Today marks the 98th birthday of the late economist and the great freedom fighter Milton Friedman. To honor Friedman’s excellent work, please watch the following videos of him explaining free market principles in a simple manner. While Milton Friedman may no longer be with us, his legacy and love for freedom live on.

 Greed:

 

Free Lunch Myth: Curing American Health Care:

Today, Republican Study Committee Chairman Tom Price (R-GA) offered a resolution to pledge that the House will not consider major legislation after Election Day until the new Congress is sworn-in. The resolution condemned the reported Democrat plans to hold a lame duck session after Election Day to pass a series of unpopular pieces of legislation. According to Chairman Price,

Americans are sick and tired of their elected leaders making backroom deals to ram through unpopular, 2000-page bills that no one has read. They are sick of out-of-touch politicians, and they are tired of being ignored.  A number of Democrats, including members of their leadership, have recently expressed a desire to ignore the public will and use a lame duck session to pass liberal legislation Americans do not want.  Today I gave my Democrat colleagues an opportunity to show they are finally ready to listen to the American people.

Our system of government rests upon the consent of the governed, but it is quite clear that Democrats no longer have Americans’ consent.  The public’s trust in this Congress has been repeatedly broken.  Voting for a national energy tax and other items on the liberal wish list in a lame duck session would shatter it beyond repair.  Republicans are fully prepared to do what is necessary to restore Americans’ trust in their elected representatives.  We know it will be a long road, but it is one well worth traveling.

The text of the resolution is available here.

Sign the No Lame Duck petition to stop Congress from using a lame duck session to pass power-grabbing legislation against the will of the American people!

 

The recent Capital article entitled “The Kirsten Gillibrand Diet, revealed!” appears innocuous and apolitical.  As this is a menial personal epithet, it would seem to fall clearly outside the reach of government activism. Think again.

 

According to Food Safety News:

 

“Senator Kirsten Gillibrand (D-NY) and Representative Nydia Velazquez (D-NY) introduced legislation to combat 'food deserts' prevalent throughout urban and rural communities across the United States.

 

A food desert is a large and isolated geographic area where mainstream grocery stores and access to fresh produce are absent or distant.  The legislation would invest $1 billion through loans and grants to help build approximately 2,100 new grocery stores in high need areas across the country.”

 

Of course healthy eating is a lifestyle choice that would combat obesity and lead to healthier Americans. Gillibrand is going well beyond attempting to properly educate people- she intends to control their personal preferences.

 

The question becomes why do these “food deserts” exist? Gillibrand and others like First Lady Michelle Obama are using their high-profile status to publicize the existence of large areas where a grocery store would face no competition. If this untapped market has so much potential, wouldn’t someone, be it a supermarket powerhouse like Safeway or even a local entrepreneur with a fruit stand, pounce on the opportunity?

 

The truth is that the private sector is unwilling to invest in these areas because they believe it will fail. Fresh fruit and healthy food costs significantly more than fast food. It demands additional personal discipline to eat well and allocate the resources to buy higher quality food. Gillibrand herself deems buying her favorite food, raspberries, a “splurge,” and she is in the top 5% of income earners in our country.

 

I am sure Gillibrand fancies that through her “food desert” bill, food oases will spring forth. In truth, the solution to the “desertification” of cities is simple, increased demand for healthier foods would prompt the market to respond with greater access.

 

The “food desert” bill plans to override the personal preferences of American by using one billion dollars of their own money to entice them to eat healthier. The people of New York elected Gillibrand to represent them, not to parent them.

 

Gillibrand successfully dieted through the power of her own decisions; it did not take a “dessert desert” initiative to rid the Senate cafeteria of unhealthy options. The Senator should be commended for her personal success in health, but does she think that her constituents don’t have the same capability of will as she? That they need her intervention to lead a better life?

 

In a Thomas Sowell column, he states:

It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it.

Today, the Joint Economic Committee released a flowchart to illustrate the bureaucratic nightmare known as ObamaCare.

 

PDF version available here.

 It gets worse. The committee analysis could only fit one-third of the complexity of Obamacare on the above flowchart. Finally, Nancy Pelosi and the other lawmakers that did not bother to read the entirety of the 2,801 page bill can find out what actually was in it. As it turns out, the creation of 159 new bureaucracies, insurance mandates and higher taxes were hidden in the complex law.

For comparison purposes, here’s what the free market health care flow chart looks like: 

The free market health care plan is a simple model that leaves health care decisions between a patient and a doctor instead of a complex web of bureaucracy. We will continue to fight until the bureaucratic monstrosity that is Obamacare is repealed and replaced with a simple free market model that emphasizes freedom. Use FreedomWorks' congressional directory to call your representatives and tell them to take action to repeal unconstitutional Obamacare!

 

Washington, DC- The Contract from America Foundation announced yesterday that Congresswoman Cathy McMorris Rodgers (R-WA), Vice Chair of the House Republican Conference and the highest-ranking woman in Republican leadership, joined over 200 Senate and Congressional candidates nationwide in signing the “Contract from America,” a grassroots legislative blueprint for 2010 and beyond.

After signing this commitment to fiscal responsibility and good governance, Congresswoman McMorris Rodgers commented, “I’m very pleased to sign the ‘Contract from America.’ This contract embodies the best ideas of a wonderful grassroots movement that will bring common sense and accountability to Washington… By enacting the Contract – and continuing to advocate for America’s constitutional principles – we can help launch an American Renaissance – a new era of freedom, opportunity, limited government, and prosperity. I’m very excited for the future."

The Contract from America is not a list handed down from on high by old-bull politicians. After garnering nearly half a million votes in less than two months, the Contract from America is an authentic grassroots document expressing what a majority of Americans want for their future.

FreedomWorks strongly supports the ten ideas voted into the Contract, which advocate fundamental tax reform, fiscal responsibility and limited government.

FreedomWorks President Matt Kibbe commented, “We are thrilled that our FreedomWorks members are continuing to spread the word about the Contract from America. This is a document created by the people, for the people that sends a clear message to Washington: We want less. Congresswoman McMorris Rodgers is a very strong addition to the growing list of Contract signers. ”

“By signing the Contract from America, Congresswoman McMorris Rodgers has shown herself to be a true champion of liberty and the free market,” added Ryan Hecker, an organizer of the Contract from America. “She made a pledge to her constituents that she will continue to be an effective conservative leader in the House."

For more information about FreedomWorks or the Contract from America, please contact Adam Brandon at (202) 942-7698 or visit the website, www.ContractFromAmerica.org.

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The Joint Economic Committee released this chart today explaining what the new health care legislation entails. Kevin Brady (R-TX) said "This portrays only about one-third of the complexity of the final bill. It’s actually worse than this."

Democracy and Power 108:  Obfuscation

Wherever politics intrudes upon economic life, political success is readily attained by saying what people like to hear rather than what is demonstrably true. Instead of safeguarding truth and honesty, the state then tends to become a major source of insincerity and mendacity. – Hans F. Sennholz

Uncle Sam has worse woes than Greece

Laurence Kotlikoff, an economist at Boston University, in the Financial Times opines the United States debt is worse than Greece.  Remember Greece has experienced government employee riots, and roiled the European bond markets.  Kotlikoff explains how government labeling can deceive and distort the actual size of the debt.  Kotlikoff, using the federal governments on going deception on the Social Security and Medicare, writes:

Greek debt totals 120 per cent of gross domestic product, twice the US figure. But debt alone tells us little about a country’s fiscal condition. Economists call this the labelling problem, because governments can describe receipts and payments in any way they like. Payroll taxes to fund pensions and healthcare can, for instance, be labelled as borrowing, with the future benefits called repayment less a future tax. Measured thus, the US budget deficit is 15 per cent of GDP, not 9 per cent.

Argentina, France, Greece are prime examples of countries deceptive labeling which often cause financial, political and social strife.  Unfortunately, Kotlikoff refers to America as the grand master of deception:

But all these countries have something to learn from the real labelling master: Uncle Sam. During the past half-century, the US has sold tens of trillions of unofficial IOUs, leaving it with liabilities to pay Social Security, Medicare and Medicaid benefits that total 40 times official debt. So is US debt actually 40 times larger than reported? Is this year’s deficit 15 per cent of GDP or 9 per cent? It’s your pick, since we are in a fiscal wonderland of measurement without meaning.

Kotlikoff and professors at Freiburg University have developed the “fiscal gap,” measuring the present value difference between all future expenditures and receipts.  Greece has 11.5 per cent of GDP fiscal gap.  Using the Congressional Budget Office (CBO) projections, the US has a 12.2 percent fiscal gap.  Tragically, it is worse.  Part of the 12.2 percent fiscal gap, assumes 7.2 per cent reduction of debt.  Kotlikoff explains:

But the assumptions underlying this 7.2 per cent adjustment are highly speculative, including a substantial rise in the share of taxpayers facing the Alternative Minimum Tax, once called the “millionaires tax” for targeting only the rich. The CBO also assumes that real wage growth will push all workers into much higher tax brackets, and that Congress will slash discretionary spending as well as greatly limit growth in Medicare and Medicaid benefits. Each supposition runs counter to recent experience.

The Democracy and Power Lesson 108:

Obfuscation

…, the state then tends to become a major source of insincerity and mendacity. – Hans F. Sennholz

Knowing their constituents are rationally ignorant, and fearing legislated failures, the politician’s speech is seldom precise or logically reasoned.  Seeking a favorable image, the politician talks in generalities, exaggerates and obfuscates. 

Presently, only an informed and active citizenry can cause good governance.  Join FreedomWorks. Save democracy and America.

With midterm elections less than 100 days away, many divisive national issues are ubiquitous in the news. Lest we forget, many issues arise in local politics that deserve attention and action. With this in mind, we want to commend a group in Richland County, South Carolina, Citizens Against the Tax Increase, for fighting against a transportation sales tax increase.

The Citizens Against the Tax Increase realize that the people of their county cannot afford an increased tax burden. During this recession, citizens need fewer and lower taxes to prosper. The tax increase would make Richland County’s sales tax eight cents, one of the highest rates in the state. Perhaps the local government could allocate the seven cent tax more effectively, but raising the rate could potentially harm the county’s economy.

The government must learn to live within their means as individuals do. Proponents of this increase claim the tax is necessary to fund road improvements, but some citizens are wary that these funds could be misused or wasted.

The Citizens Against the Tax Increase are local grassroots volunteers doing their part to educate and persuade their fellow citizens. If this particular issue affects you, contact sgilchrist1@sc.rr.com to get involved.

We encourage all of our members to engage in local constructive endeavors that encourage fiscal austerity.

Democracy and Power:  104 Future Debt Burden

A government debt is a government claim against personal income and private property – an unpaid tax bill. – Hans F. Sennholz

US deficit reduction painful, commission chiefs warn

The federal government has created gigantic debt.  Again: 

A government debt is a government claim against personal income and private property – an unpaid tax bill.

Who is responsible for the debt?  Republicans, Democrats and Presidents.  In the 20th Century, the debt has relentlessly increased.  Worse, Republicans, Democrats and Presidents have enormously increased the debt in the 21st Century.  The villains are Bush, Obama, Pelosi, Delay, Hastert, Reid and all the compliant Representatives and Senators. 

Donna Smith of Reuters quotes Erskine Bowles a co-chair of the debt commission: 

"It is all going to be very painful," Bowles said

So who will pay the debt?  Today’s workers, future workers - even the unborn.

The lesson on Democracy in America:

All politicians in all modern democracies create debt.  Intentionally, they buy votes by giving benefits to the current voters.  In America, think Medicare, Social Security and prescription drug benefits for seniors.  Burdening future generations is dishonest and immoral.

Worse, the debt burden on future generations diminishes their freedom and prosperity.

Big heads up: a cloture vote to move forward on the DISCLOSE Act is scheduled in the Senate tomorrow afternoon.

Click here to call your Senators and urge them to vote No on cloture to keep the DISCLOSE Act from becoming law.

FreedomWorks sent this key vote to the Hill this morning urging a No vote on the bill.  Here's an excerpt:

Two other pieces of the DISCLOSE Act look like specific attacks on the Tea Party movement.  It is widely known that this decentralized movement is largely made up of individuals who are new to political activism and simply organizing with likeminded members of their community to do what they can for a country they love. But the DISCLOSE Act puts in place ambiguous guidelines that will leave many, especially smaller groups without the funds to pay for expensive campaign law attorneys, wondering whether or not they are violating the new rules.  When changing the rules of political participation, Congress should err on the side of encouraging participation, not discouraging it with ambiguous legalese that only empowers lawyers. 
 
The DISCLOSE Act goes even further and expands the period of time during which those trying to participate in our democracy may violate new, confusing laws.  In an election year when a record number of Americans may participate, this act expands the “electioneering communications” period.  That’s the number of days before elections when politicians have decided they want to control free speech.  This bill says those limits would go from 60 days before an election to 120 days.  Those are exactly the days when participation should be encouraged.

Call now!

Dear Senator,

On behalf of over a million FreedomWorks members nationwide, I urge you to support the First Amendment of the Constitution, as you have sworn to do, and VOTE NO on S.3628, the Democracy is Strengthened by Casting Light on Spending in Elections (DISCLOSE) Act. There is broad opposition to this legislation from groups across the political spectrum.  Like the American Civil Liberties Union (ACLU), FreedomWorks would probably qualify for the special exemptions to this legislation that others have managed to carve out for themselves.  But, also like the ACLU, we oppose this bill on principle: it is a clear violation of free speech and would likely have a chilling effect on the political discourse that is so vital to our democracy.

Specifically, to quote the ACLU, “The DISCLOSE Act fails to preserve the anonymity of small donors, thereby especially chilling the expression rights of those who support controversial causes.”  It is important to remember why this anonymity exists.  As the civil rights movement was gaining steam in the late 1950s, opponents of the movement’s noble goals tried to silence supporters with government-mandated membership disclosure regimes that were, as the ACLU correctly notes, “thinly veiled attempts to intimidate activist organizations” by “instilling fear of retaliation among members of the activist group.”  In 1958 the Supreme Court correctly sided with the NAACP in NAACP v Alabama, ensuring NAACP supporters could maintain anonymity so they would not be subject to personal, political, or commercial attacks.

Two other pieces of the DISCLOSE Act look like specific attacks on the Tea Party movement.  It is widely known that this decentralized movement is largely made up of individuals who are new to political activism and simply organizing with likeminded members of their community to do what they can for a country they love. But the DISCLOSE Act puts in place ambiguous guidelines that will leave many, especially smaller groups without the funds to pay for expensive campaign law attorneys, wondering whether or not they are violating the new rules.  When changing the rules of political participation, Congress should err on the side of encouraging participation, not discouraging it with ambiguous legalese that only empowers lawyers. 
 
The DISCLOSE Act goes even further and expands the period of time during which those trying to participate in our democracy may violate new, confusing laws.  In an election year when a record number of Americans may participate, this act expands the “electioneering communications” period.  That’s the number of days before elections when politicians have decided they want to control free speech.  This bill says those limits would go from 60 days before an election to 120 days.  Those are exactly the days when participation should be encouraged. 

We will count your vote on cloture and final passage for S.3628 as a KEY VOTE when calculating the FreedomWorks Economic Freedom Scorecard for 2010.  The Economic Freedom Scorecard is used to determine eligibility for the Jefferson Award, which recognizes members of Congress with voting records that support economic freedom.

Sincerely,

Matt Kibbe
President and CEO
FreedomWorks

[Click here for PDF version of the letter]

File Attachments 7-26-10_Key_Vote_Disclose_Act_Senate.pdf87.22 KB

On January 1, 2011, the largest tax hike in American history may arrive. Unless Congress takes action, Bush-era tax cuts that were enacted in 2001 and 2003 will expire at the end of 2010. According to Cato Institute scholar Chris Edwards:

 The Bush tax cuts substantially reduced tax rates for people in every income group. Indeed, those at the bottom had the largest relative reductions in their tax rates.

In fact, these tax cuts have saved a middle-class family of four about $2,200 annually. Since the fate of the Bush-era tax cuts is still uncertain, countless Americans are wondering how the potential tax increases will affect them. Luckily, the Tax Foundation has released a Bush-era tax cuts calculator that allows individuals to find out how their tax liabilities will change in 2011 under three different scenarios. After filling in information such as salary and number of dependents, the user can see their 2011 income tax if all the Bush tax cuts expire, if all of the Bush tax cuts are extended or if Congress passes the tax laws in Obama’s budget which lets specific tax cuts expire.

 

Despite the fierce opposition from powerful teachers’ unions, the school choice movement is growing across the nation. Most recently, Pennsylvania State Senator Anthony Williams (D-Philadelphia) introduced the Opportunity Scholarship Act (SB 1405) that would expand educational options for children. The bill would allow low-income children trapped in chronically failing schools to attend the school of their choosing. In order to be considered “chronically failing”, a school must have at least 40 percent of their student body score below the basic range in reading, writing and math on a state assessment test. Poor students in these failing schools would be granted financial assistance that is equal to 100 percent of the state’s annual per-pupil funding in addition to 50 percent of the local school district’s annual per-pupil funding. Since Pennsylvania’s local school districts pay slightly over half of education costs, the Opportunity Scholarship would save local taxpayers money while giving poor children the opportunity to attend a better school.

 The Citizens Alliance of Pennsylvania (CAP) endorsed the Opportunity Scholarship Act stating that

The Opportunity Scholarship Act will rescue thousands of children tragically trapped in failing schools. There should be no greater priority for the politicians in Harrisburg than making sure every student in the Commonwealth receives a first-rate education.

 However, the Pennsylvania State Education Association (PSEA) has continuously rejected any proposals to increase choice and freedom in public schools. According to the PSEA union, Pennsylvania public schools are struggling due to a lack of funding,

The Pennsylvania Constitution calls for a ‘thorough and efficient system of public education’ (Article 3.B). Pennsylvania, however, has fallen short of this constitutional requirement. Decades of insufficient and inequitable state funding have forced Pennsylvania public school districts to a system of choices.

In addition, the PSEA claims that public school education will only be improved through increasing tax dollars towards education:

…money matters in determining the quality of a child’s education…PSEA believes that if Pennsylvania is to improve public education for children…education funding must increase and the state share of that funding must be increased as well.”

Unfortunately, Pennsylvania school spending per pupil has skyrocketed with no signs of any educational improvement. In 2009, the cost of educating one student in a Pennsylvania public school for a year was an outrageous $14,420. In the poor performing inner-city schools, the costs are significantly higher. The Pittsburgh School District ranks as the 13th most expensive school district in Pennsylvania spending $19,883 per-pupil. The CommonWealth Foundation’s graph below shows the dramatic increase of Pennsylvania’s educational spending:

  

 However, academic studies have shown that there is no correlation between increased per-pupil expenditures and student achievement. In Philadelphia, half of the students in the district fail to meet basic reading and math skills on a state administered exam. As the graph below depicts, students test scores on the National Assessment of Educational Process has remained relatively constant despite dramatically increased funding. 

According to Senator Williams (D-Philadelphia):

If a charter school or a private school spending between $16,000 and $20,000 per student doesn't produce positive results, parents will withdraw their children from the school and the school will—deservedly—fail. But parents don't have the option of withdrawing their children from a failing public school. Today's system permits failing schools to continue, penalizing less fortunate children who only get one chance for an education.

Sadly, the Pennsylvania State Education Association wants to trap students in a costly “one size fits all” public school that has failed to meet their academic standards. Pennsylvania must allow parents to have more control over their child’s education. The Opportunity Scholarship Act would give students the freedom to opt out of their chronically failing school. The best solution to improving educational quality in Pennsylvania is to reduce cost and increase academic satisfaction by giving low-income students the opportunity to attend a better school that meets their personal needs. 

Today, President Obama signed legislation to extend unemployment benefits. Congress claims this measure is both necessary and beneficial. Art Laffer wrote an excellent piece in the Wall Street Journal a couple weeks ago explaining why such claims demonstrate flawed and dangerous thinking. Extending benefits will extend unemployment.

People respond to incentives. As Laffer points out, if unemployment benefits provided a person with $150,000 a year, there would be no reason to find a job. Guaranteed benefits remove an incentive to seek employment. This also forces companies to pay workers more than unemployment benefits—even when their services do not merit it—thus, removing a company’s incentive to hire more people.

Empirical data supports this assertion. Laffer includes a fascinating graph in his article charting the relationship between the unemployment rate and the payment amount and duration of unemployment benefits. A direct correlation exists: as unemployment payments increase and extend, the unemployment rate rises. The historical evidence suggests that this new legislation will not foster economic recovery, but prolong high unemployment rates.

Advocates of extending unemployment benefits make the argument that this will give people more money to spend and stimulate the economy. This disregards a fundamental concern: this money has to come from somewhere. Every dollar given out in unemployment benefits is a dollar that cannot be spent elsewhere. There is no net gain; redistribution cannot create prosperity. And as Margaret Thatcher quipped, the problem is the government will eventually run out of other people’s money.

Our country quite literally cannot afford to continue extending benefits. The government has created a shortsighted and temporary fix instead of a solution. Their inability to address the long-term issue could cripple our already ailing economy.

Personal Freedom and Power VII:  Funding Government

Government is not, as some people like to say, a necessary evil; it is not an evil, but a means, the only means available to make peaceful human coexistence possible. But it is the opposite of liberty. It is beating, imprisoning, hanging. Whatever a government does it is ultimately supported by the actions of armed constables. If the government operates a school or a hospital, the funds required are collected by taxes, i.e., by payments exacted from the citizens.  -Ludwig von Mises

Lost in Taxation
The IRS's vast new ObamaCare powers.

ObamaCare requires everyone to have insurance and there are monetary penalties for individuals and businesses without proper insurance.  The IRS is responsible to enforce the rules.  Recently, Nina Olson of the IRS, indicated the need for additional employees to monitor citizens and businesses to enforce the new law.

Besides having the IRS invade everyone’s privacy and requiring compliance to the law, a portion of the new law will significantly harm small businesses, as reported by The Wall Street Journal:

Ms. Olson also exposed a damaging provision that she estimates will hit some 30 million sole proprietorships and subchapter S corporations, two million farms and one million charities and other tax-exempt organizations. Prior to ObamaCare, businesses only had to tell the IRS the value of services they purchase. But starting in 2013 they will also have to report the value of goods they buy from a single vendor that total more than $600 annually—including office supplies and the like.

The Freedom Lesson: 

The House and Senate passed ObamaCare and the President approved legislation that mandated health care for most Americans.  Associated with the mandates are compliance mandates, regulatory burdens, loss of personal privacy, fines, and increased taxes.  The expansion of government diminishes personal freedom of every American.  As President Reagan stated:  As government expands, liberty contracts.

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Congress has introduced a resolution entitled “The Miners Safety & Health Act of 2010” that threatens to devastate the mining industry. This legislation creates burdensome new regulations and begins a government takeover of mine management. Defeating this legislation is essential to preserving the industry and the market forces that drive it.

New rules will overwhelm the industry, and the punishments for failing to comply with minor regulations will be disproportionate. The focus will shift from safety to blind compliance; actual safety standards will not improve. This type of legislation encourages the crony corporatism that has aided in creating recent disasters like the BP oil spill. Such regulations create a moral hazard by reducing the company’s liability for disasters. There will be no incentive for safety innovation because it will not be worth the hassle of dealing with the intricate government policies.  Innovation will be replaced by compliance with government created standards.

The legislation also authorizes more government involvement in hiring and firing decisions, a clear example of needless market interference. Quite simply, this is a government takeover—perhaps well-intended, but misguided. The rule-making process outlined by the bill allows the agency to create standards and regulations without any advance notice or input from miners. Without predictability, the miners and the companies they work for will not be able to accomplish their work. Investors will not invest in the industry if they fear unbridled encroaching regulation. In a time when the economy is struggling and jobs are critical, this legislation will clearly dampen productivity and the economic recovery.

The Miners Safety & Health Act of 2010 is yet another example of a government takeover masked by the name of “safety.” The bill deserves defeat based on its violation of basic economic principles and its failure to achieve the ends of better safety regulations.

Albert Einstein once said that insanity was “doing the same thing over and over again and expecting different results". Under this definition, most members of Congress could be classified as insane, especially when it comes to solving the financial crisis. 

Recently, as I was rummaging through the contents of my backpack, searching desperately for any piece of literature that could cure the boredom of riding the Metro, I came across the July 19 issue of Politico. Flipping through news straight to the opinion section, I came across a piece written by fellow New Yorker Rep. Carolyn Maloney, who is the chairwoman of the Joint Economic Committee. Apparently, she is also a big spending aficionado and fits the bill when it comes to being insane. 

In her article, Rep. Maloney calls for a long term plan to tackle the debt and a forward reaching plan to combat unemployment. She also includes a three point to- do list.  Her first job is to extend unemployment benefits, which, she claims, is one of the most “cost effective” ways to combat high unemployment. The second task is to provide “temporary aid” to civil servants in the state and local governments in order to reduce layoffs and service cuts. The third and final order of business is to extend credit to small businesses. 

First off, I would like to congratulate Rep. Maloney on being able to find three brilliant synonyms for “increasing spending” and “raising the debt.” Increasing unemployment benefits helps prolong unemployment. According to a study done by the Industrial and Labor Relations Review, roughly 33% of all unemployed individuals find employment immediately after their benefits run out and most find jobs within a couple of weeks. Paul Krugman notes that Europe, whose countries have generous unemployment benefits, also suffers from chronic high unemployment, a condition coined as ‘Eurosclerosis.’ The argument that the money given to unemployed workers goes straight back into the economy is a poor one. According to a study done by the Heritage Foundation, only a few cents go into the economy for every dollar put into the hands of the unemployed. Unemployment benefits will not solve the problem and will either increase debt by $47 billion or unnecessarily tax the middle class.  

Providing temporary aid to local and state governments to avoid layoffs is like feeding cupcakes to a child to solve his cake addiction. Many state and local governments have bloated to irresponsible levels during the good times and are just unsustainable. Rewarding careless behavior by dumping more money into the system will only prolong the crisis, not solve it. 

Extending credit to small business seems like a good idea, but on further inspection, it’s just more of the same. “Credit” translates simply into more debt, because the government makes loans to people or entities that can’t get them from banks.  Basically, good small businesses and tax payers will be forced to provide capital to be made available to bad businesses considered to be too risky by banks. The overall wealth will be reduced because money was placed into the hands of less competent people.

It is astounding that Rep. Maloney would suggest that more spending is the key to economic recovery. Didn’t we just spend $789 billion, and according to the data that the Obama administration used, still have higher unemployment than what was projected without it?  I’m not an economist, and far be it for me to do the work that Rep. Maloney is supposed to do, but let me offer some sensible solutions, a to- do list of sorts. Let’ start with cutting taxes for small business owners and slashing payroll taxes. Instead of pumping money into already bloated state and local governments, how about providing incentives to restructure? And how about those Bush tax cuts? I know that Bush is single- handedly responsible for all the evil in this world, but his tax cuts helped out a lot of middle class Americans, such as my own parents. 

The cure to spending too much is not more spending, but less. It is my sincere hope that Rep. Maloney reads something from Henry Hazlitt instead of reading from Obama’s tele- prompter. If not, the insanity that is the Democratic Congress will continue.  

Rep. Maloney's opinion piece

http://www.politico.com/news/stories/0710/39893.html

Article about the harm of job benefits

http://dyn.politico.com/printstory.cfm?uuid=6B9E403E-18FE-70B2-A8726397021DAAC6

Data about the projected unemployment levels "with and without Recovery Act"

http://static.seekingalpha.com/uploads/2009/7/7/saupload_cr_unemployment_stimulus.JPG

There's a great new book out there that anyone who wants a better understanding of the roots of today's fiscal crisis and what we can actually do about it should checkout. 

It's written by David Breuhan and it's called "Spread the Wealth: More Haves, Fewer Have Nots."  Breuhan is a money-manager and has taught Austrian economics at the graduate level.  He has a keen understanding of the implications of trade restrictions, high taxes, deficits, and spending and is able to put it in simple terms that anyone can understand.

Check it out through the website: spreadthewealthbook.com!