Archives for 2009

Yesterday, in a snarky post about Matt Welch (and again, someone I genuinely enjoy reading), I asked the following:

“Do our libertarian friends at Reason feel the same way about those receiving welfare?”

In my email this morning, I found a link to this Jesse Walker piece:

“What gets people upset, and rightfully so,” President Barack Obama declared last week, “is executives being rewarded for failure. Especially when those rewards are subsidized by U.S. taxpayers.” Pounding his fist, he announced that the flood of federal money into corporate hands would cease, effective immediately.

Ha! No, of course he didn’t say that. He announced that henceforth, when taxpayers subsidize a failing Wall Street firm, the company will have to cap the boss’s pay at $500,000 a year.

It was merely the latest effort to expand the bailouts into a behavior modification program. When Democrats proposed a subsidy package for Detroit last year, for example, the plan included another set of limits on executive pay. Not to be outdone, the Republicans countered with a requirement that union workers agree to wage cuts. But for the most part, the idea of using the taxpayers’ money as a Trojan horse for new controls has been a Democratic enthusiasm, not a Republican one.

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Are there differences between old-fashioned workfare and corporate workfare? Sure. At least some of the original workfare plans were devised to make the dole less attractive, for example, whereas Washington seems intent on bailing out even those banks who claim they don’t want the money. But the most important difference is simply one of scale. Put together, food stamps, Supplemental Security Income, and Aid to Families with Dependent Children rarely rose above 4 percent of the federal budget. If only that were true of the Troubled Assets Relief Program. Say what you will about AFDC, but there never was a risk that it would saddle the Treasury with enormous, unpayable debts. That put a different spin on the old workfare debates: Whatever trade-offs you made between extravagance and intrusiveness, the larger social impact would be limited.

That isn’t true of the bailouts, and that leaves policy makers in a double bind. It is absurd to give out trillions of dollars without demanding some sort of behavior in return. And when we’re directly subsidizing CEOs’ lifestyles, every misspent penny is going to spark a new wave of resentment. When the chiefs of the Big 3 came to Washington in private jets, they might as well have pulled up in welfare cadillacs.

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There’s a reasonable case to be made that CEO pay is often inflated, a result of the sort of self-dealing that’s possible when the people who control the company are not fully answerable to the people who own it. The least sensible way to address this is by moving decision-making power even further from shareholders and into the arms of the government. You might as well try to teach a mother personal responsibility by institutionalizing her in a group home.

Now, I have excerpted this, so read the whole thing. But tell me if you aren’t in the same bind as me by the time you get to the end of it- “What is he actually proposing?”

Is he proposing we simply stop propping up the financial system? That would be a fair argument that some have made. Some on the right propose just letting them all fail, others on the left propose nationalizing. If we just let them fail, then what? Do the libertarians have a plan for the coming dark decade? If so, is it more than just capital gains tax cuts to combat the widespread and inevitable poverty?

Is he proposing that we continue to prop them up, but do nothing to regulate how they spend the money and pay no attention to excessive CEO pay and what not? Is the libertarian position that once you have violated the first order principle of giving money to these banks, then you do nothing lest you violate the principle of non-interference of private industries? And if so, does that deal with the reality that these no longer are really “private” businesses now that they continue to exist solely because of government support?

Is he proposing we just end welfare? If so, does he honestly think that is tenable? Is he proposing that we limit the regulations we impose on recipients of welfare?

Or maybe the piece was just a documentation of what has happened, and not an attempt to propose anything. If that is the case, then how do libertarians ever expect to have their ideas advanced when they simply refuse to move from the land of the ethereal to to the real world, where a course of action is required? I know I am not the sharpest tack, but I have read that three times and can not figure out what, if I were to vote for Jesse Walker, he would do.

And I don’t mean to pick on either Matt or Jesse, both of whom are people I read and like. It is just that when I read libertarian economic critiques these days, I get to the end of them, am mad as hell and just as mad as the authors, but then I calm down and ask what they wanted to do, and at that point things get thin. Compare that to their decisive, clear, and unwavering positions on issues like marijuana laws, no-knock raids, police abuses, and so forth. Does anyone have any confusion about what the folks at Reason would do in regards to no-knock raids? I don’t.

Go read the piece. What do you think they are proposing?

Why Libertarianism Can Sometimes Drive You InsanePost + Comments (108)

The NY Times with a preview of the budget:

President Obama’s budget proposal for 2010 projects a stunning deficit of $1.75 trillion for the current fiscal year, which began five months ago, reflecting a shortfall of more than $1 trillion as the fiscal year began, plus the costs of bank bailouts, the first wave of spending from the newly enacted stimulus plan and the continuing costs of the wars in Iraq and Afghanistan.

The administration, as it had announced, will try to cut that amount sharply by 2013, when Mr. Obama’s first term ends, to $533 billion, even as it escalates spending on crucial priorities.

“There are times when you can afford to redecorate your house,” Mr. Obama said on Thursday morning, “and there are times when you have to focus on rebuilding its foundation.”

His administration will attempt to close the large fiscal gap even while starting a major health-care initiative meant to substantially extend coverage; to do so, it foresees increasing taxes on the wealthiest Americans and using revenues from a new program: selling carbon credits to manufacturers as part of a cap-and-trade plan meant to slow climate change.

I remember when a 1.75 trillion dollar budget was massive, let alone a 1.75 trillion dollar deficit (and yes, I am fully aware this number is bigger than it would be under older budget rules). Oddly enough, I think the bitterest fight in this budget will not be over health care, but cap and trade (even though the two are connected, as one is allegedly paying for the other). I just sense the public has shifted on health care, and the old forces that aligned to fight it back in the Clinton years are exhausted and spent, while the public mood (in part because no one has job security anymore, and in part because the cost of health care keeps jacking up) has changed.

And while we are talking about spending, what is up with this:

The House on Wednesday passed a $410 billion omnibus spending bill packed with pet projects requested by Democrats and Republicans alike.

The 245-to-178 vote came just a week after President Obama signed one of the largest spending bills in the nation’s history, a $787 billion measure meant to rejuvenate a sluggish economy.

The new bill, a reflection of Democratic priorities, increases spending on domestic programs by an average of 8 percent in the current fiscal year, which began in October.

I don’t really need to point out how tone deaf it would be to trumpet the stimulus bill as earmark free then turn around and pass a spending bill filled to the brim with earmarks, do I (and in the comments, someone has suggested that 40% of the earmarks are from Republicans)? The PR war on this has already begun, and I am betting the Dems will lose this PR battle. Obama and Rahm better get this under control, and quickly.

Let The Games BeginPost + Comments (65)