Saturday, April 30, 2011

Professor Obama Channels Professor Krugman

President Obama today slammed global oil companies, once again, for padding their profit margins with “unwarranted taxpayer subsidies . . . to the tune of $4 billion a year.”

While the President is, he assures us, “scouring the federal budget for spending we can afford to do without,” he wants us to know that “these tax giveaways aren’t right.  They aren’t smart.  And we need to end them.”

While the Recovering Bureaucrat is delighted to hear that all this budget scouring is underway—although he hasn’t heard any results yet—he also wonders who will pay for the costs of the revoked tax subsidies.  The President apparently believes that the oil companies will simply endure reduced profits, but the RB is not so sure.  Isn’t it equally possible they will simply pass the added cost on to the consumer?

While the RB is not an economist of the caliber of Nobel laureate Paul Krugman, he hasn’t heard that the elementary laws of supply and demand have been repealed.  Prices are rising because of the greater demand for a relatively inelastic supply of crude oil.  At a certain point, this price increase will weaken demand, and the price will head back down.  Won’t the relative profit margins of the oil companies fall when prices fall?  Would the “$4 billion” in now lost tax subsidies therefore not have a relatively larger impact on their bottom line?  And if so, would that not act as an incentive to push prices higher to keep the profit margins healthy?

So how does ending the tax subsidy help drive oil prices down?  Don’t increasing energy costs threaten our weak economic recovery?

Thursday, April 21, 2011

Who Are the Children?

The fight we are in is the oldest one in the books: are we humans capable of enlightened self-governance, or are we so weak/stupid/venal that we need the guiding hand of an elite to get us through our day?

The Recovering Bureaucrat asserts that the American Revolution was solidly and affirmatively a blow for the former, but our own history shows us that too many of our fellow citizens act as if we are, in fact, the latter.  The formal counterrevolution against our founding principles that began with Teddy Roosevelt and Woodrow Wilson a century ago is still going strong today.  But the time has come for those of us committed to our founding principles to put this self-defeating creed in its proper place.

Among the many ironies involved in this crucial struggle is the fact that, for the entire duration of the Cold War, the United States forthrightly and unabashedly championed its commitment to individual liberty and limited government against the naked tyranny of the communist states.  At the turn of the current century, National Review suggested that the “Person of the Twentieth Century” should be the American taxpayer, for our willingness to put our money where our mouths were in that long and arduous struggle.

It is difficult to believe that the entitlement-besotted, victimized, free-lunch addicts typified by most of today’s Democratic Party and the roughly 40% of us who support it nationwide would have had the internal fortitude to take on and prevail in the lengthy and difficult task of defeating the Soviet Union and its Marxist allies.  It’s especially difficult to picture President Barack Obama staring down Stalin, Khrushchev, Mao, or even Qaddafi without blinking.  When too many of us so easily take offense at the slightest disagreement and are willing to use state power to coerce those that give offense, we should thank our lucky stars that there is no longer a Soviet Red Army to exploit our adolescent maunderings.

(Although we can’t forget there is still a Chinese Red Army!)

Sunday, April 10, 2011

Don't Worry, Be Happy: Deck Chairs Rearranged!

Americans have been treated—those of us who pay attention, anyway—to the spectacle of our national political leadership congratulating each other because they managed to prevent a stoppage of taxpayer dollars flowing to government operations on Friday night.  (The Recovering Bureaucrat refuses to accede to the Mainstream Media calling what didn’t happen a “shut down,” since so much of what the government does would have continued in spite of the political impasse.)  This mutual self back-slapping even included a visit by President Obama to the Lincoln Memorial to brag to tourists that “because Congress was able to settle its differences, that’s why this place is open today.”

But in a blog posting with the appropriate headline “Pathetic,” Roger Kimball says it all:
The president, right on cue, was out there beaming, praising himself: “Americans of different beliefs came together. . . .”  Thanks to me, B. Obama, we just worked out the “biggest annual spending cut in history.”

How big? $38.5 billion trimmed out of government operations through September. $38.5 billion out of—remind me, what’s the total budget? In 2010, U.S. federal spending was about $3.5 trillion.
So, as a percentage, the Congress trimmed 1.1% off that total spending number—a budget for the current fiscal year, by the way, that Congress has actually not passed yet.  The majority party, on its way to minority status in the House last fall, consciously decided for the first time in American history to renege on its responsibility to pass a budget.

To put the “drama” into another perspective: in the week leading up to the budget compromise, the federal debt increased by another $54.1 billion, according to a post on the web site of the Annenberg School at USC.  So what we have is a “deal” that nicked a decent fraction off our weekly debt bill.  One week out of fifty-two.

Sunday, April 3, 2011

Return to the Beginning

The Recovering Bureaucrat concluded the last post with the final lines of T. S. Eliot’s Four Quartets, a powerful poem about expansion of consciousness. Eliot explores the experience of many humans that spiritual growth often requires exile from one’s initial beliefs only to return, after much struggle, to the fundamental truths that were always there, usually in the form of religious principles, from the beginning.

And so it must be for America to find its way back from its flirtation with too much government to what makes it, in Lincoln’s immortal words, “the last, best hope of earth.”

The RB operates from two interconnected principles. The first is that the American experiment in self-governance requires an ever-renewing civic consciousness of and recommitment to our founding principles. The second is the understanding that those founding principles stem from the conviction that all human progress depends on mature, self-actualizing individuals, able to pursue happiness unfettered by any form of tyranny not agreed to by the lawful consent of the governed.

The American Civil War, whose sesquicentennial we are about to observe with the 150th anniversary of the Confederate attack on Fort Sumter, marked the high point of our civic commitment to these founding principles. Over 600,000 of our countrymen died to cement the “new birth of freedom” that Lincoln so rightly proclaimed at Gettysburg.

Inevitably, in the decades that followed Appomattox, the dramatic rise of the industrial economy here and in Europe sparked a push-back against the limited government philosophy of the free individual. The Progressive movement was based upon an explicit rejection of the supremacy of individual liberty as the basis for the American experiment. It sought instead to impose a new communitarian theory upon the polity.