You are browsing the archive for 2013 June 28.

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Egyptians Have Lost Faith in Morsi

June 28, 2013 in Economics

By Dalibor Rohac

Dalibor Rohac

As Mohamed Morsi prepares to mark his first anniversary as president Sunday, Egypt is bracing for a fresh wave of protests.

The Tamarod (or Rebel) campaign has reportedly collected more than 15 million signatures demanding Morsi’s resignation and an early presidential election. In response, the Muslim Brotherhood-affiliated ruling Freedom and Justice Party is organizing rallies in support of the government. Last week, tens of thousands of FJP supporters were brought in on buses from rural areas to Cairo’s Nasr City neighborhood, where they chanted slogans such as “Islam is the solution” and “The Koran is the constitution.”

Things could take a nasty turn; after all, the Rebel campaign headquarters were burned down on June 7, and attacks on local FJP offices have been reported. The government is talking of a conspiracy aimed at bringing it down. “There is information about an arrangement among certain former MPs and Mubarak’s National Democratic Party thugs to cause violence and mayhem in the June 30 demonstrations,” said an FJP media advisor.

But that’s just fear-mongering, Magdy Samaan, a Cairo-based journalist for London’s Daily Telegraph, told me in an interview. “The constant talk about violence is aimed at keeping people at home on June 30…. Egyptians have never been more upset with their government than now, and the Muslim Brotherhood is afraid that more people will come to the streets than during the Arab Spring.”

The popular discontent with Morsi is understandable. There has been crisis after crisis — economic and political — with many of the goals of the Arab Spring seemingly forgotten.

Over the last year, the government has done little to address the country’s economic problems. The economy is expected to grow at 2.5% in the current fiscal year — barely half of pre-2011 growth rates — and the budget deficit is now at 11.5% of GDP.

The deficit is overwhelmingly driven by wasteful subsidies to fuels and food, accruing mostly to wealthy households and big businesses, while the poor face shortages. The imports of subsidized commodities are draining the country’s foreign reserves — now at one-third their 2010 levels. Instead of proceeding with systemic reform of the subsidy system, Morsi’s government has a pattern of announcing partial reform initiatives but with very little, or no, follow-through.

The unemployment rate has been rising steadily since 2010. The current rate is 13.2%, with 77% of the unemployed between the ages of 15 and 29. The lack of private-sector-led job …read more

Source: OP-EDS

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Letter to the Editor: Ecuador Clings to the Greenback

June 28, 2013 in Economics

By Steve H. Hanke

Steve H. Hanke

Dear Sir,

The reportage by John Paul Rathbone and Andres Schipani (“Ecuador’s starring role as champion of human rights beset by contradictions,” June 25) states that “… Ecuador’s economy is pegged to the US dollar.” No. Ecuador is dollarized.

On 9 January 2000, President Mahuad announced that Ecuador would abandon the hapless sucre and replace it with the US dollar. By 2002, the process of official dollarization was complete. Since then, Ecuador has endured a great deal of political instability. But, thanks to dollarization, the economy has turned in a most respectable performance. That’s why President Correa, for all his bluster directed towards the US, clings to the greenback.

Steve H. Hanke is a Professor of Applied Economics at The Johns Hopkins University in Baltimore and a Senior Fellow at the Cato Institute in Washington, D.C.

…read more

Source: OP-EDS

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Washington Times Op-Ed: Obamacare ‘is still unconstitutional’ one year after Supreme Court approval

June 28, 2013 in Politics & Elections

One year ago, the Supreme Court upheld a law that radically transforms our health care system in a way that continues to frighten and beleaguer most Americans.
Friday is the one-year anniversary of the Supreme Court upholding the Affordable Care Act, popularly known as Obamacare. The 5-4 decision declared that the federal government could force Americans to buy health insurance. Not just any insurance, but insurance covering procedures dictated by the federal government. Obamacare established a new labyrinth of red tape and bureaucracy, colossal even by Washington standards, and most importantly-penalize the uninsured through the Individual Mandate.
Writing the Majority Opinion, Chief Justice John Roberts declared that individual mandate could be considered a tax, and that the power to tax was also the power to enforce the law. Dissenting Justices Scalia, Kennedy, Thomas, and Alito vehemently disagreed, writing in their dissent: ‘(W)e cannot rewrite the statute to be what it is not… (W)e have never-never-treated as a tax an exaction which faces up to the critical difference between a tax and a penalty, and explicitly denominates the exaction a ‘penalty.’
I believed that Obamacare is still unconstitutional. I still believe that Scalia, Kennedy, Thomas and Alito got it right.
One year later, the federal health care law is even more concerning. In addition to potentially causing upwards of 20 million Americans to lose their private health insurance policies, estimates say it could destroy 800,000 jobs.
The particular jobs that Obamacare creates are perhaps the most troubling.
Obamacare creates 16,000 new jobs at the Internal Revenue Service. The IRS is also given the authority to enforce and police compliance with Obamacare. The same agency that admittedly targeted groups with ‘tea party’ or ‘patriot’ in their names is now given the responsibility of making sure our individual health plans fall under the guidelines and restrictions imposed by this administration.
Last June, many considered Obamacare a nightmare. Surveying the ramifications of this law a year later, it looks even worse. Even Democrat Senator Max Baucus calls it a ‘huge train wreck.’
After the IRS scandal became public, President Obama declared his ‘outrage’ and vowed that those responsible would be held ‘fully accountable.’ Yet nothing has been done.
Instead, we are using taxpayer dollars to reward IRS agents with $70 million in bonuses. So, the IRS gets millions in bonuses and thousands of new jobs. Meanwhile they and the other Washington bureaucrats implementing Obamacare, along with the Supreme …read more


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Good News on the Budget Deficit?

June 28, 2013 in Economics

By Doug Bandow

Doug Bandow

If you’re a big spender, there’s good news in Washington. The deficit is down. The budget crisis is over. So Uncle Sam can go back to his wastrel ways!

Indeed, the usual suspects insist, it’s time to spend more. The federal government should provide more stimulus spending to put people back to work. Food Stamps should not be cut despite nearly doubling in cost over the last five years. Every state should expand Medicaid. Social Security benefits should be increased, not reduced. After years of horrible, painful austerity, it’s time to party!

Only in Washington.

A normal person could be forgiven for believing the U.S. faces a budget crisis of extraordinary proportions. Uncle Sam has run up $5 trillion in red ink over the last four years. The national debt now approaches $17 trillion. Economist Laurence Kotlikoff figured total federal debts, unfunded liabilities, and other obligations exceed $220 trillion.

But no. The Congressional Budget Office has delivered us from a life of pessimism and tears, of penury and privation. It recently issued new budget projections, which put Uncle Sam’s red ink this year at $642 billion.

That’s one-sixth of total federal outlays. It is 50 percent higher than that pre-Obama record deficit in 2008. It is adding huge obligations for tomorrow’s taxpayers to pay.

But no matter. It is less than previously predicted. So no more need for “austerity.” No more necessity for “draconian” budget cuts. No more cause to balance the budget “on the backs of the poor.” Now Washington can get back to what Washington does best — spending taxpayers’ money on clamorous interest groups.

In fact, the CBO’s latest report, “Updated Budget Projections: Fiscal Years 2013 to 2023,” actually demonstrates that we face a continuing, enduring, and potentially catastrophic budget crisis. The near term is slightly less disastrous than originally thought. But without a genuine change of direction, the federal Leviathan remains headed over an economic cliff.

There is one bit of good news. The deficit is falling. Earlier this year CBO figured the likely 2013 deficit at $845 billion. Now the organization estimates $642 billion.

However, this reduction does not reflect spending restraint. Rather, tax collections are up and the housing revival has at least temporarily stopped the fiscal bleeding of Washington’s boondoggle housing agencies. Explained the agency: the deficit estimate dropped significantly from February “mostly as a result of higher-than-expected revenues and an increase in payments to the Treasury by Fannie …read more

Source: OP-EDS