The BEA’s downward revision of GDP revealed that we have yet to recover back to pre-recession levels. Rather than taking this bad news as evidence we need to cut government spending and deficits, the Obama administration sees an opportunity to spend more now and cut later. Maybe we won’t even need the cuts if business activity picks up, he says.
Obama’s liberal mouthpiece, the New York Times, reveals Obama’s new political strategy without apology:
“The President spent this week combining his pitch for deficit reduction with a renewed emphasis on the need for further temporary spending and tax cuts to encourage businesses to hire and consumers to spend.”
Note the “bait and switch:” We spend now temporarily and cut in the distant future, if at all. We have heard this “Let’s spend more now and save later” too often. The elder Bush actually fell for it, and it cost him his reelection.
The NYT’s second drumbeat is that all “reasonable” economists agree that we should spend now and save later. After all, we all know the first Obama stimulus worked:
“Contrary to Republicans’ claims, economists generally judged his 2009-10 stimulus program to have helped, but to have been insufficient to overcome the deep downturn.”
The NYT has at least the decency to say instead of “all” economists that:
“many economists argue that while temporary spending and tax cuts [e.g., a second stimulus] add to deficits initially, such measures can increase tax collections, reduce costs for safety-net programs and ultimately keep deficits smaller than otherwise by spurring business activity and lowering unemployment.”
What is this? Lower taxes raise revenue by promoting economic activity? Is this not “voodoo economics”? I guess as long as the tax cuts are not for the rich, the NYT can embrace voodoo economics.
President Obama reminds me of an inept magician who attempts to misdirect his audience from the rabbit up his sleeve (more spending and deficits) to a beautiful bikini –clad female assistant (spending cuts and deficit reduction). No matter, how often he is caught, he tries it again.
I am becoming like a broken record too. This is at least the third post I have written on the lack of consensus on Keynesian economics and stimulus spending.
Sunday, August 21, 2011
Sunday, August 7, 2011
The NYT Says What Obama Cannot Say: Raise Everyone’s Taxes
The New York Times Sunday editorial reveals point blank the liberal agenda. According its the editorial writers, we cannot cut spending in any significant way without curtailing core liberal programs. Hence, “there is no economically sensible or politically honest way to address the deficit without also increasing revenues and reforming the tax code.”
Even more remarkable is their candor with respect to taxes. Contrary to Obama’s promise not to raise taxes on the middle class, the NYT calls for raising taxes on just about everyone.
I supply their blueprint for taxation during the second Obama administration without comments:
1). Let the Bush tax cuts expire at the end of 2012 for those making $250,000 and above. The other tax cuts could expire at the end of 2013. The middle class should keep their tax cuts for a year to prop up consumer demand. The expiration of all the tax cuts would “save” $3.8 trillion over the next decade.
2) Tax reform should not touch breaks for home ownership and retirement saving, but they should be targeted only to help low and middle-income tax payers. Capital gains should be taxed at 35 percent. Tax breaks that subsidize profitable industries like oil must be ended. If the ending of tax breaks permits, tax rates could be lowered generally.
3) We should use a value-added tax or carbon taxes to raise “needed revenue for deficit reduction, and for what government provides” so that all additional tax revenue need not be squeezed from income taxes.
The NYT ends with its reading of public sentiment: “The public is open to new taxes, and the economic facts are clear. Until tax increases are considered in equal measure to spending cuts, there will be no budget fix.”
I imagine this editorial is not being greeted with enthusiasm in the White House. It lays bare the fact that Obama’s core supporters do not want to cut spending. Instead, they propose massive tax increases on middle- and low-income families.
If Obama were to publicly embrace these proposals in his upcoming campaign, his chances of reelection would shrink virtually to zero. Republican candidates should keep this editorial ready for use.
Even more remarkable is their candor with respect to taxes. Contrary to Obama’s promise not to raise taxes on the middle class, the NYT calls for raising taxes on just about everyone.
I supply their blueprint for taxation during the second Obama administration without comments:
1). Let the Bush tax cuts expire at the end of 2012 for those making $250,000 and above. The other tax cuts could expire at the end of 2013. The middle class should keep their tax cuts for a year to prop up consumer demand. The expiration of all the tax cuts would “save” $3.8 trillion over the next decade.
2) Tax reform should not touch breaks for home ownership and retirement saving, but they should be targeted only to help low and middle-income tax payers. Capital gains should be taxed at 35 percent. Tax breaks that subsidize profitable industries like oil must be ended. If the ending of tax breaks permits, tax rates could be lowered generally.
3) We should use a value-added tax or carbon taxes to raise “needed revenue for deficit reduction, and for what government provides” so that all additional tax revenue need not be squeezed from income taxes.
The NYT ends with its reading of public sentiment: “The public is open to new taxes, and the economic facts are clear. Until tax increases are considered in equal measure to spending cuts, there will be no budget fix.”
I imagine this editorial is not being greeted with enthusiasm in the White House. It lays bare the fact that Obama’s core supporters do not want to cut spending. Instead, they propose massive tax increases on middle- and low-income families.
If Obama were to publicly embrace these proposals in his upcoming campaign, his chances of reelection would shrink virtually to zero. Republican candidates should keep this editorial ready for use.
Saturday, July 23, 2011
Media Slant: Guess Which Newspaper Ran Which Story: Wall Street Journal or New York Times?
1. "Grand Bargain Talks Collapse"
WASHINGTON—A high-stakes effort by President Barack Obama and House Speaker John Boehner to hatch a landmark deficit reduction deal collapsed in anger Friday, sending Washington into a weekend of negotiations over how the world's top financial power can make good on its debt obligations.
In a letter to his colleagues, Mr. Boehner said he called off talks with the president. He informed Mr. Obama Friday night he planned to start negotiations with the Senate to seek what would likely be a smaller deal.
"In the end we couldn't connect. Not because of different personalities, but because of different visions for our country,
2. "Debt Ceiling Talks Collapse as Boehner Walks Out"
WASHINGTON — Negotiations over a broad deficit reduction plan collapsed in acrimony on Friday after Speaker John A. Boehner suddenly broke off talks with President Obama, raising the risk of an economy-shaking default.
A visibly angry President Obama, in a hastily scheduled White House news conference, demanded that Congressional leaders come to the White House on Saturday morning. “I want them here at 11 a.m. tomorrow,” he said. “They are going to have to explain to me how it is that we are going to avoid default.”
Answer (if you need an answer: WSJ =1, NYT =2)
WASHINGTON—A high-stakes effort by President Barack Obama and House Speaker John Boehner to hatch a landmark deficit reduction deal collapsed in anger Friday, sending Washington into a weekend of negotiations over how the world's top financial power can make good on its debt obligations.
In a letter to his colleagues, Mr. Boehner said he called off talks with the president. He informed Mr. Obama Friday night he planned to start negotiations with the Senate to seek what would likely be a smaller deal.
"In the end we couldn't connect. Not because of different personalities, but because of different visions for our country,
2. "Debt Ceiling Talks Collapse as Boehner Walks Out"
WASHINGTON — Negotiations over a broad deficit reduction plan collapsed in acrimony on Friday after Speaker John A. Boehner suddenly broke off talks with President Obama, raising the risk of an economy-shaking default.
A visibly angry President Obama, in a hastily scheduled White House news conference, demanded that Congressional leaders come to the White House on Saturday morning. “I want them here at 11 a.m. tomorrow,” he said. “They are going to have to explain to me how it is that we are going to avoid default.”
Answer (if you need an answer: WSJ =1, NYT =2)
Saturday, July 2, 2011
Has the New York Times Aided and Abetted A Crime? Environmentalists, Goat Farmers, and Market Manipulators
When I posted my June 30 article: “Why the NYT-Liberal Assault on Shale Gas? How About the Volt?”, I interpreted the NYT’s attack on natural gas fracking as a political diversion. It was time to hit “Big energy” again, only this time, it was “Big Gas.” I wondered why the NYT was so worried about investors in oil shale projects, in low energy prices, and black churches that had been duped by promoters. I took the series of NYT articles seriously, read the e-mails quoted, and wrote about the natural uncertainty associated with new technologies.
I was shocked, to say the least, to read Jon Entine’s article, “Natural Gas ‘Bubble’ Report: Market Tinkering or Shoddy Reporting?”
In a real example of investigative journalism, Entine discovered that, of the two “named” NYT sources, one is an investment advisor (and long-time critic of gas fracking), listed as a “geologist,” whose firm and clients possibly stood to gain from speculation against shale oil stocks.
The other quoted sources, who the NYT lists as an “Advisor” to the Dallas Fed, is a goat dairy farmer (on some citizen advisory board of the Dallas Fed) who has tangled with a natural gas company, accusing it of causing environmental damage to her farm. The NYT failed to report this as well as her membership on the steering committee of the Oil and Gas Accountability Project at Earthworks, an anti-shale-gas advocacy group. It appears she lectures against gas fracking around the country.
The NYT’s sources are unnamed, but judging from their excerpted e-mails, they are simply stating the obvious, that this is a new technology and we do not know what the future will bring. I address in my post the e-mails that speak to the difficulty of estimating reserves in the presence of a new technology. We cannot know economically-recoverable reserves without knowing future prices, which we do not. Anti-gas fracking democrat members of Congress have called for hearings. With the disclosures in Entine’s article, it now appears that hearings are necessary. The New York Times should be one of the first witnesses to testify given the possibility of market manipulation.
For Entine’s article, see:
http://www.realclearpolitics.com/articles/2011/07/01/natural_gas_bubble_report_market_tinkering_or_shoddy_reporting.html
For my earlier post, see:
http://paulgregorysblog.blogspot.com/2011/06/why-nyt-liberal-assault-on-shale-gas.html
I was shocked, to say the least, to read Jon Entine’s article, “Natural Gas ‘Bubble’ Report: Market Tinkering or Shoddy Reporting?”
In a real example of investigative journalism, Entine discovered that, of the two “named” NYT sources, one is an investment advisor (and long-time critic of gas fracking), listed as a “geologist,” whose firm and clients possibly stood to gain from speculation against shale oil stocks.
The other quoted sources, who the NYT lists as an “Advisor” to the Dallas Fed, is a goat dairy farmer (on some citizen advisory board of the Dallas Fed) who has tangled with a natural gas company, accusing it of causing environmental damage to her farm. The NYT failed to report this as well as her membership on the steering committee of the Oil and Gas Accountability Project at Earthworks, an anti-shale-gas advocacy group. It appears she lectures against gas fracking around the country.
The NYT’s sources are unnamed, but judging from their excerpted e-mails, they are simply stating the obvious, that this is a new technology and we do not know what the future will bring. I address in my post the e-mails that speak to the difficulty of estimating reserves in the presence of a new technology. We cannot know economically-recoverable reserves without knowing future prices, which we do not. Anti-gas fracking democrat members of Congress have called for hearings. With the disclosures in Entine’s article, it now appears that hearings are necessary. The New York Times should be one of the first witnesses to testify given the possibility of market manipulation.
For Entine’s article, see:
http://www.realclearpolitics.com/articles/2011/07/01/natural_gas_bubble_report_market_tinkering_or_shoddy_reporting.html
For my earlier post, see:
http://paulgregorysblog.blogspot.com/2011/06/why-nyt-liberal-assault-on-shale-gas.html
Thursday, June 30, 2011
IMPORTANT NOTICE: URL CHANGE
My url has changed to:
paulgregorysblog.blogspot.com
I apologize for the inconvenience and hope you continue to read my blog.
paulgregorysblog.blogspot.com
I apologize for the inconvenience and hope you continue to read my blog.
Why the NYT-Liberal Assault on Shale Gas? How About the Volt?
The New York Times has devoted more than four thousand words to the impending crisis of shale gas over the past four days. The attack began with a full-page investigative report in its Sunday edition. The barrage continued and Wednesday’s edition featured calls by Democrats for Congressional investigations.
You would think the NYT and its Congressional supporters would welcome a new technology that increases domestic energy, lowers the price of a clean fuel, turns us from an importer to an exporter, and creates new jobs.
Why this all-out assault? They need to rub “Big Energy’s” face in the mud in the mainstream press and the halls of Congress to divert attention from real problems.
What is the beef? According to the NYT and Congressional Democrats, the evil energy giants have hatched another nefarious plot to dupe the gullible Federal Energy Information Agency, uninformed investors, and the general public into accepting an “irrationally exuberant” picture of the industry.
E-mails obtained through open-records worry that gas “may not be as easy and cheap to extract from shale formations, and that companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves.” The NYT praises skeptics “who question endorsing shale gas without understanding its economics.” They even complain “that dozens of black churches in Fort Worth signed leases on the promise of big money,” risking their tax exempt status.
This frontal assault on shale gas shows a profound lack of understanding of technology, economics, business, and energy.
Extracting gas from shale is a new technology that combines two established technologies – horizontal drilling and water flooding (which has been used at least since the 1950s). As a new technology, we have no history to predict the future. Even with the best and most honest of efforts, we do not know how to extrapolate reserves from existing wells, and what the eventual extraction costs will be. With such uncertainty, there will be a wide variety of estimates of reserves, some optimistic, some pessimistic. No one knows the truth at this point. There is nothing sinister on the part of those who choose to be optimists. All major innovations are made by optimists, not pessimists.
The reserves of any underground resources that can be economically extracted depend on prices now and in the future. If gold rises to $5,000 per ounce, there will be a new gold rush in the United States. The problem is that we do not know the future prices of natural gas. All we know is that it has fallen dramatically since shale oil extraction began. As long as we do not know the future price, there is no way to know the amount of reserves that can be extracted at a profit.
Presumably investors worth their salt know these two facts. They also know enough not to rely on a federal bureaucracy to make their investment decisions. After all, shale gas companies are not selling shares at Wal-Mart. Investors who are optimists will invest. Pessimists will not. Technology and market forces will decide who is right, not the NYT or Congress.
The NYT attack ends with a truism: “If natural gas ultimately proves more expensive to extract from the ground than has been predicted, landowners, investors and lenders could see their investments falter, while consumers will pay a price in higher electricity and home heating bills.” Yes, if shale gas is a bust, investors will lose and prices will be higher, but what’s new? Why all the fuss? Why should this be Congress’s business?
My two pieces of advice:
First, to the natural gas industry: Avoid at all costs federal subsidies of cars powered by natural gas. This will give the federal government the right to stick its nose into your business.
Second, to the NYT and democratic members of Congress: Obtain e mails of internal discussions of the Volt or of lithium battery manufacturers to see whether investors, taxpayers, and consumers are being sold an “irrationally exuberant” picture. I may have to wait a long time before the NYT takes me up.
You would think the NYT and its Congressional supporters would welcome a new technology that increases domestic energy, lowers the price of a clean fuel, turns us from an importer to an exporter, and creates new jobs.
Why this all-out assault? They need to rub “Big Energy’s” face in the mud in the mainstream press and the halls of Congress to divert attention from real problems.
What is the beef? According to the NYT and Congressional Democrats, the evil energy giants have hatched another nefarious plot to dupe the gullible Federal Energy Information Agency, uninformed investors, and the general public into accepting an “irrationally exuberant” picture of the industry.
E-mails obtained through open-records worry that gas “may not be as easy and cheap to extract from shale formations, and that companies are intentionally, and even illegally, overstating the productivity of their wells and the size of their reserves.” The NYT praises skeptics “who question endorsing shale gas without understanding its economics.” They even complain “that dozens of black churches in Fort Worth signed leases on the promise of big money,” risking their tax exempt status.
This frontal assault on shale gas shows a profound lack of understanding of technology, economics, business, and energy.
Extracting gas from shale is a new technology that combines two established technologies – horizontal drilling and water flooding (which has been used at least since the 1950s). As a new technology, we have no history to predict the future. Even with the best and most honest of efforts, we do not know how to extrapolate reserves from existing wells, and what the eventual extraction costs will be. With such uncertainty, there will be a wide variety of estimates of reserves, some optimistic, some pessimistic. No one knows the truth at this point. There is nothing sinister on the part of those who choose to be optimists. All major innovations are made by optimists, not pessimists.
The reserves of any underground resources that can be economically extracted depend on prices now and in the future. If gold rises to $5,000 per ounce, there will be a new gold rush in the United States. The problem is that we do not know the future prices of natural gas. All we know is that it has fallen dramatically since shale oil extraction began. As long as we do not know the future price, there is no way to know the amount of reserves that can be extracted at a profit.
Presumably investors worth their salt know these two facts. They also know enough not to rely on a federal bureaucracy to make their investment decisions. After all, shale gas companies are not selling shares at Wal-Mart. Investors who are optimists will invest. Pessimists will not. Technology and market forces will decide who is right, not the NYT or Congress.
The NYT attack ends with a truism: “If natural gas ultimately proves more expensive to extract from the ground than has been predicted, landowners, investors and lenders could see their investments falter, while consumers will pay a price in higher electricity and home heating bills.” Yes, if shale gas is a bust, investors will lose and prices will be higher, but what’s new? Why all the fuss? Why should this be Congress’s business?
My two pieces of advice:
First, to the natural gas industry: Avoid at all costs federal subsidies of cars powered by natural gas. This will give the federal government the right to stick its nose into your business.
Second, to the NYT and democratic members of Congress: Obtain e mails of internal discussions of the Volt or of lithium battery manufacturers to see whether investors, taxpayers, and consumers are being sold an “irrationally exuberant” picture. I may have to wait a long time before the NYT takes me up.
Tuesday, June 28, 2011
Thomas Friedman’s Shock Therapy (Insight into the Liberal Mind)
Thomas Friedman’s friends appear to be disgusted with American politics. They have concluded that the two parties think only of reelection and their special-interest constituencies. They cannot imperil their chances of reelection by doing the four things -- spend, cut, tax and invest -- that must be done simultaneously “if we have any hope of maintaining American greatness.”
Friedman’s disgusted friends are looking for a serious Third Party candidate to “deliver shock therapy to the corrupt, encrusted, two-party duopoly now running the show in America.”
In my vocabulary “shock therapy” describes a rapid course of transition from planned socialism to capitalism. Therefore, I expected more than I got from Friedman’s shock therapy, which consists of the following four points:
1) More stimulus to keep the economy from slipping back into recession.
2) An accompanying credible long-term plan for spending and deficit reduction — e.g., the Simpson-Bowles deficit-reduction plan.
3) New revenues (a gas tax and a carbon tax) to “reinvest” in education, infrastructure and government-funded research to push out the boundaries of knowledge.
4) Assorted other things like “shrinking” our presence in Afghanistan and raising mandated mileage standards on new cars.
Friedman opines that his hypothetical “spend, cut, tax and invest” platform is sure to attract his reasonable, sophisticated, and intelligent friends from both sides of the aisle.
I interpret it as a platform that elected liberals are too cowardly to pass for fear of voter backlash.
Why is this program the liberal Holy Grail?
Friedman’s “spend, cut, tax and invest” raises government spending now (bigger government), despite the failure of the massive fiscal and monetary stimulus of the past few years. (If once you do not succeed, try, try again). In return, Congress adopts Simpson-Bowles, which cuts spending and deficits over the long run (and perhaps never) by a combination of spending cuts and, yes, TAX increases.
But wait: Friedman is talking about cuts in “spending” not in “investment.” Government spending on research, infrastructure, green technology and other fads in liberal favor can boom because of new dedicated revenue from national gas and carbon taxes. No, the gusher of new tax revenue will not go into deficit reduction but into new windmills, bullet trains, and studies of the sex habits of mice, without which our economy cannot survive in the twenty-first century. I guess, in Friedman’s mind, we will have no innovation, no technological progress unless it is ordered and paid for by the state.
Friedman’s “spend, cut, tax and invest” is nothing more than a stealth program for ever larger and more intrusive government, in which the liberal state can pass out favors to its crony capitalists and labor allies.
A truly bold Friedmanian Third Party candidate could set the gas and carbon taxes high enough to raise total government spending to half the economy. With this accomplishment, we can at last join the genteel European brotherhood of enlightened welfare states, and Thomas Friedman can return to foreign affairs, where he belongs.
Thomas Friedman’s friends appear to be disgusted with American politics. They have concluded that the two parties think only of reelection and their special-interest constituencies. They cannot imperil their chances of reelection by doing the four things -- spend, cut, tax and invest -- that must be done simultaneously “if we have any hope of maintaining American greatness.”
Friedman’s disgusted friends are looking for a serious Third Party candidate to “deliver shock therapy to the corrupt, encrusted, two-party duopoly now running the show in America.”
In my vocabulary “shock therapy” describes a rapid course of transition from planned socialism to capitalism. Therefore, I expected more than I got from Friedman’s shock therapy, which consists of the following four points:
5) More stimulus to keep the economy from slipping back into recession.
6) An accompanying credible long-term plan for spending and deficit reduction — e.g., the Simpson-Bowles deficit-reduction plan.
7) New revenues (a gas tax and a carbon tax) to “reinvest” in education, infrastructure and government-funded research to push out the boundaries of knowledge.
8) Assorted other things like “shrinking” our presence in Afghanistan and raising mandated mileage standards on new cars.
Friedman opines that his hypothetical “spend, cut, tax and invest” platform is sure to attract his reasonable, sophisticated, and intelligent friends from both sides of the aisle.
I interpret it as a platform that elected liberals are too cowardly to pass for fear of voter backlash.
Why is this program the liberal Holy Grail?
Friedman’s “spend, cut, tax and invest” raises government spending now (bigger government), despite the failure of the massive fiscal and monetary stimulus of the past few years. (If once you do not succeed, try, try again). In return, Congress adopts Simpson-Bowles, which cuts spending and deficits over the long run (and perhaps never) by a combination of spending cuts and, yes, TAX increases.
But wait: Friedman is talking about cuts in “spending” not in “investment.” Government spending on research, infrastructure, green technology and other fads in liberal favor can boom because of new dedicated revenue from national gas and carbon taxes. No, the gusher of new tax revenue will not go into deficit reduction but into new windmills, bullet trains, and studies of the sex habits of mice, without which our economy cannot survive in the twenty-first century. I guess, in Friedman’s mind, we will have no innovation, no technological progress unless it is ordered and paid for by the state.
Friedman’s “spend, cut, tax and invest” is nothing more than a stealth program for ever larger and more intrusive government, in which the liberal state can pass out favors to its crony capitalists and labor allies.
A truly bold Friedmanian Third Party candidate could set the gas and carbon taxes high enough to raise total government spending to half the economy. With this accomplishment, we can at last join the genteel European brotherhood of enlightened welfare states, and Thomas Friedman can return to foreign affairs, where he belongs
Friedman’s disgusted friends are looking for a serious Third Party candidate to “deliver shock therapy to the corrupt, encrusted, two-party duopoly now running the show in America.”
In my vocabulary “shock therapy” describes a rapid course of transition from planned socialism to capitalism. Therefore, I expected more than I got from Friedman’s shock therapy, which consists of the following four points:
1) More stimulus to keep the economy from slipping back into recession.
2) An accompanying credible long-term plan for spending and deficit reduction — e.g., the Simpson-Bowles deficit-reduction plan.
3) New revenues (a gas tax and a carbon tax) to “reinvest” in education, infrastructure and government-funded research to push out the boundaries of knowledge.
4) Assorted other things like “shrinking” our presence in Afghanistan and raising mandated mileage standards on new cars.
Friedman opines that his hypothetical “spend, cut, tax and invest” platform is sure to attract his reasonable, sophisticated, and intelligent friends from both sides of the aisle.
I interpret it as a platform that elected liberals are too cowardly to pass for fear of voter backlash.
Why is this program the liberal Holy Grail?
Friedman’s “spend, cut, tax and invest” raises government spending now (bigger government), despite the failure of the massive fiscal and monetary stimulus of the past few years. (If once you do not succeed, try, try again). In return, Congress adopts Simpson-Bowles, which cuts spending and deficits over the long run (and perhaps never) by a combination of spending cuts and, yes, TAX increases.
But wait: Friedman is talking about cuts in “spending” not in “investment.” Government spending on research, infrastructure, green technology and other fads in liberal favor can boom because of new dedicated revenue from national gas and carbon taxes. No, the gusher of new tax revenue will not go into deficit reduction but into new windmills, bullet trains, and studies of the sex habits of mice, without which our economy cannot survive in the twenty-first century. I guess, in Friedman’s mind, we will have no innovation, no technological progress unless it is ordered and paid for by the state.
Friedman’s “spend, cut, tax and invest” is nothing more than a stealth program for ever larger and more intrusive government, in which the liberal state can pass out favors to its crony capitalists and labor allies.
A truly bold Friedmanian Third Party candidate could set the gas and carbon taxes high enough to raise total government spending to half the economy. With this accomplishment, we can at last join the genteel European brotherhood of enlightened welfare states, and Thomas Friedman can return to foreign affairs, where he belongs.
Thomas Friedman’s friends appear to be disgusted with American politics. They have concluded that the two parties think only of reelection and their special-interest constituencies. They cannot imperil their chances of reelection by doing the four things -- spend, cut, tax and invest -- that must be done simultaneously “if we have any hope of maintaining American greatness.”
Friedman’s disgusted friends are looking for a serious Third Party candidate to “deliver shock therapy to the corrupt, encrusted, two-party duopoly now running the show in America.”
In my vocabulary “shock therapy” describes a rapid course of transition from planned socialism to capitalism. Therefore, I expected more than I got from Friedman’s shock therapy, which consists of the following four points:
5) More stimulus to keep the economy from slipping back into recession.
6) An accompanying credible long-term plan for spending and deficit reduction — e.g., the Simpson-Bowles deficit-reduction plan.
7) New revenues (a gas tax and a carbon tax) to “reinvest” in education, infrastructure and government-funded research to push out the boundaries of knowledge.
8) Assorted other things like “shrinking” our presence in Afghanistan and raising mandated mileage standards on new cars.
Friedman opines that his hypothetical “spend, cut, tax and invest” platform is sure to attract his reasonable, sophisticated, and intelligent friends from both sides of the aisle.
I interpret it as a platform that elected liberals are too cowardly to pass for fear of voter backlash.
Why is this program the liberal Holy Grail?
Friedman’s “spend, cut, tax and invest” raises government spending now (bigger government), despite the failure of the massive fiscal and monetary stimulus of the past few years. (If once you do not succeed, try, try again). In return, Congress adopts Simpson-Bowles, which cuts spending and deficits over the long run (and perhaps never) by a combination of spending cuts and, yes, TAX increases.
But wait: Friedman is talking about cuts in “spending” not in “investment.” Government spending on research, infrastructure, green technology and other fads in liberal favor can boom because of new dedicated revenue from national gas and carbon taxes. No, the gusher of new tax revenue will not go into deficit reduction but into new windmills, bullet trains, and studies of the sex habits of mice, without which our economy cannot survive in the twenty-first century. I guess, in Friedman’s mind, we will have no innovation, no technological progress unless it is ordered and paid for by the state.
Friedman’s “spend, cut, tax and invest” is nothing more than a stealth program for ever larger and more intrusive government, in which the liberal state can pass out favors to its crony capitalists and labor allies.
A truly bold Friedmanian Third Party candidate could set the gas and carbon taxes high enough to raise total government spending to half the economy. With this accomplishment, we can at last join the genteel European brotherhood of enlightened welfare states, and Thomas Friedman can return to foreign affairs, where he belongs
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