Brooks is Wrong, We Won’t Be Fine

In a column that he describes as a “luscious orgy of optimism,” David Brooks cites Joel Kotkin’s book The Next Hundred Million: America in 2050 to argue that America’s future is actually bright. The argument is based around demographics, specifically, the idea that:

Over the next 40 years, demographers estimate that the U.S. population will surge by an additional 100 million people, to 400 million over all. The population will be enterprising and relatively young. In 2050, only a quarter will be over 60, compared with 31 percent in China and 41 percent in Japan.

While he uses this as a jumping off point to speak about the dynamism of our economic future, at no point does he explain how any of this economic boom can actually occur within the context of our crippling debt burden that will impose incentive-killing taxes on Americans and cement a culture of dependency.

The Congressional Budget Office, for instance, has estimated the marginal tax rates that would be necessary to balance the long-term budget. It found that the rate for the lowest bracket would have to rise from 10 percent to 25 percent; those in the 25-percent bracket would have to pay 63 percent; and the top rate would need to be increased from 35 percent to a staggering 88 percent. But these numbers are only theoretical. In reality, the CBO tells us, “Such tax rates would significantly reduce economic activity and would create serious problems with tax avoidance and tax evasion. Revenues would probably fall significantly short of the amount needed to finance the growth of spending; therefore, tax rates at such levels would not be feasible.”

As much as I’d like to believe that the future of America is bright, I don’t have much confidence that politicians in either party will make the necessary cuts to the welfare state to avert the impending fiscal collapse.

The GOP’s Weak 2012 Field

Mark Halperin writes about the difficulty Republicans will have in beating President Obama in 2012 because of the weak GOP field, and though I don’t agree with every aspect of his analysis, I do concur with the general thrust of his piece.

I do think that Obama is likely to be vulnerable in 2012, perhaps extremely so. But even if a president is vulnerable, there still needs to be a challenger capable of winning. In 2004, for example, the Iraq War was growing increasingly unpopular and President Bush’s approval rating was starting to wane. The public was open to the idea of electing somebody else, but then Democrats offered up John Kerry as the nominee.

Though Mitt Romney is considered the frontrunner for the GOP nomination right now, a lot of people still don’t like him, both within the party and among the general population. Just as he was trying to get over his reputation as a flip-flopper from his first presidential run, he’s now engaging in even more verbal gymnastics by trying to argue that Romneycare differs substantially from Obamacare (even though the plans are extremely similar). If Romney were the nominee, Obama would be able to neutralize the health care issue quite easily.

The other candidate who has been laying a lot of groundwork for a presidential run is Gov. Tim Pawlenty. In his attempt to overcome his reputation as a moderate, Pawlenty has been catering to conservative audiences for months (his CPAC speech was full of red meat and checked off all the boxes in the conservative issue matrix). By doing this, he risks repeating the failed Romney pandering strategy of 2008. But while that problem may be correctible, the biggest difficulty he’ll have to overcome is that he doesn’t really excite people. That’s something that you can’t teach.

The rest of the candidates whose names have been thrown around aren’t yet taking the traditional steps to gear up for a presidential run, and all of them come with their own sets of problems.

A lot could still change, of course, and I don’t mean to suggest that Obama will be unbeatable in 2012. The point is that even if he’s beatable, the GOP still needs to find somebody who can beat him. And as of now, it isn’t clear who that somebody would be.

NY Republican Congressional Candidate Demagogues Medicare Cuts

Throughout the health care debate, I argued that it was a huge mistake for Republicans to focus on attacking the Medicare cuts in the Democrats’ health care legislation, because it reinforces the third-rail status of the program that will need to be seriously reformed to avert the impending fiscal collapse of the United States. Now, we’re starting to see GOP candidates dig themselves in even further, by continuing to attack the Medicare cuts.

Earlier this morning, I received a press release from Chris Cox, a Republican seeking to replace Tim Bishop in New York’s 1st Congressional district. The district went for Obama by just 3 points in 2008, and is seen as competitive this time around, with Bishop’s vote for the unpopular health care bill putting him in danger of losing his seat. It’s one thing to make the much narrower argument that we’re cutting Medicare to finance a new entitlement program, but Cox goes far beyond that.

His press release began:

Supporting a bill that cuts nearly $500 billion in Medicare funding that seniors across the country depend on, Tim Bishop’s vote on government-run health care has placed thousands of New York’s seniors in a serious situation as they struggle to afford health care.

The release also reads, in bold letters, “Tim Bishop’s vote for government-run health care leads to cuts in Medicare for 800,000 New York seniors.”

The intellectual incoherence in this statement is amazing. It attacks Bishop for voting for government-run health care while arguing that the mother of all government-run health care programs cannot be touched.

The release continues with a statement from Cox in which he engages in the type of demagoguery that is typically associated with Democrats:

“Many of our grandparents, mothers and fathers depend on Medicare to receive necessary health care, but with the reckless health care bill that Tim Bishop helped pass, their benefits have been put in danger. At a time when many of our seniors have seen their retirement savings vanish during our difficult economy, additional taxes and cuts to their health care benefits is just not something seniors can afford. To cut $500 billion in funding for our nation’s most vulnerable citizens is an outrage and something that I will fight to repeal if I am given the privilege to represent Long Islanders in Congress.”

Should Republicans retake the majority with new representatives like Cox, we’ll never be in a position to repeal Obamacare because Republicans won’t be able to make a credible philosophical argument against government-run health care. And in the long-run, having already promoted themselves as defenders of Medicare, they’ll never be in a position to vote for true entitlement reform along the lines of what’s been proposed by Rep. Paul Ryan.

Cox’s defense of the sanctity of Medicare should be viewed as nothing less than a direct assault on younger generations who will be forced to grapple with the burden of unsustainable growth in entitlements. If he were really concerned about protecting “our nation’s most vulnerable citizens,” he may want to think about the grandchildren for a change, instead of trying to score short-term political points using liberal rhetoric.

March Unemployment Rate 9.7%, 162K Jobs Gained

The U.S. economy added 162,000 jobs in March, the Bereau of Labor Statistics reported this morning, as the unemployment rate held steady at 9.7 percent.

Of those job gains, 48,000 were from Census workers who had been hired temporarily.

In addition, the numbers for the previous two months were revised to show improvement, with 14,000 jobs gained in January (earlier estimate was a loss of 26,000), and 14,000 lost in February (earlier estimate was a loss of 36,000).

There were 1 million discouraged workers in June, who have given up looking for work and thus are not included in the unemployment rate.

When combining those who have settled for part-time work, the broader unemployment rate crept up to 16.9 percent.

In a typical economy, this would be considered a weak report, but given how poor the labor market has been, the White House can still claim still progress relative to where we were.