Michael F. Cannon
ObamaCare’s Independent Payment Advisory Board is everything its critics say and worse. It is a democracy-skirting, Congress-blocking, powers-unseparating, law-entrenching, tax-hiking, fund-appropriating, price-controlling, health-care-rationing, death-paneling, technocrat-thrilling, authoritarian, anti-constitutional super-legislature. Its very existence is testament to government incompetence. It stands as a milestone on the road to serfdom.
[I]f President Obama fails to appoint any IPAB members, all these powers fall to Secretary of Health and Human Services Kathleen Sebelius.
That’s an awful lot of power to give any one person, particularly someone who has shown as much willingness to abuse her power as Sebelius has.
I would also like the Congressional Research Service to address a feature of IPAB that Cohen and I first exposed. According to the statute, we write:
Congress may only stop IPAB from issuing self-executing legislative proposals if three-fifths of all sworn members of Congress pass a joint resolution to dissolve IPAB during a short window in 2017. Even then, IPAB’s enabling statute dictates the terms of its own repeal, and it continues to grant IPAB the power to legislate for six months after Congress repeals it. If Congress fails to repeal IPAB through this process, then Congress can never again alter or reject IPAB’s proposals.
You read that right. For more, read our paper, especially Box 3 on page 9.
CRS, I’m interested to know what you think. Take a close look at the law and get back to me.
View full post on Cato @ Liberty
Huge Value-Added Tax Increases in Europe Show Why Washington Politicians Should Never Be Given a New Source of Tax Revenue
Daniel J. Mitchell
The most important, powerful, and relevant argument against the value-added tax in the short run is that we can balance the budget in just five years by capping spending so it grows at the rate of inflation, a very modest level of fiscal restraint.
The most important, powerful, and relevant argument against the value-added tax in the long run is that more than 100 percent of America’s long-term fiscal problem is too much spending.
So why even consider giving politicians a new source of revenue such as the VAT, particularly since this hidden form of national sales tax helped cause the European fiscal crisis by facilitating a bigger welfare state?*
And now Europeans are doubling down on that failed approach, thus confirming that politicians will rarely make necessary spending reforms if they think more revenue can be squeezed from taxpayers.
Here’s a chart taken from the recent European Commission report on taxation trends in the EU. As you can see, the average VAT rate in Europe has jumped by nearly 2 percentage points in just five years.
As I explained last week, European politicians also have been increasing income tax rates, so taxpayers are getting punished when they earn their income and they’re getting punished when they spend their income.
Which helps to explain why much of Europe is suffering from economic stagnation. Given the perverse incentives created by redistributionist fiscal policy, it makes more sense to climb in the wagon of government dependency.
For more information, here’s my video that describes the VAT and explains why it’s a bad idea.
*The same thing is now happening in Japan.
View full post on Cato @ Liberty
gold price manipulation – the never ending game?
The argument goes on and on – but many of those in the mainstream are beginning to come around to the opinion that gold manipulation is alive and well in the interests of avoiding global economic collapse.
Author: Lawrence Williams
Posted: Friday , 12 Apr 2013
I remember sitting in the audience at a gold investment conference a couple of years ago – I think it was probably at one of the Denver Gold Group’s European Gold Forums – that a member of the audience asked the one question which is on many gold investors’ minds, namely “Is the gold price manipulated by governments and central banks?”. The experts on the panel, after some discussion, unanimously agreed to agree that there was absolutely no manipulation of the gold price by the financial powers that be.
At yet another conference, organised by the Gold Anti Trust Action Committee (GATA )in London a little later, every speaker unanimously agreed that the gold price was indeed being manipulated and suppressed by governments and central banks.
Who is correct – and why this strong difference of opinion?
To an extent this polarisation of opinion represents two sides of the argument – let’s call it the gold mainstream vs the gold mavericks – with neither side really prepared to admit that the other might have a point.
One suspects that opinion is gradually moving towards that expressed by the gold mavericks, although sometimes it seems they might damage their case by over-exaggerating the importance of, or over-theorising with regard to, some factors which may, or may not be truly significant. It’s a bit like Erich von Daniken’s books of the 1960s and 70s putting forward the idea that ‘God’ was actually a spaceman from a different world and fitting some wildly disparate ‘facts’ into supposedly ‘proving’ a personally-held theory to account for some naturally-occurring phenomena and unexplained archaeological discoveries.
But so-saying, GATA – which is very much the co-ordinator and cheerleader, if not the instigator, of the gold manipulation proposition – has come up with some interesting data, and quotes from some very significant individuals – like former US Fed Chairman Paul Volcker – which certainly do suggest that the financial powers that be are at the very least conscious that some kind of control of the gold price can work to the favour of an attempt to maintain global financial stability, and that of the U.S. dollar in particular (effectively seen by the U.S. elite as the same thing!).
While the idea of exerting control over the gold price may seem a little abstruse to the uncommitted observer, the logic of so doing is fairly strong. While current US Fed Chairman Ben Bernanke does not appear to accept that gold is a de facto currency – at least not in public statements – in reality it does indeed act like one and gold’s proponents would rate it as the currency of last resort – and there is little doubt that governments manipulate currencies. Economist John Maynard Keynes is often misquoted as calling gold a ‘barbarous relic’ when in fact the actual quote in a treatise on monetary reform, from which the quote is taken actually was “In truth, the gold standard is already a barbarous relic” rather than gold itself, but to an extent gold remains something of an anathema to mainstream economists.
What gold is is a metal of value that is hard-wired into the human psyche as the epitome of wealth in cultures from all parts of the world. It is not unique to the East or the West, or points in between. Unless there is some kind of global brainwashing to wipe it out of human culture, then it will ever remain thus. It is seen very much as being the ultimate store of value in people’s minds (put there almost from birth in childhood fairy tales and legends and thus instilled into us at our mother’s knee).
While gold’s value in paper money terms can vary, in itself it cannot be debased through huge increases in supply, as can paper (fiat) money and thus is seen as some kind of protection against governments using the printing presses to increase monetary supply without any control. The gold price tends to exert its own valuation on fiat currencies – the more paper money is printed, the less that money is worth against the ‘constant’ of gold – at least in theory and outside a financial sector where nowadays everything seems to be subject to manipulation of some kind or another.
Of course the above is a somewhat simplistic view of the process, but is sufficiently accurate for the money printers to be aware that given that gold is thus in effect a reference point against which a currency can be valued, if some kind of control can be exerted over the gold price then the debasement of the printed money through monetary easing is not so apparent. Thus the logic for exerting control over the gold price is a strong one indeed and it would probably be surprising if there was not some attempt to do just this.
Where perhaps GATA gets it wrong, perhaps unintentionally, is that it appears from some of its statements that this price manipulation is seen as something of a plot designed to do down the gold investor, whereas it would be better presented as a desire to protect the perception of currency value in people’s minds. It is not obvious to the person in the street in the US, for example, that the dollar has lost 80% or more of its purchasing power since 1971 when President Nixon took the dollar off what remained of the gold standard (with the dollar theoretically redeemable in gold at the then official gold price) and thus turned the greenback into a true fiat currency.
The person in the street may, however, look at it somewhat differently – say perhaps seeing their property soar in value and thus feeling that they are perhaps far better off now as a result – no matter that nearly everything else has risen by a similar amount – this is inflation. In 1971 an ounce of gold was valued at $35 – today it is worth $1560 – a 4,357% increase. Thus gold has hugely outperformed inflation over that period, but perhaps mainly because the price of gold back in 1971 was artificially held down. Once it was released from its government controlled price tie in 1972 it quickly rose, probably too far too fast, to around $850 an ounce by 1980 before falling back to what should perhaps be considered its equilibrium level at the time of around $300 an ounce. Gold in dollars has thus ‘increased’ in value a little more than five times over the past 25 years or so – which is probably effectively the level of dollar debasement over the same period. Those who don’t believe gold is manipulated by the financial authorities will point to this as evidence that the price is, in fact, not manipulated at all – and like other goods gold has increased in line with inflation. One can argue about percentage differences in the currency debasement and the rise in the gold price, but overall the gold price has risen in value, or the dollar has fallen – depends from which side of the coin you are looking.
Inflation is fine – as long as wages, pensions etc. keep up with it. It actually makes life easier for the person in the street. The zero interest rate environment which exists in most western nations at the moment can be more problematical. Inflation can make debts like mortgages far easier to pay off over time – again as long as earnings keep up with the inflation rate. Supposed zero inflation means that this easing of debt repayments does not happen. It is even worse when, as at present, underlying inflation is actually present, but government statistics, due to regular goal post moving, claim there isn’t any and wages are frozen as a result, but prices continue to rise anyway.
Be this as it may, there has never in the past been monetary expansion like that we have seen over the past few years since the implementation of Quantitative Easing programmes. Economic theory will tell us that the more money that is added into the supply, the greater the fall should be in the value of the underlying currency being printed.
Now even if there was in reality relatively little control exerted over the gold price in the late 20th Century and the first few years of the current one, the game has changed dramatically. The degree of money printing by the authorities has been such that there really is a clear and present danger of total currency value collapse and resultant hyperinflation. Some economists see this as inevitable.
Under these circumstances the only way of perhaps warding off hyperinflation is by convincing everyone that there isn’t a problem in the first place. Hyperinflation kicks in when people lose all confidence in their currency – if you can maintain the belief that all is right with the world and inflation doesn’t exist, nor will it to any serious extent in the future, then maybe it will never happen. At least that seems to be the theory that the Ben Bernankes of this world are working on and it is indeed a very dangerous policy. It just can’t go on ad infinitum. Sooner or later the dam will burst and most people will have absolutely no protection against the economic collapse that will result. Think Weimar Republic, Think Zimbabwe. Think Argentina. Yes people survive but any wealth most of them have accumulated will be wiped out – certainly any cash savings will be.
This is where gold manipulation is most likely to kick in and almost certainly has done. The gold price is seen as the ultimate valuer of a fiat currency. If the gold price soars it becomes apparent that the currency is collapsing and those who have been burying their heads in the sand for so long will at last be coming to the realisation that they are in financial danger, thus driving the currency down further, and moving their wealth into what they consider safe haven investments – key amongst which will probably be gold adding to the spiral – gold up, currency down.
It is thus in the interests of money printing governments, and their economic advisers, to try and keep a lid on the gold price. Indeed it might be surprising if they were not already doing so. It has been noticeable of late that events, like the Cyprus collapse, which would normally see gold rise, in practice saw a small increase at which point heavy selling came in and beat the price back down again. Every time, it seems, that such events occur and gold starts to move up, it is immediately taken down – this is more than just profit taking. GATA may indeed have a point!
How long can this gold price suppression go on? Perhaps indefinitely now that countries do not seem to care about ever increasing debt. Just print more money and pay it off! Indeed like QE, gold suppression may be with us for the long term as if the authorities lose control over the gold price that may signify they are losing control of the whole global economic system and the consequences of that may be too horrific for everyone to contemplate.
What is perhaps more likely to happen is that policies will change to bring back a supposedly managed degree of inflation – or that’s what the politicians will be hoping – and gold will be allowed to rise accordingly, but still kept under control. External factors – perhaps more bail outs (and bail-ins) in precarious European states could upset the apple cart and see a flood of money moving from the banks into safe havens like gold which would destroy the very delicate balancing act conceived by the politicians and their tame economists. That is the danger these kinds of policies face. Ultimately one suspects the matrix, as being implemented today, will have to blow up, but whether that happens this year, next year, sometime…. – one cannot predict. Safe haven investment in gold is probably an answer, but it has to be looked on as insurance rather than a way of making money per se.
Statistics: Posted by DIGGER DAN — Mon Apr 15, 2013 12:57 am
View full post on opinions.caduceusx.com
Gold Trader: “Once This Bottom Is Formed, We May Never See Gold At These Levels Ever Again.”
April 4, 2013 | By Tekoa Da Silva
I had the chance yesterday to speak with technical gold trader Gary Savage, publisher of the “Smart Money Tracker”, daily gold market commentary and trading service, which has outperformed most of the world’s hedge funds in 2011 and 2012.
It was a powerful conversation as Gary commented on the panic selling we’ve seen over the last few days, sharing his view that “once this bottom is formed, we may never see gold at these levels ever again.”
Despite continued and relentless selling, Gary commented that, “Gold isn’t in a bear market, it’s [just] been in a consolidation since the top of September 2011. If you pull up a 13-year chart, it shows that gold is not in a bear market, not even close. The miners however, are in bear market, and they have been for 19 months now, and they’ve lost 50%. That’s about an average cyclical bear market…[So] I think the miners are [primed] to bottom along with gold at this yearly cycle low, which I don’t think occurred today, but I think we’re within a day or two of that final bottom.“
When asked about valuations on mining stocks at these levels, Gary said that, “The valuations in the miners are absurd. The gold XAU ratio is higher than it’s ever been before in history. This is coming at a time where the miners have gotten the hint…management is cleaning up their act…[and] the sector is doing what it needs to do to turn itself around. [But] since the trend is down, people just invent reasons for why the miners should continue to go down. Eventually rationality is going to return, people will recognize that mining stocks are not going bankrupt, and they’re just too insanely cheap.”
In terms of the big picture following this grueling correction, Gary said, “We definitely started a [panic selling climax] today in my opinion. The volume on GDX and NUGT was just through the roof, [but] we’re close [to a bottom]…If you have the emotional ability to buy at those bear market bottoms, that’s where the really big money is made…[and] once this [bottom] is formed…we will probably never ever see gold back below this level again.”
As a final call, Gary concluded by saying, “The gold bull cannot end until the fundamentals change, and they have not changed, they’ve only gotten better…[So] I think we’re about to leave these levels behind forever.”
This was another outstanding interview with one of the world’s most successful gold traders, and is required listening for investors looking to profitably trade this gold bull market.
To listen to the interview, click the following link and/or save to to your desktop:
>>Interview with Trader Gary Savage (MP3)
Statistics: Posted by DIGGER DAN — Thu Apr 04, 2013 10:42 pm
View full post on opinions.caduceusx.com
This could NEVER happen where you live… right?
by SIMON BLACK on MARCH 18, 2013
Reporting from Sovereign Valley Farm, Chile
As you no doubt have heard by now, the government of Cyprus announced Saturday morning (when the banks were closed) that they would impose a ‘levy’ on bank deposits.
Originally they announced levies of 9.9% for accounts above 100,000 euros, and 6.7% for accounts below 100,000 euros.
In the face of such a massive backlash, they’re now talking about increasing the levy on larger deposits to 12.5%, and reducing the levy on smaller deposits to 3%.
A final vote on the measure won’t come until later this week. But they have imposed a mandatory ‘bank holiday’ this week to prevent people from withdrawing their savings.
And, according to the draft legislation, anyone who doesn’t hand over the money will be thrown in jail.
Now if this doesn’t prove the point of what we’ve been talking about for so long, I don’t know what will.
Cyprus is totally broke. And as we have discussed, bankrupt, insolvent governments have a very, very limited playbook that almost unilaterally involves stealing from their own citizens.
Bankrupt governments can, and do, steal from people. Pensions funds. Private property. And yes, even bank accounts.
This has happened so many times before throughout history; just over a decade ago in Argentina, for example, the government was in the middle of a debt and currency crisis. They shuttered bank accounts and completely vanquished the savings of their citizens.
Here’s my advice, plain and simple: do not hold the preponderance of your assets in insolvent, bankrupt nations. This includes the United States, Japan, and most of Europe.
Rather, move at least a portion of your assets to stable, independent countries. These are the same places that we routinely discuss in this column– Hong Kong, Singapore, Chile, Norway.
An Argentine friend of mine is staying down here at the farm with me, and this morning over breakfast I informed him this morning about what happened in Cyprus.
“Duh,” he responded. “What did they think would happen…?”
It just goes to show, there are two types of people– (1) Those who know that these things happen, and (2) those who refuse to believe that these things can happen.
One group will be able to protect what they have. The other will become victims.
Which one are you?
Statistics: Posted by yoda — Mon Mar 18, 2013 10:31 am
View full post on opinions.caduceusx.com
Here’s a healthy currency most people have never even heard of
by SIMON BLACK on MARCH 12, 2013
Reporting from Santiago, Chile
There is no such thing as a ‘good’ fiat currency.
Any model in which a tiny banking elite wields dictatorial control over a nation’s unbacked paper money supply is deeply flawed. The concept itself is dangerous, and comparing fiat currencies is like debating which is the ‘least harmful’ poison.
That being said, the world is not yet at a stage where you can walk into a Starbucks and pay for a few lattes with a quarter ounce of silver. Society still functions on paper currency, and if you want to engage in commerce, you have to pick one.
We’ve frequently mentioned several currencies in this column which are better options, i.e. ‘less ugly’, than the others.
The Hong Kong dollar is one example. It’s pegged to the US dollar in a very narrow band, so you’re not taking any risk of it fluctuating. And if the world experiences a deflationary spiral, both the US dollar and Hong Kong dollar will surge… so you’ll be protected.
Yet if the US dollar continues its path to irrelevance, the Hong Kong authorities will likely re-adjust the peg, giving you an instant nominal appreciation.
The Singapore dollar is another option which have been steadily appreciating against other major currencies, backed by a strong economy and a government with zero net debt.
We’ve also talked about the Chilean peso. Like Singapore, Chile has a booming economy with minimal net debt. And the peso has been one of the best performing currencies in the world.
But what most people don’t know is that there’s another ‘currency’ in Chile. It’s called Unidad de Fomento, or UF.
To be clear, UF isn’t an actual currency. There are no UF bills and coins. But you can open a savings account here denominated in UF, and it’s freely interchangeable to pesos.
Why would someone do this? Because UF is a store of value. It constantly adjusts with inflation.
In other words, one UF today will buy you as many loaves of bread and gallons of gasoline that it bought five, ten, fifteen years ago.
This way, you can ensure that the purchasing power of your savings is preserved. And if you have a UF bank account, you can even generate an inflation-adjusted return on top of that.
This is a really innovative idea born from Chile’s own experience with hyperinflation several decades ago. And as I have traveled to over 100 countries, I have seen this concept in very, very few places.
Of course, few banks in the world outside of Chile offer Chilean peso or UF-denominated accounts; and establishing a bank account in Chile is incredibly difficult.
Like many things in this country, banking is very relationship-based. I liken the Chilean banking system to a private club. It’s closed to outsiders, and it’s very difficult to gain entry. But once you’re in, you’re in…
Statistics: Posted by yoda — Tue Mar 12, 2013 12:54 pm
View full post on opinions.caduceusx.com
Copyright laws in this country are absurd and amount to little more than givaways to the entertainment industry.
Additionally they hamper creativity and the development of new ideas and markets.
In the attached article Virginia Postrel explains that, “A copyright isn’t supposed to be a reward. It’s supposed to be an incentive.”
Copyright should encourage creativity, not shut it down. Right now we are shutting it down for the sake of a few very powerful interests. Mickey Mouse, I’m looking at you.
A young Capitol Hill staff member named Derek S. Khanna published a Republican Study Committee policy brief titled “Three Myths About Copyright Law and Where to Start to Fix It.” The paper attacked the current copyright system, particularly the continual and retroactive extension of copyright terms at the behest of entertainment-industry lobbyists.
The target wasn’t new — today’s expansive copyright law has long been a pet peeve of many technorati and left-leaning critics of corporate power — but Khanna’s critique was striking. He made his case in the traditional Republican language of free markets, limited government and constitutional intent.
“The Federal government has gotten way too big,” the report declared, “and our copyright law is a symptom of the expansion in the size and scope of the federal government.” The current system, it went on, “bears almost no resemblance to the constitutional provision that enabled it and the conception of this right by our Founding Fathers.”
The post Fix copyright in the USA. It was never meant to be a way to entrench the already powerful. appeared first on AgainstCronyCapitalism.org.
View full post on AgainstCronyCapitalism.org
“Good” Politics: The Government Redefines Poverty (In a way in which poverty likely will NEVER be “reduced”)
The federal government has just decided that poverty for family of 4 in New York City means an income of up to $37,500, not $22,500. Quite a leap. As before, the figure excludes earned income tax credit cash checks from the government and also medical and other non-cash assistance.
The change in the definition of poverty may have a link to Obamacare; it may make more people eligible for Medicaid under that legislation. It may affect eligibility in other ways.
One would like to think of poverty programs as being unaffected by crony capitalism, the merger of special interests and government. But the facts suggest otherwise. Big agri-businesses and convenience stores have a lot of say about the food stamp program which now covers 47mm Americans. When cell phones were handed out in recent years by the government, it turned out that a disproportionate number were going to Ohio, the presidential election swing state, and the phones were being made by a large donor to and fundraiser for Obama.
When we look at these government statistics, let’s also remind ourselves to take them with a grain of salt. Just as the definition of poverty has now radically changed, the definition of inflation and unemployment has also radically changed. When people say that unemployment is not as bad as in the Great Depression, they are comparing one definition to another. Computed the same way, we do have Depression levels of unemployment.
(From The New York Post)
This means it will be difficult to reduce poverty in America no matter how much the living conditions of the poor actually improve. Imagine a sprinter in a race where the finish line is moved back four feet every time the runner takes a step.
Look at it this way: If the real income of every single American were to double overnight, the new measure would show no drop in poverty because the poverty-income thresholds also would double. Under this new definition, we can reduce poverty only if the incomes of the “poor” rise much faster than those of everyone else.
The goal of fighting poverty is no longer about meeting physical needs; instead it has been covertly shifted to equalizing incomes, or “spreading the wealth.”
View full post on AgainstCronyCapitalism.org
By Malou Innocent
In autumn 2001, America’s initial purpose in Afghanistan—which made perfect sense—was to destroy or incapacitate al Qaeda and punish the Taliban government that hosted it. This was accomplished 11 years ago. Today, the purpose of the U.S. mission is ill-defined, but clearly involves nation building. What the coalition desperately needs is an achievable, realistic endgame, not an indefinite timeline that commits thousands of U.S. troops to Afghanistan until or beyond 2024.
A common argument is that America and its allies must create an effective Afghan state that can rule the country and prevent the return of the Taliban and, by extension, al Qaeda. Aside from the fact that al Qaeda can exist anywhere, from Hamburg to Los Angeles, it’s not at all clear that the coalition can either eradicate the Taliban or come close to creating an effective Afghan state.
As a Department of Defense Report declared earlier this year, “The Taliban-led insurgency remains adaptive and determined with a significant regenerative capacity, and retains the capability to emplace substantial numbers of [improvised explosive devices] and conduct isolated high-profile attacks that disproportionately field a sense of insecurity.”
Arguments that the coalition must eradicate the Taliban lose sight of what the term “insurgency” actually means. Guerillas typically fight when the opportunity is ripe. They can melt easily into a population, making it difficult for conventional troops to distinguish friend from foe. Combined with the Afghan insurgency’s ability to retreat to sanctuaries in Pakistan, coalition gains can be quickly undone by such systemic factors that make insurgents resilient. Additionally, reporters Dexter Filkins and Kelly Vlahos provide excellent analyses that draw out the ethnic divisions and political factionalism posed by Afghan warlords, many of whom are regrouping and could potentially touch off a civil war in the years ahead.
As for the common contention that America must stay until Afghans can police and govern themselves, the current state of Afghan institutions ensure that it would take a decade or more before coalition forces could withdraw, with little promise of success.
A detailed report released last year by the Commission on Wartime Contracting found that the U.S. government contracted for dozens of clinics, barracks, hospitals, and other facilities that exceed Afghan funding capabilities. For instance, the $82 million Afghan Defense University will cost $40 million a year to operate, which is well beyond the Afghan government’s financial capacity to sustain, according to DoD officials. Long-term operations, maintenance, and sustainment costs for the Afghan National Security Forces could continue through 2025. Similar findings were uncovered by auditors at the Office of the Special Inspector General for Afghanistan Reconstruction.
The expectation is that the United States will maintain a presence of some 10,000 personnel in Afghanistan after 2014, while the World Bank estimates that Afghanistan will need $3.9 billion a year through 2024 for economic development. Ironically, when foreign policy planners in Washington make clear that they never intend to abandon Afghanistan, it’s their ambition to create a centralized state that will perpetuate that country’s dependency on foreigners.
View full post on Cato @ Liberty
By Daniel J. Mitchell
I’ve explained on many occasions that Franklin Roosevelt’s New Deal was bad news for the economy. The same can be said of Herbert Hoover’s policies, since he also expanded the burden of federal spending, raised tax rates, and increased government intervention.
So when I was specifically asked to take part in a symposium on Barack Obama, Franklin Roosevelt, and the New Deal, I quickly said yes.
I was asked to respond to this question: “Was that an FDR-Sized Stimulus?” Here’s some of what I wrote.
President Obama probably wants to be another FDR, and his policies share an ideological kinship with those that were imposed during the New Deal. But there’s really no comparing the 1930s and today. And that’s a good thing. As explained by Walter Williams and Thomas Sowell, President Roosevelt’s policies are increasingly understood to have had a negative impact on the American economy. …[W]hat should have been a routine or even serious recession became the Great Depression.
In other words, my assessment is that Obama is a Mini-Me version of FDR, which is a lot better (or, to be more accurate, less worse) than the real thing.
To be sure, Obama wants higher tax rates, and he has expanded government control over the economy. And the main achievement of his first year was the so-called stimulus, which was based on the same Keynesian theory that a nation can become richer by switching money from one pocket to another. …Obama did get his health plan through Congress, but its costs, fortunately, pale in comparison to Social Security and its $30 trillion long-run deficit. And the Dodd-Frank bailout bill is peanuts compared to all the intervention of Roosevelt’s New Deal. In other words, Obama’s policies have nudged the nation in the wrong direction and slowed economic growth. FDR, by contrast, dramatically expanded the burden of government and managed to keep us in a depression for a decade. So thank goodness Barack Obama is no Franklin Roosevelt.
The last sentence of the excerpt is a perfect summary of my remarks. I think Obama’s policies have been bad for the economy, but he has done far less damage than FDR because his policy mistakes have been much smaller.
Moreover, Obama has never proposed anything as crazy as FDR’s “Economic Bill of Rights.” As I pointed out in my article, this “would have created a massive entitlement state—putting America on a path to becoming a failed European welfare state a couple of decades before European governments made the same mistake.”
On the other hand, subsequent presidents did create that massive entitlement state and Obama added another straw to the camel’s back with Obamacare. And he is rigidly opposed to the entitlement reforms that would save America from becoming another Greece. So maybe I didn’t give him enough credit for being as bad as FDR.
P.S.: Here’s some 1930s economic humor, and it still applies today.
P.P.S.: The symposium also features an excellent contribution from Professor Lee Ohanian of UCLA.
And from the left, it’s interesting to see that Dean Baker of the Center for Economic and Policy Research basically agrees with me. But only in the sense that he also says Obama is a junior-sized version of FDR. Dean actually thinks Obama should have embraced his inner-FDR and wasted even more money on an even bigger so-called stimulus.
View full post on Cato @ Liberty