Archive for the ‘Government and Politics’ Category
Should Government Fund the Arts?
The New York Times asks how “we” should fund the arts, suggesting for instance a 1.5 percent payroll tax, as they have in Brazil. I answered a slightly different question:
What do art, music, and religion have in common? They all have the power to touch us in the depths of our souls. As one theater director said, “Art has power. It has the power to sustain, to heal, to humanize . . . to change something in you. It’s a frightening power, and also a beautiful power….And it’s essential to a civilized society.”
Which is precisely why art, music, and religion should be kept separate from the state.
Full column here. More writing on the separation of arts and state here.
Hey Daily Kos, Cato Is Not A ‘Republican-supporting’ Institution
I guess it’s not a huge surprise that a writer at The Daily Kos would characterize Cato as “Republican-supporting” when it suits a purpose. Just for their future reference, here is a laundry list of positions taken by Cato scholars that most Republicans (Beltway Republicans, at least) tend to abhor:
- Cutting military spending
- The Iraq War
- Eliminating the Department of Homeland Security
- Resisting intervention in Libya, Syria, Iran, etc.
- Ending the War on Drugs
- Nation-building under George W. Bush and under Barack Obama
- Criticizing the Bush administration in 2006 for its constitutional record as being starkly at odds with the notion of limited government
- A constitutional case for marriage equality
We libertarians continue to be amazed at the inconsistency exhibited by the left and the right: conservatives dislike government power except when it comes to militarizing our foreign policy and, oftentimes, running people’s personal lives; liberals profess dislike for government power except when it comes to micromanaging the economy, which can quickly morph into micromanaging everything else. The Nanny-state is pushed equally by liberals and conservatives.
Ralph Waldo Emerson once said that “A foolish consistency is the hobgoblin of small minds.” (my emphasis) I think Cato scholars demonstrate a different kind of consistency in our principled adherence to limited, constitutional government, individual liberty, free markets, and peace. Our positions do not change whenever Republicrats replace Democans in office.
Letter Correcting Politico Article re States & ObamaCare Exchanges
Politico has run my letter to the editor regarding their article on states refusing to create ObamaCare’s health insurance Exchanges:
“Right winning war on state health-insurance exchanges,” (POLITICO, Apr. 18) is false or misleading on several points.
It mislabels me a conservative and the Cato Institute a “national conservative organization,” when both are libertarian. Cato scholars and supporters advocate reducing military spending, and legalizing drugs, gambling, and gay marriage.
It states that Cato receives funding from “the Koch brothers” — who apparently lack first names. This claim is false. Cato now receives no funding from Charles or David Koch, and may never again.
The Kochs’ past contributions to Cato have no bearing on this article — aside from the potential (and false) implication that the Kochs and Cato have a financial interest in persuading states not to create Obamacare exchanges.
The article also quotes a Leavitt Partners employee who criticizes Cato’s position as reckless. Yet the article fails to mention that Leavitt does have a direct financial interest in creating exchanges: Politico has reported that Leavitt can’t hire staff fast enough for all the exchange contracts it is getting from state governments.
Finally, the article states “most legal experts” think the Obama administration may offer health insurance tax credits and subsidies through exchanges created by the federal government, despite a lack of statutory authority. The article does not provide – and despite multiple requests, its authors have not furnished – any support for their claim of consensus.
Other than that, it really was a good article.
Doubling Down on Failure: Former Obama Official Calls for U.S.-Financed Keynesian Spending Binge in Europe
There’s an old saying that insanity is doing the same thing over and over again while expecting different results. This certainly is a good description of Keynesians, who relentlessly push more government spending as some sort of magic potion for the economy – notwithstanding a record of failure.
The latest example if Larry Summers, the former economist for the Obama White House, who says Europeans need to make government bigger.
Here is some of what he writes for today’s Washington Post.
European efforts to contain crisis have fallen short. …Much of what is being urged on and in Europe is likely to be not just ineffective but counterproductive to maintaining the monetary union, restoring normal financial conditions and government access to markets, and reestablishing economic growth. The premise of European policymaking is that countries are overindebted and so unable to access markets on reasonable terms, and that the high interest rates associated with excessive debt hurt the financial system and inhibit growth. The strategy is to provide financing while insisting on austerity, in hopes that countries can rein in their excessive spending enough to restore credibility, bring down interest rates and restart economic growth.
The good news is that Summers recognizes that there has been “excessive spending.” The bad news is that he uses the wrong definition of austerity.
Many European nations seem to think higher taxes are a sign of fiscal conservatism (see this post by Veronique de Rugy for a good discussion of this confusion). Summers accepts that approach, and says that policy makers should choose a Keynesian policy instead.
Unfortunately, Europe has misdiagnosed its problems in important respects and set the wrong strategic course. …Europe’s problem countries are in trouble because the financial crisis underway since 2008 has damaged their financial systems and led to a collapse in growth. High deficits are much more a symptom than a cause of their problems. And treating symptoms rather than underlying causes is usually a good way to make a patient worse. …The right focus for Europe is on growth; in this dimension, increased austerity is a step in the wrong direction.
There’s more good news. Summers is right in stating that Europe suffers from low growth. And I agree with him that the European version of austerity – higher taxes – is not a solution.
But, as always, there is a catch. Summers has the wrong approach on how to encourage growth. He wants Keynesian spending, and here is his defense.
Skeptics will rightly wonder how a prescription for more spending by countries that already have trouble borrowing can be correct. The answer lies in the difference between borrowing by individuals and countries. Normally, an individual helps his creditors by borrowing less; but a person who stops borrowing to finance commuting to his job does his creditors no favor. A country’s income is determined by spending, so a country that pursues austerity to the point where its economy is driven into a downward spiral does its creditors no favor.
Sounds semi-reasonable. After all, everyone understands that it is important to get to their place of employment. Sometimes you spend money to make money.
But here’s the problem. Can anyone name anything in so-called stimulus schemes that actually increase a nation’s productive capacity? As we saw with Obama’s failed stimulus, lots of money gets distributed, but the main purpose seems to be buying votes and creating dependency.
What about jobs? A miserable failure.
Adding insult to injury, you probably won’t be surprised to learn that American taxpayers are supposed to pick up the lion’s share of the tab for the new spending in Europe since Summers wants the IMF to be the sugar daddy.
Going forward, the IMF and international community should condition further support not merely on individual countries’ actions but on a common European commitment to growth.
This approach is illogical, as explained in this video.
And let’s consider the historical record. Nations that have tried this type of “stimulus” have not fared well. Big spending increase under Hoover and Roosevelt failed in the 1930s. Japan tried several Keynesian packages and failed in the 1990s. Bush failed in 2008 and Obama failed in 2009.
Germany did not go with a big program of government spending, and they did better than the United States. The same is true about Canada. But the real success story is the Baltic nations. They imposed real spending restraint, not the fake austerity found in places such as the United Kingdom.
And even though it caused some short-term pain since there’s a short-term cost when labor and capital get redeployed to more productive uses, the Baltic nations are now in much better shape that the European nations that have floundered because they limited themselves to the no-win choice of Keynesianism and tax hikes.
Paul Ryan and His Catholic Critics
In today’s Washington Post, the paper’s Dana Milbank treats us to “A faith-based lesson for Paul Ryan.” He takes Ryan to task for his Georgetown University speech last Thursday defending the House Republican budget. Earlier, it seems, Ryan had told the Christian Broadcasting Network that his budget was crafted “using my Catholic faith” as inspiration. That was more than the reliably liberal U.S. Conference of Catholic Bishops could bear. Never shy about instructing Congress on the moral dimensions of the federal budget, the bishops wrote to Members, Milbank notes,
saying that the Ryan budget, passed by the House, “fails to meet” the moral criteria of the Church, namely its view that any budget should help “the least of these” as the Christian Bible requires: the poor, the hungry, the homeless, the jobless. “A just spending bill cannot rely on disproportionate cuts in essential services to poor and vulnerable persons.”
“To their credit,” Milbank continues, “Catholic leaders were not about to let Ryan claim to be serving God when in fact he was serving mammon.” And he adds that a group of Jesuit scholars and other Georgetown faculty members had already written to Ryan to say that his budget “appears to reflect the values of your favorite philosopher, Ayn Rand, rather than the Gospel of Jesus Christ.”
No shrinking violet, Ryan met his critics head-on with a lengthy defense of his budget on both factual and moral grounds. As Milbank quotes him:
the faculty members would benefit from a “fact-based conversation” on the issue. “I suppose that there are some Catholics who for a long time thought they had a monopoly … on the social teaching of our church,” … but no more. “The work I do as a Catholic holding office conforms to the social doctrine as best I can make of it.”
Not so, says Milbank, but he never grapples with the pressing economic facts that Ryan set out, preferring instead to speak of the bishops’ “rebuke” to Ryan’s “fanaticism.” He quotes Ryan’s “challenge to the theologians’ theology”—“The holy father himself, Pope Benedict, has charged that governments, communities and individuals running up high debt levels are ‘living at the expense of future generations’”—but then rests content to conclude that “even Jesus said to render unto Caesar that which is Caesar’s,” omitting the pope’s final words: we are “living in untruth.”
The bishops, too, are living in untruth. Just as they failed to grasp that their promotion of Obama’s health care overhaul would entail intractable questions about abortion and contraceptive coverage, so too they fail here to grasp not only the economic implications of our burgeoning welfare state but the moral implications of the pope’s point—that just as it is wrong to live at the expense of future generations, so too is it wrong to live at the expense of our neighbors, which is the ultimate point toward which Ryan is driving. And no biblical story captures that point better than the parable of the Good Samaritan.
A year ago, when the new 111th Congress was first wrestling with these same issues, I wrote in the Wall Street Journal that people like Milbank and the bishops
ask, implicitly, how “we” should spend “our” money, as though we were one big family quarreling over our collective assets. We’re not. We’re a constitutional republic, populated by discrete individuals, each with our own interests. Their question socializes us and our wherewithal. The Framers’ Constitution freed us to make our own individual choices.
The irony is that Jesus, properly understood, saw this clearly — both when he asked us to render unto Caesar what is Caesar’s and unto God what is God’s, and when he spoke of the Good Samaritan. [Milbank and the bishops] imagine that the Good Samaritan parable instructs us to attend to the afflicted through the coercive government programs of the modern welfare state. It does not. The Good Samaritan is virtuous not because he helps the fallen through the force of law but because he does so voluntarily, which he can do only if he has the right to freely choose the good, or not.
Americans are a generous people. They will help the less fortunate if left free to do so. What they resent is being forced to do good — and in ways that are not only inefficient but impose massive debts upon their children. That’s not the way free people help the young and less fortunate.
Far from “fanatical,” Ryan’s budget, respecting the bounds of the politically possible, is a responsible approach to addressing the bipartisan budgetary sins of the past. It rejects the path that “dissolves the common good of society, and dishonors the dignity of the human person,” Ryan told the Georgetown audience. And it offers a better path than we’ve been on, a path “consistent with the timeless principles of our nation’s founding and, frankly, consistent with how I understand my Catholic faith.” By returning power to individuals, families, and communities, he concluded, “we put our trust in people, not in government.”
House Republicans—Including ‘Tea Partiers’—Support Ex-Im
A group of 30 House Republicans, including a few members who ran as Tea Partiers according to this article by CQ, have sent a letter to the House Republican leadership calling for the reauthorization of the Export-Import Bank. (I’ve written here and here on why that’s a bad idea.) Their names are right there at the bottom, folks.
The signatories trot out the usual talking points in support of the bank, including the pretty easily debunked line that it “returns money to the U.S. Treasury,” and plenty of mercantalist nonsense. I wonder which part of the limited government, free market philosophy supposedly guiding the Tea Party movement would justify a government agency that acts as financier to some of the largest corporations in America?
Save the EWG Farm Subsidy Database!
When the Environmental Working Group released the 2011 edition of its groundbreaking farm subsidy database, they asked for my comment to use in their press release. I was more than happy to do so, and I had this to say:
I can think of fewer initiatives that have had as big an impact on the American farm subsidy debate as EWG’s database. By shedding light on just who gets these subsidies, how much they get, and where they reside, the EWG has exposed U.S. farm programs for what they are: expensive, outdated, distorting, regressive ways for politicians to shovel money to their powerful special interest friends. When American agriculture is finally free of the shackles of government intervention, it will in large part be thanks to the folks at the Environmental Working Group.
No good deed goes unpunished, of course, and the wonderful work of the EWG has annoyed many in the farm lobby. But it is a crucial part of the farm bill reform effort, not to mention a good way for taxpayers to learn where their money goes. And judging by the bill voted out of the Senate Agriculture Committee yesterday, it seems we’ll need every piece of ammunition available if we are to see any reform to U.S. agricultural policy. The Committee’s bill would end direct cash payments—based on historical production and not linked to current production or prices, and therefore relatively less distorting—but increase the role of subsidized crop insurance that would protect farmers from falls in revenue. (Here’s Chuck Abbott from Reuters with a nice summary).
Adding insult to injury, the fact that farm support seems to be turning towards a greater emphasis on crop insurance is not good news for taxpayers who thinks they have a right to know where their money is going. That’s because the Federal Crop Insurance Act (in SEC. 502. 7 U.S. C. 1502 (c), available here) prohibits the Risk Management Agency of the United States Department of Agriculture from disclosing information about who receives crop insurance subsidies, other than in aggregate form. And a Freedom of Information Act request won’t help, because the FCIA has stated that crop insurance subsidy information is exempted from FOIA provisions (in 5 U.S.C. § 552(b)(3)).
So, in short, the more we move toward crop insurance, the less EWG—and the public—will know about where money is going.
It’s considerable money, by the way: the USDA (i.e., you) spent $7.4 billion on crop insurance subsidies in 2011, plus $1.3 billion in administrative and operating expenses for insurance companies. The federal government pays an average of 62 percent of the total premium costs (up from 37 percent in 2000). The Government Accountability Office released a pretty damning report on crop insurance last month, saying that the RMA doesn’t do enough to prevent fraud and abuse of the system, and calling for cuts to premium subsidies. According to the report (pp. 19-20), one farming business (of course, we don’t know who, thanks to the FCIA) received $1.8 million in premium subsidies in 2010, plus an extra gift from the taxpayer in the form of a $309,000 payment to insurance companies to administer the farm’s insurance policies. Another farmer insured crops in eight counties and received about $1.3 million in premium subsidies. The largest recipient was a corporation that insured nursery crops across three counties for a total of about $2.2 million in premium subsidies and over $800,000 in administrative expense subsidies.
I’ll stop there before I start a riot, and return to my main point, which is this: I suspect my opinion on the proper role of government differs from that of many staff at the EWG, and I disagree with parts of the platform they are proposing for the upcoming farm bill. But I’ve nothing but respect for the good folks working there, and nothing but profound admiration for the fine work they’ve done. If we are to see any change in agricultural policy in this country, the EWG must be allowed to continue that work, and to have access to the information that enables it. It’s nothing short of shameful that politicians want to limit that access.
Obama’s Long Knives Come Out
Today POLITICO Arena asks:
Is Common Cause’s complaint against The American Legislative Exchange Council valid, or is it a smear against a successful conservative advocacy group?
My response:
Common Cause has joined such bully-boys as the discredited former White House aide Van Jones and his “Color of Change” to do what the Left does best—smear those who oppose their political agenda. The American Legislative Exchange Council is a reputable organization of thousands of conservative and libertarian state legislators from across the country. They meet periodically to develop legislative proposals aimed at pro-growth solutions to problems facing their various states. ”Stand Your Ground” and voter-ID laws have constituted only a small part of ALEC’s agenda over the years.
But this is an especially important election year, so all the stops are out for the Left. And it starts at the top. For a chilling account of the tactics to which Obama is now stooping, read Kim Strassel’s piece in this morning’s Wall Street Journal. At an Obama campaign website we find ”Behind the curtain: A brief history of Romney’s donors.” Its purpose is plain as day: to expose and shame private citizens who’ve had the temerity to donate to the Romney campaign. “Quite a few,” the post charges, have been “on the wrong side of the law.” Their “crimes”? One is a lobbyist, another a hedge-fund manager, another outsourced jobs.
We haven’t seen such tactics since the days of Nixon’s “enemies list.” This is Axelrod and Chicago politics, and it’s not going to get any better, because Obama can’t run on his record. So brace yourself for the politics of personal destruction.
Supreme Court Gives Taxpayers a Muddled Win
This blogpost was co-authored by Cato legal associate Carl DeNigris.
Before the argument on the Arizona immigration case yesterday, the Supreme Court scored a blow for American taxpayers by rejecting the IRS’s attempt to overturn the Court’s prior interpretation of a disputed provision of the Internal Revenue Code, 26 U.S.C. §6501(e)(1)(A). By avoiding the issue of whether agencies can use their regulatory powers retroactively, however, the Court didn’t go far enough.
In United States v. Home Concrete, the Court ruled that its decision in Colony v. Commissioner of Internal Revenue (1956) — that a taxpayer’s overstatement of tax basis in property is not an omission of income that would otherwise trigger an extended statute of limitations period for assessment — was still controlling. The IRS had tried to change its interpretation of the relevant regulation but the Court concluded that, despite the government’s contention that the new interpretation was due judicial deference, “there is no longer any different construction that is consistent with Colony and available for adoption by the agency.” That is, the IRS can’t unilaterally overturn Supreme Court precedent by changing how it interprets statutory language or applies a particular regulation.
But the Court didn’t address the government’s most insidious action here: the IRS sought deference for a regulation that it promulgated in the midst of litigation and which would have been retroactively applied to the taxpayers who were parties to the Home Concrete lawsuit.
In our amicus brief, Cato argued that sanctioning this sort of ad hoc, retroactive rulemaking undermines the rule of law by altering basic assumptions “regarding fairness and reliability of the laws and their application by the courts.” Yet, with the exception of Justice Kennedy’s one sentence dismissal in dissent, the Court showed no interest in the retroactivity issue. Moreover, it referred to the government’s blatant attempt at retroactive rulemaking as a mere “gap-filling regulation” with “no gap to fill.” So while taxpayers won a narrow victory today, the Court’s silence gives little assurance that it remains a bulwark against arbitrary government power.
Perhaps even more importantly, it’s now unclear how courts are to apply an important precedent called Brand X, a 2005 case standing for the proposition that administrative agencies (like the IRS) can adopt regulations contrary to a judicial decision only when the relevant statute’s silence or ambiguity represents a congressional delegation of authority to fill that “gap” to the agency. In other words, here the IRS acted contrary to clear statutory language as interpreted by Colony Cove, but what about future cases? We’re no tax or even administrative law specialists, but it does seem that the Court has made a big mess out of Brand X: When can an agency overturn decisions of the Court? When can it not? We’ll have to wait for the next ridiculous agency action to make its way to the Supreme Court to find out.
For more on the case, see here; for more technical administrative/tax law analysis, see here. One other curious thing about this decision is that it ended up 5-4 but the majority opinion was written by Justice Breyer (who styles himself as the Court’s administrative law expert) and joined by the “conservative” justices — though Justice Scalia concurs only in part – with Justice Kennedy writing the dissent, joined by the remaining three “liberal” justices.
Switzerland’s ‘Debt Brake’ Is a Role Model for Spending Control and Fiscal Restraint
I’ve argued, ad nauseam, that the single most important goal of fiscal policy is (or should be) to make sure the private sector grows faster than the government. This “golden rule” is the best way of enabling growth and avoiding fiscal crises, and I’ve cited nations that have made progress by restraining government spending.
But what’s the best way of actually imposing such a rule, particularly since politicians like using taxpayer money as a slush fund?
Well, the Swiss voters took matters into their own hands, as I describe in today’s Wall Street Journal.
Americans looking for a way to tame government profligacy should look to Switzerland. In 2001, 85% of its voters approved an initiative that effectively requires its central government spending to grow no faster than trendline revenue. The reform, called a “debt brake” in Switzerland, has been very successful. Before the law went into effect in 2003, government spending was expanding by an average of 4.3% per year. Since then it’s increased by only 2.6% annually.
So how does this system work?
Switzerland’s debt brake limits spending growth to average revenue increases over a multiyear period (as calculated by the Swiss Federal Department of Finance). This feature appeals to Keynesians, who like deficit spending when the economy stumbles and tax revenues dip. But it appeals to proponents of good fiscal policy, because politicians aren’t able to boost spending when the economy is doing well and the Treasury is flush with cash. Equally important, it is very difficult for politicians to increase the spending cap by raising taxes. Maximum rates for most national taxes in Switzerland are constitutionally set (such as by an 11.5% income tax, an 8% value-added tax and an 8.5% corporate tax). The rates can only be changed by a double-majority referendum, which means a majority of voters in a majority of cantons would have to agree.
In other words, the debt brake isn’t a de jure spending cap, but it is a de facto spending cap. And capping the growth of spending (which is the underlying disease) is the best way of controlling red ink (the symptom of excessive government).
Switzerland’s spending cap has helped the country avoid the fiscal crisis affecting so many other European nations. Annual central government spending today is less than 20% of gross domestic product, and total spending by all levels of government is about 34% of GDP. That’s a decline from 36% when the debt brake took effect. This may not sound impressive, but it’s remarkable considering how the burden of government has jumped in most other developed nations. In the U.S., total government spending has jumped to 41% of GDP from 36% during the same time period.
Switzerland is moving in the right direction and the United States is going in the wrong direction. The obvious lesson (to normal people) is that America should copy the Swiss. Congressman Kevin Brady has a proposal to do something similar to the debt brake.
Rep. Kevin Brady (R., Texas), vice chairman of the Joint Economic Committee, has introduced legislation that is akin to the Swiss debt brake. Called the Maximizing America’s Prosperity Act, his bill would impose direct spending caps, but tied to “potential GDP.” … Since potential GDP is a reasonably stable variable (like average revenue growth in the Swiss system), this approach creates a sustainable glide path for spending restraint.
In some sense, Brady’s MAP Act is akin to Sen. Corker’s CAP Act, but the use of “potential GDP” makes the reform more sustainable because economic fluctuations don’t enable big deviations in the amount of allowable spending.
To conclude, we know the right policy. It is spending restraint. We also know a policy that will achieve spending restraint. A binding spending cap. The problem, as I note in my op-ed, is that “politicians don’t want any type of constraint on their ability to buy votes with other people’s money.”
Overcoming that obstacle is the real challenge.
P.S. A special thanks to Pierre Bessard, the President of Switzerland’s Liberales Institut. He is a superb public intellectual and his willingness to share his knowledge of the Swiss debt brake was invaluable in helping me write my column.
Justice Sotomayor: “[Mr. Solicitor] General, I’m Terribly Confused by Your Answer”
Yesterday’s argument in Arizona v. United States (my preview here), which in a non-Obamacare world would be the case of the decade, revealed among other things yet another bizarre legal position taken by the Obama Justice Department. That is, the solicitor general stood there and straight-facedly made the claims that: (1) local law enforcement could make ”ad hoc” judgments to apprehend illegal aliens but state governments (the bosses of said local officials) could not “systematize” such policies by legislation; and (2) state laws like Arizona’s were unconstitutional because they interfere with federal policy decisions on how to allocate enforcement resources.
It was the first point that caused Justice Sotomayor’s (understandable) confusion.
Solicitor General Verrilli apparently resolved that confusion in an unsatisfactory manner, because Sotomayor later asked him for other arguments because “you can see [that this one is] not selling very well.”
The second point was met with similar skepticism by the Court, with Justice Alito asking whether, if “the federal government changed its [enforcement] priorities tomorrow . . . . Would the Arizona law be un-preempted?”
These colloquies don’t necessarily mean that the DOJ is headed towards a precipitous defeat — here’s a transcript and summary of the whole argument so you can judge for yourself — but it does show how far off the reservation this administration goes to assert political stances (and controversial ones at that) in place of sound legal reasoning.
Portuguese Finance Minister Admits Keynesian Stimulus Was a Flop
President Obama imposed a big-spending faux stimulus program on the economy back in 2009, claiming that the government needed to squander about $800 billion to keep the unemployment rate from rising above 8 percent.
How did that work out? One possible description is that the so-called stimulus became a festering pile of manure. About three years have passed, and the joblessness rate hasn’t dropped below 8 percent. But the White House has been sprinkling perfume on that pile of you-know-what and claiming that the Keynesian spending binge was good policy.
But not every politician is blindly ideological like Obama. Vitor Gaspar, Portugal’s Finance Minister, is willing to admit error. Here are some relevant excerpts from a New York Times report.
Mr. Gaspar, speaking to The New York Times last week, has a message for observers who say Europe needs to substantially relax its austerity approach: We tried stimulus and it backfired. Like some other European countries, Portugal tried what Mr. Gaspar called “a Keynesian style expansion” in 2008, referring to a theory by economist John Maynard Keynes. But it didn’t turn things around, and may have made things worse.
Why does the Portuguese Finance Minister have this view? Well, for the simple reason that the economy got worse and more spending put his country in a deeper fiscal ditch.
The yield on Portuguese government bonds – more than 11 percent on longer-term bonds — is substantially higher than the yields on debt issued by Ireland, Spain or Italy. …The main fear among investors is that Portugal is going to have to ask for a second bailout from the International Monetary Fund and the European Union, which committed $103 billion of financial aid in 2011.
Maybe the big spenders in Portugal should import some of the statist bureaucrats at Congressional Budget Office. The CBO folks could then regurgitate the moving-goalposts argument that they’ve used in the United States and claim that the economy would be even weaker if the government hadn’t wasted more money.
But perhaps the Portuguese left doesn’t think that will pass the laugh test.
In any event, some of us can say we were right from the beginning about this issue.
Not that being right required any keen insight. Keynesian policies failed for Hoover and Roosevelt in the 1930s. So-called stimulus policies also failed for Japan in 1990s. And Keynesian proposals failed for Bush in 2001 and 2008.
Just in case any politicians are reading this post, I’ll make a point that normally goes without saying: Borrowing money from one group of people and giving it to another group of people does not increase prosperity.
But since politicians probably aren’t capable of dealing with a substantive argument, let’s keep it simple and offer three very insightful cartoons: here, here, and here.
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