Why are Democrats souring on big government?


According to a new Gallup poll, 72 percent of Americans say that big government is a greater threat to the U.S. in the future than big business or big labor, a record high in the half century that Gallup has been asking the question. The previous high for big government was 65 percent in 1999 and 2000:

And this isn’t just Fox News-watching Republicans who think that Obama is a Communist Muslim born in Kenya who is plotting to seize all privately-owned guns and declare martial law.

Read More At TheWeek.com

On The Debt Ceiling & Drowning the Government in the Bathtub

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The mainstream coverage of the debt ceiling standoff and the prospect of government shutdown and how that thing is seen by the people who might precipitate it is predicated upon a fundamental misunderstanding. To the Tea Partiers and Grover Norquist-Ted Cruz-Rand Paul wing of the Republican Party, a government shutdown is seen less as a potential disaster in which markets and society are sent into turmoil, and more as a potential wonderland of enforced austerity where with the government handcuffed, the creative forces of the free market are finally unleashed.

The libertarian financial analyst Mish Shedlock exemplifies these sentiments:

Looking for a reason to support a government shutdown? If so, please consider Obama Stripped to Skeleton Staff in a Government Shutdown.

Mish points to the austerity measures the government would be put under:

 A U.S. government shutdown means President Barack Obama will have fewer people to cook meals, do the laundry, clean the floors or change the light bulbs, according to a White House contingency plan.

About three-fourths of president’s 1,701-person staff would be sent home. The national security team would be cut back, fewer economists would be tracking the economy and there wouldn’t be as many budget officials to track spending.

Of the total, 438 people work directly for the president. Under a shutdown, 129 could continue working, according to the contingency plan.

Biden, who has a staff of 24, would have had to make do with 12.

Obama’s national security staff of 66 would be cut to 42. Similar staff cuts would be imposed at the White House Office of Management and Budget, the Council on Environmental Quality, the Council of Economic Advisers and the Office of National Drug Control Policy, which are all part of the president’s executive office.

Mish concludes:

Fantastic Idea

If you think that a government shutdown is a fantastic idea (I sure do), then please contact your elected representatives and let them know.

But there are at least two other factors beyond simply wanting less government that may make a government shutdown and debt default attractive to the Tea Party wing.

The first of which is that the austerian worldview exemplified by the Wall Street Journal editorial page — in which large-scale deficit spending was expected to precipitate soaring interest rates and inflation — has largely been proven wrong by events. Interest rates and inflation have remained low. The Tea Party wing of the Republican Party now has an opportunity to try to make their initially wrong predictions come true by throwing the United States into default on its debt, and sending a message to markets and international investors that the US government and US Treasury debt is not a safe asset. Whether or not a government shutdown would actually result in a debt default (the Treasury would under such an eventuality likely prioritise debt service), and whether this would actually lift interest rates significantly are other matters, but shutting down the government and defaulting on the debt would certainly enforce austerity which is what the Republicans and especially the Tea Party wing want.

The second — and perhaps the greater factor — is the desire to prevent Obamacare taking effect. Now, I am not convinced that Obamacare can bring down healthcare costs as much as a Canadian-style or European-style system. Obamacare is certainly not an ideal system, although its earlier implementation in Massachusetts does appear to be fairly successful . But it does bring the United States much closer to something approaching universal coverage. With the message of the last Republican election campaign being that 47% of the population (the “takers”) is mooching off 53% of the population (the “makers”), Obamacare is seen by the Tea Party wing and probably the Republicans in general as the last turning point on the road to socialism. And avoiding the implementation of Obamacare is something that, I think, the Republican Party and especially the Tea Party wing will go all out to do.

Now, how far the Republicans are willing to go down this road remains to be seen. The more moderate wing may be willing to settle for a deal that avoids government shutdown in return for increasing the pace of austerity. But the impending implementation of Obamacare, and the general attraction of a government shutdown will strengthen the will of the Tea Party wing to not negotiate.

Personally, while I do think we are in the long run headed toward a world of increased decentralisation and a lesser state role (primarily as the result of technology), I don’t think a government shutdown will do anything to advance the cause of human liberty. In fact, I think a longer-term shutdown would probably end in civil unrest — a lot of people are dependent on government spending for income — and market turmoil (not least because markets seem to have priced in an easy resolution to the standoff). So the standoff will almost certainly end in a deal permitting a debt ceiling increase. How much carnage will occur before then remains to be seen.

Another Planet

The losers in elections often take the loss badly. Just as some Gore supporters in 2000 shouted about moving to Canada, some Romney supporters have taken the loss particularly badly too:

And perhaps the most poignant:

All the Republican rage made me think about the origins of America. So much emigration out of Europe to America came out of political and religious or ethnic friction and disagreement with the regimes in Europe (and later, the rest of the world). Many, many Americans are the descendants of Europeans who came to America to practise religion or politics the way they wanted to, and not the way that their nation, or the Catholic church, or a Feudal lord wanted them to.

That same independent-mindedness and the hunger for self-governance was the force that gave the Founding Fathers the chutzpah to finally sever ties with the British Empire in 1776 and strike out on their own as an independent nation.

For those who want to strike out into the unknown in the pursuit of self-governance, such options don’t exist anymore. There is no great sparsely inhabited continent spread out (except perhaps Antarctica which is already claimed-for) for those who want to strike out on their own. Those of a libertarian temperament and with a hunger for self-governance used to come to America. But in the modern, globalised world, where can they go?

Where is the next America? Where is the next land that people seeking self-governance can emigrate to?

One prospective answer has been seasteading — moving out onto floating cities in international waters. Perhaps that will satisfy the desires of a few in the coming years, but not everyone wants to live at sea. It is another frontier, but there are many challenges to overcome. For one thing, governments have navies, and may lay claim to successful floating cities near their waters, seeking new tax revenues. Pirates may pose a similar challenge.

In the much longer term, the answer will almost certainly be leaving the planet. The only uncolonised great new continents left are the ones up in space, on other planets.  There is no more effective or complete way to depart. So it is rather poetic that in the past couple of days a new Earthlike planet in a star’s habitable zone has been discovered.

Via the BBC:

Astronomers have spotted another candidate for a potentially habitable planet — and it is not too far away.

The star HD 40307 was known to host three planets, all of them too near to support liquid water.

But research to appear in Astronomy and Astrophysics has found three more – among them a “super-Earth” seven times our planet’s mass, in the habitable zone where liquid water can exist.

Many more observations will be needed to confirm any other similarities.

But the find joins an ever-larger catalogue of more than 800 known exoplanets, and it seems only a matter of time before astronomers spot an “Earth 2.0″ — a rocky planet with an atmosphere circling a Sun-like star in the habitable zone.

The hunger for self-governance led to the birth of America. It seems highly likely, in the very long run, that the hunger for self-governance will be the force that leads not only to local space colonisation (near-earth asteroids, Mars, asteroid belt, the moons of the gas giants) but ultimately deep space colonisation. The private space industry today is already driven by libertarian-leaning individuals like Bert Rutan, Robert Zubrin and Peter Thiel.

Powerful central government drives nonconformists to find ways to escape it. If the only road to self-governance left is up into space, then that is the road that will be taken. In the end, fury over a lost election may be the thing that drives humanity to the stars.

Americans Want Smaller Government and Lower Taxes

From Rasmussen:

A new Rasmussen Reports national telephone survey finds that 64% of Likely U.S. Voters prefer a government with fewer services and lower taxes over one with more services and higher taxes. That’s unchanged from last month and consistent with findings in regular surveys since late 2006. 

In fact, a plurality of Americans have called for small government and lower taxes ever since the days of Reagan.

But it has never worked out like that:

So what’s the difference? Is it that voters outwardly claim to be in favour of smaller government, and then when it comes down to it choose the advocates of big government? I don’t think so — I think it is that voters aren’t being given a real choice.

Here’s the increase in national debt by President:

The reality is that — with the exception of Obama — Americans have again and again opted for a candidate who has paid lip-service to small government. Even Bill Clinton paid lip service to the idea that “the era of big government is over” (yeah, right). And then once in office, they have bucked their promises and massively increased the size and scope of government. Reagan’s administration increased the debt by 190% alone, and successive Presidents — especially George W. Bush and Barack Obama — just went bigger and bigger, in total contradiction to voters’ expressed preferences.

The choice between the Republicans and Democrats has been one of rhetoric and not policy. Republicans may consistently talk about reducing the size and scope of government, but they don’t follow through.Today Ron Paul, the only Republican candidate who is putting forth a seriously reduced notion of government, has been marginalised and sidelined by the major media and Republican establishment. The establishment candidate — Mitt Romney — as governor of Massachusetts left that state with the biggest per-capita debt of any state. His track record in government and his choice of advisers strongly suggest that he will follow in the George W. Bush school of promising smaller government and delivering massive government and massive debt.

As Libertarian presidential candidate and former New Mexico governor Gary Johnson put it:

Pick Obama, pick Romney, government’s going to be bigger. Government’s going to be more intrusive.

So will the American people eventually get what they want? To do that, they have to ditch the hierarchies and orthodoxies of the past. Ron Paul and his tireless band of youthful supporters look set to achieve a strong showing at the Republican convention, as well as so far winning party chairs in Iowa, Colorado, Alaska, and Virginia. The Republican party — currently dominated by ageing tax-and-spend boomer Republicans — is being taken over by the libertarian youth who crave small government at home, as well as a smaller foreign policy. Ron Paul has taken the majority of youth votes in a plurality of states in 2012. And even if Ron Paul is not on the presidential ballot, Gary Johnson — a consistent advocate for lower debt, lower taxes, and smaller government — seems set to take a large slice of the vote in November.

As the mainstream parties continue to defy a majority of voters’ will and accrue more debt and make government bigger and bigger (while failing to address problems of unemployment and underemployment)  it seems natural and inevitable that more and more Americans — especially young Americans (who tend more and more to be unemployed and underemployed) — will abandon the sclerotic big-government Republicans and Democrats.

Trouble is, things may go badly wrong before Americans get the chance to put a practitioner of smaller government into power. Already a majority of Eurasian manufacturing and resource-producing nations have ditched the dollar for bilateral trade. Dollars and treasury bonds have long been America’s greatest export — and the greatest pillar of support for growth in spending and welfare. With the dollar’s downfall, smaller government may not be a choice.

Obama’s Fiscal Projections: A Doorway to a New Dimension of Reality

Submitted by Andrew Fruth of AcceptanceTake

Get ready to travel to a new dimension of sound, sight, and mind because President Obama has proposed to spend less on discretionary spending in 2022 than in 2011 in real and nominal terms.  That means he expects to spend fewer dollars in 2022, even after being debased by inflation, on discretionary functions than he did in 2011.  These projections come from a President that increased the entire U.S. debt by over 45% in a matter of 4 years.  We may have a credibility problem:

A closer look at the 2013 budget shows that Obama, in inflation and population adjusted dollars, wants to decrease discretionary spending from $1261 billion dollars in 2013 to $982 billion in 2022 for a decrease of 22.1%!  So, for the exception of Social Security, Medicare, Medicaid, other mandatory programs, interest, TARP, and a very small amount for “adjustments for disaster costs,” Obama plans to cut spending by 22.1% in adjusted dollars. Do we have any believers out there?:

But it doesn’t stop there.  Look at the interest rates the government expects to pay on its public debt.  The net interest row does not include intergovernmental debt.  All years are estimates except for 2011:

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
2.27% 1.94% 1.96% 2.30% 2.75% 3.22% 3.60% 3.85% 4.04% 4.18% 4.27%

Public debt is set nearly to double from 2011 to 2022 and increase by $9.358 trillion.  Yet, by 2022, the government expects to pay interest rates on the public debt that are less than they paid on the total U.S. debt in the 1990s.

You may notice a slight difference between the interest rate in the table above and the interest rate shown in 2011 on the chart below.  Unlike the table above, the chart below measures average interest rates on the federal debt outstanding, so it includes intergovernmental debt interest.  The interest rates on the intergovernmental debt brought the average up from the table above to the chart below.

The differences, however, are slight.  The 1990s still had significantly higher interest rates in the 1990s than Obama projects, even for 2022:

You might be thinking that the government plans on the Federal Reserve buying up Treasuries to keep Treasury rates low.  Well, maybe, but the government only projects the “GDP chained price index” to range from 1.6%-2.1% from 2011 to 2022.  Needless to say, unless banks, as a whole, are deleveraging throughout the whole period, the Federal Reserve’s intervention in the Treasury market would create more than 2.1% price increases.

But wait, that can’t be because if the banks are deleveraging, then it’s really unlikely the economy is going to be growing as strong as Obama projects.  From 2012 through 2018, Obama projects the economy will grow between 2.7%-4.1% YOY in real terms.  Then the real growth rate drops off to 2.7%-2.5% from 2019-2022.  For comparison’s sake, the economy grew in the 2%-4% range from 2003-2006 during the boom times.

So, then, where is the $9.358 (minus whatever amount has been borrowed so far in fiscal year 2012) trillion at 1.94%-4.36% going to come from if not the Federal Reserve?  Pick you choice: a) the free market in the U.S. b) China c) Japan d) not going to happen.  I would provide an answer key for this question, but I don’t want to insult your intelligence.

So, if the government does plan on borrowing this much, assuming it can get it from somewhere other than the Fed, what happens if interest rate levels rise to rates similar to those found in the 1990s and 1980s?  Well, fortunately, in my book The Debtor’s Ultimatum: Defy, Debase, or Default I’ve done the research.  By the way, the following chart doesn’t even include the interest on the additional interest that would develop over this time from higher interest rates.

Here’s the Hypothetical Average Interest Rate Paid on the Public Debt Alone:

Government Numbers for both the chart above and below are sourced from the Midsession Review 2012, so the data are a little bit different from the data mentioned previously that is from the 2013 budget.

Here’s the Net Interest on Public Debt Alone in Billions of $:

Yeah, and there’s even more.  The government receipts projections are incredibly optimistic.  Part of that optimism is due to projected increase in economic growth and part of it is due to Obama’s proposal to let the Bush tax cuts finally expire.  We’ll see if either of those possibilities comes to pass.  I have my doubts about both.

Rather than pontificate, I’ll let you look at the 2013 budget data yourself.  The following are federal receipts, in trillions of dollars.  2012-2017 are estimates:

2003 2004 2005 2006 2007 2008 2009 2010
1.78 1.88 2.15 2.41 2.57 2.52 2.10 2.16
2011 2012 2013 2014 2015 2016 2017
2.30 2.47 2.90 3.22 3.45 3.68 3.92

Did you notice that crazy jump from 2012-2013?  The government is expecting some pretty big economic growth.  We know those increases in receipts are not due to inflation, because the government expects hardly any at all.

Funny, in the 2012 budget, the government had the following data with only 2010 being a non-estimate:

2010 2011 2012 2013 2014 2015 2016
2.16 2.17 2.63 3.00 3.33 3.58 3.82

Notice the big jump from 2011 to 2012 they projected and compare it to the jump from 2011-2012 in the 2013 budget table.  They’re really counting on that surge of receipts, and if they’re off by a year, they’ll just delay the surge another year or so.

Take a look at the 2011 budget.  Only 2009 is a non-estimate year:

2009 2010 2011 2012 2013 2014 2015
2.10 2.17 2.57 2.93 3.19 3.46 3.63

Yep, once again, the projected jump from 2010-2011 was far less than actually occurred.

The President’s budget assumes no increase in nominal dollar spending from 2011-2022, interest rates to stay in the 2%-4% range despite needing to borrow around $9 trillion over the next decade, the Fed to not be a major player in buying that debt, because inflation numbers are low, and expects revenues to get a sudden boost, even after being wrong about his revenue predictions over and over again.  And to top it all off, all of these predictions come from a President who has increased the total U.S. debt by over 45% in his first term of office.  Oh, yes we can’t!

Why the Republican Party Needs Ron Paul

From the Washington Post:

Simply, Ron Paul is just too popular to ignore. Republicans will find it very hard to win with him running as an Independent. If anything, a three-way split might play out even more strongly for Paul, as he can bash both the incumbent and the Republican as emblematic of the establishment — an establishment that more and more is failing America.

Of course, many forces are deeply opposed to Ron Paul, because for better or worse, his small-government anti-Federalist policies are a drastic change from the status quo, and embarrass big-government Republicans like Newt Gingrich, Rick Perry and George W. Bush who claim they want to balance the budget and end up spending a heck of a lot more.

So Paul supporters can expect a deluge of negative claims: claims that he is a racist, claims that his foreign policy is dangerous, claims he wants to return to segregation, claims that he cannot win and is unelectable.

Ultimately, everyone knows that it is the status quo that is more unsustainable than anything else. America is now the most indebted nation in the history of our planet, bogged down in expensive wars and its role as global policeman, and increasingly in denial of her constitution and the principles of her founders. Congress and Obama — as well as extending the reactionary and unconstitutional Patriot Act — have recently signed some of the most reactionary and illiberal legislation ever in the NDAA of 2011, which allows for the indefinite detention of American citizens without due process. Americans voted for Obama hoping for change from the big-spending interventionist corporatism of George W. Bush, and got much more of the same.

Paul’s non-interventionist foreign policy, his civil libertarianism, his strict adherence to the constitution, his rejection of banking bailouts and his willingness to cut spending are not what every voter is looking for, but are a tonic to the disastrous policies of the status quo that are sucking down the American economy.

Of course, many Americans fear radical change. That’s why establishment contenders like Cain, Gingrich, Bachmann and Perry have rapidly risen in the polls and fallen, as voters scrabble around hunting for a viable alternative to the status quo. Paul’s gains have been slow, steady and consistent. This has been in spite of an earlier campaign of media ignorance, and now a campaign of media smears, including the charge that he is either or a racist, or has associated himself with racists.

These media attacks will prove ineffective. Voters are turning to Paul because of his policies, and the fact that he represents a radical departure from what to many Americans is a disastrously failed status quo. He could be the Grand Wizard of the KKK, a shapeshifting Reptilian from Alpha Draconis, or a cross-dressing drug addict, and that would not change a thing because Ron Paul will ultimately be judged on the content of his policies, not superficial smears that have nothing whatever to do with policy.

Voters — middle class voters, poor voters, factory workers, the unemployed — like the idea that the President will cut the debt. Voters like the idea that the President will respect a strict interpretation of the constitution, instead of passing authoritarian legislation like the NDAA, SOPA and the Patriot Act. Voters like the idea that the President will end wars, close foreign bases, and defend America, instead of practicing expensive nation building in the middle east and central Asia. Voters like the idea of not pledging future tax dollars to bailing out badly managed and corrupt banks.

While some of his stances are unpopular with some segments of the population, there is no other declared candidate from either of the major parties who offers any of the above. None. Ron Paul’s rise is just a symptom of the establishment not delivering to the people what they want, need and deserve.