Tuesday, September 18, 2012

Presidents Don't Run the Economy

So often when he addresses crowds, Bill Clinton officiates at a marriage of mendacity and excitable ignorance. This was plainly the case in his acclaimed address to the Democratic National Convention in Charlotte. The speech was very well received, and my suspicion is that President Obama’s post-convention poll bounce was primarily attributable to Clinton’s performance.

"No president, not me or any of my predecessors, could have repaired all the damage in just four years," Clinton claimed, absolving Obama of blame for America’s economic misery since he took office. This is a recitation of the Democratic plaint that Obama “inherited” a mess (notwithstanding Obama’s tripling of an already-massive budget deficit), and it perpetuates the leftist fantasy that the president runs the economy.

Clinton’s image of the president as a repairman, who really needs to get in there with hammer and tongs, maybe holding some nails in his teeth, and tinker with every aspect of the economy, is especially galling because he knows this is nonsense. He knows it because the successes of his own presidency – from his declaration that “the era of big government is over” to Welfare Reform, tax cuts and beyond – came from getting government out of the way and letting the private sector thrive.

To be certain, a president can cripple or ruin an economy, as Obama’s term in office has aptly demonstrated, but the extent to which the economy thrives is inversely proportionate to the amount of meddling an administration does.

Indeed, the “damage” Obama encountered, in the form of the 2008 market crash, was thirty years in the making, and largely attributable to government meddling. President Jimmy Carter mandated mortgages for people who could not afford them in the form of Community Reinvestment Act loans, and Clinton’s own HUD Secretary, now Governor of New York, Andrew Cuomo, threatened lenders with charges of racism and discrimination if they did not extend CRA mortgages.

Admittedly, this was exacerbated by investment whizzes who bundled those risky mortgages into securities, then sold them around the world to bankers and fund managers who should have known better. But how does a president “repair” greed and bad judgment? By signing Dodd-Frank, which codifies that such greedy parties will perpetually be bailed out by the government, if their losses are big enough?

The current “damage” afflicting America is the largest debt in history and unfunded net liabilities exceeding the GDP of the planet. Even if we accept the notion that a president runs the economy, would there be anyone less qualified than Obama, who has added almost $6 trillion to that debt in less than one term, to “repair” it?

Yet there was Clinton, the presumed personification of an economically successful presidency, casting out theories and numbers he knows to be at odds with how he attained that status. The sight and sound shook one’s faith in democracy. The cutaways to the DNC crowd were unhelpful, also – silly people nodding along to Clinton’s statistics as though they'd checked the numbers themselves and could confirm his veracity, blithely unaware of their absurd appearance (it is axiomatic that you can wear a giant foam cowboy hat in public, or be a policy expert – but not both).

“Arithmetic,” Clinton crowed to whoop-whoop approval, was the secret to Democrats’ success. A more accurate reading of history, including Clinton’s own tenure, is that Democrats are successful when they abandon their impulse to central planning and let people get to work.

Economist Thomas Sowell has documented how, from the administration of Warren G. Harding to the present, downturns have been less severe and recoveries more robust when presidents resist the urge to intervene. To wit, whenever politicians get agitated to “do something,” they almost always do it wrong.

Even so, Clinton and other Democrats insist Obama must be re-elected because there is, “more work to do.” What “work” would that be, exactly? More taxes? More spending? More regulations, to go with the tens of thousands of pages Obama has added to the Federal Register?

Command economies don’t work, and demand economies cannot be commanded. America, at least for now, remains the largest market on the planet. That means hundreds of millions of people making independent choices, each pursuing happiness in their own way. Politicians and voters must set aside the conceit that such a complex mechanism can be manipulated by a lone individual. No one person, not even a president, runs the economy.

Theo Caldwell, an international investor and broadcaster, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at theo@theocaldwell.com


Friday, September 14, 2012

Canadians Should Root for Romney

TORONTO – Many Canadians are predisposed to dislike Mitt Romney. He is a Republican, and robotic even by those standards. In this land of center-left sensibilities, such party affiliation and corporate mien often rankle. But I would urge my Canadian compatriots to reconsider. Romney is running for a foreign office, not joining your curling team, and if he can unseat President Barack Obama, the Great White North will be greater for it.

Whatever one’s views on North American free trade, or capitalism in general, it remains immutable that Canada and the United States share the largest bilateral exchange of goods and services in history. Even those Canadians who instinctively gravitate toward Democratic candidates should wish for Canada to gain the greatest possible benefit from that arrangement.

Canada is, essentially, an exporter nation, largely because we have lots of natural stuff – rocks and trees and skies and seas – and we send it to places that do not. This is a function of how and where the Good Lord placed us, and it is not necessarily so that a country is entering terminal stages of Dutch Disease simply because resources represent a major portion of its economy. Indeed, with strong capital markets, technology, and other industries, Canada has achieved a pleasant equilibrium, all things considered.

But, perched as we are beside the largest consumer market in the world, we have a particular sensitivity, and advantage, when it comes to international trade. The US consumer represents 70 percent of that country’s economy, and 20 percent of the global economy. Canada benefits most when America is open to its products, and has the money to pay for them. Emotionally satisfying as it may be for Canadians to see the Loonie at parity or soaring above the American dollar, a stronger US currency maximizes Canada’s strengths.

Obama inherited a massive budget deficit, which he proceeded to triple. At no point in his projected budget plan does he propose to balance the budget. Those ongoing deficits will be financed in large measure by an increased money supply. This augurs continued weakness in the US dollar, making it harder for Americans to afford Canadian goods.

Though the Romney plan takes its sweet time in doing so, it does balance the budget eventually, and even some measure of government spending restraint will result in a stronger US greenback.

As a matter of basic policy, Romney is, like most Republicans, a free-market, global trader. Obama, meanwhile, like most Democrats, is beholden to American union interests, and thereby eager to hose foreign workers whenever possible.

Fundamental to Canada-US trade is, of course, energy. The first of Romney’s five principal campaign pledges is that North America will be energy independent by 2020. That means opening the Keystone XL pipeline from Alberta to Texas, which Obama has blocked.

There are those who loudly insist our energy must come from wind, solar, and their own sense of self-satisfaction. But even the shrillest of Birkenstocked, Begley-ite, “No Blood for Oil” protesters must, on some level, be practical. Canada’s oil will be tapped and sold. Would they prefer it go to our imperfect ally, the United States, or to a demonstrably malevolent power like the People’s Republic of China? As to their reasonable environmental concerns, would they rather Canadian oil be shipped by the safest possible means – pipeline – or by far riskier sea tankers? And when that black gold reaches its market, which nation’s environmental regulations – China’s or the United States’ – will be most likely to preserve and protect the planet our Green-minded friends so long to cuddle?

Canadians are perennially and properly concerned about national sovereignty. If you do not know much about the US Department of Homeland Security, fear not – it knows plenty about you. They’re the folks who, thanks to the acquiescence of the Canadian government, can put the kibosh on you flying from Canada to any location in the world if your flight plan covers even one inch of American airspace. The existence and conduct of the DHS is a bipartisan disgrace, and a global problem.

Republican President George W. Bush created the department and hung its Stalinist moniker over the door. Obama made it worse, severely clamping down on domestic security, demanding that other countries do the same if they wished to have access to the United States, and appointing as his DHS Secretary the appallingly ignorant Janet Napolitano, who came into office professing that the 9/11 hijackers came through Canada.

Romney remains largely a blank slate on the issue of security overreach. But, as a free-trader, he at least understands the danger of blocking borders and thickening barriers between businesses.

Finally, if nothing else, consider this: If Obama is re-elected and his socialization of American health care becomes complete, where will Canadians go for treatment when waiting lines at home grow too long?

Counterintuitive though it may seem, Canadians should be rooting for Mitt Romney.

Theo Caldwell, an international investor and broadcaster, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at theo@theocaldwell.com

Thursday, September 13, 2012

On Taxes, Obama and Romney Obfuscate

Democrats are fond of saying that Republicans rely too heavily on tax cuts in their economic proposals. In reality, Mitt Romney’s tax plan is not only tepid and incomplete, but he has neglected to expose the true destructiveness of Democratic policies.

Absent an effective Republican rejoinder, President Barack Obama gleefully mocks GOP tax prescriptions, including in his address to the Democratic National Convention: “Take two tax cuts, roll back some regulations, and call us in the mornin’,” the president quipped in that painfully pandering, g-droppin’ manner he sometimes deploys, to the admiration of Harry Reid.

Obama characterizes tax cuts as contrary to his concept of “citizenship” and detrimental to progress in fields from medicine to technology and beyond. It is emblematic of the modern Democratic party, and the Left in general, that a person can rise through its ranks, even to the office of president, while remaining ignorant of the demonstrable truth that lower tax rates often lead to economic growth and higher tax revenues.

A particularly nonsensical Democratic talking point is that lower taxes – “the Bush tax cuts,” in their misnomer – are “what got us into this mess in the first place.” But in the four years after 2003, when the second phase of Bush’s tax plan was enacted, tax revenues increased by over $700 billion. Romney’s refusal to point this out explains, in part, why he persistently trails in the polls.

And it is not as though the country’s tax burden is light. America has the highest corporate taxes in the world, while claiming a greater share of personal income than its largest trading partner, Canada – and Obama seeks to push these rates even higher.

Beyond the rates, the Byzantine nature of the US tax system, including its worldwide reporting requirements, creates an expensive and inhospitable economic environment and disadvantages Americans overseas. Romney has offered a vague plan to eliminate the double-taxation of international US businesses but, without specifics, even Joe Biden is comfortable disdaining it.

“It’s called a territorial tax,” the vice president scoffed to the DNC, with apparent confusion. This evinces an unfortunate American myopia, whereby something that is commonplace in the rest of the world is held up and marveled at like a glowing rock that fell from space. It is particularly galling in this case because the “territorial tax” Biden considers so otherworldly was, in fact, a key recommendation of Obama’s own Jobs Council.

This same blinkered perception applies to the tax burden on US citizens living abroad. A record number of Americans renounced their citizenship last year and, if Obama is re-elected and enacts his massive tax hikes and expanded reporting requirements, the number of renunciations will increase. Invariably, such news brings howls of “good riddance” from “These-Colors-Don’t-Run” nincompoops who do not understand that their erstwhile compatriots are not dodging their taxes, but escaping anomalous, extra-territorial demands placed on them by the IRS. As a consequence of this institutional stance that US citizens remain government property, wherever they reside in the world, Americans living abroad enjoy less financial freedom than ex-pats of the People’s Republic of China.

The solution is simple: American individuals and businesses should be required to file and pay taxes only in their country of residence – just like the citizens of almost every other nation on Earth. For all his economic acumen, Romney has not made this straightforward proposal.

But perhaps most troubling is Romney’s inability to translate Obama’s tax policy as it pertains to jobs.

Two-thirds of American companies are small businesses, known as Chapter-S corporations, and they pay taxes at the same rates as individuals. This is not widely understood by the general public, or by politicians – indeed, a senior Congressional Republican recently told me that half the House Budget Committee was unaware of this fact. Moreover, these small businesses create 70 percent of America’s new jobs.

So, when Obama talks of raising taxes on “millionaires and billionaires” or, equally absurdly, “those who can afford it,” he is saying he will raise taxes on small business. Whether he realizes this or not, one cannot know (and those who still suppose Obama’s brilliance precludes him making such rudimentary mistakes should consider the tax burden of the average Navy “corpse-man,” whether he is stationed overseas or in one of the 57 states). Either way, Obama’s plan cripples job-creation.

If Romney wants to win this election, he must clarify his tax proposals – while exposing Obama’s, as well.


Sunday, September 2, 2012

Police State Conventions

TAMPA, FL – “They know better than we do.”

This was the comment of a Republican attendee, surveying the massive security surrounding us at the GOP Convention in Tampa. What began as a mumbled musing about the militarization of an American metropolis settled into a calm self-assurance that, whatever the authorities had chosen to do, that must be the right thing.

“Maybe there’s a threat they haven’t told us about,” he continued. “They can’t tell us everything.” He chuckled at me, expecting I would concur.

“I don’t assume they know better than we do,” I replied. “Perhaps they know less.”

As he squinted at me, he wasn’t angry or disputatious. While I cannot claim to know his exact thoughts, he just seemed confused. It had not occurred to him, apparently, that there is such a thing as too much security.

This column has often made the case that many of our liberal friends simply do not know that there is another side to policy issues. So ensconced are they among like-thinkers and fellow-travelers that they never hear a differing opinion. Some senior, experienced, ostensibly erudite leftists are utterly buffaloed by the demonstrable notion that lower tax rates commonly lead to higher tax revenues, for just one example.

But this interaction with my Republican interlocutor served as a reminder that we have blinkered associates on our side as well, albeit on different issues. For generations, conservatives have been proudly pro-police, strong on defense, and in favor of security. But the time has come to re-think that admirable respect for the rule of law and recognize that not everything done or decided by someone with a badge and a gun is right, or necessary, or even consistent with the principles of a free country. It is also perfectly consistent to favor a strong military while questioning Pentagon policies.

This was alluded to by Kentucky Sen. Rand Paul who, in his speech to the Convention, averred, “Republicans must acknowledge that not every dollar spent on the military is necessary or well spent.”

To bolster Paul’s point, a military that promoted Fort Hood terrorist Nidal Hasan to the rank of Major and, after Hasan murdered 13 people, saw Army Chief of Staff Gen. George Casey opine that, “it would be an even greater tragedy if our diversity becomes a casualty here” is not one that can claim to have unimpeachable judgment. Further, a Navy “green fleet” that requires alternative fuels costing 26 dollars a gallon is not an expenditure of unquestionable sagacity.

So Republicans who purport to be strong on defense, their strength measured in the number of dollars they wish to fling at such nonsense, are missing the solar-powered boat.

Just as there is a distinction between hard work and effective work, there is no guarantee that spending lots of money means those funds will be wisely deployed. While the GOP Convention went off without incident, that does not mean all these silly-bears were necessary. Similarly, if there is a riot at the DNC in Charlotte, that does not mean, ipso facto, that not enough money was spent.

The city of Tampa was reportedly given 50 million dollars in federal funds to keep people safe, but the overlap and Tower of Babel-type communication among municipal, county, state and federal authorities made for a right mess.

One senior Republican found former New Hampshire governor and Bush 41 Chief of Staff John Sununu stranded on the roadside, his ride having been turned back by the all-knowing police presence for violation of some aspect of their Byzantine protocols.

There is some cold, egalitarian comfort to be taken from the fact that even senior public officials are chomped by the mindless maw of the security state. This week, I spoke with former Missouri governor and senator Kit Bond (who, incidentally, assured me he will not agree to be drafted as a replacement for hapless Missouri senate candidate Todd Akin, whom Bond agrees should withdraw from the race) and he lamented that he is routinely molested and undressed at America’s airports, and neither Congressional waivers nor doctor’s notes about his metal implants spare him these ordeals. Either Bond, the septuagenarian, 40-year public servant, is the most patient sleeper cell operative in history, or the system requires reform.

Compare this with the recent London Olympics. Those of us in attendance at the Games encountered annoyances and security overkill, and questionable calls were certainly made (missiles on rooftops, for example), but the sheer mass of machine guns and fatigues, not to mention the grinning deference to police-state tactics, simply did not exist. How interesting that London, with more closed-circuit cameras than any other city and a populace inured to surveillance, was able to accommodate a much larger event with less kerfuffle than the host city where the party of limited government convened.

But the state of affairs on display in Tampa is not the city’s fault, nor Republicans’, and the security imbroglio at the Democratic convention in North Carolina won’t be that party’s fault, either. It is a cultural problem. America has adopted a safety-first mentality, as Mark Steyn observed in his critique of the decision to shut down Day One of the RNC due to the incoming storm. We must be bolder, Steyn aptly asserts. As to, “They know better than we do,” Americans should not think in these terms, and Republicans least of all. This is, however, a bipartisan conundrum.

President George W. Bush should not have created the Department of Homeland Security, much less given it such a Soviet-sounding name, and Barack Obama should have shut it down, not staffed it with nincompoops like DHS Secretary Janet Napolitano (in this way, the breathtakingly ignorant Napolitano is a disgrace to an office that should not exist).

It is worth noting that, having followed Mitt Romney fairly closely since he ran for Massachusetts governor, advocated his inclusion on the ticket in 2008, and having assured anyone who would listen that he would come back for the win in 2012 (notwithstanding our misbegotten notion in late 2011 that Newt would overcome, in spite of himself), I have heard him say precious little about rolling back the nation’s rapidly expanding security apparatus. This is troubling, but hope springs eternal.

Specifically, one hopes that the impulses of the modern police state will be overcome by a President Romney’s apparent decency and sense of fair play. Further to that fair and decent aspect, a word on the rest of the potential First Family: Mrs. Romney is a gem and, as for their boy-band brace of sons, some of whom I got to speak with this week, they are gentlemen.

As to the election itself, there has been and will be such carnage of inkshed in the coming weeks, my humanity permits me to add only this: Mitt Romney will win with 300 or more Electoral College votes (270 are required for victory). This will confound network anchors and liberal pundits who have been parroting that this will be “a close race” and “a base election” and who will muse and mewl late into the evening about how “nobody saw this coming.” But as both a quantitative and a qualitative matter, this race is over.

Romney’s calm, competent presence, complemented by a specialty in fixing colossal messes, makes him the right man for this moment (among those who will be on the ballot, anyway). This is something the nation will sense, apart from politics and ideology, and some measure of this demeanor and poise was evident in Romney’s acceptance speech.

With regard to the numbers, a study of the electoral map shows four or five feasible paths to a Romney victory, starting with winning New Hampshire and retaining or flipping several combinations of states from Florida to Wisconsin. To wit, there are simply more ways for Romney to win than for Obama.

On Election Night, by the time New Mexico is called, we will already know Mitt Romney is the 45th President of the United States. The question then becomes, what will he do to return America to its rightful place as the Land of the Free?

Theo Caldwell, an international investor and broadcaster, has been a member of the New York Stock Exchange, the Chicago Board Options Exchange, the American Stock Exchange, and the Kansas City Board of Trade. He can be reached at theo@theocaldwell.com