Remember when deficits were evil?

Part of this gets driven by panic.  A few years ago, Alan Greenspan famously criticized what he called “irrational exuberance” on Wall Street, causing a brief market downturn.  What we have now could be called “irrational despair,” the notion that this recession will be greater than anything ever seen since the Great Depression.  Barack Obama today offered the reversal of FDR in his speech, in which he seemed to say that the only thing we don’t have to fear is fear itself.

All of this hysteria goes to one purpose: to create a sense of panic that will make any government intervention seem rational and reasonable.  Instead of taking policy one step at a time, schemes and plans get made only to be eclipsed by even more grandiose schemes and plans without ever having tried anything else first.  The TARP plan was never even given the chance to work, thanks to a panicked Secretary of the Treasury who literally begged for its funding and then used the money to start nationalizing private enterprises.

What gets built in a panic will not get dismantled when the hysteria ends.  We are creating a baseline of expected government costs that the Wall Street Journal warns will endure as an expectation.  America saw this after FDR’s New Deal and LBJ’s Great Society.  Once Congress establishes a new level of confiscation and spending, it never reduces it — and only on occasion has kept it from growing.

Perhaps we have gone too long between recessions to understand how to handle them.  We had much worse economic prospects in the 1970s and had much less panic involved at the time.  We saw then what massive government intervention produced — inflation, stagnation, and regulatory paralysis.  Instead of drafting massive amounts of investment-capable capital out of the markets, we should be clearing the way for its use.  Let’s hope it doesn’t take another decade like the 1970s for people to remember that.

My syndicated column today takes on Obama’s stimulus Trojan Horse. It’s for the children. Mitch McConnell, are you there?

And just in: 2009 budget deficit is estimated at $1.2 trillion.

Barack Obama has dubbed his behemoth fiscal stimulus proposal the “American Economic Recovery and Reinvestment Act.” But if truth in advertising were required of White House plans, only one title would fit the trillion-dollar-plus-and-growing bill: The Generational Theft Act of 2009.

Heartbreaker: Matthews will stay on the air

I’d like to think that Matthews wouldn’t have had a chance in Pennsylvania, but Minnesotans have little room to heap scorn on egotistic celebrities who run for high political office with little qualification.  Hopefully, Pennsylvanians would have had more sense than we showed in this past election.  In any case, they won’t have to make that choice now, unless Terrell Owens returns and runs for Senator instead of Matthews.

What does this mean for MS-NBC?  They get to keep their Thrill Twins together for at least a few more years, obsequiously offering paeans to Barack Obama and attacking his critics.  Perhaps Keith Olbermann will make me his Worst Person in the World for pointing this out, but Matthews has a much more powerful platform at MS-NBC to conduct politics than he would in the US Senate.  No one at NBC apparently wants to exercise any editorial control over the “thrill up his leg” hackery, plus they’re still willing to pay him millions along with Olbermann to give a nightly re-enactment of Peter Finch’s scenery-chewing in Network.  Why would he trade that to be one of 100 voices on C-SPAN2?

Would Egypt and Jordan take back the occupied territories?

Not unless the Gazans themselves think of themselves as Egyptians, which they clearly do not.  The problem with Pipes’ plan is that it does nothing to address the nationalist movements in each territory, especially Gaza.  What Pipes suggests is trading Israeli blockade for an Egyptian occupation and swapping border concerns.

Nor would that solve Israel’s problem in any case, because the issue in Gaza is not just nationalism, but a hatred of Israel.  Hamas would launch its rockets into Israel with Gaza under Egyptian control, not because they resent Egypt but because they exist explicitly to destroy Israel and take its land for themselves.  Changing flags in Gaza won’t solve that problem, but it would create another big problem for Israel and Egypt: any military response to missile attacks would become an attack on Egypt, and that would unravel one of the pillars of stability that has managed to endure for 30 years.

Samuel R. "Sandy" Berger, Lake's deputy before becoming national security adviser himself, said that Panetta "was part of the decision-making process for every single issue we were dealing with, whether this was in the Oval Office with the president or the Cabinet Room -- the Middle East, Kosovo, China. He was a part of a small group of people who advised the president how to proceed on strategy and substance."

Across the country today, President-elect Barack Obama got exactly the headlines he wanted from his supporters in the establishment media. “[1] Obama Pitches Stimulus Plan: GOP Asked to Help Design” says the Washington Post. “[2] Obama Sweetens Stimulus for GOP” reports the Los Angeles Times. [3] Obama Finds Lovefest on Capitol Hill blares the San Francisco Chronicle. Obama’s strategy is clear: make as big a show of bipartisanship as possible to provide the most amount of conservative cover for what all signs point to being at least a $1 trillion stimulus package. Hence the [4] New York Times reports, “Mr. Obama pledged to help advance the legislation in any way he could, participants said, including inviting skeptical members of Congress to meet with him at his transition headquarters or at his temporary residence, the Hay-Adams Hotel.” Hopefully Republican votes in Congress are more expensive then a lunch at the luxurious Hay-Adams Hotel.

But the bigger worry is that conservatives in Congress will sign their names to almost $1 trillion in new federal government spending in exchange for a measly $300 billion in temporary tax cuts. Rugters University professor Ross Baker told the LAT: “[5] That’s Republican bait. It’s difficult for many Republicans to vote against a large tax cut.” Baker is right; generally Republicans ought to favor large tax cuts. But not all tax cuts are created equal. Short term tax cuts (like rebates, holidays, etc.) simply do not work. Both the Bush 2001 tax rebates and the Bush 2008 tax rebates [6] failed to stimulate the economy. Only [7] long-term tax rate reductions trigger the important economic decisions that a real recovery depends on like more investment in new factories and new equipment.

And what is the price for conservatives if they accept $300 billion in temporary tax cuts? [8] Hundreds of billions of dollars in new entitlement spending on benefits like unemployment insurance for part-time workers and Medicaid eligibility for laid-off workers. [9] Hundreds of billions of dollars in bailoutsHundreds of billions of dollars in new spending on [11] infrastructure projects which will do nothing to stimulate the economy. for profligate states like California, New York, and New Jersey. [10]

As Sen. Everett Dirksen (D-IL) quipped during the Great Society spending boom of the 1960s, “[12] A billion here, a billion there — pretty soon, you’re talking real money.” The [13] Wall Street Journal adds:

How quaint. In modern Washington, trillion is the new billion. … The human mind is not well equipped to fathom a number that large. A check for $1 trillion — a million million dollars — would have 12 zeros to the left of the decimal point. Homo sapiens hadn’t evolved a trillion seconds ago: 31,546 years in the past, Neanderthals were still trying to make fire. More immediately, $1 trillion is about one-third of annual U.S. government spending and 13% of the U.S. economy. It is more than the GDP of all but 12 countries in 2007 (America, Japan, Germany, China, the U.K., France, Italy, Spain, Canada, Brazil, Russia and India, in that order).

Obama likes to say, “We are being guided by what works, not by ideology.” But if that is true, then he should listen closely to his Council of Economic Advisers chairman Christina Romer, who has published economic studies concluding that: 1) [14] tax increases harm economic growth; 2) [15] permanent tax cuts lead to greater economic activity; and, most importantly, 3) [16] increased government spending has at best a small effect on stimulating economic activity.

Article printed from The Foundry: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/01/06/morning-bell-dont-take-the-bait-for-obamas-trillion-dollar-spending-trap/

Dear Republican Senators,

During his confirmation hearing, when Obama's nominee Leon Panetta promises that as CIA Director, he'll lead the fight to defeat "every jihadist," make sure you read the fine print . . .

You know, if Panetta and the Clinton Administration had been more focused on the real jihadists at that time, we might all be a little safer right now . . .

Nearly a year ago, I was in the southern Israeli city of Sderot, where, on almost any day, you could see the current war coming. "The next...

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I get the impression that Israel is expected to put up with this. The implied message from demonstrators and some opinion columnists is that this is the price Israel is supposed to pay for being, I suppose, Israel.

I am informed by a Palestinian journalist in a Washington Post op-ed article that Israel is trying to stop "amateur rockets from nagging the residents of some of its southern cities." In Sderot, I saw homes nagged to smithereens.

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According to DailyTech blogger Michael Asher, "Thanks to a rapid rebound in recent months, global sea ice levels now equal those seen 29 years ago, when the year 1979 also drew to a close." This isn't Asher's opinion, but fact based on data from the University of Illinois' Arctic Climate Research Center.

News about growing sea ice isn't exactly what environmentalists who predicted the North Pole would be free of ice in 2008 want to hear. Al Gore and his fellow alarmists have been telling us for years that melting sea ice and glaciers will dramatically and dangerously increase sea levels.

Could the unexpected increase in sea ice, then, be a signal that the Earth is cooling? We can't say with any degree of certainty. But then, neither can the alarmists argue with any measure of assurance that man is causing the planet to warm.

Yet they say it anyway, as they tar skeptics as flat-earthers who reject science and contend that the debate is over. And indeed in one sense it is, because the alarmists have declared the case closed and refuse to discuss the matter with opponents.

Video: Petraeus is a genius, says moron who dumped on him repeatedly

This isn’t even the most shameless thing he said yesterday on MTP. That distinction goes to his praise for John McCain, whom he described during the campaign as a borderline lunatic whose temper left him unfit to serve as president. Direct quote from August: “I can’t stand John McCain.” Direct quote from yesterday: “He’s my friend.” Nuance.

The bit that’s getting attention is his squirming over having merrily pronounced the surge a failure and the war lost in two years ago. When asked if he still feels that way, his defense is to hide behind Petraeus: All he meant is that the war wasn’t winnable with military power alone, which is no different really from anything Petraeus has said, and Petraeus of course is a “genius” so how about getting off Reid’s back already? The follow-ups Gregory didn’t ask: If Petraeus is such a genius, why did Reid vow not to believe him if he reported progress at his 2007 Senate hearing? Why did he allegedly call Petraeus incompetent a few months later? Why was he one of only 25 Senators to vote against the resolution condemning MoveOn for the “Betray Us” ad? Why was he still declaring the surge a failure as late as December 2007, and even to this day insists that Iraq is in a state of civil war? The answer to all these questions is that, for Reid, the facts on the ground are always determined by political expedience. That’s why he was able to insist four months ago, with Obama pushing hard on the stump for a renewed commitment to Afghanistan, that the country is in “pretty good shape” when everyone but everyone on both sides knows better.

Video: Richardson withdraws from Obama Cabinet; Update: AOL Hot Seat poll added

Team Obama: Richardson misled us