The Voice of Young Conservatives Blog

“Things could be worse.”

That is the best this beaten-down President can say. It reminds me of the scene from that cinema classic Dumb and Dumber. The main characters, Harry and Lloyd, beaten down from their personal (but self made) struggles go on a rant, “We got no food, we got no jobs, our PETS’ HEADS ARE FALLING OFF!”

That is the sense of frustration that many Americans are feeling. Unemployment remains persistently high. Jobs are not being created. American’s wallet are being squeezed to the breaking point. The only thing saving us from a complete meltdown is that our pets’ heads aren’t quite falling off….yet.

But don’t worry. Our President has answers! After all, this is a guy who wrote a book titled “The Audacity of Hope.” Hope! He was gonna bring “change you can believe in.” So at best he’ll have answers. At worst he’ll talk us down from the ledge.

Wrong. The man with all the answers, or at least quasi-answers couched in platitudes, is apparently all out. So we get “things could be worse.” So I’m led to ask…how?

In June the unemployment rate continued to hover around 10 percent with the private sector gaining a measly 83,000 jobs and total employment falling by 125,000. Not apocalyptic, but not all that great either. Consider, that we need to create around 10.7 million jobs to reach full employment. Over the course of five years we would need to create 300,000 a month to get back to where we were five years ago. If you need any more proof that things couldn’t really be worse, just ask the 6.8 million people who represent the long-term unemployed (jobless for 27+ weeks).

Moreover GDP growth has been extremely slow – around 2.8 percent. As Paul Krugman explained the figure: “even if the economy continued to grow at that rate, we wouldn’t see anything like full employment until late in Sarah Palin’s second term.” For those of you who don’t understand Krugman-speak that means never.

The depressingly low GDP is made even more so by the depressingly high debt-to-GDP ratio. A new report by the Office of Management and Budget shows that the budget deficit will reach a record $1.47 trillion this year. Far from getting better, 2011 is predicted to have a $1.42 trillion deficit, $150 billion more than expected. If the CBOs estimates hold true spiraling interest payments would push the debt to 109% of GDP by 2025 and would reach 185% of GDP by 2035. For a dose of context consider that America’s debt-to-GDP ratio peaked at 109 percent at the end of World War II.  Not to mention the sad fact that Greece’s debt was at 115% before their economy fell into the abyss earlier this year.

With things so historically bad, the country’s finances utterly wrecked, and an entire generation of young adults drowning in the government’s red ink, we don’t get solutions, we get “things could be worse.”

Then again, perhaps my expectations are just too high. Perhaps I should have just trusted Reagan when he told me, “government is not the solution to our problem; government is the problem.” But part of me wanted to have a little hope. A smidgen of belief that the geniuses in Washington would at worst step out of the way and let businesses do their thing. Unfortunately, that is just not how things work in this White House.

Take Treasury Secretary Tim Geithner for instance. This past weekend while speaking about the impending tax increases (because that should really get businesses going) he said, “the country can withstand that. I think it’s good policy”

“Withstand?” That is the measure by which Washington judges good policy? That’s like saying, I’ll just shoot him a couple times in the leg, he’ll survive! Yea, but I can’t walk.

We need decision-makers who don’t judge policy based on what America can stand, but instead judge it based on what America can’t stand without. Hopefully we’ll get them come November when voters will have a chance to vote out the Democratic mad scientists intent on stacking debt upon deficits waiting to see when the nation will crumble. Until then, I’ll attempt to be comforted by the fact that apparently, somehow, things could be worse.

by Brandon Greife, Political Director

I am rarely as proud of the Senate Republican Conference as I am today.  That’s because this week, every single Senate Republican, all 41 of them, stood up for free speech and the Constitution by blocking a vote on the Democrats’ shameful DISCLOSE Act.

The DISCLOSE Act is a naked attempt to chill political speech in the run-up to an election that is shaping up to be very bad for Democrats.  Its disturbing and unconstitutional provisions abound.

The Act would have mandated that, “A corporate chief, union head, or nonprofit leader…say they approved a campaign message” during the ad.  “Donors supporting the speech would also be disclosed.”

On the surface, such a requirement may not seem so bad.  Perhaps it would have some tangential effect on reducing the influence of special interests in elections.

But it would serve to further erode the protections of the First Amendment – a harm that is in no way outweighed by its perceived benefit. The DISCLOSE Act, a shameless acronym for “Democracy is Strengthened by Casting Light on Spending in Elections,” was Democrats’ response to the Supreme Court decision in Citizens United. The court found that Congress may not prohibit funding of political speech by corporations and nonprofit groups. Since Congress could not regulate the speech, Democrats tried something different – forced disclosure. Of course, the goal is the same – restrict businesses or groups free speech rights – but it is accomplished by a different means.

As John Samples of the Cato Institute explains,

Sen. Charles Schumer and Rep. Chris Van Hollen hope that forcing disclosure will lead to a backlash by customers or shareholders against the relevant businesses or groups. If so, the leaders of the businesses or groups in question may decide to the costs of speaking out are too high and remain silent. In other words, Schumer and Van Hollen hope to chill the speech of their political opponents

Any group funding an ad must already disclose its donations via an FEC report, DISCLOSE would require those donors to personally appear and endorse the ad. It is a pure partisan ploy. Bending the First Amendment in an attempt to steer the business community, who has been utterly unimpressed with this Administration’s job legislation, out of elections. It’s a case where if you know you’re going to lose, change the rules of the game. But the Constitution is not just any set of rules; it is the bedrock upon which this “nation of laws” is built.

And the Act’s disclosure requirements aren’t even its most disturbing feature.  It also prohibits government contractors from making any “independent expenditures and payments for electioneering communications” and bars any recipient of TARP fund from “making any independent expenditure or disbursing any funds for an electioneering communication.”

Both of these provisions are blatantly unconstitutional restrictions on political speech.  These aren’t bans on donations to particular campaigns or politicians; these are bans on certain entities from spending money on political advocacy.  It prohibits core First Amendment speech and effectively bars these entities from engaging in this country’s political discourse.  As the editors of National Review summarized these restrictions:

By redefining thousands of businesses and non-profits as “government contractors,” it bans them from so much as mentioning an incumbent or candidate from three months before the primaries all the way through the general election — four months before the primaries in the case of presidential elections. That’s a six-month media blackout for congressional elections and more than a year in presidential races.

This “blackout” would have insured that virtually all election discourse is concentrated in the hands of the media, and insure that all election information be “vetted in editorial offices in Washington and New York.”

One has to wonder whether these Congressional Democrats, who claimed to be outraged over George Bush’s alleged trampling of the Constitution, have ever read the document they took oaths to uphold.

This bill was not about the fairness or corruption in campaigns; it certainly wasn’t about the Constitution; it was, in the words of Minority Leader Mitch McConnell, “about protecting incumbent Democrats from criticism ahead of this November’s election.”

Senate Republicans should be proud of their opposition to this shameless attack on our Constitutional rights by the Democrats.  But they must remember that the fight is not yet over.  The Dems could very well revive this bill after their recess, or worse, during the post-election lame-duck session.

Senate Republicans must stay principled, and be ready to form another united front when this bill resurfaces for debate.  I’m waiting for them to make me proud again.

By Avi Snyder

The latest roundup of news, commentary and analysis from around the web.

Assembled by Avi Snyder

With the Bush-era tax cuts set to expire next January, the news is abuzz with talk of whether or not Democrats will let them expire and raise taxes while the economy is still ailing.  National Review’s Rich Lowry ways in on the subject, detailing the myriad arguments against tax hikes on any Americans no matter their income, and reminding us that here is plenty of spending to trim to offset any potential costs.  His arguments transcend party lines, and even the most devoted Keynesian can see the folly of a massive tax hike before our economy recovers.

Also, watch Rep. Paul Ryan (R-WI) take MSNBC’s Chris Mathews to school on issues relating to taxes, spending and the deficit.  It looks like Mathews didn’t do very much research on Ryan before the interview.  If he had, he would have knows about Ryan’s concrete proposals to trim government spending and reform entitlements.  It’s always good to watch an informed Republican teach an ignorant Liberal some lessons about economics.

But tax hikes aren’t the only mischief the Dems are up to… They are still trying to push the DISCLOSE Act, which is a blatant attempt to undo the consequences of the Supreme Court’s decision in Citizens United.  Thankfully, Republicans filibustered this latest effort to violate our Constitutional right to free political speech.   Thanks to Senate Republicans for standing proudly united in fighting this bill.

Looks like Democrats are getting more and more worried about November by the day.  With Republicans poised to take over at least one house of Congress this November, Democrats like comedian-turned Senator Al Franken (D-MN) are warning of the dangers of Republican oversight in Congress.  Byron York of the Washington Examiner details the Democrats’ paranoia of some checks and balances in our government, and shows why some serious supervision of Democrats is good for the country.

But, truth be told, if I were a Democrat I would also be worried about Republican oversight, especially with the latest news that long-time Democrat Rep. Charlie Rangel (D-NY) is scrambling to cut a deal with the House Ethics Committee in an effort to avoid a sure to be embarrassing ethics trial.  So much for Pelosi’s promise to “clean-up Congress.”

Is it just me, or does the Congressional Budget Office come out with a new report every month talking about the dangers of our National Debt?  Well, they’ve come out with yet another one this week detailing the dire consequences of never-ending and quickly growing budget deficits.  When will the Democrats wake up to the reality that we can’t keep running up our debt?  How many more reports will it take?

Call me a cynic, but I don’t think the Dems will ever wake up to our fiscal crisis.  After all, as Social Security, our biggest federal entitlement quickly approaches insolvency, Democrats haven’t offered a single solution to protect America’s retirement security.  Michael tanner of the Cato Institute, calls out the Democrats for attacking Republican reform proposals, while offering no viable alternative.  Who’s the ‘Party of No’ now?

What does all this news add up to?  It adds up to a tremendous failure on the part of President Obama to live up to his campaign promises.  The man who campaigned as a post-partisan, post-racial, new-breed of candidate has turned out to be a far-left, divisive, politics-as-usual president.  Even Democrats can’t bite their tongues anymore.  Long-time Liberals Pat Caddell and Douglas Schoen have taken to the pages of the Wall Street Journal to call Obama out on his failure.  Maybe with his own party criticizing him, the President will shape up.  But I wouldn’t hold my breath.

In politics, you have to expect the unexpected. A friend one day can be a foe the next—depending on the shenanigans going on in the political arena. No one knows this better then Rep. Charles Rangel (D-NY).

A former close friend to Speaker of the House Nancy Pelosi (D-CA), Rangel once chaired the powerful Ways and Means Committee.  Now, however, the tables have turned. The Democratic Queen is looking to banish Rangel from her kingdom.

Rangel resigned from his chairmanship in March after the ethics panel determined he had broken congressional gift rules by accepting trips to conferences in the Caribbean that were financed by corporate interests. Unfortunately for Rangel, it doesn’t look like there is a light at the end of the tunnel.

The House Ethics subcommittee just found that Rangel violated additional ethics rules in a separate instance, and will begin preparations for a trial as early as tomorrow.

Ever since it was reported in early 2008 that Rangel might have used his congressional status to benefit his personal financial interests, he has been under the Ethics’ committee’s microscope. The most serious inquiries concerned Rangel’s failure to declare $239,000 to $831,000 in assets on his disclosure forms, as well as his effort to raise money for a private center named after him at City College of New York using his congressional letterhead.

An Ethics trial in September, which is when the saga will unravel if Rangel doesn’t cut a deal, is the last thing House Democrats want with Election Day fast approaching.

While only one house Democrat, Rep. Betty Sutton of Ohio, has called for Rangel’s resignation, at least two other Democrats – Rep. Brad Ellsworth, the Senate nominee in Indiana and Rep. Kathy Dahlkemper, a Pennsylvania Democrat – have pledged to donate any campaign contributions received from Rangel directly to charity.

Slowly but surely other key Democrats are coalescing in support of Rangel’s resignation. On Monday Rep. Debbie Wasserman Schultz of Florida, who is heavily involved in the House Democratic re-election efforts, but it in terms of big picture, what is best for Rangel’s legacy in saying:

“I think Mr. Rangel would be wise to evaluate what’s best not only for him, but also for the causes he has advanced for as many years as he has in his long career.”

For a party who vowed to “drain the swamp” and bring transparency to Congress, the Democrats are failing miserably on delivering such promises. Democrats are continuing to engage in series of backdoor meetings with the embattled representative, in an effort to encourage a less dramatic alternative to a public trail.

Charlie Rangel is making the party look bad in an election cycle. Once a liberal friend, he is now a party foe. So when Van Hollen justifies his meeting with Rangel as “I was presenting him with some of my observations,” and claims he was acting “as a friend”, its just another instance of Democrats playing “Keep your friends close and your enemies closer” in an election cycle.

By Sinead Casey (Hat tip to Samantha Cohen)

The White House has predicted a record-high deficit of $1.47 trillion. In order to better conceptualize this massive amount of debt, let’s take a look to see exactly what this means in more familiar terms (thanks to Ariana Eujung Cha for the stats).

Generated by Facebook Photo Fetcher

Europe has always been a bastion of progressivism. In the United States, liberals have trumpeted the success of their social programs, suggesting that we should follow down their righteous path. Conservatives, on the other hand, have pointed out the staggering budget problems European countries, especially those that are considered Western, have consistently wrestled with.

Let’s take a look at Britain. Aside from being a steadfast U.S. ally in military operations, its political makeup has always been slightly different from ours—and that’s what made the relationship “special” and unique. Now, however, we’ve got a President and certain members of Congress who are pushing for us to become more like them—especially when it comes to health care.

Here’s the deal: the U.K. has a debt topping $900 billion (and they’ve got their own version of their debt clock…although $900 billion doesn’t seem quite as scary as $1.3 trillion). Since they’re going through the same debt crisis we are, they’re finding ways to cut corners.

And what social program is first on the chopping block? The National Health Service. In the wake of a major budget crisis, one of the first programs to be scaled back is one that directly affects the well-being of British citizens.

The cuts in funding have been called “astonishingly brutal”, as even the most common and simple surgeries and procedures will now be rationed. A recent Telegraph article itemizes just how deep the budget cuts will go in to the nation’s publicly funded health care system:

* Restrictions on some of the most basic and common operations, including hip and knee replacements, cataract surgery and orthodontic procedures.

* Plans to cut hundreds of thousands of pounds from budgets for the terminally ill, with dying cancer patients to be told to manage their own symptoms if their condition worsens at evenings or weekends.

* The closure of nursing homes for the elderly.

* A reduction in acute hospital beds, including those for the mentally ill, with targets to discourage GPs from sending patients to hospitals and reduce the number of people using accident and emergency departments.

* Tighter rationing of NHS funding for IVF treatment, and for surgery for obesity.

* Thousands of job losses at NHS hospitals, including 500 staff to go at a trust where cancer patients recently suffered delays in diagnosis and treatment because of staff shortages.

* Cost-cutting programs in pediatric and maternity services, care of the elderly, and services that provide respite breaks to long-term careers.

This is bad news for the British. Yet what really baffles me is that the Democrats, all the while watching this implosion of the British health care system, are still trying to push ours in that very same direction. Harry Reid said just yesterday: “we’re going to have a public option, it’s just a question of when.” This statement reflects similar sentiments that the President and the lovely Speaker Pelosi expressed earlier this week.

What is it that our leadership isn’t getting? Usually, lessons are learned from experience and history. We have all been forewarned to let not history repeat itself. So, when we see Britain having to ration health care services because it’s bankrupting their nation, it would hardly seem irrational to expect our leaders to think the same about the policies they’re pushing.

But they’re not. Despite our debt, and the public outrage, and the public opinion polls, and midterm elections that are expected to annihilate the Democrats, and a living example of just how awful and inefficient centralized health care systems are, Reid and his friends just won’t give up when it comes to health care.

It’s a bad sign for the U.S. when we start emulating Europe just as they’re starting to wake up and back peddle to common sense policies, a place the United States used to call home. But it’s even worse when we have a triumvirate in power (Pelosi, Reid, and Obama) that continues to defy all logical reasoning simply for the sake of a misguided political agenda.

By Leah Dow (edited by Samantha Cohen)

As the Democrats quickly approach a likely trouncing in the November midterms, they are ready to jump on any opportunity to play politics with the American People’s money.

The newest round in the Democrats political game is the fight over extending the Bush-era tax cuts, which are set to expire next January. Their expiration will amount to a roughly $500 billion tax hike over the next ten years. The Republicans, the party of economic growth vis-à-vis the free market, and even some Democrats, want to permanently extend all of the tax cuts. Unfortunately, the majority of Democrats, are desperately looking for some way (or rather, someone) to pay off their extravagant spending binge. So why not soak the rich, so to speak? Nobody likes them!

Of course, this puts the Republicans in somewhat of a bind. If the Democrats were to put forward a bill that extends middle-class tax cuts, while raising taxes on the wealthy, what will Republicans do?  Will they go against their principles and vote for a bill that ends up raising taxes while there is still so much spending to cut? Or will they vote against the bill and push hard for extending all of the tax cuts? Should they do the latter, the Democrats will pull out their classic class-warfare line, insisting that Republicans are the party of the rich and care nothing for the beloved middle class.

Democrats may not be able to craft sound policy, but they sure are good at deceptive politicking.

In response to their tactics, Republicans and Conservatives alike need to expose the fallacies of this Liberal demagoguery. They must call the Democrats out and show how raising taxes on the so-called wealthy will not only hurt all Americans, but also slow down economic recovery.

How can we do this?

First of all, Republicans must point out that tax hikes on the “wealthy” are actually tax hikes on a significant number of small businesses.  A memo recently released by Americans for Tax Reform summarizes the effect of the coming tax hikes on small businesses:

Unlike corporations, small businesses usually don’t pay their own taxes. Rather, business profits flow through to the business owner. The business owner pays taxes on her small business by adding the profits to her income tax form. Therefore, personal income taxes are the same thing as small business taxes…

There were 30 million tax returns reporting small business income in 2008. On net (profits reduced by losses), these owners reported business profits of $981 billion. A large chunk of this net profit–$488 billion—faced taxation in households making more than $200,000 per year. A majority of small business profits will face a tax rate hike under the Obama-Pelosi-Reid plan.

Democrats relish in painting Republicans as the party of the super-rich and big corporations. But the truth is that Republicans’ support for extending all of the Bush tax cuts is an extension of their support for small businesses, which lay the heart of America’s economy.

This brings me to the second argument Republicans must make to the country:

Democrats don’t have a clue what they are talking about when they say that their plans to raise taxes won’t affect job creation and economic recovery.

Small businesses employ over half of America’s private sector employees and represent 99.7% of all employer firms.  At a time when unemployment is still hovering close to the double digits, how on earth could Democrats even be thinking about raising taxes on small businesses?

And, more importantly, what on earth could left-leaning, tax-evading Treasury Secretary Timothy Geithner be talking about when he said, “I do not believe [these tax hikes] will affect growth?”

If small businesses have less money, they will higher fewer people. If fewer people have jobs, fewer people will spend money, and the economy will contract.  That’s basic Econ 101. Most college freshmen at any university in the country could follow this line of logic.

This kind of talk coming from Geithner is utter nonsense, and Republicans would do well to call Democrats out on it.           

And when we take the offensive in this tax-cut fight, the public will listen.

Polls show that a growing percentage of the public thinks taxes are an important issue.  68% of voters say that taxes are a “very important” issue.  More notably, 45% of voters would prefer a candidate who opposed all tax hikes, rather than one who wanted to raise taxes on the wealthy.

Support for low taxes concerning small businesses and all other Americans has been and remains a winning issue for the Republican Party. The American People know that across the board tax cuts translate into more jobs, more wealth and more growth.

If Republicans take control of this tax debate, we have the ability to make these tax hikes yet another losing issue for Obama and his band of merry Democrats.

Let’s get to work.

By Avi Snyder (edited by Samantha Cohen)

The Obama administration is planning on letting the Bush tax cuts expire for upper income tax payers. Sounds great in theory. Let a few rich people pay a little bit more in taxes so we can all benefit. After all, surely they can afford it…right?

Wrong. First, let’s rid ourselves of the notion that the Bush-era tax cuts only impacted the wealthy. They impact all of us. As the Investor’s Business Journal writes this “tax hike against the “rich” is in fact a tax hike on small businesses.” The reason, as Americans for Tax Reform, explains:

“Unlike corporations, small businesses usually don’t pay their own taxes.  Rather, business profits flow through to the business owner.  The business owner pays taxes on her small business by adding the profits to her income tax form.  Therefore, personal income taxes are the same thing as small business taxes.”

Nevertheless, Treasury Secretary Tim Geithner took to the airwaves on Sunday attempting to sell the tax hikes to Americans. Geithner argued that,

“We’re in a transition … from the extraordinary actions the government had to take to break the back of this financial crisis to a recovery led by private demand. That transition is well under way. It’s going to continue and it’s going to strengthen.”

Far be it from doing anything to save us from the financial crisis, the government is content with breaking the back of the private sector. The economic recovery remain fragile, profits are inching back to normal, but hiring remains slow. Before committing to growth small businesses are looking for relative calm – something the government is unwilling to provide them with.

Allowing the tax cuts to expire would be the worst possible thing the government could do for our recovering economy. Republicans are not the only ones banging the drum against raising small business taxes. The Democratic chair of the Senate Budget Committee Kent Conrad has said that “the general rule of thumb would be you’d not want to do tax changes, tax increases…until the recovery is on more solid ground.”

Gerry Connolly (D-VA) went a step further, suggesting that tax hikes, even out of a recession could depress GDP. He has said,

“I think given the fragility of the recovery, the timing is wrong for any kind of tax increase of this nature. I know that puts me out of step with many in my own caucus, but it’s important for members to remember the top 5% [of earners] generates 30% of consumer spending.”

In other words, that Keynesian “multiplier” effect which Democrats love to talk about is working over time when it comes to extending these tax cuts. Of course Obama should know this. His chief economic adviser, Christina Romer, published a paper finding that tax cuts have large multipliers, which “have very large and persistent positive output effects.” How big?

“Our estimates suggest that a tax increase of 1 percent of GDP reduces output over the next three years by nearly 3 percent. The effect is highly significant.” In addition, we find that the output effects of tax changes are much more closely tied to the actual changes in taxes than to news about future changes, and that investment falls sharply in response to exogenous tax increases.”

But has he listened? No. I guess we shouldn’t expect any better. The health care debate should have been definitive proof that President Obama is not really the listening type.

His inability or unwillingness to listen will have enormous fiscal impact on small businesses. The expiration of the Bush tax cuts on high earners translates into a $500 billion tax hike over the next ten years. A significant portion of that will be borne by small businesses who will be unable to use the money to hire, expand, or invest in infrastructure. With many economists already warning of a potential double-dip recession, this could be the straw that broke the economy’s back.

Democrats must come to understand that they cannot just rely on hiking taxes to pay for their exorbitant and ill advised spending. Americans are facing a similar situation as the United States. Unable to earn as much in a depressed market, we aren’t borrowing more, and spending more, we are prioritizing and cutting back. We should expect the government to do the same. But until Washington understands that we have a spending problem, not a revenue problem, Americans will continue to see ever higher taxes. Come November it’s time to tell Washington we can’t afford the same spend-then-tax policies that have defined the past two years. If Congress is going to let tax cuts expire, voters should be happy to let Democratic majorities do the same.

by Brandon Greife, Political Director

“Rather than fight the same tired battles that have dominated Washington for decades, it’s time to try something new. Let’s invest in our people without leaving them a mountain of debt. Let’s meet our responsibility to the citizens who sent us here. Let’s try common sense.”

–         President Barack Obama

Borrowing 41 cents of every dollar to fund government spending seems far from common sense. In fact quite the opposite it seems like a mountain of debt. The President’s “something new” is just more of the same – borrow from tomorrow to finance some shiny new objects today. Well Mr. President, I’m here to tell you we cannot afford them.

A new report released by the Office of Management and Budget shows that the budget deficit will reach a record $1.47 trillion this year. Far from getting better, 2011 is predicted to have a $1.42 trillion deficit, $150 billion more than expected. Perhaps all could be forgiven if all of this government spending was going to translate into the jobs the President has long promised us. Quite the contrary, the OMB report shows that the unemployment rate will remain at over 8% through 2012.

Senate Minority Leader Mitch McConnell responded to the report by saying, “It’s time for a new approach, one that listens to the American people rather than forcing Washington-based mandates.”

Far from listening to Americans, Obama must be doing his best to tune them out. A recent poll by Resurgent Republic found that:

“Widespread opposition to tax increases is grounded in the perception that the federal deficit is driven by too much spending rather than too little revenue.”

The public gets it on government spending. Spending today generally burdens tomorrow. This is especially true in Washington today where Democrats spend more time debating whether they can get another stimulus passed than how they are going to pay off the first one.

If Obama is loath to listen to the rabblerousing of know-nothing American voters then perhaps some economists could appeal to his academic tendencies. Even here, Obama’s deep deficits run into opposition.

The argument for stimulus is that idle unemployed labor would be added to the workforce, which would then increase consumption, justifying the need for more output. This is the so called “multiplier effect” in which every dollar of government spending leads to more than of GDP being generated. Sounds great in theory. And it may even be true in the short term. Nevertheless, we don’t live in a short term world – the future must be taken into account. When this is done we see that there is also a “negative multiplier” that exists on the other side of the ledger. For every dollar spent by the government, a potential dollar is taken away from the private sector, meaning fewer jobs and less investment. Moreover, in the long run, government stimulus spending and debt can have serious disruptive consequences for the fiscal health. As the CBO explains:

Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress economic growth in the United States.

The distortionary effects of stimulus have led to a wide range of disagreement on the actual multiplier effect of government stimulus. For instance, Harvard researcher Robert Barro found a multiplier of only 0.8. But that figure was in a period of relative economic stability (as compared to today), when businesses, banks, and consumers were not primarily concerned to use new income to pay down debt or save to protect against income loss. Today, there is so much instability and uncertainty of the economy, and the “multiplier effect” risks being much smaller.

So President Obama, we ask you to please stop fighting the same tired battles and try something new. Lay out a plan to excavate our nation from beneath this huge mountain of debt you have buried us under. Do not hide behind the ghost of a failed stimulus bill. Let’s move on by coming up with concrete ideas for how to pay down the debt so that businesses can start hiring again. I guess what I’m trying to say is, “let’s try common sense.”

by Brandon Greife, Political Director

You’re Invited!

The Internal Revenue Services New Year’s Party

Come celebrate with the IRS as they welcome back the “Marriage Penalty,” “The Death Tax” and the raising of the tax rate on dividend income, income tax rate on all wage earners, capital gains, reduction of the child tax credit and increase of the number of families paying the alternative minimum tax

When: January 1, 2011

Where: A Taxpayers’ Home Near You

*** This event is sponsored by Barack Obama, Tim Geithner, Nancy Pelosi, and Harry Reid ***

____________________________________________________________________________________________________________

Sound like a party you’d like to attend?

Didn’t think so.

It’s a happening the majority of voters in 12 key battleground states aren’t too keen on attending. But for some reason it’s a party that the Democrats seem intent on throwing. A new poll by Resurgent Republic finds that if the Democrats don’t act to stop the scheduled tax increase before the election 55% of total voters, and 57% of independents, say they will be less likely to vote for Democratic candidates.

The so called “Bush tax breaks” are set to expire on January 1, 2011, which without action would lead to the largest one-time tax increase in the nation’s history. Democrats see it as a potential way out of the deficit mess that their spending binge has caused. Treasury Secretary Timothy Geithner called the expiration “the responsible thing to do because we need to make sure we can show the world” that America is “willing as a country now to start to make some progress bringing down our long-term deficits.”

The problem with this little theory is that the public has already caught on. When asked which statement they agree with more 73% of voters say that the “deficit is a result of too much spending” compared with 24% who believe we “need more tax revenue as well as spending cuts to reduce the federal deficit.”

The greatest concern is that only a little over half of all voters (54 percent) are aware of the looming tax increases. What should be a key voting cue that emphasizes the difference between the two parties in November threatens to be overlooked. While Democrats continue to spend to pay for deficits the OMB says will reach a new record this year – $1.47 trillion, Republicans are taking a different tack. Republicans argue that now, more than ever, struggling Americans need to keep as much money as they can in their own wallets. The budget must be balanced, but it must be because our representatives in Washington are making the tough choices to cut back, not because Washington needs us to give more.

As elections draw near, incumbents and potential candidates must be prepared to answer the question – will you side with Americans and extend the tax cuts, or will you side with Washington and continue to tax and spend. It should be an easy answer. And frankly, it’s sad that we even have to ask.

by Sinead Casey