Economics 101

The Congressional Budget Office, in its role as the God of Economic & Budget Estimates in Washington, DC, has done the unthinkable- it has concluded that putting a tax on the big banks that accepted government money would “invariably be borne to varying degrees by an institution’s customers, employees, and investors.” In non-Beltway speak: Duh.

As a conservative, I am very much against governments playing favorites through subsidies, bailouts etc. However, we must accept the reality that TARP passed. As such, I would note the following: the big banks have paid back a large portion of their borrowed funds. It is the government-owned companies (General Motors, Chrysler, Fannie Mae and Freddie Mac) which are failing to pay back what they owe.

I managed to find the CBO letter, which was sent to Senator Charles Grassley (R-IA) yesterday. According to the letter (Emphasis mine):

What is the overlap between firms that would pay the proposed fee and firms that generated losses for the TARP? For the most part, the firms paying the fee would not be those that are directly responsible for losses realized by the TARP. Some firms subject to the fee are expected to generate such losses, including the American International Group, GMAC Financial Services, and CIT Group (which filed for bankruptcy protection on November 1, 2009). However, the fee would not apply to firms in the automotive industry, which account for $47 billion of the program’s estimated total cost of $99 billion. Other firms that would be subject to the fee have either paid back all of the funds received from the TARP or are current on their repayment schedule and unlikely to generate losses from their participation in the program. However, all of the institutions that might be covered by the fee benefited to varying degrees from the program’s contribution toward stabilizing the nation’s financial system and overall economy.

In defending the tax, Think Progress- which had the link to the letter- made some excellent points rebutting conservative arguments cheering the CBO’s conclusions. They include, but are not limited to, the fact that the letter states smaller banks would have a leg up on their larger competitors because the tax does not go after them, and that the tax’s cost could be offset by lower employee compensation. (Read: executives could be paid less.) Additionally, something I noticed was that CBO said the economic impact would be minimal.

Think Progress and other liberal people and organizations will pounce upon the points noted above, and others, but when it comes down to it, the tax will not hurt the business’ executives, the “if we had to be honest” target of the tax-supporting Democrats. They will hurt, as the CBO said, consumers, investors and employees. It’s economics 101. Unfortunately, Democrats fail to understand this.

Ed Morrissey was kind enough to extrapolate this basic concept to other government policy proposals Democrats sometimes don’t understand- I’ll let him explain them:

Let’s make sure we extrapolate this for everyone onto other public policies, while we’re at it:

• Increasing the minimum wage forces businesses to pay more for labor.  Either they hire fewer people or they raise prices — which undermines the buying power of those who make the least amount of money.
• A carbon tax or cap-and-trade bill will force energy producers to either raise prices to its customers or scale back power production, which will force businesses to either raise prices or cut back production, which will mean more cost or more scarcity for consumers — both of which are inflationary.
• Higher fees on insurers, medical-device manufacturers, and other goods and services in the health-care industry mean higher prices for consumers in the form of increased premiums or in greater scarcity as suppliers fail to come to market.

Imposing higher costs on business means higher costs for consumers.  It means fewer jobs, less consumer choice, less innovation, and economic decline.  I’d be surprised if the CBO analysis itself doesn’t end with the word duh in the last sentence.

To summarize this post:

What Democrats should be saying after this letter was publicized:

What Republicans (and the CBO) are saying to Democrats about their intent regarding the tax after the CBO letter:

The Heritage Foundation Bloggers Briefing

Rob Bluey, The Director of Online Strategy for The Heritage Foundation, was kind enough to invite me to the weekly Bloggers Briefing held at The Heritage Foundation every Tuesday. Today’s speaker was Representative Mike Pence (R-IN), a leading conservative in the House and the first Member of Congress to have a blog, which can be seen here.

Below are my takes from the event:

1. I met a number of interesting people, including Dan Kotman, Press Secretary for American Solutions and Steve Johnston, Associate Director of New Media for the office of the Republican Whip. I also met bloggers from Think Progress and RedState, and managed to give my card for www.thelobbyist.net to all of these people.

2. Pence spoke and, as always, was excellent (this is the third time since October I have heard him speak in person). He turned down the opportunity to run for the Senate this year, and he said it was because he wanted to lead a “conservative majority” in retaking the House in 2010. When asked if he wanted to run for President in 2012, Pence said of course he did (as he said, “Isn’t that the American Dream?), but that it would depend on the time and circumstances. He also said he was staying because he felt it was his “duty.”

3. The Think Progress blogger- a very brave young man, showing his face and speaking up, I might add- asked Pence about the Citizens United vs. FEC decision by the Supreme Court last week. In short, Pence made two points: first, that “Congress shall make no law…abridging the freedom of speech” means just that. Secondly, he said he agreed with the great conservative writer George Will, in that transparency was the issue at hand, not who can and cannot have freedom of speech. He said he would have no problem with a requirement that all Members of Congress should have to put received funds on their websites at the end of every day.

One thing Pence avoided answering by sticking to the transparency and freedom arguments was the Think Progress blogger’s second question, which was what did Pence think of the ramifications of the SCOTUS decision regarding international funding of campaigns. Pence made reference to the Democrats having to pay back such funding in the 1990s, said foreign funds should not have influence on our elections…and then never really answered the question any further.

4. I managed to put a plug in for www.rightosphere.com. A CATO blogger sitting next to me immediately began asking me about www.Race42012.com, which he said he enjoyed reading.

5. I asked Pence two questions. The first was would he prefer a Republican majority in the House or a conservative majority? He stated that he believed the new conservative majority would be made up of a new generation of leadership in Washington, DC, but never answered the real question I had, which was the difference between conservatives and Republicans.

The second question was what would a new conservative majority in 2011 push for their first step in transparency. While he never directly answered the question, he did reference negotiating bills in front of the public and a couple of other basic points that are slipping my mind at the moment.

6. Four excellent quotes from Pence:

A. On the expected move by President Obama to try to freeze billions of dollars over three years: “I never met a spending freeze I didn’t like.” Pence was also asked when he had first heard about this freeze proposal, and said it was in December, when Republicans recommended it to President Obama at a jobs summit. 

B. “Any gesture at fiscal sanity would be welcome.” Pence said , however, that Republicans would compare that proposed freeze to the laundry list of expected spending programs in tomorrow’s State of the Union speech. 

C. “This isn’t anymore about debates about actuarial perfection – this is about what kind of country we are.” Possibly the best quote of his 50-minute presentation (including Q & A). Pence made the point that the bailout in 2008, the stimulus from 2009, the takeover of the private industry etc. by the government was about who we are as a country regarding the role and size of government, as well as regarding personal responsibility. Regarding the latter, Pence was almost entirely directing his comments at Wall Street.

D. Paraphrased: “Two things have happened [since I came to Washington in 2000]. My opinion of national government has gone down and my opinion of the American people has gone up.”

*Originally posted at THE LOBBYIST.

Get Rid of Napolitano

As is well-known by now, last week there was a suicide bomber attack on a plane from Amsterdam to Detroit. The attack, fortunately, failed, as the explosive device failed to go off. The alleged terrorist is suspected to be connected to at least one terrorist organization. He claimed, initially at least, to be connected to Al Qaeda.

This, obviously, is both good news and bad. First, it’s good in that nobody died, a terrorist was captured and now we know where to concentrate more efforts on the international scale. The bad news is that some people are just plain stupid, including Think Progress’ Matthew Yglesias, who wrote the other day that, “Ultimately, it does no favors to anyone to blow this sort of thing out of proportion. The United States could not, of course, be ?devastated? by anything resembling this scheme. We ought to be clear on that fact. We want to send the message around the world that this sort of vile attempt to slaughter innocent people is not, at the end of the day, anything resembling a serious challenge to American power. It?s attempted murder, it?s wrong, we should try to stop it, but it?s really not much more than that.”

Even worse, however, is the reaction from Department of Homeland Security Secretary Janet Napolitano. “The system worked,” according to Napolitano. Given that it took a failed attempt plus civilian passengers to subdue the attempted terrorist, I’d say the system failed. Plus, the guy was on a watch list, which is particularly poignant given his father reported him as a potential threat two years ago. (See the video of Napolitano’s inane comments here.)

To quote Jonah Goldberg from The Corner yesterday, “If the White House wants to assure people that it takes the war on terror seriously (a term Robert Gibbs used this morning by the way), they could start by firing this patenly unqualified hack.” Personally, I think “man-caused disasters” are a worse threat than conservatives, Secretary Napolitano. You had better figure that out soon, or your job will be gone. Unfortunately, this will probably not happen until after Americans have died as a result of your incompetence. Yes, as they said on the Real Clear Politics blog, it’s your job to reassure the American public as part of an overall security standpoint. However- and I’ll finish with a quote from the RCP blog- “…she should be smart enough to find a way of doing that without treating the American people like a bunch of morons and dupes.”

This was originally posted at THE LOBBYIST.

Update: According to The Washington Monthly blog, President Obama has been paying close attention to the Al Qaeda threat from Yemen. Kudos to President Obama for doing so.

Update II: The Heritage Foundation’s Morning Bell points out the continued failure by the Obama administration to take the proper steps to protect this country from terrorists, and offers three steps going forward.

Update III: A friend pointed out on Facebook that I misspelled Secretary Napolitano’s name- it is corrected.

Update IIII (last one, I hope): Two links from where I posted this at Race42012 showing Secretary Napolitano backtracking on her statements about the system working well. Too little, too late, I think.

TODAY Video: Napolitano: Prevention system ?failed miserably?
http://today.msnbc.msn.com/id/26184891/vp/34608370#34608370

Security System Failed, Napolitano Acknowledges
http://www.nytimes.com/2009/12/29/us/29terror.html?_r=1&pagewanted=print

The Washington Times Is Not Helping The Cause

Thanks to Think Progress, the blog for the liberal Center for American Progress, for posting about this really bad birther ad. The ad, which can be seen in full here, is not helping the cause. I, however, more blame The Washington Times leadership for allowing the ad to be in their paper. The Times, which hit a new circulation low of 67,000?recently, is struggling, having fired several executives. I imagine this is their way of appealing to the fired up birther crowd to gain market share. (Okay, so it’s an assumption, but I don’t think a bad one.)

From the occasional article or editorial I catch, The Times does pretty good work,?so it’s too bad they have to either stoop this low to stay in business?or are so irrational at the editorial level they actually believe President Obama is not a natural-born citizen. Personally, while I would not have been surprised a year ago to find out?the president?was not a natural-born citizen, Bill O’Reilly, a number of U.S. Senators- including Jim DeMint (R-SC)- the liberal Factcheck.org?and others have verified the birthers just don’t have a case.

Think Progress overstated their case by saying the?ad?has racial undertones, but their overall point is well-taken and accurate. Conservatives, we need to stay away from the birthers. Period. It does nothing but hurt us, and even worse, they’re wrong.

Campus Progress Dislikes Competition

Campus Progress (part of the Center for American Progress) has an article on its site talking about The Leadership Institute’s new CampusReform.org. The article was, for the most part, fair to CR and LI. Interestingly, though, Andrea Nill at Think Progress (also associated with CAP) has a real issue with CR. I guess only liberals can have college activism, which is exactly what Campus Progress is. For instance, on their website: “Campus Progress, part of the Center for American Progress, works to help young people — advocates, activists, journalists, artists — make their voices heard on issues that matter. Through an online magazine and student publications, public events, multimedia projects, and grassroots issue campaigns, Campus Progress acts to empower new progressive leaders nationwide as they develop fresh ideas, communicate in new ways, push policy outcomes in a progressive direction, and build a strong progressive movement.”

Meanwhile, CR dares to have this on their site: “Created to give conservatives powerful new weapons in their fight for the hearts and minds of the next generation of citizens, politicians, and members of the media, CampusReform.org facilitates the establishment of conservative student networks and supports their development as a powerful voice of activism on their campuses. It makes available new opportunities for groups? interaction with alumni, parents, faculty, and other members of the broader community interested in taking a stand for conservative principles on America?s college campuses.”

Solution to Nill’s hyperventilism: Remember that freedom of speech and activism are for conservatives, too- even if you disagree. (Oh, and criticizing James O’Keefe for his work on ACORN is not a good way to demean LI- it merely makes you appear supportive of ACORN’s corruption.)