Economists and pundits, who contend that the Federal Reserve System has little room to maneuver in using monetary policy to jump-start our anemic economy, often have claimed that America is mired in a Keynesian “liquidity trap”, a situation in which the demand for money is unresponsive to changes in market interest rates.

After all, those commentators emphasize, the Fed has adopted a target for the federal funds rate (the interest rate charged on overnight interbank loans) of between zero and 0.25 percent. The implication is that further reductions in that rate will have little or no effect on the incentives of businesses to invest in new plant and equipment or of consumers to borrow in order to finance the additional spending necessary to raise GDP growth above the (recently downwardly revised) estimate of 1.6 percent during the second quarter of 2010.

But those commentators overlook or ignore the easily verified reasoning of John Maynard Keynes, who defined a liquidity trap in terms of long-term rather than short–term interest rates. The long-term (ten- or 30-year) rate on Treasury securities now runs at about three percent, meaning that the Fed still has arrows in its quiver. Unfortunately, however, those arrows, the use of which would demand the central bank engage in further “quantitative easing”, requires it to purchase more under-performing, “toxic” assets from banks and other financial institutions that lent money to homeowners who could not repay their mortgages. Engaging in such transactions places more bad debts on the Fed’s balance sheet, constrains its ability to conduct monetary policy in the future and raises the specter of higher rates of future price inflation.

In his recent speech at Wood’s Hole, Wyoming, Fed Chairman Bernanke was right to say that economic recovery cannot depend solely on the policies of the central bank over which he presides. But the fiscal discipline (spending and tax cuts) required to achieve that goal is incompatible with the vote motives of incumbent politicians or their challengers for political office.

(more…)

We have come a long way in the last twenty months. The President of the United States, his Chief of Staff, the Speaker of the House of Representatives, and the Majority Leader in the United States Senate have done for the Republican Party what no Republican could have accomplished. Just as rigor mortis was about to set in, they brought the old corpse back to life. For their efforts on our behalf, we should be forever grateful.

It is easy to lose perspective. It is easy to forget the dire straits in which the Republicans found themselves in and for some time after November, 2008. On the first Tuesday of that month, they were soundly defeated. The Democrats controlled the Presidency and both houses of Congress. In time, when Al Franken was seated and Arlen Specter turned coat, the Democrats would attain El Dorado – a commanding majority in the Senate capable to bringing a filibuster to a screeching halt.

The Republicans initially thought that to get along they would have to go along. Had Nancy Pelosi thrown a little patronage their way when the so-called “stimulus” bill was being put together, had Barack Obama intervened to insist that she include earmarks for compliant Republicans in the House, a great many of them would have voted for the measure. It is to her that we owe their solidarity on the occasion of the vote. She is responsible for the fact that on that occasion they presented themselves to the world as a party of principle. If the Tea-Party Movement, which sprang up in the immediate aftermath of the bill’s passage, was not as resolutely hostile to the Republicans as it was to the Democrats, it was because Pelosi and her minions wanted vengeance, sought it, and got it.

Even when the Tea-Party Movement had emerged, the Republicans were not quick to realize what was in the offing. On 2 May 2009, some six months after the election, Jeb Bush emerged from a meeting with Mitt Romney and House Republican Whip Eric Cantor to announce that it was time for the Republicans to give up “nostalgia about the past” and to leave Ronald Reagan and all that he stood for behind. “You can’t beat something with nothing,” he observed, “and the other side has something. I don’t like it, but they have it, and we have to be respectful and mindful of that.”

Jeb Bush, Mitt Romney, and Eric Cantor may have been slow to grasp what was going on, but it would be a mistake to assume that they are dopes. It was not until early August in that year that I was willing to admit to myself that a political realignment in the Republicans’ favor was a serious possibility; and, as I noted in a piece posted in the aftermath of the annual meeting of the American Political Science Association in early September, I was even then almost entirely alone. At that convention, I had attended a panel on Barack Obama’s first year as President at which not one of the distinguished students of American politics on the panel had in their prepared remarks even mentioned the Tea-Party Movement. And when I asked a question about it, I received a perfunctory answer. It was odd, my interlocutor remarked, that such a movement had emerged in the absence of institutional support. It was, I thought, very odd, very odd, indeed.

Now, thanks to Barack Obama, Rahm Emanuel, Nancy Pelosi, and Harry Reid, the Republicans appear to be on the verge of an historic victory.

(more…)

The East Coast (where BG is largely based) is bracing for Hurricane Earl. Having grown up amid tornados in the midwest, this seems mostly just a big thunderstorm, but, man, do people go crazy around here…probably because there are too many federal bureaucrats around these parts…

“We have a lot of Re-education to do,” Health and Human Services Secretary Kathleen Sebelius said this week. And no wonder — once you’ve started with Rationing and Redistribution, it’s the third R of out-of-control government!

Sebelius claims senior citizens need the re-education the most, because they “have been a target of a lot of the misinformation.” Of course, what’s really happened is that Americans have learned more about Obama’s law, and what they’ve learned, they don’t like. The facts are now inescapable, for Sebelius and for the politicians who advocated for this measure — facts that detail the false nature of the case advanced by the president and his allies, and the true ramifications of this wrongheaded reform package foisted upon the American people. They’ve learned that they can’t keep their plan, even if they like it; they can’t count on lower costs; they can’t count on lower deficits; and they can count on more bureaucracy, more rationing, and more IRS involvement in your daily life.

Today, fewer than one-in-three Americans believe their family will be better off under ObamaCare. The same survey Nancy Pelosi touted last month as showing some positive views on the measure illustrates the movement. The Kaiser Family Foundation found that “support for health reform fell over the course of August, dipping from a 50 percent favorability rating in July to 43 percent, while 45 percent of the public reported unfavorable views.”

Americans have these views because of the litany of broken promises within Obamacare, detailed across thousands of websites, hundreds of reports and dozens of research papers released since its passage. They have these views not because they need to be taught a lesson by Kathleen Sebelius, but because they’ve noticed how the politicians and activists with all those big promises are awfully quiet now. They can’t even make the claim that the legislation will reduce costs or lower the deficit any more without getting laughed out of the room.

(more…)

Drums are beating in Washington for a value-added tax in addition to the “stimulus” taxes, health care taxes, energy taxes and other taxes President Obama has imposed and wants to impose on hard-pressed taxpayers. Supposedly a value-added tax is a magic elixir for curing budget deficits and excessive debt. Quack remedy would be more like it. If it worked, you’d observe that countries with a VAT had budget surpluses and no debt problems. But almost every country that has a VAT is plagued with budget deficits and excessive debt. … No surprise that the worst financial basket cases all have a VAT. Iceland has the highest VAT rates, but this didn’t prevent its financial crisis and the near bankruptcy of its government. Italy’s VAT rates are almost as high, and its debt exceeds its GDP. Financial crises are looming in Spain and Portugal, and of course they have a VAT. Greece has a VAT, too, and when politicians ran out of money to pay government employees for more than a year’s worth of work every year, they rioted in the streets.  Great Britain has a VAT, and its government finances are in the worst shape since World War II — its budget deficit is expected to be bigger than that of Greece. Moreover, the OECD has acknowledged that “(VAT) tax and transfer wedges have discouraged firms from offering employment and individuals from taking it, reduced employment and increased inequality.”

Political prognosticator Charlie Cook’s latest column in National Journal:

Labor Day is almost here and Democrats are still waiting for the cavalry to arrive. An exhaustive scan of the horizon reveals no rescuers and none of the things Democrats badly need to save them from tough midterm election losses on Nov. 2.

There are few signs of any meaningful recovery, and indeed there is more talk of a double-dip recession, plunging the country back into economic trouble between now and the end of the year. Unemployment seems stuck at 9.5 percent, reinforcing the view that last year would have been better spent focusing on the economy than on health care reform.

Democrats also needed a public re-evaluation of the new health care reform law. They needed the public to decide that it wasn’t so bad, that it was a good idea after all. That hasn’t happened, as pointed out by the Kaiser Family Foundation’s health care monthly tracking poll released this week. Favorable attitudes toward the new law dropped from 50 percent last month to 43 percent this month, and unfavorable views climbed from 35 percent to 45 percent. Twenty-nine percent of Americans believe that they and their families will be better off under the new law, while 30 percent say they will be worse off and 36 percent say it will not make much difference.

(more…)

Uh, oh! Phil Hare, the incumbent Democrat running for re-election in Illinois’ 17th Congressional District, is at it again, apparently sore at veterans like Medal of Honor recipient John F. Baker Jr. who are supporting his opponent, Republican Bobby Schilling.

With the help of James L. Moody, chairman of the Sangamon County (Ill.) Democratic Party, Hare — the same guy who said, “I don’t worry about the Constitution,” when asked about the Constitutionality of ObamaCare — filed a complaint Aug. 27 with the Federal Election Commission.

Hare’s target: Veterans for the Constitution, a group of military veterans whose stated mission is to seat Conservative leaders who truly represent the people and do not see the Constitution as an obstacle but as a document the founding fathers intended be upheld at all costs. The group, according to spokesperson Ken Moffett, is comprised of only a handful of active members who have managed to raise a whopping $6,000.

(more…)

From 1998 to 1999, Alexi Giannoulias played professional basketball in Panionios B.C. Greece. That part we already knew.

But one thing we still don’t know is how an American with Greek citizenship was able to live in Greece without being drafted into the Greek military.

Under Greek law, all citizens must serve in the military once they turn 18. Much like in Israel, Greek citizens will perform a period of military service after high school.

Alexi Giannoulias was a college graduate when he came to Greece – an age meeting the requirement for military service. So how did he get around the requirement?

With many Americans holding dual Greek citizenship travelling to Greece, U.S. Embassy, Athens details the Greek government’s requirements for military service on its website.

(more…)

u

Did you hear about the Oregon health inspector who shut down a seven-year-old girl’s lemonade stand? How about the California mayor who put the kibosh on a three-year-old’s vegetable stand?

Sure they’re both big-time buttinskys, but this month top honors go to the top cop who busted a guy who was offering free rides to keep drunk drivers off the road.

Presenting Reason.tv’s Nanny of the Month for August 2010: Quincy, Illinois Police Chief Rob Copely!

(more…)

What a difference a year makes in the character of Democrats.  In 2009, the Democrats in Congress were believing press accounts about the demise of the Republicans Party and the conservative movement.  Amidst those false tailwinds, the Congressional Democrats took on America and its institutions.  As the 2010 midterms approach, however, many of those same Democrats have turned tail and are running away from Pelosi, Reid and Obama amidst headlines like:  “Democrats seek separation from Nancy Pelosi.”  Unfortunately for them, it is too late to run away.

Former Republican Congressman J.C. Watts famously said that “Character is doing what’s right when nobody’s looking.”  Watts, of course, was assuming that when the whole world was looking even politicians would do what was right.  In 2009, the whole world was looking at the Democrats.  Would they build a new level of consensus by charting a middle course?  Or would they follow Reagan’s paradigm that Democrats campaign in the middle and govern on the Left?

Sure enough, Reagan proved right and the Democrats proved arrogant.  According to Eric Cantor, a leading Republican in the House, Obama told him “elections have consequences…and Eric, I won” when discussing tax policy. Cantor also says Obama once told Republican leaders to “stop listening to Rush Limbaugh…and do what’s right for the people.”

Turns out Democrats stopped listening to voters and hardly did what was right for America.  On issue after issue, they ignored public sentiment in favor of their ideological agenda.  The stimulus bill passed on partisan terms.  Cap and Trade was pursued with partisan ideology.  The Health Care Bill was passed despite widespread opposition by Americans – including voters in the Kennedy seat and civilian terrors didn’t make legal common sense to most Americans any more then suing Arizona for a law that mirrored existing federal law.

Now that polling shows an unprecedented Republican advantage going into the Fall elections, many Democrats are not willing to stand by the leaders they supported earlier this year.

(more…)

Today, in 1939, Germany invaded Poland, ushering in World War II.

Tonight, Sen. Murkowski conceded the “Republican Nomination” for the U.S. Senate. She did not endorse Joe Miller. She did not take questions at her press conference. Also, she did not concede the overall election.

Sources in Alaska confirm that her campaign is in talks with the Libertarian Party in Alaska. Big Government originally broke the story that the Executive Committee of the Libertarian Party voted to deny her their ballot slot. Big Government, however, has learned that some members of the Libertarian Party are discussing “options” with Sen. Murkowski. (Tells you everything you need to know about the Libertarian Party.)

(more…)

Sources in Alaska have informed Big Government that the trend in the count of absentee ballots makes it virtually impossible that Sen. Murkowski will overtake Joe Miller in the GOP Senate Primary. A trusted and well-placed operative told BG:

It’s over.

Sources have also revealed that the Murkowski campaign is scheduling a conference call this afternoon (Alaska time) with her entire campaign team to discuss next steps. There is additional information we hope to be able to publicize soon. Stay tuned for updates.

UPDATE: Sen. Murkowski has tentatively set a press conference for 10pm EDT.

Al Sharpton is not happy with Glenn Beck.  On The O’Reilly Factor yesterday he took umbrage with Beck’s desire to “take back the Civil Rights movement.”  Now, as I see it there are several reasons a so-called Black Community leader like Sharpton could find that language offensive.

It could be that be Al believes that the Civil Rights movement – one in which Americans of all races, creeds and backgrounds came together to forge a new national character that elevated previously down-put groups to equal legal and social footing with the majority population as a whole – is the exclusive property of African-Americans.  He said so much during his counter-rally when he commented on the date being the anniversary of Dr. Martin Luther King’s “I Have A  Dream” speech on the mall. “This is our day!” Sharpton bloviated.  “And we ain’t giving it away!”

I guess the idea that those on the mall this Saturday had no right to that day came as a surprise to Dr. Alveda King who is the niece of Dr. King and was a featured speaker at Beck’s rally.  It may have even come as surprise to the late MLK himself were he alive.  He was, after all,  the man who referred in his
speech to “All God’s children, black men and white men, Jews and Gentiles, Protestants and Catholics…” coming together.  And isn’t that what made King’s speech so special?  That his was a message of inclusion.  Not an “us versus them” but a gigantic national ”we.”  King understood that the cancer of racism destroys the entire body (America), not just the organ (minorities) it specifically targets.  In comparison, Sharpton’s comments seemed so beneath the memory of King.  So petty.  So small as to make one shake his/her head and ask what happened to this most noble of movements that began when a woman on a bus refused to give up her seat to a white man so many years ago?

And this really gets to the heart of Sharpton’s problem with Beck’s incredibly successful gathering.

(more…)

The Mid-Atlantic Region of Carpenters (MARC) is notorious for hiring non-union workers to walk their union picket lines. These paid non-union picketers are usually given minimum wage and no benefits.

In an act of pure hypocrisy MARC protests are targeted at construction companies they are claim are not paying a “living wage.”

The union has over 150 pickets around DC and Baltimore. Yesterday the Competitive Enterprise Institute sent a camera to document one of these pickets.

News broke just before the weekend that California Republican Senate candidate Carly Fiorina opposes the absurd notion known as Internet Network Neutrality (NN).

“The principle sounds fantastic, but the principle is not the problem,” Fiorina said in an interview at the Technology Policy Institute’s conference in Aspen, Colo. “The problem is how companies and regulatory bodies are trying to translate that principle into policy, which would have a bad effect.”

A spokeswoman later added that Fiorina “opposes Net neutrality and thinks government intervention and more regulation will not be helpful where the Internet is concerned.”

It’s really helpful to have someone running for office publicly standing opposed to NN who is as knowledgeable on it as is Fiorina – she is a former (1999-2005) chief executive officer of Hewlett-Packard (HP).

Fiorina’s opponent is a big NN proponent.

Fiorina’s position contrasts greatly with that of her opponent, Democratic Sen. Barbara Boxer, who previously cosponsored legislation that would have set open Internet rules firmly in place.

In a statement, Boxer reaffirmed her support for Net neutrality. Her office later added that Boxer felt it was “premature to comment” on the Federal Communications Commission (FCC)’s efforts to mandate Net neutrality using its own rule-making process.

(Emphasis mine.)

“Premature to comment?”

(more…)

As you can read here, retired Albemarle County (Virginia) Circuit Judge Paul Peatross has ruled that Virginia Attorney General Ken Cuccinelli may not have access to records under Virginia’s Fraud Against Taxpayers Act, as he seeks to determine the propriety of Michael “Hockey Stick” Mann’s claims made to obtain research funding. Judge Peatross’s ruling protects Mann, the University, and specifically the Department of Environmental Sciences, at least for now.

Here’s the rub, on which I will have more to say. I attended the hearing a week ago Friday at which the parties argued the University’s motion to dismiss. The Deputy AG Wesley Russell’s arguments dominated, so badly I almost felt sorry for the University. The judge’s queries were puzzling, as he pleaded with the University’s counsel to come up with some argument how he might rule in their favor, as were other comments (continue reading).

Before the hearing commenced Peatross, substituting for the vacationing chief judge, cited his wife’s 1982 degree in environmental science from UVA –  oddly, he then said “but not in global warming” — as part of a rather spare recitation of why he was hearing of this case (which he attested he had never heard about until reading the briefs that morning. A prominent case in the local, state and national news assigned to his old court! This man takes his retirement seriously…), and articulating his history so that counsel might decide whether he carried any conflict such that he should not hear the University’s motion.

That fact of her 1982 degree from Mann’s former Department, apparently, was relevant. Okay. But…

The fact that the judge’s wife had in fact previously worked in that Department of Environmental Sciences — the very Department that stands to suffer should he have ruled in favor of the Attorney General – was somehow not worth disclosing to counsel.

(more…)

The “Restoring Honor” event at the Lincoln Memorial was inspiring. That should be just the beginning of a “Restoration Movement.” We don’t really need a revolution in America; all we need to do is restore what once was. I have a suggestion for another aspect of our Founding that needs to be restored—a suggestion that some will call unrealistic, yet one that the Founders considered essential.

Let’s restore the provision in the original wording of the Constitution that allows state legislatures to choose a state’s senators who serve in Congress.

Article I, Section 3 says, “The Senate of the United States shall be composed of two Senators from each State, chosen by the Legislature thereof.”

The reasoning was lucid: the people of each state already had direct representation into the national government via the House of Representatives; it was necessary as well to provide representation for the state governments in the national Congress. The goal was to make sure that laws passed by each state were not going to be overturned by the national government without good reason.

It was one of those key checks on power; it was to provide balance in the federal system.

Why did this change?

(more…)

Are you opposed to Obamacare or illegal immgration? You’re a racist. Are you opposed to gay marriage? You’re a homophobe. Did you oppose Elana Kagan’s appointment to the Supreme Court? You’re a sexist. After less than two years of complete Democrat control of government, there aren’t many Americas progressives haven’t accused of some sort of bigotry for simply having an opinion different from theirs. The politics of “hope” and “change” have devolved into exactly what those espousing them claimed they would end. Is this really Democrat’s plan to win votes in November?

Barack Obama campaigned under the banner of unity and ending the “politics of division.” But that banner was swiftly furled and the true banner of progressive politics began flying over our country. Progressivism leaves no room for debate or disagreement. To paraphrase former President Bush, to progressives you’re either with them or you’re with the enemy.

During the Obamacare debate, opponents were compared to opponents of civil rights legislation. The ethically challenged Congressman from New York, Charlie Rangel, said “The group that were in Washington fighting against the health bill and fighting against the President, [they] looked just like and sounded just like those groups that attacked the civil rights movement in the South.” Left-wing blogs ran with this mantra and agenda-driven media outlets like MSNBC dutifully followed. They still advance the lie that African-American Members of Congress were pelted with racial slurs as they walked to cast their vote, something even the New York Times has acknowledged there is zero evidence of.

The ends justify the means, no matter how sickening and divisive the means.

(more…)