Tag: Economic theories

Starving the Budget

With the fiscal cliff looming, Republicans are indicating some flexibility on taxes, at least for the higher income brackets. Naturally, this is generating some opposition:

To start with, Kristol misunderstands the opponents of the tax increases on the rich, whose main goal is not to ensure that the rich get to keep more of their money. Their main goal is to prevent the federal government from obtaining a new source of revenue. Why might that be?

Tax increases can be immediate, but spending cuts must be spread over many years. That provides politicians with plenty of opportunities for change their minds on spending (i.e.: vote for me and I will increase funding for your program). Contemporary Western Europe provides a perfect example of this phenomenon. In the wake of the 2008 crisis, Western European countries have introduced substantial tax increases that, in my humble opinion, are the primary reason for Europe’s double-dip recession.

There is a reasonable point in this, which is that promised spending cuts often don’t happen. But that’s not a fundamental law of the universe. After the tax hikes of the late 80’s and early 90’s, we did get spending restraint. And we got it from the same people who control the purse strings right now … a Republican House of Representatives. If the GOP wants spending cuts to happen, they can make those spending cuts happen, as they did in the 90’s.

Moreover, the Grand Bargain that has to happen is on entitlement spending with Medicare and Social Security. That will involve statutory changes, not budget changes and those are extremely hard to undo. If Congress raises the retirement age or changes the COLA formula or institutes Medicare vouchers, that will be almost impossible to undo (as we’re now seeing with Obamacare).

To be frank, the argument that we should not give the government new revenue cross me as a rehash of one the most fiscally destructive ideas in the last thirty years: the so-called “Starve the Beast” theory.

Starve the Beast was the theory that if we cut taxes, it would force the government to cut spending because the resulting deficit would be unsustainable (this was before people decided that the Laffer Curve was, in fact, the Laffer Line and that all tax cuts paid for themselves). Starve the Beast sounded tempting, especially to faux conservatives who were big on tax cuts and not so big on cutting spending. But it ran aground on several rocks:

First, spending cuts don’t just fall from the sky. You have to actually cut spending at some point. And the people who had to cut spending were the same people trying to force themselves to cut spending. It was like trying to lose weight by eating a box of doughnuts hoping that will force you to go the gym.

Second, the lesson Congress learned from Starve the Beast wasn’t that they couldn’t tolerate big deficits. The lesson they learned was that they could. As a result, we’re now enjoying our fourth straight year of trillion dollar deficits.

Third, and this is a point I keep harping on, Starve the Beast made spending painless for the taxpayer. This was especially true in the Bush years when we started two wars and put in a prescription drug program while removing millions from the tax rolls. The impression given to the taxpayers was that wars and drug programs were free, or at least were paid for by somebody else (somebody rich). It has continued in the Obama years, with spending and taxes being manipulated so that Obamacare appears to decrease the deficit when it, in fact, does not and tax hikes only acceptable if they hit the dreaded rich.

I keep saying this and I am going to keep saying it: the most important aspect of any government budget is that spending should hurt. Spending should hurt either in cutting other services or in raising taxes. If you aren’t doing either of those things, you are giving people government on the cheap. And they will have no incentive, none whatsover, to support spending cuts.

Would you turn down services that are discounted 40-100%?

One of the problems we face in balancing the budget is that spending cuts are popular in general and unpopular in detail. When you ask people what spending they support cutting, the only thing that even gets 50% is foreign aide. But a big reason for that is that, for most Americans, government spending doesn’t hurt them. They can support all these wonderful things confident that the money for it will come out of somebody else’s pocket.

And that leads in to my real point: if we’re going to raise taxes to close the budget deficit, we have to raise them on everyone, not just the evil rich. The obsession the Democrats have with only raising taxes on the rich is a product of class warfare, not fiscal sanity. To balance the budget with taxes — hell, to balance them with any sensible mix of taxes and spending cuts — is going to mean raising taxes on everyone. Alex’s post made this point very well. Look at the breakdown of where the fiscal cliff taxes are coming from: over 80% are from people who are not rich.

If we just raises taxes on the rich that will, once again, give the American people the impression that the budget deficit is something other richer people will cover. It will make it almost impossible to cut spending in the future because, really, how is all that spending hurting 98% of the voters? But if we raise taxes now, raise them on everyone, then the popular support for spending restraint will come roaring back.

That’s not just ivory tower theorizing. We have a historical precedent. From the early 80’s to the early 90’s, Reagan, Bush and Clinton raised taxes eight times. The resultant backlash brought the Republicans into power in 1994 on a platform of fiscal discipline. And they delivered. And as much as the press tried to whine and cry and tell sob stories about how the budget cuts were destroying our country, the Republicans (and Clinton) got re-elected. Because people didn’t want more spending and they saw that, in many cases, the country was better off without it.

The only way to make spending cuts happen and make them stick is to make sure the American public feel it when we spend too much. And they’re not going to feel it because we eliminated a tax break on corporate jets.

There’s another reason to stop kicking the can down the road. Bruce Bartlett:

At the time the tax cuts were enacted, I recall arguing with my longtime friend Grover Norquist that temporary tax cuts were a really bad idea. Supply-side theory has always held that permanent tax changes are vastly more powerful than temporary changes, I told him. He didn’t disagree, but said the Bush tax cuts were de facto permanent because Democrats would never have the guts to permit them to expire; they would be renewed forever. People and businesses will know that, Mr. Norquist said.

That was a foolish position for political and economic reasons. People and businesses don’t make the sorts of changes in their behavior that would give the economy a supply-side boost unless they have confidence that today’s tax regime will be in place when the payoff from increased work, saving or investment is realized.

You know all that stuff we’ve been saying about regulatory uncertainty and how businesses are afraid to invest because they don’t know what the future will bring? Well, these temporary tax cuts, renewed every couple of years, are part of that. Bartlett specifically gets into the R&D tax credit and how its temporary status has created wonderful lobbying opportunities but little economic benefit. He argues that higher but more certain taxes would be better for our economy than lower but more uncertain taxes. And given that Bartlett basically invented supply-side economics, I’m inclined to agree with him.

Obviously, the best scenario would be to burn the entire tax code down and rebuild it, a la Simpson-Bowles. But that would take months, if it happens at all. If you want to create certainty, putting together a long-term budget deal with higher taxes is the way to go. And then, if we do get a tax overhaul, that will be an unexpected shot in the economy’s arm.

Yeah, I know. This is the dreaded compromise. But the idea that we’re going to cut spending 40% is ridiculous, not just in terms of the politics of the possible but in real terms. Cutting spending 40% means we can pay for Medicare, Social Security, the military and veterans. Everything else — from Medicaid for poor seniors to law enforcement to disaster relief would go. Oh, and every state would suddenly find a 30-50% hole blown in their budget.

Moreover, I’ve been thinking of something Ed Morrissey said the other day, in the context of a compromise on immigration:

The insistence on demanding nothing but the hard-line approach creates big problems for the nation and the GOP itself. First, the issue of border security has been left in limbo for more than 11 years after 9/11, and more than seven years after the 9/11 Commission rightly demanded better security on both borders, and the broken visa program that offers no follow-up on expired entries. If we continue to punt rather than compromise, we will be left waiting for at least four more years to get any kind of solution.

In two years, there will be another election. In four years, we will have a new President. If the Republicans have exercised some serious budget restraint by then and our deficit is falling, then we can reopen the issue of returning to Bush tax rates. Until then, however, we have to deal with the situation we have in front of us. And the situation we have is a big deficit that can not be closed by spending cuts alone and Democratic control of the White House and the Senate.

Keep in mind something else: taxes are already programmed to go up. The price of doing nothing is a gigantic half-trillion dollar tax increase on January 1. If we insist on taxes not going up, the result will inevitably be that they will.

Look, I hate taxation. I’m one of those who will get hit pretty hard if we return to Clinton-era rates or something approaching them. But there is something I hate more than taxes and that is debt. And I don’t see any practical way, outside of Fever Swamp La-la Land, to balance the budget without raising taxes.

Yes, the GOP needs to drive a hard bargain. Tom Coburn has identified tens of billions in wasteful defense spending that we should cut. Agriculture subsidies and ethanol subsidies should be on the table. The Ex-Im Bank should have been killed last year. Hell, maybe we could even taken Obama up on his “Department of Business” idea if it means we kill off Commerce, SBA, Ex-Im and some other budget functions. The hardest bargain, of course, has to be driven on entitlements.

But we can not stick to anti-tax orthodoxy. It’s not realistic. It’s not responsible. And, in my opinion, it’s not conservative.

Let me elaborate on that last point: low taxes are not a conservative value; small government is. Low taxes do not create small government, they are the result of keeping government small. Raise taxes to cover the bloated government we have now, hack at it like hell for four years and then we can talk about cutting taxes back.

Update: If you think you balance the budget without raising taxes, there are various budget simulators that can get you there.

Argentina and Japan

Wasn’t it just like a week ago that Paul “Wrong Way” Krugman was praising Argentina? And wasn’t it this week that he gushed over Japan’s growth, stimulated by tsunami reconstruction?

Oops:

Recently, two more countries have felt the bite of Keynesianism. Today, the credit ratings agency Fitch downgraded Japan’s economy and the AP reported that the Argentinian economy is likely to decline sharply. While Japan and Argentina might be different kinds of economies performing differently in different markets, their recent bad news can be attributed in part to a fondness for government spending.

These countries have used two different approaches to Keynesianism, but it amounts to the same thing: gushers of debt, oceans of spending and rivers of “stimulus” producing … bad economies. And that’s ignoring, for the moment, the recent downgrades of all the other economies trying to spend their way into prosperity (the US) or raising taxes and calling it “austerity” (most of Europe). They have not acted as dramatically as Japan and Argentina have, which is probably they aren’t hurting as much. Yet.

Is Keynesianism ever wrong? Really, it’s only a matter of time until they drag out the Phillips Curve again.

The Deception of a Liberal

Read this. Then read this. The first is Paul Krugman praising Argentina’s “economic model” of plundering, theft and deception, claiming its performance has been comparable to Brazil’s. The second is Juan Carlos Hidalgo’s response pointing out that Krugman (1) uses Argentina’s official inflation numbers, which economic journals have stopped using because they are transparent lies; (2) starts his analysis two years after Argentina’s recession began; (3) compares Argentina with a relatively poorly-performing country (10 South American countries have done better); and (4) ignores that Argentina’s growth, such at is, is about to blow up in their face.

A bit more about that last point, since it’s relavent to the “spend yourself to prosperity” policies that Krugman and the Left are embracing for America and the Euro Zone. Inflating economies can give the illusion of prosperity. But it always end the same way — with a massive hangover. In the 1960’s and 70’s, the US deliberately inflated its currency because of a Keynsian piece of bullshit called the Phillips curve. It blew up in our face under Carter and we had to endure a brutal hangover once Volker got things under control. Argentina’s economy is already cracking: I noted earlier their nationalization of a Spanish oil company and their saber-rattling on what Obama calls “the Maldives”. These are not the actions of a country experiencing real economic growth.

Back to Krugman. This is not an isolated incident. He is frequently factually challenged. He asserts the Euro-zone is “slashing spending” when spending is flat (and rising outside the PIIGS). He claims Hoover slashed spending when Hoover increase spending 80% in response to the Depression and was denounced by FDR for being a socialist. As we saw in the debate with Ron Paul, he ignores the post-War prosperity that followed Truman’s massive spending cuts.

And he’s one of the most influential liberals in the country. It just goes to show that fact don’t matter when you’re telling people what they want to hear.

Paul vs. Paul

Ron Paul and Paul Krugman had a debate about economics (apologies for the link, which auto-plays). You can read Tyler Cowen’s commentary here. I agree with his final take:

There were too many times when RP simply piled polemic points on top of each other and stopped making a sequential argument. He overrates the costs of inflation, including in the long term, and for a believer in the market finds it remarkably non-robust in response to bad monetary policy. Still, given that Krugman is a Nobel Laureate in economics, and Paul a gynecologist, the score could have been more lopsided than in fact it was.

I have disagreements with Ron Paul on monetary policy and the Federal reserve. But I think Cowen understates Paul’s performance. There were several times where he got in points that Krugman had no response to (except to later whine with dubious factual accuracy on his blog). The fact is that the Keynesians really don’t have an explanation of how a 60% cut in federal spending after World War II produced an economic boom, other than to wave the “we owe the debt to ourselves” mantra. The fact is that they predicted Truman’s budget cuts would wreck the economy and they didn’t.

I think Krugman also, like most Keynesians, underestimates the potential danger of inflation. It is true that a moderate inflation can ease a financial crisis. But it’s very hard to manage a “moderate” inflation because the temptation to inflate away debts is strong and it is very easy to get into an inflation-interest rate spiral like we did in the 70’s. This is why the Federal Reserve has been keen to keep that beast in its cage for three decades.

Still, it tells you something about the intellectual weakness of the Left when they are preening/whining about, as Cowen said, a Nobel Laureate debating a 76-year-old Republican who is regarded as a crackpot by all “thinking people”. I suspect Krugman will next debate Milton Friedman. This may actually be an even match since Friedman is dead at the present time.

Consensus! The debate is over…

Well, not really but that’s how they operate on the left, so I wonder how they will react to this revelation:

The majority of economists surveyed by the National Association for Business Economics believe that the federal deficit should be reduced only or primarily through spending cuts.

The survey out Monday found that 56 percent of the NABE members surveyed felt that way, while 37 percent said they favor equal parts spending cuts and tax increases. The remaining 7 percent believe it should be done only or mostly through tax increases.

That tells me 56 percent of economists understand the problem with our politicians and spending, 37 percent are still hoping the politicians this time will actually institute real cuts if they get revenues, and only 7 percent are insane or stupid enough to think the answer is to fleece the productive even more. Looks like the grand majority is however for cuts, an aggregate 93% of economists that believe government is way too big and spending too much, and that’s an awesome thing to see, despite the fearful belief of some 37% that more taxes will not simply make these morons forgo any real cuts. The 7% that want tax increases only are to be made fun of. I bet most are part of the Obama Admin though. That was a joke CM, so don’t ask for proof please.

It gets better too.

As for how to reduce the deficit, nearly 40 percent said the best way would be to contain Medicare and Medicaid costs. Nearly a quarter recommended overhauling the tax system and simplifying tax rates and exemptions. About 15 percent said the government should enact tough spending caps and cut discretionary spending.

How about a balanced budget amendment – with no loopholes please! And also make everyone pay taxes. It is very clear now that the compassionate conservative move to spare the lowest earners from paying taxes just served to divorce them completely from the reality that the others paying taxes are already paying far too much. But there was also some bad.

According to the survey of 250 economists who are members of NABE, nearly 49 percent of those responding said the country’s fiscal policy should be more restrictive, while nearly 37 percent said they believe the government should do more to stimulate the economy. The remainder said fiscal policy should remain the same.

A striking 37% of these idiots either still think Keynesian economics work and that the problem was they didn’t spend enough or that government spurs economic growth. The reality is that it can certainly stump or kill economic growth, but as far as I am concerned whatever “stimulus” they do is at best mediocre, and more likely fictitious, because they do not account for the impact that taking all that wealth from others that do far better growing it has in any of this nonsense. And printing new money or borrowing it might short term look like it helps, but now that we are there economically and doing this stupid crap, we can clearly see that the jump in inflation and the weight of the huge debt load that comes with this, has a far greater overall impact on the economy.

Finally there is this:

At the same time, more than 70 percent of the people that responded said they expect U.S. fiscal policy to be more restrictive over the next two years.

One can only wish.

UPDATE: And many others are pointing this discrepancy in government spending vs. revenue collection out, like Byron York does in this awesome article at the Washington Examiner:

There’s no doubt federal spending has exploded in recent years. In fiscal 2007, the last year before things went haywire, the government took in $2.568 trillion in revenues and spent $2.728 trillion, for a deficit of $160 billion. In 2011, according to Congressional Budget Office estimates, the government will take in $2.230 trillion and spend $3.629 trillion, for a deficit of $1.399 trillion.

That’s an increase of $901 billion in spending and a decrease of $338 billion in revenue in a very short time. Put them together, and that’s how you go from a $160 billion deficit to a $1.399 trillion deficit.

But how, precisely, did that happen? Was there a steep rise in entitlement spending? Did everyone suddenly turn 65 and begin collecting Social Security and using Medicare? No: The deficits are largely the result not of entitlements but of an explosion in spending related to the economic downturn and the rise of Democrats to power in Washington. While entitlements must be controlled in the long run, Washington’s current spending problem lies elsewhere.

The truth is a bitch.

Jobs

I’ve been thinking a lot about the job problem in this country. Jobs are the problem right now. One in eleven Americans is unemployed, the knock-on economic effects are making a bad deficit situation worse and a long-term culture of dependence is being created. I am under no delusion that a blog post will change anything. But I thought I’d write up about 2000 words of thoughts on the subject so you’ll know where I’m coming from.

The fundamental problem with fixing the job situation is that we have two parties absolutely devoted to failed policy. On one side we have the Republicans insisting that just a few more rounds of Bush-style demand-side tax cuts will get things moving. However, there is very little evidence that these would help, even if we could afford them. We know what the Bush tax cuts did for jobs: jack.

The Bush tax cuts were followed by low GDP growth, negative median wage growth, and little job growth. Even before the Great Recession, growth in the Bush business cycle was the weakest since World War II. And the cuts cost about $2.6 trillion between 2001 and 2010, according to the Economic Policy Institute—adding to a debt future generations of taxpayers will pay for, plus interest.

To be fair, Sarbanes-Oxley played a role here as well. But the record is stark — one of the weakest economic booms since World War II and the tax cuts distinctly failing to “pay for themselves”. Tax cuts can pay for themselves when you’re cutting a marginal rate of 97% (Kennedy) or 70% (Reagan). The don’t pay for themselves when the marginal rate is in the 30’s or lower. No one is quite sure where the Laffer Curve turns over, but it’s not at 0.

On the other hand, we have a bunch of Democrats calling for more stimulus spending under the Keynsian theory that … actually I’m not sure what the Keynsians are on about. The stimulus failed and their response is to claim it wasn’t big enough — the equivalent of saying we’ll really really fly if we just jump off a taller building. Will Wilkinson called it a religion, a belief that government can create an infinite multiplier of loaves and fishes. Given the immunity of the Keynsians to fact, that’s a fair description.

So what do we need to do to get the economy moving?

Deficit Reduction: Bruce Bartlett:

Government mainly affects savings not so much through tax rates as through the budget deficit, which constitutes negative saving. When government borrows, it takes funds out of the economy that would otherwise be available to finance domestic investment. Alternatively, the U.S. must borrow more from foreigners, which increases the trade deficit. In the national income and product accounts, the trade deficit is subtracted from GDP, thus lowering growth.

The bottom line is that neither taxes nor spending by themselves are the most important government contribution to the investment climate; it’s the budget deficit. Consequently, a reduction in tax revenue which raises the deficit is unlikely to stimulate domestic investment because more money will have to be borrowed from abroad. Conversely, a tax increase dedicated to deficit reduction could well be stimulative, as was the case with the 1982 and 1993 tax increases. Contrary to Republican dogma, rapid growth followed on both occasions.

But, scream the Keynesians, austerity kills! Look at Ireland! Look at the UK!

OK, assholes. Let’s look at Ireland:

Ireland was the first of the debt-plagued European countries to cut government consumption significantly in 2009, mainly by reducing government paychecks from 12.3% of GDP in 2009 to 11.8% in 2010.

While such gestures toward fiscal frugality lasted, the country was rewarded with a tolerable risk premium on government bonds. The yield on 10-year Irish government bonds was still 5.3% as recently as last August, compared with 10.7% in Greece. This May, the interest on Irish bonds reached 17.6%. What went wrong?

Back in June 9, 2010, I wrote that “unlike Greece, the Irish economy is showing encouraging signs of recovery.” Ireland’s real GDP had increased by 1.7% in the first quarter, with an 11.7% quarterly rise in industrial production. Manufacturing output increased 29% from November 2009 to July 2010, thanks to growing exports.

Ireland tanked shortly after, which the Kenysians blame on austerity. To them, the logic is inescapable — Ireland cut spending, the economy crashed, QED. They leave out the intermediate step, when Ireland did was Iceland refused to do — bailed out foreign investors in their banks and quadrupled their debt overnight. It was an incredibly stupid move that the EU bullied them into. Claiming that austerity caused Ireland’s ongoing economic woes is like claiming that Mexico won World War II. Yeah, they contributed, a little. But let’s not ignore the bigger players.

OK, OK. But certainly the UK is fucked because of … what was that?

Unemployment is falling at its fastest pace in a decade, official figures reveal, in a boost for George Osborne as he prepares to deliver his Mansion House speech. The Office for National Statistics (ONS) said the number of people unemployed fell by 88,000 in the three months to April, to 2.43 million — the largest drop since the summer of 2000. The unemployment rate was 7.7%, down from 8% three months earlier.

The UK has gained 100,000 private sector jobs even as the government has cut 24,000. The recovery is still fragile and could crumble underneath them. But if we had similar numbers in the United States, the President would be turning cartwheels on the White House lawn and prank-calling Mitt Romney (“Hey Mitt, heard you’re unemployed, hahaha.”). Canada and Puerto Rico have followed this model as well.

The ultimate example here, of course, is Germany, which refused to engage in a stimulus despite pressure from the Administration. I’ll have more to say on them later. But I want you to savor this — at least two, possible more European welfare states have righted the ship while keeping their deficit under control. According to both the Keynsians and the Norquistians out there, this should be impossible. Without stimulus spending or tax cuts, you can’t get an economy moving. But the example of these countries belies this. Hell, the example of our own country in the 80’s and 90’s show this to be false. Both decades saw tax hikes; neither saw any stimulus (the GOP filibustered Clinton 1993 stimulus bill). And yet — miraculously — we recovered. Recovered enough that we could later ease the tax burden.

The Tax Code: Despite my aversion to yet more tax cuts, overhauling the tax code would help a great deal. The tax code, because of its complexities, imposes $200-300 billion of deadweight loss on our economy every year. Cutting that in half would be the equivalent of a permanent and massive tax cut. Reagan’s 1986 tax hike was eased by tax reform, which more than compensated for the economic hurt of higher rates. American corporations spend more time figuring out the tax implications of their business decisions than the business implications of their business decisions. Does this strike anyone as healthy?

The most important thing is to broaden the tax base. Our income tax has become highly dependent on the top earners, who now pay almost all of the tax. This is a problem because when the economy is doing well and the rich are getting seven figure bonuses, revenues boom and governments spend like mad. Then the economy stalls, the rich make less and revenues crash, creating a gaping budget hole. Coburn’s idea of increasing revenue by closing loopholes and tax credits is the right one. It’s not just that it bring in more revenue, it stabilizes the revenue by making it less dependent on a few key economic sectors.

The tax code has also contributed to numerous bubbles, especially the housing bubble through the mortgage interest deduction and the home buyer tax credit. The last thing we need is the government stimulating another bubble — this time in green tech — through either direct spending or tax breaks.

There are other anchors on American business as well — notably the failure of the Administration to enact free trade agreements and the hideously awful Sarbanes-Oxley law. Both need to be dealt with as well.

Our regulatory structure also needs help. How do we expect to build a green economy when it takes a decade just to get the paperwork done for a new power line? Congress should create an agency specifically designed to identify regulatory problems. The idea is that a business could go to this agency and say: “Here — this is the law that’s holding everything up. This is why it’s taking us two years to start a business instead of two minutes. This needs to be fixed.” And Congress would fix these not with waivers doled out to powerful industries but with a repeal that benefits everyone. The most important business to help are the ones that don’t have lobbyists.

The German Model: You can read here about what Germany did to make their economy healthy. It’s a long post, but the gist is that Germany made jobs their sole focus. They enacted provisions to make sure that people stayed working. This meant reforming their unemployment system so that people had to take any job they could find, even if it was “beneath” them. Their unemployment system focused on finding people jobs — any jobs. They also made it easier to hire and fire workers.

I’m not so sure how well this would work here. Our unemployment benefits aren’t as generous and a government job-matching service isn’t that useful in the internet era (and our government would inevitably find a way to fuck it up). But the philosophy — a focus on jobs — is the right one.

One thing we should do it make it easier and cheaper to hire people. The problem is that everything this Administration has done has made it more expensive to hire people. From health insurance mandates to supporting Davis-Bacon mandates to raising the federal minimum wage, they have made it more and more expensive to hire people. And they’re surprised that people aren’t hiring.

The solution seems simple. First, suspend Obamacare provisions or lighten them by allowing cheap high-deductible insurance and HSA’s to qualify (the latter, in my opinion, having the added benefit of fighting rising healthcare costs). Second, suspend Davis-Bacon provisions in federal spending. The Democrats seem to think that 100 jobs at union wages is better than 120 jobs as sub-union wages. I don’t see that. The other thing we could do is lower the “employer contribution” on Social Security and Medicare. Obama almost did this, but decided to cut the employee contribution instead — yet another failed supply-side tax cut.

If you make it easier to hire people, more people will be hired. Take it from a rocket scientist — this isn’t rocket science.

So to sum:

  • Close the deficit, even if it means broadening the tax base.
  • Overhaul the tax code.
  • Repeal Sarbanes-Oxley.
  • Sign the pending free trade agreements.
  • Create a process to identify and remove the most damaging regulatory provisions.
  • Suspend Obamacare or allow HSA’s to qualify.
  • Suspend Davis-Bacon provisions.
  • Reduce the employer contribution on payroll taxes.

I’m not a complete moron. I don’t expect all of the above to happen, certainly not on my suggestion. But we are moving on the first goal. There are rumblings on the second and fourth. And each goal we move on multiplies the effect of the others. If you close the deficit, signs the FTAs and overhaul the tax system, the combined effect will be greater than any of them.

Anyway, those are my thoughts. And I’m judging candidates based on them. Mindless anti-tax rhetoric doesn’t impress me — Pawlenty’s proposal is especially ridiculous. What impresses me is someone looking directly at the issue — thinking in terms of how we make it easier for jobs to be created. When one of our six hundred Presidential candidates gets there, I’ll let you know.

Update: Heh.

The Obama economic recovery!

The employment numbers for last month are abysmal. Well, here is some more salt in the wounds of the Keynesian morons running the country: half of last month’s new jobs came from McDonalds!

SG: Economists watered down expectations to 125,000 jobs created in May after a 244,000 gain in April, after several disappointing indicators, notably the ADP employment gauge and ISM manufacturing poll.

SG: McDonald’s ran a big hiring day on April 19 — after the Labor Department’s April survey for the payrolls report was conducted — in which 62,000 jobs were added. That’s not a net number, of course, and seasonal adjustment will reduce the Hamburglar impact on payrolls.

Get that? They cut the jobs added by almost half, and of that new number, half come from MCDs. Worse yet, how many of those jobs are seasonal? Great economic news! Don’t expect the MSM to point this out.