Trade, stimulus, jobs

Friday, June 5, 2009

One Bush agenda item that President Obama is determined to pick up and complete: free trade deals with Panama, Columbia and South Korea. The White House is mounting a full-court press with Congress, making the same arguments Bush did: Failure to ratify the Panama and Columbia agreements risks alienating two key allies in Latin America and bolsters Venezuela's efforts to undermine the U.S. in the area. Similarly, leaving the pact with South Korea dangling could damage that alliance at a time when Seoul's help is essential in containing a nuclear armed North Korea.

-- Kiplinger

Half of stimulus goes to unions: Columnist Ben Stein has taken a close look at President Barack Obama's proposed $820 billion stimulus package and made some eye-opening discoveries.

Writing for and, Stein calculates that:

* The House of Representatives debated the bill for eight hours, or roughly $102 billion per hour.

* Only 10 percent of the stimulus funds would be spent in 2009.

* Almost half of the $820 billion would end up in the pockets of Democratic-controlled unions, such as the Service Employees International Union and federal, state and municipal employee unions.

* At 680 pages long, neither Obama nor any member of the House had enough time to read the entire bill before the House voted.

* The $820 billion would be enough to give every unemployed American $75,000.

Says Stein: "There has been pork-barrel politics since there has been politics, but the scale of this pork is beyond what had ever been imagined before -- and no one can be sure it will actually do much stimulation. ... This has been a punch in the solar plexus to the kind of responsible, far-seeing, mature government processes that are needed to protect America."

One of President Obama's campaign pledges was to "create or save" more than 3 million jobs in his first two years in office -- not all that ambitious, considering the economy has created 1.5 million jobs annually since 1980.

Now Christina Romer, chairwoman of the White House Council of Economic Advisers, says don't expect any new jobs this year -- and that unemployment could reach 9.5 percent, up from the current 8.9 percent, even though she expects the economy to grow 3.5 percent in the fourth quarter.

We understand that jobs are a lagging, not leading, indicator of economic strength. And this time will be no different.

Yet in the near term we're actually more optimistic than the White House. Not because we think what's been sold to the American people as "stimulus" is any great shakes, but because private-sector economic activity and global stock markets appear to have hit bottom and are ready to resume growth later this year.

-- IBD

Going nuclear: Nuclear power has already had a major impact on [reducing U.S. greenhouse-gas] emissions. Had America's nuclear reactors not been operating, about 48 million tons of sulfur dioxide, 19 million tons of nitrogen oxides and 8.7 trillion tons of carbon dioxide would have been emitted since 1995. As we've noted before, the U.S. would already be in compliance with the Kyoto Protocol without breaking a sweat if every plant on order or planned at the time of Three Mile Island had been built.

"Every year these reactors alone spare the atmosphere from the equivalent of nearly all auto emissions in America. Yet we have not broken ground on a single nuclear plant in over 30 years." U.S. sailors have sailed aboard nuclear submarines and aircraft carriers for more than five decades without ill effects or accidents. No American sailor, past or present glows in the dark.

-- IBD

Radical tax reform: Thirty years ago, the average top personal income tax rate in industrialized nations was more than 65 percent, and the average corporate tax rate was nearly 50 percent. Double taxation of dividends and capital gains was ubiquitous, and most nations taxed income a third time with either death taxes or wealth taxes-or sometimes even both. Not surprisingly, economic stagnation was common, and policy debates focused on how to divide a shrinking pie. Today the world of fiscal policy is profoundly different. Beginning with "radical" reforms implemented by Margaret Thatcher and Ronald Reagan, governments across the globe have been racing to lower tax rates on productive behavior. In a growing number of nations, the debate now is focused on fundamental tax reform.

Twenty years ago, the Soviet empire was a threat, both militarily and ideologically, to the free world. Today, the Soviet Union no longer exists and 18 nations to emerge from communism's collapse now have single-rate systems-accounting for a clear majority of the world's 25 flat tax jurisdictions. This tax revolution signifies the spread of market-oriented policy and demonstrates that it is possible to have an income tax without following Marx's dictate of "From each according to his ability, to each according to his needs."

-- Daniel J. Mitchell, cofounder and chairman, Center for Freedom & Prosperity Foundation

Gary Rust is the chairman of Rust Communications.

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