I keep hearing those on the left saying that people must pay their "fair share". These are buzz words for "increase taxes". However, it is curious that with 49 percent of workers not paying any taxes at all with the heaviest burden falling mainly on high earners, the only group not paying their "fair share" are those who are not paying any taxes. Thus, this group does not have any skin in the game. Campaigns to lower taxes do not find empathy with those who pay no taxes and neither do campaigns to raise taxes. It seems to me that a minimum requirement of citizenship should be the paying of federal income taxes. This is why I am for a flat tax. A flat tax of 20 percent would provide the government with "revenues" sufficient to cover its expenditures - except with the current administration. It would also mandate that everyone have skin in the game. I know you will hear the hue and cry about taxing those with the lowest incomes, but that is no tragedy. Low income people receive subsidies through things like food stamps, housing subsidies and numerous welfare programs. Thus, although they will pay taxes, they will get the money back through these programs. However, they will now have an interest in any discussion on taxation. A flat tax is simple and elegant. First, eliminate the federal income tax. Second, count as income all earnings regardless of source. This is must preferable to the so-called "fair" tax which is a consumption tax. A consumption tax is hidden. This is bad because it is important for all to know exactly how much of their income goes to the government. A flat tax accomplishes this while the "fair" tax does not. So in order for people to pay their "fair share", everyone must pay.
A part of the debt ceiling bill that the House is insisting on is a balanced budget amendment. I am not certain if the bill says that a balanced budget amendment must be voted on in both houses or if it says that it must be passed by both houses. If it is the latter, then the ceiling crisis will continue because it is doubtful if the senate will pass the amendment. Nevertheless, I am opposed to a balanced budget amendment. To balance the budget, you must either decrease spending or increase taxes. Which is the more likely outcome? It is raising taxes. Consider the following: let us say that the congress must incorporate revenue projections from the congressional budget office into the appropriations process. Forecasters usually give three choices - most likely, a low side estimate and a high side estimate. Which one will the congress choose? Given the choice, spending will be dictated. It is guaranteed that whatever choice is made, it will not occur. How many times have economic forecasters been correct? Don't you hear that when economic statistics are released, the commentators always say that the numbers were "not anticipated" by the forecasters. Therefore, regardless of what estimate is chosen, it is highly likely that the actual revenues will not match with the appropriations thereby calling for an adjustment in revenues (taxes). So what can be done? Language would have to be incorporated into the amendment limiting the ability of the congress to balance the budget through taxation. This would mean that any balanced budget amendment would be complicated which would lessen its passage otherwise the spirit of the amendment would be circumvented virtually every year. What is ironic is that the discipline for limiting government is already on the books. It is the debt ceiling itself. If the congress just says no to raising the ceiling, the federal government would be forced to submit appropriations roughly equal to projected expenditures and no more. Congress could no longer write deficit budgets. So in essence we already have a law mandating a balanced budget on the books already. What is happening now is one of those rare instances in which the congress is not ignoring the law or constantly modifying it. What all this means is that we must elect more people to congress (senate and house) who pledge not to raise the debt ceiling.
With all the talk about the debt ceiling I have found it intriguing that the Republicans keep submitting new budgets. The question is why? Does this mean that each proposal is better than the previous ones - or worse? By keep submitting proposals it gives me the impression that they are grasping at straws. Again the question is why? Since spending legislation is initiated in the House, then it seems to me that they have done their job. That the majority leader in the Senate refuses to bring the legislation to the floor, not allowing debate or a vote should not cause the House Republicans to write another piece of legislation, in essence negotiating with themselves. I have also have not heard anything about democrats in the house participating in the crafting of the bills. Surely there are blue dogs that would be willing. This reminds me of when the republicans were complaining about being excluded from crafting the hallmarks of the previous congress: health care, Dodd-Frank, and the stimulus. At least extend the invitation to the dems and then it might be more difficult for the senate to ignore the bills. If the senate will not consider the house bills, then I wonder how will the legislation get introduced? I guess a house democrat will introduce it. Then do the house republicans refuse to let it get to the floor? Also there are those who keep carping that the president does not have a plan. That is no surprise. This president has never been the source of any of the legislative initiatives during his administration. He has adopted bills introduced in the congress as his own and then pushed them on the public with speech after speech after speech. At least in this case, he does not want to state a position on spending cuts because he is looking to the next election. He feels that any words about cuts in entitlements will come back to bite him - although he did allow a $500 billion cut in medicare to make the math work on Obamacare. Remember that spending legislation starts in the house not in the Oval Office so for once, the president is not at fault on this one. Lastly, all this mess could have been avoided had the president demonstrated any political acumen. He could have easily adopted all the Simpson-Bowles recommendations.
I posted a piece on the total lack of diversity on the women's soccer team. Subsequently I was informed that one player was biracial. But back to the point. I was stunned by the responses I got that totally were off point (to me). I am a free market economist and am a devotee of Adam Smith, Milton Friedman and the great Karl Brunner (my phd advisor). I analyze everything in turns of market solutions. When teaching my students on the effects of restricting the market by doing something like fixing prices I illustrate the difference between a market solution and one made by individuals. I say what is the price of a ticket for a football game between UT and Alabama. They say $50. Is that market clearing? They all say no. Then what is the result? They say scalpers and long lines at the ticket office. I then say suppose the tickets were priced at the market clearing? They say "no lines". I then say suppose you had all the tickets how would you distribute them? They invariably say "first come first served". I say: that is your tastes and preferences but don't be politically correct, what would you really do? They say: I would give them to my fraternity brothers or I would only give them to cute girls. I then say those are your tastes and preferences too. The point being that discrimination is more likely if individual tastes and preferences rather than markets determined the distribution of goods and resources. So in asking why is the soccer team 100 percent Anglo (subsequently corrected), I got points raised that told me why it should be mostly white but not all white. Some pointed to (mostly) black basketball teams or to (mostly) white swimming teams or to (mostly) black sprinters forgetting that swim teams and sprint teams are actually market determined. They are selected solely based on timing heats. Surely that is nondiscriminatory. However soccer teams and basketball teams are ultimately selected by individuals who make judgments making 100 percent of anything more likely. Again I would proffer the same question regardless of the racial composition of any squad if it were selected and turned out to be 100 percent one race. You see, I don't care about the race of the team. That is intellectually uninteresting. If it were the US basketball team, the same question would occur to me. I care about addressing the question as to why it is 100 percent one race (not knowing about Shannon Box). I see this as being totally consistent with my market principles. That it generated such a firestorm with me being accused of racism has been illuminating. So keep those comments coming. I will publish them but this my last word on the matter.
This is my Knoxville News-Sentinel article from July 3, 2011
Spending More Just Doesn't Work
Albert Einstein is reputed to have said that insanity is doing the same thing over and over and expecting different results. However, you need not be an Einstein to figure out that those arguing that the government didn't spend enough to stimulate the economy must be certifiable.
Yet this is the often-heard defense of government spending. We heard this with regard to the war on poverty and other failed government programs. We have heard it with education. It does not matter that there is no correlation between educational achievement and spending. It doesn't matter that the war on poverty destroyed poor families and dramatically increased out-of-wedlock births. It doesn't matter that TARP and stimulus did not lower unemployment.
The avowed solution is always "spend more."
The reality is that Keynesian macroeconomics has failed. Government spending is part of the problem, not the solution.
Government spending has to come from somewhere. If it comes from the private sector through raising taxes or selling government securities, it reduces the money that the private sector can spend and invest. If it comes from creating money, it causes inflation. There is considerable economic research showing that government spending stunts job creation as private investment - the fuel of job creation - falls.
Economist Martin Feldstein estimates that each dollar of deficit spending has added less than a dollar to gross domestic product. Since Keynesianism has given us more spending and less growth, it is now time to try something different.
First, we all seem to have conveniently forgotten that before any recovery can take place, people and businesses must shed their debt. Stimulus always fails in a recession because both households and firms reduce debt rather than expand demand or employment.
Once debt is reduced, the rival macroeconomic theory says that to grow the economy incentives need to be provided that are not temporary. Any change perceived as temporary will fail.
People and businesses will not alter their behavior due to temporary changes. Households who have less debt can be motivated to spend if their taxes are reduced. Businesses can be motivated to expand if regulatory burdens are lessened and corporate taxes are reduced. Investors will invest more if capital gains taxes are reduced. Jobs will not be exported if the government is less hostile to domestic businesses.
The Environmental Protection Agency is seeking to destroy jobs in the coal industry; the National Labor Relations Board is fostering a hostile U.S. work environment; increased costs are evident through Obamacare; the administration is threatening to increase taxes on the "wealthy." They all point to why the economy is not growing despite $2 trillion in "stimulus."
The actions taken by this administration have stunted any recovery. What is ironic is that economics tells us that we can have recovery without spending a dime. Isn't it time to test that theory?
One of my dearest friends recently moved back to her home state of North Carolina after 40 years in DC. Although an avowed liberal she is open-minded and has conservative friends (other than just me). The other day she said that NC governor Bev Perdue (a democrat) was stupid. Then she said that Michele Bachmann was "so stupid she could be elected governor of North Carolina." I asked her to give me examples of Bachmann's stupidity and she cited two of the examples that I had earlier posted on my blog (the mix up regarding Lexington and Concord and saying John Wayne was from Waterloo, Iowa). She however knew that all the founders were not pro-slavery because of the Quakers. I then said well at least Bachmann did not think there were 57 states. I was incredulous when she said "Now who would say that?" I said Barack Obama and she did not believe me so I sent her the following. By the way, it occurred to me that if George Bush had said it, she would know it. This simply shows how we are shaped by what media sources we listen to and read. I told her that this was only a sampling of Obama's gaffes. I could easily have sent her 20 more.
1. "I've now been in 57 states -- I think one left to go." --at a campaign event in Beaverton, Oregon.
2. Not knowing (or ignoring) the royal etiquette in the toast to the Queen.
3. "The Middle East is obviously an issue that has plagued the region for centuries." --Tampa, Fla., Jan. 28, 2010.
4. "UPS and FedEx are doing just fine, right? It's the Post Office that's always having problems." –attempting to make the case for government-run healthcare, while simultaneously undercutting his own argument, Portsmouth, N.H., Aug. 11, 2009
5. "One such translator was an American of Haitian descent, representative of the extraordinary work that our men and women in uniform do all around the world -- Navy Corpse-Man Christian Brossard." –mispronouncing "Corpsman" (the "ps" is silent) during a speech at the National Prayer Breakfast, Washington, D.C., Feb. 5, 2010 (The Corpsman's name is also Christopher, not Christian).
6. "The reforms we seek would bring greater competition, choice, savings and inefficiencies to our health care system." --in remarks after a health care roundtable with physicians, nurses and health care providers, Washington, D.C., July 20, 2009.
7. "It was also interesting to see that political interaction in Europe is not that different from the United States Senate. There's a lot of -- I don't know what the term is in Austrian, wheeling and dealing." --confusing German for "Austrian," a language which does not exist, Strasbourg, France, April 6, 2009.
8. "No, no. I have been practicing...I bowled a 129. It's like -- it was like Special Olympics, or something." --making an off-hand joke during an appearance on "The Tonight Show", March 19, 2009.
9. "I didn't want to get into a Nancy Reagan thing about doing any seances." --after saying he had spoken with all the living presidents as he prepared to take office, Washington, D.C., Nov. 7, 2008.
10. "What I was suggesting -- you're absolutely right that John McCain has not talked about my Muslim faith..." --in an interview with ABC's George Stephanopoulos, who jumped in to correct Obama by saying "your Christian faith."
11. "I'm here with the Girardo family here in St. Louis." --speaking via satellite to the Democratic National Convention, while in Kansas City, Missouri, Aug. 25, 2008.
12. "Let me introduce to you the next President -- the next Vice President of the United States of America, Joe Biden." -- Springfield, Illinois, Aug. 23, 2008.
13. "On this Memorial Day, as our nation honors its unbroken line of fallen heroes -- and I see many of them in the audience here today -- our sense of patriotism is particularly strong."
14. "In case you missed it, this week, there was a tragedy in Kansas. Ten thousand people died -- an entire town destroyed." --on a Kansas tornado that killed 12 people.
15. In London when he signed the guest book at Westminster Abbey. Obama reportedly asked someone nearby what the date was and they told him "May 24," assuming incorrectly that the leader of the free world would know what year it was (2011). Instead, Obama wrote in his leftist scrawl "24 May 2008."
16. How about the movie DVDs for Prime Minister Gordon Brown that wouldn't work on British players, and the iPod for Queen Elizabeth II thoughtfully pre-loaded with some of the Real Good Talker's own speeches.
17. “First time I saw 10th Mountain Division, you guys were in southern Iraq. When I went back to visit Afghanistan, you guys were the first ones there. I had the great honor of seeing some of you because a comrade of yours, Jared Monti, was the first person who I was able to award the Medal of Honor to who actually came back and wasn’t receiving it posthumously.“
18. Not only does Obama not know how many states there are, he also doesn’t know where they are. During the 2008 primary campaign, he explained why he was trailing Hillary Clinton in Kentucky: “Sen. Clinton, I think, is much better known, coming from a nearby state of Arkansas. So it’s not surprising that she would have an advantage in some of those states in the middle.” Obama’s home state of Illinois, and not Arkansas, shares a border with Kentucky.
19. Remember when he claimed that the civil rights march in Selma, Alabama resulted in his birth? “There was something stirring across the country because of what happened in Selma because some folks were willing to march across a bridge. So they go together and Barack Obama Jr. was born”. The only problem was that Obama was born in 1981 four years before the march at Selma.
20. How about his speech in Missouri when he said that one of the problems in the Afghan war is a lack of translators because “if they are all in Iraq, then it is harder for us to use them in Afghanistan.” Well it would be hard to use them anyway since Iraqis speak Arabic or Kurdish while Afghans speak Pashto and Farsi.
Has anyone heard of FICA? The other day, Sean Hannity was interviewing Laura Ingraham and was ranting about Obama’s threatening seniors regarding social security checks. Recall the president said that he does not know if the money would be there in August to pay seniors if the debt ceiling were not raised. Hannity said that there were enough revenues to pay seniors. Ingraham rightly pointed out that social security is a pay as you go system with current payments coming out of FICA receipts. Hannity was confused. He said “I thought they had depleted the lockbox.” Ingraham patiently pointed out that yes: those monies had been siphoned off into the general tax fund and spent but still there were enough coming in from FICA to pay current recipients. I don’t think Hannity ever understood. Fast forward to an interview of an Obama supporter and Stuart Varney of the Fox News network. The Obama apologist said that the payments to the government were lumpy and the needed amount may not be at the treasury when the checks had to go out. Varney then insisted that the treasury secretary could then make a decision as to who would get paid when and the president was being irresponsible. At no time in the conversation were FICA payments even mentioned. At present the estimate is that we have another 25 years or so until FICA receipts no longer cover promised payments. Perhaps that is why Harry Reid said that we don’t have to worry about social security until 2036. Maybe Harry Reid should tell this to Obama in the debt ceiling talks.
Have you ever seen a commercial and scratched your head and said "that makes no sense"? Actually, let me re-phrase that: the latest commercial that makes no sense is the American Postal Workers Union currently running a commercial saying that it delivers 8 zillion pieces of mail annually (give or take a zillion) without costing the taxpayers a dime. It says it is fully funded by what it charges for services. Huh? I thought the Post Office ran a deficit last year of $8.5 billion and it was the fourth straight year of losses. It lost $2.2 billion last quarter. If it is not getting subsidized by taxpayers then how can it stay in business? The commercial is parsing the facts (lying). Direct subsidies from taxpayers ended in 1982. Since then the Post Office has covered its deficits through borrowing rights from the Treasury (taxpayers). It owes the Treasury (taxpayers) over $4 billion and has a revolving credit line of $3.4 billion and has said that if it does not get relief it will default on its payments.. It also gets indirect subsidies from the taxpayers having to only pay 0.3% on outstanding debt and its credit line. The taxpayer subsidies also extend to its not paying any taxes, federal, state, local and, no vehicle registration fees.
Next month I will get my first social security check. At my age, my doctors’ visits are now regularly scheduled events (annual check up, dermatologist, allergist, and periodontist). Since I will be leaving Blue Cross Blue Shield and will be under Medicare I asked each if they would still keep me as a patient. They all said yes. I was relieved but something occurred to me. Under my present health care plan, the provider seldom pays 100 percent of the bill – even with the co-pay. I always get a bill for what was not covered. Since the Federal government’s solution to the costs of medicare is to pay the doctors an ever decreasing percentage of the bills, the talking heads say that the doctors are getting squeezed and will start accepting fewer and fewer medicare patients if they accept them at all. This makes no sense to me. It simply means that instead of getting a bill from my doctor for $50, it will be for a larger amount. Currently if I did not pay my doctors, they would drop me even though I have Blue Cross Blue Shield. So why would they drop me if I have medicare if I continue to pay the amount not covered by the government? In essence, medicare is being means tested as well as rationed. It is rationed because as most of us already know, medicare has a higher denial rate than any private insurer. It also covers fewer prescription drugs. So I don’t understand no one has ever pointed this out. There is no need for “death panels” in medicare because it is already being rationed. Thus, there should be no need for death panels either in Obamacare for the same reason.
I was going to write about how both sides on the debt ceiling debate were deceiving the American public but my old friend Larry Lindsey beat me to it. In his Wall Street Journal opinion piece "the deficit is worse than we think" (June 28) Larry points out that the numbers are cooked. First, an important question is what interest on the debt is being used to calculate how much interest is owed on the existing debt. The current rate is artificially low as a result of ramped up purchases of Treasurys by the Fed. If the Fed comes to its senses and conducts a more rational policy, interest rates will rise. Larry points out that if the rate goes up to 5.7 percent which is the average over the past 20 years, the deficit rises by $420 billion in 2014. Second, the revenue projections are based on economic growth forecasts put together by Rosie Scenario. The forecasts project growth rates in excess of 4 percent per annum even though we have been growing at half that. A one percent lower growth rate brings in $750 billion less in revenues PER YEAR! Third, Larry finally reiterates that the costs of Obamacare - like most government cost estimates - will be much higher than the political-based numbers foisted on the American public. Larry says be prepared for costs higher by $75 billion rising each year. I know it is too much to expect the administration to put forth more rational numbers but the republicans accepting the administration's numbers is inexcusable. All this means that whatever "solution" is decided upon by the congress and the president, the issue will have to be revisited after the 2012 election. Everyone loves to talk about the so-called "nonpartisan congressional budget office". I used to be a visiting scholar at CBO and why its called nonpartisan when its head is appointed by the house majority leader president pro tempore of the senate is beyond me. But John Boehner needs to make clear to the CBO chairman Doug Elmendorf that he expects realistic numbers rather than those that all of us know are wrong.
When the president lied about not knowing whether there would be enough money if the debt ceiling were not raised to pay seniors, the disabled and the military, the talking heads on the right went ballistic. They were saying that this was a typical democratic tactic to scare old people. Well as an old person I am insulted. I was not scared nor do I know any other old person who was scared. I am reminded of what my father told me when he said "Please tell me when I get stupid." What he meant was that he was getting calls and solicitations that only made sense if he had lost all his faculties - gotten stupid. Well my dad died at 86 and never got stupid. The talking heads are somehow assuming that us old folks somehow have gotten uninformed, or believe anything that apparently only the democrats tell us. It also puzzles me how anyone came to the conclusion that a failure to increase the debt ceiling would somehow only cause the voters to take it out on the republicans. It seems to me that if the republicans would somehow shed the mantle given to them by George Will as "the stupid party" they would in the house pass the Toomey bill to require the payment of the interest on the debt (so no default), entitlements and the military. The budget wonks tell us that that would leave $30 billion per month available for other spending. Personally I feel that if the government cannot get by on a mere $30 billion a month, it should not exist period. However, it would make the politicians earn their money by allocating it and making those tough decisions. Getting rid of all the Federal agencies except those specified by the constitution would be a good first step. As I said in the posting on "What would Adam Smith do?" if the government only performed its constitutional functions and the roles outlined in the Wealth of Nations, I bet we could get by on $30 billion and that amount would increase monthly as the debt decreased monthly as it matures and is not increased.
Whenever states have contemplated cuts during budget crises, they always pick high profile cuts like shutting down parks, cutting teachers, firefighters and police. They never talk about cutting faceless staffers in the bureaucracy or duplicative programs. By cutting stuff that voters like, the tactic is intended to leave spending alone so voters will endorse increases in taxes. The same tactic has now occurred at the federal level. The president has just said "I cannot guarantee that those checks (social security and military pay) go out on August 3rd if we haven't resolved this issue. Because there may simply not be the money in the coffers to do it." Obama said this in an interview with CBS Evening News. This president lying is nothing new. But this is outrageous and of course the interviewer on CBS News did not call him on it. All of us know that the government gets enough money to pay the interest on the debt, all entitlement payments and pay the military and even have a few billion left over. Pat Toomey (R-PA) had introduced legislation to mandate that the government must continue to pay these first knowing that the administration would try to play these games. By threatening to withhold these checks, Obama is hoping that the voters will pressure the republicans to raise the debt ceiling by raising taxes and not lowering spending significantly. Well if the republicans cave and fall for these disgraceful tactics then they are just fools. Only those politicians in districts populated by those who do not pay taxes should be able to safely vote for an increase in taxes. Even those who vote to increase the debt ceiling while decreasing spending should be in peril at the polls since spending cuts are never certain. The only certainty is that with no increase in the debt ceiling the federal government cannot increase spending. Ladies and gentlemen: Just say no.
I have never understood how wealthy politicians could bash themselves. Obama, Pelosi, Harry Reed, Chuck Schumer have taken up the mantra of railing against tax breaks for millionaires and billionaires. This has also been taken up by the vast majority of the leftist talking heads on talk radio and the news channels. During the current discussions on raising the debt limit (see my Just say no in March) the president has said that if federal expenditures are to be cut, then limiting the tax breaks going to the “wealthy” must be part of the discussion. Of course his definition of the wealthy now includes those making $250,000. As I pointed out before, his singling out of the tax break for corporate jets was merely posturing and typical democrat class warfare in that the tax break was in the stimulus bill that no Republican voted for. I wonder if Claire McCaskill, John Kerry and other democrats with private jets are on board with thiw. Or what about those Gulfstream jets that Nancy Pelosi order for congressional use? I don’t believe that the media cared to point any of this out either to the president or to the public for that matter. The democrats have also railed (notably Nancy Pelosi) that the republicans want to cut medicare and her caucus would never vote for a decrease. Excuse me? Didn’t the democrats cut medicare by $500 billion to get the mathematics of Obamacare to work? How can the democrats get away with telling these two obvious lies? What I want asked is that if the top 50 percent of wage earners pay 96 percent of federal income taxes, how much more are they supposed to pay – 99 percent? Currently the top 1 percent of Americans earn 19 percent of the income but pay 37 percent of the income taxes. How much more is going to have to be ripped off to satisfy the president? The president always talks about “shared sacrifice”. Well if we are to engage in shared sacrifice, then we should include the federal government. While jobs in the private sector workforce has shrunk by 6.6 percent under Obama, the federal workforce has grown by 11.7 percent. With unemployment rate between 9-17 percent (depending on definition) the federal unemployment rate is only 4.4 percent which is essentially full employment. The republicans should say to the president, that revenues are not the problem and consequently are off the table. The solutions lie in spending excesses and only spending is on the table. We should put in place a plan to gradually pare down federal employment. I suggest a three percent cut in total federal employment (including the senior executive service) per year. I also suggest that total compensation for any position in the federal government not exceed the median total compensation for comparable jobs in the private sector.
Sarah Palin, Michele Bachmann, Sharon Angle, Christine O’Donnell, Ann Coulter, Michelle Malkin, Laura Ingraham
We all know of the liberal media bias against conservative women as seen in the vicious attacks and slanted reporting. I googled “media attacks on conservative women” and got hit upon hit of comments many of which would cause me to blush – if that were possible. I then googled “media attacks on liberal women” and got mostly referrals to attacks on conservative women by liberals (with” liberal” and “women” being in the same search) or attacks by talk show hosts on Hillary Clinton, Nancy Pelosi and Maxine Waters. Now I am as put off by Rush Limbaugh’s comments on Hillary Clinton’s ankles and Michele Obama’s weight as I am by liberals referring to Sarah Palin as a cheerleader and Michele Bachmann as a prom queen. However, the liberal media’s domination of the major newspapers and major networks means that more of their comments are widely disseminated than those of talk radio. I know that many would have said “talk radio and Fox News”. But Fox News has had its moments as well. There was Chris Wallace astoundingly asking Michele Bachmann if she was a flake. (By the way, Wallace also had a “gotcha” moment when he asked Herman Cain about “the right of return”. Cain did not have a clue as to what Wallace was talking about. If Wallace had phrased the question differently by asking Cain his position on whether Palestinians should be allowed by Israel to reclaim the land of those displaced by the 1948 Palestinian War, there would have been no hesitation on his part). However, Wallace would not have asked the “flake” question to Nancy Pelosi or Maxine Waters or Sheila Jackson Lee – all certified flakes. Britt Hume even commented that Bachmann’s gaffes may hurt her campaign. What gaffes? The media has pounced on four. The first is her saying that John Wayne was from Waterloo, Iowa. The second was the comment that the Founding Fathers worked tirelessly to end slavery. The third is in a speech in New Hampshire, she said that she was in the state “where the shot was heard around the world at Lexington and Concord.” Lastly some have ridiculed her for saying that the Great Depression was caused by the “Smoot-Smalley tariff”. John Wayne was from Winterset, Iowa which is 150 miles from Waterloo. Some of the Founding Fathers did own slaves but others such as Alexander Hamilton and Ben Franklin were adamantly opposed to it. Significantly, the Northwest Ordinance in the Articles of Confederation of 1787 banned slavery in the new western territories. Would such a stunning ban in 1787 have existed were not there significant opposition to slavery among the founders? Bachmann’s speech in New Hampshire was a gaffe since Lexington and Concord are in Massachusetts. But is this any less of a gaffe than candidate Obama when he said "It is wonderful to be back in Oregon," Obama said. "Over the last 15 months, we’ve traveled to every corner of the United States. I’ve now been in 57 states. I think one left to go”? Maybe Britt Hume would explain to us how this hurt his candidacy. Finally, I am impressed that any person today would even have heard of the Smoot-Hawley tariff much less recognize its critical role in the Great Depression. That she mispronounced it is trivial. Remember when Obama pronounced the “s” in corpsman? Where was the ridicule from the media there? A good deal of the attacks against conservative women come from the liberal equivalents of the talk show right (Chris Matthews, Keith Olbermann, Rachael Maddow, Ed Schultz) who basically speak to themselves because their audience is so small. Indeed, most of us would not have even heard of them if conservative talk show hosts didn’t waste our time relating to us their comments. I have often said that Chris Matthews must talk about Rush Limbaugh so much because he knows that Limbaugh can’t resist talking about himself and in so doing calls attention to Matthew’s show. Finally, Chris Wallace asking Bachmann if she was a flake reflects on Wallace’s ignorance. Here is Bachmann’s response "I think that would be insulting to say something like that because I'm a serious person. I'm 55 years old. I've been married 33 years, I'm not only a lawyer, I have a post-doctorate degree in federal tax law from William and Mary. I've worked in serious scholarship. My husband and I have raised five kids, we've raised 23 foster children. We've applied ourselves to education reform. We started a charter school for at-risk kids. I've also been a state senator and member of the United States Congress for five years." Flake indeed. Any liberal woman with these credentials would be canonized by the media, not scorned.
Last year, when we were flying to Cigar Aficionado's Big Smoke in Las Vegas my beloved Connie was subjected to humiliation by TSA agents at the Knoxville airport. She was wearing a loose fitting skirt (very attractive) and was told that they had instructions to fondle everyone wearing such types of dresses. I wondered if that applied to muslim women. She was irate and is still fuming one year later. Now comes the word that TSA is on the lookout for bombs inside the body - even though there is no documented threat. Give me a break! Are they saying that last year's invasions of privacy are just a minor foreboding of what is to come? Pray tell: how is the TSA going to look for inside the body bombs? Please spare me the lurid details. I can only say that it will be interesting to see whether the flying public finally rebels against this one. My suspicion is that it will be tested on international flights into the United States first rather than domestically. When I flew back from South Africa last year, the scrutiny was much greater than when I flew to South Africa. After the bags getting screened and going through security, we had to go through security again before boarding the plane with the men being separated from the women. I asked what was going on and was told that they were only following instructions from the American government. Well I can tell you this, when Connie and I fly to Las Vegas this year, if they even try to conduct a search like they did last year, we will not allow it and will go to the parking lot, get in the car and drive instead. God knows what we will do if they decide that an aging all-American looking couple poses a threat to national security and decide that we might be carrying a body bomb.
The sainted Anna Jacobson Schwartz once told Ben Bernanke that he was out of his league (http://www.nytimes.com/2009/07/26/opinion/26schwartz.html). She was right. Ben Bernanke has been the most malleable Fed chairman since G. William Miller and is in the discussion for the worse Fed chairman ever (although Paul Krugman would nominate Alan Greenspan). Bernanke has been the ultimate accommodator to the administration. If the Fed did not monetize the national debt by directly buying Treasurys, the fiscal policy initiatives of the administration would have collapsed under their own weight. Let me explain. The administrations' dramatic $2 trillion increase in spending could only occur if they got "revenues" from increasing taxes or by selling Treasurys. They did the latter. However, the market only wants a certain amount of Treasurys for portfolio reasons and will not buy more than that amount. In rides the Fed who then purchases them directly from the Treasury. In addition to buying commercial paper, mortgage backed securities and who knows what from the private sector, the Fed bought from the Treasury as well. Now I am perhaps the only one who is not overly critical of the Fed buying from the private sector. Those purchases are actually collateral for loans at the discount window and will be bought back by the borrower when the loans are repaid. If the loans default then the Fed can either sell the collateral or sit on it. Buying Treasurys directly is entirely a different matter. If the Fed did not buy them, then the ability of the government to expand its spending is curtailed. This is why I would like to see a law prohibiting the Fed from purchasing Treasurys directly except in the case of a national emergency declared by the president and confirmed by a super-majority vote in both houses of Congress. Why the Bernanke Fed has chosen to abdicate its independence is beyond my pay grade but there is hope. With Obama sliding in the polls and looking increasingly like a one term president, Bernanke has a chance to grow a set. If a new president is elected, Bernanke should know that he will not be re-nominated as Fed chair. His only hope would be to start asserting his independence and conducting monetary policy for the good of the country rather than for the good of the party in power. Let's hope that it is not too late.
In the tradition of Socrates who remarked that all Greeks are liars, I often say that I am only prejudiced against prejudiced people. Recently my inbox has been flooded about the decision at Tyson Food's Shelbyville, TN plant to allow Muslim workers to substitute a Muslim holiday for Labor Day. However, the emails don't say that. Instead they say that Tyson Food's is dropping Labor Day for the Muslim holiday which is the Fox News headline (http://www.foxnews.com/story/0,2933,397645,00.html). I wonder if Fox's headline said "substitute" rather than "drop" if the response would have been the same. I am now being urged to boycott Tyson products. Give it a break: read the article and tell me what is unreasonable here. The article states that 250 of the 1,200 employees are Somali muslims and their union (a member of the AFL-CIO) negotiated with Tyson to substitute the holiday for Labor Day (only for the muslims) and provide them a prayer room. The rest of the employees will still have Labor Day as a holiday. This all sounds eminently reasonable to me. The union contract calls for 8 paid holidays a year and Eld al-Fitr becomes one for the muslims and not labor day. Therefore, the muslim workers do not get 9 paid holidays. Note that they still get all of the all-American holidays such as Memorial Day, Independence Day, Thanksgiving and the ultimate irony Christmas. As I responded to the emails, why boycott Tyson? Maybe they should urge a boycott of the AFL-CIO because the union negotiated the provision which was then ratified by all the workers. The hackneyed reaction is by people who have become intolerant toward a religion that advocates intolerance toward other religions, ergo, I am only intolerant against the intolerant. This may be perfectly understandable but I am disappointed nonetheless.
Harold A. Black is professor emeritus in the Department of Finance, University of Tennessee, Knoxville having retired after 24 years of service. He has served on the faculties of American University, Howard University, the University of North Carolina - Chapel Hill and the University of Florida. His government service includes the Office of the Comptroller of the Currency and as a Board Member of the National Credit Union Administration. He also has served on the boards of directors Home Savings of America and its parent company, H. F. Ahmanson & Co., Irwindale, California prior to its merger with Washington Mutual Savings Bank, on the board of New Century Financial Corporation, Irvine, California, then the nation’s largest real estate investment trust and as director and later chairman of the Nashville Branch of the Federal Reserve Bank of Atlanta. He writes an occasional article for the Knoxville News-Sentinel at http://www.knoxnews.com/staff/dr-harold-black/. His web page is haroldablackphd.com