Friday, December 24, 2010

Goodbye to the 111th Congress

At last the 111th Congress is history! While various media sources are attempting to give Pres. Obama a political makeover in reality conservatives won on the big issues. Of course there has to be a caveat with that, but we'll get to that later. The most important issue was extending the Bush tax cuts accomplished through the compromise with the President. The second most important issue was the defeat of the Omnibus spending Bill and its replacement with a short-term continuing resolution. These two wins empower the Republicans to set the economic agenda for the next two years. Finally, the defeat of the so-called Dream Act was a major victory for the conservative movement.

The caveat is of course the repeal of Don't Ask Don't Tell and Start Treaty ratification. However in the case of the first it was likely the Supreme Court would eventually overturned Don't Ask Don't Tell anyway given Justice Kennedy's historic support of gay rights issues. The Start Treaty vote does reveal a shocking lack of unity in the Senate Republican Caucus. But also reveals a fundamental flaw in US strategic thinking is affected both parties since the fall of the Soviet Empire. As such it is an issue that was not addressed by the 2010 political campaign and so the ultimate result is not surprising.

While many strong conservatives have bemoaned the tax compromise, given the weakness that was displayed by Senate Republicans during the lame-duck session they instead should congratulate Sen. McConnell on his achievement. It's unclear whether a strategy to block everything to the end of the session would've been successful or instead would've resulted in a RINO rebellion that would've resulted in a complete Democrat victory. It is certainly clear that Republicans need to work for better party discipline if they are going to be effective.

One key thing that has been accomplished is to deny funding for the implementation of Obamacare. The budget victory also gives the Republicans in the House a chance to reduce spending in the 2011 budget. While we can expect the House Republicans to vote the repeal of Obama care as a symbolic gesture, such a measure has no chance the Senate and of course would face Pres. Obama’s certain veto if it were to arrive on his desk. However, by breaking the elements of the Omnibus spending Bill into separate departmental elements (the way it is supposed by done) the Republicans can attach incremental changes to Obamacare forcing the President to veto one bill after another or to accept some changes. The success of such an approach will also be affected by the outcomes of several court challenges that are currently working their way to the Supreme Court.

While the prospects for significant modifications to the so-called health reform bill are problematic, the process will force Senate Democrats who are up for reelection in 2012 to take a stand on various elements of the bill in isolation which may be even less popular than the bill in its entirety. This incremental approach will also have the advantage of not challenging those elements of Obamacare which are popular. It will also maximize the number of presidential vetoes casting him as an obstructionist while avoiding a total government shutdown media circus.

So in conclusion, don’t expect the trend the last few days of the 111th Congress to be indicative of what to expect in the 112th.

Sunday, August 1, 2010

Myths of the Clinton Economy and Tax Policy

If you take what Democrat politicians and spokespeople say literally you would believe that the Clinton Administration inherited a bad economy and by the magic of raising taxes on upper income people he turned the economy around. Nearly eight years of prosperity emanated from that brilliant policy. It even results in some amazing years of balanced budgets. So by this reasoning higher tax rates lead to prosperity.

This stands against the evidence of four other administrations: Kennedy, Reagan, Bush I and Bush II. Three of these made significant tax cuts and the economy prospered. One of them, i.e. Bush I, raised taxes and the economy was very sluggish leading to conditions for the Clinton victory.

So what are we to conclude? Why was the Clinton economic policy so different? The mystery is actually fairly easy to understand when one looks at the broader economic conditions in the Clinton years. First of all there is way too much credit and blame given to presidents concerning the economy. Presidents can’t abolish the business cycle. The Bush I recession was a correction to the economic boom of the middle to late Reagan years. One key element of this aftermath was the savings and loan crisis. Bush the elder had the thankless task of cleaning up this mess. He then compounded his problem by agreeing to a tax increase that was poorly thought out. By the time Bush the elder was voted out office, the economy was growing nicely but there hadn’t been time to have the improving GDP result in more jobs.

So Clinton came into office with an economy that was destined to be good even without new initiatives. However, Clinton slapped the economy with a tax rate increase that was that was three times as high as Bush I’s. So why didn’t this kill the recovery that Clinton inherited? The key fact at that time was rather high “real” interest rate, i.e. interest rate minus inflation. What saved the Clinton economy was a cleaver deal the administration made with then Fed Chairman Alan Greenspan. The Fed would hold down short term interest rates which are those which it can most affect and the Treasury Department would refinance the national debt with shorter term notes rather than long-term bonds. By removing the U.S. government from the long-term debt market interest rates came down in that sector as well. So this monetary policy counter balanced the high tax policy allowing the recovery to continue.

It often said that it is “better to be lucky than good” and so it was with President Clinton. The other part of “good Clinton economy” was due to a revolution in microprocessor technology that was coincident with his term of office but had nothing to do with any of his policy initiatives. This increase in cheap computing technology resulted in a complementary explosion in software development and the internet. Wave after wave of new companies were started to exploit these new technologies. Initial Public Offerings raised massive amounts of capital. The stock market soared and the massive increase in short term capital gains, bonuses, and increased salaries brought hundreds of billions into the Treasury. With spending held in check by a Republican Congress, the government started running surpluses.

So the Clinton experience gives little support for the concept that high tax rates are good for growth. It only shows that if conditions are just right they aren’t necessarily a show stopper. President Obama doesn’t have the luck of President Clinton. He can’t use reduced interest rates to counter balance the tax increases that will come in 2011 unless the current tax rates are continued. To address the dilemmas of the current economic situations we must address the end of the Clinton era and the Bush II years to set the stage. I plan to address this in a subsequent posting.

Saturday, February 13, 2010

Obama's Bad News for U.S. Space Leadership

Newt has gone fuzzy again as when he endorsed anthropogenic global warming. The new Obama space initiative is like the little book offered to John in the Book of tastes sweet in the mouth and is sour in the stomach. It offers the vision of advance space technology to space advocates and free enterprise in space to conservatives. In reality it is unlikely to produce either. On top of that is the gratuitous cancellation of every element of NASA's manned space program. Now we start over with new efforts which will at best give us a reduced range of capabilities. On paper every new alternative can seem lower cost but so did the programs that Obama suggests ending.

It would make more sense to continue with the Orion spacecraft and the Ares I launcher to maintain our space presence. Critics have made exaggerated claims of problems with Ares I. It is clear that a management shake up may well be in order but to simply throw out $9 billion in investment is wrong. Saving these elements of Constellation would allow us to continue ISS operations without long-term dependence on the Russians and use these elements to support a more robust effort later, i.e. Moon or beyond.

NASA chief Charles Bolden speaks of the need to develop a heavy lift rocket but it is unclear that a practical/affordable rocket better than Constellation's Ares V is possible in the foreseeable future. On one hand Bolden complains that Ares V is behind schedule and then proposes an alternative that does the same thing that will arrive at even a latter date. This makes little sense. Furthermore without the Orion spacecraft what is it intended to launch?

I'm very much for advanced space technologies but of what use will they be if there is not commitment to a stable space program that can take advantage of them. Furthermore the most promising of them such as Dr. Chang-Diaz's plasma thrusters don't require massive budgets in the next few years and development can be expanded with modest budgets for many years to come. It is my primary concern is that the Obama plan is a step to the end of U.S. human space flight. In fiscal 2011 all existing NASA human space vehicles are cancelled in favor of commercial investments. Then problems with these new programs and budget pressure slowly squeeze them out of the out-year budgets as well. The end of our space program is then a fait accompli.

Wednesday, January 27, 2010

State of the Union

President Obama performed up to my expectations tonight. He has decided not to deviate from his liberal agenda regardless of a series of election defeats the Democrats have suffered in recent months. He is leading the Democrats to a major defeat in the off year elections which is exactly what we want.

He did have some useful proposals such as endorsing the expanded use of nuclear energy and increased exploration for offshore oil and natural gas. In addition his support for improving education in science and math are on target. The President’s suggestions on incentives for stimulating small business were encouraging.

However, then we are off to increased educations loans with terms more favorable to those taking government jobs over those in the private sector. Continued support for cap and trade even though there is increasing evidence that the UN IPCC climate change story is flawed. He is still pushing his health bill with misleading claims that would reduce the deficit. He implicitly blames Bush for his problems. He attacks the Supreme Court. He claims he is going to reduce the deficit with a spending freeze while announcing one new spending plan after another. Most of all it was just too long!

I really don’t think that he got the message that the people are sending him.

Tuesday, January 19, 2010

My Open Letter to Conservatives...One Year Later

About a year ago after President Obama assumed office I posted the following on my websites political page (the predecessor to this blog). At the time there was much pessimism among Republicans and Conservatives. I think it is interesting how my statement looks now after a year. I think that I was a little optimistic about the political judgment of “blue dog” Democrats.

Anyway here it is:

It’s time to fight Democrat liberalism. I’m reading way too much negativism about the conservative situation. While it is true that we have suffered serious setbacks in the last two elections there is no reason to be as defeatist as some commentators are. There are many reasons for the present situation including some very silly mistakes of specific candidates. The main reason, however, is the general inability of the out going Bush Administration to effectively communicate its positions and the lack of unity among Republicans in the Congress.

It is likely that that the Democrats have now reached their “high water mark” and will slowly begin to recede in the years ahead. What is important now is that we unite in opposition to the Obama Administration and the Democrat leadership in Congress. We should vote against questionable appointments like Geithner and Holder. We must oppose the wasteful surge in spending that Obama now proposes. We must also seek allies among the Democrats recently elected in basically Republican states. If they want to remain in office they must be educated not to follow Reid, Pelosi, and Obama off the cliff.

Issues we must be prepaid to fight, with bipartisan filibusters where possible, include the so-called “Freedom of Choice Act”, any new gun bans or registration, etc., socialized medicine, the so-called Fairness Doctrine, and attempts to mainstream homosexual behavior. It addition we must press to keep the Bush tax cuts as a requirement to support any stimulus bill. There is a real possibility that the Democrat policies will lead to a serious inflation problem before the 2012 election and we need to get on the right side of this issue. So what might be seen as short-term unpopular may well turn out very different in a few years.

One useful move would be to organize a group of Senators in “safe” seats and those who won’t face election until 2014 to engage in a media counter-offensive against the Democrats. They should be joined by House member in “safe” seats. We need to carefully but consistently chip away at Obama’s credibility. The decisions announced today on terrorism the clearly move in the direction of weakening our security are just one opening. Congressman Boehner handled this well. Others need to follow up and press this issue.

Now is not the time of complacency but rather the time for bold action. The future our country is clearly at stake. We must be strong now more than ever.

Sunday, January 17, 2010

An Obvious Suggestion for Airport Security

Yesterday (January 17, 2010), traveling public experienced another major air travel disruption because one individual opened a door into a restricted area. This resulted in all of the people who had been cleared through security and those who had already boarded planes being evacuated and rescreened at the American Airlines terminal in New York’s JFK Airport. Two weeks before a similar incident occurred at the Newark Liberty Airport. This time authorities were able apprehend the intruder quickly. I’m sure this will result in calls for more draconian punishments than those for simple trespassing.

Both incidents aren’t related to terrorism and most likely due to carelessness. My question is why have unlocked doors that anyone can open that allows access which breaks down security? Shouldn’t such doors be locked or even permanently blocked? Locking or blocking these doors would prevent these accidental breeches from happening. It makes a lot more sense than sentencing the hapless to felony sentences in prison. It would also save the airlines money and the traveling public a lot of inconvenience.