Remains of the Day: 8/18/2011

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  One of my recent YouTube videos has already gotten over 100 views. It's only the second one to reach that mark. What's even more impressive is that, as of the time I am writing this, 35 comments have been posted on it. Some of those were me replying to other comments, but most of them are from people I've never heard from before who somehow found my video. That's pretty cool, I think.


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  Is it too much to ask that we have one presidential candidate who's charismatic and can really energize a crowd without making a gaffe a day?


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  Warren Buffett says he should pay more in federal taxes. I wish that I was paying more in federal income taxes, because it would mean that I actually had an income.


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  I'll start my 7th Quarter of law school (6th as a full-time student) next week. Returning to law school is kind of like making love to your girlfriend for the first time after finding out that she never really had an orgasm all the other times you've been with her.


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  Because I'm going to be competing in a Moot Court competition this fall, I can't try out for Mock Trial. At least I have a real excuse this time.


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  As much as I'm looking forward to resuming my regular routine, I am going to miss having my own swimming pool. For me, a swimming pool is kind of like a bathtub (not that I use it as such): I don't like swimming in a pool with other people in it, unless the other people are supermodels or really good friends.


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  Gene Simmons has endorsed Rick Perry for president. Could this be the KISS of death ... or will Perry rise to it and "shock me" be winning the nomination and getting elected?


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  A lot of people have posted some really nasty comments on my YouTube videos, but I don't mind. What really hurts is when people I don't know read my blog posts but never comment on them. The whole point of a blog is that it's supposed to be a forum, people!


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  I don't begrudge President Obama for taking a vacation. Come next November, I hope the voters will send him on a permanent vacation. (By the way, I realize I'm probably not the first person to make that wisecrack, but I deliberately ignored nearly all media today so that I could delude myself into thinking it was an original witticism.)

Are We Now the World's California?

I'm returning to Waco this week. Next Monday marks the beginning of the fall quarter at Baylor Law School, and needless to say, I won't be blogging nearly as much after then. Right now, I'm visiting my folks in Arlington, and later this week, I'll head back to my apartment.

On Sunday, I was watching 60 Minutes with my parents. Leslie Stahl was doing this segment on American corporations moving their headquarters overseas to avoid paying high U.S. taxes. While we were preparing supper, my Mom asked, rather disdainfully, "Why would anybody want to run a business in the United States?" My immediate answer was, "Good quality of life, I guess." That's when it hit me: the U.S. has become the California of the world.

It's no secret that California has one of the worst business climates in America. Its tax burden is also now on par with infamously high-taxing New York and New Jersey, and it has a lower bond rating than any other state. The Golden State has long believed that it can maintain this hostile atmosphere without discouraging people from living there because of what are known as "exploitable amentity asymmetries," which basically means that people will pay more to live in such a nice place. When you're in close proximity to some of the greatest natural splendor this country has to offer (not to mention the cultural meccas of San Francisco and Los Angeles), shouldn't there be some sort of premium on the cost of living?

For decades, the overwhelming answer was "yes." Ever since the Dust Bowl of the 1930s, California has been somewhat of an American "promised land," the last, best hope down-on-their-luck citizens have of finding the American dream. (You could go back even farther to the Comstock Lode and ensuing Gold Rush of the 19th Century.) Recently, though, it's become increasingly apparent that California's zenith may be behind her. I just mentioned its current financial woes, and population trends are reflecting it. For the first time since the 1920s, the Great Bear failed to gain a single congressional district following the U.S. Census, a result of slowing population growth.

Back to the analogy: I remember when Gov. Rick Perry appeared on The Daily Show last year. Eventually, the discussion came around to Texas's relatively pro-business climate and why businesses (and jobs) were migrating from the Midwest and Northeast to the Sun Belt. When Perry rattled off statistics indicating just how big the jobs boom has been in Texas over the past decade, Jon asked hmi, "Why do you think that is?" Perry mentioned our low taxes, "fair and predictable" regulatory climate, "a legal system that's fair and doesn't allow for over-suing," and "accountable" school system that produces skilled workers. This exchange followed:

STEWART: Couldn't you make the same argument, though, in terms of globalization, for companies going to India and China? If you are the pressure-valve release for companies in California, [then] who's t'say, would you criticize Texas companies --

[CROSSTALK]

PERRY: Seriously, you wanna live in India, or you wanna live in Texas?

STEWART: Are you -- For real?

[LAUGHTER/APPLAUSE]

It's an excellent point. The U.S. may not have the most favorable business climate, but we have a better quality of life than any other country. That has been our trump card against the growing number of business-friendly states on the global stage. Years ago, John Stossel did a 20/20 episode in which he visited India and Singapore and compared the ease/difficulty of opening a business in each country. In the latter, it took a few hours, much less than it would in the U.S. (and a lot less than in India). He was even able to set up a booth or something in a mall before the end of the day. Singapore also has no capital-gains tax, but on the other hand, you won't get caned for chewing gum in the United States (not by the government, anyway; I can't speak for all parents and boarding schools).

In this age of globalization, it's important for policymakers in D.C. to remain constantly aware that we are competing with countries all over the world, not just for investment, but for human capital as well. A tax code that, as Leslie Stahl put it, "all but forces companies to keep their money out of the country indefinitely" needs to be reformed. This Congress should act on pending free trade agreements that the past two Congresses have pushed aside. We'll lose out on a small amount of revenue that would have come from tariffs, but it will pale in comparison to the capital that will flow into this country when we expand the market for U.S. goods. It may be too late to save California, but the entire U.S. does not have to suffer the same fate.

The Real Reason Warren Buffett's Taxes are Low - Yahoo! News

The Real Reason Warren Buffett's Taxes are Low - Yahoo! News

A Question for Maryland (Full Version)

Right as I was about to save the full version of the (edited) video I uploaded to YouTube on Sunday, an error message popped up telling me that Windows Live Movie Maker would have to shut down. Unfortunately, it did not give me the opportunity to save the project I had just spent hours editing, and it appears that my work was not recovered. Check back later this week; if I have any good luck in retrieving what I lost, then I'll probably still upload the video.

It was only a matter of time ...

Pawlenty Drops 2012 Presidential Bid - FoxNews.com

My Take on the "Super-Committee" Membership

In what would have been the big news of the day had nothing else happened, House Minority Leader and ex-Mafia queen Nancy Pelosi announced her appointments yesterday to the super committee that will be tasked with ... you know what? I'm so sick of talking about this, but I promised to critique the committee's prospective membership once all twelve members had been named, so let's get this over with.

REID'S PICKS: THE IDEOLOGUES

Since this is supposed to be a panel on deficit reduction, it's only fair that we look at its prospective members' records on the deficit, and I think Sens. Baucus, Kerry and Murray have proven they could care less about deficit reduction. For the most part, they all supported the largest contributors to our deficit/debt. All three voted for Obamacare, the "stimulus" of '09, the War in Afghanistan and the tax compromise of 2010. Sens. Kerry and Baucus both voted for the War in Iraq. All three opposed Cut, Cap & Balance and The Path to Prosperity. In short, Reid's choices for this committee betray either a lack of seriousness on his part to deal with the deficit or a cynical attempt to stymie any meaningful efforts toward debt reduction. Perhaps both.

BOEHNER'S BOYS: THE FISCAL HAWKS

While I was surprised/dissapointed that Paul Ryan won't be on the commission, I think Speaker Boehner made at least two good choices for the committee: Dave Camp chairs the House Ways & Means Committee and has a vast knowledge of our frustratingly complex tax code. Jeb Hensarling was making small efforts at deficit reduction back when Republicans were spending money like it grew on trees. Both men were members of the Bowles-Simpson deficit commission and voted against that panel's final recommendations. I have to admit, I don't know much about Fred Upton. I was curious as to why he was named Chairman of United States House Committee on Energy and Commerce, considering that he has no background in either field. What you really should know about Upton is that he is a protégé of David Stockman, the former Michigan congressman and OMB Director who, during his time in the Reagan administration, advocated a large federal tax hike to reduce the mounting budget deficit. He resigned in 1985, the year before the deficit peaked and Reagan signed the Tax Reform Act of 1986 into law, which cut the top individual income tax rate from 50% to 28% and eliminated a lot of costly deductions and tax credits. Over the next three years, tax receipts climbed 29%, and the deficit was reduced by 31%. Regrettably, Stockman apparently hasn’t given up his penchant for higher taxes. I can’t say that Upton shares his former boss’s policy views, but it’s certainly worth mentioning here.

McCONNELL'S CHOICES: THE POLICY WONKS

Maybe I shouldn't call Jon Kyl a "policy wonk," but it certainly fits Sens. Pat Toomey (R-PA) and Rob Portman (R-OH), both of whom were just elected to the Senate last year. The latter served as U.S. Trade Representative and then as OMB director during President George W. Bush's second term. During his time at OMB, the federal budget deficit fell by 35% in just one year. Toomey is a brilliant man, though I'm not thrilled with his record as president of the Club for Growth, the fiscally conservative 527 group that often does more harm than good by interfering in Republican primaries and damaging the eventual winner.

PELOSI'S PICKS: THE LEFT-WING LACKIES

In picking Reps. Jim Clyburn, Chris Van Hollen and Xavier Becerra (CA) for the joint committe, the ex-Speaker was clearly rewarding some of her most loyal toadies. Clyburn was House Majority Whip, the person tasked with shoring up votes for controversial pieces of legislation, when Democrats were in charge from 2007 to 2011. After the American people made their voices heard in 2010, the Democrats created the new post of "Assistant Democratic Leader" so that they could avoid having to demote Clyburn, the highest-ranking black member of Congress, from a leadership post. Van Hollen, a tenacious pol with a history of saying stupid things, chaired the Democratic Congressional Campaign Committee from 2007 to 2011. Becerra, a former chairman of the Congressional Hispanic Caucus, is currently Vice-Chair of the House Democratic Caucus.

I'd like to add to this column, but I'm very tired. Perhaps I'll write more later. Good night, y'all.

Shoddy Journalism at its ... well, not "Worst," but Pretty Awful

Get a load of this Reuters article by Kevin Drawbaugh, Richard Cowan, Donna Smith, Thomas Ferraro and Dave Clarke:

Three Senate Democrats -- Max Baucus, John Kerry and Patty Murray -- were named by Senate Democratic Leader Harry Reid on Tuesday to serve on a 12-member "super committee" being set up to address deficit issues.
Here are facts about the three Democrats, as well as a list of other lawmakers seen by analysts and congressional aides as front-runners for the nine committee slots still to be filled.

I'll stop right there to point out two things: (1) that is the longest by-line I’ve ever seen on a Reuters piece, and (2) when a reporter (or a group of them) purports to offer you "facts" about something, do you really expect that what you're about to read is purely a list of facts? I guess that second thing was actually a question. Anyway, the article describes Max Baucus this way:

A centrist leader known for his ability to work across party lines, Baucus is chairman of the powerful Senate Finance Committee and has urged tax reform. He was a member of the 2010 Bowles-Simpson deficit commission formed by President Barack Obama. Baucus voted against the final Bowles-Simpson proposals because they would have cut benefits for the elderly and veterans and hurt his largely rural home state of Montana by raising gasoline prices. He fought President George W. Bush's push to privatize Social Security and is a critic of a House Republican plan to privatize Medicare for future retirees.

Okay, at the risk of pointing out the obvious, calling someone a "centrist" is an expression of opinion, not a statement of fact. Also, surely one of the five people it took to write this puff piece was aware that "privatize" is a politically-charged term with a loaded connotation. If they wanted to make it clear that Baucus, like most left-wing partisans, opposed The Path to Prosperity and George W. Bush's plan to reform Social Security by allowing individuals to set up personal savings accounts with a portion of their payroll taxes, then why didn't they just say that? Moving on: Drawbaugh, Cowan, Smith, Ferraro & Clarke stuck to the facts on John Kerry, which is to say they didn't say much about him except that he was the unsuccessful 2004 Democratic presidential candidate and currently chairs the Senate Foreign Relations Committee and serves on the Finance Committee. They also write that Sen. Jeff Sessions (R-Ala.) "has had an open mind about closing some tax loopholes." Complimentary, to be sure, but again, an opinion. Later on, they said that balancing the budget without raising taxes "a key Republican goal and one that most budget experts say cannot be met without devastating budget cuts." It's technically not an opinion if your stating that somebody else said something or weighed in on an issue, but there's too many relative terms in that sentence. What do the authors consider "raising taxes"? Who qualifies as a budget expert? And "devastating budget cuts" is too ambiguous a phrase to use unless you're directly quoting someone.

The piece really portrayed House Majority Leader Eric Cantor, a Virginia Republican, in a negative light, saying he lived “up to his reputation as an aggressive partisan unlikely to compromise.” Whether or not someone has a reputation and what that reputation is are matters of fact, but any good journalist knows it should be up to the reader(s) to decide whether the person lives up to that reputation. Finally, while not mentioning The Path to Prosperity by name, the article called the brainchild of House Budget Committee chairman Paul Ryan "a plan to slash Medicare costs and benefits." That's misleading if not utterly false (though it is technically a fact). What Ryan's plan actually does is slash costs without cutting benefits. It's one of the few criticisms I have of the Path to Prosperity: the plan makes no changes to Medicare until 2022. If we actually did "slash benefits," then it would be a lot easier to save the program from bankruptcy.

I'll address the prospective members of the joint committee in a future article. For now, I just wanted to express disdain for this lousy piece of drivel that barely qualifies as journalism and express my heartfelt gall that it took five people to write this crap.

WHAT?!?

One of the key elements of the Budget Control Act of 2011 is the so-called "Super-Congress," a 12-member congressional committee, made up equally of Republicans and Democrats from each chamber, tasked with finding a $1.5 trillion in budget savings on top of the spending reductions already enacted. Senate Majority Leader Harry Reid, Senate Minority Leader Mitch McConnell, House Speaker John Boehner and House Minority Leader Nancy Pelosi each get to select three members from their respective chambers to serve on the committee. Reid announced his picks yesterday, and Boehner and McConnell came out with their selections earlier today. I'll post a critique of the committee's prospective membership once all twelve individuals have been selected, but today something was revealed that I just had to blog about right away.

Perhaps no one seemed a more obvious choice for one of the three slots to be filled by House Republicans than Rep. Paul Ryan (R–WI), chairman of the House Budget Committee and the principal author of the GOP’S "Path to Prosperity." Many expected Boehner to tap the seven-term Wisconsin lawmaker, and some even called Ryan "a natural choice" to co-chair the joint committee. Yet today, when the Speaker revealed his three appointments for the super committee, Ryan's name was conspicuously absent from the list. Alana Goodman, writing for Commentary, asks:

Why no Paul Ryan? It’s hard to believe he wouldn’t have been one of Boehner’s first choices, so could it be Ryan wasn’t interested in the position?

Goodman offered her own well-developed answer, but she only needed to look at Paul Ryan's official web site to solve the mystery. The congressman released a statement today in which he said that he had asked the Speaker not to consider him for the Joint Committee. His reasoning was that "only the Budget Committee can write legislation to reform the budget process." That’s true, but it's somewhat of a shock that one of the smartest guys on the Hill would not want to participate in an endeavor where his intellect and logical acumen will be sorely needed.

Democrats Fall Short in Wisconsin Recall Effort

Click here to read Sean Trende's excellent write-up on the results of yesterday's recall elections in Wisconsin.
Dan Cantanese also reported on the story for POLITICO.

Five Left-Wing Myths About the Economy

The recent debate over the debt ceiling and fiscal issues in general provided ample opportunities for politicians and pundits alike to flood the airwaves/blogosphere/print media with their rhetoric. A few relied on objectively verifiable facts to bolster/support their arguments, but most stuck to their trusty talking points. I thought this would be as good a time as any to list, analyze and debunk some of the most salient (and, when believed, dangerous) falsehoods I've seen/heard propagated repeatedly.

1. The Bush tax cuts are the largest contributor to our deficit/debt.

I'm not sure where this one has its roots or when the Left first started chanting it, but it's demonstrably false. The number I keep hearing cited as the "cost" of the "Bush tax cuts" is $1.6 trillion. Simply put, that was the initial number used by the Bush Administration (!) when it pitched its proposal to a skeptical Congress and the American public. Before I go any further, it's important to recognize that there were actually two rounds of "Bush tax cuts," one enacted in 2001 (EGTRRA) and another in 2003 (JGTRRA). After the first round of tax cuts, which primarily benifitted middle- and lower-income Americans, was enacted in 2001, the CBO issued a report stating that the Economic Growth & Tax Relief Reconciliation Act of 2001 ("EGTRRA") would "reduce surpluses by a total of almost $1.4 trillion from 2001 to 2011." (In the same report, it projected that real GDP would grow at average annual rate of 3.2% for 2003 through 2011. Nominal GDP was projected to grow by an average of 5.3% annually during the same period.)

Then came the devastating attacks of September 11, 2001, which were quickly followed by a rash of corporate scandals and the federal government's ill-conceived response to them (Sarbanes–Oxley). The combined effects of all these events were a prolonged recession and sluggish recovery. Of course, the CBO had not predicted any of this, so when it issued its Cost Estimate for the Jobs & Growth Tax Relief Reconciliation Act of 2003 ("JGTRRA"), many proponents of the new tax law (including yours truly) received it with a few more grains of salt. (To tell you the truth, I didn't even read the damn thing until I sat down to write this article.)

In its May 2003 report, the CBO projected that JGTRRA "would increase deficits by about $350 billion" through Fiscal Year 2013. The bulk of that $350 billion was the anticipated reduction in revenues, but some $39 billion would result from "outlays for refundable tax credits" and something called the "Temporary State Fiscal Relief Fund."

So, what actually ended up happening? Well, the deficit for FY2003 (which we were nearly eight months into when JGTRRA was enacted) came in at $377.6 billion. It peaked the following year at $412.7 billion, then started to come down. This is where the argument that the Bush tax cuts created huge deficits and added over a trillion dollars to our National Debt starts to break down. We all know that Congress and the president spent like drunken sailors during the last decade, and yet the deficit dropped sharply (from $412.7 billion for FY2004 to $160.7 billion in 2007, a 61% reduction in just three years). The manifest explanation is that revenues increased at a faster-than-expected rate. As I explain here, total budget receipts shot up 44% (from a low of $1.78 trillion in 2003 to nearly $2.6 trillion in 2007) after the second round of tax cuts. By comparison, total receipts under the old tax rate structure maxed out at $2.03 trillion in 2000, then plummeted because of the recession.

It's impossible to know what would have happened had the tax code gone unchanged, but it's clear that the original "estimate" of what the tax cuts would "cost" should not be cited as empirical data or anything other than what it was: an estimate based on projections that turned out to be wrong. As the CBO itself now admits:

In January 2001, CBO's baseline projections showed a cumulative surplus of $5.6 trillion for the 2002-2011 period. The actual results have differed from those projections because of subsequent policy changes, economic developments that differed from CBO's forecast, and other factors. As a result, the federal government actually ran deficits from 2002 through 2010 and will incur a deficit in 2011 as well. The cumulative deficit over the 10-year period will amount to $6.2 trillion, CBO estimates—a swing of $11.8 trillion from the January 2001 projections.

What is clear is that the federal government ended up collecting vastly more revenue after JGTRRA and EGTRRA were enacted (an average of $2.3 trillion per annum from FY04 through FY08) than it was before (an average of $1.6 trillion per annum from FY94 through FY00). Even adjusted for inflation, that's a BIG difference. Remarkably, some people are so obtuse as to not even acknowledge this when you lay it out for them in the simplest terms possible.

So, if EGTRRA and JGTRRA aren't the largest contributors to our staggering National Debt, then what is? Certainly the War on Terror stands out as the single largest budget-buster of the last decade. Add up all the expenditures on Operation Enduring Freedom and Operation Iraqi Freedom, the cost of veteran benefits for those who had not served prior to 2001, the newly-created Department of Homeland Security, and the additional billions spent on intelligence/counterintelligence after 9/11, and you'll come up with a lot more than $1.6 trillion. Yet, there are other factors worth mentioning here. As Kevin D. Williamson wrote for National Review Online in April:

The Department of Health and Human Services will see more than $900 billion in outlays in FY2011. About $83 billion of that is discretionary spending on things like the Centers for Disease Control. Almost all of the rest is Medicare and Medicaid — the two programs that President Obama has vowed to shield from substantial reform of the sort envisioned by Rep. Paul Ryan. The other big driver of spending, as the president himself acknowledged yesterday, is Social Security, meaningful reform of which he also promises to resist.

2. Spending cuts will have a devastating effect on the economy.

This is a favorite old saw of the Left, and it's been repeated ad nauseum ever since Obama took office and, along with a willing Democratic Congress, kicked federal spending into hyperdrive. I'll refrain from a lengthy critique of Keynesian economics for the time being and stick to a brief rebuttal of this ridiculous argument. First, I must once again point out that it's crucial to distinguish between actual reductions in government spending and reductions in the growth of planned spending. (The latter are often referred to as "reductions in the baseline.") It is a very rare occurrence when total federal spending actually drops from one fiscal year to the next. That happened in 2010 (for the first time in 45 years), but only because we spent so G*d***n much in FY2009. However, when we actually spend less on certain programs/services, it's fair to call the decreases in spending on specific items real spending "cuts."

With that in mind, the most significant federal spending cuts in the last 60 years took place in the 1990s, the early 1980s and the mid-1960s. You'll notice that none of those dates coincides with the beginning of a recession. In fact, the spending cuts in the '60s and '90s took place amid historic economic boom periods that continued for years after the effects of the cuts were felt, if they were even "felt." The country was already in a deep recession when President Reagan took office and persuaded a divided Congress to slash the federal budget in nearly every department, and the economy was no worse for the wear. The last time a recession in this country was precipitated by deep spending cuts was 1945, when World War II ended and government spending appropriately cratered. (To give you an idea of how big the crater was, total outlays dropped from $92.7 billion for FY45, which at that time ended on June 30, to less than $30 billion for FY48.)

Let's pause here for a moment to note what exactly a "recession" is. Traditionally, we have recognized a "recession" in the U.S. as two or more consecutive quarters of economic contraction (meaning a decline in real GDP). Defining when a particular recession begins and ends has proven to be a much more controversial matter. The National Bureau of Economic Research (NBER) has become somewhat of an unofficial authority on the subject; it defines a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real gross domestic product (GDP), real income, employment, industrial production, and wholesale-retail sales." The definition of GDP is much less disputed. Simply put, our gross domestic product (GDP) is the sum total of all final goods and services produced in the U.S. during a given year. Government spending is part of GDP. So, it's technically possible for a recession to occur just because government spending drops. History reveals, however, that such an occurrence is very rare and usually coincides with the end of a war, which is actually what happened in 1945.

On paper, the Recession of 1945 looked to be a mild one. It lasted only eight months, and while GDP declined sharply, the unemployment rate (as it was then calculated) for 1945 ended up at only 5.2% or, as it’s now called, “full employment.” Getting back to the present, this bogus argument that even the mildest spending cuts are a bad idea given the current state of our economy has been advanced by so many individuals that it hardly seems worth it to cite anyone. However, the old saw appears to have spread beyond opinion commentators and politicians to previously objective journalists. Lex Haris of CNNMoney, for example, recently crowed that cutting spending by $111 billion in 2012 (the “Cut” in Republicans' “Cut, cap and balance” plan) was “just too much, too soon without risking another recession.” (For the record, the CBO currently projects outlays of $3.655 trillion for FY2012, so $111 billion would amount to a whopping 3% haircut off the baseline.) If our economy can't handle a 3% reduction in something that constitutes less than 25% of GDP without risking another recession, then we're in real trouble.

Though instances of true fiscal restraint by Washington are few and far between, history shows that austerity in the form of belt-tightening (which is necessary now more than ever) should not hurt our economy very much, if at all. Besides, it's not like the reckless spending of the past three years has created a robust economic recovery.

3. Many wealthy Americans want to pay higher taxes.

Of all the outrageous myths being pushed by the Left in America today, this one is probably the most laughable. It's impossible to know what's going on in someone else's mind, and I can't speak for the likes of Warren Buffett or George Soros, but the reality is that, no matter what these tycoons say, if they really wanted to pay more in taxes, then they would send bigger checks to the government. The fact that they don't is all the proof anyone should need that these proponents of higher taxes on "the rich" do not want to pay more. There is no law (and I've looked) that bars taxpayers from voluntarily paying the government more than they owe in federal taxes, nor is there any statute forbidding the U.S. Treasury from keeping the surplusage if one of these magnanimous fat cats decides to give Uncle Sam a bonus, with express indication that (s)he is aware of it and does not want a refund. In fact, the federal government welcomes contributions to reduce our staggering debt. You can make a contribution online at Pay.gov or write a check to the Bureau of the Public Debt. (Make sure to notate in the memo section that it's "a Gift to reduce the Debt Held by the Public.") These are the facts.

4. Free trade costs American jobs.

Unfortunately, the Left is not alone in propagating this one. There has been a disturbing strain of protectionism spreading throughout the country of late, fueled by a number factors (not the least of which is the understandable anxiety over our economic conditions and the bleak forecast of things to come). Sadly, many on the Right have now jumped on the anti-free trade bandwagon. Some, like Lou Dobbs, have been beating the protectionist drums for a while now. Others, such as a number of Tea Party activists, joined the march more recently.

So, what's the rap on free trade? Well, for starters, there's this growing notion that it's made America less competitive globally. Apparently, more and more Americans are rejecting the general principle that free trade agreements prove mutually beneficial to the countries that enter into them. Sara Murray and Douglas Belkin of the Wall Street Journal report:

The rising hostility seems a delayed reaction to a slow economic recovery and high unemployment. To many, China has replaced Wall Street as the villain du jour. Opposition to trade is fueled by reports that many U.S. multinational companies, sitting on huge stockpiles of cash, are reluctant to invest in the U.S. and are looking overseas, and by the fact that China has pulled out of the global slump much faster than the U.S.

John Wallis, 50 years old, blames imports for the 2001 death of his 12-employee business that made small electronic prototypes for the telecommunications industry and the subsequent loss of his Chicago-area home. "Trade is fine and dandy in a scenario where everybody wins," Mr. Wallis said. But the U.S. isn't winning, he said. Mr. Wallis now works in programming and design for an international manufacturer in Rhode Island, but doubts he'll ever be able to repay debts from his old business. "Financially we've never recovered," he said.

That whiny Chicagan's sob story about losing his business reminded me of something. It took me more than a week to find it (which is why this is the first post on my blog in a week), but I finally came across an old edition of National Review with an article I remember reading more than three years ago. The whole thing is really a pretty good read, but here's a little preview: According to Standard Textile’s Gary Heiman ("the upstart competition in his old-line industry"), the notion that the U.S. has lost jobs due to trade with other countries “is nonsense.” Trade takes the blame when people lose their jobs because it’s an “easy target,” Heiman says, absolving shortsighted industry leaders and labor unions when companies run into financial trouble and jobs are eliminated. Rather than take responsibility for failing to adapt, he says, “it’s much easier to say, ‘It’s their fault. It’s China’s fault. The Chinese are taking away our jobs,’ when in fact, that’s just not the case.”

Another riff against free trade is that it sucks capital out of the U.S. and into foreign markets, throwing our current account balance out of whack, but the numbers suggest something different. At year’s end 2009, the value of foreign investments in the United States exceeded the value of U.S. investments abroad by some $2.4 trillion, according to the Bureau of Economic Analysis. Granted, we have a huge trade deficit, but we don't seem to have a problem attracting foreign capital; the BEA's preliminary numbers show that, in 2010, net investment in the U.S. continued to increase.

Getting back to the big lie, protectionists want people to think that free trade agreements make it easier for American companies to "ship jobs overseas." There's no truth to this whatsoever. Last fall, I spotted an opinion piece in the New York Times by none other than Robert Lighthizer. Yes, that Robert Lighthizer. The former deputy U.S. trade representative pointed out that, during the last decade, our trade deficit in manufactured goods was “about $4.3 trillion,” and “the country lost some 5.6 million manufacturing jobs.” But don’t confuse correlation with causation. The fact of the matter is that free trade agreements make American goods cheaper overseas, increasing the market for our goods abroad. Ask any devout protectionist to explain how NAFTA and other free trade agreements are responsible for the loss of American jobs in any sector, and all but the most erudite scholars are quickly exposed as hacks.

Back when he was alive, William F. Buckley, Jr. took note of the increasingly conspicuous protectionist rhetoric in America and exposed its absurdity in an online article that doubled as a defense of free trade from a nationalist standpoint (something very few men could pull off). More than two centuries ago, “Adam Smith was resoundingly correct in laying down the law that both parties benefit,” Buckley wrote, “giving us the benefit of exposure to Lou Dobbs, and the freedom to reject his counsel.”

5. We were heading into a depression in 2009, and President Obama's policies saved the economy.

The second half of this conjunction has been bandied about considerably less of late, probably because enough Democrats and their surrogates in the media have realized that Americans don't appreciate being told how the president "saved" the economy when everything seems to be getting worse. Yet, many left-wing apparatchiks are still singing the first half of this tired old song. (As this video shows, some of the people who like to say we were headed for another Great Depression when Obama took office don't know what they're talking about.)

Again, it's impossible to know what would have happened if Obama and the Democrats had taken a hands-off approach in 2009 or if the GOP's alternative stimulus plan had been enacted, but the sobering reality remains: the economy has only gotten worse on President Obama's watch. The unemployment rate for January of 2009 was 7.8%, a far cry from Depression-era levels. That same month, Christina Romer (incoming chair of the president's Council of Economic Advisers) and Jared Bernstein (Joe Biden's "top economic adviser") released this report on the pending stimulus legislation. The report contained this now-infamous graph: Wow. Boy, was that wrong. Then the CBO came out and projected the unemployment rate would climb to 8.3% in 2009 and peak at 9% in 2010. In February, CBO Director Doug Elmendorf sent a letter to Sen. Judd Gregg (R-NH). According to the CBO's revised analysis, the unemployment rate would hit 9% in 2009 without the stimulus, which at that point had already passed both houses of Congress but had yet to be signed into law by President Obama. With the stimulus, the CBO projected the unemployment rate for 2009 would be anywhere from 7.7 to 8.5 percent.

By October of 2009, the unemployment rate had shot up to 10.1%. That may sound like a very steep climb in a very short period of time, and it is. Look, the easiest part of this myth to debunk is the notion that Obama's agenda prevented the economy from getting worse. One thing that economists on the Left and Right agree on is that the Troubled Asset Relief Program (TARP), enacted under President George W. Bush and expanded by the Obama Administration, acctually did more to save us from "a second Great Depression" than any other government action since 2008. As Danielle Kurtzleben of U.S. News & World Report reported a few months ago:

In propping up major financial institutions, TARP provided relief from the immediate problem of frozen credit markets, according to James Gattuso, a senior fellow in regulatory policy at the Heritage Foundation, a conservative think tank: "It served a critical function in terms of providing liquidity at a time that it was needed to counter a panic in financial markets," he says. Doug Elliott, a fellow at the liberal Brookings Institution, believes that without government support of financial institutions, the financial crisis would have taken on far greater proportions. "The recession we had would have been substantially worse; millions of people would have been out of work," he says.

(In fairness, Kurtzleben's article also explained why critics of TARP say it was a flop. Follow this link to read the entire article.) Obama may have voted for TARP, but it was not his brainchild. He also played no integral role in crafting the legislation that created the program, so if you think that TARP rescued the economy, then don't give Obama any credit for averting a worse recession.

I don't expect to convince anybody who thinks otherwise that we were not headed for another Great Depression in 2009. What I can do is present the data and offer my own analysis to explain why I think what I think. If anyone feels my arguments lack cogency or thinks they could be stronger, then please comment below. I realize the preceding list is by no means exhaustive; there is an abundance of left-wing mendacity out there, and it's not just limited to economics. When I sat down to decide what "myths" I would attack in this piece, I purposefully omitted such oft-repeated claims as "the rich aren't paying their fair share of taxes" because those are technically opinions, and "fair" is a relative term. Also, I realize that I could have developed my arguments more thoroughly/extensively, but I didn't want this column's length to discourage people from reading it and actually taking its content to heart. Thank you for reading it, and I look forward to hearing the response, if there is one.