Alan S. Blinder has all the credentials and accolades which liberal elites crave. He is a Princeton economics professor, the first member of President Clinton's original Council of Economic Advisers, a former Vice Chairman of the Board of Governors of the Federal Reserve and one of Keynesian economics' staunchest supporters. Recently in a Wall Street Journal op-ed, he juxtaposed two recent downgrades of the U.S. economy by two different entities in a Keynesian economist's typical way. Right out of the gate he downplayed and ridiculed the Standard and Poor's downgrade of the sovereign debt of the United States form AAA to AA+ as "not serious" if not "ridiculous." He chastised the Standard and Poor's assessment, which in reality has more to do with America's massive and ever-growing national debt, as merely a downgrade focusing on "America's politics."
While passing off the S&P's downgrade as trivial and without merit, and down playing America's unsustainable debt, Blinder focused his attention instead on the Federal Reserve Board's Open Market Committee's recent downgrade of "its near-term assessment of the U.S. economy." In other words, he believes the words of the Federal Reserve about U.S. economic conditions are much more important than stopping President Obama's reckless spending and accelerated accumulation of debt. Here we have a Keynesian economist's typical reaction to a very real problem of debt -- spending and debt aren't the problem.
Maybe a more informative way of evaluating the S&P downgrade could be developed from looking at the recent economic history of members of the Eurozone.
About a year ago, we were all told that Greece had a little spending problem and would need a rescue package of about $60 billion. But the European Central Bank and the IMF, which gets about 17% of its money from the American taxpayers, said they could handle the problem. In subsequent events, there have been the announcements of bailouts for Ireland, Portugal and another one for Greece.
Now the European Central Bank is buying the bonds of Spain and Italy. Furthermore, many European commercial banks own bonds from these same failing nations. So, the European Central Bank has started to purchase bad bonds from the banks too. This is a drastic move to prevent a "crisis" in these banks. What is the problem? Very simply, too much government spending that has produced too much government debt that these economies cannot pay off. So, the 22 European nations that participate in the Euro currency are, in the aggregate, an economic house of cards. Therefore, the value of the Euro currency is threatened.
How much debt is too much debt? On the chart below, we show how much public debt selected Euro nations have as a percentage of GDP. This is the standard of comparison.
As you can see, the best and biggest nations, Germany and France, have respectively, 83% and 81% of publicly held debt to GDP. One of the largest candidates for a bailout, Spain, has publicly held debt to GDP of just 60%.
Now let's relate this to data to the publicly held debt of the United States from 2001 to the present.
On 9/30/08, the end of the last fiscal year before the Obama Administration, the debt held by the public was $5.808 trillion. As of August 18, 2011, it was $9.946 trillion. This is an increase of $4.138 trillion in less than 3 years. This is a 71% increase. It too... Continue
In states across the country, great new Republican leaders are taking the party into a future of fiscally and constitutionally responsible government. And they are rejecting payouts to special interest groups that have been raiding government treasuries for years.
Especially in this environment, it is very hard to understand why any Missouri Republican would be interested in supporting the passage of the so-called “Aerotropolis/MOSIRA” legislation. It is nothing but poorly disguised payoff to special interest groups.
As I understand it, the bill provides tax credits that can be sold by the recipient special interest group for cash without any obligation to perform any act or accomplish some special interest goal other than satisfaction of the initial qualifications.
Therefore, all that this legislation would do is give cash to special interests (after the sale of the so-called tax credit) so that some of the same cash may be recycled back to the supporters of the legislation as political contributions. Since limits on campaign contributions have been eliminated in Missouri, this opportunity for corruption is all too real. Why not just write the checks to yourselves to save postage?
The economic arguments for projects in the bill are complete nonsense. Government spending does not create jobs. This is clearly shown by our experience with the Obama Administration’s massive government spending which has only resulted in higher unemployment, slower economic growth and massive deficits. And so, the handouts in the Aerotropolis/MOSIRA bill are a fraud on the Missouri taxpayers who trust you to care for their taxes.
MOSIRA is another fraud in process against the citizens of Missouri. It is just another vehicle to funnel to life science special interests taxpayer dollars unencumbered by protections against spending on unethical human experimentation. When the Missouri Legislature passed the Life Sciences Trust Fund in 2003, which originated this type of special interest funding, the main reason it was able to pass was because of specific restrictions against using Missouri taxpayer dollars on abortion, human cloning and fetal tissue research. This legislation passed the General Assembly in the House by a vote of 158 to 2 and in the Senate by a vote of 28 to 1. This was the will of the people of Missouri as well as could have ever been expressed by their legislators.
Then in 2006, cloning special interests spent an unprecedented $30 million in 2006 to pay for the so-called “Stem Cell Research” Amendment 2. When voters walked into the booth to vote during the 2006 elections, they saw the following Amendment 2 ballot summary:
Shall the Missouri Constitution be amended to allow and set limitations on stem cell research, therapies, and cures which will…ban human cloning or attempted cloning….(emphasis added)
The voting booth language is the core of the Amendment 2 fraud. At the time that their eyes saw this language, “human cloning” was already defined in Missouri Statutes. Buried in the small print of the 2,000 word text of Amendment 2, which hardly anyone ever saw, was a new definition of cloning that would be enshrined after all the votes were counted.
The effect was that voters who thought they were banning cloning (as defined in Missouri Statutes) were actually creating a constitutional right to human cloning.
Now, the MOSIRA legislation is just a vehicle to fund these same cloning special interests unencumbered by the restrictions of the Life Sciences Trust Fund. We know this because these same restrictions were stripped from the bill in the last days of the most recent legislative session. Now, Missouri taxpayers may have to pay for abortion, human cloning and embryo-destructive experimentation. The special interest group that spent $30 million to pass Amendment 2 in 2006 wants our money! And lots of it.
This is all corrupt and old politics. You, as leaders of the Missouri General Assembly, are at a fork in the road. You can lead by following brave and fiscally responsible Republicans in Wisconsin, Indiana, Ohio and New Jersey by rejecting this pile of special interests payouts. And, this would help to elect a Republican Governor in Missouri and to ensure your re-election.
If you take the other fork in the road by bundling and passing Aerotropolis/MOSIRA, it will only result in inflaming the fiscally conservative and faith-based communities. And, these are two of your most important support groups. This threatens you and any of your fellow consenting colleagues with defeat in 2012. And this will help re-elect a Democratic Governor.
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