Peter G. Peterson is founder of the Blackstone Group and founding president of The Concord Coalition, which is a bi-partisan citizen’s group organized in 1992 for the purpose of building a constituency of fiscal responsibility.
In this New York Times book review, Financial Times and Weely Standard columnist Christopher Caldwell reviews Mr. Peterson’s new book entitled “Running on Empty” in which Mr. Peterson lays out the case that politicians in both political parties have abandoned any pretense of fashioning responsible fiscal policy. That has resulted in the highly-leveraged state of various government entitlement programs such as Social Security and Medicare:

How we reached this pass can be stated simply: Republicans undertax, while Democrats overspend. For decades, Mr. Peterson writes, Democrats ”labored patiently to purge America of its traditional aversion to deficits,” bribing voters with jobs and social-service programs that the country could not afford. Starting with the Emergency Recovery Tax Act of 1981, though, Republicans have learned that tax cuts and write-offs can be used as bribes in exactly the same way. Dependent on deficit spending, both parties have blown through every institutional constraint erected against reckless tax cuts and benefit expansions, from the Gramm-Rudman deficit ceilings of the 1980’s to the Budget Enforcement Act of 1990. And they have blown the Social Security-tax surpluses meant to offset predictable future shortfalls.

And although he blames both political parties for this fiscal debacle, Mr. Peterson takes dead aim at the Bush Administration:

While Mr. Peterson blames both parties for conniving against fiscal common sense, he puts the present administration in a class of its own. George W. Bush has discarded traditional Republican qualms against big government, replacing the old Democratic model of tax-and-spend with his own model of borrow-and-spend. Thanks to three unaffordable tax cuts and an unfinanced Medicare drug benefit that will eventually cost $2 trillion a decade, Mr. Peterson writes, ”this administration and the Republican Congress have presided over the biggest, most reckless deterioration of America’s finances in history.”

But even more interesting is why politicians continue to ignore these clear warning signs of fiscal disaster? Mr. Peterson has a theory:

”[O]ur national leaders are providing the American people with precisely what they want.” Debt, he notes, is particularly alluring in periods of partisan intransigence. If the two sides cannot compromise on priorities, each can take what it wants while dumping the bill on future generations. Americans used to understand this temptation and flee it. Thomas Jefferson warned: ”To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.”

Mr. Peterson’s book highlights the watershed nature of this year’s Presidential election. The Bush Administration has done precious little during its first four years to merit the support of voters who yearn for prudent fiscal reform of government entitlement programs. On the other hand, the Democrats have nominated a candidate with an extraordinarily weak record on the same issues.
Is Peterson correct that most voters simply do not care anymore about fiscal responsibility of government? Or has the public simply given in to the dark side of using debt to pay for our government’s lack of fiscal responsibility? Interesting questions with no easy answers.
And to get a good idea of just how far the Bush Administration has strayed from sound economic policy, Tyler Cowen over at Marginal Revolution outlines what he believes the Bush Administration’s economic platform should be.

Before you dismiss this season’s Presidential race as an easy one between a profligate Democrat and a fiscally-restrained Republican, review this W. James Antle III piece from the The Foundation for Economic Education:

. . .over the past few years the Republicans have enjoyed unified control over both houses of Congress and the White House. Instead of a renaissance of spending restraint and economic freedom, government has grown at a prodigious clip.
According to the Cato Institute, total federal outlays are scheduled to rise by 29 percent between 2001 and 2005 while discretionary nondefense spending in particular will climb 36 percent over this same period. During President Bush’s first term, we have seen three of the five largest annual increases in real discretionary spending of the past 40 years.

This is not to suggest that Mr. Kerry would enact policies to reduce this trend if he is elected President. However, it is important to remember when you hear the inevitable drumbeat from the Republicans that Mr. Bush and the Republican-controlled Congress are acting in a fiscally responsible manner.
Hat tip to the good folks at Southern Appeal for the link to this article.

Pejman Yousefzadeh, who was noted in this earlier post regarding his work on the benefits of futures markets in predicting terrorist attacks, has this interesting analysis of how the Electoral College vote is stacking up in regard to the upcoming Presidential election based on the current status of future markets. Check it out.

Bob Formaini is a Senior Economist and Public Policy Advisor at the Federal Reserve Bank of Dallas. In this TCS Central column, Mr. Formaini addresses a fundamental absurdity of the income tax system in the United States:

You might be wondering why, this year, my return has become something that, as I gaze on its small novel length, reads as if it were written in some foreign language. It’s simple. My wife and I are dealing with the death of her mom and an inheritance that involves two trusts, dozens of stocks, and three limited partnerships. I can understand the W2s okay. But the heart of my return is completely alien to me. I have no idea what it says or whether it is accurate. We have placed our fate in the hands of a very competent tax accountant, but even though his name is on the return along with ours, I remain somewhat uneasy signing a document that I can’t understand.

Then, Mr. Formaini addresses the real heart of the matter:

There is something wrong with a tax code that requires so much paperwork, so many hours of preparation, so much frustration with the endless record keeping that the law demands. And that’s just for individuals. The burdens on business are staggering. Even so, our return no doubt is, for our accountant, a baby sort of thing. I doubt that he even worked up a mild sweat. Compared with the returns he does for a living — a living created by Congress and their inability to have a simple tax code and for which I certainly do not begrudge him — our return is probably a laugher. And yet, to a guy like me with four college degrees including a PhD, it might as well be written in Klingonese. I have become, along with most of my fellow citizens, just another helpless dunce who can’t deal with the complexities that our wonderful politicians yearly serve up.

Which leads Mr. Formaini to a very provocative thought regarding this ludricrous situation that we have allowed our leaders to place us in:

The upside, assuming there is one, of being a helpless dunce is that one can no longer be held responsible. Unless Congress, “simplifying the tax laws” once more, decides that the old legal doctrine of mens rea is no longer the standard for criminal behavior. If that happens, were all potentially in some very serious trouble.

Amen.

Check out this interesting TCS Central piece by San Diego attorney and former Harvard history professor Michael Rosen that compares this year’s Presidential campaign with that of 1904. Good stuff.

The Wall Street Journal’s ($) Holman Jenkins weighs in today with this column regarding the ideas regarding the psychology of leading of Stanley Renshon, who is a psychologist and political scientist at the City University of New York Graduate Center.
Mr. Renshon has written a new book set for publication in September called “In His Father’s Shadow,” in which Mr. Renshon addresses George W Bush’s emergence from an “erratic commitment to conventional success” in early adulthood to an “embrace of responsibility and sustained success that would have been little expected from his performance until then.” Mr. Renshon is also the author of a number of other works on the psychology of American presidents, inlcuding the award-winning account of Bill Clinton’s first term, “High Hopes.”
Mr. Renshon first notes that the public’s pre-election evaluation of Mr. Bush’s leadership style overlooked an important part of his personality. As Mr. Jenkins notes:

He came to office promising to be a “uniter not a divider”; his reputation in the traditionally weak Texas governor’s office was that of a consensus seeker. Those who expected more of the same in the White House have been pleasantly (or unpleasantly) surprised because, says Mr. Renshon, they overlooked an aspect of Mr. Bush’s character: His rare capacity to “stand apart,” even from friends and supporters, and withstand abuse and criticism when he believes a policy course is the right one.

He also ended up with a political character noticeably different from that of his loved and admired papa, who famously derided the “vision thing” and sought compromise with every critic. “Mr. Bush is a president who is comfortable taking controversial stands and sticking with them,” Mr. Renshon writes. “He is able to do so through sometimes severe storms of public anxiety and critics’ cries to change course.”

Using Mr. Renshon’s analysis, Mr. Jenkins speculates on the probable course of Mr. Kerry’s leadership style if elected president:

GOP harping on Mr. Kerry’s “liberal” record would seem to imply he has philosophical commitments that he’s prepared to sacrifice for. The label “Massachusetts liberal” perhaps points closer to the truth. Unlike Mr. Bush, he built his life and self-image around elective office, and in a state and party where survival required adhering to certain unfashionable and arguably obsolescing norms. He’s risk averse where Mr. Bush is a risk taker.
His leadership style is strongly at odds with Mr. Bush’s — and one that Democrats are hoping Americans are in the mood for right now. That’s the real message of his constant invoking of Vietnam. That’s the real strength of his campaign: I was daring and adventurous then, and had my fill. Witness my career ever since: cautious, “nuanced,” utterly lacking in the “go for it” certainty of my opponent.
Contrary to much campaign rhetoric, the difference probably wouldn’t be felt in the war on terror, to which both parties are now committed. It’s on domestic issues that history has trapped Democrats in the role of reactionary party, reflexively defending a status quo.
On Social Security, Medicare, education, you name it: Republicans at least grapple realistically with the need to reshape these programs to keep them solvent and delivering value in the 21st century. Democrats don’t. A lot of voters would be pleasantly (or unpleasantly) surprised by Mr. Kerry if he turned out to be a politician willing to court controversy and criticism to change that.

I do not agree with Mr. Jenkins’ assessment that the Republican Party is “at least grappling” with the issues relating to reshaping the above-cited governmental programs. On the contrary, the only reason that this Presidential race is likely to be a close one is because the electorate senses that this Republican Administration and Republican-controlled Congress have largely failed to take any constructive action in addressing these issues.
Nevertheless, Mr. Jenkins is correct that the success of either a second Bush Administration term or a Kerry Presidency will likely depend on the willingness of the leader to take risks and to adhere to unpopular positions that will lead to a sound goal. Bush has proven that he has the capacity to do that in regard to his foreign policy against the Islamic fascists. Does Kerry have that attribute?
Read the entire article.

In this American Spectator piece, New York Sun columnist William Tucker relates to his past interview with famed Houston plaintiffs’ attorney John O’Quinn in interpreting fellow trial lawyer and Democratic Party vice-presidential candidate John Edwards‘ world view:

When it came to defining his core vision, here’s what Edwards said:

“Tonight, as we celebrate in this hall, somewhere in America, a mother sits at the kitchen table. She can’t sleep because she’s worried she can’t pay her bills. She’s working hard trying to pay her rent, trying to feed her kids, but she just can’t catch up.
It didn’t use to be that way in her house. Her husband was called up in the Guard. Now he’s been in Iraq for over a year. They thought he was going to come home last month, but now he’s got to stay longer.
She thinks she’s alone. But tonight in this hall and in your homes, you know what? She’s got a lot of friends.
We want her to know that we hear her…
So, when you return home some night, you might pass a mother on her way to work the late shift, you tell her: Hope is on the way.”

Let’s look at what’s going on here. First and foremost, we’ve got a lonely woman. There’s a passing reference to Iraq and her husband, but that’s basically to get him out of the house and out of the picture. (Remember, these are the same people who brought you the welfare system, also designed to get men out of the house and out of the picture.)
She has no friends, no relatives, no religion, no community, nothing to rely on. Her husband? Well, he doesn’t even seem to write anymore. And so she sits by herself at the kitchen table, waiting for someone to come along.
What a beautiful vision of America — a nation of lonely, isolated women, in dire need of help, abandoned by everyone, waiting for some handsome trial lawyer to come knocking on their door.
Hope is on the way.

Read the entire piece. Hat tip to Michael over at Southern Appeal for the link.

Count the Wall Street Journal’s ($) George Melloan as skeptical that the 9/11 Commission’s recommendation of a new cabinet department headed by a “National Intelligence Director” is a good idea:

The late William E. Simon, Treasury secretary in the Nixon and Ford administrations, once described to a small group of Journal editors the origin of what would later become the U.S. Department of Energy.
As deputy to Treasury Secretary George Shultz in 1973, he had been sitting in for his boss at a Nixon cabinet meeting and offered a report on the energy “crisis.” Mr. Nixon chewed on his pencil for a moment and then, inspired by a thought, told Mr. Simon that he was putting him in charge of a White House energy policy office, a job that later earned him the title of “energy czar.” In 1977, Congress and Jimmy Carter created a full-blown cabinet-level department to try to deal with the still-unsolved “energy crisis.” Today, the DOE has wide-ranging powers and a budget of roughly $20 billion.
The interesting thing about this story is that it was a clumsy attempt to correct a problem the government itself had created. The “energy crisis” had been caused primarily by the price controls President Nixon adopted in 1971 as a response to inflation, also of the government’s own making. That’s one way government grows, or metastasizes if you will. It adds new functions to try to correct the problems of existing functions. This new cell growth is always popular inside the Beltway, because it creates jobs and opportunities.

Mr. Melloan notes that the Commission’s recommendation of bringing all intelligence under one master and coordinating the exchange of information sounds like a good idea on the surface, but is it really?:

A new department, Homeland Security, was created under Secretary Tom Ridge only two years ago. It already has spent $70 billion and wants $40 billion more next fiscal year, notes Forbes magazine. The DHS is hard at work, organizing better security for nuclear plants, arranging point-of-origin certification of shipboard containers, asking banks to monitor transfers from places like Saudi Arabia. But Forbes still rates these risks at the “yellow” level and gives a high-risk “red” to the threat of computer network hacking.

Mr. Melloan then points out that more government bureaucracy may be the problem, not the solution:

It wasn’t that the U.S. had no defenses [before the 9/11 attacks]. It has many thousands of law enforcement officers at all levels of government and as many as 20,000 people in the CIA alone. But all of these people, many of them very able, were trapped in a morass of government bureaucracy.

Some of the restrictions are mind-boggling. Most big cities in the U.S. have “sanctuary” ordinances, pressed on them by “civil rights” groups, which prohibit city employees, especially the police, from checking with the Immigration and Naturalization Service on the immigration status of anyone who runs afoul of the law. As a result, thousands of illegal aliens are at large in the U.S. and encounter no trouble with the INS even if they are picked up for theft or drunken driving. And of course, airport screeners, under the same “civil rights” pressures, are barred from “profiling” passengers and thus, in the words of one critic, must accost a “blue haired 70-year-old woman with an aluminum walker” and nine other average travelers for every able-bodied 30-year-old Mideast male.
The INS also has little coordination with the overseas consular offices of the State Department, which approve visas for visitors to the U.S. The State bureaucracy is responding to homeland security fears by tightening up on visa grants, but with no evident system for distinguishing between possible terrorists and innocent students, business travelers and the like. The CIA’s failure to insert spies into al Qaeda was a major shortcoming. One wonders what it does with its estimated $40 billion budget.
Congress is itself fragmented, politically polarized and mired in the oversight methods of yesteryear, and so is not up to the requirements for legislating a more streamlined and efficient defense against terrorism. For example, Secretary Ridge has had to testify to 80 committees and subcommittees since taking office. What they do with all that duplicative information and how he finds time to do anything else is a mystery.

Read on.

Awhile back, Professor Ribstein and I discussed (here, here. and here) the unique nature of current vitriolic criticism of President Bush.
Today, the always insightful Virginia Postrel weighs in with one possible reason for the intensity of the Bush-bashing:

When I was in New York a few weeks ago, a friend in the magazine business told me he thinks the ferocious Bush hating that he sees in New York is a way of calming the haters’ fears of terrorism. It’s not rational, but it’s psychologically plausible–blame the cause you can control, at least indirectly through elections, rather than the threats you have no control over.
I thought of that insight today when I glanced at Maureen Dowd’s column and read this sentence, “Maybe it’s because George Bush is relaxing at his ranch down there (again) while Osama is planning a big attack up here (again).”
That is the voice of a petulant child, angry that she has a tummy ache while Daddy is at work or Mommy is visiting a friend, or the voice of a grouchy wife angry that she has a migraine while her husband is out coaching the kids’ baseball team. You’re upset that you’re in pain (we’ve all been there), so you get mad at someone whose presence wouldn’t make the pain any better.

Professor Ribstein is not buying Ms. Postrel’s speculation, and contends that an underlying condescending nature is the root of the Bush bashing.

This Washington Post article does a good job of analyzing the financial support for John Kerry’s Presidential campaign. Mr. Kerry’s supporters are made up of several disparate group, which WaPo summarizes as follows:

? Lawyers, especially trial lawyers, are the engine of the Kerry fundraising operation. Lawyers and law firms have given more money to Kerry, $12 million, than any other sector. One out of four of Kerry’s big-dollar fundraisers is a lawyer, and one out of 10 is an attorney for plaintiffs in personal injury, medical malpractice or other lawsuits seeking damages.
? Much of the seed money for the Kerry presidential campaign was collected through donors to his Senate campaigns, including lobbyists with interests before two of the Senate committees on which Kerry serves: the Finance Committee and the Commerce, Science and Transportation Committee.
? Fueling Kerry’s money surge havebeen credit card collections on the Internet, a technique pioneered by his onetime rival Howard Dean in 2003 but used with even greater success this year by the presumptive Democratic nominee. Kerry has been raising more than $10 million a month on the Internet, for a total of more than $65 million, compared with $8.7 million for Bush in the past year, according to officials with both campaigns.
? Kerry appears to have succeeded in creating a new class of donors for the Democratic Party. Dozens of his fundraisers are relative neophytes in big-money politics and have not been active in making their own contributions. A review of federal campaign contributions of the big Kerry fundraisers shows that one-third of them have not made more than $20,000 in campaign contributions since 1990.
? Kerry’s donor base is overwhelmingly bicoastal. Almost half of the big-money fundraisers hail from either California or New York. Seventeen of the fundraisers are from Kerry’s home of Massachusetts. Kerry has substantially outraised Bush in California and New York, $39.7 million to $28.5 million; Bush has crushed the Democrat in Florida and Texas, $36 million to $8 million.

WaPo also compares the fundraising base of Mr. Kerry with that of President Bush’s:

Overall, Kerry’s fundraising base is much different from Bush’s. Kerry draws heavily on professionals with advanced degrees, academics, scientists and technology workers, in contrast to Bush’s strong base in the business community. Bush has close to 100 major fundraisers — Pioneers or Rangers, as the president’s campaign calls them — from the agribusiness, energy and power, construction, and transportation industries, compared with no more than half a dozen for Kerry.
According to PoliticalMoneyLine, five times as many corporate CEOs, presidents and chairmen gave to Bush as Kerry: 17,770 to 3,393. Conversely, the number of professors who gave to Kerry is 11 times the number of those who gave to Bush, 3,508 to 322. Actors split 212 for Kerry, 12 for Bush; authors, 110 to 3; librarians, 223 to 1; journalists, 93 to 1; and social workers, 415 to 32.