Fed Cuts by 0.5 Point

Today the Federal Reserve Board cut its federal funds rate by 0.5 point reports Martin Crutsinger of the AP.

The Fed announced Tuesday that it was reducing its target for the federal funds rate, the interest that banks charge each other, from 5.25 percent to 4.75 percent. The half-point reduction was double the quarter-point move that many economists had been expecting.

Stocks soared and the 30-year Treasury Bond slumped.  So is this good news or bad news?

Probably what it means is this.  The Fed is taking action to ease the liquidity crisis.

The question is: what about the solvency crisis?  How many financial institutions are going to be in good shape 6 months, or a year from now.

The simple answer is: we don’t know. 

Raise Taxes Why Don't You

Rep. Charles Rangel (D-NY) is now chairman of the House Ways and Means Committee.  He’s the guy who gets to change our federal taxes.  

According to Robert Novak he’s a man on a mission.

Rangel wants to make history. His staff is hard at work on an audacious plan that over the next decade would redistribute up to a trillion dollars in American income through the tax system.

He wants to raise tax rates on upper-income Americans and raise the top capital-gains tax rate up to 35 percent.

Tactically, the Democrats have done a good job over the 12 years of the Republican Congress.  With their combative rhetoric they have prevented any real reform of the welfare state. All their public-sector jobs and pensions pretty well escaped the axe.

And now that people are tired of the Republicans, Democrats have a chance to advance the frontiers of the welfare state once again.

It could be a bumpy ride, because chances are that Democrats will get into power for the first time in half a century with the economy in the tank. Don’t believe it?  Here’s the how the economy looked to the Democrats when they entered the White House on a change in party starting in 1961:

• 1961, Kennedy: economy growing nicely after 1958 recession.
• 1977, Carter: economy growing nicely after 1974 recession.
• 1993, Clinton: economy growing nicely after 1990 recession. 

Compare that with the Republican experience:

• 1969, Nixon: recession in 1969-70.
• 1981, Reagan: 1981-82 recession.
• 2001, Bush: recession in 2001.

So if Charlie Rangel thinks he’s going to raise tax rates in 2009, he’d better think again, especially if the economy starts tanking any time soon.  If Democrats start piling on new taxes and spending it could really screw up the economy, just like in 1933 to 1939.

Only back in the 1930s, nobody blamed the Democrats for their economic incompetence.  But this time it could be different.  And it could turn the American people against paying taxes just so that Democrats and their supporters could live on easy street at the expense of working America.

Politics and the Classroom

Good news from Iran, reported by Amir Taheri.  The Iranian revolutionary regime has decided to purge the universities. 

President Mahmoud Ahmadinejad has promised to "cleanse" the Iranian educational system of what he calls "the corrupt influence of the infidel"

This the second time that the Iranian regime has decided to purge the education system.  The first time was in 1980 when:

A committee created to "cleanse" academia purged more than 6,000 professors and lecturers, virtually destroying Iranian academia.

That will really help Iran in its program to take over the world.

Politics and education don’t go well together.  In an article about “safe lecturing” Robert Weissberg writes about the danger of offending minority students at the university with controversial course content.

an African-American student who mangles "blacks disproportionately commit more violent crimes" into "blacks are criminals" can demand that the university itself plus sundry student-based organization rectify this "offense."...  [C]rimes against racial sensibilities requires action. This is the raison d’etre for these injustice monitors and justifies salaries. To compound matters, certified victims have diplomatic immunity and can never be punished for false accusations or foolish hyper-sensitivity.

The result is that professors tend to purge anything that might be offensive from their course material.  You can’t say that the rule in the constitution counting slaves as “three-fifths” of a person for congressional apportionment was actually a device to limit the representation of slave states.  Some black kid heard somewhere that the three-fifths rule meant that the founders were racist.

Of course, the same thing happens with the feminists and K-12 education.  In their rage to force girls to be free they have utterly transformed the education system so that nothing can happen that offends their ideas of gender neutrality.

So the result is that in education today, nothing happens. Teachers can’t teach without looking over their shoulder, and content is dumbed down to make sure that the teacher doesn’t get into trouble.

It’s probably been ever thus.  But that doesn’t make it right.

Call Me Mary not Maricruz

What is happening out there, with respect to the mortgage meltdown and immigration?  Maybe a total meltdown according to a commenter at HousingBubbleBlog:

Maybe OT, but let me know what you think. I’m a high school English teacher in OC [Orange County, CA]. Some very interesting things are afoot in Anaheim public schools.

The AP in charge of scheduling says our freshmen enrollment is down 100 kids, about 5% off normal. We’ve been reading about decreasing enrollment coming through the elementary schools, but didn’t expect it to hit us so quickly.

In five classes, I SHOULD have 100-110 kids.

I have 71. Any of you familiar with OC public schools knows how low that number is.

Also, I’ve got many, many more white and asian students than ever before. I *think* what’s happening is that many of those families have downsized into our lower-middle class neighborhood.

On top of that, the recently immigrated Mexican kids seem to have *poof* vanished. (Note: I have no knowledge of their status, illegal or legal.) ALL my students, for the first time in my career, have insisted that I eschew their given names and use an anglicized version (e.g. Mary for Maricruz, Judy for Yuridia, Tommy for Tomas, etc.) instead. No one is speaking Spanish inside or outside the classroom.

This leads me to believe either (a) all the enforcement ICE has been doing is scaring the crap out of the (legal and illegal) immigrant community and/or b) people are ditching Cali for greener pastures.

Or maybe the housing meltdown has melted away all the construction jobs and the construction workers have gone back to Mexico. 

Putting the MoveOn.orgers on the Couch

All animals live by killing.  That’s the awful truth that we spend our lives avoiding.  Even your average cow does nothing but kill innocent living grasses all day.

Some people believe that they know a higher truth than the instinctive need to live and the instinctive desire to protect your own.  They believe that we can break the “cycle of violence.”  And that leads them away from loyalty to their community or nation.  As William Hawkins puts it:

Only an intense belief in a "higher truth" can lead people to turn against their own country during a war. The flowering of this strain of liberal doctrine goes back to the decades following the Napoleonic Wars.

Actually it goes back before that.  Christianity views all selfish action—let alone violent action—in a questionable light. And we can regard the tension between church and state in the Christian era as a healthy response to the problematic both of untrammeled selfishness and unrestrained unselfishness.

So the liberal reaction to 9/11 was predictable.

Liberals warned against "overreacting" to the September 11, 2001, terrorist attacks. Katrina vanden Heuvel, in the misnomered journal the Nation, argued, "The most promising and effective way to halt terrorism lies in bringing those responsible to justice through nonmilitary actions in cooperation with the global community and within the framework of domestic and international law."

Maybe so.  But the 20th century’s foremost theorist of thuggery, V.I. Lenin, had another idea.  He called people like Heuvel “useful idiots.”  And after 9/11 the useful idiots knew what to do.

The patriotic unity felt by Americans in all walks of life when the Pentagon and World Trade Center were attacked by al Qaeda had to be torn asunder as quickly as possible to conform with liberal-left ideology. Thus, groups like Moveon.org cranked up their partisan hate speech.

For the left believes not in the nation state but in “class division and hyper-individuality.”  It’s a curious combination.  People are only allowed to form communities based on class.  For the rest, we are individuals.

But sometimes reality has a way of breaking through.

The French philosopher Ernest Renan started out as a classical liberal but after his country lost its 1870 war with Prussia became an eloquent exponent of nationalism. He argued, "A nation is a living principle, a spiritual principle. ... To have common glories in the past, a common will in the present, to have done great things together, the will to do the like again — such are the essential conditions for the making of a people."

There’s nothing like having foreign soldiers in your country to concentrate the mind.

In Iraq, of course, there are foreign soldiers not just from the US, but from Saudi Arabia, Syria, and Iran.  And that is not counting the non-state actors like Al Qaeda.

No, history is not over, Virginia.  Not for a while.  Not in your lifetime.

Fighting for Kids in Utah

The Utah Education Association has got $3 million from the National Education Association to fight school choice in Utah.  As Ken Blackwell reports it:

The head of Utah’s largest teachers’ union promised an "ugly, mean and expensive" campaign, and the National Education Association has given her $3 million to wage it.

They are fighting against the Parents Choice in Education Act, passed by the Utah legislature and signed by Governor Jon Huntsman earlier this year.

But the pro-kid forces are spoiling for the fight.

In fact, grassroots groups like Parents for Choice in Education and child-centered school choice advocates like Dr. Patrick Byrne of Overstock.com are on the front line of this fight. They seem to have the will and fire power necessary to win this battle.

Giving parents choice in education.  It’s something well worth fighting for.

How Economic Crackpots Devoured American Politics

Conservatives and Republicans keep hoping that liberals will actually admit that supply-side economics works, that is that low tax rates and limited government is the best prescription for prosperity.

But liberals just don’t want to accept of grace and love, spurning the offer of friendship made by Sir Walter Blunt to Harry Percy in Henry IV Part One.

In fact Jonathan Chait, Senior Editor of The New Republic has just published a book rejecting the whole supply-side deal.  It’s called The Big Con: The True Story of How Washington Got Hoodwinked and Hijacked by Crackpot Economics, and it argues that Arthur Laffer (of the curve) was a lightweight, Jude Wanniski (of the Wall Street Journal edit page) was a crackpot, and George Gilder (of Wealth and Poverty) was a blind (and misogynistic) enthusiast.

Well, enough with pulling our punches, let’s get Chait’s own words from anexcept to The Big Con from The New Republic.

American politics has been hijacked by a tiny coterie of right-wing economic extremists, some of them ideological zealots, others merely greedy, a few of them possibly insane.

To add to the fun, Chait and Grover Norquist, president of Americans for Tax Reform, have been trading barbs in the online New Republic:

• Chait
• Norquist
• Chait
• Norquist
• Chait

 Of course, Chait is right.  Arthur Laffer is no Milton Friedman; Jude Wanniski was weird, and George Gilder enjoys bucking the liberal consensus.  And it’s true that the advocates for supply-side economics oversold their product.  That’s what advocates usually do.

The big question is whether liberals are ready to concede that they ought to back off, just a little,their philosophy of governance by program and subsidy and endlessly mucking around with the tax code. 

That is really the argument of supply-side economics.  It says that you can use government to reward your supporters and punish your opponents: politics as usual.  Boys will be boys.

But you ought to understand that when you erect confiscatory tax rates and huge subsidies that you distort the economy and reduce the prosperity of ordinary Americans.

You ought to confront, for instance, that when you send huge amounts of money to the poor it reduces their work effort and it devastates their families.  And that is not just an economic issue.  It is a moral issue.

And it is true.  Supply-side economics devoured American Politics—at least as liberals had known it.