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Kansas and Wichita quick takes: Wednesday August 3, 2011

Debt ceiling. What is the real value of the debt ceiling? Has it ever constrained the growth of government debt, until now? Thomas Sowell in Debt-Ceiling Chicken: “Some people may have been shocked when the credit-rating firm Moody’s recently suggested that the debt-ceiling law be repealed, in order to avoid fiscal crises which can throw world financial markets into turmoil that can injure countries around the world. Anyone who wants to show that Moody’s is wrong should be prepared to show the actual benefits of the debt-ceiling, not its goals or hopes. That will not be easy, if possible at all. … The national debt-ceiling law should be judged by what it actually does, not by how good an idea it seems to be. The one thing that the national debt-ceiling has never done is to put a ceiling on the rising national debt. Time and time again, for years on end, the national debt-ceiling has been raised whenever the national debt gets near whatever the current ceiling might be. Regardless of what it is supposed to do, what the national debt-ceiling actually does is enable any administration to get all the political benefits of runaway spending for the benefit of their favorite constituencies — and then invite the opposition party to share the blame, by either raising the national debt ceiling, or by voting for unpopular cutbacks in spending or increases in taxes.”

Was August 2nd a deadline? All through the debate over raising the federal debt ceiling it was taken as granted that the deadline — the day the U.S. Treasury would run out of money — was August second. U.S. Representative Tim Huelskamp, who is in his first term representing the Kansas first district, has released data that shows otherwise. A chart on his website shows a declining balance in the treasury, but projections show a positive balance far past August second.

Despite drag of government health care, Canada thrives. The unemployment rate in Canada has fallen, GDP growth is healthy, and there were no bank bailouts. It has been able to reduce the size of its government relative to its economy, writes Jason Clemens in Why Canada Is Beating America: It shrank government, and now unemployment and debt are declining: “Total government spending as a share of the economy peaked at a little over 53% in 1993. Through a combination of spending cuts in the 1990s and spending restraint during the 2000s, it declined to a little under 40% of GDP by 2008.” … For 2010, government spending at all levels in the U.S. amounted to 36.22 percent of GDP, according to the Bureau of Economic Analysis. While that compares favorably with Canada’s level, the trend in the U.S. is for spending to increase, having risen from 30.82 percent in 2004. … According to Clemens, the success of Canada’s economy is in spite of its government health care, not because of it: “The unavoidable challenge is the country’s health-care system. … Canada devotes a relatively high share of its economy to health care without enjoying commensurate outcomes. Of the 28 countries in the Organization for Economic Cooperation and Development (OECD) that have universal access, Canada has the sixth-highest rate of health spending as a share of its economy.” It would be one matter if Canadians enjoyed good results from all this health care spending. “But Canadians’ access to care is poor, despite high spending. The country ranks 20th of 22 OECD countries for access to physicians. … Waiting times for treatment continue to worsen.” … Liberals in the U.S. point to Canada as a model for government health care, but the actual situation is not one that we should aspire to.

Kansas government website revamped. Kansas has remodeled its main website, kansas.gov. Besides a new look, I think a useful feature will be the use of a Google site-specific search feature. These generally work very well, applying the power of the popular and effective search engine to a specific website. Time will tell as to whether the design is useful. The state does not have a good record in recent times of website redesigns, as the effort to replace the legislature’s website right as the session started was a disaster. The press release with other details is at New State Web Portal Provides Better Experience, Mobility.

Demand is not the problem. A recent letter to the Wichita Eagle started with “The only thing that creates jobs is demand for product.” This idea of economic wealth deriving from consumer demand is a Keynesian concept, and we’ve seen over and over the wreckage that Keynesian economics leaves on countries — starting with our own efforts to cure the Great Depression to the failing economic policies of President Barack Obama. It’s also curious to blame economic stagnation on the absence of desire of people for more stuff. People want more stuff — that’s human nature. It is by producing more that we create the wealth necessary to satisfy our demands. Production benefits from capital formation, and the policies of the United States are not favorable for this. … The author also promotes increasing exports while at the same time urging Americans to buy only U.S.-made products. This ignores the fact that trade — no matter who the trading partner — is a source of wealth. Both parties are made better-off through trade; otherwise the transaction would not take place.

Debt ceiling bill. A budget cut only by Washington standards. “Throwing in the towel.” All the angst over the past month seems to have produced very little in the way of meaningful reform. Here several Cato Institute policy experts comment on this week’s lawmaking. “This week’s bipartisan deal to raise the debt limit and achieve some spending reductions will do little in the way of actual spending cuts, defers all the tough decisions on spending and debt to a “SuperCongress” committee and will do little to protect the United States credit rating. Cato Institute Senior Fellows Dan Mitchell and Jagadeesh Gokhale and Director of Tax Policy Studies Chris Edwards comment on the debt deal.”

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