Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Politics for Pros- moderated -- Ignore unavailable to you. Want to Upgrade?

To: Nadine Carroll who wrote (347118)	2/3/2010 7:50:38 PM
From: TimF	1 Recommendation Read Replies (1) \| Respond to of 794476

Clunker Legislation The economic illiterates in Washington are so impressed with the "success" of Cash for Clunkers that they're readying Cash for Clunker Appliances (http://tinyurl.com/kqfoe8). The ludicrous "stimulus" bill gave $300 million to the Department of Energy to provide rebates for 10 types of appliances that have been rated energy efficient. Before government extends Cash for Clunkers to more products, it might be a good idea to examine the original. The fact that Washington and the buyers who took advantage of Cash for Clunkers are gaga is hardly evidence that it was in the public interest. It wasn't. As usual, the program has been judged only by its first and most visible consequences, violating Henry Hazlitt's teaching in his classic, "Economics in One Lesson" (http://tinyurl.com/dkx9pm): "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." If you only look at the immediate effects, Cash for Clunkers appears pretty good. People traded in gas-guzzlers for more fuel-efficient new cars. The program cut carbon emissions slightly and gave the auto industry a boost. "Manufacturing plants have added shifts and recalled workers. Moribund showrooms were brought back to life, and consumers bought fuel-efficient cars that will save them money and improve the environment," Transportation Secretary Ray LaHood bragged (http://tinyurl.com/nu8nz5). "American consumers and workers were the clear winners thanks to the Cash for Clunkers program." But wait. Shouldn't that be some consumers and some workers? And only in the short run? Let's start at the beginning. The government paid car owners to trade in their old cars, which will be destroyed. But the government is running a deficit. So it doesn't have $3 billion to hand out. It must borrow the money, which reduces the amount of money for other investments. Moreover, the government must raise taxes in the future to pay back the principal and interest — or the Federal Reserve will monetize the debt through inflation. Either way, we pay. That isn't all. Those car buyers were either going to trade in their used cars soon or they weren't. If they were, Cash for Clunkers simply moved up the schedule. The stimulation of the auto industry occurred earlier. Big deal. But if buyers planned to keep their cars longer, the program imposed costs that are less visible. Without the government incentive to buy cars, consumers would have bought other things — computers, washing machines, televisions. The manufacturers and sellers of those products didn't get to make those sales. Why should the auto industry get privileges at the expense of others? Then there are the mechanics who would have serviced those used cars. They've lost business. Some will be laid off. Nor should we forget low-income people who depend on the used-car market for their transportation. The cheap cars they would have bought were destroyed. What about the alleged environmental benefits? Assuming that cutting carbon emissions is worthwhile, was Cash for Clunkers helpful? It's hard to see why. People who traded in inefficient cars for efficient ones will likely drive more and therefore use more gasoline. Even if carbon emissions are cut by a lot, economist Christopher Knittel says the program will cost more than $365 per ton of carbon saved (http://tinyurl.com/mrmtuy). Economist Bruce Yandle points out what a lousy deal that is: "The much celebrated Waxman-Markey cap-and-trade carbon-emission control legislation estimates the cost of reducing a ton of carbon to be $28 when done across U.S. industries. Yes, we are getting carbon-emission reductions by way of clunker reduction, but we are paying a pretty penny for it" (http://tinyurl.com/lnua3k). Finally, there is something revolting about the government subsidizing the destruction of useful things. It reminds me of the New Deal policy of killing piglets and pouring milk down sewers to keep food prices from falling. Leave it to politicians to think we can prosper by obliterating wealth. creators.com

To: Nadine Carroll who wrote (347118)	2/4/2010 3:00:07 AM
From: KLP	3 Recommendations Read Replies (1) \| Respond to of 794476

Gregg Eviscerates Orszag God bless Sen. Judd Gregg for eviscerating OMB Director Peter Orszag during yesterday’s Senate Budget Committee hearing. Here’s what Sen. Gregg said in response to Director Orszag’s tesimony: While President Obama was visiting Nashua, Gregg’s birthplace, the three-term senator was on Capitol Hill skewering Peter Orszag over the plan to funnel $30 billion from the Troubled Asset Relief Program. Gregg erupted as Orszag spoke of the TARP use to solve lingering problems with access to credit for small businesses. “No! No! No!” he yelled out. “You can’t make that type of statement with any legitimacy. You cannot make that statement.” Gregg then held up a guideline for the TARP, which he helped write in 2008 to keep the country from further economic collapse. “This is the law,” he said. “Let me tell you what the law says. Let me read to you again because you don’t appear to understand the law. The law is very clear. The monies recouped from the TARP shall be paid into the general fund of the Treasury for the reduction of the public debt. It’s not for a piggy bank because you’re concerned about lending to small businesses and you want to get a political event when you go out and make a speech in Nashua, N.H.” Gregg accused Orszag and Obama of passing on debt to generations of Americans and having an abashed sidestepping of the TARP law. “And,” he said, “you ought to at least have the integrity to be forthright about it.” The legislation that established TARP is very specific. Once the money is repaid, that money goes into the general fund. It’s against the law to use the repaid money as a slush fund to be spent on whatever this administration wants to spend it on. PERIOD. Under further questioning from Gregg, Orszag said the administration would be seeking congressional approval. Then Sen. Bernie Sanders, I-VT, chimed in, “That is how laws are made usually, Congress passes them.” Gregg fired back, “Did the senator from Vermont make a statement? Well the senator is wrong. This is the law as it stands today. There is no law on the books.” This administration and their progressive allies in Congress have this nasty habit of running roughshod on the laws of this country, especially if those laws stand in the way of President Obama’s ability to recklessly spend money at unsustainable rates. Thank God that people of the intellectual heft of Sen. Gregg still serve in the Senate. Sen. Gregg is the taxpayer’s watchdog. For that alone, I’ll grant him hero status. Orszag, whose official title is director of the Office of Management and Budget, appeared before the committee to testify on the President’s 2011 budget. In his prepared remarks, Orszag placed much of the blame on the country’s budget deficit on the Bush administration. It’s getting old to hear President Bush get blamed for everything that’s wrong with the US economy and the federal government’s budget deficits. It simply doesn’t pass the laugh test. The administration and the congress that passed two omnibus spendin bills, the failed stimulus bill and a budget that runs up trillions of dollars of debt over the next decade simply don’t have any credibility as being fiscally responsible. President Bush wasn’t a fiscal conservative by any stretch but it wasn’t his signature that turned this administration’s failed stimulus bill into law. It wasn’t President Bush’s signatures that turned the Democratic Congress’s omnibus spending bills into a 25 percent spending increase of the federal budget. This administration and the Democratic majority’s reckless spending habits are documented facts. This isn’t theory. This isn’t speculation. Dick Morris’s column puts the administration’s argument to rest. Here’s the important statistics: President Obama is being disingenuous when he says that the budget deficit he faced “when I walked in the door” of the White House was $1.3 trillion. He went on to say that he only increased it to $1.4 trillion in 2009 and was raising it to $1.6 trillion in 2010. Congressman Joe Wilson might have said “you lie,” but we’ll settle for “you distort.” (As Mark Twain once said, there are three kinds of lies: “lies, damn lies, and statistics.”) Here are the facts: In 2008, Bush ran a deficit of $485 billion. By the time the fiscal year started on October 1, 2008, it had gone up by another $100 billion due to increased recession-related spending and depressed revenues. So it was about $600 billion at the start of the fiscal crisis. That was the real Bush deficit. But when the fiscal crisis hit, Bush had to pass TARP in the final months of his presidency which cost $700 billion. Under the federal budget rules, a loan and a grant are treated the same. So the $700 billion pushed the deficit, officially, up to $1.3 trillion. But not really. The $700 billion was a short term loan. $500 billion of it has already been repaid. So what was the real deficit Obama inherited? The $600 billion deficit Bush was running plus the $200 billion of TARP money that probably won’t be repaid (mainly AIG and Fannie Mae and Freddie Mac). That totals $800 billion. That was the real deficit Obama inherited. Then…he added $300 billion in his stimulus package, bringing the deficit to $1.1 trillion. This $300 billion was, of course, totally qualitatively different from the TARP money in that it was spending not lending. It would never be paid back. Once it was out the door, it was gone. Other spending and falling revenues due to the recession pushed the final numbers for Obama’s 2009 deficit up to $1.4 trillion. The deficit that President Obama inherited was the biggest in history to that point. Now he’s exploded that deficit, surpassing it by $620,000,000,000. People aren’t buying this administration’s talking points that it’s all President Bush’s fault because it isn’t all his fault. This administration and this Democratic Congress certainly played a major role in doubling the deficits they inherited from the Bush administration. letfreedomringblog.com