Democrats Win means America Loses!

Free trade is under attach as I predicted it would be if Democrats regained power. Read the following stories:

Financial Times Story
Wall Street Journal Editorial
Washington Post Story

So why is free trade under attack? Well, the Democrats are about to lead the Congress into rejecting a FTA with Colombia and Peru. This is bad news for the poor in those Andean countries and all Americans. Free trade brings more competition to both countries, it widens the marketplace for more businesses to operate and to reach more people. It lowers prices for the consumer and ensures that the most efficient companies survive. It also weakens the federal government by taking away a source of income. Lastly, the economies of the countries that liberalize their trade policies ALWAYS will be better off. These are basic economic principles that apply to all countries.

However, Democrats want to add in labor rights side agreements to these deals. To do so would dilute the freeness of the free trade deal. The essence of free trade is that it frees business from constraints that governments imposes on them (which will lower prices for all).

But why are these labor side agreements pushed by Democrats? Is it because they are worried that poor Colombians and Peruvians (who need jobs desperately) will be "exploited" in their NEW, HIGH PAYING jobs? Even if they were, they would be misguided. However, their real goal is to protect the Labor movement in the US. American Labor is worried that FTAs will ship jobs overseas and they are correct. It will ship the jobs that we are doing inefficiently, allowing Americans to move to higher paying service sector jobs. Labor does not want this. The AFL-CIO is one of the leading lobbyists behind the Democrats push to stop free trade. The AFL-CIO does not like competition, low prices, or capitalism. They want secure jobs such as the ones that the Soviet Union gave to their citizens.

So the question all Americans should ask? Do you want to live in a world of prosperity for all or do you want inefficiency and mediocrity to reign all for the sake of equality? I hope to help the American psyche by quoting Milton Friedman:

"A society that puts equality -- in the sense of equality of outcome -- ahead of freedom will end up with neither equality nor freedom. The use of force to achieve equality will destroy freedom, and the force, introduced for good purposes, will end up in the hands of people who use it to promote their own interests."

Post-mortem: The Good, the Bad, and the Ugly

The election has passed and the Democrats are now firmly in power (at least in the House). I am deeply upset to see the country vote in the wrong direction. When in 2004, Bush was reelected after making the wrong decision to go to war in Iraq. And now in 2006, the Democrats were elected telling the politicians that they want out of Iraq at a time when Iraq needs us the most. It seems that the US electorate is always wrong. But here is the good, the bad, and the ugly...

The Good
-The Republicans will go back to what they should be: hard-nosed, true-blue fiscal conservatives. The fiscal spending is one of the reasons they were kicked out of office. The formation of a more fiscally conservative Republican caucus is one positive that will come out of this election.

-Pay-go - As long as this is on the spending side only, the Democrats can actually HELP reduce the deficit. However, if they include tax hikes in the pay-go plan then the economy could be headed for a recession.

-Oil subsidies - The Democrats are intent on killing these subsidies. HOORAY for this part of the agenda. Unfortunately, the subsidies will simply be passed to another industry that doesn't need them. Probably, the ethanol industry might get them which will make the ethanol industry even more regulated and less efficient. The end result - ethanol NEVER getting off the ground as a viable alternative to oil.

The Bad

-Minimum Wage Hike - The Democrats will pass it but hopefully Bush will veto it. This is another populist/leftist policy that is created to "help" poor people. However, the real result is less jobs for the least paid (companies will simply fire workers that don't merit $7.50 an hour) and could even create inflation.

The Ugly

-Speaker Pelosi - Her record below (very ugly)
* NO on the 1996 Welfare Reform Law (and NO on its reauthorization)
* NO on making the Republican tax cuts permanent
* NO on eliminating the marriage penalty
* NO on eliminating the death tax
* NO on creating Health Savings Accounts
* NO on CAFTA
* NO on US - Oman Free Trade Agreement
* NO on Fast Track Authority
* NO on Normal Trade Relations with China (goodbye cheap Wal-mart goods that make the poor better off)
* YES on Steel Tariffs
* YES on the Bloated Highway Bill
* NO on the Line Item Veto
* NO on DC Vouchers
* YES on No Child Left Behind

-Socialist Bernie Sanders is now a Senator. This man sponsored a bill that would make the US withdraw from the WTO. This man is economically incompetent. And he is a socialist!

In conclusion, I am no die-hard Republican. But they ARE the lesser of the two evils. They believe in Free Trade (more so than the Democrats), low taxes, limited government, etc.

A Voter's Guide!

Tom Kean/Michael Steele/Rick Santorum (The Republican Stance)

Economy

-Taxes in New Jersey–Republican Kean Supports Tax Cuts – New Jersey “gets the worst return on its federal taxes of any state in the country: only 57 cents of every dollar we send to Washington comes back to New Jersey in federal spending.” Lower taxes mean more money for New Jersey residents to spend on New Jersey.

Some more facts about the Bush Tax Cuts that Kean/Steele/Santorum support…

FACT: The 92.1 million taxpayers with annual incomes of less than $50,000 in 2003 saw a 47 percent reduction in their average tax bill from President Bush's 2001-2003 income tax relief. ("Who Benefits Most From Tax Cuts On Investment Income," The New York Times, 4/5/06)

FACT: The 26.9 million taxpayers with annual incomes between $50,000 and $100,000 in 2003 saw a 20 percent reduction in their average tax bill from President Bush's 2001-2003 income tax relief. ("Who Benefits Most From Tax Cuts On Investment Income," The New York Times, 4/5/06)

These low taxes have produced the following…

FACT: Last year, the economy grew at a healthy 3.5 percent rate – faster than any other major industrialized country.

FACT: The unemployment rate is at 4.8 percent – lower than the average of the 1970s, 1980s, and 1990s.

FACT: The tax cuts have actually created a boost in tax revenue which resulted in a reduction of the deficit of at least $70 billion.

Bob Menedez/Ben Cardin/Bob Casey (The Democrats’ Stance)

Bob Menendez/Ben Cardin/Bob Casey are against the above tax cuts and if re-elected would vote to NOT extend these tax cuts. You might be worried about the deficit and the effect that tax cuts have on the deficit. However, the truth is that lower tax rates lead to higher tax revenue in the near future (more money in your pocket leads to more investment in the economy – this increased investment leads to higher revenue and therefore higher tax receipts). We have seen this fact in 2005 by witnessing the fastest growth in tax revenue in over 25 years. The problem that still needs to be resolved regards spending. While the Republicans have not controlled spending like most would like to see, the Democrats would spend even more. For example, the Democrats’ Alternative Budget for 2006 put forward in the House of Representatives was to increase government spending by $177 billion.

One last note: if Democrats were put in power, they would not pass bills supporting free trade. In fact, they would pass bills restricting trade (such as the Schumer bill that would put a 27.5% tariff on Chinese goods). The Schumer Bill would make most of the things you buy 27.5% more expensive. This does not sound like good economics.

So on November 7^th, remember vote Republican if you want to have a prosperous economy for the next two years.