January 11, 2011

Free Market Fundamentalist is Moving

Free Market Fundamentalist is moving.

I'm integrating this blog with the Atlantic Sentinel, a transatlantic news, analysis and commentary website that is set on expanding its opinion section.

You will be able to read Free Market Fundamentalist at this location from now on. (There'll be a shorter URL, probably marketfundamentalist.atlanticsentinel.com, available soon.)

The Atlantic Sentinel is on the look out for other voices as well: liberal, libertarian and conservative. For all of the website's opinion articles, follow this link. You'll recognize the Free Market Fundamentalist posts from the Atlas imagery.

January 8, 2011

Democratic Hypocrisy on Deficit Reduction

As Republicans will vote to repeal ObamaCare in the House of Representatives this week, Democrats are condemning the measure as fiscally irresponsible. Repealing their health care reform bill, liberals say, would add some $230 billion to the federal deficit over the next decade.

The numbers come from the Congressional Budget Office and while some Republicans dispute them, I don't really care. For a decent and concise summary, I recommend this blog post though.

What matters are two things:

1) During Speaker Nancy Pelosi's tenure (2006-2010), Democrats have almost doubled the national debt, running trillion dollar deficits each year. Now they're worried about deficit spending? I doubt it.

2) The notion that Republicans should favor any measure that reduces the deficit and oppose any measure that increases it is nonsense. Republicans have reinvented themselves as fiscal conservatives but fiscal conservatism is not an end in itself. It stems from principle: the principle that government should be limited and people free.

Even if repealing ObamaCare increases the deficit, Republicans should favor it because the law infringes on individual liberties and expands the role of government in an industry that is already far too heavily regulated.

January 7, 2011

Federal Deficit in First Quarter of Fiscal Year 2011: $371 Billion

From the Congressional Budget Office's Director's Blog:

The federal budget deficit was $371 billion in the first quarter of fiscal year 2011, CBO estimates in its latest Monthly Budget Review, $18 billion less than the shortfall in the same period of fiscal year 2010. Revenues were 9 percent higher than they were a year ago, whereas outlays were only 3 percent higher. [...]

Revenues through December totaled about $531 billion [...] CBO estimates that spending for the first quarter of fiscal year 2011 totaled $902 billion, up $26 billion from outlays in the same period last year. [...]

Compared with spending in the same period last year, defense spending was 7 percent higher, and net interest on the public debt rose by 10 percent, reflecting the substantial growth in debt in the past year. Outlays for major entitlement programs grew at varying rates during the first quarter of fiscal year 2011. Spending for Medicaid increased by 13 percent. Spending for Social Security and Medicare grew more slowly—by 4 percent and by less than one percent, respectively, adjusted for timing shifts. Expenditures for unemployment benefits decreased by 15 percent because of a decline in the number of claims and because average benefits were lower than they had been a year before.

America’s Looming Entitlement Disaster

After billions in stimulus spending and bailing out banks and automakers, America's public finances are in dire straits. Last year, the federal deficit reached almost $1.5 trillion while the debt has grown to $14 trillion, equaling the total annual economic output of the United States. Americans may need to brace for austerity but plans to rein in spending are few and controversial.

Republicans have pledged austerity in the new Congress. Several incoming Tea Party conservatives have promised to cut spending by up to $100 billion but this would not solve the country's budget woes for the long term. Entitlements, which account for approximately a third of federal spending and will likely swallow up half of the budget by the end of this decade, have to be abolished or reformed in order to restore fiscal balance. But neither party likes to take away benefits from low income families and seniors.

That is not to say that lawmakers don't recognize the problems. According to Republican Congressman Phil Gingrey of Georgia, thirty-eight states across the country are already taking funds from other programs, including education, to continue to pay for Medicaid. On the Fox Business Channel last month, he lambasted the Democrats' health care reform bill which prohibits states from making any changes to Medicaid for the next three years. "In 2014," he added, "every state has to cover individuals up to a 138 percent of the federal poverty level." Currently only Americans with incomes below the poverty line are eligible for health care benefits.

Another congressman who has warned against runaway entitlement spending for many months is Wisconsinite Paul Ryan. He expressed concern in February of last year about Americans being "more worried about their material support from goverment than they are about their own liberties." Many lawmakers in Washington believe that it is their job not merely to equalize opportunity, but to equalize the outcomes of peoples' lives, he said. "The more we ask government to do for us," Ryan warned, "the more government can take from us."

Ryan has designed deep spending cuts and entitlement reform, including a privatization of Social Security for those who are under the age of 55. Medicare would be similarly dismantaled if Ryan had his way. Current recipients and those enrolling over the next ten years could continue to enjoy today's program whereas in 2021, the system should become voucher based for new recipients.

On NBC's Meet the Press last November former Federal Reserve chairman Alan Greenspan expressed support for Ryan's plans, noting that with government borrowing over a third of what it spends, to find spending cuts, lawmakers have to look for "not individual, piecemeal cuts or taxes," but reconsider whole programs instead.

As incoming chairman of the House budget committee, Ryan will be at the helm of trimming federal expenditures for the next two years. Democrats, who maintain a majority in the Senate, have already announced that they will "protect" public pensions against reform efforts however.

When the chairmen of the president's debt commission released their recommendations last November, then Speaker Nancy Pelosi professed that entitlement reform "must do what is right for our seniors, who are counting on the bedrock promises of Social Security and Medicare." The president himself has pledged to preserve Social Security "forever". He denounced privatization as "an ill conceived idea that would add trillions of dollars to our budget deficit while tying [people's] benefits to the whims of Wall Street traders and the ups and downs of the stock market."

Raising the retirement age by one month every two years after it reaches 67 under current law would achieve nearly $4 trillion in deficit reduction through 2020, according to the debt commission. The pension age would reach 68 around 2050 and 69 by 2075. But even under those circumstances, Social Security remains a "Ponzi scheme," said Texas Governor Rick Perry in an interview with Newsweek. He advised congressmen who aren't willing to cut spending to "just go home."

With Democrats adamantly opposed to entitlement reform and Republicans similarly hostile toward the notion of cutting defense spending, there wouldn't seem to be much reason to assume that Washington will be able to avert the looming entitlement crisis.

Originally published at the Atlantic Sentinel, January 7, 2011.

January 6, 2011

Nanny State At Work in San Francisco

The city of San Francisco is banning toys from McDonald's happy meals. It's so preposterous that really the only thing to do is make fun of it. Which The Daily Show does best. Watch.

British and German Liberals Losing Appeal

The governing coalitions in Germany and the United Kingdom are under pressure as their junior partners have failed to deliver on key election promises. Both liberal parties are currently trailing in the polls as voters flee the center.

Chancellor Angela Merkel's own christian democrats lost seats in the upper house of parliament last May in the wake of the Greek bailout effort. German voters have been skeptical of having to come to Europe's rescue time and again and many are longing for a return of the Deutsche Mark.

The junior Free Democratic Party (FDP) has bore the grunt of voter dissatisfaction however. A liberal free market party, the FDP pledged to lower tax rates ahead of federal elections last year. The liberals won nearly 15 percent of the vote in 2009. Forced to cut public spending, they have been unable to deliver on their promise. In recent polls, the party receives but 5 percent of votes, not enough to make the election threshold.

According to the socialist opposition in Germany, the government's austerity measures as socially imbalanced and some 80 percent of Germans agree. Two thirds of voters are in favor of raising the top income tax rate instead, something both the chancellor and the FDP are opposed to. Conservatives and business leaders are increasingly weary of the coalition meanwhile, predicting its demise as early as this summer.

In Britain the Liberal Democrats, in coalition with the Conservatives since May of last year, have similarly lost part of their appeal, particularly among students and young urban professionals. If elections were held today, the party would receive but 11 percent of votes; half of what they won last year.

As in Germany, the government's fiscal policies are unpopular with voters on the left. The Liberal Democrats agreed to a raise in the value added tax from 17.5 to 20 percent and supported an education reform measure which they said to oppose ahead of the elections.

In other parts of Europe, liberal parties have performed well. Small government conservatives and proponents of the free market were on the rise in Central Europe last year while in the Netherlands and Scandinavia, broad alliances of liberals, conservatives and populists remain firmly in power.

A new right is emerging across Europe, spearheaded in some countries, as in the Czech Republic, the Netherlands and Sweden, by traditional liberals and in others, including Germany and the United Kingdom, by conservatives who have moved to the center. Like Swedish Prime Minister John Fredrik Reinfeldt, David Cameron is far from an outspoken antagonist of Britain's welfare state. The political rights favors spending cuts and smaller government but does not believe in abolishing welfare provisions altogether.

The British and German liberals could be part of that new right except their base is divided. Leftists have been disillusioned by their support for spending cuts while moderate voters are drawn to the right where they find conservatives who share their concerns about immigration and crime. There doesn't seem to be much room for social liberalism in the middle anymore.

Originally published at the Atlantic Sentinel, January 6, 2011.

January 5, 2011

The Era of Speaker John Boehner Begins

Two months after November's congressional elections, a Republican majority took power in the House of Representatives today. Wednesday afternoon John Boehner of Ohio became Speaker of the House. His priorities: to repeal the Democrats' health reform bill and slash federal spending.

For several months Republicans have promised to rein in spending. With a deficit exceeding $1 trillion, or more than a third of expenditures, the opposition can't be reasonable and compromise, especially when fiscally conservative Tea Party newcomers demand deep spending cuts.

Republican leaders know that the Tea Party insurrection launched against government overreach in the private sector, including health care, last year was not exclusively aimed at Democrats. Conservatives also blame Republicans who, during the Bush Administration, allowed a huge expansion in the size of government and a vast increase in public spending to occur. Federal spending nearly doubled between 2000 and 2008 in fact.

Even if neither party cheered last month's compromise on tax cuts, the business lobby praised Republicans for extending current tax codes at the cost of extending unemployment insurance at the same time. But Tea Party groups have been critical. In a Politico op-ed the founders of Tea Party Patriots urged incoming legislators to challenge their party's leadership if need be and stand on principle. "They have a mandate from the people to step up and lead," they wrote.

Will they lead by principle? Or will they go along with Speaker-elect John Boehner, like so many sheep to the slaughter?

Republicans have pledged austerity in the new Congress. Two critical votes in the months ahead will test that promise.

In February, Congress is scheduled to enact a huge spending bill to keep the government running. Many incoming legislators have promised to cut discretionary domestic spending by up to $100 billion. Even if such a spending cut would reduce the deficit only minimally, the Democratic majority in the Senate may not accept it. John Boehner wants to avoid a government shutdown similar to the one that tarnished the 1994 Republican majority but he will be hard pressed to maintain discipline among his members when Congress has to raise the federal debt ceiling in the spring. The current debt ceiling, enacted last February, is $14.3 trillion. The president's budget for this fiscal year will topple the national debt of $13.9 trillion, necessitating the vote.

Letting the nation default on its debt could trigger another global financial meltdown but some Tea Party conservatives have already announced that they will vote against the measure to protest runaway federal spending.

On health care reform, there is no division among Republican ranks. The House is set to vote on repealing ObamaCare next week---an effort that is almost certain to die either in the Senate, where the Democrats are still in the majority, or by presidential veto.

If Republicans fail in their repeal effort, they might try to undercut the Federal Government's ability to enforce the least popular part of the law---the individual mandate which forces people to buy health insurance. By withholding funds for the IRS and health department in the House Appropriations Committee, which has to approve all federal spending, Republicans could delay the bill's implementation in order to repeal it in 2012 when they expect to take back the Senate.

The first order of business in the new House of Representatives tomorrow will be a reading aloud of the Constitution. Some House Democrats have ridiculed a related rule that Speaker Boehner will enforce, requiring members to cite the specific constitutional authority for any bill they introduce. "It's an air kiss they're blowing to the Tea Party," according to Barney Frank, outgoing chairman of the House Financial Services Committee.

Boehner has also announced to slash the sizes of House committees, meaning that each member will have a narrower focus for oversight and legislation. And he has promised to keep track of and publicize the names of members who show up to do their legislative work and those who don't.

Originally published at the Atlantic Sentinel, January 5, 2011.

California Court Rules Texts Can Be Searched Without Warrant

From the AP wire:

The California Supreme Court ruled Monday that police do not need a warrant to search a cell phone carried by someone under arrest.

The state court ruled 5-2 that US Supreme Court precedent affirms that police can search items found on defendants when they are arrested.

"Items," yes, to make sure they aren't carrying weapons or have illegal substances on them. Reading a person's text messages is no different from reading a person's mail. Policemen shouldn't be able to do that arbitrarily.