Beginnings

I don't really care about happy endings.
Endings are the saddest part,
So just give me a happy middle,
And a very happy start.

It will set you free for a price

People love simple and preposterous lies. 

They much prefer them to the truth. Truth is elusive. Difficult to discover. Infinitely nuanced. Hard to hold onto.

Each tiny bit of truth comes at a high price: A love lost. A marriage ruined. A business bankrupt. Money wasted. And a sorry soul burning on some ash pit in Hell. Nor does truth make you feel good. Like a magnifying mirror, it shows blemishes. You squirm in your seat when you see it. Often, you want to turn off the lights.

Not so with myth. It comes right over to you, fawns over you, airbrushes your photo, and botoxes your face. It flatters you with weak light and strong angles. It pretends you are the noble master and it is merely the humble slave… willing to do your bidding.

The Bitcoin Money Myth

Bitcoin is not money but rather a new way of employing existent money in transactions

by Frank Shostak

Many economists and financial commentators believe that in the unregulated market of the internet economy, new forms of money can be created that bypass central-bank and government supervision. The latest development is the emergence of a new electronic means of exchange, Bitcoin (BTC). Bitcoin was launched on January 3 2009 by its inventor, a programmer called Satoshi Nakamote.

The basic idea behind Bitcoin is to create, by means of a mathematical algorithm, a digital good that is scarce and fungible.

Nakamote devised a software system that enabled people to obtain bitcoins as a reward for solving complex mathematical puzzles. The resulting coins are then used for online trading. Nakamote also arranged that the number of bitcoins can never exceed 21 million.

Some experts maintain that Bitcoin will displace the existent fiat money and will usher in a new era of free banking, which will finally put to rest the menace of inflation.

Unfortunately, this is a pipe dream. Electronic money will not replace fiat paper money. The belief that it can stems from a failure to understand the nature and function of money and how it emerges on the market.

To see where this view goes wrong, let's first see how money comes about. Money emerges out of barter conditions that permit more complex forms of trade and economic calculation. The distinguishing characteristic of money is that it is the general medium of exchange, evolved from private enterprise from the most marketable commodity. On this Mises wrote,

There would be an inevitable tendency for the less marketable of the series of goods used as media of exchange to be one by one rejected until at last only a single commodity remained, which was universally employed as a medium of exchange; in a word, money. (The Theory of Money and Credit,pp. 32-33)

In short, money is the thing for which all other goods and services are traded. Furthermore, money must emerge as a commodity. An object cannot be used as money unless it already possesses an exchange value based on some other use. The object must have a pre-existing price for it to be accepted as money.

Why? Demand for a good arises from its perceived benefit. For instance people demand food because of the nourishment it offers. With regard to money, people demand it not for direct use in consumption, but in order to exchange it for other goods and services. Money is not useful in itself, but because it has an exchange value, it is exchangeable in terms of other goods and services.

The benefit money offers is its purchasing power, i.e. its price in terms of goods and services. Consequently for something to be accepted as money, it must have a pre-existing purchasing power: a price. This price could have only emerged if it had an exchange value established in barter.

Once a thing becomes accepted as the medium of exchange, it will continue to be accepted even if its non-monetary usefulness disappears. The reason for this acceptance is that people now possess previous information about its purchasing power. This in turn enables them to form the demand for money.

‘Zionist’: the worst insult in the world

Among the Western chattering classes, ‘the Zionist’ has replaced 'the Jew' as the cause of the world's ills

by Tom Bailey 

Speaking to the Jewish Chronicle newspaper recently, UK Labour Party leader Ed Miliband reportedly claimed to be a Zionist. The article in the JC read: ‘Ed Miliband: “I’m a Zionist and oppose boycotts of Israel”.’

However, Miliband’s self-identification as a Zionist lasted less than 24 hours. He has since clarified that he was responding in the affirmative to the question ‘Are you a Zionist?’ with the answer ‘Yes, I am a supporter of Israel’. He would not actually describe himself as a Zionist, though, he now says.

It seems Miliband is prepared to proclaim his support for Israel as a Jewish state. He supports the idea of that state as a homeland for the Jews. Yet the ideology that is associated with the creation of the state and with the larger project of creating a permanent Jewish homeland - Zionism - is something he is reluctant to sign up to.

The reason for Miliband’s reluctance is pretty obvious: Zionism is no longer simply a term denoting a particular ideology. A Zionist is no longer just someone who supports the creation of a Jewish homeland. Rather, Zionism has become a term of abuse, the worst term of abuse there is in modern, right-thinking circles; the word Zionism is now used to denote something deeply sinister, something beyond the pale of bien pensant civilisation. A Zionist is now imagined as an evil shadowy figure, eating babies while playing puppetmaster of world politics.

Cocaine Cowboys Know Best Places to Bank

Too-big-to-fail isn’t merely an economic problem 

By Jonathan Weil

To grow up in South Florida during the 1970s and 1980s, as I did, wasn’t your typical American childhood experience. Back then the area was known as the most dangerous place in the country.

Carnage from the drug wars filled the local news long before “Miami Vice” became a hit TV show. By elementary school, my friends and I knew some of the lingo. A Colombian necktie wasn’t a piece of clothing, but a gruesome execution method. When I was 7 years old my barber was murdered in his shop, apparently over a drug deal.

It had been a long time since I thought much about those days. By chance I recently came across a fabulous documentary, “Cocaine Cowboys,” by Miami filmmaker Billy Corben. Then last month a Senate panel held a hearing on the U.K. bank HSBC Holdings Plc (HSBA) and its ties to drug lords, money laundering, al- Qaeda and rogue nations such as Iran and North Korea.

Here’s a bank with $2.7 trillion of assets that flouted U.S. laws for a decade, according to the July 17 report by the Senate Permanent Subcommittee on Investigations. HSBC turned a blind eye to organized crime, Mexican drug cartels and overseas terrorism financiers, and gave them access to the U.S. banking system. HSBC’s main U.S. regulator, the Office of the Comptroller of the Currency, for years tolerated its violations of anti-money laundering laws.

For this, HSBC and the OCC apologized. Justice Department fines are likely. It’s an outrage HSBC hasn’t had its U.S. banking licenses revoked, assuming the Senate panel’s report is accurate -- and there’s no reason to believe it isn’t.

Try This

Let’s try out a novel idea: Banks that help drug cartels launder money and give cover to those tied to terrorism should be put out of business. Is that really so hard for everyone to agree on? Free markets have worked in the U.S. because we have the rule of law. It’s why so many investors from other countries want to do business here. When contracts are breached, courts can be accessed to enforce them. When individuals or companies commit crimes, they’re supposed to be prosecuted and punished.

Double trouble

Bipartisanship Is Behind Government's Worst Programs

By GEORGE F. WILL

Bipartisanship, the supposed scarcity of which so distresses the high-minded, actually is disastrously prevalent.

Since 2001, it has produced No Child Left Behind, a counterproductive federal intrusion in primary and secondary education; the McCain-Feingold speech rationing law (the Bipartisan) Campaign Reform Act); an unfunded prescription drug entitlement; troublemaking by Fannie Mae and Freddie Mac; government-directed capitalism from the Export-Import Bank; crony capitalism from energy subsidies; unseemly agriculture and transportation bills; bailouts of an unreformed Postal Service; housing subsidies; subsidies for state and local governments; and many other bipartisan deeds.

US Taxation Myths

The U.S. tax code is more progressive and European than you think

By Veronique de Rugy 

Americans often tout the contrast between the bloated, tax-funded welfare states of the Old World and our leaner, cheaper government. But the data reveal that the U.S. may be closer to Europe than we think.

Contrary to common belief, the American tax system is more progressive than those of most industrialized democracies. A 2008 report by the Organization for Economic Cooperation and Development (OECD), titled “Growing Unequal,” gave two different estimates of the progressivity of tax systems in 24 industrialized countries. One ranking found that the U.S. has the most progressive tax structure; in the other Ireland beat America by a nose. France, which has a notoriously generous welfare state, ranked 10th out of 24 in both of the OECD progressivity indexes.

Other countries have higher tax rates than the U.S. but manage to be less progressive overall. How can this be? The answer is that the rate structure alone doesn’t necessarily tell you much about the progressivity of a country’s tax system. The top rates kick in at much lower income levels in Europe than in the United States, making E.U. tax codes more regressive than ours. 

Random Thoughts

Evolution, creationism and government

By Thomas Sowell

How long do politicians have to keep on promising heaven and delivering hell before people catch on, and stop getting swept away by rhetoric?

Why should being in a professional sport exempt anyone from prosecution for advocating deliberate violence? Recent revelations of such advocacy of violence by an NFL coach should lead to his banishment for life by the NFL, and criminal prosecution by the authorities. If you are serious about reducing violence, you have to be serious about punishing those who advocate it.

The 400 pound gorilla in the US economic living room

Obama And The Commanding Heights

By Joseph Y. Calhoun

We gather tonight knowing that this generation of heroes has made the United States safer and more respected around the world.  (Applause.)  For the first time in nine years, there are no Americans fighting in Iraq.  (Applause.)  For the first time in two decades, Osama bin Laden is not a threat to this country.  (Applause.)  Most of al Qaeda’s top lieutenants have been defeated.  The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.

The nature and cause of economic development

The History of “Underdevelopment”

Underdevelopment Theories Have Generated Disastrous Policies

By Stephen Davies

Perhaps the most important feature of the modern world is its sustained, intensive economic growth. This produces most of the other distinctive features of modernity. Although there were earlier episodes of such economic efflorescence (to use Jack Goldstone’s term), it was only with the “industrial revolution” of late eighteenth-century Britain that it became a permanent and prominent feature of the world economy. Following the advent of this transformative process, questions soon arose elsewhere. The first was that of how to achieve the same kind of growth and dynamism. Soon this led to further questions: why other parts of the world did not show these qualities and why their attempts to do so ended in failure.

The debate engendered by these questions and the answers given has been one of the most important of the last 200 years. Known as the “development debate,” it consists of such topics as the nature and causes of economic development and the reasons it occurs at some times and places but not others. This is not simply an academic debate. It has obvious implications for public policy and, through its impact on policy, for the lives and circumstances of ordinary people.

Since the early 1950s much of this debate has been dominated by “dependency theory” and its offshoot “world system theory.” Developed by several people, this was a theory that explained the economic success or failure of different parts of the world by the nature and structure of the economic relations among them. The argument is that the relations of trade between different parts of the world are inherently exploitative and inevitably create inequality and lack of development in certain places. Certain parts of the world (the “core”) dominate high technology and high profit activity such as manufacturing. The rest (the “periphery”) is left to produce raw materials and primary products.

The Command-and-Control Economic Model

Dangerous Historical Myths

By Stephen Davies

One of the most powerful influences on human affairs is historical myth—beliefs about the past that are simply wrong. Some historical myths have far-reaching and baleful effects because they shape the way people understand not only the past but also the present, leading them to make harmful or even dangerous decisions. This seems to be especially so with economic history.

Take the standard account of the Great Depression and the New Deal. In many ways the New Deal itself was one result of another historical myth: the widely received account of what had happened to the German economy in the first half of the twentieth century, particularly during World War I and the Third Reich. That myth probably did more harm than almost any other in that century.

In the case of the Third Reich, the widely held perception even now is that whatever else may be said about his regime, Hitler managed to bring about a dramatic revival of the German economy. After 1933 Hitler and his finance minister Hjalmar Schacht stabilized the economy and managed to solve the huge unemployment crisis that had destroyed the Weimar Republic’s legitimacy. This was partly due to Schacht’s imaginative monetary policy and partly to massive public works programs, such as the autobahnen. There was a sharp move away from free markets to a much more interventionist economy that worked better than what had gone before. During World War II this economy was able to achieve great success in terms of war production, notably under Hitler’s armaments minister, Albert Speer.

What They Want To Hear

Getting the rioters to do their dirty work

The Guardian’s study of the August riots is pure advocacy research, designed to harness the power of riotous menace to chattering-class causes.

by Brendan O’Neill 

Well, that’s convenient, isn’t it? A four-month Guardian/London School of Economics study into the riots that rocked English cities in August has found that the rioters were pretty much Guardian editorials made flesh. Concerned about government cuts, annoyed by unfair policing, shocked by social inequality and outraged by the MPs’ expenses scandal, it seems the young men and women who looted shops and burnt down bus stops weren’t Thatcher’s children after all – they were Rusbridger’s children, the moral offspring of those moral guardians of chattering-class liberalism.

This is a blatant case of advocacy research, of researchers finding what they wanted to find, or at least desperately hoped to find. For months now, the Guardian has been publishing articles arguing that the rioters were politically motivated, under headlines such as ‘These riots were political’ and with claims such as ‘the looting was highly political’ and the riots were a protest against ‘brutal cuts and enforced austerity measures’. And now, lo and behold, a Guardian study, Reading the Riots, has discovered that the rioters were indeed ‘rebels with a cause’, with 86 per cent of the 270 rioters interviewed claiming the violence was caused by poverty, 85 per cent arguing that policing was the big issue, and 80 per cent saying they were riled by government policies. Reading this study, we are left to marvel either at the extraordinary perspicacity of Guardian writers, or at their ability to carry out research in such a way that it confirms their own political preconceptions.

This study looks less like a cool-headed, neutral piece of sociology, and more like a semi-conscious piece of political ventriloquism, where rioters have been coaxed to mouth the political beliefs of the middle-class commentariat. This is not to say the Guardian and LSE researchers have been purposely deceitful, inventing evidence to suit a political thesis. Advocacy research is more subtle and less conscious than that. It involves a kind of inexorable pursuit of facts that fit and evidence that helps bolster a pre-existing conviction. So mental-health charities keen to garner greater press coverage always find high levels of mental illness, children’s charities that want to raise awareness about child abuse always find rising levels of child neglect, and now Guardian researchers who want to show that they’re right to fret about Lib-Con policies and outdated policing have found that these are burning issues amongst volatile English youth, too.

In terms of both the way the research was carried out and the comments that were made by the rioters who were interviewed, we can see advocacy research in action. As one commentator has pointed out, the selection process for the study means that it is largely the ‘upper crust’ of the rioters who ended up being interviewed. Many of the 270 interviewees were recruited through their connections with community organisations, meaning they may have already been infused with, or at least influenced by, the mores and outlook of community activism, of the kind you’ll frequently find in the Guardian ‘Society’ supplement. As a Telegraph writer says, ‘The sort of rioter who agrees to be interviewed as part of a social science research project for the Guardian is unlikely to be representative’. Indeed, the Guardian admits that ‘a large majority of the 270 people interviewed for the project had not been arrested’ – that is, they’re the ones who got away with it – and they were ‘surprisingly articulate’. These are the sections of inner-city youth more likely to be au fait with the liberal classes’ explanations for the rioting.

Also, we shouldn’t underestimate the keenness of the interviewees to say things that might make their rather pointless anti-social behaviour in August appear grand and meaningful. Where some of the interviewees are fairly honest about their opportunism – one says the rioting was ‘a festival with no food, no dancing, no music, but a free shopping trip for everyone’ – many of them adopt the kind of political language that had already appeared in the serious press in an attempt to make their behaviour seem purposeful. ‘It felt like I was part of a revolution’, said one; another described his fellow looters as ‘a battalion, a squadron, a troop of men’, as if he were involved in a political war rather than an exercise in kicking in JD Sports’ windows. With the researchers talking only to ‘the right kind’ of rioters and hoping to hear a political message, and the rioters keen to parrot some of the political excuses that had already been made for their behaviour, it was inevitable that this report would end up as something like a 1.3million-wordGuardian editorial.

The Guardian writers now promoting this report as evidence that they were right all along – with one of them claiming the rioters were ‘far more politically conscious’ than many people thought – imagine that they are doing the opposite of what the Lib-Con government did in response to the riots. Where David Cameron and his cronies condemned the rioters as feral or amoral, this report and its cheerleaders claim to reveal that the riots were in fact ‘political in nature’, if also ‘destructive and incoherent’. Yet this is just the flipside of what the Lib-Cons did. Government officials claimed to see in the rioters evidence of a widespread and dangerous ‘gang culture’ (a claim that was challenged by spiked long before anybody else), while their Guardian critics claim to see confused but definitely socially-aware protesters. Both sides see simply what they want to see in the weird tumult of August, imagining that the rioters confirm either their prejudices about feckless youth or their fantasies about reruns of 1960s-style, anti-conservative uprisings.

If anything, the riot-related advocacy campaigning of the Guardian is worse than what Cameron and Co. indulged in. Where Cameron’s shallow and predictable claims that this violence all sprung from bad parenting and ‘Broken Britain’ were opportunistically designed to make him and his government look strong in retrospect, through taking on has-been rioters, the advocacy aim of this latest piece of research is somewhat more sinister. What we have here is a pretty naked attempt to add a touch of physical force and menace to Guardian-style arguments about cuts and inequality and the monarchy and MPs, an attempt to harness the violence of the rioting to the various causes of the liberal commentariat. Feeling, perhaps, that their measured, middle-class demands for nicer policing, fewer cuts to the public sector and more banker wrist-slapping lack urgency and oomph, the Guardian and others are now effectively arguing that the failure to address such issues causes actual violence; that the alienated youth of Britain not only share this general outlook, but are willing to use violence to pursue it. It is moral blackmail in place of proper conviction and proof.

What gets lost in this dual attempt to politicise the rioters, with the Conservatives slamming them as badly mothered urchins and the Guardian kind-of praising them as ‘political in nature’, is any serious attempt to get to grips with what was new and different and unusual about what occurred in August. The riots did indeed reveal a great deal about modern Britain, particularly about the dearth of social solidarity amongst younger generations of poorer communities and the collapse of police and state authority in inner cities and elsewhere in England; yet neither of these things can seriously be discussed so long as all political factions remain more interested in plonking the rioters on their knees and getting them to mouth What We Want To Hear.

Quote of the day

Paragraph of the Year

From Reihan Salam:

To really learn from the Chinese, and to enjoy such staggering growth rates, we should go about things differently: let’s have a Maoist insurrection followed by a civil war that lasts for several years. Then let’s destroy most of the wealth in the country, and drive out millions of our most enterprising and educated citizens by launching systematic terror campaigns during which millions of others will die in violence or of starvation. Next, let’s have a modest economic opening in coastal regions: impoverished citizens will be allowed to launch small-scale township and village enterprises and components will be assembled in a handful of cities by our stunted descendants. Then let’s severely curb those township and village enterprises because they represent a potential political threat and invite large foreign multinationals and state-owned enterprises [let's not forget those!] to work our population to the bone at artificially suppressed wage rates, threatening those who complain with serious reprisals up to and including death. Let us also initiate a population control policy designed to improve our dependency ratio for a few decades. As large numbers of workers shift from low-value agricultural work to manufacturing, we will experience … rapid growth! Mind you, getting from here to there will involve destroying an enormous swathe of our present-day GDP. And that sectoral shift from rural to urban work will run out of gas pretty fast, as will the population control policy that will guarantee rapid aging.

There’s nothing I find more annoying than people who talk about how we need to learn from China’s “success.”  I’m all for learning from other countries, but can we please focus on actual success stories (Denmark, Switzerland, Singapore) and not a country that is much poorer than Mexico.

The Death of a Straw Man

The Death Of Global Warming Skepticism, Or The Birth Of Straw Men?

By J. Taylor

The mainstream media has been spiking the football in the proverbial end zone ever since a paper released last Friday claimed two-thirds of global temperature stations show some warming occurred during the past century. The media have been claiming the new paper delivers a death blow to skepticism, but the paper itself brings almost nothing new to the global warming debate and instead shows how far global warming advocates are from presenting credible evidence of a crisis. Rather than delivering a death blow to skepticism, the media has merely invented and shredded an insignificant straw man.

University of California, Berkeley physics professor Richard Muller analyzed land-based temperature readings from temperature stations around the world and found two-thirds indicate warming temperatures and one-third indicate cooling temperatures. As a result, “Global warming is real,” summarized Muller in an editorial he wrote in the October 21 Wall Street Journal .

Muller acknowledged that many of the stations produced incomplete temperature records and had poor quality control. He claimed that he nevertheless included them in the study to avoid “data-selection bias.” Scientists such as Anthony Watts have pointed out several additional flaws in the Muller paper. But let’s assume, for the sake of argument, that Muller’s paper is flawless in its conclusion that two-thirds of land-based temperature stations report warming rather than cooling. Even under such an assumption, Muller’s paper does nothing to dispel skeptical objections to the theory that humans are causing a global warming crisis.

The case for a human-induced global warming crisis requires the demonstration of several components. These include (1) that global temperatures are rising, (2) that global temperatures will likely continue to rise in the future, (3) that the rise in temperatures is or will be sufficiently rapid and substantial to cause enormous negative consequences that far outweigh the benefits of such warming and (4) that human emissions of greenhouse gases account for all such temperature rise or enough of the temperature rise to elevate the temperature rise to crisis levels.

In order to justify government action against global warming, advocates must also show that the proposed action will substantially reduce the negative impacts of the asserted crisis and that the costs of such action will not outweigh the benefits.

Muller’s paper merely addresses the first component necessary to support the theory of a human-induced global warming crisis. Moreover, this first component hasn’t been in dispute, even before publication of Muller’s paper.

Very few if any skeptics assert that the earth is still in the Little Ice Age. While the Little Ice Age raged from approximately 1300 to 1900 AD, it is pretty well accepted that the Little Ice Age did indeed end by approximately 1900 AD. The mere fact that the Little Ice Age ended a little over 100 years ago, and that temperatures have warmed during the course of recovering from the Little Ice Age, tells us absolutely nothing about the remaining components necessary to support an assertion that humans are creating a global warming crisis.

Muller himself admits, “How much of the warming is due to humans and what will be the likely effects? We made no independent assessment of that.”

So we have a paper merely claiming that two out of three global temperature stations report the Little Ice Age is over. This supports the media spiking the football and proclaiming the death of skepticism regarding a human-induced global warming crisis?

Even prominent global warming advocate Eric Steig admits, “Anybody expecting earthshaking news from Berkeley, now that the Berkeley Earth Surface Temperature group being led by Richard Muller has released its results, had to be content with a barely perceptible quiver. As far as the basic science goes, the results could not have been less surprising if the press release had said ‘Man Finds Sun Rises At Dawn.’”

“Overall, we are underwhelmed by the quality of [the] Berkeley effort so far,” Steig adds.

Far from marking the death of skepticism, the media’s over-the-top sensationalism of the Muller paper shows just how far global warming advocates are from supporting their assertions of a human-induced global warming crisis. The straw man may be dead, but skepticism of a human-induced global warming crisis is alive and well.

Addictions

Math vs. Myth

By M.Tanner
There is no austerity, only more uncontrolled spending.

It is a medical truism that if you get the diagnosis wrong, the treatment will be wrong. The same holds true with Washington budgeting. Unfortunately, as we prepare for yet more debates over budgeting, spending, and stimulus, we can expect to once again enter a fact-free debate.

Among the most common myths:

1. Republicans have slashed government spending. While there are political reasons for both Democrats and Republicans to pretend that we’ve entered a new age of austerity, it’s not even close to true. According to figures released last week by the Treasury Department, federal spending this year is up by roughly 5 percent over the same period last year. That’s a $120 billion increase in just the first nine months of this year. That’s right: Despite a near shutdown of the government and “holding the debt ceiling hostage,” government spending is still increasing. And not surprisingly, we are borrowing more money in order to fund it. The deficit is already $23.5 billion higher this year — with three months still to go. As a result, our national debt continues to grow. This month it will close in on $15 trillion. Throw in the unfunded liabilities of Social Security and Medicare, and our real indebtedness tops $120 trillion and rising. If Keynesian-style stimulus worked, we should be swimming in jobs.

2. States are firing teachers and firefighters because they are broke. Washington has to help. That’s the logic behind the president’s plan for $35 billion in additional federal aid to the states, a bill that the Senate is expected to vote on this week. In reality, however, state government spending has also been rising, up more than 10 percent in the past two years. And while some of that represents a pass-through of federal aid from earlier stimulus bills, state general-fund spending rose 5.2 percent this year. If state governments are laying off teachers and firefighters, it’s because they are failing to manage their priorities, not because they don’t have any money.

3. We have a revenue problem. Yes, tax revenues are low today by historic standards, in part because of the recession and in part because of the Bush tax cuts. But this is a temporary phenomenon. According to the Congressional Budget Office, even if the entirety of the Bush tax cuts were made permanent and the Alternative Minimum Tax (AMT) repealed, tax revenue would rise to more than 20 percent of GDP by 2020. That’s roughly two percentage points of GDP above the historic average. If taxes will bring in more revenue than usual, how is it that we are still projecting huge future deficits? Simple, spending is expected to rise even faster. In 2020, federal spending is estimated to be roughly 25 percent of GDP, roughly four percentage points higher than historic averages, and seven points higher than it was under President Clinton. So, which side of the ledger has a problem?

4.  We can solve our problems by taxing the rich and closing corporate loopholes. Set aside the question of whether higher taxes on the rich would stifle economic growth and job creation. There is simply no way to raise enough money to cover our deficits by taxing the rich. As the president would say, “It’s math.” This year, we will run a deficit of roughly $1.3 trillion. Eliminating the tax break for corporate jets, a prime Democratic talking point, would raise roughly $300 million this year. Yes, that’s million with an “m.” Ending tax breaks for oil and gas companies, another frequent Democratic target, would bring in somewhat more, nearly $4 billion per year. And, the big enchilada, the Democrats’ proposed 5.6 percent surtax on “millionaires and billionaires,” would raise an average of $45.3 billion in additional revenue per year. Therefore, if the Democrats were able to get every penny that they want, they would raise all of $49.6 billion per year, leaving us with a budget deficit this year of only $1.25 trillion.

5.  We can balance the budget by cutting “fraud, waste, and abuse.” This is the Republican flip side of the Democrats’ reliance on higher taxes, a way to avoid making tough choices about cutting defense and reforming entitlements. Total domestic discretionary spending — everything from the Department of Education to the Department of Commerce, from the FBI to the FDA — amounted to roughly $650 billion this year. If we simply abolished all of those programs, the muscle and bone as well as the fat, we would still have a $650 billion budget deficit. That is not to say that we shouldn’t cut everywhere we can, but to spend too much time searching for “fraud, waste, and abuse” is to pluck out a splinter while the patient is bleeding to death.

With any addiction, the first step to recovery is to admit that you have a problem. Washington remains addicted to spending. It is time for Congress to get honest about that and stop hiding behind these budget myths. Maybe then, we can begin the path to economic recovery.