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Volume 13, Issue 7: February 15, 2011
MyGovCost 2.0: The Government Cost Calculator
Can the Fed Really Create Jobs?
Rethinking Cold War–Style Defense Spending
Reassessing Reagan's Foreign Policy
1) MyGovCost 2.0: The Government Cost Calculator
What will Washington's spending binge cost you? The Government Cost Calculator at MyGovCost.org enables you to estimate your lifetime federal tax liability—based on your age, level of schooling, and current income. It also calculates what your future tax contributions could earn if you invested those dollars and earned the average long-term yield of the U.S. stock market. Visitors can also see how federal spending in twenty different program categories affects their tax liabilities.
The Government Cost Calculator at MyGovCost.org has just been upgraded to reflect new spending data from the Congressional Budget Office and the Office of Management and Budget. Users of the Government Cost Calculator can also print their results, receive updates, and share the information with others.
"Most people have a hard time understanding what the true value of their tax dollars would be if invested and saved for the future," says economist and Independent Institute Research Fellow Emily Skarbek, director of the Center on Entrepreneurial Innovation. "MyGovCost.org's latest version is an easy-to-use tool that provides an understanding of how government spending directly impacts you."
MyGovCost.org
Press Release: "The Independent Institute Launches Version 2.0 of the Government Cost Calculator" (2/7/11)
2) Can the Fed Really Create Jobs?
Last week Congressman Ron Paul, the new Chairman of the House Subcommittee on Domestic Monetary Policy and Technology, sponsored a hearing entitled, "Can Monetary Policy Really Create Jobs?" Independent Institute Senior Fellow Richard Vedder testified at the hearing and assessed the ability for activist monetary policies to create sustainable jobs.
Vedder delivered a concise history of Federal Reserve policies from the Fed's inception to today. He noted that monetary policies that foster expectations of price stability have been associated with periods of robust employment. This was observed "in the 1920s, 1950s, most of the 1960s, and to a somewhat lesser extent, in the period from about 1985 to 2000," he said. But those policies were not attempts to reduce unemployment by artificially lowering interest rates—a policy strategy the Fed has pursued in recent years without success, he argued.
What kind of monetary policies and institutions should we adopt to increase sustainable job creation? "To restore monetary stability, ideally we would ultimately consider retreating from fractional reserve banking where even moderate declines in confidence potentially lead to devastating consequences," Vedder said. "But more immediately, we need to limit monetary growth, and given human weaknesses, probably the best way to do that ultimately is by having a gold standard or some variant that removes or dramatically reduces the discretion of central bankers.... In the short run, however, you can start holding the Fed's feet to the fire; perhaps, for starters, you should establish price stability as the single monetary mandate for the Fed, repeal the Humphrey-Hawkins Act, and privatize or abolish Fannie and Freddie."
Congressional Testimony: Richard K. Vedder at the House Subcommittee on Domestic Monetary Policy and Technology (2/9/11)
Out of Work: Unemployment and Government in Twentieth-Century America, by Richard K. Vedder and Lowell E. Gallaway
3) Rethinking Cold War–Style Defense Spending
Defense Secretary Robert Gates should be commended for his fiscal restraint—compared to some his more profligate predecessors. But his recent announcement, a disclosure that the Pentagon found "at least $100 billion in savings," should not be confused with a proposal to cut defense spending in absolute terms, as Gates himself noted. Defense analyst and Independent Institute Senior Fellow Charles Peña explains in an op-ed for the Christian Science Monitor:
"The plan Gates has touted amounts to defense spending legerdemain to find $100 billion worth of efficiency savings to maintain the defense budget at or near its current level over the course of five years. That's merely a promise to stop budget growth by the end of the next five years—a promise not to spend an additional $100 billion dollars."
To make meaningful and appropriate reductions in defense spending, the United States should rethink its strategy of forward-deployed military forces around the world—a relic of the Cold War that is poorly suited to meet current defense needs. An honest review of U.S. defense strategy would prompt policymakers to slash the lavish subsidies spent to defend wealthy allies, such as the European Union and Japan. Significant savings would result from the withdrawal of the 80,000 U.S. troops stationed in Europe and the 70,000 U.S. troops in East Asia. Refocusing U.S. priorities so that they serve true national security requirements—rather than broad global security—would enable the U.S. to cut defense spending $100 billion or more across five years, Peña concludes.
"Pentagon Cuts Don't Cut It," by Charles Peña (2/2/11)
Winning the Un-War: A New Strategy for the War on Terrorism, Charles Peña�
Nuclear Nonproliferation in the Post-9/11 World, by Charles Peña
4) Reassessing Reagan's Foreign Policy
The Ronald Reagan centenary offered a fitting occasion to reassess the foreign policy of the 40th U.S. President. According to Independent Institute Senior Fellow Ivan Eland, author of Recarving Rushmore: Ranking the Presidents on Peace, Prosperity, and Liberty, Reagan's achievements in the realm of international relations are highly overrated.
On the plus side, Reagan signed the Intermediate Nuclear Force Treaty, which eliminated nuclear weapons in Europe. Conservatives often claim the Gipper won the Cold War, but if his challenges to Soviet power were effective, then Reagan shares a victory with every president since Truman. However, perhaps a more effective approach than decades of confrontation wherever Moscow's influence surfaced would have been "to let the Soviets take over and pay to administer economic basket cases, such as Vietnam, Angola, and Afghanistan," Eland writes in his latest op-ed.
On the minus side, Reagan's foreign policies came at enormous cost—including a 1983 accident during the NATO Able Archer exercise that could have triggered a nuclear war. Moreover, Reagan's stance on terrorism was "a disaster," Eland writes. "He helped make new enemies that made use of anti-U.S. terror (Libya and al-Qaeda), retreated in the face of terrorists (Hezbollah in Lebanon), aided a state sponsor of terrorism (Iraq), and appeased a state sponsor of terrorism by trying the bribe of illegal weapons sales (Iran)." Reagan's Iran-Contra scandal was the worst in U.S. history because, writes Eland, "the scheme circumvented Congress's primary function under the Constitution—the power to decide funding for U.S. government activities."
"Tear Down This Wall (of Fame): Reagan's Overrated Foreign Policy," by Ivan Eland (2/9/11)
"TSA Thugs," by Mary Theroux (2/14/11)
"Obama's Budget: The Greek Model of Public Finance," by Randall Holcombe (2/14/11)
"Gabriel Roth Debunks Government Transit Subsidies," by David Theroux (2/12/11)
"High-Speed Rail and the Poverty of Obamanomics," by William Shughart (2/11/11)
"Blogger, Post at Your Peril," by Robert Higgs (2/8/11)
From MyGovCost News & Blog:
"Obama's Bailout of Fannie Mae and Freddie Mac: $153 Billion and Counting," by David Theroux (2/12/11)
"How to Cut the 2011 Federal Budget by 2/3 and Have a $1.3 Trillion Surplus," by David Theroux (2/11/11)
"Binging on Washington Spending: 'Jack Daniels Explains the Deficit,'" by David Theroux (2/9/11)
"The CBO's Latest Budget Projections," by Craig Eyermann (2/8/11)�