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SEPTEMBER 9, 2009 | Commentary by NATHAN BENEFIELD
Whoops, We Were Wrong...
One of our goals at the Commonwealth Foundation is to predict the effect of proposed public policies. Most of the time, we are proven correct, and humbly announce, "We told you so!" But sometimes, our predictions miss the mark. Case in point: in a November 2008 commentary, we predicted "Obama's presidency will likely be less radica
MAY 29, 2009 | Commentary by ELIZABETH STELLE
Government Intervention Prolongs Recessions
Recessions are a tough time for all—many lose their jobs, family incomes shrink, and budgets are squeezed. But recessions are natural and, in the long-run, foster a stronger economy. It is important that policymakers recognize the ups and downs of the economy, and the lessons from past recessions, so as to not over-react to the curre
MARCH 17, 2009 | Commentary by NATHAN BENEFIELD
Free Markets: An Unknown Ideal
President Obama, Governor Rendell, and many in the media have been echoing a similar refrain recently, "Conservatives had their chance. We tried free markets, and they failed." When exactly they think citizens enjoyed free markets is unclear, but it certainly did not occur under the presidency of George W. Bush or under Gov. Rendell.
Recent Blog Posts
OCTOBER 18, 2010
Federal Cash for State Budget Cuts?
In an Investors Business Daily piece this summer, Nicole Gelinas puts forward an interesting idea about how to stimulate the economy, and at the same time cut back on future government growth. The idea is a reverse of President Obama's $4 billion dollar "Race to the Top" program, and other federal subsidy programs, which offer federal tax dollars to states for "innovative" reforms—but which almost always require higher spending by state government after federal funding goes away (case in point: expanding unemployment compensation eligibility).
In Gelinas' plan, federal money would be tied to reducing state and local government spending. For every two dollars states cut either now or in the future, states and cities would receive one dollar of stimulus money from the government. For example, if Harrisburg needs to make a debt payment now of $100 million, it could cut $200 million worth of future pension spending to receive $100 million in stimulus money.
Federal funding would be tied to things like moving to a 401(k) retirement plan for state workers, public employee wage freezes, or requiring government workers to contribute more for their health care.
posted by NICHOLAS FETT | 11:55 AM | 0 comment
SEPTEMBER 24, 2010
The Downside to Government Spending
While federal stimulus funding for turtle tunnels, ant colony research, iPod Touch devices for students, and Blackberry smart phones for smokers might stimulate a few Americans, the rising national debt is bad for everyone.
Jeffrey Miron, Director of Undergraduate Studies at Harvard, explains how this federal spending spree is endangering the U.S. economy.
"The U.S. national debt currently stands at 62 percent of GDP, its highest level since WWII. Under plausible assumptions, this ratio will rise to at least 80 percent and possibly 185 percent of GDP by 2035 and continue increasing thereafter. As the debt-ratio increases, the U.S.'s creditors will demand higher and higher interest rates to continue financing this debt. This means ever larger deficits and ultimately a U.S. default. The U.S. can try to avoid this fate by raising taxes, but that approach faces both political and economic obstacles... If tax increases cannot restore fiscal balance, then the U.S. must slow the path of expenditure to avoid fiscal Armageddon."
To avoid the U.S. defaulting on loans in the future, the government either needs to drastically increase taxes, which slows economic growth, or drastically cut spending.
A recent Reuters/Ipsos poll shows that Americans want to cut the deficit, not increase spending.
- 57% of Americans want the U.S. government to cut the deficit to stimulate the economy
- 39% support deficit spending to stimulate the economy
- 68% of registered voters think lowering taxes creates jobs
- 60% think reducing the budget deficit creates jobs
- 50% believe government spending creates jobs
posted by KATRINA CURRIE | 09:20 AM | 0 comment
SEPTEMBER 20, 2010
Odd Headline of the Day
CNN reports, "Stocks rally to 4-month highs after economists report recession ended in June 2009." Three comments:
- Are you surprised to learn the recession ended 15 months ago?
- The recession ended before almost any of the Obama stimulus money had been spent, so that's not what ended the recession.
- Really? People bought stocks after learning a recession ended 15 months ago? As in previous instances, I'm not convinced reporters do a good job of analyzing stock market cause and effects.
posted by NATHAN BENEFIELD | 06:13 PM | 0 comment
