Paul, meanwhile, used the opportunity to give a second airing to the traditional Libertarian principles he espoused as a candidate in 1988 on the Libertarian ticket. Alone among the candidates, he opposed issuance of identity cards to immigrants and called for abolition of the Internal Revenue Service.

Update... Reader Tim Daniels notes,

"I couldn't help but noticing last night that when Paul was answering one of the questions aimed at him ( I don't remember the exact question), host Chris Matthews let out an "Oh, God" when Paul espoused the belief in strict constructionist constitutional ideals. It was as if Matthews was thinking to himself, "Oh, God, here goes this kook again."

Update 2... Paul was unique among the candidates in mentioning inflation, calling it "the inflation tax" and properly blaming the Federal Reserve. The Fed, along with the IRS, is on Paul's list for elimination. From a 2002 statement in Congress, the timing of which was quite prescient, in that it corresponded to the moment at which the Fed was just starting to slip into hyper-accommodative mode and heading toward excessively low 1% interest rates:

Mr. Speaker, I rise to introduce legislation to restore financial stability to America's economy by abolishing the Federal Reserve.

Since the creation of the Federal Reserve, middle and working-class Americans have been victimized by a boom-and-bust monetary policy. In addition, most Americans have suffered a steadily eroding purchasing power because of the Federal Reserve's inflationary policies. This represents a real, if hidden, tax imposed on the American people.

From the Great Depression, to the stagflation of the seventies, to the burst of the dotcom bubble last year, every economic downturn suffered by the country over the last 80 years can be traced to Federal Reserve policy. The Fed has followed a consistent policy of flooding the economy with easy money, leading to a misallocation of resources and an artificial "boom" followed by a recession or depression when the Fed-created bubble bursts.

With a stable currency, American exporters will no longer be held hostage to an erratic monetary policy. Stabilizing the currency will also give Americans new incentives to save as they will no longer have to fear inflation eroding their savings. Those members concerned about increasing America's exports or the low rate of savings should be enthusiastic supporters of this legislation.

Though the Federal Reserve policy harms the average American, it benefits those in a position to take advantage of the cycles in monetary policy. The main beneficiaries are those who receive access to artificially inflated money and/or credit before the inflationary effects of the policy impact the entire economy. Federal Reserve policies also benefit big spending politicians who use the inflated currency created by the Fed to hide the true costs of the welfare-warfare state. It is time for Congress to put the interests of the American people ahead of the special interests and their own appetite for big government.

Abolishing the Federal Reserve will allow Congress to reassert its constitutional authority over monetary policy. The United States Constitution grants to Congress the authority to coin money and regulate the value of the currency. The Constitution does not give Congress the authority to delegate control over monetary policy to a central bank. Furthermore, the Constitution certainly does not empower the federal government to erode the American standard of living via an inflationary monetary policy.

In fact, Congress' constitutional mandate regarding monetary policy should only permit currency backed by stable commodities such as silver and gold to be used as legal tender. Therefore, abolishing the Federal Reserve and returning to a constitutional system will enable America to return to the type of monetary system envisioned by our nation's founders: one where the value of money is consistent because it is tied to a commodity such as gold. Such a monetary system is the basis of a true free-market economy.

In conclusion, Mr. Speaker, I urge my colleagues to stand up for working Americans by putting an end to the manipulation of the money supply which erodes Americans' standard of living, enlarges big government, and enriches well-connected elites, by cosponsoring my legislation to abolish the Federal Reserve.

When Bush vetoed the Supplemental Appropriations bill over conditions on Iraq, also vetoed were provisions in that bill doling out some $25+ billion in non-defense spending, most of which was pork. (This is also called the "payola" scam b/c without the pork spending as an inducement, Pelosi would not have gotten the votes from her fellow Dems to pass that bill.)

So the word from my inside sources on Capitol Hill, the House Appropriations committee will trim that to $21+ billion as they negotiate with Bush over the kind of Iraq conditions he will accept. Pelosi still needs to play the "payola" game with her Dems but this time she gets the WH to yield. Budget hawk Republicans are worried. Ditto the tax cutters. Ugly game, ain't it?

The Dems are also working on an AMT "fix" which will merely shift more of AMT's burden up the income ladder. The Dems hope to force Repubs to choose between either protecting the highest income taxpayers earners (top 1% is mentioned) and the tax relief for the millions now paying AMT.

AMT of course was what the Dems enacted decades ago to hit the-then top 225 taxpayers then paying little or no tax (due to numerous deductions and exemptions) and to ward off the prospect of more fundamental tax reform. AMT is their tax policy -- and it mostly works to shield high taxes by certain blue states such as NY.

Because the Dems are very clever and now in the majority, they get to set the agenda. Someone from outside the sausage factory needs to blow the whistle before Bush gets cornered into signing onto billions in new spending (expect him whittle it down to $15-18B or so) and later be cornered into accepting some crappy AMT "fix" which just helps the Dems and screws productive people like you and me.

So...what to do? Blow the whistle that a weakened Bush will be forced to accept over-budget spending and a bad AMT deal unless he snaps out of his funk. Solution: refuse to go along with any non-defense, non-emergency spending in the War supplemental and call for either the repeal of AMT (redirecting taxpayer anger where it should be at the states doing the over-taxing) or cut the AMT rate to 20%, thereby enacting a flat tax in one fell swoop.

I am a practical lawyer-lobbyist and an experienced one. It is my opinion that this strategy might, repeat might, work but first someone has to shine a light on the problems and propose an alternative. At a minimum, it will stop the bleeding.

So...to all those amateur observers of the Washington game who think divided gov't is good because the excesses of both parties are gridlocked, I say wake up. Pelosi & Company has found the key to the lock! It's Bush's weakened stature and his desperation on funding the surge in Iraq. Once they break free, the Dems will hit the accelerator on spending and escape from the predicted AMT mess they created.

So...Republicans on the Hill need to push back on both Bush and Pelosi -- freeze spending and either repeal or lower drastically the AMT tax.

In the prelude to the Iraq war and the early days of the war, Knight-Ridder stood apart from most of the mainstream press in consistently raising doubts about the Bush administration’s claims, later discredited, that Saddam Hussein had weapons of mass destruction and ties to Al Qaeda. Bill Keller, executive editor of The New York Times, said that record contributed to his selection of Mr. Hoyt.

Update... Here's Hoyt a year ago giving a lecture -- that's him behind the podium from which the sign has fallen to the floor (good to see he's in control of the details). He said at that lecture,

Hoyt faulted the Bush administration for curtailing access and punishing journalists who dare question spoon-fed conservative talking points...

“Not since Vietnam and Watergate have relations between the government and the press been as strained as they are now,” he added. “Powerful forces are very much against our getting the truth and printing it.”

...“People at the top of the administration were of one mind,” he said. “We had to dig elsewhere to find information.”

The easy solution [to Social Security and Medicare solvency] is to change the demographics by increasing the number of workers. This can be achieved by allowing enough foreigners to work in the United States on some kind of work visa. These foreign workers would pay enough US taxes to keep Social Security and Medicare solvent, would not be citizens, would not vote, would not be entitled to remain in the United States indefinitely, and, best of all, would not be entitled to Social Security or Medicare payment themselves.

And note the extremely eccentric use of quotation marks. What were they "thinking"?

Posted by Donald L. Luskin at 12:48 AM | link    

Wednesday, May 02, 2007

Posted by Donald L. Luskin at 3:58 PM | link    

Tuesday, May 01, 2007

And of course the New York Times yammers about them more than the Wall Street Journal. According to a publication of the St. Louis Federal Reserve,

First, “recession” stories seem to exhibit normal business cycle characteristics; the number of stories rises during periods of slow growth and recession and remains low during periods of economic expansion. Second, recession stories seem to peak toward the end of the recession, or shortly after, and then fall sharply—which suggests that this indicator might be useful in helping identify troughs, though perhaps less so for peaks. Third, although the two newspaper counts show a high degree of correlation (0.86), the number of recession stories that appear in the New York Times is usually larger than the number that appear in the Wall Street Journal. This was particularly evident in the 1973-75 and the 1990-91 recessions. Finally, despite a noticeable jump in the number of “recession stories” in the Wall Street Journal in March 2007, both series remain at levels consistent with economic expansion.

Thanks to our monetary affairs correspondent "Irrational Exuberance" for the link.

Posted by Donald L. Luskin at 9:55 PM | link    

I'M SO PROUD TO BE REPRESENTED BY THIS WOMAN   Makes me go all weak in the knees when I think about what a privilege it is to be a Californian. From The Hill:

California Sen. Dianne Feinstein (D) chairs the Senate Rules Committee, but she’s also a Cardinal. She is currently chairwoman of the Interior, Environment and Related Agencies subcommittee, but until last year was for six years the top Democrat on the Military Construction, Veterans Affairs, and Related Agencies (or “Milcon”) sub-committee, where she may have directed more than $1 billion to companies controlled by her husband...

The problems stem from her subcommittee activities from 2001 to late 2005, when she quit. During that period the public record suggests she knowingly took part in decisions that eventually put millions of dollars into her husband’s pocket — the classic conflict of interest that exploited her position and power to channel money to her husband’s companies.

In other words, it appears Sen. Feinstein was up to her ears in the same sort of shenanigans that landed California Rep. Randy “Duke” Cunningham (R) in the slammer. Indeed, it may be that the primary difference between the two is basically that Cunningham was a minor leaguer and a lot dumber than his state’s senior senator.

Posted by Donald L. Luskin at 9:51 PM | link    

NO WONDER JOBS ARE GOING OVERSEAS   Would you want this idiot from Michigan working for you? A reader responds to my latest NRO column attacking Lou Dobbs:

Hey momma's boy, you don't understand what Lou Dobbs, Pat Buchanan, Tom Tancredo, Duncan Hunter, Phyllis Schlafly are talking about? Could it be because you don't actually work for a living. Pull your head out of your ass - we have replaced higher-paying, middle class jobs with retail and restaurant jobs, you jack-ass. You're educated beyond your intelligence.

It's because of "uber-free-traders" like you that our country is losing sovereignty, losing technical/industrial skill-set and weakening to become just another Spanish-speaking, dumbed-down polyglot "region" (not a nation) that devalues citizenship all for the sake of increasing economic growth by a fraction of a point.

You're not an American - you're a momma's boy. Remember that.

Raymond Golich
Michigan

Update... Economist John Seater observes,

According to government data, jobs are not going overseas, nor are jobs or incomes in the US being downgraded. However, jobs are leaving Michigan, and Michigan's economy is falling apart. Guess what kind of people are being left behind.

Update 2... David Hogberg suggests that Raymond ask Jeff Daniels for a job.

Posted by Donald L. Luskin at 2:08 PM | link    

GROPING WITH OTHER PEOPLE'S MONEY   From the New York Times:

When Maine became the first state in years to enact a law intended to provide universal health care, one of its goals was to cover the estimated 130,000 residents who had no insurance by 2009, starting with 31,000 of them by the end of 2005, the program’s first year.

So far, it has not come close to that goal. Only 18,800 people have signed up for the state’s coverage and many of them already had insurance.

“I think when we first started, in terms of making estimates, we really were kind of groping in the dark,” said Gov. John E. Baldacci, who this month proposed a host of adjustments.

How would the Times have covered this story if a similar failure had occurred on the Bush administration's watch, or in corporate America?

Posted by Donald L. Luskin at 8:59 AM | link    

DEMS AND TECH, A LOVE STORY   Bloomberg reports an amusing fantasy:

Silicon Valley companies are poised to score their biggest gains in Washington since the glory days of the Internet bubble, courtesy of House Speaker Nancy Pelosi.

Democrats in the House and Senate are pushing legislation - - including an overhaul of patent law, an increase in visas for highly skilled workers and more federal funds for research and development -- that has long been on companies' wish lists.

This ``Innovation Agenda'' was developed over the past two years by Pelosi, 67, and other California Democrats in discussions with executives from Silicon Valley companies such as Cisco Systems Inc. and Google Inc. With the Democrats in control of Congress since January, the industry now stands to reap its greatest legislative haul since the late 1990s, when companies such as Microsoft Corp. obtained a liability shield for the ``Y2K bug'' and enhanced protections for patents and Web addresses.

My DC lawyer/lobbyist friend says,

I've seen this movie so many times...I keep hoping against experience it will end happily once.

Republicans do 97% of the heavy lifting on the real issues which foster a successful business climate for the high-tech (and other) industries -- free trade, low taxes, reasonable levels of regulation, tort reform, etc. -- while Democrats promise a few mostly small things they later mostly fail to deliver. So, which suitor wins the love?

Posted by Donald L. Luskin at 7:40 AM | link    

WILL THE REAL JOE LAVORGNA PLEASE SHUT UP?   Here's the YouTube replay of my Kudlow appearance yesterday. It's one thing for guests on shows like this to stimulate an active debate with other guests, but Joe Lavorgna is turning out to be just a plain bad actor. It started last week. And now yesterday, well, judge for yourself. In my view, Joe can disgaree all he wants, but he ought to keep his mouth closed long enough to find out what he's disagreeing with -- or he's doing nothing more than showing how rude he is. Let's hope he's a little more sophisticated when he deals with Deutschebank's clients.

Posted by Donald L. Luskin at 12:43 AM | link    

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Monday, April 30, 2007

FRONTIERS OF FREAKONOMICS   From reader Mark Spahn:

A sentence from the article "Freaks and Geeks: How Freakonomics is ruining the dismal science" by Noam Scheiber in the April 2, 2007 issue of the New Republic:

"Judging from the dizzying sales of Freakonomics and the thousands of lecture halls across the country now bursting with econ majors, [these economics papers on non-economic topics like sumo wrestling and bagel filching have] also been wildly successful at *ginning up* interest in the discipline." (Emphasis added.)

It is curious that most dictionaries do not list this common transitive verb phrase "to gin up". In most cases, "to gin up" means (1) to devise, to invent, to create, to come up with. This meaning is supported here. But in the above quote, "to gin up" seems to mean (2) to stimulate, to stir up. This meaning is supported here.

Let's try a little Freakonomics-like hypothesis-spinning... Hypothesis: Humans use "to gin up" in sense (1); Vulcans use "to gin up" in sense (2).

As is well known, Vulcans are a humanoid species from the planet Vulcan. Vulcans are recognizable by their pointier-than-human ears, their toupe-like haircut, and their five-letter names that end in the letter "k", e.g., Spock, Surak, Tyvek (audaciously smothering our planet in his so-called "home insulation").

In recent years, Earth has been the target of a stealth campaign of takeover by Vulcans who masquerade as humans, but who are unable to completely conceal their Vulcan traits. The well-eared Barak Obama has been heard to use "gin up" only in sense (2), which is consistent with the hypothesis. Barak's fellow candidate for president, Dennis "DeniK" Kucinich, is also a fellow Vulcan, as proved not only by his nickname but also by this photo of him with his comely human spouse, showing his prominent ears and characteristically Vulcan haircut.

So here is a test of the hypothesis: Does Kucinich use the term "to gin up" in sense (1), or in sense (2? If the latter, the hypothesis is confirmed. But I have thus far been unable to catch DeniK using the term "to gin up".

Mark Spahn@VulcanWatch.org

Posted by Donald L. Luskin at 1:56 PM | link    

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