Archive for July, 2010

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

Texans have a reputation as being loud-mouthed, boot-wearin’, truck-driving, fiercely proud individuals.  Say what you will about the Lone Star State and all its (almost) 25 million residents, but the state has one thing that the rest of the country would kill for: economic stability in a time where our federal budget is coming apart at the seams.

As we watched other large, populous states like California, Illinois, and New York fall into a heavy and stifling economic downturn, Texas managed to keep its head above water and avoid the deep recession that continues to grip most other states.   The southern state has managed to maintain, all things considered, a sound economy due to one of the things Texans are so adamant about: limited government.  The Weekly Standard describes the situation as follows: “a state known for size and excess has succeeded because of public policies that avoided excesses of big government overspending”.

Even before the nation’s economy began to completely tank, it was predicted that Texas would stand to weather the storm better than others.  Dale Craymer, chief economist of the Texas Taxpayers and Research Association, predicted back in 2008 that “if the nation gets the flu, [Texas is] going to get a bad cold,”  ”If the nation gets a cold, [Texas will] get the sniffles.”

This was exactly the case.  Texas job growth, especially in the private sector, topped the nationwide average for the past decade.  While most of the nation saw major net growth in government jobs, Texas continued to follow an economic policy that encouraged capital investment and job creation—helping to lessen the affects of this nasty recession without the help of a massive and essentially useless stimulus bill.  Its unemployment rate has consistently remained solidly below the national rate throughout the recession.

But for what other reasons has Texas fared better?  In a nutshell, the explanation is in the way it views the role of government.   The governor of Texas (and former President Bush’s successor) Rick Perry explained that “in Texas, we have long based our approach on individual liberty and initiative, believing that families, entrepreneurs and individual citizens deserve the opportunity to strive and succeed — with minimal government interference.”

The state only has a 140 day long legislative session every two years.  The rest of that time, legislators are expected to go back to their districts and abide by the laws they passed.  In contrast, our national legislators are either always in session or talking about being in session—leaving the rest of the country feeling like their elected leaders are always politicking instead of serving the public and its needs.  Texas lawmakers get down to business and get their entire agendas outlined in an amount of time that it takes Washington to just start talking about an issue they plan on bringing to the floor.  This seemingly perpetual state of playing politics in our capitol, as Democrats and our President are starting to understand, leads to voter fatigue and even more so, a disconnect between voters and legislators.

Because Texas limits not just time, but also size and scope, it has enjoyed balanced budgets, low taxes, and a fair legal system.  Rick Perry points out in a Washington Times article published last year that a productive 140 day session yielded a balanced state budget, tax relief for 40,000 small businesses, and it left $9 billion unspent for future state needs.

“$9 billion unspent for future state needs”?  The federal government, the same government that’s supposed to convince Americans that they can do everything better and more efficient than the states, is running a 1.4 trillion deficit because of reforms and stimulus bills that fell well short of expectations.  Texas, however, has a “rainy day” fund that the federal government should take careful note of.  After all, the Lone Star State achieved this $9 billion not through overtaxing, overregulating, or overspending. In fact, Texas and taxes don’t mix. Texas is one of the few states with no income taxes and its sales tax remains nationally competitive. Overall, Texans pay only $95.50 for every $1,000 they earn compared to a place like New York which pays $130.80 per $1,000. The difference comes in the governing mentality. They’ve fully embraced what conservative politicians like Paul Ryan (R-WI) have been saying: “we have a spending problem, not a revenue problem.” To that end, Texas doesn’t spend money it doesn’t have. And when it does run into budget trouble, much like it did in 2003 when it had a $10 billion budget “shortfall”, the state didn’t raise existing taxes—or impose new ones.  Instead, economic development was encouraged through the use of state funds in order to lure big companies.  Texas is now home to some of the largest oil, energy, and technology markets in the country.

President Obama and Democrats should begin to take notice of the states—like Texas—who did not spend their way out of their economic hardships.  Instead, they made responsible policy decisions to help keep their state afloat during an economic downturn in which the federal government made appallingly bad monetary policy decisions. Texas, long a bastion of conservative politics, has largely avoided the economic crisis that is plaguing the rest of our nation. They have managed to avoid a deep slump and have their economy rebound without going deep into debt. Perhaps the White House should take note. Start making the difficult choices to get this nation back on track. Balance the budgets, get spending under control, and don’t rely on tomorrow’s taxes for today’s debt. It sure worked for Texas.

by Leah Dow

Immigration is a problem longing for a fix. Unfortunately, it has been accorded leper status in Washington. Too broken to leave alone but too politically perilous to touch with a ten-foot pole. One need look no further than Arizona to realize the incendiary nature of attempting to come up with an immigration solution. Where there is much to lose, there is also much to gain. That is why Republicans must take the initiative, outflank their political opponents, and craft an immigration reform plan that not only preserves conservative values but potentially captures a new bloc of conservative voters.

Republicans have long been labeled as xenophobes when it comes to immigration. It is largely the result of a debate that has been couched in between two equally unattractive views. The word “immigrant” at its worst conjures up images of people who are stealing American jobs and living off our social welfare system without paying a dime in taxes to support it. At its best, they are unskilled laborers, doing the jobs Americans won’t do while living off our social welfare system without paying a dime in taxes to support it. Either way, not exactly a rosy picture. With this mindset, Republicans are doomed to forever fight an uphill battle when it comes to standing behind a viable, working option for immigration reform.

Sadly, without such reform Republicans will be doomed to wander the political wilderness. The fact is Hispanics will be a majority in this country by as soon as 2050. To remain a viable political party you will eventually have to capture this growing voting pool. Fortunately, and many Republicans don’t understand this, Hispanic-Americans tend to be conservative. In 2006 pollster David Winston asked registered voters to rate themselves on a 1 to 9 scale from very liberal to very conservative. Winston found that Hispanic Americans viewed themselves were more conservative than the rest of an already center-right country.

They are a natural source of votes but we’ve got to wise up to capture them.

This is where I’m going to lose some of you. But let me go ahead and say, wising up does not equal selling out. I understand that a party is about more than politics, it is about principle. Fortunately, reforming our stance on immigration isn’t just good politics, it meshes perfectly with conservative principles. But, it will require a change in mindset.

We’ve all heard the melting pot argument. That the United States is a nation of immigrants, melting together to form the essential fabric that binds us to this nation. All true, but very blah. Even with this argument immigration bas become a convoluted issue, existing as the enormous elephant in the room. Grasping the “melting pot” argument relies on a sense of history and fairness – concepts that are intangible and don’t really come with any personal benefits. Today, with unemployment staying stubbornly high and deficits clouding our fiscal future, it is a much easier to argue that illegal immigrants are taking our jobs and eating up our taxes. So what can we do to reframe the debate?

Republicans should put forward an immigration reform package that promises to increase jobs, lower the number of unskilled immigrants, and boosts the number of taxpayers. Sounds conservative. Now, what if I told you it could be done in a way palatable to Hispanic voters.

The first step is to change the make-up of our immigrant population. “Unskilled” and “immigrant” are too often viewed as inseparable. It needn’t be this way. After all you wouldn’t view Albert Einstein this way. But imagine how many fewer jobs America would have without people like these:

• Jerry Yang – Taiwanese founder of Yahoo
• Sergey Brin – Russian founder of Google
• Andrew Grove – Hungarian founder of Intel
• Andrew Carnegie – Scottish business mogul
• Levi Strauss – German inventor of blue Jeans
• John Kluge – German owner of Metromedia – one of largest privately held companies in the US

Immigrants success extends much deeper. A study by Harvard researcher Vivek Wawha found that “one in four engineering and technology companies founded between 1995 and 2005 had an immigrant founder. We found that these companies employed 450,000 workers and generated $52 billion in revenue in 2006.” Moreover, foreign nationals residing in the United States represented 25.6 percent of all patent applications. In Silicon Valley, one of the primary entrepreneurial centers in the United States, 52 percent of tech and engineering companies were founded by an immigrant.

Immigrants do not have to be the job takers. They can be the job creators. But first we have to create an immigration policy capable of attracting and harnessing their talents. One way to do that would be to change the H-1B visa system. The visa, which is provided for immigrants that want to work in the U.S., has helped draw the top talent in the international work force. Unfortunately, as Darrel West argues in the Wall Street Journal,

“[O]nly 15% of our annual visas are now set aside for employment purposes. Of these, some go to seasonal agricultural workers, while a small number of H-1B visas (65,000) are reserved for “specialty occupations” such as scientists, engineers, and technological experts.”

65,000. That’s it. Applications for this type of visa are normally gone within the first two days of the application period. In other words, while the H-1B visa should be luring the best and the brightest international talent, we are shutting off the tap. The Cato Institute argues that such a low cap “is hampering output, especially in high-technology sectors, and forcing companies to consider moving production offshore.” The expansion should not be limited to H-1Bs. Other skilled worker visas such as the L-1, which allows foreign workers to relocate to a multi-national corporation’s US office, and O-1, which allows aliens with “extraordinary abilities” in a particular field, should also be emphasized and revised.

Given the inherent power of these visas to actually create jobs why has the government been so slow to change it? Partially because of the misperception of so many voters who believe that increasing quotas will take away jobs from Americans. This logic doesn’t have a basis in fact. As Cato explains:

“Fears that H-1B workers cause unemployment and depress wages are unfounded. H-1B workers create jobs for Americans by enabling the creation of new products and spurring innovation. High-tech industry executives estimate that a new H-1B engineer will typically create demand for an additional 3-5 American workers.”

This is the chance for Republicans to take the lead on immigration. Republicans have long been thought to have lost the debate – and have the lack of minority support to prove it.  The key to winning the support and turning the debate around is to focus on immigrants as realistic and viable solution to the economic trouble. Immigration reform could be the jobs bill we’ve all been waiting for and with a price-tag much cheaper than the so-called stimulus.

by Brandon Greife, Political Director

Democrats plan on allowing the Bush-era tax cuts for individuals and many small businesses making more than $250,000 a year to expire. Treasury Secretary Timothy Geithner said yesterday that, “I do not believe it will affect growth.

The Pentagon and the Obama administration are currently at odds with the House of Representatives over funding a second engine for the advanced fighter jet. The Administration and Pentagon budgets have not funded an alternate engine for the F-35 for the past three years. The only continued funding for an alternate engine has come from Congressional earmarks.

In the midst of wrestling with increasing budget pressures, Presidents George W. Bush and Barack Obama both pushed to kill the program. Defense Secretary Robert Gates has opposed the extra engine for years, understanding that it is an unnecessary and substantial waste of money.

Secretary of Defense Robert Gates announced his intention to eliminate “programs where the requirements were truly in the exquisite category and the technologies required were not reasonably available to affordably meet the program’s cost or goals” back in 2009.  At an additional cost of $2.9 billion, the alternate engine falls into the “exquisite” category Secretary Gates describes. The alternate engine will not lower costs for the Joint Strike Fighter program, and should be eliminated.

On several occasions Gates has threatened to advise President Obama to veto the entire defense bill if Congress pursues the second engine. Despite all of this, it looks like Congress can’t be swayed. The House voted on a $56 billion defense bill – $484 million of which is set to fund a second engine for the F-35 Joint Strike Fighter, a plane projected to be the centerpiece of U.S. airpower in coming decades.

The House approved the project anyway, overcoming an attempt by opponents to strip it from the bill. That attempt failed by a vote of 231 to 193, with both parties divided on the issue.

Quite frankly, members of Congress cannot be trusted to spend our money wisely.

Don’t believe me?

It would cost taxpayers $2.9 billion more, on top of the $1.3 billion already spent in upfront costs, to develop the second engine. Billions of dollars that can’t even be justified, considering that no military aircraft developed in the last 30 years has used an alternate engine. The Washington Post called the alternate engine an example of a big-ticket defense program and an “undisclosed earmark”, agreeing with Gates that it is a colossal waste of money.

The primary engine for the Joint Strike Fighter is manufactured by Pratt & Whitney, while General Electric and Rolls Royce joined forces to build the second one. The manufacturers have been engaged in heated arguments to win support on Capitol Hill and in congressional districts where parts for the engines are made.

Quite frankly, this is not the year for Congress to fund an extra engine for the F-35.  This is a year that needs to be dedicated to cutting government waste, not increasing it. The alternate engine for the Pentagon’s F35 Joint Strike Fighter is a perfect example of a program that wastes funding desperately needed by our military men and women serving in harm’s way.

Four out of five independent studies have concluded that an alternate engine will not save money over the life of the JSF program. In fact, funding the alternate engine has taken money away from the overall JSF program, reducing the number of aircraft that can be produced. The total aircraft impact of continuing with the alternate engine could be a reduction of up to 40 aircraft, which will drive up the unit cost of each plane.

At a time when we are trying to repair our economy and end relentless joblessness in America, the federal government absolutely cannot afford superfluous weapons expenditures. American people get it, even our president gets it—why doesn’t Congress?

by Samantha Cohen

It’s hard to defend the indefensible.  And for the you and your party Mr. President, it’s getting harder and harder to convince the American People that your massive “stimulus” spending, which had added over a trillion dollars to our national debt, is the best way to deal with the recession.

Which probably explains why you’ve been exaggerating the effects of your stimulus so damn much lately.

As the Wall Street Journal reports:

On his recent “Recovery Tour,” Mr. Obama boasted, “The stimulus bill prevented the unemployment rate from “getting up to . . . 15%.”

So your nearly trillion dollar stimulus really only prevented unemployment from rising only 1%? If I were you, I’d exaggerate that number too.

That’s a pretty impressive statistic Mr. President.  Do you happen to have any economists to confirm that?  How about your chief economic adviser?

But the president’s own chief economic adviser, Christina Romer, has estimated that the stimulus bill reduced peak unemployment by one percentage point—i.e., since the unemployment rate peaked at 10.1%, it prevented the unemployment rate from rising to just over 11%.

Then again Christina Romer should not be considered a trusted source when it comes to stimulus jobs either. Last week she got up in front of Congress and dropped this bomb, ““By [our] estimate, the Recovery Act has met the president’s goal of saving or creating 3.5 million jobs — two quarters earlier than anticipated.”

But as Carolina Baum of Bloomberg explains,

“These numbers might just as well have been pulled out of a hat. Recall that it was the same model and method the administration used in January 2009 to predict an unemployment rate of 7 percent in the fourth quarter of 2010 with the enactment of the fiscal stimulus and 8.8 percent without. The unemployment rate now stands at 9.5 percent.”

In other words the administration continues to use a knowingly flawed metric to judge the success of the stimulus program. How open and transparent of them! Sadly that is not the only flaw in their success metric. The government model assumes that $1 of government stimulus fund generates more than $1 of GDP once injected into the economy.

Two problems there. First, of course government spending increases GDP in the short term. After all, government spending is a component of GDP so it necessarily translates into increased GDP!

But, that is not the end of the story, or should I say exaggeration. The European Central Bank just released a study showing that,

“Our results indicate that–despite a relatively stable total fiscal impulse the effectiveness of spending shocks in stimulating economic activity has decreased over time. Short-run spending multipliers increased until the late 1980s when they reached values above unity, but they started to decline afterwards to values closer to 0.5 in the current decade.”

Translation. One dollar of government stimulus translates into about fifty cents of GDP. Some stimulus!

What other exaggerations have you been bloviating about?

You’ve declared that:

It is largely thanks to the Recovery Act that a second Depression is no longer a possibility.

Let’s do a fact check on that one also.

[Obama’s] Council of Economic Advisers just estimated the stimulus bill’s effect on GDP at its trough was 1%-2%.

The most common definition of a depression is a long period in which GDP or consumption declines at least 10%. The decline in GDP in the recent recession was 3.8%, in consumption 2%. No one disputes the recession was severe, but to reach a 10% GDP decline requires tripling the administration’s estimate (three times their 2% effect) added to the actual 3.8% decline.

You’re losing your credibility by the minute.

But you haven’t just exaggerated, you’ve flat out lied, and it isn’t very hard to call you out on it.

You have said that:

“Every economist who’s looked at it says that the Recovery Act has done its job.”

Well that’s just not true.

Just half a year ago Harvard economist Robert J. Barro published an article in the Wall Street Journal which stated that:

The bottom line is this: The available empirical evidence does not support the idea that spending multipliers typically exceed one, and thus spending stimulus programs will likely raise GDP by less than the increase in government spending. Defense-spending multipliers exceeding one likely apply only at very high unemployment rates, and nondefense multipliers are probably smaller.

That’s one Harvard economist who thinks government stimulus spending doesn’t work.  The Cato Institute has compiled a nice long list, courtesy of economist Greg Mankiw, which includes: Alberto Alesina, Gary Becker, John Cochrane, Eugene Fama, Robert Lucas, Greg Mankiw, Kevin Murphy, Thomas Sargent, Harald Uhlig, and Luigi Zingales.

That lie was so easy to catch that you should be embarrassed Mr. President.

You’re failed policies have already damaged your credibility, and your defense of them damages it even more. Despite continuously high unemployment, and despite numerous studies showing the positive effects capital-gains, corporate, and income tax cuts could have on our economy, you persist in pushing the outmoded tax-and-spend agenda your party has been pushing for decades.

As we said earlier, it is hard to defend the indefensible. So let’s stop. Stop trying to tell us how successful the stimulus was and actually do something to address the persistently high unemployment. There is lots the government can be doing to spur economic growth and business hiring, but none of it includes misrepresenting the success of your failed program

By Brandon Greife and Avi Snyder

The proverbial shepherd boy cried “wolf,” “wolf” over and over again, tricking his fellow villagers into thinking a wolf was attacking his flock of sheep. But when the villagers came to his rescue, they found that the alarms were false and they had wasted their time. Eventually the villagers just stopped coming and a wolf did come.

In America a similar event is occurring – with the recession dragging down the economy and stifling job creation Obama cried “stimulus,” “stimulus.” But the promise of economic recovery turned out to be untrue. Throughout Obama’s “Recovery Summer” tour he is chanting to whomever will listen, “stimulus,” “stimulus,” look at all the good it has done. But with an agenda that stifles the job creation Obama is promising, citizens will just stop believing and President Obama will be left to the wolves.

Obama’s flawed promises begin with a flawed premise. A dollar of government stimulus does not become more than one dollar when injected into the economy. The multiplier effect is at best exaggerated, and at worst, false. A recent study conducted by the European Central Bank, finds that when we analyze the last 30 years worth of government stimulus, the multiplier effect has diminished to the point of nonexistence. Quite the contrary, the study suggests that today, every $1 of stimulus spending produces only 50 cents of GDP.

Some stimulus.

The townspeople eventually called the bluff of the boy who cried wolf. The ECU study is now calling the bluff of Obama’s Keynesian fantasy.

The study concludes by stating:

Finally, our results indicate that rising government debt is the main reason for declining spending multipliers at longer horizons, and thus increasingly negative long-run consequences of fiscal expansions. . .[W]e interpret this finding as an indication that further accumulating debt after a spending shock leads to rising concerns on the sustainability of public finances. In this context, agents may expect larger fiscal consolidation in the future which, in turn, depresses private demand and output.

The study tracks and analyzes each economic quarter from 1980 to 2010, which includes multiple tests of the economic theory across the European continent. And it finds, not only is stimulus a poor investment in the short term, returning only fifty cents on the dollar, it actually has long term negative consequences on economic growth.

President Obama promoted his stimulus package on the selling point that it worked for Europe and it would work for us. But now the Continent that cried “stimulus” is admitting its failure.

Countries across Western Europe are imposing austerity measures in order to reduce their massive and unsustainable debts.  European leaders like Angela Merkel in Germany and David Cameron in the U.K. are chartered a future course for Europe that focuses on reducing national debt rather than stimulus spending.

Europe is most certainly over government “stimulus.”

However, President Obama hasn’t taken quite caught on yet. At the G-20 summit in Toronto in late June, the President continued to urge wealthy European nations to continue pumping stimulus money into their economies. But, from London to Rome, a clear “no” echoed across the continent.

What this study shows is that when the President lectured us to, “learn from the consequential mistakes of the past when stimulus was too quickly withdrawn,” he didn’t have the facts on his side. The true mistake wasn’t withdrawing stimulus too quickly, but issuing government stimulus in the first place. The short term results in terms of jobs has been poor. The long-term results, owing to decreased investor confidence because of our unsustainable debt and deficits, may be even worse.

Economist Dean Baker, co-director of the left-leaning Center for Economic and Policy Research in Washington said it best when he refuted the President stimulus-promoting strategy in stating:  “You don’t win something in Congress by saying, oh, Europe’s doing this.”

Especially when what Europe’s doing hasn’t worked. And especially not when they even fully admit that it didn’t work.

Like the villagers who wasted their time when the boy cried wolf, with this new study, Americans should see much more clearly that Obama wasted our time crying for stimulus. Let him continue to tout its benefits, but for me, I’m leaving him to the wolves.

By Sinead Casey and Brandon Greife