Author: Heritage

On 01.26.10 11:00 AM posted by Conn Carroll

According to multiple reports, President Barack Obama will announce a “spending freeze” in his State of the Union tomorrow night. While we definitely have our doubts about the efficacy and reality of these proposed cuts, what there is no doubt about is that President Obama’s past Defense budget was entirely inadequate to protect our nation.

The Congressional Budget Office correctly notes that total inflation adjusted Defense spending “exceeds the peak of about $500 billion (in 2010 dollars) during the height of the Reagan Administration’s military buildup in the mid-1980s.” However, our economy is a lot larger today than it was then. In GDP terms we are actually spending a lot less on defense than we were in the 80s.

In a Stimson Center guest blog last week, Heritage fellow Mackenzie Eaglen explained why Obama’s nominal defense increases actually fall far short of what is needed to protect our nation:

While many expect a minimal topline increase for defense spending again in FY 2011 (one to two percent real growth), this modest bump is still insufficient to pay all the Pentagon bills. … The critical takeaway is that a flat defense budget topline is really a declining defense budget. That is because the cost of doing everything in the military–from paying people to buying new equipment–greatly outpaces inflation every year.

Eaglen later quotes Brookings Institution scholar Michael O’Hanlon

For the Defense Department to merely tread water, a good rule of thumb is that its inflation-adjusted budget must grow about 2 percent a year (roughly $10 billion annually, each and every year). Simply put, the costs of holding on to good people, providing them with health care and other benefits, keeping equipment functional, maintaining training regimes, and buying increasingly complex equipment tend to grow faster than inflation.

http://blog.heritage.org/2010/01/26/…tary-spending/

On 01.26.10 11:50 AM posted by Brian Darling

Liberals in America are mad because they *have had a difficult time implementing an unpopular far left agenda, especially with regard to Obamacare.*One of the results of this rage is for liberals to attack one of the rules in the Senate that protects unlimited debate and amendment – the Filibuster Rule.

Rule 22 of the Senate’s rules governs the conduct of a filibuster and requires that a “Cloture Petition” be signed by 16 Senators to commence the process of shutting off debate on a nomination or legislation. The left wants to get rid of this rule because they don’t like the fact that the rule requires a vote of 60 members to shut off debate.* They are mad because they can’t get Card Check and a Public Option passed in the Senate, even when they had a 60 vote Democrat Caucus, so they are going to change the rules of the game to make it easier to pass big government legislation.* The effect of abolition of the filibuster would be to marginalize moderate Democrats in the Senate and eliminate the need for any input from Republicans.

The Constitution states in Article I, Section 5 that “each house may determine the rule of its proceedings.”* The Senate has passed Rule 22 by a 2/3rds vote.* In 2005, some Republicans flirted with the idea of abolishing the filibuster for judicial nominees and the left fought that idea with all they had within the Senate and in left-leaning think tanks. **In 2005, the term used to describe abolishing the filibuster was the “Nuclear Option.”* Basically, this was a means to use a simple majority of the Senate to ignore the rules of the Senate by claiming the filibuster was unconstitutional.

The Center for American Progress (CAP) set up a page titled The Nuclear Option were they wrote “the filibuster is one of the only ways to encourage genuine bipartisan cooperation and compromise on important issues that come before the Senate.”* CAP hosted a conference titled, Going Nuclear – The Threat to our System of Checks and Balances on April 25, 2005.* John Podesta, President and CEO of the Center for American Progress spoke at the event where he said:

by removing the safeguard offered by the filibuster, the nuclear option would seriously and perhaps irreparably damage an institution that has functioned since the its inception under customs and traditions that ensure an atmosphere of careful deliberation and mutual respect.* Ultimately, this is not a dispute between the left and the right.* It is a matter of right and wrong.* It’s a choice between safeguarding our system of checks and balances or destabilizing it; between upholding the Senate’s coequal role in the confirmation progress or diminishing it.

This same think tank is now messaging for an abolition of the filibuster.

Other outlets who have advocated the abolition of the filibuster include New York Times,*Mother Jones, Think Progress, and Washington Monthly.* Daily Kos wants to “end the filibuster.”* Ezra Klein maps out 4 ways to end the filibuster.* Even the President and Vice President have weighed in against the filibuster.* The irony is that many of these same politicians supported and participated in filibusters before they were against it.

Senator Barack Obama voted on January 30, 2006, to filibuster the nomination of Sam Alito to be a justice on the U.S. Supreme Court.* Senator Obama filibustered the nomination of John Bolton to be U.S. Ambassador to the United Nations … twice.* The President’s words do not match up with his actions as a Senator.

Vice President Biden’s record also belies a double standard on the filibuster.* Vice President Biden stated on May 23, 2005. that eliminating the filibuster from the Senate’s rules:

extinguishes the power of Independents and moderates in this Senate. That is it. They are done. Moderates are important only if you need to get 60 votes to satisfy cloture. They are much less important if you need only 50 votes. I understand the frustration of our Republican colleagues. I have been here 32 years, most of the time in the majority. Whenever you are in the majority, it is frustrating to see the other side block a bill or a nominee you support. I have walked in your shoes, and I get it.

Evidently some time in the executive branch has changed the minds of our President and Vice President.

On an interesting note, Senator Robert Byrd (D-WV) spoke at the CAP public event in 2005 and put the filibuster in historical context.* “Plutarch reported that while Caesar was on sojourn in Spain, the election opposed his request and attempted to prevent his success by gaining time with which view he spun out the debate until it was too late to conclude upon anything that day.* Hey!* The filibuster has only been around 2,064 years, since circa 59 BC.”* The filibuster has a very long tradition.

Both Republicans and Democrats have exhibited bipartisan hypocrisy on the issue of the filibuster.* It is time for cooler heads to prevail and retain the long history and tradition of unlimited debate and amendment in the Senate. Any attempt to abolish the filibuster should be met with bipartisan disdain.

http://blog.heritage.org/2010/01/26/…he-filibuster/

On 01.26.10 12:09 PM posted by Steve Keen

Senator Tom Coburn (R-OK) has a radical alternative to raising the debt limit: spend less money. In an amendment introduced last week Senator Coburn proposed saving approximately $120 billion by, “consolidating more than 640 duplicative government programs, cutting wasteful Washington spending, and returning billions of dollars of unspent money.” The vast majority of the savings, $100 billion, would come from rescinding discretionary federal funding that has been unused for over two years and remains unassigned for a specific purpose. The remainder would result from the consolidation of hundreds of duplicative government programs and recessions to several government departments and agencies.

The total public debt outstanding is now $12.3 trillion, and public debt as a percentage of the economy is currently projected to exceed World War II levels. At some point Congress must say enough is enough. Debt has consequences; President Obama’s own figures see outlays for interest on the debt rising to levels greater than the all defense spending by 2018. Currently, a single month of interest payments on the national debt already exceed yearly spending on programs such as Child Nutrition, and International Assistance.

Although this amendment is not a cure all for the nations addiction to debt – entitlement spending alone is set to swamp the entire budget by 2052 – Senator Coburn’s amendment is certainly a good place to start. Any true solution must address Social Security, Medicare, and Medicaid spending by including placing the program on long-term budgets and including the long-term obligations of these programs in the budget. In the meantime, actions such as consolidating duplicative programs and rescinding unobligated funds should be common sense.

The amendment needs 60 votes to pass. Will Congress finally choose the fiscally responsible solution?

http://blog.heritage.org/2010/01/26/…he-debt-limit/

On 01.26.10 12:33 PM posted by Baker Spring

In a report titled, “Long-Term Implications of the Fiscal Year 2010 Defense Budget,” the Congressional Budget Office (CBO) points out that this year’s Department of Defense (DoD) budget will exceed the real dollar equivalent of the Pentagon’s budget at the time of the defense build-up in the 1980s. Specifically, CBO calculates that this year’s defense budget will total $664 billion, compared to roughly $500 billion in 1985 — an increase of one-third.

This comparison is no surprise to Congress or the American people because the U.S. is currently fighting two wars in Iraq and Afghanistan. In 1985, a military build-up was required because the military had become a hollow force after Vietnam. A hollow force lacks the resources to do three critical tasks at once:

• Provide trained and ready forces,
• Support ongoing operations, and
• Modernize its equipment and platforms.

Out of necessity, the federal government increased defense spending in the 1980s to rebuild a military broken in the course of the Vietnam War and its aftermath.

The key difference between 1985 defense spending and that of today is that the military was not engaged in any major contingency operations then, one of the three pillars of a balanced defense program.

Defense spending today is higher because of ongoing combat operations that are a significant strain on the force. Spending is also higher because the U.S. military is simultaneously trying to recover from the “procurement holiday” of the 1990s. Throughout the ‘90s, Congress and the President cut the size of all three military services by one-third to one-half and reduced the purchase of modern equipment to match. As a result, defense spending dropped significantly in the 1990s to less than 3 percent of gross domestic product.

Today’s Military is Doing More than Yesterday’s

Any discussion about spending on today’s combat operations must examine the defense budget more closely. When the U.S. military is operating at a high operations tempo, as it is today, these wartime demands impose resource burdens on the operation and support accounts within the defense budget.

These accounts—operations and support—primarily fund military pay and operations and maintenance activities. In the President’s fiscal year 2010 defense budget request, these accounts will roughly absorb nearly 65 percent of the DoD budget. Yet in 1985, these accounts absorbed roughly half, or 50 percent, of the defense budget.

The wear and tear on military equipment during wartime is also straining resources and burning through equipment at rates five, six, and even seven times that of peacetime. To bring the military back in balance, weapons systems and platforms can either go through significant maintenance to restore them, or the military may seek to buy newer replacements with next-generation technology. This reset and recapitalization of military equipment is funded largely through the procurement account. However, today’s procurement funding accounts for a much smaller share of the defense budget than it did in 1985.

The 2010 defense budget will allot less than one-fifth of its total to procurement funding. By comparison, in 1985 procurement absorbed over one-third of the DoD budget.

The recovery from the procurement holiday of the 1990s was never fully achieved after 9/11 due to ongoing wartime requirements and the necessity of prioritizing funding for restoring weapons and equipment lost or damaged in combat.

Defense Spending is Less than One-Fifth of the Federal Budget

Finally, the defense budget should not be examined in isolation from the rest of the federal budget. If policymakers do not compare the increase in defense from the mid-1980s and current defense spending levels with other federal budget accounts, they may assume out of context that the defense budget is too large.

The Medicare budget this fiscal year is currently estimated to be seven times what it was in 1985. Other health care funding is 11 times what is was in 1985. Social Security funds will likely be more than three times their 1985 levels. This explosion in other federal spending comes when the Administration is arguing the federal government is not spending enough on health care and is looking at significant tax increases to fund this additional spending.

Conclusion

Instead of isolating one factoid for examination from a larger report, Congress should pay special attention to what CBO says about future defense spending. CBO analysis is not limited to comparisons between past defense budgets and 2010 defense spending.

CBO projects that the average DoD budget for the period covering fiscal years 2011 through 2028 will be $50 billion less in real dollars than its current estimate for this fiscal year. This estimate includes the costs that the Congressional Budget Office calculates that the Obama Administration has not fully budgeted.

The report estimates that future defense budgets will average $91 billion less annually in real dollars than for the current fiscal year when the Administration’s stated defense budget is submitted to Congress. In essence, CBO acknowledges that the Obama Administration is cutting the defense budget, both in real dollar terms and as a percent of the economy.

Congress should not be intimidated by charges that defense budgets are excessive by historical standards. They are not when taken in context, and Congress should fight the defense budget reductions the CBO expects are coming from President Obama.

http://blog.heritage.org/2010/01/26/…es-in-context/

On 01.26.10 01:32 PM posted by Brandon Stewart

After a presentation this afternoon at the weekly Bloggers Briefing held at The Heritage Foundation, Representative Mike Pence (R-IN) sat down with us for his first interview following today’s announcement that he will not challenge Senator Evan Bayh (D-IN) for his seat in the U.S. Senate. In this exclusive interview, Pence discussed his future plans, the prospects for the conservative movement, and what he believes the President and Congress can do to spur growth in the economy. Reflecting on health of American conservatism,*Representative Pence said:

I would describe the state of conservatism as in the ascendancy. The American people are in the midst of a great awakening. It’s a time when the American people want to see our government return to it’s roots of limited government, fiscal responsibility, personal responsibility, and traditional values. And, like no other time in my lifetime, those mainstream, common sense, common values that we describe as conservatism are on the rise and I believe the are going to propel a real renewal in 2010 and again in 2012.

http://blog.heritage.org/2010/01/26/…-conservatism/

On 01.26.10 02:00 PM posted by Dan Lips

The Los Angeles Times reports that President Obama plans to call for a “$1.6 billion increase in federal funding for child-care programs” in his upcoming State of the Union address. The report frames this proposal as part of a larger effort to “help the middle class.”

Some parents will probably welcome the news of more subsidized child care. But they need to remember that their children are the ones who will end up paying for the billions that will be added to the ballooning national debt, which is set to explode over the next decade. Put in that perspective, parents and taxpayers need to ask: is another “investment” in child care or preschool really worth it?

According to the GAO, the federal government currently operates 69 different early childhood education and child care program at a total annual cost of at least $25 billion. And new evidence suggests that this considerable “investment” isn’t being well spent.

As we have reported, the recently-released national evaluation of the $9 billion per-year Head Start program found the program to be a complete failure—providing zero lasting benefits to students by the end of 1st grade. Russ Whitehurst of the Brookings Institution provides a good overview of the study’s findings and importance in a new article:

The study demonstrated that children’s attendance in Head Start has no demonstrable impact on their academic, socio-emotional, or health status at the end of first grade. That’s right. If you were a mother who lost the lottery, couldn’t get your child into Head Start, and had to care for her at home, she was no worse off at the end of first grade than she would have been had she gotten into Head Start.

Whitehurst also points out that media has completely ignored the release of the report:

The study went virtually unnoticed. You can’t find anything about it in the Washington Post or the New York Times or the Wall Street Journal or any other media outlet that serves the general public. The Post has 11 reporters covering education. Why isn’t a report on the effectiveness of the nation’s largest federally administered education program, one that serves thousands of needy children within the Post’s metro area, deemed worthy of newsprint? Is Head Start so sacrosanct that bad news about it is to be ignored?

This week’s State of the Union address should give the press another news hook to look at the Head Start report. As President Obama urges that taxpayers “invest” billions more on child care or preschool programs, he should be asked to explain whether his administration will still live up to his pledge of “funding what works.”

Taxpayers and children (the taxpayers of the future) deserve to know.

http://blog.heritage.org/2010/01/26/…care-spending/

On 01.26.10 02:30 PM posted by Mike Brownfield

Tomorrow, join The Heritage Foundation as we discuss President Barack Obama’s State of the Union address. Here’s how you can be part of the debate:

Chat Live on Facebook:

Visit our Facebook Fan Page beginning at 8:30 p.m. EST for a live chat on our Facebook Wall to share your real-time reaction to the President’s speech and to hear the latest analysis from Heritage experts.

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Would you rather chat on Twitter? Join us in our Twitter chat room at http://tweetchat.com/room/heritagesotu to chat with fellow Tweeters and to follow the latest reaction from Heritage. Or you can follow the Twitter hashtag #HeritageSOTU.

Not following Heritage on Twitter? Follow us at http://twitter.com/heritage

Post-Speech Analysis on The Foundry:

Heritage analysts will post their expert reactions to the President’s speech on The Foundry immediately following his remarks. Visit us on The Foundry to read the best conservative analysis in the country.

Live Chat on Thursday:

Join Heritage Vice President of Communications Mike Gonzalez at 2:30 EST for a live Web chat on The Foundry to give his reaction to the State of the Union address. Ask him questions and join in the discussion.

http://blog.heritage.org/2010/01/26/…-of-the-union/

On 01.26.10 02:31 PM posted by Stuart Butler

The Senate this week is considering amendments to Majority Leader Harry Reid’s (D-NV) legislation to raise the debt limit.* Reid’s bill is a substitute to the version that passed the House, which would add $925 billion to the federal debt ceiling, but his would hike the limit by $1.9 trillion so that the Senate does not have to take another troublesome vote on the debt limit before the 2010 election.

Raising the debt ceiling to some degree is, unfortunately, necessary to avoid a default with perhaps catastrophic financial consequences for America. But at least the legislation has focused attention on the need for Washington to control its spending behavior.* The issue is: What amendments can be added to the Reid bill to push Congress to face up to the spiraling fiscal problem?

Early on Tuesday, the Senate voted down an amendment offered by Senators Judd Gregg (R-NH) and Kent Conrad (D-ND) which threatened to take the wrong approach by creating a commission to address our debt problem.

Senate Finance Chairman Max Baucus (D-MT) made the prospect of any decisive fiscal action more remote by offering an amendment that would prohibit Congress from including Social Security in any budget legislation involving expedited procedures. Unfortunately, the Baucus amendment was agreed to by the Senate.

Removing Social Security from the discussion may be good short-term politics, but it is the three big entitlements – Medicare, Medicaid, and Social Security – that are the major drivers of federal spending.* These three programs alone will cause spending to explode in the next few decades as the U.S. population ages and the cost of providing health care continues to climb.

The fiscal crisis the nation faces cannot be addressed unless these programs are significantly reformed, but Senator Baucus’ amendment rules out one-third of the equation out if expedited procedures are used—even though tax increases, for example, could be implemented under such procedures.

The Senate will very shortly vote on another Baucus amendment to create his version of a commission. If it is accepted by the Senate, a Bipartisan Task Force will be created to address the fiscal imbalance that threatens the financial future of our children and grandchildren. The task force he proposes is almost identical to the Conrad-Gregg version that has just been defeated. The only significant difference is that it removes that version’s requirement for Congress to use expedited procedures to consider the Commission’s recommendations.* Like Conrad-Gregg, the Baucus commission would not reveal its plan until just after the November election.* The plan could then be voted on by this Congress, including members who might well have lost their seats in the election because of their poor fiscal stewardship.

The most likely the result of the Baucus commission would be no congressional action at all on entitlement reform—while carrying the risk that it would provide cover to raise taxes.

This is the wrong way to conduct a commission, and it will do nothing to build the broad public support needed to confront the federal government’s spending addiction.

http://blog.heritage.org/2010/01/26/…-for-spending/

On 01.26.10 04:59 AM posted by Ed Feulner

The President of the United States tomorrow will inform the Congress on the State of our Union, as he is constitutionally mandated to do. The past 12 months have seen our country head down a dangerous course, and The Heritage Foundation can only hope that the President will use this time of reflection, coming on the heels of a stunning electoral loss, to change direction.

You must recognize, Mr. President, that the State of the Union is not good. You need a new approach and fresh domestic and foreign policies. The caps on spending which reports last night said you were considering are but an exceedingly modest first step, and the devil is in the details. The caps will do virtually nothing to improve the nation’s fiscal health unless you tackle Social Security, Medicare and Medicaid. Shifting tactics and stoking populism will be both cynical and condescending to the voters, who will see through this strategy. Mr. President, it’s the policies you need to change, not the spin.

In 2008, you promised economic recovery and sound financing. You promised to keep our country safe. You also promised bipartisanship.

Instead, our nation is enduring high unemployment and slow growth, due to surging spending and government borrowing. Bailouts and a pork-ridden “stimulus” bill will not get our country back on track. High unemployment comes primarily from the lack of job creation, rather than job destruction. Our research shows that your Administration’s policies have created uncertainties that have hindered risk-taking by entrepreneurs.

And now, faced with difficulties, instead of changing course you are doubling down and promising increased regulation. The challenges you have faced in one year in office—tea parties, town halls, three tough electoral losses—should have made you rethink your policies. Americans have always preferred limited government over the expansionist kind, lower—not higher—taxes, rational policies, not punitive ones. Your advisors are misreading the public, and economic reality, if they think increased red tape and government control will cure any of our ills.

The Index of Economic Freedom, which The Heritage Foundation publishes annually alongside The Wall Street Journal, tells the story. This year, for the first time since we started publication of the Index, the United States has fallen from the top tier “free” category. Yes, about half of this fall came because of decisions taken by your predecessor, but your policies have dramatically accelerated this descent. And our Index, issued last week on the anniversary of your inauguration, does not even take account of the second half of your year in office.

Your signature health care reform initiative has been a colossal missed opportunity. It is now in free fall, while insurance and health costs continue to climb.

This was a year that should have been spent working on lowering the barriers to jobs creation. But expansionist policies have crowded out investment and are killing the great American job machine.
In foreign policy, your year in office has left the world a more troubled place. A President has to lead in the world as it is, not as he wishes it to be.

Just as creating jobs should get all your attention domestically, battling terrorism should be Job One in foreign policy. The massacre at Fort Hood and the attempted Christmas Day bombing should have been wake-up calls for Washington. Our country is not using all the tools in the tool kit to protect Americans from terrorism. Even worse, your Administration seems ambivalent over the fact that the legal authority for key investigative methods granted under the Patriot Act is about to expire.

Abroad, we simply don’t know when Iran will obtain a nuclear weapon. You seem to have thrown all your chips with an entity that does not exist—the International Community—waiting for it to impose sanctions on Iran and turn the spotlight on its horrific human rights record. This fits with your view that the Berlin Wall fell because “the world came together as one,” but just like that was bad history, your view of the present is also borderline mythical.

So right now the world has the impression that America is distracted, unable, or unwilling to lead or vigorously defend its interests. That was painfully apparent in your Administration’s decision to walk away from our missile defense commitments to Poland and the Czech Republic. The time for missile defense is now, not after a threat emerges.

Mr. President, several policy areas cry out for your attention.

Domestically, you need to show the American people the full long-term obligations of the government in your annual budget, just as the government forces private corporations to do. Bring transparency to Washington by showing the long-term debt picture on your budget.

Then you and the leaders of both parties should lay out the options for fixing the deficit crisis and conduct a national conversation on what action to take. Trust the people to help make decisions. And press Congress to put Medicare and Social Security on a 30-year budget, to give seniors certainty while forcing the tough decisions necessary to give our children a financial future.

Get the economy moving again. You need to give main street businesses and banks—our real job creators—some certainty by eliminating the threat of higher taxes, spiraling debt, and suffocating regulation. Make the tax cuts on the books permanent, to encourage more saving and investment.

Urge Congress to reform the bankruptcy laws so that supposedly “too big to fail” companies can be restructured in an orderly way rather than bailed out or regulated to a slow death. Denationalize General Motors. And please, end the TARP bailout slush fund.

On health care, you can get real reform back on track by doing what you should have done on day one: genuinely reach across the aisle as you promised your voters last November. If you proceed in this manner, you will be able to move forward with bipartisan tax reforms that provide adequate tax relief for those who have reasonable coverage today, while extending help to those taxpayers who currently do not have coverage.

Rather than trying to pass a huge health care bill that runs everything from Washington, it is time to downsize the legislation drastically and to give states much greater freedom and encouragement to put into place innovative approaches that will work best for them. The solution for Massachusetts or Vermont will be different than that for Colorado or Texas.

States need to be able to negotiate major changes in statutory programs, like Medicaid, as part of a plan to increase coverage. It should be states that set up insurance exchanges, reinsurance pools or other ways to make affordable insurance available to everyone. And if Americans in one state want to buy health insurance from another state, nothing should stop them.

In foreign policy, please stop giving captured terrorists the same constitutional rights as Americans. We should be turning over captured terrorists to Military Commissions for trial after our intelligence services have interrogated them.

America should be strong in deeds as well as in words. That is not possible without a strong national defense. We must make an irrevocable commitment to recapitalizing the U.S. military, an effort that would require another $50 billion a year to buy the new equipment and maintain the capabilities our men and women under arms need to defend us.

We need a new vision. We need to keep Americans safe. And we need to reverse the decline of American leadership and influence in the world. Our freedom and security are at stake unless we reverse the decline of American fortunes in the world.

Afghanistan is a war that must be won. Winning is more important than any deadline for withdrawal. Announce that the United States won’t quit until the job is done.

Mr. President, let’s recommit to expanding free trade and making America more competitive in the world. We need to make America the freest economy in the world, in order to have more economic growth, prosperity, and jobs. You should recalibrate the top tax rate on U.S. corporate profits so that it is no higher than the average of the top rates that prevail in our 30 largest trading partners.

We also need to recommit ourselves to our friends and allies. You have not done a good job supporting our friends. Instead, we engage our enemies and get a clenched fist in return. We should re-dedicate ourselves to the proposition that America is a beacon of freedom for free peoples of the world, and that being true to that proposition means supporting free peoples, not coddling or giving comfort to dictators.

Be a war President 24-7-365. Commit yourself to helping, rather than hurting, our economy 24-7-365. Every moment of every day you should be working to defend the nation; protect our liberties; and promote American prosperity. Your resolve must not waver. Your commitment should not falter.
If you devote all your attention to letting our private sector create jobs at home and achieving victory overseas, we will enthusiastically support your efforts, and the State of the Union in 2011 will be far better.

By Edwin J. Feulner, President of The Heritage Foundation

Quick Hits:

• According to the latest Rasmussen Reports poll, only 30% of U.S. voters say the country is heading in the right direction.
• For the first time in 15 years, welfare rolls rose in 2009 and the number of people receiving food stamps and unemployment insurance also spiked.
• According to the latest CNN poll, nearly three out of four Americans believe that at least half of the money spent in the President Obama’s $787 billion stimulus plan has been wasted.
• The chairman and ranking Republican of the Senate Homeland Security and Governmental Affairs Committee, Sens. Joe Lieberman (I-CT) and Susan Collins (R-ME), sent a letter to Attorney General Eric Holder yesterday urging the Obama administration to transfer the Christmas Day bomber into military custody.
• A new report by the former senior CIA official who led the agency’s hunt for weapons of mass destruction warns that al-Qaeda has not abandoned its goal of attacking the United States with a chemical, biological or even nuclear weapon.

http://blog.heritage.org/2010/01/26/…-of-our-union/

On 01.26.10 06:50 AM posted by Theodore Bromund

The 2010 edition of the Index of Economic Freedom poses a frightening paradox. Around the world, the economically freest countries are, by and large, those with a British legacy. Indeed, the top five – Hong Kong, Singapore, Australia, New Zealand, and Ireland – were either founded or influenced by the British. Of the top ten states, only Denmark, Switzerland, and Chile were not, at one point, governed from London. The lesson should be clear: economic freedom, born of the thought of Adam Smith and David Ricardo, spread round the world with the English-speaking people, to the immense benefit of both their children and those who learned from them.

And yet the two most important English-speaking countries today are sliding backwards. In 2009, the United States, for the first time, dropped out of the ranks of the free, and into those of the ‘mostly free.’ The United Kingdom dropped only slightly less than the United States, and it fell out of the top ten for the first time. Even more disturbing is the fact that the U.K. has now declined for four consecutive years, and that the level of economic freedom in Britain is now as low as it has been since the Index began to measure it in 1995. Britain’s decline is even more disturbing when compared to its major European competitors, such as Germany, France, and Italy, all of whom increased their scores in 2009.

The reasons for the U.K.’s comparative decline are clear: while some countries did not respond to the 2008-9 financial crisis by limiting economic freedom, others, including Britain, did. The U.K. already had to carry the burden of the National Health Service and the E.U.’s Common Agricultural Policy, which distort its domestic prices and impose higher costs on consumers, as well as a high and increasing level of government spending. Add to that the nationalization of Northern Rock Bank and the majority and minority stakes, respectively, the government has taken in the Royal Bank of Scotland and Lloyds Banking Group, and you have a nation that is moving increasingly rapidly away from economic freedom.

There is little likelihood that the U.K. will reverse this retreat in the next edition of the Index. The 2010 Index reports that government spending as a share of national income in the most recent year was 44%. But the OECD reports that public spending will reach 53% of national income in 2010. That by itself will hurt the U.K.’s score next year, just as the jump in public spending that began under President George W. Bush and accelerated under President Obama will drag the U.S.’s ranking down.

Of course, in the end, the ranking’s not the thing: it’s the policies that the ranking reflects, and their results, that matter. And with both Britain and the U.S. moving for the first time into the ranks of the ‘mostly free,’ they can, if they keep on their current road, look forward to a future that has more debt and less prosperity, and where politics revolves around how to share the pie, not how to grow it. Nothing could be less in keeping with the lessons the world’s leaders in economic freedom learned from Britain, lessons that both Britain and the United States badly need to relearn before they fall even further behind.

http://blog.heritage.org/2010/01/26/…ican-alliance/

On 01.26.10 08:08 AM posted by Kathryn Nix

Today in Washington, the Bipartisan Policy Center (BPC) launched its new Debt Reduction Task Force, chaired by former Sen. Pete Domenici (R-NM) and former OMB director and CBO director Dr. Alice Rivlin.

The task force will aggressively address the abysmal fiscal outlook of the United States economy due to government spending. As Domenici and Rivlin displayed, the amount of debt held by the public is set to reach 100% of Gross Domestic Product (GDP) by 2019. Under the same trajectory, the debt would reach 400% of GDP by 2049. As Rivlin pointed out, however, this outlook is completely unrealistic. Far before the debt reached such gargantuan proportions, lenders would refuse to continue purchasing our debt and the United States would find itself in economic ruin.

According to Sen. Domenici, “America has the worst economic future that we have ever had.” This sentiment was echoed by former Senator Tom Daschle (D-SD), one of the founders of the BPC, who explained that following the current path, the nation could see basic needs of society pushed aside to make way for out-of-control entitlement spending.

The Debt Reduction Task Force will address this spending crisis. The task force includes representatives from all parts of the community and from across the political spectrum. What makes the BPC’s task force unique, however, is its commitment to go further than vague suggestions to lower the deficit and control spending—rather, it will create a specific plan for a long-term budget.

Sen. Domenici and Dr. Rivlin stressed that all measures for reducing the public debt will be on the table when the task force begins its mission. This will include options that may be unfavorable to both Democrats and Republicans. Even Sen. Domenici referenced tax increases, saying they might have to accompany requisite spending reductions to decrease the nation’s debt, which will make it difficult to bring many conservatives on board. But, both he and Ms. Rivlin also emphasized that the task force would not be recommending spending cuts or tax increases that could undermine the economy’s recovery and job creation. Instead, they said, the Task Force will propose long-range policy changes.

To get spending under control, the Task Force will have to focus heavily on reforming Medicare, Medicaid, and Social Security, the three entitlement programs which devour revenues. And though most conservatives equate “raising revenue” to tax hikes and consequently oppose such measures, this would not necessarily have to be the case. The Task force could create revenue in other ways, as is exemplified by the Cooper-Wolfe SAFE Act (H.R. 1557). This bipartisan commission would consider reforms that make United States tax laws more efficient and more conducive to encouraging economic growth.

When asked about the political palatability of a proposal that could include provisions unpopular among both Democrats and Republicans, Domenici and Rivlin stressed that Americans will need to be understanding of the severity of the situation, and that its solution might require them to sacrifice. The only other option is to wait to act until crisis is imminent and the power and strength of America has already deteriorated.

The Task force’s goal is to show that solutions can be forged by working together – before a crisis hits. Regrettably, Congress for many years has proven incapable of addressing the autopilot growth of federal entitlements. As Dr. Rivlin explained, one of the reasons the current Congress is incapable of tackling this problem is the newly-developed viciousness of partisanship in Washington. To Rivlin, the biggest threat to the economy is the federal spending trajectory—and the biggest threat to fixing it is partisanship. It’s unfortunate that everyone but Congress seems to be coming up with solutions.

http://blog.heritage.org/2010/01/26/…on-task-force/

On 01.26.10 08:41 AM posted by Alison Fraser

The President has the right idea with his proposal to freeze spending.* Unfortunately, after driving spending to a record $3.7 trillion—nearly 26% of GDP—last year with the accompanying $1.4 trillion deficit, the proposal*is at best a bit….underwhelming.

According to the administration, only $447 billion in spending would be subject to the freeze with a total of $15 billion to be*saved.* *So this freeze would reduce the deficit by 1.1 percent or less than half a percent off of last year’s spending.**Details have yet to be announced, but those that have trickled out do make one wonder what spending forecasts the White House budgeters are reading.

The good:

Spending is out of control.* Under Obama, federal*spending increased in every category—in many cases massive increases driving spending to its highest point since WWII. Spending needs to be frozen*andreduced.**Reallyreduced.* If the President is serious about restoring confidence in his ability to control the excesses of Washington, he must go much further.

The bad:

First – this freeze would only apply to a sliver of total federal spending.* The administration has conjured up a new definition of spending called “non-security”, which would only affect about one-eighth of the budget.

Second – as reported – the cap would not be imposed across the board. Some areas would see increases like “investments related to jobs creation” while others like The Department of Justice—a core*constitutional function of government—could see a cut. Budgets are about setting priorities and*the President should be making such trade-offs across the entire federal budget.* He and every president before him have done just that. But calling it a freeze?* Puleeze.

Third – the major drivers of spending are completely off the table. Spending on*Social Security, Medicare, and Medicaid is about to explode as baby boomers swarm into retirement. It is impossible to be serious about bringing the budget under control or*restoring confidence in his ability to control the excesses of Washington without taking action to limit spending on these programs.

Fourth*- what additional spending would be outside the “freeze” and considered “security”? Emergency spending?**Members of Congress are highly*skilled at*turning an emergency*spending bill into a Christmas tree full of unrelated and outrageous spending. *A new stimulus bill all dressed up as a jobs bill? Capping repayments (e.g. free) of*college loans?**New subsidies for child care?

Fifth – what level of spending would this*”freeze” apply to? If it applies to last year’s supercharged spending on stimulus steroids baseline, it’s no freeze at all, but a locking in of spending that was supposed to be temporary.* Alternatively, it would be very easy to undo any of the savings. For instance, one small jobs stimulus bill could wipe out all savings.

The simple fact is this: no matter how they spin it, the President must hold spending level with last year—minus all the temporary stimulus, TARP and other bailout spending—otherwise this freeze is a fakeroo.

http://blog.heritage.org/2010/01/26/…eze-a-fakeroo/

On 01.25.10 06:39 AM posted by Conn Carroll

Since President Barack Obama was sworn into office, the U.S. economy has shed 3.4 million jobs and the unemployment rate has risen to 10%. But not all sectors of the economy have been suffering equally. In fact, the sector of the economy most supportive of President Obama has not only avoided contraction, but has actually managed to grow instead.

According to a report released by the Bureau of Labor Statistics (BLS) last Friday, in 2009 the number of federal, state and local government employees represented by unions actually rose by 64,000. Coupled with union losses in the private sector economy, 2009 became the first year in American history that a majority of American union members work for the government. Specifically, 52% of all union members now work for the federal, state or local government, up from 49% in 2008. Or, to better illustrate these statistics:*three times more union members work in the Post Office than in the auto industry.

So what? Why should Americans care if unions are now dominated by workers who get their paychecks from governments, instead of workers who get their paychecks from private firms? There’s one simple reason: private firms face competition; governments don’t.

Collective bargaining, the anti-trust exemption at the heart of a union’s power, was created to help workers seize their “fair share” of business profits. But if a union ends up extracting a contract from a private firm that eats up too much of the profits, then that firm will be unable to reinvest those profits and will lose out to competitors. But when a union extracts a generous contract from a government, the answer is always higher taxes or borrowing to pay for the bloated spending. And make no mistake: unionized government worker compensation is bloated.

As Heritage fellow James Sherk notes “[t]he average worker for a state or local government earns $39.83 an hour in wages and benefits compared to $27.49 an hour in the private sector. While over 80 percent of state and local workers have pensions, just 50 percent of private-sector workers do. These differences remain after controlling for education, skills and demographics.”

Unionized government employees not only want to keep their bloated compensation packages, but their leaders are desperate for more members and more union dues. That is why public-sector unions have become a fierce lobbying force for higher taxes and more spending across the country. Organized labor once fought against taxes and regulations that impeded the economic interests of their employers, but now they are*in alliance with environmentalists pushing private sector and economy-crippling cap-and-trade legislation.

It’s worth noting that the BLS did not count the United Auto Workers working for General Motors and Chrysler as unionized government employees. But perhaps they should have. Our country will share their fate unless something is done about unionized government power.

Quick Hits:

• Three different White House advisers (Senior Adviser Valerie Jarrett, Press Secretary Robert Gibbs and Senior Adviser David Axelrod) gave three different estimates for the number of jobs President Obama’s economic stimulus program “created or saved” this Sunday.
• According to the latest CNN poll, 56% of Americans now oppose President Barack Obama’s economic stimulus program.
• Rep. Barney Frank (D-MA) said his committee was preparing to recommend “abolishing” Fannie Mae and Freddie Mac.
• The Obama administration Guantanamo Bay task force has concluded that at least 47 prisoners must be held indefinitely without civilian or military trial.
• Venezuela President Hugo Chavez has ordered popular television station RCTV off the air for not televising Chavez’s speeches in their entirety.

http://blog.heritage.org/2010/01/25/…-win-you-lose/

On 01.25.10 07:15 AM posted by Ray Walser

Venezuela’s Hugo Chavez took another step aimed at consolidating his authoritarian choke hold on Venezuela by forcing cable providers to dump Radio Caracas Television (RCTV) from their broadcasting lineups.* The popular, anti- Chavez channel first ran afoul of the populist leader for its critical programming back in 2007.* At the time the Chavez government refused to renew its license to broadcast over open airwaves. It disappeared from the cable channels on January 24.

Government officials cited violations by RCTV such as failure to broadcast Chavez endless diatribes, airing soap operas during children’s hour, and other egregious infractions. This censorship by restrictive regulation is the favored tool of the Chavez regime as it accelerates throttling of individual rights and liberties.

Shutting down a TV station is hardly his only problem. On Saturday, January 23, large demonstrations for and against Chavez took to the streets of Caracas.

It is easy to see easy to see why the great leader is in trouble. Increasing polarization is the result of mounting problems occasioned by Chavez’s disastrous “Socialism of the 21st Century” that include galloping inflation, recurring power outages, and periodic food shortages. **Chavez has resorted to increasingly restrictive measures ranging from currency devaluation to the nationalization of retail stores to shore up his struggling oil-based economy. *He has driven his nation’s economy to the bottom of the barrel. The Heritage Foundation and Wall Street Journal 2010 Index of Economic Freedom released last week handed Venezuela’s statist economy a ranking of 174th out of 179 rated economies, placing it on par with Burma, Cuba, North Korea and Zimbabwe.

http://blog.heritage.org/2010/01/25/…opular-unrest/

On 01.25.10 08:10 AM posted by Bruce Klingner

The results of a small town mayoral election on distant Okinawa island risks undermining plans to build a U.S. base and may further inflame tensions in the already strained U.S.-Japan military alliance. Challenger Susumu Inamine, who opposes constructing the U.S. base, beat pro-base Yoshikazu Shimabukuro in the January 24th contest, which had largely became a referendum on the U.S. military facility.

Inamine’s victory will stiffen Okinawan and Japanese resistance to the construction plan. Japanese Prime Minister Yukio Hatoyama will use the Okinawan election as further justification for refusing to abide by an existing bilateral U.S.-Japan agreement on the disposition of U.S. military forces in Japan.

In 2006, Washington and Tokyo agreed to a complicated realignment of U.S. forces in Japan, including Okinawa. The most contentious component was moving a Marine Corps air unit from a densely populated region of Okinawa to a more desolate location elsewhere on the island. Both countries agree that the Futenma Air Station needs to be moved due to safety concerns arising from urban encroachment on the base. However, plans to build a replacement facility near Camp Schwab faced opposition from local residents.

The left-of-center Democratic Party of Japan (DPJ), which assumed control of the Japanese government in August 2009, opposes the Futenma Replacement Facility (FRF) plan agreed to by the predecessor government. The DPJ has called for the U.S. to instead redeploy the Marine Corps air unit to Guam. The Obama Administration has strongly resisted the Japanese-proposed abrogation of the existing agreement. Washington correctly asserts that separating the Marine air and ground units would have detrimental impact on U.S. ability to fulfill its security obligations under the 1960 bilateral defense treaty.

Although the Nago mayor has little actual legal leverage over base construction, Inamine’s victory will be characterized as Okinawan rejection to accepting the redeployment of the Marine Corps air unit. The election decision could also intimidate the Okinawan governor, who faces reelection later this year, to hesitate in issuing the required environmental impact statement for expanding the base.

The election results will make it even more difficult for the DPJ to compromise with the U.S. on the FRF. The DPJ is reliant on two minor political parties to maintain a majority in the legislative upper house. Both of those parties have threatened to leave the coalition if Hatoyama implements the base agreement.

Hatoyama’s plunging approval ratings will make him even more reluctant to risking his administration in the run-up to the upper house election this summer. Ichiro Ozawa, the powerful DPJ secretary general, would strongly resist any attempt by Hatoyama to accept the advice of his defense and foreign ministers to implement the agreement.

Washington has become increasingly frustrated with Hatoyama’s indecisiveness and DPJ security policies. Regardless of how the FRF issue is resolved, there will be residual animosity in both Washington and Tokyo, complicating debate on other upcoming security issues. As a result, the U.S.-Japan military alliance will continue to be problematic during Hatoyama’s tenure.

Although the Okinawan election will make implementing the bilateral agreement even more difficult, the Obama Administration must remain resolute on the need to implement the force realignment agreement, especially maintaining U.S. Marine Corps air units on Okinawa. To garner increased Japanese support for the realignment plan, Washington should boost public diplomacy efforts to better educate Japanese officials and the populace on the necessity of forward-based U.S. forces to not only defend Japan but to also maintain peace and stability in Asia.

Despite its shortcomings, the alliance is critical to fulfilling current U.S. strategic objectives, including maintaining peace in the region. The forward deployment of a large U.S. military force in Japan deters military aggression by North Korea, signals Washington’s resolve in defending U.S. allies, and provides an irreplaceable staging area should military action be necessary.

http://blog.heritage.org/2010/01/25/…ent-agreement/

On 01.25.10 08:38 AM posted by Derek Scissors

China announced last Friday that its economy grew 8.7% last year. Among other things, this will prompt a chorus of claims that China is leading the world out of recession.

Wrong.

The typical way of thinking about this is to take China’s and every other country’s GDP growth, add it all up, and see which economy contributed most to the world’s pile. But that is not the way GDP works.

Consider the case of a country that successfully dictates trade terms such that it extracts a great deal of wealth from its partners. Its GDP would grow very quickly while that of its partners would shrink or grow much more slowly. It would then seem that the predator is leading global growth higher, when it is enriching itself at the rest of the world’s expense.

Behind this possibility is that GDP includes trade. A trade surplus adds to GDP and a trade deficit takes away. China runs the largest trade surplus, which means the rest of the world runs a large trade deficit with the PRC.

Seen that way, China is not adding anything to global growth. Using trade, it is adding the most to its own GDP and taking away the most from the rest of the globe’s.

It need not be so. China could encourage the development of its domestic economy, as it has long been urged to do for its own sake and that of its own people. This would increase demand for goods produced in the rest of the world. Then, and only then, China might actually be an engine for the world economy.

The distinction is between performance and welfare. China is outperforming the world but it is not contributing to global GDP, just the opposite. Some of its gains are intrinsic to offsetting GDP losses for the rest of the world.

Beyond GDP, the PRC has contributed a great deal to the world economy, especially earlier in the decade. Competition is the life-blood of long-term growth, however it is measured, and competition from Chinese goods is arguably the biggest contributor over the past decade to competition in the global economy. In terms of policy, Chinese production kept consumer prices down worldwide, helping to keep inflation low despite high levels of government stimulus around the world.

The financial crisis has changed this, unfortunately. Previously, Chinese supply was helping meeting strong global demand. Now, Chinese supply is threatening to overwhelm weak global demand. Rather than leading, China is using the world to boost itself higher.

http://blog.heritage.org/2010/01/25/…-in-recession/

On 01.25.10 10:11 AM posted by Bill Beach

This year’s Index of Economic Freedom contains the unsettling news that the United States has dropped out of the exclusive club of free economies and is graded “mostly free” for the first time in the Index’s 16-year history. The United States’ Index score dropped from last year’s 80.7 to this year’s 78. For many Americans who still have their jobs and incomes, “mostly free” may feel no different than “free.” For the nearly 20 million who lack work or the millions more who find themselves working for a lot less than they did two years ago, this news may be part of the answer to their question, “Why me?”

The decline of the United States to “mostly free” means that our economy is less capable of strong, sustained economic growth than it was when it was freer. That’s bad news for the job seeker and someone starting their climb up the income ladder. The U.S. economy needs to produce a net increase in jobs of about 150,000 per month just to keep up with high school and college graduates searching for work and with those re-entering the labor force after raising a family or retraining. When average job creation falls below this level, the unemployment rate usually rises.

The U.S. economic freedom score declined in six of the ten factors used to calculate the economy’s overall rank. Reviewing why they fell may help explain why prospects in labor markets have dimmed. Here are the factors the fell and why:

1. Government spending: Massive increases in overall government spending since July of 2008 through June of 2009 (the data time period of this year’s Index) reduced the U.S. score for this factor. In 2009 alone, spending grew by 20 percent over 2008 levels – an astounding increase in the weight of government on the economy. The spending score dropped from 59.6 to 58 on a 100 point scale.

2. Monetary Freedom: Aggressive interventions by government in private housing, financial and automotive industries substantially distorted prices, and these price distortions encouraged inefficient economic behaviors. When labor and capital are not used in their highest and best ways, economic productivity (and thus job creation) falls. The monetary freedom score dropped from 84 to 78.1.

3. Financial Freedom: The past year saw the federal government take over many of the key financial firms and taking virtually unprecedented steps to control the compensation of financial industry employees. The financial freedom score dropped 10 points.

4. Property rights: The ability of individuals to use their own labor and capital – that is their own property – peacefully and in any way they wish is central to economic freedom. When that ability declines, so does freedom. The U.S. score for this element of the Index declined by 5 points this year.

5. Investment freedom: The freedom to invest one’s property stems directly from the enjoyment of property rights. Unfortunately, the federal government has increased controls on the ability of non-U.S. citizens to invest in the United States over the past 12 months. This past year saw the U.S. score for investment freedom fall 5 points.

6. Fiscal freedom: While much of the developed world continued to reduce tax rates on personal and business income, the United States continued to fall behind by doing nothing. Like increased spending that expands the burden of government on the economy, high tax rates reduce economic growth by discouraging the use of private resources in new business ventures and the creation of new labor-saving, capital goods. While the US score for this element did not fall, many of our key economic competitors did better.

While the U.S. economy undoubtedly is righting itself from the most severe recession since the 1930s, it is doing so at a glacial pace. Clearly, the burden of public policies that reduce the free use of personal property and retard the unsubsidized risk taking of entrepreneurs are lengthening the recovery process. The real cost of this sluggishness are the millions of unemployed Americans who continue to wait for the return of economic spring and the millions more who hope for a better economic times. The real source of this human cost – the real driver of persistent economic want – is the erosion of our economic freedom caused by these government policies.

http://blog.heritage.org/2010/01/25/…llions-in-u-s/

On 01.25.10 10:31 AM posted by Conn Carroll

It is still far from clear what the White House’s new strategy to pass health care reform will be in the face of Scott Brown’s election to the Senate. But according to Federal News Radio negotiations between the House and Senate are still ongoing, including this victory for House Democrats:

Federal employees covered under some of the more expensive plans in the Federal Employees Heath Benefit Program now have some breathing room as well.

Federal workers had been left out of an earlier compromise on health care reform shielding union workers from a proposed 40-percent excise tax until 2018.

The office of Rep. Gerald Connolly (D-Va.) says he “personally called the White House to express his concern of leaving federal employees out of the deal.” An agreement reached Wednesday extends the exemption to federal employees through 2018 as well.

The Senate bill’s health insurance excise tax is terrible public policy. Although the insurance companies would technically make the tax payment (a 40% levy on insurance plans worth more than $8,000 a year for individuals) they would undoubtedly pass this cost along to employers purchasing the plans for their workers in the form of higher premiums. Employers, in turn, would pass that cost on to their workers by lowering other forms of compensation like wages. Once the excise tax is passed on to workers, the result is no different than an increase in their income taxes. Faced with the possibility of paying substantially higher taxes, many workers would logically look for ways to avoid the tax. The first way they could avoid it would be by reducing the value of their health benefits below the threshold. If workers take less expensive health care coverage, they would want higher wages so as not to experience a reduction in total compensation. But this would not allow them to escape higher taxes completely, since higher wages would also be taxed.

Instead of facing this mess, Congress has chosen to exempt federal workers … which last time we checked included Members of Congress.

http://blog.heritage.org/2010/01/25/…insurance-tax/

On 01.25.10 01:52 PM posted by Mike Brownfield

Dr. Charles Krauthammer, who described President Barack Obama’s first 12 months in office as “the year of living fecklessly,” spoke at The Heritage Foundation last week on “The Age of Obama” and gave his views of the President’s first year of foreign policy.

Watch his speech below and share your thoughts in our comments section.

http://blog.heritage.org/2010/01/25/…-age-of-obama/

On 01.25.10 02:39 PM posted by Nick Loris

How do you solve homelessness, obesity and global warming all at once? A green gym, of course:

Cass Community Social Services (Cass) will further its commitment to the Detroit community and the environment on Wednesday, January 20, 2010 at 9:00 am when it opens the doors to its Green Gym. The Green Gym is the nation’s first workout facility created specifically for homeless men, women and children. The grand opening of the Green Gym will mark a revolutionary step by Cass to improve its carbon footprint, reduce its energy costs and improve the quality of life for Detroit’s most at-risk citizens.

The Green Gym will be the first of its kind. Nowhere else in the country have such innovations been implemented for the benefit of homeless citizens. In addition to standard fitness equipment such as two weight machines, boxing bags, and a treadmill, 10 Green Revolution Technology™ enabled stationary bikes will generate electricity to be redirected into Cass’ power grid. Over one year of four daily classes, a full class of 10 at the Green Gym can generate enough power to light 36 homes for a month, or three homes for a year!

“Not only is this gym a good idea for the environment, but it will help build the general health of our clients who often struggle with diabetes or heart disease associated with obesity and weight gain,” states Rev. Faith Fowler, Cass executive director. “Stationary bikes offer accessible exercise for most levels of fitness and create an atmosphere for our growing healthy community.”

The organization running the program, Cass Community Social Services, is a non-profit so it can choose to spend its money how it pleases. But there is a significant opportunity cost here; resources spent on a green gym could have been spent elsewhere more prudently – trying to save the environment is spreading the Cass’s initiative too thin. Or why not pay the homeless if they’re providing a service?

It also goes to show how inefficient “green energy” really is. Assuming that Cass meets the goal of four daily classes of 10 homeless people riding bikes for an entire year is met, it will power three homes in that year. This is the green mantra: more jobs per kilowatt hour is a good thing. To show how inefficient green energy is, Heritage economist David Kreutzer points to a “1945 issue of Mechanix Illustrated. It shows a cyclist pedaling a jerry-rigged generator to power hair dryers in a Parisian beauty salon. Though not the sort of green job that is currently talked about, this human-powered generator illustrates why costly energy policies are not a stimulus.

A person on a bicycle generator would do very well to average 150 watts of output during a day. At this level, a modern-day cyclist/generator could produce electricity worth 10-15 cents per day at retail prices. With sufficient subsidies, people could be induced to power such generators and the proponents could then point to the “green” jobs that have been “created.” What is not seen is the value of the cyclists’ forgone output elsewhere. Even at minimum wage, the value of the labor is $52.40 per day. So each human powered generator would shrink the economy by over $50 per day. This is not an economic stimulus.”

Proponents of renewable energy argue that since windmills and solar panels create more jobs per kilowatt hour than more traditional sources of energy, they are a good investment. But this logic should not be the measuring stick for implementing new energy sources—it proves only that clean energy sources are an inefficient use of human capital and these resources could be more beneficial in other sectors of the economy.

President Obama’s State of the Union address will likely focus on jobs, jobs, jobs. One would think a big part of that message will be green jobs. But if Spanish experience with a green job initiative is any preview of what would happen in the United States, green policies will destroy more jobs than it creates – and cost the taxpayers at the same time. Spain spent $8 billion a year on green energy subsidies. The result is that for every green job created, 2.2 jobs were lost because so much money was taken out of viable parts of the economy and put into a more unreliable green market. There’s that opportunity cost problem again.

http://blog.heritage.org/2010/01/25/…or-green-gyms/