Food Stamp Mantra[s] from Democrats Rebutted

Michael Medved responds to the food stamp issue that Democrats and the Left are bringing up. I take a clip from yesterday’s show and insert it into the middle of today’s show to give the listener some ammunition when these banal arguments come up. At the 5:17 mark, the caller mentions taxes for the millionaires as part of his argument. Medved Responds well to this challenge at the… and at the 6:24 mark you hear the caller respond with a bumper sticker jingle. In other words, talking about facts matters little to these people, but at least you will be able to influence those around you eavesdropping in on the conversation.

I posted this video on LIVELEAK, and a comment got me “clicking around” the internet to test what the person said. Here is the comment:

For every $1 spent on food stamps there’s a $1.80 stimulative effect to the economy. The poor person spends the funds at the grocery store, which allows the store to employ more people, the store spends the funds to buy more food which helps farmers and food producers. On the other hand, tax cuts for the wealthy have a negative effect on the economy, it just doesn’t trickle down enough so it drains economic growth. Plus it helps feed poor people that can’t afford to eat. — Warren H.

First, it should be noted that this idea was championed mainly by Moody’s chief economist Mark Zandi, a hard-core Keynesian. However, it should be noted that unfortunately “for Zandi, there has never been any empirical evidence of the Keynesian multiplier.  Government doesn’t take one dollar and turn it into more by spending it.  God doesn’t live in the White House, no matter how much Paul Krugman prays.” (AMERICAN THINKER)

HERITAGE FOUNDATION puts it like this:

…The Keynesian argument also assumes that consumption spending adds to immediate economic growth while savings do not. By this reasoning, unemployment benefits, food stamps, and low-income tax rebates are among the most effective stimulus policies because of their likelihood to be consumed rather than saved.

Taking this analysis to its logical extreme, Mark Zandi of Economy.com has boiled down the government’s influence on America’s broad and diverse $14 trillion economy into a simple menu of stimulus policy options, whereby Congress can decide how much economic growth it wants and then pull the appropriate levers. Zandi asserts that for each dollar of new government spending: temporary food stamps adds $1.73 to the economy, extended unemployment benefits adds $1.63, increased infrastructure spending adds $1.59, and aid to state and local governments adds $1.38. Jointly, these figures imply that, in a recession, a typical dollar in new deficit spending expands the economy by roughly $1.50. Over the past 40 years, this idea of government spending as stimulus has fallen out of favor among many economists. As this paper shows, it is contradicted both by empirical data and economic logic…

They then respond to the above:

The Evidence is In

Economic data contradict Keynesian stimulus theory. If deficits represented “new dollars” in the economy, the record $1.2 trillion in FY 2009 deficit spending that began in October 2008–well before the stimulus added $200 billion more–would have already overheated the economy. Yet despite the historic 7 percent increase in GDP deficit spending over the previous year, the economy shrank by 2.3 percent in FY 2009. To argue that deficits represent new money injected into the economy is to argue that the economy would have contracted by 9.3 percent without this “infusion” of added deficit spending (or even more, given the Keynesian multiplier effect that was supposed to further boost the impact). That is simply not plausible, and few if any economists have claimed otherwise.

And if the original $1.2 trillion in deficit spending failed to slow the economy’s slide, there was no reason to believe that adding $200 billion more in 2009 deficit spending from the stimulus bill would suddenly do the trick. Proponents of yet another stimulus should answer the following questions: (1) If nearly $1.4 trillion budget deficits are not enough stimulus, how much is enough? (2) If Keynesian stimulus repeatedly fails, why still rely on the theory?

This is no longer a theoretical exercise. The idea that increased deficit spending can cure recessions has been tested repeatedly, and it has failed repeatedly. The economic models that assert that every $1 of deficit spending grows the economy by $1.50 cannot explain why $1.4 trillion in deficit spending did not create a $2.1 trillion explosion of new economic activity.

(read it all)

CATO likewise notes that the numbers were fudged to provide exaggerated outcomes:

Food stamps are effective economic stimulus. Led by Mark Zandi and other Keynesian economists, food-stamp advocates have made wildly exaggerated claims about the program’s role in stimulating the economy. Zandi, for instance, claims that “extending food stamps is the most effective way to prime the economy’s pump.”

But aside from the fact that those economic models just as well predict an alien invasion would be a boon to the economy, there is little evidence to support the theory. Even the Agriculture Department’s own inspector general concluded that it was unable to determine whether the additional dollars in the stimulus’s food-stamp expansion were in any way effective in meeting the 2009 Recovery Act’s goals. Three of the four performance measures the program was supposed to use, the office found, “reflected outputs, such as the dollar amount of benefits issued and administrative costs expended” and did not provide any insight into outcomes.

On the other hand, we do know that a failure to get government spending under control will have long-term economic consequences. Food stamps are hardly the major cause of deficits and debt — that distinction lies with middle-class entitlements such as Social Security and Medicare — but every little bit helps.

Valerie Jarrett and Nancy Pelosi said similar things:

  • JARRETT: Let’s face it: Even though we had a terrible economic crisis three years ago, throughout our country many people were suffering before the last three years, particularly in the black community. And so we need to make sure that we continue to support that important safety net. It not only is good for the family, but it’s good for the economy. People who receive that unemployment check go out and spend it and help stimulate the economy, so that’s healthy as well.
  • PELOSI: Economists agree that unemployment benefits remain one of the best ways to grow the economy in a very immediate way. It immediately injects demand into our markets and increases employment. For every dollar spent on unemployment benefits, the economy grows by, according to one estimate, $1.52; by others, $2. So somewhere in that range, but much more than is spent on it…. We have a responsibility to the American people. These are people who have played by the rules, have lost their job through no fault of their own, and need these benefits in order to survive. So we must extend this insurance before the end of the year and we must extend it for at least a year. And I’d like to see that as we go forward before this year ends. Hopefully it could be part of a budget, but it doesn’t have to be part of a budget. It could be in its own vehicle as it goes forward, but it’s something we must consider.

Again, similar responses happened then as well:

Economists at the Heritage Foundation have written about this claim, explaining:

The theory behind extending UI [Unemployment Insurance] benefits as a stimulus assumes that unemployed workers will immediately spend any additional UI payments, instantly increasing consumption, boosting aggregate demand, and stimulating the economy.

This is not a new idea. Economists in the 1960s thought that unemployment insurance could function as an important automatic economic stabilizer. Empirical research in the 1970s demonstrated that this was not the case, and studies since then have concluded that unemployment insurance plays at best a small role in stabilizing the economy. Empirical research at the state level also finds that UI plays a negligible role in stimulating the economy.

Studies that have found that UI stimulates the economy effectively — such as studies by the Congressional Budget Office and economist Mark Zandi — rely on two faulty assumptions, thereby drawing a false conclusion:

They assume that unemployed workers spend every dollar of additional UI benefits almost immediately and that extending unemployment insurance does not affect workers’ behavior. In that case, every dollar spent on unemployment insurance adds a dollar to consumption without any direct effects on the labor market. Both assumptions are false.

Unemployment Insurance Prolongs Unemployment. One of the most thoroughly established results in labor economics is the effect of unemployment benefits on unemployed workers’ behavior. labor economists agree that extended unemployment benefits cause workers to remain unemployed longer than they otherwise would.

This occurs for obvious reasons: Workers respond to incentives. Unemployment benefits reduce the incentive and the pressure to find a new job by making it less costly to remain without work…..

Our Founders Hated “Direct Democracy”

Take note of Article IV, Section 4 of the Constitution reads:

  • “The United States shall guarantee to every state in this union a republican form of government…”

I tell my kids that we do not have a democracy, but a Democratic REPUBLIC; and I am basing these on the Constitution and the authors (and signers) understanding of it (commonly referred to as “original intent”).  Our Founders had an opportunity to establish a democracy in America but chose not to.  In fact, they made very clear that we were not – and never to become – a democracy:

James Madison (fourth President, co-author of the Federalist Papers and the “father” of the Constitution) – “Democracies have ever been spectacles of turbulence and contention; have ever been found incompatible with personal security, or the rights of property; and have, in general; been as short in their lives as they have been violent in their deaths.”

John Adams (American political philosopher, first vice President and second President) – “Remember, democracy never lasts long.  It soon wastes, exhausts, and murders itself.  There never was a democracy yet that did not commit suicide.”

Benjamin Rush (signer of the Declaration) – “A simple democracy… is one of the greatest of evils.”

Fisher Ames (American political thinker and leader of the federalists [he entered Harvard at twelve and graduated by sixteen], author of the House language for the First Amendment) – “A democracy is a volcano which conceals the fiery materials of its own destruction.  These will provide an eruption and carry desolation in their way.´ /  “The known propensity of a democracy is to licentiousness [excessive license] which the ambitious call, and the ignorant believe to be liberty.”

Governor Morris (signer and penman of the Constitution) – “We have seen the tumult of democracy terminate… as [it has]  everywhere terminated, in despotism….  Democracy!  Savage and wild.  Thou who wouldst bring down the virtous and wise to thy level of folly and guilt.”

John Quincy Adams (sixth President, son of John Adams [see above]) – “The experience of all former ages had shown that of all human governments, democracy was the most unstable, fluctuating and short-lived.”

Noah Webster (American educator and journalist as well as publishing the first dictionary) – “In democracy… there are commonly tumults and disorders…..  therefore a pure democracy is generally a very bad government.  It is often the most tyrannical government on earth.”

John Witherspoon (signer of the Declaration of Independence) – “Pure democracy cannot subsist long nor be carried far into the departments of state – it is very subject to caprice and the madness of popular rage.”

Zephaniah Swift (author of America’s first legal text) – “It may generally be remarked that the more a government [or state] resembles a pure democracy the more they abound with disorder and confusion.”

CATO Article:

Critics have long derided the Electoral College as a fusty relic of a bygone era, an unnecessary institution that one day might undermine democracy by electing a minority president. That day has arrived, assuming Gov. Bush wins the Florida recount as seems likely.

The fact that Bush is poised to become president without a plurality of the vote contravenes neither the letter nor the spirit of the Constitution. The wording of our basic law is clear: The winner in the Electoral College takes office as president. But what of the spirit of our institutions? Are we not a democracy that honors the will of the people? The very question indicates a misunderstanding of our Constitution.

James Madison’s famous Federalist No. 10 makes clear that the Founders fashioned a republic, not a pure democracy. To be sure, they knew that the consent of the governed was the ultimate basis of government, but the Founders denied that such consent could be reduced to simple majority or plurality rule. In fact, nothing could be more alien to the spirit of American constitutionalism than equating democracy will the direct, unrefined will of the people.

Recall the ways our constitution puts limits on any unchecked power, including the arbitrary will of the people. Power at the national level is divided among the three branches, each reflecting a different constituency. Power is divided yet again between the national government and the states. Madison noted that these two-fold divisions — the separation of powers and federalism — provided a “double security” for the rights of the people.

What about the democratic principle of one person, one vote? Isn’t that principle essential to our form of government? The Founders’ handiwork says otherwise. Neither the Senate, nor the Supreme Court, nor the president is elected on the basis of one person, one vote. That’s why a state like Montana, with 883,000 residents, gets the same number of Senators as California, with 33 million people. Consistency would require that if we abolish the Electoral College, we rid ourselves of the Senate as well. Are we ready to do that?

The filtering of the popular will through the Electoral College is an affirmation, rather than a betrayal, of the American republic. Doing away with the Electoral College would breach our fidelity to the spirit of the Constitution, a document expressly written to thwart the excesses of majoritarianism. Nonetheless, such fidelity will strike some as blind adherence to the past. For those skeptics, I would point out two other advantages the Electoral College offers.

First, we must keep in mind the likely effects of direct popular election of the president. We would probably see elections dominated by the most populous regions of the country or by several large metropolitan areas. In the 2000 election, for example, Vice President Gore could have put together a plurality or majority in the Northeast, parts of the Midwest, and California.

The victims in such elections would be those regions too sparsely populated to merit the attention of presidential candidates. Pure democrats would hardly regret that diminished status, but I wonder if a large and diverse nation should write off whole parts of its territory. We should keep in mind the regional conflicts that have plagued large and diverse nations like India, China, and Russia. The Electoral College is a good antidote to the poison of regionalism because it forces presidential candidates to seek support throughout the nation. By making sure no state will be left behind, it provides a measure of coherence to our nation.

Second, the Electoral College makes sure that the states count in presidential elections. As such, it is an important part of our federalist system — a system worth preserving. Historically, federalism is central to our grand constitutional effort to restrain power, but even in our own time we have found that devolving power to the states leads to important policy innovations (welfare reform).

If the Founders had wished to create a pure democracy, they would have done so. Those who now wish to do away with the Electoral College are welcome to amend the Constitution, but if they succeed, they will be taking America further away from its roots as a constitutional republic.

How did the terms “Elector” and “Electoral College” come into usage?

The term “electoral college” does not appear in the Constitution. Article II of the Constitution and the 12th Amendment refer to “electors,” but not to the “electoral college.” In the Federalist Papers (No. 68), Alexander Hamilton refers to the process of selecting the Executive, and refers to “the people of each State (who) shall choose a number of persons as electors,” but he does not use the term “electoral college.”

The founders appropriated the concept of electors from the Holy Roman Empire (962 – 1806). An elector was one of a number of princes of the various German states within the Holy Roman Empire who had a right to participate in the election of the German king (who generally was crowned as emperor). The term “college” (from the Latin collegium), refers to a body of persons that act as a unit, as in the college of cardinals who advise the Pope and vote in papal elections. In the early 1800’s, the term “electoral college” came into general usage as the unofficial designation for the group of citizens selected to cast votes for President and Vice President. It was first written into Federal law in 1845, and today the term appears in 3 U.S.C. section 4, in the section heading and in the text as “college of electors.”

How to Solve America’s Spending Problem ~ PragerU

Everyone complains about America’s debt, and rightly so, but how do we get out of it? As Cato’s Michael Tanner explains, spending on entitlement programs — Social Security, Medicare and Medicaid — has exploded in recent decades. We must slow their growth or they will soon swallow the entire federal budget. In five minutes, learn how America can preserve these programs and get out of debt.

The War on Work ~ Prager University (Michael Tanner)

The U.S. government has spent trillions of dollars in recent decades attempting to combat poverty, yet the poverty rate has remained virtually unmoved. Why? As social economist Michael Tanner explains, the “War on Poverty” has both discouraged work and ensnared people in hardship. The “War on Poverty,” it turns out, is actually a “War on Work.” In five minutes, learn the truth about government’s counterproductive efforts to eliminate poverty.

How Is Obama’s Economic Recession the Worst? Larry Elder Explains

Larry Elder weighs in with an older article from 2011: Economy: Reagan Gets No Credit, Obama Gets No Blame

Ronald Reagan did nothing. Barack Obama saved the nation from total collapse.

How else to explain the absence of jobless pitchfork-wielding Americans storming the White House? How else to explain the contrast between the explosive Reagan Recovery and the dud on our hands right now? Fortunately, the left is up to the task.
“The secret of the long climb after 1982 was the economic plunge that preceded it. By the end of 1982 the U.S. economy was deeply depressed, with the worst unemployment rate since the Great Depression. So there was plenty of room to grow before the economy returned to anything like full employment,” said left-wing economist, Nobel laureate and New York Times columnist Paul Krugman in 2004. Oh.

An economy that is “deeply depressed,” Krugman insists, or at least he did seven years ago, naturally comes back strong. To what principal factor did Krugman point to in calling the 1982 economy “deeply depressed”? Unemployment. It peaked in the early ’80s at 10.8 percent, even higher than during “The Great Recession” (aka the economy “inherited” by President Barack Obama). In 2010, the unemployment rate hit 10.2 percent, which means the early ’80s still holds the record for the “worst unemployment rate since the Great Depression.”

What most people care about are jobs. By that standard, Reagan faced an even tougher economy. Throw in a higher rate of inflation — 1980’s 13.5 percent average vs. 2011’s 2.6 percent — and much higher prime interest rates — 20 percent vs. 3.25 percent — and the early ’80s looked even grimmer than The Great Recession.

Krugman gives no credit to the Reagan policies of lower taxes, deregulation and a slowdown in the rate of government spending. He believes Reagan’s policies (SET ITAL) harmed (END ITAL) the economy. Krugman approvingly quotes Bill Clinton, who, as a presidential candidate, said: “The Reagan-Bush years have exalted private gain over public obligation, special interests over the common good, wealth and fame over work and family. The 1980s ushered in a Gilded Age of greed and selfishness, of irresponsibility and excess, and of neglect.”

Enter President Barack “Hope and Change” Obama, with a Democratic majority in the House and a supermajority filibuster-proof Senate. Out went policies like reductions in income taxes, corporate taxes, capital gains and dividends. In came transfers of money from one pocket to another to “spread the wealth.”

Under ObamaCare, the Democrats placed the entire health care system under the command and control of the federal government. Through a nearly $1 billion “stimulus” package, Democrats spent money on “shovel-ready” projects with a promise to “save or create” 3.5 million jobs. To rein in “greed” and to fight “climate change,” the Obama administration imposed billions of dollars’ worth of new regulations on businesses. Through “quantitative easting,” the Federal Reserve effectively printed money to keep interest rates low, a widely disputed policy designed to encourage banks to lend and businesses to borrow.

So where is it? When do we see the massive bounce-back from this “deeply depressed” economy, at minimum the kind of bounce-back that occurred in the ’80s in spite of the allegedly harmful policies of Reagan?

Krugman’s analysis of the Reagan recovery — a deep recession equals sharp recovery — tells us that the economy should be storming ahead, especially given Obama’s enlightened leadership. But in the seven quarters following the end of this recession, gross domestic product growth has averaged 2.8 percent. In the seven quarters following the Reagan recession, GDP growth averaged 7.1 percent.

…read more…

(Below) The C.A.T.O. Institute has been proven correct in their warning!

Michael Cannon (CATO Inst.) Explains the Recent D.C. Court Ruling

Video Description:


The Washington D.C. Upper Court ruled…

….NOT in favor of not nixing part of Obama-Care, or overturning it… but rather, to uphold the clear portions of the law that deal with the IRS and subsidies. THIS is why this ruling is important, and has a great chance of winning.

For more clear thinking like this from Larry Elder… I invite you to visit: http://www.larryelder.com/


 

Marked Pattern Of Lower Support For Pro-Liberty Views Among Immigrants ~ Statistically Significant And Sizable

Anti-Liberty Votes

Democrat operatives have been seen busing Somali immigrants to early-voting stations in the swing state of Ohio, and telling them how to vote for the Democrat Party, sources report.

The Somalis, who cannot read English, are told by the Democrat operatives to “vote Brown all the way down,” anonymous eyewitnesses have told Human Events. The statement is an apparent reference to Senator Sherrod Brown, the incumbent Democrat Senator in Ohio who is on the ballot….

~The Right Perspective (Oct 2012)

Libertarian Republican’s post caused me to wonder the following:

Wouldn’t there be then, a correlation to these “less-liberty” immigrants voting overwhelmingly Democratic? Doesn’t this — anecdotally — show that maybe, just maybe, the “statistically significant and sizable differences” signify something? Hmmmmm?

Here is LB’s post:

  • “Marked pattern of lower support for pro-liberty views among immigrants… statistically significant and sizable” differences from Americans

Excerpted, MarginalRevolution, “U.S. Immigrants’ Attitudes Toward Libertarian Values” (link to study by UCSD psychologist Hal Pashler):

While there has been much discussion of libertarians’ (generally although not universally favorable) attitudes toward liberal immigration policies, the attitudes of immigrants to the United States toward libertarian values have not previously been examined.

Using data from the 2010 General Social Survey, we asked how American-born and foreign-born residents differed in attitudes toward a variety of topics upon which self-reported libertarians typically hold strong pro-liberty views (as described by Iyer et al., 2012). The results showed a marked pattern of lower support for pro-liberty views among immigrants as compared to US-born residents.

These differences were generally statistically significant and sizable, with a few scattered exceptions. With increasing proportions of the US population being foreign-born, low support for libertarian values by foreign-born residents means that the political prospects of libertarian values in the US are likely to diminish over time.

Pro-Open Borders, liberal-leaning libertarian Cato Inst. admits increased immigration will lead to electoral failure for libertarians

[To wit]

From Cato.org:

Here are some reasons why Pashler’s paper shouldn’t worry libertarians much or convince many to oppose immigration: First, libertarians generally support immigration reform, the legalization of unauthorized immigrants, and increasing legal immigration because it is consistent with libertarian principles – not because immigration reform will lead to breakthrough electoral gains for libertarian candidates. The freedom for healthy non-criminals to move across borders with a minimum of government interference is important in and of itself. General libertarian support for immigration reform does not depend upon immigrants producing a pro-liberty Curley effect – as nice as that would be.

LR comments on CATO’s position:

Editor’s note – Of course, the Cato Institute is not in the business of electoral politics. They’re in the business of pointy-headed intellectualizing and policy paper pushing. Why should they give a “f” what the electoral consequences are, of vastly increasing liberty-hating immigrants into the U.S. and putting them immediately onto the voter rolls.

A mighty f-u you goes out to our friends at the Cato Institute this morning from the political arm of the libertarian movement.