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CRNC Research Compendium October 2010

Editor: Brandon Greife, Political Director

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Table of Contents
Democratic Governors Earn Failing Grade for Budgeting! CRNC Polling Update: The House of Representatives! Pelosi and Hoyer Battle Brews As Democrats Move Toward the Center! Pete Rouses Style Sure to Anger Progressives and Conservatives Alike! New Bill Shows Dems Only Serious About Protecting Their Own Jobs! Saving as a Way to Save America! Will Obamas Diminished Political Capital Push Him Toward the Center?! Gallup-ing To the Election Finish Line! Connecticut Senate Candidate McMahon Lays the Smackdown on Government Intervention! Poll: Americans Want Supermajority Requirement for New Entitlements! Report Slams Administrations Lagging Response to Oil Spill! Oil Spill Commission says Obama Administration Not Fully Candid! Forgotten Economic Policies from Brazils Lost Decade! Voting Republican The Cheapest and Most Effective Stimulus! Obama Issues Casting Call Conservatives Need Not Apply! September Jobs Report Shows Slow and Steady Isnt Working! Obamas Foreign Money Scare Tactic Falls Flat!

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Liberal Economists to Obama: More Waste, Fraud, and Abuse Please! High Corporate Tax Rates Threatens Americans Competitiveness in Global Market! Obamas Faith in Fairness Only Reinforces Inequity! Voter Anger of Economy Spells Big Trouble for Democrats! Brooks: Government Strangling on Its Own Self Indulgence! Debunking the Krugman Claim That Government Expansion is a Myth! Fighting Back with Fact Government Spending IS a Problem! Public Sector Pensions: Frankensteins New Monster! This is About YOU: Portman Praises CR Involvement! Poll Shows Democrats Clueless on Top Voter Concerns! Barney Frank Ignores Past Mistake Urges More Partisanship! Obama Should Focus on Equalizing Opportunity Not Results! Obama Approval Rating Plummets Among College Students! History Lesson: How Leaner Governments Equal Fatter Wallets! US Heads Toward Welfare State as Europe Flees Toward Austerity! Dont Be Fooled We Can Do Better Than Robbing From the Rich to Pay the Poor! Americans Go On An Anti-Pork Diet! False Charges of Racism Delay Our Entry Into a Post-Racial World Thu. 10.21! New Polls Show Voters Ready for a Change! Its Not Us Its You. Democrats Take to Blaming Voters for Losses! Doomed to The Wilderness in 2008 GOP Fights Back! The Need To Reform Entitlements Lessons From the French!

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Democrats Lack of Accountability Not Wooing Any Voters! Obama Must Follow the Texas, Not the Tax-Us Model! Economy Continues to Falter in Lead up to Election Day! The Final Push! Republican Gains on Election Day Exactly What the Economy Needs!

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Democratic Governors Earn Failing Grade for Budgeting


Today, the Cato Institute released their Fiscal Policy Report Card on Americas Governors: 2010. The report card uses statistical data to grade the governors on their taxing and spending records. The grades are based on 2008 to the present, a particularly tough economic time as states faced declining tax revenues and yawning budget gaps. Some state leaders responded better than others, managing to keep tax rates low and finding ways to cut spending, to keep the fundamentals strong until growth returns. Many governors didnt escape the recession unscathed, finding themselves unable or unwilling to keep their deficits sustainable. Only four governors received As, while seven governors received Fs. If you compare the two extremes a startling distinction emerges three of the four As were Republicans, and six of the seven Fs were Democrats. The trend would likely run deeper had Governors Chris Christie from New Jersey and Bob McDonnell of Virginia been in office long enough to have received a grade. The report is important because it illuminates the return to true fiscal conservatives among todays Republican leaders. Our nation is in dire fiscal straights. Our $13 trillion deficit hole grows deeper by the day and it will take leaders with some creative and brave plans to be able to dig our way out. One thing we cannot do is spend our way into prosperity or out of debt. Look no further than Illinois, New York or California, whose governors received either Ds or Fs, to see the failure of the big-government, big-spending experiment. If we wish to see America prosper without the burden of European levels of taxation then Washington must make difficult choices on spending cuts and government reform. Fortunately, Republican governors across the nation, from Chris Christie in New Jersey to Tim Pawlenty of Minnesota, are leading the way to defeat the debt. Lets take a look at one Republican success story Bobby Jindal of Louisiana who received one of the four As given by the Cato Institute. During his term, beginning in January 2008, he has repealed income tax increases that were put in place by the Democratic legislature in 2002. He has also pushed through business tax cuts and income tax cuts keeping more money in the pockets of those who earned it. To keep a budget balanced declines in revenue must be met with cuts in spending. In this regard, the governor has proposed a 2011 budget that is 17 percent less than the budget when he took office in 2008.

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The results have been dramatic. The Commission on Streamlining Government has identified $1.5 billion in savings by streamlining the government and eliminating redundancies. He has eliminated thousands of government positions and over 70 unnecessary or wasteful state commissions. Any savings as a result of these projects are on top of $248 million in reductions ordered by Jindal in anticipation of declining tax revenues as a result of the recession. The totality of cuts and reform are the fulfillment of a promise Jindal made earlier. Just like in families and small businesses, state government has to live within its means. That means we will have to reduce government spending to a level we can afford. Raising taxes is not an option, and would be the worst thing we could do in an economic downturn. On the opposite side of the grading spectrum is Democratic Governor Ted Kulongoski of Oregon who received an F under Catos rubric. Since taking office in 2003 Kulongoski has pursued tax increase after tax increase in a desperate effort to cover his big spending ways. In 2003 he signed into law a $544 million tax increase, the largest in decades, despite his state suffering under the nations highest unemployment rate. He has also championed enormous hikes in corporate taxes in 2007, raising the minimum tax from $10 up to $5,000. Apparently none of this was enough. In 2009 Kulongoski continued the trend, signing two new tax hikes that would increase corporate and personal income taxes by $733 million over two years. Sadly, that doesnt even begin to cover it, he also increased taxes on gasoline, hospitals, and small businesses while proposing a sales tax and cigarette tax. The result of all this increased taxation? In 2009 the legislative budget writers needed to fill a $4.4 billion deficit. How could the deficit rise with all of these increased taxes? As the Cascade Policy Institute found, Oregon ranks seventh in total overspending relative to its demographics. State and local governments spend approximately 10.6 percent more than would be expected for a state with Oregons demographics. Kulongoski, like so many Democrats, fell into the trap of taxing-and-spending, which inevitably leads to higher budget deficits. Catos report provides an obvious warning about the dangers of government spending and a clear path to escape our budget woes. We are presented by two choices. And as the Cato report shows they are largely represented by the two parties. We can choose the party that pursues failed economic policies of tax and spend, or we can choose the party that has found its way toward pragmatic, proven methods that will help us prosper.

CRNC Polling Update: The House of Representatives


If the election were held today, Republicans would have a strong chance of winning back the House of Representatives and likely making John Boehner the 61st Speaker of Congress lower body.
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Today, polling shows that 49 Republican candidates are winning in House seats currently held by Democrats. This is 10 seats more than is necessary for the Republicans to regain the 218 votes necessary to reclaim control of the House. States where Republicans are set to make sizable gains in the House are Pennsylvania (6), Ohio (5), Arizona (3), Colorado (3), Florida (3), Illinois (3) and Virginia (3). Now, this post doesnt take account for the few seats (around 5) that Democrats have a chance at flipping, but lets nonetheless quickly go through all 49 Democrat-controlled seats where the Republican candidate is currently beating the Democrat. AL-05: Mo Brooks (R) is beating Steve Raby (D) 48%-37%. AZ-01: Paul Gosar (R) is beating Ann Kirkpatrick (D) 47%-41% AZ-05: David Schwiekert (R) is beating Harry Mitchell (D) 60%-40% AZ-08: Jesse Kelly (R) is beating Gabrielle Giffords (D) 47%-46% AR-01:Rick Crawford (R) is beating Chad Causey (D) 48%-32% AR-02: Tim Griffin (R) is beating Joyce Elliot (D) 52%-35% CA-11: David Harmer (R) is beating Jerry McNerney 45%-44% CO-03: Scott Tipton (R) is beating John Salazar 51%-43% CO-04: Cory Gardner (R) is beating Betsy Markey (D) 50%-39% CO-07: Ryan Frazier (R) is beating Ed Perlmutter (D) 40%-39% FL-02: Steve Sutherland (R) is beating Allen Boyd 52%-37% FL-22: Allen West (R) is beating Ron Klein 44%-42% FL-24: Sandy Adams (R) is beating Suzanne Kosmas 44%-41% IL-11: Adam Kinzinger (R) is beating Debbie Halversom (D) 51%-40% IL-14: Randy Hultgren (R) is beating Bill Foster (D) 44%-37% IL-17: Bobby Schilling (R) is beating Phil Hare (D) 45%-32% KS-03: No recent polling, but the FiveThirtyEight model shows a 93% probability of a Republican win MD-01: Andy Harris (R) is beating Frank Kravotil (D) 39%-36% MI-01: Dan Benishek (R) is beating Gary McDowell (D) 51%-38% MI-07: Tim Walberg (R) is beating Mark Schauer (D) 42%-38% MS-01: Alan Nunnellee (R) is beating Travis Childers (D) 50%-42% NH-01: Frank Guinta (R) is beating Carol-Shea Porter (D) 50%-40% NH-02: Charlie Bass (R) is beating Richard Swett (D) 43%-38%
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NY-19: Nan Hayworth (R) is beating John Hall (D) 44%-42% NY-29: Tom Reed (R) is beating Matt Zeller (D) 44%-30% NC-02: Renee Elmers (R) is beating Bob Ethridge (D) 39%-38% NC-07: Iloario Pantino (R) is beating Mike McIntyre (D) 46%-45% ND-AL: Nick Berg (R) is beating Earl Pomeroy (D) 48%-45% OH -01: Steve Chabot (R) is beating Steve Dreihaus (D) 53%-41% OH-12: Patrick Tiberi (R) is beating Paula Brooks (D) 51%-34% OH-15: Steve Stievers (R) is beating Mary Jo Kilroy (D) 46%-41% OH-16: Jim Renacci (R) is beating John Bocierri (D) 49%-35% OH-18: Bob Gibbs (R) is beating Zach Space (D) 44%-43% PA-03: Mike Kelley (R) is beating Kathy Dahlkemper (D) 44%-38% PA-07: Pat Meehan (R) is beating Bryan Lentz (D) 47%-26% PA-08: Michael Fitzpatrick (R) is beating Patrick Murphy (D) 49%-35% PA-10: Tom Marino (R) is beating Chris Carney (D) 40%-36% PA-11: Lou Barletta (R) is beating Paul Kanjorski (D) 43%-32% PA-12: Tim Burns (R) is beating Mark Critz (D) 44%-40% TN-08: Steven Fincher (R) is beating Roy Herron (D) 47%-37% TX-17: Bill Flores (R) is beating Chet Edwards (D) 53%-41% TX-23: Quinco Conseco (R) is beating Ciro Rodriguez (D) 43%-37% VA-02: Scott Riggell (R) is beating Glen Nye (no relation to the science guy sorry couldnt resist) (D) 41%-35% VA-05: Robert Hurt (R) is beating Tom Perriello (D) 58%-35% VA-11:Keith Fimian (R) is beating Gerry Connoly (D) 40%-35% WA-02: Joe Koster (R) is beating Rick Larson (D) 50%-46% WA-03: Jaime Herrera (R) is beating Denny Heck (D) 54%-41% WI-07: Sean Duffy (R) is beating Julie Lassa (D) 42%-33% WI-08: Reid Ribble (R) is beating Steve Kagen (D) 49%-39%

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Pelosi and Hoyer Battle Brews As Democrats Move Toward the Center

House Majority Whip Steny Hoyer and Speaker of the House Nancy Pelosi have never exactly seen eye to eye. Hoyer is the de facto leader of the moderate wing, Pelosi the figurehead of the far Left element of the Democratic Party. Their history is long and often rocky. They first met as college interns in the office of Senator Daniel Brewster. They both took offices in the 80s, battling along the way toward Democratic leadership. In 2001 they ran against each other for minority whip a battle that Pelosi won. She beat him out again when she ran for minority leader, with Hoyer then elected minority whip. The most contentious power struggle of all came in 2006 when Democrats regained the majority. Pelosi was elevated to House Speaker while Hoyer and the late Rep. John Murtha were in the running for the majority leader position. Guess who Pelosi threw her support behind? Yep, Murtha. Nevertheless, Hoyer prevailed, forcing the two rivals to attempt to work together. Until recently the relationship has gone smoothly, but the Democrats fading November hopes has widened the divide between Hoyer and Pelosi.

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This year has been filled with Hoyer-Pelosi battles. Big ones like healthcare where Pelosi determined to have a public option in the healthcare bill while Hoyer stated that such a provision could never pass the House. To small ones, like their disagreement over Stephen Colberts recent testimony before a House subcommittee. Hoyer said it was not appropriateWhat he had to say was not the way it should have been said. Nancy Pelosi disagreed, saying of course I think its appropriate. Hes an American, right? Now, with the elections looming large on the horizon, Steny Hoyer and Nancy Pelosi are locked in their largest war of words to date. Pelosi was determined to have a vote on the middle class tax cuts this past week, before her members went home to campaign. When asked, Pelosi said that what were going to do is to say, at the end of the day, the extension of the Obama middle-income tax cuts will take place. Meanwhile Hoyer was saying that I doubt that we will stage a vote. The disagreement runs deeper than two of the partys leaders. As The Hill explains, The disagreementreflects a broader divide in the Democratic Caucus. Centrist and vulnerable Democrats want to push a vote on the tax cuts until after the election, and many want a temporary extension on rates for the wealthy in addition to a permanent extension of the current rates for the middle class. Liberal Democrats want an immediate vote on extending the middle-class cuts, arguing that the move would give incumbents an act to tout on the campaign trail and would force Republicans into a political corner. Democrats are becoming increasingly comfortable distancing themselves from Pelosi. Hoyer has gone beyond disagreeing with Pelosi over the timing of the vote, he now disagrees with her policy entirely. Rather than raise taxes on anyone during a recession, Hoyer is joining with a growing number of conservative Democrats who would like to see all of the Bush-era tax cuts extended. As ABC News reported today Hoyer recently said, One hundred percent of America will not have any increase in their taxes. The growing divide between the liberal Pelosi and many moderate House Democrats is leading to questions about whether she will remain Speaker of the House if Democrats retain the majority. As Roll Call reported, Nancy Pelosis support among moderate Democrats appears to be eroding, with more than a handful refusing to commit to supporting her for Speaker next year. The list of those possibly holding out for a more moderate leader include Reps. Bobby Bright, Jim Marshall, Gene Taylor, and other Blue Dogs like Heath Shuler and Mike McIntyre.

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With the public growing concern over government spending and the deficit, expect Hoyer to take even more of a middle of the road stance. Over the summer months he made three major policy addresses focusing on issues like jobs and fiscal discipline areas where Nancy Pelosis leadership has eroded the support of many moderate voters. That appears to be just the first step for a growing number of Democrats who are fleeing towards the middle, Democrats who will need a more moderate leader. Pelosi may have won the first few rounds in a battle with Hoyer. But the growing voter concern over national debt has finally given the moderate Hoyer the ammunition he needs to win the war.

Public Sector Unions Work to Divide the Public


Labor Unions: The inventor of the Weekend; creators of minimum wage; and womens rights pioneers. Pretty strong history. They have been the voice of the employee, fighting for fair pay, reasonable hours, and better working conditions. But for all the historical gains theyve made for society over the course of their history, one now has to wonder whether they are doing more harm than good. One of the major problems has been their spreading influence. Originally, they were limited to the private sector, attempting to pressure factory bosses into providing competitive wages. But as Steven Malanga explains, unions have recently undergone a change that is putting enormous financial pressure on those they originally sought to help. [T]he union movement in America crossed a crucial threshold recently, as membership in public sector unions surpassed private sector union enrollment for the first time. The problem is that as government workers increasingly become dominated by the labor movement a conflict of interest develops. Labor groups typically require members to pay union dues. These dues go typically fund a wide variety of activities, but a growing percentage is being devoted to political lobbying and campaigning. For instance, the SEIU, one of the largest and most aggressive unions, announced that it would spend $80 million in the 2008 presidential elections. The AFL-CIO also spent an estimated $200 million on the 2008 elections. But as these private sector unions decline in membership, their influence and money is being replaced by public sector unions. While only about 8 percent of private sector workers are unionized, nearly 40 percent of public sector workers carry the union label. The growing pervasiveness of unions in government is creating a conflict of enormous for those which government is intended to serve the taxpayers.

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This tension is most evident in the debate over tax increases. Public sector unions, by their vary nature, create a vicious circle that taxpayers cannot escape. Public sector unions collect dues, working to elect their preferred candidates (themselves and more like them) elected. Once elected they can pass union friendly legislation. Perhaps the most visible example in todays debate is generous pension benefits for public sector employees such as teachers, policemen and government workers. Eventually, as we are seeing in the burgeoning number of underfunded pension plans, the cushy benefit packages run into financial trouble. To pay off the pension debts, taxes on the private sector must be levied. And who is there to propose and help these tax increases pass elected union officials. Unions, once elected, become a self-perpetuating and growing parasite. They force dues, elect more unions members, push for union benefits, and then bail themselves out when they dont work. Throughout it all the taxpayer is left out in the cold. This problem doesnt exist in mere hypotheticals. As Steven Malanga writes, Find a tax increase campaign and youre almost certain to find a government union behind it. . . . In fact, since the budget squeeze hit states and municipalities starting in 2008, such tax and spend campaigns have been typical. Researchers at the Heritage Foundation counted some 25 public union-driven efforts in that time. They include successful efforts by Arizonas unions to raise the states sales tax earlier this year, a ballot initiative in Oklahoma sponsored by the states teachers unions to raise education spending by $1 billion, a successful $8 million campaign in Oregon by public unions to defeat initiatives seeking to roll back corporate and personal income tax hikes, and a $4 million advertising effort this past spring designed to pressure New Jersey Governor Chris Christie to raise taxes in his state, which failed. The ongoing recession is beginning to uncover the cushy union pension packages and the resultant tax campaigns. Increased awareness is the only way to break the union cycle of money and influence. Government is having trouble affording its basic functions, can it really afford to pay off union debts as well? Unions can get back to doing good, but to return to their true mission it appears as if they need a stern rebuke in this years elections.

Pete Rouses Style Sure to Anger Progressives and Conservatives Alike


Quiet

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Calm. Laconic. Those are three words that could never be descriptors of Rahm Emanuels managerial style. Yet those words are the embodiment of the man chosen is replacing Emanuels whirlwind style in the White House. Last week, President Obama named long time aide Pete Rouse to be the interim White House chief of staff, taking over the office vacated by the outspoken Emanuel. Rouse is a virtual unknown for most of America. But dont be fooled, hes served as chief of staff for Democrats in Washington for over three decades and has been by Obamas side since he was a Illinois Senator. As a New York Times article from 2008 wrote about Pete Rouses relationship with Senator Obama, Knowing he needed insider help, Mr. Obama cajoled Mr. Daschles former chief of staff, Pete Rouse, to lead his office. Mr. Rouse advised Mr. Obama about managing relationships on the Hill and helped engineer hefty assignments Unlike Obama, Rouse is quiet, and works behind the scenes. He rarely gives interviews, and during photo-ops he is the one who more likely than not has his back turned to the photographer.

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Emanuel was known as the instigator. Emanuels fiery, expletive-laden tirades burned bridges, most notably calling a plan by liberal groups to attack conservative Democrats Fing retarded. But as Emanuel tore them down, Rouse was the one who would go behind and rebuild them. Emanuel was a willing compromiser. He was willing to give up portions of legislation, such as the public option, that progressives deemed essential, if it meant an easier path through Congress. Rouses strategy is yet to be determined, but in 2008 he criticized the Democratic Leadership Council for find[ing] the lowest common denominator and pass[ing] it. Thats not what [Obamas] talking about here. I think hes talking about moving forward with a progressive agenda. Pete Rouse seemingly is the antithesis of Rahm Emanuel. But he is not. Rouse was not able to limit the damage of Emanuel because he was so different from him. Rouse was able to control the peripheral damage because he was the same as Emanuel. Rouse is an intelligent problem solver, pragmatic to his core. Pete Rouse and Rahm Emanuel are two sides to the same coin. They are in essence, fixers, able to see past party lines and the progressiveconservative divide to just get things done. Given the choice both would choose the pragmatically possible over the perfectly impossible any day of the week. Pete Rouse was the one who diffused the firestorms over Elizabeth Warren and Guantanamo Bay. President Obama charged with managing healthcare reform efforts. Rouse was the one who
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found common ground with moderate Democrats and Republicans in regards to healthcare reform. He was the one largely credited with finding common ground with fiscally conservative Blue Dogs and socially conservative members like Ben Nelson. Given the ongoing Leftist criticism that Rahm Emanuels tenure will forever be marked, and flawed, by his willingness to compromise, many Democrats may view Rouses tenure as unnecessarily repetitive. Many liberals are tired of the Obama administrations kowtowing in an attempt to draw Republican, and even conservative Democrat, votes. As liberal blogger Peter Daou writes, As President, Obama has done much goodBut that doesnt mean progressives should set aside the things theyve fought for their entire adult life. It doesnt mean they should stay silent if they think the White House is undermining the progressive cause. If liberals are upset that they are getting the exact same thing someone too willing to compromise conservatives are upset as well. Why? Because they too feel as if they are getting more of the same insider politics. In fact, Rouse has been called the ultimate Outsiders Insider and someone who is steeped in the ways of a Washington. His thirty years in Washington have left him with a large rolodex, a bevy of people who have worked under him, and likely a long list of people who owe him favors. Is this the kind of shake up that we needed. To say that the last two years havent gone well for President Obama and other Democratic leaders can be seen in their rock bottom approval ratings. This was a staff in need of change both in personnel and direction. Rouse represents none of that. Hes an insider at the exact time that the public is demanding an outsider. Hes the incumbent in the year of the anti-incumbent. That is why Pete Rouse, like Rahm Emmanuel cant win. Hes too pragmatic to be embraced by the Left, too insider to be liked by the public, and too closely tied to Obama to be cheered by the Right.

New Bill Shows Dems Only Serious About Protecting Their Own Jobs
I love the names Congressmen attach to their bills. Gone are the days when we actually describe what the bill actually is, or what it actually does. Instead we get recycled fluff designed to make it sound absolutely insane not to support it. Take for instance a new bill proposed by Senate Democrats last week, the Creating American Jobs and Ending Offshoring Act. What! You
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voted against that! You dont want to create jobs? Or keep more jobs in America! What are you, some sort of a Communist? Well as it turns out the wonderfully named bill leads to some less than wonderful results. In fact, the bill which was sponsored by Democrats wasnt even intended to pass, it was purely to force a vote that would make Republicans look unwilling to help create jobs in America. As the Tax Policy Center wrote, I suppose the Senates debate today may serve some useful purpose as a show vote. Endangered Democrats can go home and argue that while they care deeply about American jobs, Republicanswho voted en masse to kill the billdo not. But partisan politics aside, this is a classic example why Congress should not be allowed anywhere near tax policy during election season. Scrape away the bills show vote usefulness and youll find a poorly thought out waste of paper. Democrats proposed a very limited payroll tax holiday one that would give employers a two year payroll tax exemption for hiring American workers rather than overseas workers. To be eligible businesses must certify that the U.S. employee is replacing an employee that is performing similar duties overseas. But as the Tax Policy Center argues, is a United States company really going to shut a plant in Shanghai to hire workers in Sheboygan all for a two-year tax holiday? When the two years comes and goes what happens? Do they relocate all those jobs back to Asia? Seems like a lot of cost and trouble to save a few thousand in payroll taxes. Fortunately, the bill was rejected, gaining only 53 votes in the Senate, well short of the 60 needed to pass filibuster. Five Democrats voted against the bill, throwing a wrench in Harry Reids plan to cast Republicans as the party that has continued their job killing agenda today by protecting these tax breaks for CEOs who offshore American jobs. As it turns out, some prominent Democrats like Senator Max Baucus and Chuck Grassley must also be furthering their job killing agenda. Grassley who voted against the bill said, The reality of the consequences for manufacturing jobs in the United States was cast aside to create a debate for political demagoguery. Adding that the bill is an unacceptable gamble with American jobs. Demagoguery has become the number one export out of Washington this campaign season. Democrats have been tossing up one perfectly named bill after another, hoping that one of the no votes sticks during the election. Republicans have been voting no one bill after another,

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more concerned about the results of the legislation than the bill title. Of course with every no vote the partisan catcalls blame Republicans for their obstructionism. Perhaps if Washington didnt spend so much time on this partisan chess match there would be some time for actual legislation. Like passing the tax cuts, which a majority of Republicans and Democrats are calling for. Or, crafting legislation that actually gets our economy back on track, not just in the title. But as the Tax Policy Center writes, If Senate Democrats are truly worried about losing jobs overseas, they could rethink trade policy or even restructure the U.S. corporate tax code, which has evolved into a toxic combination of loopholes and high rates. But with this bill, it seems the only jobs they are seriously trying to protect are their own.

Saving as a Way to Save America


Turn on Vh1 in the middle of the day and there is a good chance youll catch a show showcasing how great it is to be rich. Some narrator with a smarmy English accent that drips with aristocracy discussing the opulent yachts, mansions, and shopping sprees of Americas rich and famous. Or perhaps youve seen the new DirectTV commercial with the rich Russian, choosing between two solid gold busts of himself, picking a diamond studded remote control off blocks of gold while sitting beside beautiful women, and then kissing his miniature pet zebra while laughing maniacally. This is apparently what it means to be rich in America. Spending millions at the drop of a hat. Buying things that cant even count as a whim, because they dont even hold your attention long enough to be classified as such. Forget about being eco-friendly. The rich go green by spending stacks of money like its nothing. Obviously, Mark DeCambre doesnt watch Vh1. In a recent article, Mark DeCambre, of the New York Post, compares the rich to squirrels hoarding their nuts away for winter, not free-wheeling spenders. According to DeCambre, the persona that the other 98% of American have given their wealthier counterparts is a complete fallacy. DeCambre, and the study by Mark Zandi he was referencing, came to the conclusion that tax cuts for the wealthy will do little to help the US economy. The study found that during the tax cuts between 2001 and 2003 the savings rate for the wealthiest Americans underwent a sharp rise.

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Saving, according to DeCambre is a very bad thing for the wealthy to be doing. We need them buying oversized houses, putting new 3-D televisions in every bathroom, and frittering money away on miniature giraffes. I could have sworn liberals despised trickle down economic theories? Anywho, he argues that the wealthy are simply pointless if they arent stimulating the demand needed to get the economy back on track. Squirreling away nuts may mean they survive the winter, but what about the rest of us? Such Keynesian arguments in favor of fiscal stimulus ignore the importance and necessity of saving. Saving, unless youre stuffing money into a mattress, can also have a great impact on the economy. A saver can choose to either deposit it in a bank, which in turn will make it available for working capital for businesses, or can choose to invest it himself. And as Nobel winning economist Henry Hazlitt explained, When money is invested it is used to buy capital goods houses or office buildings or factories or ships or motor trucks or machines. Any one of these projects puts as much money into circulation and gives as much employment as the same amount of money spent directly on consumption. Saving, in short, in the modern world, is only another form of spending. The value of this saving as spending reality can be seen in a modern example. Take Facebook for instance. Facebook became the multibillion dollar near-omnipresent entity that it is today largely due to a $500,000 investment made by a billionaire hedge fund manager. Facebook is now worth over $11 billion, its annual revenues are around $800 million, and it employees 1,400 people. Even that does not take into account the product tree that has grown from Facebooks seed. Companies such as Zynga Game Network that began as Facebook applications and is now worth around $2.6 billion. All because the billionaire, Peter Thiel, decided to ignore the impulse to buy frivolities and save their money. As John Tamny, senior economic adviser to Toreador Trading, wrote in Forbes, Facebooks existence is the certain result of rich individuals choosing to delay their consumption, as opposed to spending current income on fancy cars and mansions. Absent Thiels willingness to squirrel away his earned income, Facebook, along with every other innovation would not be with us today. . . Indeed, if the economic truth is acknowledged that entrepreneurs cant be entrepreneurs without capital, we must then ask what is most economically stimulative: excessive purchases of houses, cars and yachts, or savings that will fund tomorrows jobs, cancer cures and software that will enable more efficient and profitable business operations?

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If that is not enough look at the rise of Google. Google received its first funding in 1998 when Andy Bechtolsheim, a cofounder of Sun Microsystems, contributed $100,000. Googles initial public offering gave it a market capitalization of over $23b. Google now directly employs 21,805 people and had 2009 revenues of $23.651b, over $6.5b in profit, and is now worth over $153.4b. The trick is to look beyond the very clear and immediate benefactors of frivolous spending. The makers of yachts, the builders of houses, etc., and to look at the less-clear benefits of saving the start-ups that have the potential to hire thousands, the fledgling company that brings incredible innovation, or the undercapitalized entrepreneur who creates a billion dollar company. As Henry Hazlitt so perfectly stated, what we must do is get down to the science of tracing the effects of some proposed or existing policy not only on some special interest in the short run, but on the general interest in the long run. If we can follow that principle, then the mirage that saving is somehow a bad thing fades away.

Will Obamas Diminished Political Capital Push Him Toward the Center?
Obama has to juggle multiple deficits. His first concern is likely the federal budget deficit that is a growing concern to voters this election season. Hes also dealing with a trust deficit in that many, if not most, Americans look suspiciously at the way Democrats are running things. These two problems have led to another deficit a deficit of political capital that is endangering his agenda. Political capital is the currency in Washington. Obama came into office with more than any president in recent history. His enormous margin of victory and substantial majorities in Congress granted him a political mandate that encouraged Democrats and Republicans to line up behind him and his ideas. Over the course of his first two years in office he has frittered away almost all of his political capital. He invested substantial amounts in the stimulus. Initially it appeared to pay off in spades. But as unemployment continued to climb ever higher it was clear that the only thing the stimulus did was put investors on edge over our growing deficits. His account substantially diminished, he then spent a lot of political capital in attempting to get the controversial healthcare bill passed. This too he believed would be a good investment, that may not see immediate dividends, but would grow gradually more popular over time. This too
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has proven to be a bust. The bill delivered on none of his initial promises, leading to higher premiums, increasing government healthcare expenditures, and hurting Medicare providers. Given the failure of these huge expenditures of political capital Democrats now find themselves in serious trouble in the upcoming November elections. Any dent in the Democratic majorities in Congress would only serve to further deplete the Presidents already perilously low store of political capital. With a substantial number of policy goals still left incomplete from his election year checklist, President Obama will be forced to make some significant changes in how he invests his influence. In addition to being forced to work more closely with Congressional Republicans and triangulating closer to the center of the ideological spectrum the president will likely have to scale back his legislative plans. As the Wall Street Journal reported yesterday, They are talking about a new, more incremental approach, championed by former Chief of Staff Rahm Emanuel, to fulfilling campaign promises on energy, immigration and on closing the military prison at Guantanamo Bay. . . We werent able to do a lot of those other things even with this Congress. That obviously calls for a new approach, one White House official said. In other words, go ahead and eliminate comprehensive from your political lexicon. If the incremental approach sounds familiar it is because it is what Republicans have been championing for the past two years. The Republican healthcare proposal took an incremental approach, focused on controlling costs rather than increasing the number of the uninsured. The piecemeal theme can also be found in Republican plans for immigration and the environment. They understand what Democrats do not the federal government is simply not good large, wholesale reform efforts. But there is another reason in favor of incrementalism it ensures agreement. Take energy policy for instance. There is bipartisan agreement that something must be done to end our foreign dependence on foreign oil. Consensus could also be formed around incentivizing electric vehicles and renewable energy baselines for utilities. We can achieve these things and take significant steps forward in the battle to preserve our environment without ever mentioning the words tax or carbon. That is the fundamental reality that the President must deal with and make a choice as to whether to accept. He can either use his diminished political capital to advance his goals that enjoy bipartisan support, or he can stubbornly attempt comprehensive but controversial reforms. His governing style must make clear that he is acting as if the moderate electorate is more important than his Democratic base. It will require compromise that will anger many progressives, but it is a
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strategy that will gain measurably more middle of the spectrum supporters. As Clive Crook wrote in the Financial Times, what President Obama ought to do is simple. Instead of blessing leftist solutions, then retreating feebly to more centrist positions under pressure, he should have identified the centrist policies the country could accept and advocated those policies. If the past two years have taught him anything it should be the importance of investing his political capital wisely. Gambling big on partisan comprehensive reform left him bankrupt and cost his party significant momentum. By focusing on ideas that enjoy wide acceptance he can get back to the mantle of change that he carried into office. There are more than a few places we can agree, it seems to me those would be some great places for Obama to regrow his political capital.

Gallup-ing To the Election Finish Line


20 months after the election of a Democratic supermajority in Congress, a filibuster proof 60 votes in the Senate, and a Democrat in the White House, the finish line is in sight for Republicans. Now the looming question is, can we keep our head of steam, and make it to the end. If youre judging by recent headlines alone, one can infer that Republican support has slowly, but steadily, been slipping.

Daily Beast: The latest polls suggest the Dems are gaining ground as the midterms loom New York Times: House Majority Still Uncertain, Republicans Say UK Guardian: Did the GOP Peak Too Soon?

In fact, Rasmussens Generic Congressional Ballot indicates that the days of a 12 point Republican lead is nothing more than a memory. Republicans now cling to a 3 percent advantage. A new Washington Post poll finds that likely voters now favor the Republican candidate by a 6 percent margin, cut in half from last months 13 percent. Moreover, Republican support in several states has been waning in the past week, a signal that the national trends are filtering down to the local level.

In Florida, Republican Richard Scott has seen his September 20th lead drop from 50% to 44% lead to 44% to 42%.

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On September 26th, Connecticut Senate candidate Richard Blumenthal, a Democrat, led by 3 points. Today he leads by 7. Republican Mark Kirks chance to win Illinoiss Senate seat has taken a few setbacks. On September 25, he led by two points, now he trails by that many.

A glance through these headlines and you begin to wonder what is happening to the promised Republican wave. Did the GOP really peak too soon? Are Republican voters finding themselves exhausted after a year of fighting? Worse, are we taking huge wins for granted, and thus losing our enthusiasm and turnout edge before weve actually won anything? If so, the dreams of a Republican Congress able to push back against Democratic spending could be nothing more than that a dream. But those are just the headlines. If you take little time to dig a little deeper you will see that Republicans are not out of steam. Hopes for a Republican resurgence are still alive, and in November we will wake to a tangible Republican majority. According to the latest Gallup poll, Republicans only have a 3 percent lead among registered voters, but among likely voters the GOP edge expands to 18 points! The Washington Post reaffirmed the lead in their recent poll. The poll found that among likely voters Republicans held a 13 point advantage on the generic congressional ballot. More locally, a poll of 12 hotly contested races done by The Hill finds Republican challengers are beating freshman Democrats in 11 of the 12 races polled. But the thing keeping Republicans in the lead is their enthusiasm and motivation. Any erosion in the enthusiasm gap means a parallel erosion in election margins. Yesterday, Gallup released two scenarios of election results among likely voters. The scenarios predict what will happen if in both high voter turnout and low voter turnout scenarios. In the high voter turnout situation, Republicans will have a 13 point lead among likely voters at the polls, and will gain 71 seats in the House. In their low voter turnout model, the Republican lead among likely voters increases to 18 points. In that scenario the number of seats gained in the House will be 86.

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The Gallup poll shows that Americans know that they cannot afford another two years of a progressive majority. They know the new healthcare law is going to raise premiums, increase healthcare costs, and drive up the deficit. Americans know that the economic policies of the Left have not created jobs or led to growth. We know that the only way to spur economic growth is to address business uncertainty by lowering spending and eliminating harmful regulation. With the goal in mind and our eyes firmly set on Election Day Republicans must maintain our momentum. Complacency is unacceptable. Overconfidence will lead to defeat. As pollster Mark Penn says, very few of these races are really put away one way or the other, the outcome will rely on the masses of undecided voters who are still up for grabs. In other words, this thing isnt over yet.

Connecticut Senate Candidate McMahon Lays the Smackdown on Government Intervention


Its all over YouTube, Republican Senate candidate Linda McMahon choke slammed Richard Blumenthal in a televised debate last night. This didnt literally happen, but figuratively speaking, McMahon definitely put a hurting on the former Connecticut Attorney General. McMahon pointedly asks Blumenthal how do you create a job? Richard Blumenthals answer starts as a rambling response involving a variety of ways, and a variety of people. Realizing that he is going nowhere fast, Blumenthal switches direction and then talks about how he personally supported jobs and that he wants the government to support jobs. At the end of Blumenthals less than eloquent oratory, Linda McMahon concisely tells the audience how jobs are made: an entrepreneur takes a risk and if an entrepreneur thinks that (he can create a good that is cheaper to make than sell) he creates a job. The answers of Richard Blumenthal and Linda McMahon are symbolic of the two choices voters face in November. Voters can choose the party that advocates Option A (the Blumenthal Model), the government, government, government solution, or the party that pursues Option B (The Free Market Model), the entrepreneur choice, where private individuals create solutions and expect to be able to sell their solutions at a fair market value. If you choose the Blumenthal Model, the government is your economic savior. You believe a selfless, altruistic government holds the key to our future prosperity. Washingtons creative policies are what can create jobs. Government programs should be created to give more capital to our businesses, different tax policies should be implemented to promote hiring by businesses and stronger oversight by the government is how Richard Blumenthal, and progressives like him, think jobs are made.
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There are so many things fundamentally wrong with the Blumenthal Model. For starters, take what Mr. Blumenthal said about the government needing to provide more capital to small businesses. On whose authority is the government able to supply capital? Who determines which small business receives capital and how much they receive? Isnt this just taking money out of the hands of private investors and putting it into the hands of government investors? Who says they know best (clearly they dont)? Given capital is not the same thing as earned capital. If you give a company capital you are removing incentive for them to earn capital, and to do so distorts the reality of if the business is viable or not. It is bailout economics. Some who should succeed dont. Some who should fail dont. Both realities exist because the government decides to step in and decide that one business is too big or too important to fail. Nevermind that the business cant provide goods or services of the same quality or price, the government is rarely concerned with such things. This leads to incredible distortions in our otherwise free market. Sure we may save the jobs of the big failing business. Those jobs are easy to see and thus the government acts quickly to save them. But in doing so they ignore the jobs that are destroyed in the longer term. The capital used to prop up the business could have been kept by citizens who could spend and invest in more cost efficient products. The money saved could be used to buy more things. Jobs are created as our purchasing power goes up. The government in the Blumenthal model never sees the longterm. Instead we chug along with less certainty, greater inefficiency, and inevitably, higher taxes. Now, let us take peek at the alternative the Free Market model as explained and lived by Linda McMahon. Say whatever you want about McMahons chief business venture, the WWE, it is an example of an entrepreneur pursuing a need and creating lots of jobs in the process. The genesis of the WWE is the Capital Wrestling Corporation. The CWC was created by two men who stumbled across an entertaining alternative to boxing, recognized its value, and sought to make money by promoting it in New York. Through decades of decisions made by individuals, not the government, the CWC evolved into the WWE and is now a global icon that holds over $425.4 million in assets. The Blumenthal-McMahon debate illuminates the decision voters will have to make. Voters will have to decide if sustainable jobs can proceed from government action or if they come from individual entrepreneurial risks. Who do we want in our corner the Invisible Hand or the Iron Fist of government? Do we choose the rambling, aimless, governmental approach spoken of by Richard Blumenthal? Or, do we choose the more concise, directed, approach that let individuals create their own risks and keep their own reward described by Linda McMahon?

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On Election Day, Americans need to take all the facts into account. For if we choose wrong, we run the serious risk of suplex-ing our own economy

Poll: Americans Want Supermajority Requirement for New Entitlements


Americans are bargain shoppers. We are constantly looking for the biggest bang for our buck, doing our best to get more for less. Unfortunately, Washington has caught on. The trouble is that Americans simultaneously loathe big government but love specific government programs. The dichotomy is made clear in a recent Washington Post poll. By a 58 percent
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to 38 percent margins, Americans said they prefer smaller government and fewer services to a larger government with more services. Yet when asked about making cuts to specific programs Americans are less enthusiastic about the idea of fewer services. A recent GfK Roper poll finds that 85 percent of adults oppose cutting Social Security to reduce the deficit. Polls also reveal similar distaste for changing other popular government programs such as Medicare. Once Americans begin to enjoy the benefits of a program, often at a price made more attractive by government subsidy, they dont want it to go away, regardless of their feelings about government in general. This should not come as a surprise. If the government proposed a bill to hand out plasma televisions I would be at the front of the picket line protesting the obvious waste of government dollars. But if somehow the bill passed Id also be at the front of the line to pick up my television. The reason is because Americans are focused on the benefit of the short term, regardless of the negative impact on the long term. We see the promise to retire with a guaranteed Social Security payment, but dont see the higher taxes that must inevitably be imposed to cover the underfunded program. Politicians have jumped on this tendency toward a short term focus and turned it into a winning election strategy. Promise to fight for keeping Social Security just the way it is and voters will cheer you for protecting their retirement, regardless of the unsustainable finances of the program. Fight to reform the program so that future generations may also be able to enjoy it and youll be accused of slashing grannys retirement fund. This is why it is so important to limit the creation of new entitlements. Once theyre enacted all of the electoral inertia is stacked against reform. They grow and grow and grow until our debt reaches crisis levels. To avoid this problem we must make enacting them more difficult. Fortunately, a new poll released by PreserveourFuture.org shows that Americans may support the idea. The poll asked whether or not Congress should require a 2/3 supermajority in order to pass any new entitlement bills. Seventy percent support requiring a two-thirds super majority vote in Congress to create new entitlement programs. And nearly sixty percent believe Congress should pass a Constitutional amendment requiring a two-thirds super majority to create new entitlement programs. A supermajority of Americans, therefore, believe that only a supermajority of Congress can create new entitlements.
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The American people are very much aware of the debt that is plaguing this nation. Moreover, they seem to be acutely attuned to its cause our growing entitlements. As the CBO explains, Measured relative to GDP, almost all of the projected growth in federal spending other than interest payments on the debt stems from the three largest entitlement programsMedicare, Medicaid, and Social Security. Our country is already $13 trillion in debt. On top of that, we have $76 trillion in unfunded entitlement liabilities that the government will be forced to find ways to fund. Finding ways to reform the problem will be absolutely necessary in the coming years unless we can stomach the thought of historically high tax rates. Until the political realities allow us to enact reform, the very least thing we can do is avoid making the problem worse by adding new entitlements onto our bill.

Report Slams Administrations Lagging Response to Oil Spill


The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling, tasked by the President with studying the federal governments response to the Gulf oil spill, released four preliminary reports yesterday. The verdict? The government apparently didnt learn very much from its poor response to Katrina. Two of the main issues that the Commission found were: (1) a slow and uncoordinated response and (2) purposefully underestimating the flow of oil into the Gulf. This post addresses how the federal government bureaucracy negatively impacted the speed and effectiveness of the response. For an analysis of the governments misinformation campaign, read Part II. The report questioned why the mobilization of resources to combat the spill seemed to lag. Nine days after the explosion in the Gulf, the governmental response remained almost purely regional. As the Commission notes, [t]he President had not been to the region, Cabinet secretaries had not yet become involved, and the responders were from the local area. The reason for the slow response? [I]t appears that a sense of over-optimism affected responders. Of course, when the President did respond, likely sensing that the publics negative perception of his efforts was having a negative political effect, he then overcorrected.

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The Commission says that at the end of May, after the government did not take any major steps in addressing the spill, the President announced that he would triple the federal manpower and resources responding to the spill. This tripling was noted to be an overreaction to the public perception of a slow response that resulted in resources being thrown at the spill in general rather than being targeted in an efficient way. Overly bureaucratic command structures and miles of red tape at the federal level also hampered the states ability to deal with the crisis. The Commission found that because of political demands, concern that the federal government was ineffective, or genuine confusion about the applicable legal framework, state and local officials closest to the affected areas complained that they were shut out from the decision-making. This disconnect led to a feeling of unfamiliarity and discomfort with the federal response which manifested itself in competing state structures, which undercut the efficiency of response efforts. Each of these problems demonstrates the problem with an overly large and bureaucratic federal government. The National Contingency Plan, a set of federal regulation that prescribes how the government will respond to oil spills, creates a bureaucratic mess that leads to a poor response by the states and the federal government. The organization is a mishmash of a National Response Team of sixteen federal departments, Regional Response Teams which includes representatives from all level of governments, a Federal On-Scene Coordinator, a State On-Scene Coordinator, a Unified Area of Command, the National Incident Commander, and Area Committees. While everyone is jostling for roles and attempting to establish a decision making hierarchy amongst the mess of committees, weeks went by where oil was pouring into the Gulf. Just when a decision making tree had finally been organized, political considerations led to the President stepping in and stepping on toes. President Obama appeared to care less about exactly what was being done, and more about the perception that a lot was being done. The resultant jumble of resources led to an unorganized effort that hampered rather than helped the ability of the Response Teams to react to the crisis. The entire problem is a metaphor for the disastrous impact that an overly large federal government has when responding to any problem. They are slow to respond and subsequently overreact, thus wasting vast amounts of time and resources that could have been better targeted and managed at the state level. Big government strikes again.

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Oil Spill Commission says Obama Administration Not Fully Candid


On April 20, 2010 the Deepwater Horizon rig in the Gulf of Mexico exploded, creating an enormous oil spill that threatened the livelihood of millions living along the Gulf coast. The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling was convened by the White House to study the federal governments response to the crisis. The report found two massive problems with the governmental response: (1) a slow and uncoordinated response and (2) purposefully underestimating the flow of oil into the Gulf. For an examination of the reports examination of Problem 1 read HERE. The Commission kicks off their report with a straightforward indictment of the Administrations attempt to manage the publics perception of the spill. By initially underestimating the amount of oil flow and then, at the end of the summer, appearing to underestimate the amount of oil remaining in the Gulf, the federal government created the impression that it was either not fully competent to handle the spill or not fully candid with the American people about the scope of the problem. When you cut through the bureaucratic niceties what the Commission essentially said was that the federal government appeared either really dumb or really dishonest. Neither exactly inspires confidence in the federal governments ability to respond to crises. The federal governments underestimation of the oil spill began not long after the spill itself. On April 23, three days after the spill, the Federal On-Scene Coordinator Mary Landry told CBS news that at this time there is no crude emanating from that wellhead. This estimate was made public before Landry even had an estimate from the remotely operated vehicle on whether oil was flowing from the riser. The next day, because apparently Landry couldnt wait for factual reports on the spill, the Coast Guard estimated that 1,000 barrels per day were flowing into the Gulf. Unfortunately, this estimate too came without supporting documentation. The next week the official flow rate increased from 1,000 to 5,000 barrels per day, an estimate that finally had some scientific backing. Then again, this science is less than precise, involving a
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method of using color to estimate the thickness of various parts of the spill. Moreover, the Commission notes that there is no indication that the scientist had expertise in estimating the size of underwater oil spill leaks. Despite the dubious estimation process, the 5,000 barrel figure remained the official estimate for an entire month. While the federal government was relying on visual estimates of the flow, at least three scientists issues their own estimates using various methodologies. Columbia University geophysicist Dr. Timothy Crone, using a peer-reviewed technique estimated a flow between 50,000 and 100,000 barrels per day. Dr. Eugene Chiang, an expert in orders of magnitude estimate found the flow between 20,000 and 100,000 barrels per day. Finally, mechanical engineer Dr. Steven Wereley gauged the flow at 72,179 barrels per day. Even the smallest of these estimates was four times the largest government approximation. Rather than accept or use any of these estimates the Obama administration underwent efforts to hide them from the public. As the Commission explained in their report, In late April or early May 2010, the National Oceanic and Atmospheric Administration wanted to make public some of its long-term, worst-case discharge modelsand requested approval to do so from the White Houses Office of Management and Budget. Staff was told that the Office of Management and Budget denied NOAAs request. The miscommunication campaign may also have had significant impacts on the oil spill response. Although the Commission notes that government responders have repeatedly insisted to Commission staff that low initial flow-rate estimates did not impact the response they acknowledge that it is possible that inaccurate flow-rate figures may have hindered the subsea efforts to stop the flow. Regardless of whether the flow rates impacted the actual response, the Commission notes that the questionable figures did mislead the public. They criticize the administration for attempting to assure the public they were not working off the 5,000 barrel a day estimate and yet never actually stating what they were basing operations on instead. The result, as expected, was public skepticism about the governmental response that subsequently led to the overreaction discussed in our first analysis. Questionable estimates, purposefully hiding scientific approximations from the public, and a subsequently diminished response. These are not the hallmarks of an effective top-down reOctober Compendium! 29

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sponse to a natural disaster. They are the signs of an Administration that was doing its best to maintain the perception that they were doing their best. It appears as if we were lied to. All in the name of protecting approval ratings.

Forgotten Economic Policies from Brazils Lost Decade


One of the reasons why many Americans once held such great faith in Obamas ability to manage the recession was that they felt he was in tune with the lessons of history. Even Obama styled himself as a student of history. Obamas cabinet was stacked with academics that surely had boned up on the subject. In fact, Obama appointed Christina Romer as the chair of his Council of Economic Advisors. Romer is considered the worlds leading expert on the economics of the Great Depression. Obama looked, and still looks, to the head of the Federal Reserve, Ben Bernanke, for advice on what to do to improve the USs economy. Bernanke is also a Great Depression nerd, having written a book entitled Essays on the Great Depression. During the Great Depression, the market determined which banks were in trouble by looking at whether they were receiving government aid. If a bank was being helped out by the government, its business with the private sector would dry up. Ben Bernanke astutely realized that the markets would do the same thing in 2008. To prevent this, he and his regulators pressured the 10 largest banks to join TARP. Even banks that did not need TARP, like BB&T, were strongly encouraged to join under ambiguous threats that they would not be properly capitalized under new government guidelines. Clearly, the memory of the Great Depression guided the hand of government policy during the Obama administration. We should take historical anecdotes into perspective when faced with challenges of these magnitudes. To think they hold no value in helping illuminate correct answers defies reality. What if, however, we are looking for direction from the wrong example? What if the guidance we seek comes from a more recent crisis, a crisis that should not be that far removed from the minds of our policy makers? Lets take a look at Brazils Lost Decade (a decade that many economists are warning the US might soon approach). Right before the collapse of the Brazilian economy in the early 1980s,
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Brazil pursued policies of import-subsisting industrialization (ISI). ISI is rooted in the premise that a countrys dependency on foreign manufactured goods must be reduced, and to reduce the dependency the country must pursue policies that promote local industrial production. To do this, Brazil did several things. Brazil would devalue currency to boost exports and discourage imports. The Brazilian government was heavily involved in providing capital for infrastructure and heavy industry. Also, despite increasing costs for consumers, high subsidies were provided to manufacturers regardless of how efficient they were. In the short term, Brazils ISI model increased domestic employment, enabled less long distance transportation of goods, and made industries invulnerable to smaller dips in the economy. The ISI model was able to achieve this because it created an artificial economy. By essentially giving businesses free capital handouts, companies lost their incentive to innovate and remain competitive so all resemblance to a strong economy with healthy competition was lost. Under an ISI regime, the economy was doomed to fail from the start. Another caveat of Brazil is the amount of debt that was accrued before the economic collapse. From 1964 to 1980, Brazils foreign debt increased from $6.4b to $54b. From 1974 to 1980, Brazils deficit rose from $1.7b to $12.8b. These were the years leading up to the Lost Decade, not during the Lost Decade itself. Brazil accumulated this debt at a time when the economy grew 6.9% per year and the debt still wrecked havoc on the economy by playing a part in triggering the economic collapse. Per annum, during the Lost Decade, GDP increased by only 1.6 and per capita GDP decreased 6%. Gross investments proportion of GDP fell from 21% to 16%. 40% of Brazils GDP was eaten by inflation. Savings declined by up to 2,000%, Credit card companies charged 25% interest, and there are numerous examples for prices doubling every 10 weeks. That whole decade was created because the government felt intervention was necessary and decided to give businesses more capital- capital that was given not earned. The proposals preached by progressives will push the American economy into the direction of the Brazilian economy in the years leading up to the Lost Decade. Heavy government investment into infrastructure, the hand outs of capital to business that are sinking because of their own decisions and protectionist regulations are crippling the American Dream. Government intervention is not the answer. We dont even have to look at Brazil to know this. Look at what is going on now because of the governments regulation of healthcare. Wellpoint, Cigna, Humana, and ConventryOne have announced that they will all stop writing policies for children. The new healthcare law requires them to insure sick children at the same
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rates that they insure children who are not sick. Sick children require medical care than non-sick children. It may sound callous, but it is a fact. Where is the additional revenue going to come from to cover these children if rate increases are prohibited? It is either going to come from the companies profits or from the government. If it comes from the company there is only a finite amount it can absorb before the company collapses under the burden. Insurers are already required to spend at least 80-85% of their revenue on patient care. If it comes from the government taxes or debt (but probably both) will have to be raised to cover the additional costs. Unless it can get waivers from Kathleen Sebelius, McDonalds will be cutting insurance for 30,000 employees because it cannot remain a viable business and afford the level of healthcare mandated by President Obama. We dont even know what will happen to other companies. McDonalds might be the first of many employees dropping their coverage. Home Depot, Disney, CVS, Staples, and Blockbuster, among others, all have similar plans under the provider Aetna, Inc. The Principle Financial Group has already left the market, leaving 840,000 Americans without coverage. Democrats are simultaneously removing the ability of companies to remain competitive and increasing the national debt. We dont need to look 80 years in the past to know that this is a bad idea. All we have to do is look to Brazil during 1980s. Just because the decade was lost, it doesnt mean that its lessons have to be too.

Voting Republican The Cheapest and Most Effective Stimulus


Need to jump-start your economy? No need to spend hundreds of billions of dollars on Keynesian stimulus programs. No need to add a dime to your deficit. Nope, economic stimulation can be achieved with just two words Conservative Congress. As it turns out, simply voting conservative this November may provide a spark to the markets that could lead to some huge economic gains. The New York Post reported earlier this week, [M]idterm election years tend to presage good times on Wall Street no matter the outcome, with the market up 17 percent, on average, in the year after a midterm . . . but when the election leads to a divided government and a huge reversal in power, as it did in 1994, the gains can be even more stunning.

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As billionaire Kenneth Fisher of Fisher Investments told Bloomberg, Markets love gridlock. What the market wants to see is no change: less legislation that engages in changes in taxes, spending, regulation, or property rights. In other words, markets love certainty, something that businesses have been telling President Obama and Congressional Democrats over the last two years. Instead, weve gotten massive legislative changes including healthcare and Wall Street reform that have left many small businesses wondering the increased cost of doing business. Walter Hellwig of BB&T Management explains the frustration that many businesses face. The current thinking is that the administration is punitive towards businesses and any erosion of power in Congress would create an environment thats less punitive. Businesses dont have an ally in the White House. So they are taking the enemy of my enemy is my friend approach to fixing the situation. In that sense they are cozying up to the idea of sizable Republican majorities in Congress. The hope is that Republicans will slam the brakes on the Democrats agenda and potentially even roll back some of its more harmful business measures. Perhaps most importantly for businesses and investors it will likely mean that President Obamas proposed tax increases on capital gains will not see the light of day. Sensing that the political winds may already be signaling substantial Republican gains, the market has made a historic rally. On October 5th the stock market rose an incredible 200 points. The question is why is Wall Street putting the rally ahead of the results? Former Reagan economic adviser Larry Kudlow has a theory a newly released Gallup poll showing Republicans are poised to make enormous gains in the midterm elections. The Gallup poll found that using their high turnout model Republicans lead by 13 percent in a generic ballot test. Using their low turnout model the Republican lead jumps to 18 percent. As Kudlow explains, Now thats a game-changer for politics and stocks. . . Anything that even slows down the federal tax-and-regulatory pawing of American firms could conceivably prompt businesses to unleash their massive cash hoard into something that more closely resembles a normal capitalgoods-investment and job-hiring campaign one that would increase economic growth and reduce unemployment. Judging by the numbers it appears clear that businesses believe a Republican Congress is the best prescription for their fiscal health. They understand the certainty that Republican majorities
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would bring to policy arena by providing a powerful check on President Obamas progressive agenda. They see the opportunity to keep tax rates on investment low, the chance to roll back some of Obamacares more punitive provisions, and chart a more even course on fiscal policy. In short, we dont need another trillion dollar injection of taxpayer money into the economy. The reality, at least in the eyes of businesses, is much simpler. We just need to vote Republican.

Obama Issues Casting Call Conservatives Need Not Apply


President Obama appears to have learned his lesson. No more audience slip ups. No more disgruntled supporters. No more of these kind of awkward situations: Im exhausted of defending you, defending your administration, defending the mantle of change that I voted for, and deeply disappointed with where we are right now. For his upcoming town hall meeting dubbed A Conversation with President Obama MTV issued a casting call for the audience. From the Backstage.com listing: SeekingAudience Members: males & females, 18+. To apply, email townhallaudience@mtvnmix.com and put Town Hall in the subject line. To ensure that the audience represents diverse interests and political views, include your name, phone number, hometown, school attending, your job and what issues, if any, you are interested in or passionate about. Also, provide a recent photo and short description of your political views. Submission deadline: Oct. 14. No pay. That seems to be the politically correct way of saying, Seeking: young, good looking liberals needed to lob easy questions to President Obama. Conservatives, or liberals who are exhausted of defending the President need not apply. Stocking the audience with friendlies is an old political trick. It allows your followers to appear diverse, differences to appear purely academic, and answers to be pre-written to perfection. The problem is that President Obama previously went to great lengths to assure the skeptical public that his audience and questioners were always open to the public and chosen at random.

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As ABC News reported in 2007, Opening up the floor for questions Obama laughed and assured the crowd, By the way, these questions have not been pre-screened or pre-selected. Dont know whats coming up. In fact, when a reported asked Obama about a controversy surrounding Hillary Clinton planting questions at a town hall event he replied, Ill let Senator Clinton answer for her campaign and how they operate town hallsI think youll have to ask her to defend the practices theyve engaged in, Obama responded, Its not a practice that weve ever engaged in and its not a practice that we ever plan to engage in. Oops. Scrap that plan. The President and his Party are staring down the barrel of a disastrous election season. Americans, and especially young people, disappointed at the lack of change we were promised, have a lot of tough questions for President Obama. But with everything needing to go his way to stave off Republican gains, it looks like the President is only looking for softballs. Fortunately, there are no casting calls for the ballot box. There will be no issue screening or partisan vetting. It appears that will be the first chance well get to really voice our concern with this administration.

September Jobs Report Shows Slow and Steady Isnt Working


New labor statistics for September have been released showing zero improvement in the 9.6 percent jobless rate. In the month of September alone, 95,000 jobs were lost. The private sector added a measly 64,000 jobs, not even enough to keep up with population growth, while the government dropped 159,000 workers. These numbers are the latest ominous sign for the Democrats, the last thing they needed as we near the midterm elections. America is restless, fearful even. In Obamas recent town hall meeting on CNBC he was confronted with fears from ordinary Americans. There were those who feared this was the new norm and that the American dream is dead. Obamas response, Its slow and steady as opposed to the kind of quick fix that I think a lot of people would like to see. Slow and Steady. The words are intended give us hope that Obamas fiscal policies will eventually get the economy back on track. But as the months of job losses drag on our hope is wearing thin

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In response to Obamas slow and steady policies CBS White House correspondent Mike Knoller tweeted about the historically bad nature of our economy, unemployment has now topped 9.5 percent for 14 straight months, longest stretch since the 1930s. The 1930s! Our economy hasnt been this down in the dumps since the Great Depression. Worse, many economists are seeing no end in sight. A poll of business executives earlier this week found that 22 percent expect a double dip recession, while 64 percent believe that a recovery will occur in 2012 or later. House Minority Whip Eric Cantor blames the lack of progress (slow and steady would be an overstatement) on the Democrats current fiscal policies. Cantor, among many other conservatives, believe that in order for the economy to grow businesses must not fear federal policies. Todays jobs report is the latest reminder that small business people, job creators, and investors need certainty before they can grow,Over the past two years, the policies pursued by the President and Democrat leaders in Congress have created a cloud of uncertainty and fear that has inhibited productivity, innovation and job creation. Diana Furchtgott-Roth, Senior fellow at the Hudson Institute, understands why businesses remain reluctant to hire and job growth continues to lag. Its not surprising that employers arent hiring. Congress has left town and employers dont even know what their tax rate is going to be next January. If they file as a small business, will their tax rates be 35 percent or 39.6 percent? If theyre corporations, will taxes on dividends be 15 percent, or will dividends be taxed at ordinary income levels? Will the long-term capital gains tax rate be 15 percent, 20 percent, or 25 percent? Will businesses get expensing and a permanent research and experimentation credit? No one knows, so businesses cant plan and hire. If the US wishes to get out of this new norm of +9 percent unemployment, we need a government that will not only allow, but encourages business growth. We need a Republican Congress, if for no other reason that it will provide a much needed check on President Obamas progressive agenda. We need certainty on tax rates. We need to cut through the red tape. We need to provide a clearer path through the maze of regulations that are preventing businesses from being able to make the economic case to hire. None of this can be done within the current Democratic structure who are more concerned about saving their jobs in Congress than saving your job in the private sector. The White House displayed its shocking indifference to the long term unemployment problem by saying, it is important not to read too much into any one monthly report. We need to respond that they need to understand that it is important to get this economy on track. And it should start this month. No excuses. Slow and steady is just not going to cut it anymore.
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Obamas Foreign Money Scare Tactic Falls Flat


Oops. Thats the Obama administration admitting their latest messaging failure. Over the past week the Democratic National Committee and President Barack Obama have been laying out a coordinated attack against donations by foreign owned corporations. Yet another election year bogeyman that is intended to draw voters away from the main issues the economy, the unemployment rate, and looming taxes that are sure to hurt Democrats in November. Speaking at a rally on Sunday Obama said that the American people deserve to know who is trying to sway their elections. He put a seed of doubt into the crowd of whether the apparently nefarious influence peddlers from across the oceans could be the ones attempting to dismantle his mantle of positive change. You dont know, Obama said, It could be the oil industry. It could even be foreign owned corporations. You dont know because they dont have to disclose. Obama echoed the concern in other campaign stops throughout the week, telling voters that groups that receive foreign money are spending huge sums to influence American elections. The DNC was more pointed in their criticism accusing the Chamber of Commerce and Karl Rove of stealing our Democracy, spending millions from secret donors to elect Republicans to do their bidding in Congress. It appears theyve even taken secret foreign money to influence our elections. Its incredible, Republicans benefitting from secret foreign money. Powerful if true. Faux nativism plays almost as well in elections as another recent Democratic schtick faux populism. So the question is, is it true? Perhaps Obamas senior adviser David Axelrod can shed some light on the answer. When Axelrod was asked by Bob Schieffer of Face the Nation whether he had any evidence that the Chamber of Commerce was using foreign funds to influence the election he responded Do you have any evidence that its not, Bob. The fact isthey wont release any information about where their money is coming from. The New York Times reported, The Democratic committees spokesman, Hari Sevugan, likewise offered no evidence and suggested it was up to the chamber to disprove the assertions. Serious questions have been raised, he said in an e-mail. If they want to clear this up, they can open up their books.

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In other words, this is a guilty before proven innocent kind of world and Democrats are more than happy to throw around unfounded accusations and then leave it to Republicans to prove that it isnt true. Apparently slander and fear tactics are part and parcel of this whole hope and change package. Regardless of who bears the burden of proof, were still left wonderingis it true? Fortunately, the New York Times has done some digging and found that, [A] closer examination shows that there is little evidence that what the chamber does in collecting overseas dues is improper or even unusual, according to both liberal and conservative election-law lawyers and campaign finance documents. Organizations from both ends of the political spectrum, from liberal ones like the A.F.L.-C.I.O. and the Sierra Club to conservative groups like the National Rifle Association, have international affiliations and get money from foreign entities while at the same time pushing political causes in the United States. Bipartisan agreement? Well that sure makes it sound less scandalous. But lets say that these evil foreign corporations with names like Reebok, 7-Eleven, and (gasp) Food Lion, are squeezing the life out of our American Democracy. Who exactly are these shadowy foreign groups giving to? Well according to the Center for Reponsive Politics, a nonpartisan group tracking money in U.S. politics, of the $12.2 million given by foreign-connected PACs in 2010, Democrats have received $6.52 million while Republicans have received $5.58 million. Wait, what? All this hoopla by the Obama and the DNC railing against the influence of foreign corporations on the upcoming elections and theyve actually received more money from them? Yep. So perhaps Obama and the DNC were right. Perhaps foreign corporations are influencing our elections. Its just an inconvenient truth that they happen to be influencing more towards Democrats than Republicans.

Liberal Economists to Obama: More Waste, Fraud, and Abuse Please


Macroeconomics sounds about as approachable as astrophysics. Something that should just be left to the really, really smart people at the Federal Reserve while the rest of us just mind our
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own business. But, its not. As noted economist Henry Hazlitt wrote, when we study the effects of various proposals, not merely on special groups in the short run, but on all groups in the long run, the conclusions we arrive at usually correspond with those of unsophisticated common sense. Cut through the complicated math, eliminate the mile-long equations, and get down to the base conclusions that economics leaves you with and youll be amazed at how well they gel with common sense. And yet economists today, presumably very smart men and women, are advocating for outcomes that Hazlitt descries as palpably absurd. For instance, take an example given by John Maynard Keynes in his book The General Theory of Employment, Interest, and Money, a book whose influence can still be seen in Obama administration policies. If the Treasury were to fill old bottles with banknotes, bury them at suitable depths in disused coalmines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the repercussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. When you parse out the message through Keynes impenetrable writing style he was suggesting something rather simple. Digging holes, burying money, then digging up the buried money, will ultimately benefit society and create wealth. Listen to economists today and theyll tell you to look at all the jobs that are created. Someone will be paid to dig the hole, someone will be hired to bury the money, and yet more people can be employed to dig it up again! Look at all the jobs. But when you take a step back arent you left wondering, isnt this ridiculous? Were really going to dig holes and then fill them up again? Your common sense is yelling at you. And it would be right. Sure, it is easy to see the jobs being created. They are right there in front of you the hole diggers and the hole filler-uppers. What you dont see is the jobs that have been destroyed. The problem with spending such as this is that the government is paying for people to dig the holes. The debt the government goes into to pay for the hole diggers must eventually be paid back in higher taxes. Higher taxes takes away disposable income from everyone, income that would have been spent buying goods like houses, cars, and televisions. Since people will be buying less of these products, we will employ fewer people to build our houses, cars, and televisions. The problem is that these lost jobs are difficult to see because they are spread thinly across a va-

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riety of industries. But the fundamental outcome remains the same weve simply robbed Peter to pay Paul. Given this seemingly simple reality and my own common sense I was very surprised (and distraught) to read that some liberal pundits were calling for more waste, fraud, and abuse in the Obama stimulus program. The punditry followed the release of a government audit on the stimulus which found that it had historically low levels of waste, fraud and abuse. The average person cheered this as fantastic news (despite our suspicion that the results, finding that a mere two-tenths of a percent of stimulus projects required investigations, seemed unrealistically low.) But some liberals were actually upset at the news. For instance Matthew Yglesias of the prominent liberal website Think Progress had this to say: If were looking for things with a high multiplier i.e., a large fiscal impact on GDP relative to the expenditure then letting corrupt mayors embezzle money and hand it out as walking around money actually looks pretty good. The recipients of such funds presumably have a high marginal propensity to spend. . . [T]heres obviously something to be said for doing cost-effective programs in a cost-effective way but you might get a bigger macroeconomic bang for the buck by building bridges to nowhere in a deliberately inefficient way. In other words, screw spending the money wisely, we should have been digging holes and filling them up from the start! This should fly in the face of your common sense. In fact, the nonsensical nature of it should feel like a smack in the face. Just imagine how easy it would be to jumpstart any economy if all wed have to do is dump truckloads of cash onto the feet of our most wasteful spenders. But remember, theyre talking about your money! It may not seem like it now, because tax rates have yet to catch up with the crazy amounts of debt this Administration is building, but just you wait until the bill collector comes. Youll look down at your tax bill, and the reduced amounts of services that the government is providing, and wonder to yourself why youre having to pay more for less. To which Yglesias would want to emphatically say, because we gave it to corrupt mayors! Its an epically stupid concept, one that should undermine the concept of stimulus measures altogether. If inefficiency is good, waste is better, and fraud is best, what does that say about your ideas?
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Nevertheless, some really smart people will agree with them. Its all about the economic multipliers theyll say. But remember, economics is, at its core, about common sense. Dont let them talk you into the idea that digging holes and filling them up is actually intelligent. But if they do, come back and see me, Ive got a bridge Id like to sell you.

High Corporate Tax Rates Threatens Americans Competitiveness in Global Market


Our world is shrinking. Communication and technological advancements have broken down borders that had been previously created by distance. Not only is culture crossing borders, but businesses and money are moving with it. Globalization can be a great tool in advancing the progress of our society. It ensures specialization, an efficient allocation of resources, and in the end, cheaper goods. Historically, the United States has been a haven for many job-creating businesses. We have a highly educated workforce, a lot of consumers, and a (comparatively) stable government. Unfortunately, our inherent advantages are losing out to bottom-line economics in the minds of todays entrepreneurs who are deciding where to locate their operations. You can call it cutthroat if you wish, but the fact remains, in the modern world corporations are going to locate where they can keep more of the money that they earn. If the tax rate in India is half of what it is in the United States, there is currently very little reason for them to set up shop on our shores. We no longer have the comparative advantages, like being the home to hordes of consumers, that would allow us to overcome our burdensome tax structure. That is why the United States, which is currently laboring under the second highest corporate tax rates in the world, is consistently finding itself left out in the cold by start ups and businesses looking to relocate.

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Unfortunately, President Obama has his eye on digging us into a deeper competitive hole. Last year Obama announced plans to close corporate tax loopholes on U.S. multinational corporations and crack down on overseas tax havens with the goal of creat[ing] new jobs in the United States and making the tax code fairer. All told, the administration said the changes would raise $210 billion in tax revenue over 10 years. The administration has already passed several of these loophole closers in an effort to offset their drastic spending increases. But as Martin Regalia, chief economist at the Chamber of Commerce, told CNN, These arent loopholes. These were put into the code with full knowledge and discussion. This is only about raising more money its not about making the tax code simpler or more efficient. There should be a serious question about whether further raising taxes on corporations will actually raise the money the President is promising. The corporate tax rate situation facing the federal government is very similar to a decision states are making the revenue maximizing income tax rate. Individuals are free to move across states based on tax incentives. An Illinois businessman may pick up and move to Texas to avoid paying income taxes on his earnings. This is very similar to what globalization has done to corporate decision making. Multinational corporations are no longer beholden to one nation. They are free to set up shop nearly anywhere in the globe based on a number of incentives corporate tax rates being chief among them.

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When we zoom in to look at how various income tax levels impact state revenues we find an interest trend. Our states are being forced to compete with each other on an individual basis. If a particular state creates an environment that is more attractive to job creating individuals, that state will have more entrepreneurs moving to that state; bringing more wealth and jobs. A case study done by noted economist Arthur Laffer finds that, In the past decade, the nine states with the highest personal income tax rates have seen gross state product increase by 59.8%, personal income grow by 51%, and population increase by 6.1%. The nine states with no personal income tax have seen gross state product increase by 86.3%, personal income grow by 64.1%, and population increase by 15.5%. Regardless of the policy incentives employed, states have been fortunate enough to see growth. But states with no income tax have seen growth soar, especially among their gross state product. By lowering income taxes these states have been able to attract businesses into their state, bringing with them jobs and increased population. Each of those things actually increases their tax haul by increasing yields in sales tax, property tax, etc. Laffer finds that over the past decade, the nine states with the highest tax rates have experiences tax revenue growth of 74% a full 22% less than states with no income tax. While the lure of raising income taxes brings to mind enormous increases in revenue for state governments, experience shows this just isnt true. To the contrary, maintaining low income taxes actually appears to increase tax revenues, the result of businesses and people migrating to the state in higher numbers. This carries with it an implicit lesson for the federal government. Although raising corporate tax rates or closing loopholes appears to be an attractive way to increase tax revenues, it is just a mirage. The damage it would do, in terms of driving businesses, and the jobs they create, to more tax-friendly countries, would more than eliminate any tax gains from the businesses already here. The better solution would be to lower corporate tax rates to a level at which we can regain our competitive edge with the rest of the world. In this depressed world economy we must incentivize businesses to come, and bring jobs with them, not push them out. Fortunately, President Obama is beginning to come around to the idea of keeping corporate taxes low. A recent Wall Street Journal article reports that,

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President Obama voices supportfor a broad rewrite of the corporate tax code, including a lower corporate tax rate. . . [Obama] said such a move could be a win-win for everybody. Currently he is focused on continuing his plan to close numerous tax loopholes and then overall corporate tax rates. This is a good start but does not go far enough. Our corporate tax code is a mess that certainly deserves, and needs, a fresh start. But the fundamental impetus for reform must not be closing loopholes, it must be centered around lowering the overall corporate rate. If we want to stay a step ahead in the global economy we must make our tax laws as attractive as possible. To do so, we must go beyond balancing closing loopholes with lowering the tax rate, which ends up in a wash in terms of actual taxes paid. If we do so, we may just be amazed to see our corporate tax revenues rise, not fall.

Obamas Faith in Fairness Only Reinforces Inequity


Fairness is a crucial part of President Obamas worldview. The notion has also had an enormous impact on his policy choices. Take for instance, some of the speeches he has given while on the campaign trail and as President:

Those kinds of progressive tax steps, while closing loopholes and rolling back the Bush tax cuts to the top 1 percent, simply restores some fairness and a sense that were all in this together. We talk about welfare and we talk about poverty, but what people really want is fairness. They want people paying their fair share of taxes. They want that money allocated fairly. 2007 Democratic Primary Debate at Howard University Jun 28, 2007 These steps are all paid for, and designed to restore balance and fairness to the American economy after years of Bush Administration policies that tilted the playing field in favor of the wealthy and the well-connected. Speech in Flint, MI, in Change We Can Believe In, p.244 Jun 15, 2008

These policy positions can be summed up by an off-the-cuff remark that President Obama made to Joe the Plumber, Its not that I want to punish your success; I just want to make sure that everybody who is behind you that theyve got a chance to success, too. I think when you spread the wealth around, its good for everybody.
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In making such statements President Obama seems to be ignoring a fundamental question does penalizing the wealthy really lead to a fairer system? During the Presidential debates Charlie Gibson questioned him about his plan to raises taxes on capital gains from 15 percent to 28 percent. Gibson pointed out that in each instance in which the rate was lowered the governmental revenues from the tax actually increased. This didnt matter to Obama. His response remained the same, Well, Charlie, what Ive said is that I would look at raising the capital gains tax for purposes of fairness. That hard and fast rules leaves no room for variables. Fairness, apparently, outweighs all. Increased tax revenues? Doesnt matter. Less government debt? Meh. More investment being pumped into the economy? No consequence. The problem with this dogmatic view is that it overlooks how certain tax policies actually take away from fairness. Wealth in America is not a zero sum game. The upper tier of taxpayers can grow their riches while the middle class simultaneously makes income gains. In fact, that is the way it should be. What is a zero sum game is money. When the government takes a dollar away from private sector investors, through tax increases or government debt, that is a dollar they cant invest in entrepreneurs or capital improvements. Less capital investment and fewer entrepreneurs sets off a chain of events that inevitably lead to less profits, fewer jobs, and a relatively depressed economy. The people that we were trying to be fair to are the ones left out in the cold. Unfortunately, this traps us in a downward spiral. To ensure fairness to the less well off, i.e., the people who suffer from the reduced amount of jobs, the President passes programs such as healthcare reform, extensions of unemployment benefits, and other social programs that must be paid for out of taxes. The higher taxes must be paid for primarily out of the pockets of the wealthy, thus restarting the cycle of reduced investment and entrepreneurship that got us into this mess in the first place. The fairness Obama should be talking about, but isnt, is equality of opportunity, not equality of results. This doesnt require any game rigging, redistribution, or penalizing of those who succeeded. When you do these things, even in the name of fairness, youll be left disappointed by the unfair results.

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Voter Anger of Economy Spells Big Trouble for Democrats


Big emotions lead to big turnout in elections. In 2008 it was hope that drove record numbers of people to the polls. Americans were tired of the insider culture, the seeming arrogance of the Bush administration, and its isolated leadership style. They turned out, in overwhelming numbers for a change. Now voters are angry. Upset that there is very little perceived change in Washington, but genuinely furious about the state of the economy. As ABC News reports, 85 percent of Americans are either angry about the economy or at least dissatisfied with it. Moreover, by more than a 3-to-1 margin, voters say they blame Democrats more than Republicans over the state of the economy. Our economy is in the dumps. Weve lost around 8 million jobs since the beginning of the recession, but as last Fridays jobs report shows, were making almost no progress in getting them back. The report by the Bureau of Labor Statistics finds that 95,000 jobs were lost in September. The private sector gained a measly 64,000 jobs, not enough to keep up with population growth, much less make a dent in the growing ranks of the unemployed. But still, 64,000 jobs still provides a glimmer of hope that the Democrats policies are working right? No. For some perspective, liberal economist Paul Krugman calculates that if we want to return to full employment in 5 years, we need add 300,000 jobs each month. In other words, losing 95,000 jobs in total, or even gaining 64,000 private sector jobs, just aint gonna cut it. Not many voters are buying into the measly growth either. As the new ABC/Washington Post poll found, optimism about our economic recovery has been eroding gradually over the past year. Last December, Americans were essentially divided over the question over whether or not the economy has begun to recover 50 percent said it had, 49 percent said it had not. Feelings that we had survived the worst feel to 45 percent in February. Now, a mere 34 percent feel that the economy is recovering, an all time low since ABC began asking the question last November. Not only are Americans angry about the state of the economy, they are increasingly pessimistic that it is on the road to recovery. Even more worrisome for Democrats is the fact that the decline in economic optimism has fallen the steepest amongst independents, a voting group that will be key in the upcoming midterm elections. Voters have every right to be angry. Democratic leadership in Washington, headlined by Barack Obama, Harry Reid, and Nancy Pelosi, has done nothing but erode the confidence of Americans. We actually feel like were moving backwards!

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While Democrats were successful in getting many of their policy priorities, like healthcare and financial regulatory reform, through Congress, Americas economy continued to stagnate. With their poll numbers tanking and elections approaching, Democrats continued their economic inaction, choosing instead to hunker down in their districts and gear up for a hard midterm season. But while Democrats were out fighting for their policy priorities and now fighting to save their jobs, Americans are angry that so little was done to fight for their priorities and their jobs. Just as in 2008, emotions will be driving this election, but unlike 2008, it will be for the benefit of Republicans.

Brooks: Government Strangling on Its Own Self Indulgence


Our government has forced itself into a Catch-22. A Catch-22 is a logical paradox arising from a set of circumstances in which a person needs something that can only be acquired by not being part of that set of circumstances. In the governments case this is perhaps most clear in our attempts to escape the dire economy. The government wants to spend money on a variety of things to help escape the economy. But their previous profligate spending habits has made it impossible to get the political momentum necessary to pass spend anymore money. New York Times writer David Brooks points out another of these Catch-22s in todays column. He discusses a recent decision by New Jersey governor Chris Christie to stop construction of a tunnel between New Jersey and New York. Brooks explains, Christie argues that a state that is currently facing multibillion-dollar annual deficits cannot afford a huge new spending project that is already looking to be $5 billion overbudget. His critics argue that this tunnel is exactly the sort of infrastructure project that New Jersey needs if its to prosper in the decades ahead. And as Brooks writes, both sides are right. One of the primary reasons Christie, and many other governors, are facing such difficult financial decisions is that they have spent lavishly on public sector pensions the past few decades.

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A new study released by Robert Novy-Marx finds that cities are facing unfunded liabilities in their public pension plans of around $574 billion. This is in addition to his analysis that found a $3 trillion gap in state public pension plans. As Brooks explains, New Jersey cant afford to build its tunnel, but benefits packages for the states employees are 41 percent more expensive than those offered by the average Fortune 500 company. These benefits costs are rising by 16 percent a year. This is a problem of governments own creation. We cant pay for the things we want, like a space program, or things that we need, like the interstate highway system, because were cash strapped by paying for things that we neither want nor need. In the end, our inability to pay for these simple requirements of a functioning economy, will further depress our economic output, lowering the governments tax receipts in the process. The Catch-22 rears its head. Or as Brooks says, governments cant promote future prosperity because they are strangling on their own self-indulgence.

Debunking the Krugman Claim That Government Expansion is a Myth


Heres the narrative you hear everywhere: President Obama has presided over a huge expansion of government, but unemployment has remained high. And this proves that government spending cant create jobs This excerpt is out of Paul Krugmans recently published New York Times article entitled, Hey, Small Spender. Ive never agreed more with anything the controversial liberal economist has ever written. The federal government under president Obama has grown at historic levels, even as private sector employment continues to contract. Unemployment has indeed remained high. In fact, that is an understatement. Following Septembers job report, the unemployment rate has now topped 9.5 percent for 14 straight months the longest stretch since the 1930s. This is all despite nearly $1 trillion in taxpayer-funded stimulus, trillions more in buying up risky mortgages, and the Fed doing everything in its power to spur the economy. If that doesnt prove government spending cant create jobs then what does?

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Unfortunately, Krugman didnt stop there. You didnt really expect him to take a conservative (or even rational) viewpoint did you? He continued, by saying, Heres what you need to know: The whole story is a myth. Normally when you make that strong of statement, saying the entire theme of the upcoming is bunk, you at least have some evidence to back it up. So lets see what kind of evidence Krugmans got. He begins his argument against the government expansion myth by asking a question. What major new federal programs have started up since Mr. Obama took office? asks Krugman. Well, first there is healthcare reform, the largest government program since Medicare. Implementing it will cause the IRS to hire as many as an additional 16,500 additional auditors to investigate and collect the new taxes. That is in addition to the thousands of new government workers who will go to staff the 159 new government agencies, bureaucracies, and boards mandated by the new health law. Krugman dismisses all of this with one line. Healthcare reform hasnt kicked in yet. Having ignored that elephant in the room he asks another question, are there giant infrastructure projects under way? No. Well, were not building any Bridges to Nowhere, but when viewed as an entire package, yes there are giant projects underway! The stimulus directed $300 billion towards states and cities for spending on infrastructure projects like roads and bridges. For more context consider that more than 100,000 projects to upgrade schools, airports, subways, schools, roads, railways, etc. are being funded by the stimulus. None of that includes nearly one-sixth of stimulus dollars that TIME Magazine describes as an all-out effort to exploit the crisis to make green energy, green building and green transportation real. So yes, Mr. Krugman, there are giant infrastructure projects underway that are boosting the size and scope of the federal government. Ignoring these facts, Krugman lobs up his final question, are there huge new benefits for lowincome workers or the poor? No.

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Once again, the facts are in conflict with his simple dismissal. Unemployment insurance benefits have been extended multiple times to accommodate for the enormous numbers of unemployed. Enrollment in Medicaid, the healthcare program for the poor, showed the sharpest annual rise last year since the late 1960s. Enrollment in the food stamp program has also skyrocketed with 41.3 million people receiving the stamps, up 45 percent from 2008. As the Wall Street Journal summed up the situation, As recently as the early 1980s, about 30% of Americans lived in households in which an individual was receiving Social Security, subsidized housing, jobless benefits or other governmentprovided benefits. By the third quarter of 2008, 44% were, according to the most recent Census Bureau data. Krugman conveniently ignores all of these facts in making his assertions. He only addresses the enormous increases in government programs by saying Medicaid, Social Security, etc. dont really count as big government. The reason, he says is that when people denounce big government theyre talking about big bureaucracies and major new programs. Somehow he doesnt notice that these programs are big bureaucracies. When facts dont match his argument, Krugman is content to change the facts. His final argument, the supposed nail in the big government coffin, is that the total number of government workers in America has been falling, not rising, under Mr. Obama. Perhaps hed like to take this up with the Bureau of Labor Statistics who reported growth in all sectors of government in 2010.

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But that is not my main quarrel with his argument. By talking about the total number of government workers and then saying under Obama, Krugman gives the impression that the President controls state and local government hiring. That is simply not the case. So when we focus on what the President does have control of, the size of the federal government, we find that the government has gained 198,100 jobs. Growth in government, regardless of whether it is big or small should be considered unacceptable against a backdrop in which the private sector has lost 7,837,000. Despite the lack of facts, Krugman finishes his argument with the smug statement, [s]o as I said, the big government expansion everyone talks about never happened. Well, as I said, Krugman should have stopped after his first paragraph. If he had, it may have been his most honest and informative column hes ever written.

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Fighting Back with Fact Government Spending IS a Problem

Were all wrong. Contrary to what you may have seen or believed, the size of government hasnt grown and Washington isnt spending at record levelsat least in the world according to Paul Krugman. In this alternate Krugman reality in which he, and he alone, inhabits there never was a big expansion of government spending. See how we busted that myth HERE. But he didnt stop there, he also argues that there is a widespread perception that government spending has surged, when it hasnt. He begins his argument with this whopper, we know that Congress enacted a stimulus bill in early 2009; why didnt that translate into a big rise in government spending? I dont know even how to counter that. It is so divergent from the truth that Im left wondering how best to argue with it.
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The fact is that in 2009 the federal government spent a record $3.52 trillion. About $1.4 trillion of that was deficit spending. For comparisons sake lets look at another big spender that Obama and Democrats like to blame for our current budget situation. George Bush spent $1.8 trillion in his first year of his presidency nearly one-half what Obama spent in his. Despite the decline in stimulus and TARP spending 2010 was yet another banner year for government expenditures. At the end of September the government had spent $3.45 trillion, the second highest yearly total behindyou guessed it, 2009. A significant portion of the incredible rise in spending compared with historical averages comes from growth in our broken entitlement programs such as Medicare, Medicaid, and Social Security. However, we cannot overlook, as Krugman has chosen to do, the dramatic increase in discretionary spending. Over the course of the last fiscal year, discretionary spending, which the government can control, increased by 84 percent! Moreover, according to his own budget spending will continue to rise. Prior to the recession federal spending totaled $24,000 per U.S. household, but by 2019 that figure will rise to $32,000 even after being adjusted for inflation.

Krugman dismisses all of these numbers, arguing that the public has been deluded by a misinformation campaign from the right, based on the usual combination of fact-free assertions and cooked numbers. For making such a claim youd at least think that hed have some facts and numbers to back up his assertions. Youd be wrong. His column mentions very few concrete facts, instead choosing
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to say things like the stimulus wasnt actually all that big compared with the size of the economy. Of course, he neglects to tell us the facts namely, that the stimulus was roughly 17 percent of GDP in 2009. Hes content to inform us of his opinion that it wasnt all that big. He doesnt even give us any cooked numbers. In fact, the column is remarkably devoid of numbers for something attempting to argue that government spending is a myth. There is no comparison with past spending, no talk of budget projections, no deficit or debt figures, and not even a favorable CBO score. Krugman brought an opinion to a numbers fight. That just isnt gonna cut it. The fact is, over the past two years, federal spending has increased 21.4 percent over the past two years, unemployment is at 9.6 percent, and Obamas deficit is around $2.7 trillion. Clever words from a decorated wordsmith are a powerful foe, but not when Ive got the facts on my side.

Public Sector Pensions: Frankensteins New Monster


Congress has created a monster. For years the subject of public sector pensions raised the ire of heard, but never seen, conspiracy theorists. As the years have passed, they continued to grow with no oversight and very little public pushback. In the shadows they have grown into a ravaging monstrosity, a Frankensteins monster that is threatening the financial wellbeing of our local and state governments. It is pillaging and terrorizing the countryside. Pensions werent created for the purpose of devouring our budgets. Like Frankenstein, government created its pension monster with good intention. They wanted to provide government workers with a comparable retirement to the private sector so they could be more competitive in luring talent from the private sector. But once government workers had a taste, they lobbied for more. Pensions grew, retirement ages shrunk, and the unfunded pension monster began to take shape. Now, it is threatening to tear our budgets apart at the seems, eating away at tax revenues, and bankrupting our cities and states. While private sector union membership has dropped to 12.3%, public sector unions have grown exponentially. For the first time ever there are more people in public sector unions than private sector unions. Thirty-nine percent of state and local government workers now belong to unions. If you look outside of the South, the percentage skyrockets. For instance, in New York 70% of government workers are in unions.

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Public sector unions have been an incredible lobbying force, working from the inside out to push for more lavish pension packages for government workers. One of the biggest public sector unions is the American Federation of State, County, and Municipal Employees (AFSCME) have openly declared that they have the power to determine elections. The AFSCME was the biggest election spender between 1989 and 2004. They spent over $40 million in federal elections, with an astounding 98.5% going to Democrats. Victor Gotbaum, former lead of AFSCME District Council 37, once declared we have the ability, in a sense, to elect our own boss. Any efforts measures to curb growth are immediately met with hostility. The California Teachers Association spent $57m to stop a referendum to limit government growth and to reduce union power. Unfortunately, they have been such successful parasites that they are threatening to kill their hosts. A new report finds that American cities face a $587 billion shortfall in pension funds. Some of our most iconic cities face the largest problems. Chicago has a $44.9 billion shortfall and New York City has a $122 billion deficit. State governments are facing a similarly dire crisis, finding themselves $3 trillion in the hole in terms of pension liabilities. Even tiny states such as Rhode Island are over $6 billion the hole while places such as California face a seemingly insurmountable $75.5 billion in underfunded pensions. We have already seen the wrangling of private companies by private sector unions. Some private industries now have 3 people receiving full pensions for every person they have actually working. Paying four people for the productivity of one person simply isnt sustainable, and now we are seeing the governments system falter under the same logic. But where private sector pensions rely on currently productive works in their industry, when public sector pensions fail, the onus of payment falls on all taxpayers. One of the primary problems about growing problems are higher base salaries. Since the level of pensions you receive is largely based on your salary at the time of retirement, the government is paying more for the same thing. Public sector unions have the unique ability to increase their wages without regard to their market value since there is, by definition, a monopoly of employers. There is only of government employer the government. Since there is no worry about profit margins, wage negotiations are rarely adversarial and bosses are inclined to side with the workers to keep them happy. Higher wages mean higher pensions. For instance, In California, one of the worst pension offenders, state police can receive 90% of their final salaries when they retire as early as age 50. With their salaries going up, they are increasingly receiving 90% of an ever-larger number. Given that public sector unions are an incredibly powerful lobby, there is little impetus to change the system. Any inkling of severance between politicians and the unions is virtual career suicide. Because of their unique position, public sector unions can threaten the public more directly than any other union, manipulate supply and demand, and essentially elect their own bosses.
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Public sector unions also have the ability to threaten the public more directly than private sector unions. What if trash collectors or firemen went on strike? In the private sector a strike means you can still get the goods, they will cost more, but there will still be creating. If firemen or police go on strike there will be destruction. The costs are much higher in a public sector strike. This lobbying force can be used for some interesting and nefarious social engineering. For an example look at the The California Correctional Peace Officers Association, a union of correctional officers. They successfully lobbied for California to enact a 3 strikes law in 1994, not necessarily with the goal of taking dangerous people off the streets, but because it would dramatically increase the number of inmates. Between 1980 and 2000 they lobbied for the creation of 22 new prisons, necessary to house the increases in inmates. Before 1980 there were only 12 prisons in the state. Today, 11% of the state budget goes to the penal system, more that what goes to education! Through their lobbying efforts the union was able to manipulate the supply of inmates (yes, were talking about people here) thus increasing the demand for prisons and correctional officers. More jobs, more union members, and all paid for by higher taxes. As unions wield their power states are being forced to choose between upsetting unions and paying for imperative state functions like infrastructure or education spending. This is a problem, a monster, that has grown out of control. The public and its political representatives are essentially being extorted by a strong, unified, group exercising its political clout from the inside out. When the economy was humming and budget surpluses were common, we could look the other way. But with the economy in the tank and state revenues unable to meet spending obligations, this is a problem that must be addressed. This is a monster that must be stopped.

This is About YOU: Portman Praises CR Involvement


Well rounded. That is the first thing that comes to mind when I think of Rob Portman, the Republican candidate for Senate from Ohio. Growing up in Cincinnati he watched as his father borrowed money to start the Portman Equipment Company. His family built the business from five employees to one that employed more than 300 people. After graduating from Dartmouth and the University of Michigan Law School he developed a private law practice dedicated to representing small businesses. He has also served as a Congressman, authoring over a dozen bills that became law, worked as a U.S. Trade Representative in the Bush administration, and was Director of the Office of Management and Budget. Entrepreneurial. Intelligent. Successful. Leader. Public servant.
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Having taken some time out of politics to work as counsel for a law firm, Portman is ready to bring change back to Washington. Realizing the impact that the historic spending will have on our generation, Portman has made an effort to reach out to College Republicans and other young people. These issues are about youultimately, what kind of country we have depends on the election because our deficit and debt are growing out of control and that will be left to the next generation unless we do something about it, said Portman. Young adults are realizing the same thing. Todays spending is tomorrows debt. Rather than be doomed to a future of higher taxes, College Republicans are getting active out on the campaign trail. The calls their making, the door to door their doing, the signs they are getting out for us is a huge part of our campaign, Portman said. Im glad CRs are getting engaged and involved, I think there is a real incentive because these issues are affecting your generation more than anybody elses.

Poll Shows Democrats Clueless on Top Voter Concerns

Announcer: Okay everybody, welcome to another episode of the Family Feud. On my left we have the Roosevelt family represented by Barack Obama, Nancy Pelosi, Harry Reid, and Steny Hoyer. On my right we have the Reagan family represented by John Boehner, Eric Cantor, Paul

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Ryan, and Chris Christie. Gallup has have surveyed thousands of people and the top answers are on the board. Lets play some Family Feud! Our first head-to-head contestants will be Pelosi and Boehner; if you could come on down. First person to ring their buzzer will have the chance to answer the question. Okay, here is your first question, a recent Gallup poll asked American citizens, Name something that the federal government is doing that it should not be doing?

BEEP! Announcer: Madame Speaker, you rang first. Pelosi: Well In my dealings with the human spirit, I know that every true American both young and old would like the government to mandate federally funded health care. Announcer: Can I see health care? Survey says! X Announcer: Im sorry Madame Speaker, that was not found on the board. It seems as if Democrats drastically overestimated Americans hunger for healthcare reform while suffering a dismal economy. Okay Mr. Boehner, would the Reagan family like to pass or play?

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Boehner: We are actually gonna pass sir, wed like to see if the Democrats have any idea what Americans want the government to do. Announcer: Alright, now we will allow the Roosevelt family to see if they can find the top five issues Americans believe the government should be focusing on, but arent. Are you ready Roosevelts? Roosevelt family: Yes we can, Yes we can, Yes we can! Announcer: Okay, Mr. Hoyer, same question. Hoyer: Well sir, my fellow Democrats and I have found that Americans are very concerned about economy. Surely the answer to that is for the government to spend more money. So, were gonna go with spend more. The government should spend more money? Announcer: Survey says! XX Announcer: Sorry Mr. Hoyer, it appears that Americans do not share the Democrats belief that spending is actually going to fix the economy. Now it is time for the Roosevelt familys last shot at staying in the game. Mr. Reid, to keep your team in play, name one thing that the American people want the government to do that it is currently not doing. Pelosi: Well, I know that I dont like to see big businesses making any money while people are out of work. If I feel strongly about that, Americans must as well. Final answer, Americans want stronger business regulation! Roosevelt Team: Good answer, good answer. Announcer: Survey says! XXX Announcer: Ouch, Im sorry Mr. Reid, it seems that the American people dont feel the same way you do on that subject. In fact, it appears as if Americans understand that increased regula-

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tions are actually preventing businesses from hiring and only adding to the ranks of unemployed. Since you got three strikes it is time for the Reagan family to see if they can win the elections I mean game show. Okay, Mr. Cantor, slightly different question. Gallup asked thousands of Americans to name something that the government is not doing that it should be. Can you name one of the top answers? Cantor: Well, sir, I think it is pretty obvious what the American people want. They want jobs. They want to be able to provide for their family and be self-sufficient. My answer, Jobs. Announcer: Survey says! DING!!! 15 Announcer: Jobs is right! And it comes at the top of the board. Fifteen percent of Americans mentioned creating jobs and reducing unemployment is the number one thing the government should be doing but currently isnt. Now Mr. Ryan, can you keep the ball rolling? Ryan: Well I believe that with states like Arizona being forced to take immigration matters into their own hands to protect their own borders, that must be a pretty big issue. Whether you believe in stronger border protections or an easier path to citizenship, it must be a pretty big issue for Americans. Border security and addressing immigration is my answer. Announcer: Can I see immigration? DING!!! 13 Announcer: That is correct! That was the second highest response on our board with 13% of Americans mentioning border security as a top issue that the federal government should be focusing on. Okay Mr. Barbour, there are three more answers on the board, if you can answer one more right then the Reagan family will win the electionser, I mean game. This is for the win Christie: In my time as Governor, I have found that America wants a fiscally responsible government, one that can keeps more money in the pockets of taxpayers. I think Americans are tired of Washingtons tax-and-spend policies. So for my final answer, I will have to say balancing our budget and working on debt.

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Announcer: Survey Says! Ding!!! 6 Announcer: That is correct!!! Six-percent of Americans mentioned limiting government spending as something the government should be doing. It seems the people believe that the federal government has simply gotten too big. Congratulations to the Reagan family who has won the game! It looks like they know exactly what America is looking for out of their government. On November 2nd well see them take on the Roosevelt family against as we kick off our new season. Looks like the Reagan family knows exactly what America is looking for. On November second we will see them take on the Roosevelt family again as we kick off our new season. Thanks for watching and be sure to tune in November for another episode of the Family Feud!

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Barney Frank Ignores Past Mistake Urges More Partisanship

Obama is saying that he will make Republicans work with him after the elections. Obama thinks that they will come to him regardless of the outcome of the election. But maybe, just maybe, it is he who should be seeking them out, not the other way around. Maybe this is wishful thinking, but maybe Obama really will need a change. Maybe Obama will realize that it is outdated fearmongering monsters like Barney Frank that are holding this country down. Obama has routinely criticized Republicans for being too partisan. What has Barney Frank done? He has criticized Obama for not being partisan enough. In August Frank said that the President was not partisan enough, following it up this month by criticizing Obama for being post parti-

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san. That should not come as a surprise. Barney Frank has a history as a partisan terror. To see, let us rewind to 2003 to see what Barney Frank was up to. Back in 2003 there were hearings to determine if Fannie Mae and Freddie Mac were fiscally strong. Not only did Frank declare that Fannie Mae and Freddie Mac were strong, but he went on to assert that critics and regulators were exaggerating financial threats for their own gains. Franks said that I do not want the same kind of focus on safety and soundness that we have in the OCC [Office of the Comptroller of the Currency], and instead wanted to roll the dice a little bit more in this situation towards subsidized housing. The director of federal oversight over Fannie Mae and Freddie Mac, Armando Falcon, sent two reports to Frank and other members of the Financial Services Committee detailing problems with Fannie Mae and Freddie Mac and warned of a catastrophic failure of both. Armando Falcon pointed to $1.5 trillion worth of debt Fannie Mae and Freddie Mac had issued and the misstating of earnings by billions of dollars. Falcon found that Fannie Mae and Freddie Mac had misled investors through deceitful accounting and had not adequately hedged against rising interest rates. Falcon pushed for tougher oversight and asked that Fannie Mae and Freddie Mac be required to disclose more of their finances. The Bush administration then tried wrangle in a measure that would more strongly regulate the practices of Fannie Mae and Freddie Mac. As CNN reported back in 2003: The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. Under the plana new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac. . . The new agency would have the authority [among other things] to determine whether the two are adequately managing the risks of their ballooning portfolios. Fannie Mae, Freddie Mac, and supporters, Frank included, pushed back saying these regulations would limit their ability to finance loans for low income families. As Frank responded to the proposed legislation, [t]he more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing. A few years later in 2008, Henry Paulson phoned Frank to tell him the government would need to spend billions of taxpayer dollars to stop a catastrophic failure. Two days later, Barney Frank said Fannie Mae and Freddie Mac were fundamentally sound. Barney Frank has since realized his errors. He told the Boston Globe that he missed the warning signs because of his ideological blinders. Frank now says that the committee will be recom-

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mending abolishing Fannie Mae and Freddie Mac in their current form and coming up with a whole new system of housing finance. But while he appears ready to admit his housing mistake, one that has literally cost Americans hundreds of billions dollars and played a key role in spurring the financial crisis, he is not ready to take off the ideological blinders. Somehow, he encourages more partisanship, fully knowing that it is what caused him to ignore all the warning signs in the housing market. Did Barney Frank learn nothing from this crisis? Does he not see that the reason we got into this mess was in large part because many people blindfolded themselves with their party affiliation and overlooked the evidence in front of them? And now, he believes that the problem is the solution. Hopefully, Obama will not listen to him. Politicians like Frank are what got us into this mess. They are the ones who initially dismissed the warnings of a Fannie Mae and Freddie Mac collapse as Republican hype and spin. Isnt there a chance that they are the ones still keeping us in this debacle? The polls and unemployment rates show that there is a pretty angry mob getting together. On November 2nd that mob, pitchforks, torches and all, is going after someone. Obama can either stand with the mob or with the monster. While I dont know his choice I do know the smart choice and it isnt with old Barney Frankenstein.

Obama Should Focus on Equalizing Opportunity Not Results


Forget your self-help books like, 7 habits for highly effective people and Rich Dad, Poor Dad. Heck, forget going to college, working hard, and even trying your best. Financial success is all based on one simple thing. You ready? LUCK. Luck is the most important factor when in achieving the financial comfort we all dream about. Shooting stars, four-leafed clovers, rainbows and horseshoes, those are more important than any amount of work ethic and education. It is for that reason we should redistribute the fortunes of the wealthy. After all, their wealth is all due to good fortune, isnt it?

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There always after MY lucky charms Okay, enough melodrama. Clearly Im being sarcastic. We all know that unless youre playing the lottery, luck does not usually play a starring role in clawing your way into the top income bracket. Take, for instance, legendary investor and third wealthiest person in the world, Warren Buffet. As a child he went door to door selling chewing gum and Coke. As a child he spent time in the regional stock brokerage to learn about the market and by age 11 had made his first stock purchase. By his sophomore year in high school he invested in a pinball machine and placed it in a barbershop, using his earnings to place more machines throughout town. This was the foundation of hard work and entrepreneurship that eventually got him into Columbia business school and made him an ultra-successful investor. But that is not the Presidents line. According to Obama we need to end the tax breaks for the wealthiest 2% of Americans, so that folks like me who are extraordinarily lucky . . . Democrats, including Obama, have set aside the economic arguments in regards to tax cuts in favor of a debate over morality. As liberal journalist Jonathon Cohns writes in The Moral Case for Soaking the Rich,

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[T]his debate isnt just about budget arithmetic. Its about morality, too. And Im not sure that part of the debate is getting the attention it deserves. Cohn argues, Almost by definition, people who are successful have benefited from some measure of good fortune. That fortune can take the form of obvious, material advantageslike access to advanced technology and good schools. Or it can take the form of more subtle, but still important, assets for moving forward in lifelike good health or loving parents. This is what he counts as luck? This is what he wants to tax? Do we really want to have a good health tax, or better yet, a loving parent tax? What Cohn, and other liberal scholars have done, is to twist the traditional luck hypothesis. Previous iterations of the luck theory attempt to show that rich people got that way because they knew the right person or just in the right place at the right time. In that sense, theyve grown more nuanced. They now say that the luck that they were talking about is growing up in a nurturing home, with good parents, and having the opportunity to go to good schools. These factors, they argue, increased the opportunities they had to achieve success. And yet this is where their argument breaks down. They say that the problem is unequal (and thus, lucky) opportunities, but in terms of solutions, they want increase taxes on results. It seems to me that if you truly believe that rich people benefited from being lucky in their opportunities then you would attempt to equalize such opportunities. If we really want to debate morality, equalizing opportunity, not equalizing results, would seem to be the most moral course. In fact, penalizing people, through higher taxes, from taking advantages of beneficial opportunities seems to be sending the completely wrong message altogether. Sadly, many Democrats have no idea how to improve opportunity. Worse, they fail to understand that attempting to equalize results actually deters society from self-correcting. As Lloyd Marcus explained in his article, Why I Am a Black Tea Party Patriot, I witnessed the trap of government welfare. And why were so many around me angry and violent despite getting free housing, food and healthcare? He referred to a redistributive policies as reinforcing the bigotry of low expectations. Rather than government taxing the rich to give to the poor he argues that true self-esteem comes form personal achievement.

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Redistribution based on taxing the rich ever-higher amounts does not reallocate luck, it allows us to continue to overlook the fundamental reform we need evening out opportunity. In attempting to solve the problem they only further entrench one of its root causes. So, to sum up my argument, if you want to become wealthy and successful, never cross a black catduring a full moonholding a broken mirroron Friday the Thirteenth. If that does happen, just spin around three times and throw salt over your left shoulder, then you should be fine.

Obama Approval Rating Plummets Among College Students


Im exhausted. Im exhausted of defending you. Defending your administration. Defending the mantle of change that I voted for. And deeply disappointed with where we are right now. I have been told that I voted for a man that said he was going to change things in a meaningful way for the middle class. Im one of those people and Im waiting sir, Im waiting. Velma Hart to President Obama at a CNBC townhall Hart took the words right out of our mouths. Young adults are tired. In 2008 we came out with unprecedented energy, voting and volunteering for Obama in historic numbers. So far the only change weve seen from the White House has been for the worse. Instead the interests of young adults have been consistently ignored in the policymaking process. This is seen most clearly in the Democrats willingness to mortgage our future for political gain. Every problem Democrats have faced has been met with a one-note solution money. But Democrats are writing checks that young adults will be cashing. Todays debt and deficits will be paid for with higher taxes and fewer government services for tomorrows citizens. As Jeb Hensarling, ranking Republican member of the House Budget Committee, explains, [Our debt] means our children are going to have smaller homes, they are going to drive older cars, theyll compete for fewer jobs, with smaller paychecks, and ultimately will be confined to smaller dreams.

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That is not the America we hoped to inherit. That is why young adults are seeing Republicans as the party of change. College students are waking up to the reality that we are going to have to pay off a bigger debt with a smaller salary. Or, should I say, those young adults lucky enough to have a salary. The Bureau of Labor Statistics reported that the number of unemployed workers between the ages of 16 and 24 was 18.6 million. This year, the share of young people who were employed during the summer months was 48.9 percent, the lowest rate since records were first kept in 1948. Our exhaustion over defending Obama and our anger at the results of his policies has translated into low approval ratings. In May 2009, 60 percent of college students either strongly or somewhat approved the way Barack Obama was handling his job as President. According to a new Associated Press/MTV poll his approval rating has plummeted to 44 percent. Sensing that he is beginning to lose one of his key consistencies from 2008, Obama is making one last all out push to energize young adults. In hopes of rekindling the youth enthusiasm Obama has made a number of stops from a youth town hall to be shown on MTV to rallies at Ohio State, the University of Wisconsin, and George Washington University designed to sway college students back toward Democratic candidates. While President Obama attempts to sell young adults a recycled version of change, College Republicans are working feverishly to provide a better option for our future. Through Operation Red November, targeted recruitment and volunteer campaign, we have signed up more than 25,000 new College Republicans who have contributed over 40,000 volunteer hours to Republican campaigns. On campuses throughout the United States, College Republicans are providing

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students who are tired of defending Obamas same old tax-and-spend politics a chance for something different. A chance to keep more money in their pockets rather than be faced with higher taxes. A chance to find a job by removing the policy uncertainty that is keeping business hiring at bay. In short, a chance to fulfill the American Dream without the government getting in the way. We may be young, but were not stupid. Obamas falling approval ratings among college students are merely the latest evidence showing that young adults are ready to vote Republican. After all, we were told we voted for a man that said he was going to change things in a meaningful way. And sir, were done waiting.

History Lesson: How Leaner Governments Equal Fatter Wallets


History is cyclical. That is because human nature, for all we tout progress and change, stays recognizably constant. As George Bernard Shaw famously said the more things change, the more they stay the same. With this in mind, there is no reason why we should not pay more attention to our past. General Petraeus looked at Vietnam when he wrote the definitive counterinsurgency (COIN) manual and Stalin remembered the lessons of Alexander I when employing the scorched earth policy. The past is a valuable classroom. Since humans, in the general sense, do not change, the pasts lessons are always relevant. Sixty years removed from the end of the Second World War, we have already forgotten what it taught us. The US government was faced with huge questions with very, very serious repercussions for even the smallest of policy mistakes. The US needed to successfully demobilize its troops, convert a wartime budget to a peacetime budget, and reduce regulations without creating the greatest period of unemployment and dislocation which any economy has ever faced. Keynesian economists were fearful that a massive decline in government spending would disrupt the US economy. At the time, they were gaining prominence and were very vocal about their fears. Harry Truman, thankfully, ignored them. Between 1945 and 1947 government spending was reduced by two thirds from $93 billion to $36.3 billion. If we use the formulas of Obamanomics we can determine, given Obamas multiplier of government spending, a $63.7 billion cut in government spending should translate into a $95 billion decline in GDP. The opposite actually occurred. GDP increased 10 percent during that span. GDP went from $223 billion in 1945 to $244.1 billion in 1947.

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What makes this all the more impressive, is that during this time of growth 10 million servicemen were demobilized and 1 million civilian employees were laid off by the government. During 1945-47 the civilian labor force increased by 7 million, or 12 percent. Most of these people were able to find work too. Civilian employment increased by 5 million, or 9 percent. The difference can be accounted by the 1 million demobilized servicemen who enrolled in colleges and the women who were in the work place and decided to go home. The absorption of former government workers and servicemen occurred alongside layoffs from war equipment manufacturers. From 1943-1948, 2.8 million workers who were employed in the transportation equipment sector (they were employed by private companies who manufactured military equipment) were laid off. Of these only 500,000 went to work in the automotive industry. The rest of them found employment in retail trade, sales, construction, and trade. Those fields added 4 million employees during that time. A reduction of government spending of two thirds, an injection 10 million demobilized servicemen and the layoffs of millions of war-related manufacturing workers was met with 10 percent growth. This a phenomenal achievement that we should not forget. If we do forget it, however, we are in luck there several success stories of an economy thriving without government spending. Fast forward a few decades to New Zealand. In the 1980s New Zealand was plagued with a deficit equal to 9 percent of GDP, government spending that accounted for 45 percent of the GDP, unemployment that ranged from 9 percent to 11 percent, a top tax rate at 66 percent, and all for a measly economic growth of 2 percent. Despite a government that attempted to spend its way into prosperity, or at least spend its economy into growth, growth remained flat. The New Zealand government realized there was a problem, so they took action. The government privatized government enterprises. Facing competition these enterprises immediately saw productivity rise and costs fall. Revenues from taxes that the enterprises paid increased and the government was able to use the capital raised from selling them to pay down the debt. Due to the reduction in government enterprises, the civil service was reduced by 66 percent leading to enormous savings in government pay and pensions. These actions eliminated the deficit, lowered unemployment, and increased investment in New Zealand. Government spending shrank to 27 percent of the GDP. Unemployment almost vanished at 3 percent. The top tax rate was more than halved to 30 percent. And 17 years of surpluses and economic growth were the result.

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Rather than learn from these mistakes President Obama has continued governing under the philosophy that government spending is necessary to keep the economy afloat. In reality government spending in the economy may be choking off economic growth by replacing, rather than spurring, private investment. Under the Obama administration alone, the federal debt has increased by $3 trillion. After more than $1.4 trillion in stimulus money, unemployment is nearing double digits. Democrats have taken this failure as a sign that we need to pump more money into a stagnating economy. They argue that the stimulus was a failure only in the sense that it was too small to make a dent in the problem. Of course, they never say how much would have been enough. They are simply unwilling to admit that their experiment failed, costing future generations hundreds of billions of dollars in the process. Even after admitting that there is no such thing as a shovel ready job, support for Keynesian ideas are still strong in the ruling administration. Despite our economy veering out of control Democrats are simply unwilling to take their hands off the gas pedal. This is despite history providing indications that the best thing we can do is for the government to pump the brakes and turn the steering wheel over to the private sector. Human nature is the strength of a free market economy. Government involvement stifles a healthy economic environment. History keeps showing us that a more limited government role in the economy is the best thing for growth. All we have to do is actually listen and act upon these lessons.

US Heads Toward Welfare State as Europe Flees Toward Austerity


It is interesting to note that Obama is trying to model the US economy after the European welfare states, at a time that the European states are rescinding many of their welfare programs. Many European nations are realizing that their cradle to the grave welfare system is unsustainable. The economic crisis has curbed tax revenues, spurred huge deficits, and yet attempts to balance budgets are being met with mass protests. The massive safety net that American progressives have often dreamt of is what is sinking the European economies. Denmark, a progressive pinnacle, has been cutting back heavily. The European Union placed Denmark on a watch list of countries that must take action to slash their deficits or risk destabilizing the continent. Before the budget crisis Danes were eligible to receive up to four years
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worth of unemployment benefits. Economic realities have forced them to halve that. On top of that, those out of work are guaranteed about 80 percent of their wages in benefits. These cuts were part of a government plan to cut state spending by 24 billion kroner ($5.23 billion). Nevertheless, the governments proposed changes were not enough for the Economic Council that urged the government to prevent retirement before 62, reduce a number of public subsidies, and have zero growth in government spending through 2020. Denmark is facing such austerity measures regardless of a top income tax rate of 50 percent. The British system also seeing cuts. Prime Minister David Cameron is trimming back the social safety net in an attempt to get his nations finances in order. Since 1997 the national debt has gotten out of control, growing from 400 billion pounds to more than 1 trillion pounds. In the 20092010 fiscal year the budget deficit hit a record high of 155 billion pounds (248 billion dollars) which is around 11 percent of GDP. To solve the problem the Conservative government announced $128 billion in spending cuts through 2015. In addition nearly 500,000 public sector jobs will be slashed and about $28.5 billion chopped from welfare programs. Finally, in one of the more highly contentious proposals, the state pension age will be raised to 66 saving the government nearly $8 billion a year.

French Riot Police Stand Against Protesters France has been rocked by massive strikes and protests over President Sarkozys attempt to slash the size of its welfare state. The nations social welfare budget faces a $43 billion shortfall in
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2009, with projections only getting worse in the future. Taken on its own, Frances pension system, which currently runs a $13 billion deficit, is expected to rise to $123 billion within 40 years. To close the fiscal hole, Sarkozy has proposed massive changes to the pension program. The proposal would increase the minimum and full retirement ages to 62 and 67 respectively up from the current 60 year retirement age. That represents part of a plan to lower the budget deficit from 8 percent to 3 percent by 2013 roughly half of which will come from spending cuts. Once upon a time Sweden was the model of a successful womb-to-tomb welfare state. Since the financial crisis of the early 1990s Sweden has been quietly reforming its system and has been deregulating key industries. In 1994, with revenues down and the welfare system driving up debt, the government budget deficit exceeded 15 percent of GDP and the total debt was about 71 percent of GDP. In the 1990s Sweden began to course correct and abolished government monopolies, trimmed public spending by lowering government benefits, and partially privatized its pension system. Yes you read that right, Sweden has privatized its equivalent of Social Security, an idea that would be considered a non-starter in the much more conservative United States. Sweden now has the second most competitive economy in the world according to the World Economic Forum and was able to withstand the recent global recession with relative ease. Swedens economy had a 4.6% annual growth rate in the second quarter of 2010. Rather than emulate the Sweden of today, President Obama and Congressional Democrats are attempting to rewind the clock and mimic the failed welfare policies of pre-80s Sweden. Ya know, the Sweden whose debt led to out of control inflation and an economic crisis that prompted conservative reforms. America and traditional welfare states are crossing paths. While the cradle-to-the-grave approach to social welfare is being buried, Democrats in Washington are hoping to resurrect the flawed model and install it here. Were headed toward becoming a welfare state just as welfare states are headed towards small government, free market capitalism. Our national debt and deficits are threatening our place as the most powerful economy on earth. Moreover, our entitlement programs, such as Medicare, Medicaid, and Social Security represent the overwhelming majority of the growth in our future deficits. Rather than reform these programs, we added a new one Obamacare, that will speed up our long-term woes. That is the tragedy of Americas trajectory. We are a step behind the rest of the world. So please America stop and look. Look around and see what is happening to the welfare states. Austerity packages, benefit cuts, and violent protests in response. We need to pull a U-turn. That is why
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this election is so important. The is our chance to free ourselves from a safety net that is no longer protecting us from falling, but is preventing us from rising.

Dont Be Fooled We Can Do Better Than Robbing From the Rich to Pay the Poor
In every entry-level economics classroom you will almost always encounter the same scene. The front row will be dominated by opinionated and vocal liberals who feel it is their moral duty to set the class straight on the failings of American capitalism. The middle rows will be a nice blend of both conservative and liberal students who are trying their best to earn an A and perhaps learn a thing or two along the way. In the back there is the kid in the headphones with his legs stretched across another chair, obviously not caring one way or the other. Those in the front rows, their hands perpetually raised, hoping for an opportunity to lash out at the oppressive capitalist system in which we live, have a laudable goal. Only those at the very top of the economic hierarchy are capable of overlooking the class divide in the United States. Nobody with a halfway functioning moral compass is happy that so many suffer through poverty while some enjoy the benefits of wealth. Whether or not the middle class is shrinking, or wealth inequality is growing, is up for debate. Many liberals point to the fact that the income disparity in the United States is growing, with the top 10% of earners making 50% of the national income up 15% in the last 30 years. Many conservative economists argue that when we adjust for things like regional costs of living differences the rise in American inequality has been exaggerated both in magnitude and timing. Moreover, if we use after-tax rather than pre-tax income Cato Institute economist Alan Reynolds finds that there has been no change in income inequality over the past several decades. Regardless of the truthfulness of the claim, we can all agree that in theory any increase in the size of income inequality is a bad thing. The rich should not be getting richer if the poor are getting poorer. The front-row liberals have a clear answer to solve this clear injustice we have to drive down the incomes of the wealthy. We must level the playing field by redistributing the wealth and taxing the well-to-do also known as the lucky. Sadly, our government is being run by people who sat in the front row and now have much more powerful tools at their disposal than simply an economics class rant. Take for instance, James
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Galbraith, a former director of the Joint Economic Committee. In regards to President Obamas hope to increase taxes on higher income workers he said, putting income in the hands of people who need it, and not in the hands of people who dont, is the right economic policy. Sounds eerily like Karl Marx idea: from each according to his means, to each according to his needs. Actually no, it sounds exactly like that. Barack Obama feels similarly. He has remained consistent in his plan to eliminate the Bush-era tax cuts for the upper classes. As President Obama said on the campaign trail, Its not that I want to punish your success; I just think when you spread the wealth around, its good for everybody. Hes made similar comments about raising taxes on capital gains, arguing that it should be done, regardless if it lowers tax income for purposes of fairness. The goal of such policies appears clear we are going to create inequality by pushing the top down. Thats one way to do it I guess, but it seems to make more sense to do just the opposite. Couldnt we also lower the income gap by promoting policies that pulling the top up? The reason that this isnt done is because it is more abstract. It is easy to visibly punish the top earners. Simply tax them. It is much more difficult, absent direct subsidy, to have such a direct or clear impact on helping the lower classes. Pulling up the lower classes requires things such as K-12 education reform, improving community colleges, and encouraging independence by trimming the social safety net. Such policies take time to see results and their effects are spread out. That doesnt mean that this shouldnt be the approach we take, it simply means that we must be more patient when searching for results. Moreover, these ideas are being promoted by those who occupied the middle rows of your economics class the ones who have studied the problem and have the right answer but arent necessarily shouting their answers to the world. As they say, the squeaky wheel gets the grease. That adage is no more true than in Washington. So in this election season, as Democrats spout concepts of fairness, ask yourself whether it is more fair to focus on bringing down the upper class, or focus on attempting to bring up the bottom classes. Hurting one group, especially the ones that happen to be the primary job creators, in return for questionable benefits on the middle and lower classes seems like a poor policy choice. Perhaps a smaller income gap would make them feel better, but that is much different than actually being better off. Instead, lets pursue policies that are capable of building up one social class without attempting to tear down another. Only then will we truly be able to conquer any wage gap in society. Only then will those loudmouths in the front row sit down and shut up.

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Americans Go On An Anti-Pork Diet


A pork barrel was originally used as a measure of present and future prosperity. Prior to modern refrigeration it was the method by which families kept their meat fresh through the lean season. A barrel of salt pork was also given s a reward to plantation slaves as an incentive to compete for a share of the handout. That history is where we derive its modern meaning spending intended to benefit constituents in hopes of gaining their political support. Despite the negative connotations of the term, history shows Americans have a love-hate relationship with pork barrel spending. We love it when the money is being given to our district. We hate it when our tax dollars are used to fund projects for some other district. This dichotomy also reflects how many Americans traditionally view Congress. They hate the institution as a whole, believing it to be a corrupt bunch of wasteful know-nothings. And yet they typically love their individual Congressman, thankful that all that the good things he brings back to the district. That traditional relationship is beginning to change. Our love affair with localized government spending is fading fast, falling victim to our deep concern over the national debt. This change is recent, brought on by the historic levels of spending under the Obama administration. As Economics 21 explains, federal spending reached historic levels in 2009 to be surpassed again in 2010 soaring to its highest levels since World War II. The increase in spending was not gradual but instead represented a sudden surge of spending with spending increasing 4 percent of GDP in a single year. The spending has led to a skyrocketing federal deficit rising from 3.2 percent of GDP in 2008 to roughly 10 percent in 2009 and 2010.

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As this November approaches, incumbents are facing a whole new world one in which bringing home the pork could actually hurt your chances for reelection. In this post-stimulus world, concern over the deficit trumps all. In fact, it appears that the more you bring home the bacon, the longer the odds of reelection. Consider a few prominent examples, Barbara Boxer (D-CA): This powerful Senator, holding the Chief Deputy Whip of the Democratic Majority and chair of the Environment and Public Works Committee, is one of Washingtons biggest spenders. She currently receives a 1% rating from the Citizens Against Government Waste, the result of numerous pork-laden bills she has voted for. Her most egregious vote? Despite the Department of Defense insisting that they have more C-17 needs than they actually need and the Secretary of Defense urging the White House to veto any bill with additional C-17s, Barbara Boxer is on the frontlines fighting for more. Why? Because they are built in California. Sorry Babs, that approach isnt working this year. Boxer is currently in a virtual tie with Republican Carly Fiorina, To see just how far she has fallen remember that she won by 20 percent against her Republican challenger in 2008. Harry Reid (D-NV): The Majority Leader of the Senate is facing an uphill battle toward reelection. Recent polls have upstart Republican Sharron Angle up by 2-to-3 percent. This is against a guy who won by more than 25 percent in his last reelection bid! Hes falling despite bringing some serious taxpayer cash home for his district. He received a 4 percent rating last year from the Citizens Against Government Waste and brought home the sixth highest amount of earmarks in the Senate. In fact, Reid got more earmark money than the four

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members of Nevadas Congressional delegation combined! All told Reid received nearly $662 million in pork barrel projects for his state. Barney Frank (D-MA) is the Chair of the House Financial Services Committee and has been a key player in the Democratic power structure. Every election Frank has been considered a shooin. In 2004 he won by an incredible 56 percent, in 2006 he scared away every potential challenger, and in 2008 he won by 43 percent. Although polls have been scarce this year (nobody thought a Republican could win) the latest report has Republican challenger Sean Bielat within 9 points. Once again, Franks precipitous fall is not due to any failure in bringing home pork projects. In 2009 Citizens Against Government Waste named him the Porker of the Year for his steadfast financial support of failed mortgage giants Fannie Mae and Freddie Mac. He also played a large role in getting the stimulus passed and even lobbied and received $12 million in TARP funds for OneUnited Bank in Boston. His own mini-bailout. Bacon is delicious, but bad for you in extremely large quantities. Americans have realized that our Congressmen have been gorging far too long on pork. Weve rewarded them in the past because frankly, it tastes good. We like seeing our representative bring money, projects, and sometimes even jobs back to our district. However, the times have changed. Our appetite for more and more has made our national finances sick. Now its time for a diet. That starts with making a change this elections season.

False Charges of Racism Delay Our Entry Into a Post-Racial World Thu. 10.21
Barack Obama was supposed to usher in a new era. This was supposed to be a brave new postpartisan world. Instead weve gotten the most partisan Washington in decades, with neither party willing to move an inch. Perhaps more importantly it was supposed to mark progress towards a post-racial world. Which is why Democrats recent attempts to use racial stigma as a last gasp election tactic is all the more sad. The year in politics has been marked with racial undertones. New York Times columnist Frank Rich argued that opponents of Obamas healthcare legislation were motivated by racism. News story after news story has been devoted to uncovering the Tea Partys racist origins. When conservative talk show host Glen Beck gave a speech on the Lincoln Memorial steps where Martin
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Luther King Jr. gave his I Have a Dream Speech he was labeled a racist wanting to overshadow Kings message. This was despite, Kings niece, Alveda King, speaking at the reality reminding everyone that she too has a dream one that was shared and cheered by Becks supporters. Even former President Jimmy Carter got in on the act, arguing that [a]n overwhelming portion of the intensely demonstrated animosity toward President barack Obama is based on the fact that he is a black man. In some ways charges of racism are being used as a tool to suppress criticism. When the Journolist, a private online forum for many writers and bloggers, became public one writer proposed race as a method to distract attention away from the Rev. Jeremiah Wright controversy. If the right forces us all to either defend Wright or tear him down, no matter what we choose, we lose the game theyve put upon us, Spencer Ackerman wrote. Instead, take one of them Fred Barnes, Karl Rove, who cares and call them racists. But the really sad thing about using race as a wedge, is, as Jonah Goldberg wrote in the National Review, that we have somehow come to define racism as disagreeing with the Democratic Party or its African American base. The inevitable debate our nation must have over the direction of our country will be much more difficult is criticism and disagreement are leveled with charges of racism. These are not idle concerns. This election season has seen racism transform into a viable, if lamentable, political tool. Take Meg Whitman, a Republican currently running for governor in California. Before her decision to run for office, Whitman was employing an illegal immigrant as a housekeeper. Employment applications from the housekeeper included a copy of her Social Security card and Californias drivers license, indicating that she was a legal resident. Upon finding out that she was in the country illegally, Whitman immediately terminated her employment contract.

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Fast-forward a few months, to just weeks before Election Day and the housekeeper is back, making allegations that Whitman knew of her illegal status. Adding to the dubious nature of the claim, the housekeepers attorney, Gloria Allred, is a longtime Democratic supporter who was a Hillary Clinton delegate and has contributed to Whitmans opponent. Moreover, according to the Mercury News she has a history of injecting eleventh-hour accusations into campaigns. Regardless of the truthfulness of the claim the headlines have had a major impact on the race. Whitman has made it a point during her campaign to aggressively target Hispanic voters, a key demographic in California. In fact, she was previously endorsed by comedian Paul Rodrigues who praised her plan to solve water shortages that have cost many Hispanic-Americans jobs. Nevertheless, the story, combined with her strong position on illegal immigration has forced her to defend allegations of racism. Or take, Tea Party favorite Sharon Angle who is also fending off charges of racism stemming from a recent embarrassing gaffe at a meeting of the Hispanic Student Union. At the meeting she said that, I dont know that all of you are Latino. Some of you look a little more Asian to me. I dont want to defend the remark. Regardless of intention it was simply a stupid thing to say. What I will argue is that the comment doesnt make her racist. She was attempting, very clumsily, to segue into the argument that our nation is a melting pot. In reality, Angle is the proud grandmother of half-Hispanic children.

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Nevertheless, Democrats like Harry Reid have leveraged the stupid remark to subtly paint her as something more nefarious. In debates he points to Angles advertisements highlighting her strong preference to tighten border security. Of course this overlooks Reids own personal questionable comments about race. Reid said that Obama could succeed because of his light skinned appearance and speaking with no Negro dialect. Finally, we have the Tea Party. The Tea Party has become the dominant theme of the 2010 election season. They are a culmination of a number of trends disillusionment with the political process, a desire for a smaller government, and a demand that we reduce our national debt. Yet, somehow, these motives have been misconstrued by some liberals as a racist movement against our first black president. For instance Rev. Randolph Bracy, President of NAACP in Orang County has asked:How many black people do you see at these parties? asked Bracy. The vast majority of enlightened people of color see this movement as racist. Washington Post columnist Eugene Robinson has said that ugly, racially charged rhetoric has been part of the movements stock in trade all along. Finally, NAACP Chairman Ben Jealous suggested on a conference call that politicians are denying the obvious by suggesting they dont see racism within the Tea Party movement. The list goes on and on. Our post-racial world has become, in fact, anything but. The debate over race in the United States has taken a step backward. There are racists in the Tea Party. There are racists in the Republican Party. I wish there werent. But they represent an insignificant faction in a movement and a Party that is concerned about the direction of our nation. Not because it is being led by a black President, but because it is heading down an unsustainable fiscal path.

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There is plenty of room for honest debate in how to get our nation back on the right track. Lets not waste time highlighting (or imagining) the racial element of this debate. Save charges of racism for true instances of its use. Otherwise, we dilute the power of the accusation and delay our entry into a true post-racial world.

New Polls Show Voters Ready for a Change

Homecoming results are in, and the tall, dark, and handsome man did not win. Yes, sadly, Obama is not going to be the homecoming king. If Washington was a high school Obama would be out of the cool kids club. In fact, Obamas whole clique the far leftist elements of the Democratic Party are out as well. The past week has been rife with polls showing that the ever-unhip Republican Party is the one who looks to be taking home the Prom Queen this November. The GOP is sweeping voters off their feet. But they arent doing it with promises of big shopping sprees or celebrity entourages. Theyre doing it the old fashioned way chivalry. They are listening when voters talk, they are opening doors to new policies, and they are showing respect to the Constitution. The return to respect is paying off big with voters. Check out these polls:

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Change? Yea the Wrong Kind: In 10 competitive House districts, 41 percent of likely voters say Obama has brought change for the worse, and 30 percent say he has made no difference. Only 26 percent believe hes delivered on his promise to end business as usual in the capital Penn Schoen Berland Poll Young Adults Breaking Up with Obama: Only 34 percent of young people say the president has effected change for the better. Remember that in 2008, voters under the age of 30 voted 2-to-1 for Obama Hill 2010 Midterm Election Poll Cause Im Free! Free Fallin! Barack Obama has averaged a 44.7 approval rating in his seventh quarter in office the lowest average approval since he took office Gallup GOP in the Lead Coming Down the Homestretch: Among likely voters, Republicans hold a 50 percent to 43 percent edge up from a three point lead a month Wall Street Journal/NBC News Should We Still Call Them Competitive? In the 92 House districts considered the most competitive, the GOPs lead among registered voters is 14 percent Wall Street Journal/ NBC News Dominating the Issues: Voters trust Republicans more than Democrats on handling the economy, protecting the country, managing the budget deficit, handling taxes, creating jobs, managing the federal government, handling social security, and handling immigration. Whats left?!? AP/GfK Poll

All told, Americans are realizing that Republicans are the ones willing to treat Lady Liberty the way she deserves to be treated. Thats why Republicans appear ready to take the crowd of Homecoming king. Thats why America is not going to dance with Obama or any of his fellow Democrats this November. Voters have dumped Obama. Better yet, theyve found a new date in Republicans.

Its Not Us Its You. Democrats Take to Blaming Voters for Losses
Blame the Voter that seems to be the campaign slogan of Democrats as a whole during this election. An interesting election year strategy given that it will be, in fact, the voters who will decide who actually gets elected. Shouldnt you at least wait until after the election to blame them. But hey, maybe thats why Im not a paid party strategist. Or maybe this is the change Obama was talking about. It used to be politicians who were the dumb ones. We are not that far removed from the time of its the economy stupid. Those were the times when politicians were the ones who were responsible for getting themselves elected. If
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politicians failed to resonate with voters it was their own fault. Failure was not the fault of the voters. Democrats have strayed from the wisdom of the former White House press secretary under Bill Clinton, Mike McCurry. McMurray was the one who said In my time in politics, I think its best not to accuse the American people of not thinking when youre trying to earn their support and trust. Oh how times have changed. Last week, Obama said that Americans were not thinking clearly because they were scared and American confusion was the reason why the Democrats fact and science argument has not been successful. When pressed about the lack of liberal support for his party this coming election Obama called it inexcusable and irresponsible. Vice President Joe Biden told progressives to stop whining. Democratic Senator Harry Reid compared Americans to the selfish little boy at Christmas time who wanted more presents, despite his parents sacrifice already to provide him with what they could. The 2004 Democratic presidential candidate John Kerry chimed in and said that voters dont always pay that much attention to whats going on so people are influenced by a simple slogan. Put it all together and were whiny, confused, inattentive, and selfish children. Huh. I never knew. Perhaps they should have also said I lack self-awareness. Surely this isnt the rhetoric that Democrats think will win the election. Surely the Democrats do not think they can lambast voters and then expect those same voters to come to bat for them in November. Even the media has been getting in the mix. The rhetoric aimed at Tea Party candidates has been especially harsh. As Denver Post columnist David Harsanyi pointed out, his enlightened friends continually ask him how someone so smart could not want to spit at those stupid tea party candidates, with their stupid positions and their stupid stupidity? One columnist went as far as to call supporters of candidates like Christine ODonnell diseased and argued that a society of ODonnell supporters is a society that no longer takes itself seriously. All the anger, all the name-calling, and all the overheated rhetoric is the result of one simple thing they are anger that voters repudiated their agenda. Democrats tried it their way and failed. Healthcare? A bust. Stimulus? Bust. Financial reform? Bust.

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But through the blue-tinted glasses of Democrats none of the policies were the problem. It was the silly little voters who couldnt understand their awesomeness. And now, those same silly little voters are voting for big stupid candidates. Of course they forget that those same voters were the ones who carried them to huge victories in 2006 and 2008. Two years later those same voters are ignorant fools who dont know left from right. I mean, how could they have become so dumb, so fast! So they pout. Pout and blame everyone but themselves. Is this really the way to get a vote? To shame and bully the voter into picking the right choice? Trends like this are endemic to a party that has no direction, no ideas, and no responsibility. But of course, its not them, its us.

Doomed to The Wilderness in 2008 GOP Fights Back


Latest Gallup poll shows that President Obamas approval rating has reached a new low 44.7 percent. When Obama was elected President, it was by a landslide. From the beginning of the campaign Obamas team perfectly executed a 50 state strategy that sought to maximize gains in traditionally Democratic districts (the easy part) while also making up significant ground in Republican districts. In other words, they were going to take the fight to the so called battleground districts. As the results piled in, those battles, and the war, had been won. At the time it appeared as if they had won much more than the 2008 elections, it looked like they had recast the entire political map. The electoral playing field appeared like a long term disaster for Republicans. Democrats had maintained their clout in blue states but had expanded their influence into the middle of the country the South, the Midwest, and the West, where Republicans reigned. Republicans appeared to be doomed for a long walk through the political wilderness. Democrats had won control of both houses of Congress by substantial margins and had taken the Presidency to boot. The partys stronghold was left dramatically reduced down to a few reliably conservative core states. The Republican Party appeared as though it was going to become more conservative at a time when the country was shifting left. Pundits argued that Republicans would have to dramatically reinvent itself if it wished to remain relevant. That turned out to be a false narrative. Two years after being doomed to wander the wilderness, Republicans are back in the forefront. Yes, the GOP is back on the battlefield taking the fight to the Democrats. And the party of the once-invincible Obama appears to be in retreat. Their base is shrinking back toward the coastlines and retrenching to the cities. The substantial gains they

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made in the Midwest, the South, and in rural areas throughout America appear to have already been erased. As Politico reported, Based on the state of the political map two weeks out from the elections, the famed red vs. blue model that followed the 2004 presidential race appears to be returning to shape, with enough grave threats to Democratic officeholders to suggest that the party as it is expressed in Congress, at least could end up even narrower than that. To a large degree the fall of President Obama mirrors his Party. In 2008 millions of Americans were enchanted by his eloquent speech and his rockstar status. They voted for him, and his party, in droves. Two years later, the President hasnt changed. He is exactly who we thought he was. But our opinions of his ideas have dramatically shifted. As it turns out America hadnt shifted left. We were never really in favor of massive expansion in the size of the federal government, we didnt like the idea of Keynesian style policies, and we didnt like the idea of government meddling with the private sector. Republicans, who were said to be completely out of touch with the desires of Americans, were suddenly perfectly aligned to recapture the minds of voters. Now it is Obamas turn to act out of touch. Hes now blaming his dismal disapproval ratings on his inability to properly explain his policies. So wait, the neo-Great Communicator who wowed us with his eloquence had trouble describing the legislation? Something about that doesnt seem right. What seems more likely is that Americans understand what President Obama and the Democratic Congress have done, they just dont like it. And why should they? Unemployment remains above 9.5 percent for the longest stretch since the Great Depression. The October hiring figures show that the private sector isnt hiring enough people to offset population increases, much less make a dent in unemployment. This is all despite historic levels of government debt and deficits money that was spent on the promise that it would turn the economy around. It hasnt. America has been left disappointed. A new poll for The Hill finds that 41 percent of likely voters say President Obama has brought change for the worse, while 30 percent say he has made no difference. Moreover, only 34 percent of young people say that he has affected change for the better, a far cry from the 2-to-1 support he received from this age group in 2008.
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Obama and his party are out of touch with Americas concerns. The electoral map which was supposedly redrawn with promises of permanent majorities has once again been wiped clean. This election season Republicans once again have the chance to show that America is, and always was, a center-right nation.

The Need To Reform Entitlements Lessons From the French


The flashback episode. We have all seen this clichd technique being abused by a television series. Inevitably, long after the series has reached its peak and is desperately trying to hang on to viewers the writers begin to lose their creativity. The resulta flashback! The family or friends are sitting around their television screen when suddenly, the worst-case scenario happens the power goes out. This is about the time when you would hear Homer say, DOH! The characters in the show are outraged. What do you do when there is no TV? how could you possibly survive? But just as the characters are on the verge of a riot, some nostalgic family members pulls out the scrapbook or whips out the old home movies. The producers will then force-feed a montage of memorable clips from past episodes in an attempt to tug the viewers heartstrings. It is all fluff we all know it we all hate it (but we still watch it). As the episode has finished its sad excuse for creativity, the clich episode will end with a clich finish; the power will come back on, the family will realize that it wasnt all that bad without electricity, theyll realize how much they all love each other, and the credits will roll. Every year Americans add a new necessity to the market. College students can remember the first family computer, their first cell phone, or the first time they downloaded a song. They were a luxury at the time. An incredible innovation that added a level of simplicity or comfort to our lives. But over time they somehow become necessities. Like the sitcom family who loses power, losing these new necessities seems like the end of the world. Just imagine the mental angst you would cause if you told todays average college student that they would have to go without internet for a week. Theyd beg and plead and would likely be willing to give their left arm if it only meant that the blessed internet would remain. To sum it up the lesson I would like to quote the 80!s hair band Cinderella when they sing, You dont know what you got, till its gone.

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Many European nations are learning that lesson the hard way. Over the past several decades the welfare state has essentially coddled and babied its citizens, providing them with a cradle to the grave social safety net. In France the hallmark of the welfare state was their pension plan. France allowed workers to retire as early as age 60 and still receive full pension benefits. Unfortunately, like many European welfare states are discovering, the lavish system is simply unworkable. Spending on these programs continues to grow and grow even as government revenues shrink and shrink. It is a system destined to drag down the finances of even the most financially stable nations. But the social innovation has become a seeming necessity. Having enjoyed the benefits of the welfare state for so long they are loathe to let it go, regardless of the fiscal realities. France has become the symbol of the problem. The French have been rioting for several weeks now, leading to multiple deaths, over the governments proposed reduction in pension benefits. In other words, the power is out, they have no TV, they dont know how to live. France currently has some of the most luxurious pension benefits in the world. These luxuries have taken their toll on the French economy. The French have been forced to restrict their pension program, however, due to the increase in the worker/benefactor ratio, along with inflation increases and the current economic environment. Some of these changes include:

Raise the retirement age from 60 to 62 (gasp!) by 2018 Raise the security contributions qualification from 40.5 to 41.5 years Raise the age pensioners can receive a full state pension from 65 to 67

Railways are shut down; garbage cans are left on the street; gas pumps are turned off; the airports are in a state that would somewhat resemble anarchy. All because of union protests. France has shut down. And its all because the government is doing what it must to remain solvent. This tragic story carries many lessons for America. Workers here may seem miffed that the French could have the gall to protest over raising the retirement age to 62 when we have to work until 65. Its hard for us to feel sympathize with the riotous French when they still receive more generous pension benefits than we do. Its hard not to think to ourselves, what are those snobby French complaining about again? But are we on a similar path? Our entitlement system has been growing right along with Europe. Social Security has been one of the main ofenders.

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The US Social Security is a ticking time bomb. With baby-boomers nearing retirement there will be a huge increase in the number of Social Security beneficiaries and a decrease in the number of taxpayers who are funding their benefits. It is an untenable situation that concerns both sides of the political aisle. And yet the very mention of reform has become political suicide. Mention reform and youll instantly be lambasted for trying to steal grannys retirement or wanting to gamble away our pensions. Instead of addressing the issue and talking seriously about alternatives, politicians must disavow any notion of change. They do this just as the system is crumbling around them. Some brave politicians, however, have refused to neglect the problem. This has resulted in a barrage of distorted press releases which only make it more difficult for elected officials to even approach the issue. Press coverage of important fiscal issues tends to oscillate. Much of the time, there is earnest reporting on the severity of the federal governments fiscal problem, decrying the refusal of elected officials to get serious about fixing it. But when an elected official does put forward a serious proposal, many of these same media outlets naively quote from the most misleading attacks upon it. The electorate often ponders why politicians dont simply suck it up and do the right thing. This regrettable, recurring pattern is a large part of the explanation (economics 21). We as Americans must remember that if we wish to keep our entitlement system we must be willing to make sacrifices. We cannot become so beholden to its allure that we prevent the government from making changes to preserve it. The problem of debt and deficits cannot be allowed to evolve to a point where the only two options we face are bankruptcy or riots. The issue will only get worse if we continue to ignore it. Running with the television analogy, we need to work on the issue now, before the electricity goes out permanently. Unlike the sitcom clich, it may not end with a big family hug.

Democrats Lack of Accountability Not Wooing Any Voters


I finally got around to seeing the Social Network last night. The movie, a highly dramatized history of the creation of Facebook also functioned as a nuanced morality tale about the success of Mark Zuckerberg. The movie presents a story in which a petulant Zuckerberg got the idea for forming Facebook after being dumped by his girlfriend. In one scene he rails against her on his blog, leading to a rift between the two that spans the length of the movie.

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Zuckerberg, shown to be a socially inept genius, never truly understands why his ex wont simply accept his apology. Fed up she answers, the internets not written in pencil, Mark. Its written in ink. Yes, to the lament of politicians everywhere, the internet is written in ink. This fact has been especially vexing for Speaker of the House Nancy Pelosi who has a very difficult time stating the truth. Take for instance, an interview with Rolling Stone that Pelosi did after President Obama signed the stimulus law. We will be accountable. We will answer for this legislation one year from nowWe wont say, Well, thats just the economys fault. No, we will be accountable for the decisions that we make. Accountable? That is perhaps the last word that comes to mind after watching the Democrats final push towards Election Day. The strategy for many Democrats is nothing but a comprehensive cop-out. Theyve taken to saying that the economy and the nation in general was in a deeper hole than they could have ever predicted. They argue that if voters cant appreciate the Democrats accomplishments, its just not their problem. In short, its the many great geniuses were unappreciated in their lifetimes approach. This strategy was perfectly dissected by New York Times writer Robert Brooks in yesterdays column in which he explained Democrats blame-game technique. Always remember, many great geniuses were unappreciated in their lifetimes. Democrats are lagging this year because the country appears incapable of appreciating the grandeur of their accomplishments. Thats because, as several commentators have argued over the past few weeks, many Americans are nearsighted and ill-informed. Or, as President Obama himself noted last week, they get scared, and when Americans get scared they stop listening to facts and reason. They get all these crazy ideas in their heads, like not wanting to re-elect Blanche Lincoln. Blaming the voters for being stupid, especially when they are the same people who carried you into office in 2006 and 2008, seems like an especially poor strategy. It is not voters who are nearsighted and ill-informed, it is Democrats who were willing to spend away our future in a vain attempt to save their political fortunes. Forgive us if we arent impressed. As to Obamas point, we are scared, but it is because the facts remain so bleak despite your partys best efforts.

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Its enough to make you wonder exactly what Speaker Pelosi was talking about after the State of the Union. She said that her party would answer for her legislation when elections rolled around. So consider my surprise when President Obama took to The Daily Show last night and said that, When we promised during the campaign change you can believe in, it wasnt change you can believe in in 18 months. It was change you can believe it but youre gonna have to work for it. Vice President Biden has been echoing the message, saying recently that [t]here was a misreading about just how bad an economy we inherited. When you distill the rhetoric the Administration is simply saying that they are not yet willing to answer to voters for their legislation. Well sorry Mr. President, as Speaker Pelosi said, its time that Democrats be accountable for the decisions that they made. Those decisions imperiled the financial future of young adults, dug our nation into a fiscal hole that will require enormous changes to escape from, and has arguably made the very things you promised to improve healthcare, the economy, and the financial sector worse. Regardless of time, that is not change I want to believe in. The internet is not written in pencil, it is written in ink. If Speaker Pelosi is going to demand that voters hold her party accountable, forgive me if I ignore Democrats more recent attempts to wriggle free of that pronouncement.

Obama Must Follow the Texas, Not the Tax-Us Model


Quick, get out your pen and paper. We are taking a pop quiz. Ready? Here are the questions: A) B) Which state has the highest concentration of Fortune 500 companies? Which state is number one in export revenues?

C) Which state, of the 20 largest, is the only state to have a net gain in jobs during the last four years? D) For the last question, which state is home to the two fastest growing cities in the US

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To be honest you looked confused during the quiz. You had that glazed look all over your face. How did you do? What states do you have listed? You wrote down New York, Florida, California, and Arizona. Those seem like pretty solid answer. But still.you failed. Come on. This was supposed to be an easy quiz. You only needed to know one answer. One state fits the all the criteria of the questions. Which state is that? Texas! Believe me; I was just as incredulous when I found out. I had no idea that the state of the Alamo, the Rio Grande, and Jerry Joness HD Jumbotron was the state that had the most Fortune 500 Companies, was number one in export revenues, had the two fastest growing US cities, and had a net gain of jobs during the last four years. As it turns out God really has blessed Texas. For six years running, Texas has been named the top state for economic development. From 2000 to 2010, Texass population grew by 480,000. The top two fastest growing US cities are Dallas and Houston, respectively. Being home to 57 Fortune 500 companies definitely helps sustain growth like that. Those companies helped bring in more than $160b in state export revenues last year. Those big businesses also helped create 480,000 new jobs in Texas from January to July of this year. The Great Recession, as it is being called, hit the US in December of 2007 and ended in June of 2009. The US lost 8.5m jobs during that time period. Though economists have declared the recession is over the US has still been struggling. In June 2009, unemployment was at 9.5%. In the beginning of October 2010 it had risen to 10.1%. Worse, the US economy only grew at a 1.7% rate in the last quarter not large enough to offset natural gains in the workforce, much less put a dent in unemployment. Texas is perhaps the state that has weathered that financial storm the best. In Texas, the period of job losses lasted from late 2008 until mid 2009. Compared with the rest of the nation, thats next to nothing. From September 2009 to September 2010 the US, as a whole, the US gained 321,000 jobs, which equals a job growth rate of .2%. Texas, during the same time span, created 166,600 jobs. That means that one state is responsible for nearly one-half of the nations total job growth over the past year! The Texas private sector, the sector which is the key for any long term economic growth, had an annual employment growth rate of 1.9%. Private sector annual employment growth in the US during the same period of time was a whopping .5%. Economists, journalists, and academics agree that three factors helped Texas to limit the damage from the recession and bounce back, economically, very quickly.

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A) B) C)

Strong energy prices Low housing costs A GOVERNMENT THAT ENCOURAGES ECONOMIC GROWTH

I emphasize that last tenet. Having a government that gives free market enterprises room to grow is integral to having a strong economy. In Texas, adherence to pro-business principles is a bipartisan effort. The last three governors of Texas, Ann Richards (D), George Bush (R), and Rick Perry (R),all followed similar economic platforms. Texas is big, but Texans know that there is not enough room for economic growth and a colossal government entity. So to make room for this growth, the Texas government has spurned revenues from personal income taxes and capital gains taxes. While the rest of the country is looking for more ways to raise revenues, Texas decided to let money stay in the pockets of its citizens. But the results have been incredible. Businesses and wealthy individuals have flocked to the state, actually leading to increases in the states tax revenues. Theyre charging less and getting more! As the Guinness guys would say, Brilliant! Texas has done other things to encourage and fortify private sector growth. Their government regulations remain light beyond the required Federal mandates. Theyve implemented tort reform to keep healthcare costs low. And perhaps most importantly their government has simply stayed out of the way. Businesses love certainty. In Texas there is no worry about a ballooning deficit and higher taxes to pay for it. To the contrary Texas has conquered their deficit and created a $9 billion rainy day fund that they are able to tap into rather than increase taxes. It looks the current model of the former Republic of Texas is the model America as a whole should be following. Theyve bucked the national trend and remained Texas instead of Tax Us. The only thing the rest of us can do is sit on the sidelines and watch the result of good governance and sound fiscal policy. Except that is not entirely true. Fortunately, for the rest of us, we dont have to be benchwarmers much longer. Lets get excited, productivity and prosperity doesnt have to keep passing us by. We have an opportunity to make unprecedented gains in this midterm election. We are a few days away from being able to take Congress back. We cannot afford to pass up on this event. If we vote the right people into office, our economy, starting in January, begin to look like the Texas model, not the Tax Us model. And that is the best answer Ive heard in a while.

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Economy Continues to Falter in Lead up to Election Day


As you walk into the voting booth on Tuesday there are a few numbers you need to remember.

3.03 trillion the increase in the national debt since President Obama took office 14.2 trillion the projected national debt in 2019 under President Obamas budget 1.3 trillion the average annual deficit run in the last two years under Democrats leadership 7.9 million- the number of private sector jobs that have been lost despite this spending spree 9.6% the unemployment rate

The midterms are two days away. Let me repeat, two days. So as you go to vote, in what could be one of the most important elections of our lifetimes, remember those numbers above. Remember, because they are more than just numbers on a page. They are the result, in terms of dollars spent, jobs lost, and people unemployed, of Democratic leadership in Washington. America continues to struggle, begging for help, while Obama continues to say hold on the recovery is surely coming. But Americans are past the point of blind faith. Its time we see results. The only results to be found are those that show a non-existent recovery, a far cry from President Obamas promise that better days were just right around the corner. As Politico explained, Home prices, the Achilles heel of the economy, are falling again. Consumer confidence remains at levels usually associated with recession. And on Friday, the government is expected to announce that economic growth was around 2 percent in July, August and September, less than half of what is normal in a modest recovery. Did you catch that? We are not even growing at half the rate for a modest recovery. We can add that 2% growth in GDP to the expanding list of numbers showing the debilitating effects of the Democrats policies. In the final 48 hours before Election Day Democrats will attempt to minimize the impact of these numbers. These snake oil salesman will have you believe that theyve done their best to fix a problem they inherited. They will make the argument that they need more time. They will ask
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you if you are ready to hand back the keys to a party who drove us into a ditch, ignoring the fact that theyve worked for the past two years to dig the ditch deeper. And as a study by the Wesleyan Media Project shows, they will use personal attacks against Republicans in a last minute attempt to sway voters. Americans, whose most sensitive organ is not the heart or the brain, but their wallet, wont be fooled. We are hurting. Our wallets are on life support, drained of money, that element of vitality that keeps our families fed, sheltered, and clothed. We are a patient in an emergency room waiting for an infusion and yet Obama is telling us to be patient. There is no more time for patience. Our economy continues to wither, our families continue to struggle, and our futures look bleaker by the day. Its time for a change.

The Final Push


There are less than 72 hours left until the polls close Tuesday night, and, as of right now, Operation Red November volunteers have passionately given 54,140 volunteer hours and counting to Republican candidates. Because of you, millions phone calls have been made, hundreds of thousands of doors knocked and tens of thousands pieces of literature distributed for a Red November! But now is not the time to stop, now is the time to double our efforts and to push harder! We must finish strong because the stakes have never been higher. Here is what you can do to ensure that we do.

Vote! Voting is the most important thing you can do to make sure that this November is a Red November! If you havent already voted early or absentee, be sure to vote this Tuesday, November 2! Tell your friends and family to vote! Reach out to 10 friends or family members and ask them to vote conservative. Look them in the eye, tell them that you are voting conservative and then explain why. Aside from voting yourself, personally reaching out to friends and family is the single most important thing you can do for a Red November! Volunteer at your local Victory Center! At your local Victory Center, you have the opportunity to volunteer to get-out-the-vote for Republican candidates. If you believe that change needs to come to Washington D.C., then you can bring that change by volunteering at your local Victory Center. Find your local Victory Center here.

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If we all do these things, if we each time the time to vote on November 2, reach out to friends and family and give a couple hours at a Victory Center; then together we will have made this reddest November ever. As young people, we have much to lose. Lets make sure that history does not look back on our generation with astonishment that those with the most to lose did the least to prevent its happening. To a Red November!

Republican Gains on Election Day Exactly What the Economy Needs


Fear. It is a powerful election year tactic that Democrats have been leaning on heavily in the days leading up to November 2nd. They warn that if Republicans live up to expectations and take back the House of Representatives it will be the end for America as we know it. It may sound as if Im using hyperbole to describe their positions but Im not. Take liberal commentator Paul Krugman who was made famous by his economics and turned infamous by the ridiculous stuff he says in his New York Times column. Krugman warns that if Republicans win back the House, [It] will be terrible. In fact, future historians will probably look back at the 2010 election as a catastrophe for America, one that condemned the nation to year of political chaos and economic weakness. . . So if the elections go as expected next week, heres my advice: Be afraid. Be very afraid. Catastrophe? Condemned? Chaos? An alliterative triumverate of cowardice. I mean, I understand that horror is en vogue during the Halloween season, but cmon! Youd think Republicans were zombies straight out of a George A. Romero movie, dripping blood from every orifice and wanting to feed on voters flesh. Yet in his article, Krugman does something very strange. In making the case for why Americans should be afraid, be very afraid of Republican control, he explains exactly why they shouldnt be.

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After, all, says Krugman, the last time Republicans controlled Congress while a Democrat lived in the White House was the period from the beginning of 1995 to the end of 2000. And people remember that era as a good time, a time of rapid job creation and responsible budgets. Rapid job creation? Responsible budgets? That sounds almost exactly what America needs right now! As the Washington Post reported yesterday, The U.S. economy remains stuck in neutral, according to the latest data, continuing a pattern of steady growth that is too slow to bring down joblessness. In fact many economic forecasters actually expect the unemployment rate to edge up, the result of economic growth too small to incorporate population increases. Moreover, with Democrats having full control of both houses of Congress and the White House the nations budget has been disastrous. For the second straight year the budget deficit has been above $1.3 trillion, the result of enormous spending programs like the stimulus and steady increases in discretionary spending. As the Wall Street Journal recently explained, CBO shows that over the first three years of the Obama Presidency, 2009-2011, the federal government will borrow an estimated $3.7 trillion. That is more than the entire accumulated national debt for the first 225 years of U.S. history. By 2019, the interest payments on this debt will be larger than the budget for education, roads and all other nondefense discretionary spending. After the sad reality of the last two years rapid job creation and a responsible budget sounds exactly like what we need! Nevertheless, Krugman and many liberal pundits argue that Tuesday is likely the first sign of the End Times. As Jonathon Alter wrote in Newsweek, If Democrats lose control anyway, maybe nothing bad will happenBut a right wing Republican takeover of Congress and state capitals isnt something to accept with indifference. Hes exactly right. When Tuesday rolls around and you go and cast your vote for change, dont do so with a feeling of indifference. Do it with a feeling of exuberance. Happy that you have provided a check on an out of control government who had no qualms on spending unprecedented amounts of taxpayer money. Happy that you elected a party with a state purpose of restoring certainty to an economy that has been rocked by new regulations and threatened by higher taxes. Happy that we may have finally taken the first step towards getting this nation back on the right track.

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