Wednesday, February 6, 2013

February 6, 2013

Kibbe: Rove's Plan to Protect GOP Incumbents is 'Political Suicide'
by Jim Meyers and Kathleen Walter
by February 5, 2013

FreedomWorks President Matt Kibbe tells Newsmax that a new Karl Rove-backed group is seeking to protect incumbents who “are afraid of a tea party challenge” — and he calls the effort “political suicide.”

Kibbe also discloses that his group intends to target in GOP primaries incumbents who don’t consistently support conservative principles.

Tea party-affiliated FreedomWorks was founded in 2004 and claims to have millions of members nationwide.

Former George W. Bush adviser Rove’s group, American Crossroads, has formed a new organization called the Conservative Victory Project that will target Republican candidates it deems unelectable. The organization was formed because of concerns that candidates like Todd Akin and Richard Mourdock were costing the GOP congressional seats.

Commenting on the group’s efforts, Kibbe says in an exclusive interview with Newsmax TV: “It’s all about stifling competition. It’s all about protecting incumbent senators who are afraid of a tea party challenge, afraid of actually standing on their record.

“If you think about what Karl Rove is trying to do, he’s going to eliminate this whole new breed of Republican that’s repopulated the party, bringing all this energy. There would be no Marco Rubio, no Pat Toomey, no Mike Lee, no Rand Paul if this type of apparatus was successful.

“So it’s a really bad idea and if you look at our record on balance, we have in fact brought new energy to the Republican Party and it’s vital that we continue to do so.”

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Prophets and Losses: Part II
by Thomas Sowell
February 6, 2013

People on both sides of tax issues often speak of such things as a "$300 billion tax increase" or a "$500 billion tax decrease." That is fine if they are looking back at something that has already happened. But it can be sheer nonsense if they are talking about a proposed increase or decrease in the tax rate.
The government can only raise or lower the tax rate. Whether the actual tax revenues that the government will collect as a result will go up or down is a matter of prophecy. And these prophecies have been far too wrong far too often to base national policies on them.

When Congress was considering raising the capital gains tax rate from 20 percent to 28 percent in 1986, the Congressional Budget Office advised Congress that this would increase the revenue received from that tax. But the Congressional Budget Office was wrong, not simply about the amount of the tax revenue increase, but about the fact that the capital gains tax revenue actually fell.

There was nothing unique about this example of tax rates and tax revenues moving in opposite directions from each other -- and also in opposite directions from the predictions of the Congressional Budget Office. Reductions of the capital gains tax rates in 1978, 1997 and 2003 all led to increased revenues from that tax.

The Congressional Budget Office is by no means the only government agency whose prophecies have been grossly unreliable. Anyone who looks at the history of the Federal Reserve System will find many painful examples of wrong prophecies that led to policies with bad consequences for the whole economy.

In a worldwide context, during the 20th century economic central planning by governments -- prophecy at the grandest level -- led to so many bad consequences, in countries around the world, that even most socialist and communist governments abandoned central planning by the end of that century.

The failures of governmental prophecies in so many different contexts cannot be blamed on stupidity. Most of the people who made these prophecies were far more educated than the average person, had far more information at their fingertips and probably had higher IQs as well.

Their intellectual superiority to others may well have given them the confidence to venture into areas where no human being has what it takes to make prophecies that lead to policies overriding the plans and actions of millions of other human beings.

As John Stuart Mill said, back in the 19th century, "even if a government were superior in intelligence and knowledge to any single individual in the nation, it must be inferior to all the individuals of the nation taken together."

People competing with each other, and being forced to make mutual accommodations with each other in the marketplace, are operating in a trial and error process.

Human beings are going to make errors in any kind of economic or political system. The question is: Which kind of system punishes errors more quickly, and more effectively, in terms of forcing errors to be corrected?

A market economy with many competitors has incentives and constraints that are the opposite of those in a government monopoly.

Anyone familiar with the economic history of businesses knows that their mistakes have been common and large. But red ink on the bottom line lets them know that they are going to have to shape up or shut down.

Government agencies face no such constraint. The Federal Reserve can keep making the same mistakes in the next hundred years that it made in its first hundred years. Or it can make new and bigger mistakes.

Nor is the Federal Reserve unique. The same thing applies to the Congressional Budget Office and to government agencies on down to the local DMV.

Elected politicians not only can keep making the same mistakes. They have every incentive to deny that they made a mistake in the first place, since such an admission can end their careers.

That is why these prophets can lead to our losses.

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Stunning new numbers forecast debt explosion by 2023
by Betsi Fores
February 6, 2013

The nonpartisan Congressional Budget Office released an estimate Tuesday saying that by 2023, the federal debt will be $7 trillion larger.

“If current laws remain in place, debt will equal 77 percent of GDP and be on an upward path,” CBO projects.

Based on their modeling, the deficit will total $845 billion in 2013, making it the first year in five years to have a deficit below $1 trillion.

“With such deficits, federal debt would remain above 73 percent of GDP — far higher than the 39 percent average seen over the past four decades,” says the CBO.

Economists commonly recommend that the debt-to-GDP ratio should not exceed 60 percent. It currently exceeds 70 percent.

“The CBO’s report is yet another warning that we need to get spending under control,” House budget committee chair Paul Ryan said last week. “The deficit is still unsustainable. By 2023, our national debt will hit $26 trillion. We can’t let that happen. We need to budget responsibly, so we can keep our commitments and expand opportunity.”

Included in the CBO’s budget outlook is the future of medical insurance programs. The CBO projects that 7 million people will no longer have employer-provided health insurance by 2022, because of changes required by the Affordable Care Act.

The cost of Social Security is expected to nearly double over the next ten years, from $773 billion in 2012 to $1.43 trillion in 2023.

G. William Hoagland, senior vice president of the Bipartisan Policy Center, testified before Congress that by 2022, the debt will be $27 trillion. Hoagland agreed that the debt-to-GDP ratio will reach 77 percent.

In all, the CBO expects economic growth to be slow for the remainder of the year as the expected budgetary cuts take place. Following 2013, the CBO estimates economic growth will speed up, “causing the unemployment rate to decline and inflation and interest rates to eventually rise from their current low levels,” the CBO writes.

“Nevertheless, the unemployment rate is expected to remain above 7½ percent through next year,” making 2014 the sixth consecutive year with unemployment exceeding 7.5 percent — the longest period of extended unemployment in the last 70 years.

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