It’s Thursday, September 6th, 2012….and here’s The Gouge!

At the top of today’s order, the WSJ details why The Obamao, his prevaricating protestations to the contrary notwithstanding, is….

Desperately Seeking Middle-Class Taxes

What Obama’s critique of Ryan tells us about Obama’s budget plans.

 

Democrats in Charlotte are pounding away at the savage budget cuts that Mitt Romney and Paul Ryan supposedly favor and their phantom plan for “raising taxes on the middle class,” as President Obama puts it. The truth is the opposite, but table that for a moment. The President seems not to realize his critique is really a scorching if implicit indictment of his own time in office.

Think about his logic like this: Mr. Ryan’s House budget details a long-range plan to equalize spending and tax revenues without—ahem—raising tax rates. But if such fiscal restraint is as deep and draconian as Mr. Obama claims, then as a matter of arithmetic the White House must favor a tax increase of an equal size, or something close to it, in order to pay for the amount of government he wants to sustain.

The nearby chart dramatizes this reality. It shows the accumulation of outstanding debt as a share of the economy in the modern era. This is debt held by the public—the kind the country has to pay back to bond investors, and not the IOUs that one part of the government owes to another part. These debt projections are highly speculative, and faster economic growth would do a great deal to mitigate them. But we offer them to help readers compare the Ryan and Obama budget visions.

For reference, the top line shows the Congressional Budget Office’s “alternative fiscal scenario,” which it considers the most realistic prediction if current tax and spending policies continue. In that model, debt grows two times as large as GDP by 2037 and the economy crashes. Not good.

Barely better is Mr. Obama’s 2013 budget, which is the second line from the top. The White House purports to “stabilize” the deficit and therefore the debt boom over the next decade. After four consecutive $1 trillion-plus deficits and a more than 70% leap in publicly held debt since Mr. Obama’s inauguration, that’s a pretty modest goal.

But even discounting the usual accounting gimmicks that the White House uses to show this “stability,” check out the fine print. There, the document concedes that beyond 2022 “the fiscal position gradually deteriorates” and the deficit “continues to rise for the next 75 years, and the publicly held debt is also projected to rise persistently relative to GDP.” In other words, Mr. Obama’s budget does not change the spending and debt trajectory.

Even in this best-case scenario by Mr. Obama’s own lights, debt soon exceeds the 112.7% debt-to-GDP high-water mark in 1945, incurred to win a war for civilization across the world. The U.S. would now be taking on a larger liability—well above the 90% ratio that most economists consider the general boundary between safety and crisis—simply because the political class refused to modernize the entitlement state that drives the debt.

Mr. Ryan’s budget, as shown by the third line, would gradually reduce debt by 36% relative to the status quo by the end of the decade, by 59% in 2030 and 80% less by 2040. No question that requires reforms that by conventional political standards are large. But that’s because they’re commensurate with the magnitude of the fiscal problem.

Mr. Ryan’s major contribution has been to expose the illusion that Mr. Obama’s re-election campaign rests on: pretending that raising taxes on a few thousand “millionaires and billionaires” can fund an ever-growing government. (See Bill Whittle’s Eat the Rich video which follows.)

The shaded wedge represents the smallest possible tax increase Mr. Obama would need to achieve the same fiscal balance as Mr. Ryan—except that, in his budget, spending would be at a quarter of the economy and climbing fast. And that’s by the White House’s own most optimistic projections. The reality will be far messier.

Every time Mr. Obama warns about Mr. Ryan “gutting” this or that “investment,” what he’s not saying but is unavoidably implying is that taxes must be far higher to finance this spending. Assuming he can read the budget tables, he knows the government has made promises it cannot mathematically keep—but he hopes nobody notices.

Mr. Ryan had an instructive colloquy with Tim Geithner on this point in February. The Budget Chairman noted that the Administration doesn’t “have a plan to make good” on the promises the political class has made to voters. The Treasury Secretary replied that “As I said, we’re not disagreeing in that sense. I made it absolutely clear that what our budget does is get our deficit down to a sustainable path over the budget window.”Timothy Geithner and Paul Ryan.

The only omission in Mr. Geithner’s remarkable candor is that Democrats do have a plan, kind of. As debt continues to build, at some point U.S. creditors will lose confidence in the Treasury’s ability to repay. Then Democrats and even some Republicans will impose a European-style value-added tax or another money machine to appease the bond markets.

What voters should know is that this taxing big bang won’t only hit the affluent. Far from it. For evidence, consult a recent study by Eric Toder, Jim Nunns and Joseph Rosenberg of the Tax Policy Center. We know this Brookings-Urban Institute shop has credibility with liberals, because it is the source of the fiction that the Romney-Ryan team wants to boost middle-class taxes.

The researchers looked at how high income-tax rates would have to rise in the top two or even three tax brackets to lower debt to sustainable levels under something akin to CBO’s alternative fiscal scenario. They conclude that even if the top rates hit 100%, the budget “cannot achieve the debt-reduction targets in some or any of the target years.” Though conceding that near-total confiscation is “completely unrealistic,” they report the results anyway “to indicate the infeasibility of achieving a high debt-reduction target simply by increasing top individual income tax rates.” And this is from economists who favor higher taxes.

Another way of putting it is that the rich aren’t nearly rich enough to finance Mr. Obama’s spending ambitions. Sooner rather than later, Washington will come for the middle class, because that’s where the real money is.

Another thing Mr. Obama likes to say is that Messrs. Romney and Ryan “know their economic plan is not popular.” Perhaps he can read minds, but at least they have a plan they’re willing to put before voters. The President knows that voters won’t like his, which is why he isn’t honest about it.

And for those who still doubt the “Rich” can produce enough to satisfy the appetite of a government gone wild, Bill Whittle separates fact from fiction:

If’n we hailed from Maine, the reason would quite simply be, “Ya cahn’t git thayre frum heere”!

Next up, courtesy of Conn Carroll and the Morning Examiner, meet the REAL engineer driving the Obama train:

Planned Parenthood’s Obama rally reveals a lot

 

Women dressed as vaginas milled about the parking lot of the NASCAR Hall of Fame where the old and young alike grabbed up the free Planned Parenthood condoms while an emcee dressed as a birth-control dispenser led the crowd in chants.

Abortion provider and lobbying powerhouse Planned Parenthood held a rally for Obama just outside the convention center Tuesday afternoon, and it highlighted a few important themes: (1) the centrality of abortion in the Democratic Party, (2) the extremeness of the party’s abortion position, and (3) the rank deception at the heart of the party’s war-on-women talk.

The event’s main emcee, actress and Planned Parenthood board member Aisha Tyler recounted an episode (covered here, by the New York Times) that showed how the abortion lobby is at the bedrock of Obama’s Democratic Party. During the 2011 debt-ceiling debate House Speaker John Boehner visited the White House late in the negotiations, and when he brought up cuts to Planned Parenthood subsidies, as Tyler put it, Obama said “This is a non-starter. You will get nowhere with this.”

Obama was willing to default on the U.S. debt over subsidies for Planned Parenthood.

Newark Mayor Cory Booker and Planned Parenthood President Cecile Richards both cited the pro-choice plank in the Democrats’ platform. The Dems’ platform is pretty extreme on abortion, calling for abortion subsidies (“access to affordable family planning services”, and the right to abortion “regardless of ability to pay”).

“We oppose any and all efforts to weaken or undermine that right,” the platform say. That means they oppose even rules restricting late-term abortions, requiring parental notification when minors are aborting their children. In the past, Obama showed he has a pretty extreme view of what might “weaken” the “right” to abortion. As a state senator, Obama opposed legislation to require hospitals to care for babies who survive abortion. His reasoning: he thought it might erode the right to abortion.

Finally, the rally highlighted how dishonest the war-on-women rhetoric is. Opposing — or simply wanting to limit — Planned Parenthood subsidies was portrayed as wanting to abolish the organization. And opposing mandatory contraception coverage was portrayed as banning contraception.

Tyler said Mitt Romney and Paul Ryan “want to make sure birth control isn’t covered by health insurance.” Richards asked “Can you believe we’re fighting in 2012 over the right of women in America to get birth control?” Then she added, “that’s exactly what this election is about.” Congresswoman Gwen Moore, D-Wisc., said Republicans are “trying to take away Planned Parenthood.” Moore added that one issue this election is “whether or not you can have contraception.”

This all says something about the state of the pro-choice movement — and thus the state of the Democratic Party.

Yeah, the Party of Death; at least if you’ve yet to be born….or are unfortunate enough to have been born an Israeli!

In a related item from Byron York, courtesy of Conn Carroll and the Morning Examiner, the Dims pay homage to Teddy Kennedy, who, as reader John Plunket noted, is the only politician with a confirmed kill in the War on Women:

‘Forward’ looking Democrats look back to Ted Kennedy

 

Democrats have adopted the one-word slogan “Forward” to describe President Obama’s re-election campaign and the party’s philosophy in general.  All the speakers on the convention’s first night made some sort of reference to it.  But for a party that is so intently focused on the future, the biggest, loudest, and most emotional moment of the night came not when the delegates welcomed one promising face of the future (keynote speaker Julian Castro), nor the face of the present (First Lady Michelle Obama), but instead when the crowd watched a video tribute to the late Sen. Edward Kennedy, who would have run for president 40 years ago, in 1972, had he not suffered the political effects of fleeing and failing to report a fatal auto accident, and did run for the White House 32 years ago, in 1980, when he unsuccessfully challenged a sitting Democratic president.

The Kennedy tribute had an impact not only because the late Massachusetts lawmaker and his family remain Democratic gods.  It was also perfectly pitched for the current campaign because the video producers threw in a few clips from 1994, when Kennedy ran against one Mitt Romney and hit his Republican challenger with one putdown after another in their debate.  With each Kennedy zinger, the crowd roared. Some observers thought the inclusion of the Romney segment injected an overly partisan note in a nostalgic tribute, but it’s hard to imagine that the old partisan warrior Kennedy would have objected to his memorial video doubling as an attack ad.

Later in the seven-minute presentation, when Kennedy spoke passionately on behalf of universal health care, the crowd  roared again.  Very loudly.  No living speaker could top that, not even the First Lady.

Democrats like to joke that they belong to no organized political party, but there were times in the Time Warner Cable Arena when party regulars were not only not disorganized but instead displayed the single-minded discipline of the Beijing Olympics opening ceremony.

When Maryland Gov. Martin O’Malley delivered a speech which repeated the phrase that President Obama will take the nation “forward, not back,” DNC staffers scurried through the aisles distributing zillions of signs that said FORWARD and NOT BACK.  Democrats dutifully waved along in time with O’Malley.

When the First Lady was introduced, the same staffers zipped back down the aisles with WE LOVE MICHELLE signs for everyone except convention-goers seated directly in front of the television cameras.  On signal, they waved and waved and waved.  A well-organized display.

Mrs. Obama received plaudits for a skillfully delivered speech.  Like other speakers, she emphasized hers, and her husband’s, humble origins.  “Our families weren’t asking for much,” she said.  “They didn’t begrudge anyone else’s success or care that others had much more than they did; in fact, they admired it.”  That was a direct response to the charge, heard often at last week’s Republican convention in Tampa, that Obama and Democrats stoke class envy and resentment.  No, we don’t, said Mrs. Obama; we just want everyone to share in the good fortune.

After a number of earlier speakers pointed out that Mitt Romney is rich, Mrs. Obama pointedly said she and her husband have never much cared about money.  “For Barack, success isn’t about how much money you make, it’s about the difference you make in people’s lives,” she said.  Mrs. Obama mentioned that her husband turned down high-paying jobs to work in order to help people in struggling neighborhoods, and she’s often spoken in the past of her own choice to leave “corporate America” for more satisfying, if lesser paying, jobs helping others.  At the podium Tuesday night, she didn’t mention that helping others has paid pretty well, at least for her. (Not to mention the proceeds from her husband’s two autobiographies.) In 2004, just before her husband was elected to the Senate, she made $121,910 from her position as an executive at the University of Chicago Hospital.  In 2005, almost immediately after Barack Obama took office, her pay jumped to $316,962 — a very nice raise, even during the Bush years, when the economy was doing far better than today.  Helping others was actually a pretty good living for Mrs. Obama.

But that wasn’t a topic for the opening night of the Democratic convention.  The evening was a hodgepodge: a little bit on this issue or that, focusing particularly on abortion; a helping of red meat for the base (delivered most effectively by Ohio Gov. Ted Strickland); a rousing tribute to Kennedy; an immigrant success story (Castro); and the First Lady.  Was there a theme to it all?  Not really.  On their first night, Democrats were mainly celebrating themselves.

Likely because the only reason for anyone else in the country to celebrate the Dimocratic Party would be on the occasion of its ultimate demise.

Then there’s this follow-up to yesterday’s item detailing Mayor Emanuel’s premature departure from the Queen City:

Despite Crime Wave, Chicago Police Sent to Democrat Convention

 

Only days after Chicago Mayor Rahm Emanuel asked for federal agents and US Marshals to help combat the city’s wave of violence, about 50 Chicago police officers have arrived in Charlotte to work perimeter security details for a week at the Democrat National Convention. The Chicago officers, in their distinctive uniforms and checkerboard-brimmed hats, said they had been instructed not to talk with reporters about their out-of-town assignment.

A Charlotte police department spokesperson confirmed that “roughly 50 officers from Chicago” were on duty at the convention. “These are officers on their days off and were specially trained as mobile field force officers for the recent NATO summit in Chicago,” said a spokesperson for the Chicago police department, Melissa Stratton.

“I would love to know the logic behind that decision to send them there given all that is happening here in Chicago,” the Rev. Ira Acree of the Greater St. John Bible Church in Chicago told ABC News Monday. “It’s a state of emergency here in Chicago,” Rev. Acree told the Wall Street Journal last week.

Rahmbo; he’s just as concerned about his adopted city as The Obamao is about his adopted country.

And since we’re on the subject of The Dear Misleader, Jonah Goldberg observes….

Obama sells old ideas as new

 

A few years ago, it was fashionable for Democrats to describe themselves as “members of the reality-based community.” These days, it seems the foreclosure crisis has hit them so hard they’ve been forced to move to another neighborhood.

Metaphorically, at least, they’ve set up a refugee camp here this week. In this political Brigadoon, things are going well in America, so well in fact that President Obama obviously deserves a second term because Americans are better off than they were four years ago, and that the Republican Party is little more than a haven for old-fashioned robber barons who think like Klansmen but dress like Mr. Monopoly.

Obama doesn’t quite say it like that, but he’s perfectly happy to have his subalterns — some at the Democratic National Committee, some at MSNBC— make that case for him. Obama tries to take the higher road, insisting that the GOP represents old ideas while he champions a new approach. For instance, after letting it be known that he didn’t watch the Republican convention, the president held a rally in Colorado over the weekend talking as if he had seen the whole thing. The convention in Tampa was so “last century,” he explained. “You might as well have watched it on a black-and-white TV, with some rabbit ears.” His chief strategist, David Axelrod, chimed in on Fox News Sunday that the Republican convention was a “terrible failure” because it lacked any new ideas. It’s a remarkable claim for a president who has taken Franklin Roosevelt as his lode star and hopes that Republicans of the sort that dominated the party during the Eisenhower administration will return to power. It’s as if Democrats think pouring money into roads is some sort of cutting-edge, outside-the-box idea. You know who else invested a lot in roads? Julius Caesar. That doesn’t make it a bad idea, necessarily, but please let’s not talk about it as if it’s some sort of major policy innovation.

The same goes for pretty much the entire suite of Obama policies: more government control of health care, more regulations of the free market, more goodies for college students, more cash for state government employees. Culturally, the Democrats sound like it’s not so much still the “recovery summer” but the Summer of Love, promising abortion on demand and free birth control. It’s hardly as if Obama is a time traveler visiting us from the future with great policy boons that our unevolved brains can scarcely imagine.

Oh, but what about all his innovative ideas for green energy: faster trains local governments don’t want and electric cars consumers won’t buy? The New York Times reports that the electric car “has long been recognized as the ideal solution” because it is “cleaner and quieter” and “much more economical.” The Times reported that in 1911. Obama has turned his back on nuclear power while investing massively in a technological breakthrough pioneered by Heron of Alexandria in the first century: the windmill.

There’s a bizarre double standard in public policy debates that treats Keynesian spending binges as a cutting-edge and novel approach while casting free market reforms of entitlement programs as throwbacks to the horse and buggy age.

“Everybody’s watching what’s going on in Beijing right now with the Olympics,” Obama said while campaigning in 2008. “Think about the amount of money that China has spent on infrastructure. Their ports, their train systems, their airports are all vastly superior to us now, which means if you are a corporation deciding where to do business you’re starting to think, ‘Beijing looks like a pretty good option.'”

First of all, that’s nonsense. Our infrastructure is vastly superior to China’s. For instance, we have more than 11 times as many airports with paved runways as they do. China’s Olympic stadium is falling apart, unused today. Far more disturbing is the fact that Obama looks at the huge economic strides made in China since it adopted market-based reforms and concludes that what we should learn from the communists is to drop more money on vast state-run boondoggles. That’s just weird. (Not if you’re a Marxist.)

It also illustrates the real problem with how the self-described inhabitants of the “reality-based community” see the world. They sincerely see government as a key generator of innovation.

Obviously, government can help — spending money on basic research and the like. Beyond that, government far more often serves to stifle innovation and insulate itself from new ideas created by the market. That’s what public-sector unions — one of Obama’s core constituencies — do. Whether it’s health care, education or manufacturing, government retards new ideas and makes innovation more expensive, or impossible. But it does excel in one department: finding new ways to claim that old ideas are new.

Meanwhile, in the Windy City, as Rahmbo parties….

….two more are killed….despite the toughest gun laws in the nation.

In other National News of Note, it’s another black eye for Team Tick-Tock:

Lawsuit alleging ‘frat house’ at ICE moves into settlement talks after official quits

 

The federal government is moving into settlement talks with the Immigration and Customs Enforcement official whose allegations of discrimination, retaliation and lewd behavior led to the resignation of a top official in the agency.

James Hayes, head of the New York ICE office, sued Homeland Security Secretary Janet Napolitano earlier this year, claiming he was shoved aside in favor of female employees and then punished when he complained. He also accused then-ICE Chief of Staff Suzanne Barr of running a “frat-house”-style agency. His claims, coupled with those of other employees who submitted affidavits in the case, led to Barr’s resignation last weekend.

Court documents filed in U.S. District Court in Washington, D.C., on Tuesday show that the case has been referred to a magistrate judge for “settlement purposes,” while the lawsuit itself was put on hold. The deadline on the talks was set for Nov. 2. Hayes’ attorney Morris Fischer confirmed in a statement to FoxNews.com that “both parties motioned the court to stay the litigation of this case and set the matter down for mediation.” “This motion was filed in an effort to settle this case,” Fischer said, adding he couldn’t go into specifics over what his client is demanding.

The Obama administration had earlier described the allegations in Hayes’ suit as “unfounded.” In Barr’s recent resignation letter, she too rejected the claims against her as “unfounded” but said she didn’t want to distract from the agency’s mission.

Meaning more than her absolute lack of self-control, competence and discretion already had.  Soooo….if the allegations are indeed unfounded, why is the government settling?  After all, won’t any settlement be paid out using our money?  And if Barr is in fact undoubtedly guilty, which is why the government is settling, should not the Bionic Lesbian, who hired, protected and promoted Barr, join her in the unemployment line?!?

Shifting gears, Andrew Biggs, writing for the AEI, examines….

The accounting trick that will haunt public pensions

 

State and local government employee pensions around the country are significantly underfunded. The Governmental Accounting Standards Board (GASB), which is the closest thing that comes to a regulator of public pensions, tells them, through its accounting rules, that the single best thing pensions can do to improve their funding is to take greater investment risk. Economic theory, accounting rules applied to virtually all other pension plans, and plain common sense strongly disagree. GASB rules cause U.S. public pensions both to vastly understate their true liabilities and to take excessive investment risk, putting in danger both government budgets and the economy as a whole. With pension liabilities breathing down the necks of state and local governments around the nation, it is time for bond rating agencies to expose what GASB rules sweep under the rug.

Under GASB’s current accounting standards, state and local pensions “discount” their future benefit liabilities using the assumed rate of return on pension’s assets, typically 8 percent. Discounting calculates the present value of a future payment by subtracting interest each year, something like compound interest in reverse. Under GASB’s current standards, public pensions were around 76 percent funded as of fiscal year 2010, with unfunded liabilities exceeding $750 billion.

Bad as this may seem, the reality is worse. In economic theory, financial markets and the rest of the pension world, riskless liabilities like public pensions are valued using low discount rates to reflect the fact that public employee benefits are guaranteed, by law, legal precedents and often constitutional amendments. If accrued pension benefits are valued using riskless Treasury yields, unfunded liabilities today top $4 trillion, an amount that makes most current pension plans financially unfeasible.

In response to criticism, GASB in June proposed amended rules. Under the new standards, the current 8 percent discount rate could be applied to benefits only through the years in which the plan’s assets are expected to last. Liabilities occurring in years after plan assets would be exhausted must be valued using a lower municipal bond rate.

Any step toward reality would seemingly be welcome. But GASB’s new approach would reduce pension funding ratios by only around 10 percentage points. As the State Budget Crisis Taskforce report recently stated, even the new GASB rules “fall far short of what finance experts argue is appropriate and reported unfunded liabilities will not increase anywhere near as much as they would under a pure finance approach.”

But the dangers of GASB’s discounting rules are far from merely theoretical. Like the current rules, the new regulations tell pensions that boosting investment risk automatically makes them better funded, before a dime of higher returns have been realized. Since riskier investments have higher expected returns, shifting to a riskier portfolio allows public pensions to use a higher discount rate, instantly improving their funding status.

And these misaligned incentives have real effects. In a recent study, economists Aleksandar Andonov and Rob Bauer of Maastricht University and Martijn Cremers of Notre Dame show that public sector pensions in the U.S. take greater investment risk than either U.S. corporate pensions or public plans abroad, which cannot discount liabilities using high expected asset returns. “In the past two decades,” the authors state, “U.S. public funds uniquely increased their allocation to riskier investment strategies in order to maintain high discount rates and present lower liabilities…” Accounting-driven choices for U.S. public sector pensions, the authors say, “have large economic effects and could have potentially severe future consequences.”

Despite GASB’s intransigence, there is hope on the horizon. The bond ratings agency Moody’s, buttressed by a number of academic studies and government agency reports, announced in early July that it will no longer accept state and local governments’ pension liability figures at face value. Instead, Moody’s will value pension liabilities using yields from high quality corporate bonds, similar to the standards applied to private pensions. While corporate bond yields are almost surely too high- public pension benefits remain safer than corporate pensions and thus should be discounted at lower rates – even this change would nearly triple unfunded pension liabilities to $2.2 trillion nationally. Once bond markets take notice, state and local governments will at last face market pressure to manage their pensions responsibly.

On the Lighter Side….

Then there’s this twisted bit of Liberal illogic courtesy of Dan Feeney:

Finally, in News of the Bizarre, circa March, 2010 and courtesy of Rich Thayer, just when you thought you’d heard it all….

Megan Barnes Driving While Shaving! Fla. Woman Arrested After Crash, Grooming “Bikini Area” Say Cops

 

Megan Barnes was driving while doing what?!?! No, the 37-year-old woman wasn’t on her cellphone. She wasn’t texting, either. The Florida Highway Patrol says Ms. Barnes was driving while shaving – there’s more – driving while shaving her, uh, “bikini area.” Well, that’s what the cops call it.

It might not surprise you to learn that during Barnes’ ride on the razor’s edge, she allegedly crashed into the backup of a pickup truck in Cudjoe Key, Fla, according to CBS affiliate WFOR. Then, she and her ex-husband reportedly drove another half-mile before being pulled over last Tuesday morning. We’re told the ex-husband was actually doing the steering — from the passenger seat, of course.

Patrol officers say they determined that in addition to this bit of “landscaping” behind the wheel, Barnes was already driving with a suspended license, just one day after she was convicted of driving under the influence. Now, for her apparent adventure with blade in hand, throw in charges of reckless driving, driving with a revoked license, leaving the scene of a crash with injuries, and driving without insurance. The good news, nobody was seriously hurt.

Trooper Gary Dunick, describing what Ms. Barnes was thinking, explained, “She said she was meeting her boyfriend in Key West and wanted to be ready for the visit.”

But of course she was!

Magoo