to the long-run costs businesses must endure to operate and expand – and in fact can add unproductive costs for time-phased tax avoidance. This is why the last temporary tax policy of any kind prior to 2001 was imposed during the 1970s, before anti-Keynesianism grew into the umbrella of ideas that it has become.

As a result, Bush the Younger’s tax reductions were drained of any supply-side effects, and were simply much larger versions of Keynesian temporary tax cuts from earlier times. The result was as expected – an inflationary expansion fueled by higher prices in resources (including land – hence the housing bubble) and vast increases in consumer debt to pay for it all.

Looking back, it would have been better to reach out to the Democrats to see if they would accept smaller, but permanent, tax reductions. Instead, we now have reductions about to expire, and massive budget deficits fueled in no small part on the possibility of those very tax cuts expiring (and thus recovering large amounts of revenue).

In short, we got the disadvantages of higher tax rates (on the economy, and on the impulse of Washington to spend) without that actual revenue from them: literally the worst of all worlds.

Looking forward, it is all but certain that the Republicans currently in Washington will cave on the president’s demand for higher tax rates. I would prefer that they didn’t – in fact, I find any kind of tax increases to be a bad idea – but to some extent this was inevitable the moment Bush the Younger and the Republicans in Congress decided to make the 2001 and 2003 tax cuts temporary rather than spend the political capital needed to make them permanent and/or find accommodation with the Democrats for a smaller yet permanent reduction.

A Republican Party that so thoroughly lacks the courage of its convictions is in need of a far deeper overhaul than anyone is considering right now – or simple replacement.

Cross-posted to Virginia Virtucon

And the winner is . . . (part 2)

August 7, 2012

I knew George H. W. Bush would lose his bid for re-election on July 3, 1992 (never mind that he was leading in the polls at the time).

How did I know, you ask? Because those were the days of the release of the June unemployment numbers for that year.

Back then, every political candidate, consultant, activist, and junkie knew about the “unemployment rule.” Since 1948, if unemployment fell in the second quarter of an election year (between March and June), the incumbent party was going to win. If it stayed the same or rose, the incumbent party was going to lose. The lone exception all but proved the rule (Dwight Eisenhower’s re-election in 1956). There were two elections where unemployment was the same in June as it had been in March: 1968 and 1976. The incumbent party lost both times.

Since the 1990s, the rule has fallen out of favor and even knowledge . . . and yet it still holds. Unemployment fell from March to June of 1996, and President Clinton was re-elected. It stayed even between March and June 2000, and the Democrats lost. It fell from March to June of 2004, and President Bush the Younger was re-elected. It rose from March to June of 2008, and the Republicans lost.

So once again, in every presidential vote since World War II save for Ike’s re-election (and in every single presidential election for the last 52 years), if unemployment falls, the incumbent party wins. If it doesn’t, the incumbent party loses.

Unemployment in March of this year was 8.2%.
Unemployment in June of this year was 8.2%.

Mitt Romney will win.

You heard it here first.

Cross-posted to Bearing Drift

And the winner is…?

August 6, 2012

For the first time in weeks, President Obama took the lead in the Rasmussen tracking poll survey (by 2). As of this posting, he still leads in the Gallup tracking poll by 1. Most of the non-tracking, “snapshot in time” polls also have the president ahead. Worried Republicans are already starting to whisper about Election 2012 slipping away. It’s as if no one has paid attention to the last 25 years.

This is not to say I am certain Mitt Romney will win; in fact, I don’t know who will win at this point in time – and neither does anyone else. Predicting election results before the conventions is foolhardy. Full Stop.

Of course, it didn’t use to be this way. Based on Gallup’s historical numbers, between 1936 (when they first started polling) and 1984, the leader in the polls before the conventions won all but once (the infamous 1948 foul-up), and of the twelve who won, ten never lost their lead (Kennedy fell behind Nixon in 1960 before recovering after the first televised debate; and Reagan fell behind Carter in 1980 before his own post-debate recovery). So if one were basing their predictions on that 48 year span, the president is in fine shape.

Unfortunately for the president and his backers, things became much more unstable after 1984. Of the six front-runners going into the convention period between 1988 and 2008, only one was still in front coming out of it (Clinton in 1996, and even he saw 7 points shaved off his lead). Two of them (Dukakis in 1988 and Bush the Elder in 1992) fell behind and never recovered; two others (Bush in 2000 and Obama himself) were able to recover in September; one (Kerry 2004) managed a temporary recovery only to fall back again by Election Day.

In other words, being in the lead before the conventions start isn’t what it used to be.

This may surprise many political observers (and even a few activists and consultants) who have perceived conventions to be on the wane. Yet the 2008 conventions broke viewership records, and the GOP gathering actually topped the final American Idol episode from earlier in the year (a first in the AI era). Whatever one may think of conventions, they remain the best opportunity for the major parties to present their case to the American people.

This year the conventions begin and end later than ever before, meaning two vital pieces of information (how America reacts to them) are still unknown. Woe to (s)he who tries to guess the election winner without them.

Cross-posted to Bearing Drift

1812: the culmination of a fourteen-year mistake

June 26, 2012

Two centuries ago this month, the United States of America completed a fourteen-year series of blunders by starting an unnecessary war that led to the destruction of the capital, embarrassing defeats in what is now the Midwest, a peace that solved none of the issues that started the war in the first place, and a battle (two weeks after the peace was signed) that inflicted Andrew Jackson upon the nation. The events from 1798 to 1815 are a clear-as-crystal warning from history of the dangers of geopolitical naivete, “non-intervention,” and general disinterest in foreign affairs that, sadly, still find favor in far too many classical liberals today. That their prominent political progenitors (Thomas Jefferson and James Madison) were forced to jettison nearly every belief they had in limited government to justify Adams’ mistake is an irony so painful it is clearly lost on them.

Normally, when it comes to a major foreign policy decision, it is about an action taken – usually a war. This is one of those rare instances where we can examine the effects of a war not undertaken: in this case, a 1798 war with France. Much of the arguments against war (outside of the ones openly sympathetic to the tyrannical “Republic” in Paris) became “non-intervention” mainstays: the risk of state expansion, the preference for a foreign policy based on commerce only, the value of diplomacy, and the danger of lost blood and treasure. What the events after 1798 reveal is that non-intervention does not take place in a vacuum. In fact, it is quite clear that the decision not to go to war with France made the very fears aforementioned come true – and then gave us a war with France’s enemy to boot.

For example: Government power growing and danger to commerce didn’t need a war with France to rear their ugly heads. Jefferson himself, in a desperate attempt to avoid the merchant marine getting slammed by both France and Great Britain, convinced Congress to pass the hideous Embargo Act of 1807, easily the most intrusive peace-time economic measure this side of Obamacare. Commerce was ground to a halt not due to war, but ostensibly to prevent one. Ditto the expansion of government power. By contrast, Great Britain would have certainly maintained and protected US trade had we been at war with France (lest we forget, Britain herself had been at war with France since 1793).

Meanwhile, diplomacy and concern for loss of men and resources in battle is essentially laid waste by the actual War of 1812, in which we took on a much more formidable enemy (Great Britain as she defeated Napoleon) than we would have faced in 1798 (a weakened French Directorate that had sent Napoleon to Egypt). A War of 1798 would have likely meant the easy seizure of Louisiana (instead of paying $15 million five years later) as well as American possessions in the Caribbean. Meanwhile, most of the reasons for war with Britain in 1812 would have been resolved quickly years before that. London would have hardly considered Royal Navy deserters to American ships as a mortal threat if said deserters were still fighting the French (albeit under different colors). Border issues in re Canada would have been transformed from interesting geopolitics to useless distractions drawing men and arms away from the common enemy. As mentioned before, Great Britain would now consider American commerce abroad as a value to be protected, rather than a problem to be fought.

Would the War of 1798 have been unpopular in some areas? Yes, including most likely Virginia. Would it have been worse than the controversy surrounding the War of 1812? Only those with no knowledge of New England would even ask the question.

In short, the alternative to war is not always “peace.” It can often be twisted policies that surrender the very things peace was supposed to protect and a different war against the wrong adversary. In the case of War of 1798, its avoidance led America to both, the latter being the lamentable War of 1812.

Cross-posted to Virginia Virtucon

In Russia, the president reveals his arrogance . . . and ignorance

March 26, 2012

The blogosphere practically exploded over President Obama’s admission to his outgoing Russian counterpart that he could easily make a deal on missile defense once this whole pesky election thing was out of the way (ABC via Weekly Standard, emphasis added):

President Obama: On all these issues, but particularly missile defense, this, this can be solved but it’s important for him to give me space.

President Medvedev: Yeah, I understand. I understand your message about space. Space for you…

President Obama: This is my last election. After my election I have more flexibility.

From one angle, this simply confirms every worst fear about the president – once he is no longer accountable to the people, he will be free to impose his will on the country without limitation.

Clearly, that’s how he, himself, sees the situation, and that should give any voter considering his re-election pause.

However, it also reveals something else – just as important, in my view – his rather stunning ignorance of American history on the subject.

America has only had five presidents who by law were disallowed from seeking another term (Eisenhower, Nixon, Reagan, Clinton, and Bush*). If one considers the pre-FDR two term tradition as one solid enough to create the same impediment for a third term (and in the case of Ulysses Grant and Teddy Roosevelt, it wasn’t), one could add Jefferson, Madison, Monroe, Jackson, Lincoln, Cleveland, and Wilson to the list.

Nearly all of these twelve presidents began their second term with roughly the same sense of energy and optimism that Obama would (Madison is the exception, having been re-elected in the midst of the disastrous War of 1812). Nearly all (Madison excepted again) took their re-election as a mandate to establish their vision of America as permanent American policy.  All of them (including Madison) had their plans thoroughly wrecked by either the political opposition (in Lincoln’s case, fatally), maneuverings within their own party, or – the favorite fear of Harold MacMillan – events. To wit…

Jefferson took his re-election (which was arguably the most lopsided contested national result until 1964) as the mandate it really was, but the Napoleonic Wars dominated his second term, and led the champion of limited government to impose the most intrusive economic regulation this side of Obamacare (the Embargo Act).

Madison’s second term was almost completely dominated by the War of 1812, the end of which was known to Americans halfway through the term. The realities of war led him to some dramatic flip-flops, such as pushing Congress to bring back the Bank of the United States just five years after he let its charter expire in 1811.

Monroe, whose supporters actually needed to find an elector willing to vote against him to preserve the uniqueness of Washington’s unanimous elections, began his Administration as the political master of the universe, and ended it with the Jeffersonian Republicans blasted to factional pieces.

Jackson, whose re-election in 1832 was arguably the most policy-driven campaign since 1800, was actually censured by the Senate in his second term, forced by southerners to restrict freedom of speech via mail, and – by historian Sean Wilentz’s account – watched his hard-money policy go up in smoke at the hands of Whigs and state-bank-backed Democrats, even as the BUS charter expired in 1836.

Cleveland’s plans for his second term (which came in a revenge election, dethroning the man who defeated his own re-election plans four years earlier) were laid waste by the Panic of 1893. By 1896 his own party had abandoned him, and most of his supporters quietly backed the Republicans.

Wilson, elected in 1912 due largely to Teddy Roosevelt’s hubris and driven almost entirely by a vision of dramatic domestic reform, saw his second term literally explode in World War I – a war he loudly and categorically opposed in his re-election campaign (his slogan: “He kept us out of war”). In one of the bizarre ironies of history, the rickety, overarching, nearly-collapsed-under-its-own-weight rationale Wilson threw together in desperation to explain his switcheroo became the basis for international diplomacy. Except that would be a generation later. Wilson himself saw the American people completely reject his “vision”, first with the rejection of the Treaty of Versailles, and then with the Harding landslide of 1920.

Even FDR’s second term was a complete mess (before Hitler invaded Poland, Bob Taft was running even with FDR in election polls, and incumbents in that position are always in deep trouble). TR would have gone down in history as the Panic of 1907 president had J.P. Morgan not bailed out the country. Grant’s triumphant re-election actually left him weaker politically as party factions maneuvered under him. Finally, Washington himself – the creator of the two-term tradition – probably came up with it after realizing his effort to be the nonpartisan national leader had collapsed in reaction to the Whiskey Rebellion and the Jay Treaty (Washington gave up trying in 1796, endorsing John Adams and essentially declaring himself a Federalist).

Now, one could say that tradition is one thing, while the law is another, and that the imposed and certain liberation of having to go to the voters can change things. There’s only one problem with that logic: it didn’t.

Dwight Eisenhower was the first president blessed with the “no more elections” freedom. His second term was dominated by Sputnik hysteria and the first clamors for civil rights, neither of which was on his radar (unlike most 1950s-era Republicans, Ike cared little about civil rights, and was largely pushed into it by southern intransigence on the one hand and the latent Nixon-1960 campaign pushing him to do more on the other). He actually wanted to remake the Republican Party entirely in his image – which the party (led again, quietly, by Nixon) almost completely rejected.

Nixon himself was thoroughly emasculated by Watergate, which consumed his second term before it even began. The Paris Peace Accords ending the Vietnam War were seen more as a sign of weakness then strength, and the guarantees he made to protect South Vietnam were thoroughly rejected by Congress. Nixon’s “detente” foreign policy with the Soviets, meanwhile, was savaged even by left-wing Democrats (who bashed it as a way to temporarily re-enter into the anti-Communist consensus). No Republican aspirant for President in 1976 would even touch it (Ford himself refused to mention it even though he was still employing co-architect Henry Kissinger as Secretary of State).

One could argue the Ronald Reagan had the most successful second term of just about any President; however, that was mainly reaping rewards from the hard choices of the first term. The rapid defense buildup of the early 1980s actually went into reverse during the second term (not by Reagan’s choice); Congress imposed trade sanctions against South Africa over Reagan’s veto; aid to the Nicaraguan anti-Communist resistance practically dried up (leading in part to the Iran-Contra fiasco); and by 1988, a majority of his own party’s candidates for president opposed his signature arms-control treaty (the INF treaty).

Finally, whatever plans Bill Clinton may have had for his second term, a Republican Congress made sure he almost never mentioned them. Instead, government spending as a percentage of GDP went down, and on foreign policy, Clinton was forced into reactions by the UN, Saddam Hussein, and Congressional Republicans. His one success came in Bosnia, largely because the Serbian opposition used the war as an opportunity to challenge and dethrone Slobodan Milosevic – which was not a part of Clinton’s plan. What were in his plans – namely, Kyoto and the Nuclear Test Ban Treaty – were summarily rejected by Congress.

Bush the Younger used his inauguration to dramatically lay down foreign policy marker for the Wahhabist-Ba’athist-Khomeinist War. By the end of 2005, the reaction to Hurricane Katrina and events in Iraq weakened him so much politically it took all his political capital just to save the latter (during this time, Afghanistan began its own deterioration). By the end of his term, Bush was talking about destroying the free market to save it (TARP), and nearly all the political energy for the WBK War had evaporated.

In other words, a president doesn’t quite have the free hand in his second term as is generally believed. Even in foreign policy, Congress can be much more powerful than even they realize, and events can completely upend a president’s actions. An Iranian ICBM test could lead Congress to force SDI funding down the president’s throat – and while Obama himself might be more than willing to veto a defense bill to stop SDI, the numerous Democrats running to succeed him would probably run for cover, jeopardizing his position substantially. Moreover, as the Clinton (and Wilson) treaty problems reveal, any actual agreement to stop SDI would run into serious trouble.

So, while Obama’s comments say quite a bit about him, they say little about his prospects for “flexibility” in a second term . . . assuming he even gets one.

Cross-posted to Bearing Drift

* Lyndon Johnson and Harry Truman were eligible for another term in 1968 and 1952, respectively. Johnson actually won the New Hampshire primary, but faced certain defeat in Wisconsin, and chose not to tun again. Truman, facing certain defeat in New Hampshire, also pulled out of the race in early 1952.

Portsmouth Historical Commission Dedicates May as Southern Unionist History Month

March 22, 2012

For a whole slew of reasons, Southern Unionism during the War of the Rebellion is of special importance to me. Some time in 2010 (during the whole Confederate History Month brouhaha), I came up with the idea of Southern Unionist History Month. Late last year, a friend of mine (Greg Eatroff) who serves on the Portsmouth Historical Commission came across a memorial in Lincoln Cemetery built by the Silas Fellows Post #7 of the Grand Army of the Republic, in honor of local Unionist veterans who had gone to their greater reward.

That inspired us to push forward on SUHM. Greg took the ball and presented this resolution to the Portsmouth Historical Commission; the Commission passed it last Tuesday night:

Whereas the history of the Civil War has at times, understandably but mistakenly, been seen as a battle between regions . . .

Whereas in reality the dedication to Union and Emancipation was shared by millions of Americans north and south . . .

Whereas there were many in the states that formed the Confederacy “who in the darkest hour of slavery kept alive in their souls a love of manhood rights, justice, and the unity of the United States of America”

Whereas these men and women who risked everything to preserve the Union are rarely remembered as much as they should . . .

Whereas in Virginia especially, support for Union was so pronounced that the state split itself in two . . .

Whereas many of the people of present day Virginia can also look to the family histories of Unionism of which they can be proud . . .

And whereas the city of Portsmouth was, for much of the war, a haven for Virginia’s Unionists, both black and white . . .

Be it resolved that the City of Portsmouth through its History Commission. . .

Declare May of this year to be Southern Unionist History Month,

Encourage other localities in Virginia and the Commonwealth itself to join in this declaration, and

Provide for various events and information during May to make Virginians more aware of Civil War Unionism in and around Portsmouth, Virginia.

The resolution will be present to the Portsmouth City Council next week.

Cross-posted to Bearing Drift


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