THE CORRAL

Today, the Senate will decide whether or not America will have a national budget. Most likely, the Democrats who comprise the majority of the Senate will decide, for the third straight year, that we will not. They will probably decide that no budget is better than a budget that does not fulfill all their big-government, rainbow-emitting unicorn and fairy dust dreams. We’ll probably continue in our current situation in which our government lurches from “crisis” to “crisis” without a coherent plan while it stacks another trillion dollars or more of debt on top of the 16 trillion dollars we’ve heaped on our children and grandchildren already.

I know that comes across as awfully cynical, so let me point you over to the Washington Free Beacon for a summary of today’s Senate schedule.

Senate Democrats are poised to continue their impressive streak of budgetary negligence on Wednesday by unanimously rejecting as many as five different budgets, including the one offered by President Obama. Republicans, meanwhile, are hoping that voters will pick up on the disturbing trend.

The Democratic-led Senate has not formally proposed a federal budget resolution in more than three years, and is not expected to offer one Wednesday. Senate Majority Leader Harry Reid (D., Nev.) and Budget Committee chairman Kent Conrad (D., N.D.) have made explicitly clear that they have no intention of doing so before the November election.

Senate Republicans plan to offer four GOP budgets—authored by Sens. Mike Lee (R., Utah); Rand Paul (R., Ky.); Pat Toomey (R., Pa.); and House Budget Committee chairman Paul Ryan (R., Wis.)—as well as the president’s budget. None of them are expected to draw any support from Democrats.

I’ve written about some of these budgets here before (Lee’s and Paul’s here, Ryan’s here, and the President’s here). Most of them would be a vast improvement over our current situation. Even the President’s budget would be useful, inasmuch as it would force us to decide between immaturity and maturity. That, however, is a decision Democrats are not willing to take, which is why we haven’t had a budget for well over one thousand days.

We ought not tolerate such neglect from those we have hired specifically do conduct the business of government responsibly and with deference to us. If we can not convince them to do their jobs, then we should toss them out of office and replace them with people who will.

I’m not entirely willing to let Senate Republicans off the hook, though. Harry Reid (D-NV), who leads the majority, is one man, even though he has wielded an impressive array of rules and tools like Rutger Hauer wielded his cane in Blind Fury. He is not an impassable obstacle and voting him out of office is not the only way to get around his dogged determination not to pass a budget. Surely, people smart enough to win a statewide election can figure out now to get a budget passed around the blocking maneuvers of one man. I admit I could be wrong about this and Harry Reid could be not a man but a budget-thwarting machine sent to our time from the future to ensure unlimited government funding to a computer system that will later become sentient and destroy all humanity but that seems like a remote possibility. Harry Reid really is just a man and there are ways to get around him. It would be a very good idea for Republicans who prize responsible government to put a few of their Reid-avoiding ideas into play so America can have a federal budget once again.

A funny thing happened on the way to Happy Shiny Obamacareland. See, the President promised that no one would have to give up their much-beloved health care plans. If we have a plan we liked, he said so often and with such mechanical regularity that I had to resist stuffing a cracker into his mouth, we could keep it. Without that promise, Obamacare could not pass. No one in their right mind would voluntarily hand over a health insurance plan they liked for one run by the same type of bumbling, overpriced, under-accountable bureaucrat who runs the GSA, IRS, or TSA.

So that promise provided security. Not only would Obamacare provide health insurance for everyone who would not or could not get it on their own well enough that it would actually reduce the deficit but it wouldn’t affect the average American’s health care at all. Indeed, the President and his Democratic allies promised that Obamacare would contain dire penalties to any company that did drop people from their health insurance plans.

Except that someone forgot to tell all the businesses who actually buy the policies. According to a recent survey by the House Ways and Means Committee, plenty of companies do not feel particularly bound by the President’s empty promise. In fact, they think the penalty isn’t so much a penalty as it is an inducement.

The report, published May 1, surveyed 71 of the 100 companies in the Fortune 100 list of large corporations and finds that all of them would save considerable amounts of money by dropping their health care coverage instead of complying with the Obamacare insurance mandate.

“According to data provided by the 71 Fortune 100 companies that responded to the inquiry, they could save a total of $28.6 billion in 2014 alone if they stopped offering health insurance to their U.S. employees and instead paid the employer mandate penalty for not doing so,” the report said.

Uh oh.

Let’s review that, just for a moment. Every single Fortune 100 company — these are not Mom and Pop corner store operations but major companies with thousands if not tens of thousands of employees — would rather pay the Obamacare fine than continue to provide health care coverage to their employees.

That makes good economic sense. Companies, run by and owned by fairly intelligent human beings, know that higher health care costs are coming. Those are costs they will have to absorb unless they can find some way of reducing them. Now here comes Obamacare, like a nattily-clad Spanish gentleman, to rescue them! Of course they’re going to drop all their employees to pay a one-time fine that will be a lot lower than many, many years of government-elevated costs.

That “why” is easy to see. What is less easy to see is why the Democrats would write a low with such an obvious way for businesses to make the President a liar. My friend Duane Lester has the answer, which was right in front of us the whole time. When not just 71 companies, but thousands, drop their health insurance plans and shove millions of Americans onto the Obamacare government plans, we will have de facto government-run health care. It will be a simple matter to move the whole system to a single-player health system, the holy grail of the progressive movement since at least the days of FDR.

And if you think our deficit is bad now, just wait until we get that bill.

If you’ve followed the coverage of the election of France’s new President, the Socialist Francois Hollande, you might have caught the faint whiff of an agenda at work. Let me show you a few headlines from early in the week to make that whiff more of a, how do you say, forte odeur.

“France’s Hollande to buck Europe’s austerity trend” – CBC News, 5/7/2012
“French Socialists celebrate as Greece voters reject austerity – as it happened” – The Guardian News Blog, 5/7/2012
“Anti-austerity ballot backlash rattles euro zone” – Reuters, 5/7/2012
“Austerity now a dirty word in Europe” – USA Today, 5/7/2012

No doubt you see the common thread here. The votes in France (and to a lesser extent in Greece) toward unabashed Socialism was a rejection of an “austerity” program that cut government spending, forced people to work longer work weeks, reduced pensions given by the government, deprived babies of lollipops, and forced old people to eat dog food directly from the can without even heating it up first.

The problem with the entire “austerity” narrative is that it isn’t true. European governments did not reduce spending drastically. They did not cut pension or welfare programs much at all; indeed, government spending across most of Europe during the so-called time of austerity increased, in some cases dramatically. That is the finding of a brief look across Europe by Veronique deRugy, who published what she found at NRO’s The Corner. Some of the more obvious points:

• These countries still spend more than pre-recession levels
• France and the U.K. did not cut spending.
• In Greece, and Spain, when spending was actually reduced — between 2009–2011 — the cuts have been relatively small compared to what is needed. Also, meaningful structural reforms were seldom implemented.
• As for Italy, the country reduced spending between 2009 and 2010 but the data shows and uptick in spending 2011. The increase in spending represents more than the previous reduction.

Click on either link and look at the chart she produces. Every single government she tracked, including France, spent more over the entire period. There was no “austerity”. There were no deep or “severe” spending cuts. There was no sense of alarm about the immediate and grave fiscal disasters all of those nations face in the very near future. In fact, most of Europe did exactly what President Obama wants to do with out budget.

The most important point to keep in mind is that whenever cuts took place, they were always overwhelmed by large counterproductive tax increases. Unfortunately, that point is often overlooked. This  approach to austerity — some spending cuts with large tax increases — is what President Obama has called the “balanced approach.”

However, as I have mentioned previously, while this balanced approach may sound good and appeals to our sense of fairness and moderation, but it can be a recipe for disaster. That’s because it fails to stabilize the debt, and it is more likely to cause economic contractions.

We know what successful fiscal adjustment look like and it’s not what was implemented in Europe.

Indeed we do. It requires major structural reform of so-called entitlement programs, real budget cuts (under the baseline), long-term sustainable tax policies that foster growth, and, well, economic growth. Without all of those things, any attempt to turn disaster into prosperity fails. Our representatives in Washington need to keep those points in mind, and shouldn’t fall for the “austerity” canard.

After reading day after day bad news like over-the-top conferences in Las Vegas or prostitutes in Colombia, it’s great to be able to shine a light on positive news. Joe Davidson did just that when he wrote an article in The Washington Post regarding the 54 recipients of the 2011 Presidential Distinguished Rank Awards.

“Their accomplishments are inevitably awe-inspiring, and you will be stunned to learn not only what they have accomplished, but that the savings and cost avoidance documented in their nominations total over $36 billion,” Bonosaro said. “If the American people only knew. Actually, if the Congress only knew.”

What the honorees do — from coordinating multi-agency relief efforts in Haiti to making mattresses much less fire prone, from protecting endangered wildlife to running a spinal cord injury center — is the everyday work of government employees.

“Your work changes lives and transforms communities,” Mills said. “Your actions may not always make headlines, but collectively, they make our government and our country a shining example around the world.”

Kudos to American ingenuity. Check out the complete list of award winners.

Today we observe a grim milestone in the history of our country. April 29, 2009 was the last time the United States Senate, under complete control of the Democratic Party, passed a budget. For three years, our federal government has guzzled down our money and the future earnings of our children without pause or plan. That situation will not change so long as Harry Reid (D-NV) is in charge either. Just two months ago, Reid said there would be no budget vote this year and barely two weeks ago the Democrats’ budget point-man cancelled a number of votes on a new budget for 2013.

This has been said before, but it bears repeating: imagine how your life would be right now if you didn’t have a personal or household budget. Imagine the chaos in which you’d live every day if you simply improvised your expenses each month, if you never planned out how you’d make your expenses match your income, if for three years you spent and spent and spent while ignoring every creditor and those in your own household who begged you almost every day to control yourself and act like a responsible adult. You wouldn’t make it three years. You probably would get out of the first year before the bills your bills outran your paycheck and the legal notices packed your mailbox.

Yet this is exactly how the Democratic Party has decided our nation should operate, not just this year, but for as long as they are in charge. We should not accept their “plan”. We should throw them out of office, toss them as far from the public trust as we can hurl them, and make sure that any of them who have put their own personal power above the demands of the nation never draw a paycheck from the public ever again.

Enough is enough.

Read Douglas Holtz-Eakin’s post on National Review Online which explains what a budget resolution is and why it is so important.  He quotes Erskine Bowles line regarding the fiscal situation American finds itself facing.

…the most predictable crisis in history.

The administration has made quite a bit of hay of income inequality, the notions that it is wrong that some people have a lot more money than others and that the gap between rich and poor has widened unacceptably over the past 20 or 30 years. Often, the administration points to evil Republican Presidents like Reagan and Bush as the main culprits, but, really anyone who pushes hard for smaller government and freer private markets is to blame. Capitalism lets the few Monopoly Men in their posh penthouses grow obscenely rich while the rest of us toil in the mud pits, building bricks for their money bins, in which they swim about every night, so they say.

But none of it is true. Well, okay, very little of it is true. There is a gap between rich and poor, which comes as no surprise to any of us, because if there were no gap, we wouldn’t need separate words for rich and poor (which should give you a hint about the futility of the progressive “social justice” mindset). What is not true is the assertion that the gap has widened at an alarming rate in the recent past.

Jim Pethokoukis found a recent study of household incomes done by a research team at Cornell University that shows, when you add in all the stuff we usually consider income, we’ve all gotten richer. This study dismantles an earlier paper, used to under gird the progressive income inequality mantra, that median household incomes have risen barely more than 3 percent over the past 30 years. Here is the big takeaway.

The academics, led by economist Richard Burkhauser, don’t say the findings of Piketty and Saez are wrong — just incredibly, massively incomplete. According to the Cornell study, median household income – properly measured – rose 36.7%, not 3.2% like Piketty and Saez argue. That’s a big miss.

And all income levels got richer. Yes, the very rich did exceptionally well, mostly due to technology and globalization. Incomes rose 63% for the top 5%, 56% for the top 10% and 52.6% for the top 20%.  But everyone else made out pretty well, too. Incomes rose 40.4% for households between the 60th and 80th percentiles, 36.9% for the next quintile, 25.0% for the next, and 26.4% for the bottom 20%. There’s the “shared prosperity” Obama says he wants, right in front of his eyes. (Indeed, the study finds, income inequality has actually been shrinking since 1989, with the Gini index falling to 0.362 from 0.372.)

Let me stop for a moment to give you a quick definition of the Gini Coefficient. In the early 1900s, an economist named Gini came up with a way to calculate the distribution of income over a population. According to his formula, a result of zero means income is distributed evenly, that is, every household earned the same amount. A result of one means income is concentrated in one place. In 1979, the Gini Coefficient for the United States was 0.33. In 2007, it was 0.362. Granted, that is an increase, which means income concentrated slightly more at the top, but it’s not a huge increase and we are still closer to income equality than we are to the vassal state where lords owned everything and we got what they chose to lend us.

What did this new study do that the other study didn’t? It took into account all the ways a household gets income: tax credits, Social Security and other entitlements programs, government payments, and health care provided by employers, to name a few. In other words, the study progressive most often use never bothered to account for the massive amounts of cash our government takes from the middle and upper class specifically to reduce income inequality. That’s a glaring flaw and, once it was taken into account, we find that the inequality used as a weapon to pummel entrepreneurship in this country isn’t nearly as bad as we’re told.

If you’re interested in more on the study, and the subject in general, the study’s lead researcher was a guest on the very good EconTalk podcast not long ago. It’s quite a good show.

Ed Morrissey has a must read post up at Hot Air, which includes this important badge from The Heritage Foundation.

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If you laid all the various Congressional budget proposals in front of me and asked me to pick one, and only one, I’d choose the Tea Party budget in a hot second. It is, to my limited government-loving heart, a thing of real beauty packed full of real budget cuts, simple but effective entitlement and tax reforms, and brakes on ridiculous regulations.

On the other hand, there is Paul Ryan’s budget. It is not perfect. As Dan Mitchell notes, its biggest flaw is that it still increases federal spending by an average of 3.1 percent every year. That, alone, is the biggest sign that the Republican leadership does not understand what “limited government” really means even if they point out some of the most ridiculous spending well.

On the other other hand, Ryan’s proposal has been honed by two years of internal debate and ridiculous political attack from outside. Republican legislators have seen it a few times and have had time to get comfortable with it. That’s important because, as you’ve no doubt noticed, the GOP contingent in Congress is more skittish than a herd of meth-amped gazelles at a Lion Jamboree. The more time they’ve had to hear and read the arguments for Ryan’s budget, the more comfortable they will be when they have to use them. And they will have to use them because, this time around, we simply can’t let them sit on the sidelines while the left shreds another good budget proposal. We can not allow a single Republican legislator to continue in silence while we careen toward the death of our entire economy.

As I see it, the very best way we can revive our moribund economy is to pry government off its throat. The Ryan budget will do that — not perfectly and in many ways not even particularly vigorously, but if it passes, we will all get more room to breathe and that is a very good thing. We need some breathing room to prepare for even better budget proposals in two or three years — proposals that look a lot more like the Tea Party budget than like Ryan’s budget today.

That is worth fighting for right now. It took us a long time to get to the sorry situation in which we find ourselves. There is no quick political solution. Paul Ryan’s budget is a solid first step toward a real fix to real problems and will prepare the ground nicely for even better steps in a couple years. We might as well get started right now.

Opportunity Cost – The cost of an alternative that must be forgone in order to pursue a certain action.

Throughout our lives, we as individuals have choices to make.  Both big and small. Whether we want yogurt or pancakes for breakfast?  Whether to study for the economics final or go out with our friends?  To live in Omaha or New York City?   To buy a house or rent?  With each decision one makes, one gives up some or multiple other opportunities.  Our decisions can be based on emotional or rational reasons…or both.

Washington faces the same choice everyday and must make difficult decisions regarding spending priorities. With a federal debt fast appraching $16 trillion, weak GDP growth, annual deficits exceeding $1 trillion for the past four years, and the last time we didn’t have an annual deficit being 2001, choices must be made.

Example: Hollywood Liaison Offices

Hollywood Liaison Offices: There are five federal departments and agencies which maintain offices and programs for the purpose of helping Hollywood produce movies and television programming, often with the goal of ensuring producers positively portray the federal government.  Taxpayers could save an estimated $34.4 million over the next ten years by eliminating these offices.   …Page 13, Back in Black

Does Hollywood really need the taxpayer’s help?  Would you have chosen a different use for the $34.4 million of the taxpayer’s money (the opportunity cost)?

Eliminating the Hollywood Liaison Office is just one of hundreds of specific spending reductions and cost savings recommendations consolidated in Senator Tom Coburn’s deficit reduction plan entitled “Back in Black”.  The plan’s 624 pages detail ways to reduce the deficit by $9 trillion. No sacred cows were allowed to be exempted including entitlements and defense.  The report highlights programs that are some of what makes up the giant government hairball.

In gathering their recommendations, Senator Coburn’s staff looked for ways government is not being effective or efficient…therefore wasting or not prioritizing OUR tax dollars.  It included programs identified as:

• Not Needed — Serves no vital or essential federal role or has outlived its intended purpose.
• Not Meeting Any Need — Little or no evidence to demonstrate results or effectiveness achieving stated goals.
• Wasteful — Significant amounts of silly or unjustifiable expenditures.
• Duplicative — Duplicates or overlaps existing government agencies or initiatives.
• Not a Priority at this Time — Mission cannot be justified within today‘s budgetary constraints.
• Not Cost Efficient — Benefits do not exceed the costs.
• Parochial — Serves a local or special interest with no overriding federal role and exceeds the limited powers granted to Congress enumerated in Article 1, Section 8 of the U.S. Constitution.
• Mismanaged — Significant amounts of erroneous, fraudulent and improper expenditures, excessive overhead and administrative costs, or otherwise poorly administered or implemented.

So is the Hollywood Liaison office really the highest and best use for your money? Instead of Washington setting the priorities, this time you choose.  We’ve posted the question on our Facebook page and hope you will take a moment to post your answer and share the question with your friends.

Is $34.4 million enough to make an impact when we are talking about trillions in federal spending?  The question instead should be if we can’t trust our elected officials to make the smaller decisions, how can we expect them to make the tougher, more critical ones.

Keep an eye out for more “Opportunity Costs: You choose?” ideas where we highlight more programs and options for you to share your views.