Wednesday, January 20, 2010

An Earthquake Hits Massachusetts!...







In 2008 America’s Independents slammed the Republicans for being too Keynesian, in 2009 those same Independents are slamming the Democrats for their hyper-Keynesianism.

THAT is “THE message” of those two electoral seasons.

While the Bush administration did two very positive things, (1) first it engaged the scourge of our day, global jihadist terrorism, AND (2) greatly INCREASED tax revenues via those across-the-board tax rate cuts, the overwhelming bulk of its agenda was recklessly Keynesian.

How successful those tax rate cuts were was proven when the Capital Gains tax was cut from 30% to 20% and Capital Gains revenues subsequently soared, as investments skyrocketed. The SAME THING happened when the income tax rates were lowered across-the-board - income tax revenues soared and the Deficit was halved by 2006.

Opponents lamely argue that “Had those incomes and investments been taxed at their original (higher rates) we’d have reaped a LOT more in tax revenues.”

That’s not merely naïve it’s absolutely UNTRUE.

When the Capital Gains rate is lowered, investments rise and so do Cap Gains tax revenues. When the Capital Gains rate is raised, investments fall and the Cap Gains revenues fall...it really is just as simple as that.

The same goes for the income tax – escalating income tax rates incentivize SAVING (deferring income tax deferred) and result in lower income tax revenues, while lower rates, incentivize spending (taking more of one’s income upfront) and that results in higher income tax revenues.

But aside from those two things, the Bush administration was as Keynesian as LBJ’s, Nixon’s or Carter’s. In fact, not only did the Bush administration spend MORE in social spending (adjusted for inflation) than LBJ did, it also delivered over 1,000 pages of REGULATION per year, including the most expensive and far-reaching piece of financial regulation in decades, in Sarbannes-Oxley, which single-handedly resulted in the “jobless recovery” in that administration’s first term.

The "de-regulation" liberals often complain about, the repeal of the Glass–Steagall Act, occurred in 1999 and was signed into law by Bill Clinton on November 12th, 1999.

So the Bush administration’s legacy is primarily a Keynesian one. In fact, it was at least as Keynesian as Nixon’s and close to that of Carter’s and LBJ’s.

THAT’S what America’s Independents responded to in 2008 in delivering these Keynesian Republicans a serious warning and political body-blow.

Pundits from across the political spectrum speculated that “perhaps the American electorate had veered Left,” or “embraced big government.”

Not even close.

Since 2007, the number of self-proclaimed Conservatives has increased (from 37% to 41%...and growing) every year, as the number of self-proclaimed liberals actually decreased a little - a fact hardly indicative of a nation “veering Left.”

And this year, those same Independents have made it all too clear where they stand and that’s solidly AGAINST big government and excessive government spending.

So far in 2009, the Dems have suffered three major losses, the first in “bluing” Virginia, which saw its first Republican sweep of the top 3 spots (Governor, Lt. Governor and Attorney General) in over 25 years! New Jersey saw a heavy-set, charisma-challenged Republican (Doug Christie) beat a well-funded, incumbent Democrat (Jon Corzine)...and last night, we saw the most shocking of upsets – a little known Republican State Senator beat out another well-funded, politically connected and “Democrat’s ANNOINTED candidate” (Martha Coakley), by more than 5% (over 100,000 votes) in perhaps the BLUEST of blue states!

The fact that President Obama campaigned for all three Democratic losers is telling...even the “popular” Obama couldn’t save them.

Still, last night’s upset, which saw a seat occupied by Ted Kennedy since 1962 taken by an under-funded and unknown Republican upstart was the clearest message America’s Independents have sent! In that special election, 71% of the Independents in Massachusetts (a state where 51% of the electorate is Independent) voted for a Conservative Republican!

As Scott Brown so presciently said, “When there’s trouble in Massachusetts, there’s trouble everywhere.”

Massachusetts was clearly a referendum on the current healthcare abomination, the ineptly carried out non-stimulating stimulus packages, the huge and wasteful bailouts, Cap & Trade and the reckless and irresponsible exploding national debt, which the current administration just added a whopping $1.6 TRILLION to in ONE year!

I am still concerned that the Rockefeller-wing of the GOP may not be ready to listen to the people any more than liberal Democrats are.

Starting in 2006 and in the route of 2008, the American people rejected the Keynesian overspending GOP.

So far in 2009, the American people have rejected the Keynesian overspending of the liberal Democrats in 3 major races (VA, NJ and last night, in MA)...BUT the Keynesians (who inanely believe that, “Every problem has a scientific solution, best implemented by a beneficent government”) in BOTH major Parties have proven to be stubbornly tone deaf.

But it’s clear for anyone with eyes to see, the American people have spoken loud and clear over the last four years (2006 thru 2009) in rejecting that Keynesianism overspending outright.

15 comments:

Fuzzy Slippers said...

Excellent analysis. I can't help but wonder how on earth BO's "popularity" numbers are still so high. I just don't get it.

Roadhouse said...

JMK,
WOW! What a night! Maybe there is hope for humanity after all. Let's hope this guy is the real deal.

JMK said...

"I can't help but wonder how on earth BO's "popularity" numbers are still so high." (FS)



Two things, I believe help him alot. The first is that he comes across well, sincere, charming and he's a family man with a very appealing, even telegenic family.

And he comes across, as G W Bush did, as a "perfectly nice guy."

The second is that Reid and Pelosi take a lot of the focus and the pressure off him. They're hideous and the likes of Reid, Pelosi, Dodd, Rangel and Frank are why Congress' approval ratings remain in the teens.

As things degenerate, I expect the people's opinions will sour even more, but that will take a prolonged period (more than 6 months of unemployment above 10%), rising inflation - as China and other lending nations raise the price of our debt servicing, that will put a very strong UPWARD pressure pressure on BOTH inflation and interest rates.

A prolonged bad economy....and the liberal's policies are designed to virtually assure that, will further remind Americans why they revile liberals so much.

JMK said...

"Maybe there is hope for humanity after all. Let's hope this guy is the real deal." (Roady)


Oh, there's ALWAYS hope for humanity Roady....Americans are decent and generous to a fault, but they're fiercely independent and revile big-government goobers who claim to want to "take care of them."

As far as Scott Brown goes, he certainly seems like "the real deal." The line, "It's not Ted Kennedy's seat, it's not the Democrat's seat, it's the people of Massachusetts' seat," is one for the ages, AND so was, "When there's trouble in Massachusetts, there's trouble everywhere."

If only Teddy could see this!

Happy Hour...Somewhere said...

I hope Scott Brown is the real deal, too. Perhaps he can show the Republicans how it's done. I am hopeful that this truly could be the canary in the coal mines for Democrat and Republican Keynesian spenders...if they get the right message. Democrats are out here sputtering with rage and I'm not sure if they get it. Republicans are wonderful at turning victory into defeat.

Sunshine is the best disinfectant and I hope this is one of the lessons learned...let us watch what you are up to. No last minute 200 page amendments. No promising to be on CSPAN and then going back out on this. Oh, and, of course, stop spending like a drunken sailor. Perhaps that is an insult to sailors. Stop spending like John Thain might be more appropriate.

JMK said...

"Republicans are wonderful at turning victory into defeat." (HHSW)



Yes, the GOP has a real talent for that and that's probably because of the schizophrenic nature of that Party, with liberal (Rockefeller-wing) Republicans controlling the money spigot and a very and increasingly Conservative base.

I think such a quick turnaround could be bad for the GOP...lulling them into what's appeared to be a fatal mistake on the part of the Dems - the arrogance that comes with feeling that "All we have to be is against THEM."

I hope they've learned some lessons too, but with a track history of guys like DeLay and Hastert, I'm not all that optimistic.

More Republicans along the lines of Scott Brown (charismatic Conservatives who can actually make affirmative arguments for their views) would certainly be welcome at this point.

Skunkfeathers said...

Barry's numbers are hanging on, for now, because he is good -- every bit as good, it would appear -- at his homesy, "nice guy" deceptionspeak as Bill Clinton was. People knew he was lying, but didn't care (at least enough of the electorate did, to give him two terms). But his selections for cabinet posts, czars, and some of his other gaffes, will dogpile on the scales to push that number gradually down, me thinks. Time will tell.

As for Republicans...the voters spanked them in '06 and '08. Some of them get it; some of them (a pair in Maine, for example) still don't. Some don't have to get it: if they're in a more permissive district or state, and throw enough 'bones' to the money machine, they can get re-elected, time and again. Some voters are more tolerant of the nonsense than others.

Colorado -- for years, a so-called 'red' state -- went blue in '06 and '08, with two democrats in the US Senate, and a democrat in the governor's chair. Now, that governor can read the polls, and is not going run in '10, and the junior senator -- appointed to his seat -- has to defend it this year, and is in big trouble hereabouts.

Colorado voters have limits, and the Barry Wave has overreached here.

But Republicans...failure to grasp the real message from the voters in '10, will cost you, too. The Keynesian models flop whenever tried, and the pain associated with them takes years to straighten out. RINOs who cling to Keynesian strategy, will be as expendable as Coakley.

JMK said...

"Barry's numbers are hanging on, for now, because he is good -- every bit as good, it would appear -- at his homesy, "nice guy" deceptionspeak as Bill Clinton was." (SF)


Actually SF, Obama's approval ratinghas seen the largest one year drop in history. In an ironic twist, Ronald Reagan's was second worst....BUT Reagan's administration saw the Misery Index fall EVERY year until it reched single digits in 1986, where it stayed throughout the rest of his tenure.

Reagan inherited the REAL "worst economy since the Great Depression," complete with STAGFLATION an the highest Misry Index reached post-WW II (22) in 1980 (Carter's last year).

Obama inherited a deep recession caused by Keynesian overspending and over-regulation, ESPECIALLY government meddling and micromanaging the mortgage market!

The Misery Index for 2008 was 9.7...the MI for 2009 looks poised to top 10 for the first time in 16 years....and things look even bleaker on the horizon.

In short, Obama is no Reagan and his Carteresque policis will inevitably lead to even worse poll numbers, as the economy sadly gets worse.

He came into office with an approval rating near 70%...it's now hovering round 50%.

Scott Brown's win seems to signal there's more bad news for liberals not far down the road.


"But Republicans...failure to grasp the real message from the voters in '10, will cost you, too. The Keynesian models flop whenever tried, and the pain associated with them takes years to straighten out. RINOs who cling to Keynesian strategy, will be as expendable as Coakley." (SF)


An unfortunate thing for the GOP is that it's monied interests are predominantly Keynesian, mking the GOP an unnatural fit for Conservatives.

Keynesian policies HAVE, as you say, ALWAYS fAILED, starting with the first "progressive U.S. President", Herbert Hoover (the original Jimmy Carter), through FDR, LBJ, Nixon, Carter and Bush Sr.

What G W Bush's administration proved was that even revenue enhancing tax cuts don't mask the ill effects of Keynesian ploicy over time.

We sure could use another Gingrich about now.

Skunkfeathers said...

I'd settle for some conservative leadership that means what they say and say what they mean, screw the media sound bytes.

I know Barry's numbers have dropped, though the last report I heard still had him holding above 50%; but on things like his hellthscare charge, he's dropped to the mid-low 40% support. Long as he clings to his Saul Alinsky template of governance, he'll follow the Carter route to one-term, leaving a helluva mess to be cleaned up for generations to come.

JMK said...

"I'd settle for some conservative leadership that means what they say and say what they mean, screw the media sound bytes." (SF)


I think more and more people feel that same way.

I suspect, given the decidedly Keynesian leanings of the GOP's "Moderate" or Rockefeller-wing, they will outwardly embrace or "appear to surrender to" its Conservative base, while doing their best to thwart or at least undermine any real Conservative agenda.

Considering that the "truly wealthy" (those who do NOT rely on income as the primary source of their wealth) and large corporations benefit the most from the "free-for-all of the market" being locked in place by either socialism or the heavily government-regulated economy (Corporatism) and that the scions of the wealthy and well-connected, get their own form of affirmative action (I hope no one actually believes that the Kennedy's, Gore's and Bush's actually earned their way into the Ivy League with advanced scholarship)...the agenda of those folks is actually far closer to that of Left-wing activists than it is to the Conservative base of the GOP.

THAT is the problem Conservatives have in dealing with the GOP.

In many ways, the Democratic Party was initially a much more likely home to the Conservative movement.

In fact, since the two primary ideologies today are Conservatism and Libertarianism - ideally the Democratic Paerty should be home to the Libertarian faction and the GOP to the Conservative faction...and the Left should have their own Third Party (the "Democratic Socialists" or the "Progressive party," or whatever euphemism they choose).

JMK said...

"I know Barry's numbers have dropped, though the last report I heard still had him holding above 50%; but on things like his hellthscare charge, he's dropped to the mid-low 40% support." (SF)


Yeah, but think about that drop!

He'll always have the appx. 18% of the committed "liberals" in this country, now nearly half the total number of Obama supporters left.

What he's lost are Moderate and Independent voters...the voters whom he courted when he ran as a Reaganite tax cutter and populist, then lost when he began governing as a Carteresque tax and spender.

While this is certainly GREAT NEWS for Republicans, I still believe that Conservatives should remain guarded and perhaps, at best, "cautiously optimistic," given the penchant for Keynesian Rockefeller-wing Republicans to "sh*t the bed," so to speak.

Consider this, under Reagan the Misery Index went down every year from 1981 to 1986, when it reached single digits.

On top of that, Reagan inherited a 21 point monster he inherited of a Misery Index!

Under Obama, the Misery Index is now 12.72...and rising.

2008's Misery Index was 9.6. G W Bush handed off a 7.6% unemployment rate....over the course of ONE YEAR, Barack Obama has reportedly borrowed more than Bush did over 8 YEARS!

Even this year (2009), the Misery Index remained under 10 points until October 2009, when it jumped from 8.51 to 10.02. It has stayed over 10 points ever since!

2009's year-long Misery Index (8.92) was masked by 8 months of mild deflation - from March of 2009 thru October of 2009 the inflation rate was in negative numbers, from a -0.3% in March to its lowest at -2.10 in July.

Since July, the inflation rate has been rising steadily, from that low 0f -2.10 to the +2.72% it is right now, a quiet gain of 4.82 % over 5 months.

Should the inflation rate top 5%, with unemployment still hovering around 10%, we'll back in a "1970s-style economic malaise."

Since WW II, we've had only six years that the Misery Index topped 15% - '74, '75, '79, '80, '81 and '82.

We've had only ONE YEAR above 20% since the great Depression....and that was Carter's last year, 1980.

Given the reckless and irresponsible spending (a whopping $1.6 TRILLION deficit in the first year) and the idiotic emphasis on public sector (non-productive) over private sector (productive) employment, I see no way those numbers or the economy improve at all....in fact, it's highly likely that the economy will contract along with his approval rating over the next year onward.

Paul Champagne said...

Sometimes I want to just quit my job and go on the public dole ... if you can't beat them ... join them.

Then someone like Scott Brown comes around and gives me hope for us poor working stiffs.

JMK said...

"Sometimes I want to just quit my job and go on the public dole ... if you can't beat them ... join them." (Paul Champagne)


That's not all that irrational of a sentiment Paul. When the rewards of both investment and productive work are diminished, in order to give out more government aid to those who are unproductive, then non-productivity (sloth and government dependency) begins to look more and more like the better alternative!

There's a problem with that. One that apparently liberals don't see...or perhaps don't want to see - if we all refuse to work and we all demand government aid, then nothing gets produced and there are no revenues on which to run government...and the whole scheme falls apart.

It's the fatal flaw in Marx's fantasy of FROM each according to his abilities and TO each according to his needs." That bit of whimsy ultimately and inevitably leads to a country filled with gluttonous citizens with chronically bad backs.

Happy Hour...Somewhere said...

I have always hated that phrase...from each according to their ability to each according to their need. The gravy train has to run on SOMETHING...not just liberal whining and wishing life was more fair and thinking they can mandate it to be true. I'm tired of being the turkey drained to make the gravy.

JMK said...

"...The gravy train has to run on SOMETHING...not just liberal whining and wishing life was more fair and thinking they can mandate it to be true. I'm tired of being the turkey drained to make the gravy." (HHSW)


Yes it does have to "run on something"....something called productive work and creative entreprenurial effort.

We've abandoned the free market since 1912 when Bernard Baruch teamed up with J P Morgan to introduce the modern regulated market - a cooperative partnership between business and government.

The truly rich (those who don't rely on income for thir wealth) and big business wanted that partnership to "freeze the free-for-all of the market (and their gains) in place.

Since that time government has struggled to take a larger and larger role in that partnership, starting with Hoover's intrusions, which were caried on and expanded by FDR, through WW II when government directed American business in the war effort and ever since.

Architects of Ruin (http://www.amazon.com/Architects-Ruin-government-liberals-economy/dp/0061953342/ref=sr_1_1?ie=UTF8&s=books&qid=1264389568&sr=1-1) chronicles the last three decades of government intrusion and micromanaging of the banking industry.

What we've seen over the last few years is th failure of the government-led partnership between business and government.

The command economy failed entirely in 1989.

The problem is that Capitalism/economic freedom IS a hard path....but sometimes there are simply no shortcuts in life and the hard path is also the most viable one - like in this case...especially for those who are "tired of being the turkey drained to make the gravy." (great line HHSW)

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