Bankrupting America

America's leading minds discuss the economy at Restoration Weekend.

The panel discussion below recently took place at David Horowitz's Restoration Weekend in West Palm Beach, Florida (Nov. 17-20, 2011).

Craig Snider: First, I want to thank -- my name's Craig Snider, I'm a member of the Board of the David Horowitz Freedom Center, recently appointed.  But also, I am the director of the Philadelphia Freedom Center, which is David Horowitz's East Coast operation.  And I am delighted to be here today.  And I appreciate all of the long hours and focus that everybody has put in.  I think everybody will be glad that this is the last panel, despite the fact that it's been a most interesting and illuminating weekend.Today, for our last panel, we're going to talk about economics.  And I will tell you that it is a fascinating group of people that we have here today, each of whom brings an interesting insight into an aspect of the economy that I think you'll feel grateful to have heard.On the panel with me today, beginning on my right, is Steve Moore.  I will introduce each person before they speak rather than do it all now.  To his right is James Delingpole, an author from Britain.  To his right is Congressman Ed Royce of California.  And to his right is John Fund, journalist, author and analyst of all things political.We will be talking about a number of different things.  First, I'd like to introduce our first speaker, James Delingpole.  James had a book for sale here, called "Watermelon."  And it describes the adverse effect that the green movement has had on jobs and the economy, in contrast to the idea that green jobs is somehow helping the economy.

James is a journalist, a broadcaster, and an author of six books, including "How to Be Right," "Thinly Disguised Autobiographies."  And he writes for the Daily and Sunday Telegraph, the Daily Mail, the Mail on Sunday, The Sunday Times, the Times, the Independent on Sunday, and everything from rock culture to politics and gardening.

With pleasure, I introduce James Delingpole.

James Delingpole: Thank you.  Thank you very much.

Can I just first say how wonderful it is to be here on my first ever Restoration Weekend, and secondly how fantastic it is to be in America.  I love you people.


And there are three reasons why I love you people -- number one, your generosity; number two, your tolerance.  But above all, what I love about you is --



So let's just deal with the first two.  Your generosity -- there was a small, struggling solar panel company you may have heard of.  I think we all know here that solar panel -- the solar industry is an [indrawn] industry.  It doesn't work on any economic level.  The only reason solar panel industries can survive is through massive taxpayer subsidy.  But nevertheless, despite knowing this fact, you, you generous American people, donated $527 million to this company called Solyndra.

But that wasn't enough.  Oh, no.  You gave even more to a company owned by this poor kid called JFK Jr., a company called BrightSource Energy.  You funded this ailing solar industry to the tune of $1.4 billion.  How proud you must be.

Let's move on to the tolerance -- your tolerance.  When these industries started to fail, you did not do what you could've done, which is march on the White House, march on the Environmental Protection Agency, and come back with Steven Chu's, John Holdren's, Lisa Jackson's, and President Obama's heads on spikes.  You didn't do that at all.  You were perfectly happy to let this happen in your name.

Now, I tease you, America, about what's been happening in the name of green jobs, that great myth.  But I'm afraid to say, it is not a problem which exists only in America.  In Britain, where I come from, we have a government which is committed by something called the Carbon Act.  It is committed to spending 18.3 billion pounds every year de-carbonizing our economy.  Now, I know 18.3 billion pounds may not seem too much to you guys.  But 18.3 billion here, 18.3 billion there, and soon you're talking pretty serious money.

The green movement is the enemy of capitalism.  I'll give you another example of what is being done at the moment by environmentalists to destroy your economy.  Consider the example of the Keystone XL pipeline.  That is going to cost your economy 20,000 jobs you could've had.  By rejecting that pipeline -- or postponing it, as he puts it -- President Obama has denied 20,000, at least, jobs they could've had.

Now compare and contrast the green jobs industry.  When Obama came to power, he promised that he was going to create -- I believe, rather optimistically -- he claimed he was going to create five million green jobs.  He then amended this to a more modest 65,000.  And he was going to achieve this by spending $38.6 billion of your generosity, giving loan guarantees to clean tech industries.  Well, I can tell you now that green jobs are a myth.

A blogger rightly described green jobs as the equivalent of feeding the poor on unicorn ribs.  It is a fantasy.  Of that 38.6 billion, so far, the administration has disbursed about half of it.  As of September this year, that massive taxpayer splurge resulted in the creation of -- get this -- 3,545 green jobs.  At a cost to the taxpayer, per job -- you are so generous, you Americans -- of $5.4 million.  Per job.  You are such nice people.

Unidentified Participant: USA, USA.

James Delingpole: USA, USA, all the way.

I was particularly interested to read the excuse that President Obama gave for canceling or postponing the Keystone XL pipeline.  He said -- I quote -- folks in Nebraska, like folks all across the country, aren't going to say to themselves -- we're going to take a few thousand jobs if it means our kids are potentially drinking water that would damage their health.

I love that use of the word "potentially."  I don't know how many of you have heard of something called the precautionary principle.  The precautionary principle is an excuse often advanced by the eco-Nazi movement to justify why we cannot, say, drill in the Gulf; why we cannot build oil pipelines, why we cannot frack for shale gas and shale oil.

By that token, you could say that on the precautionary principle, what we should be doing right now is building in every state a gigantic death laser pointed towards space, just on the precautionary principle that all the alien species out there are waiting to invade us.  We need a deterrent, do we not?  We need to spend this money, on the precautionary principle.  Because it could happen, in the same way that building a pipeline could somehow jeopardize water supplies?

What planet is your President living on?  What planet is the Environmental Protection Agency living on?

I can tell you now, America, that environmentalism isn't the only thing that is destroying your economy and destroying the global economy.  But it is doing a very important part of this, this war on economics.  It is -- there are many things we're going to have to do to bring about an economic recovery in America.  But one of them definitely is to disband the Environmental Protection Agency.


I don't think it's an exaggeration to say that the EPA is run by Marxists, who justify their rape of the American economy using the flimsiest of junk science.

The fashionable thing for the last 20 years has been this thing they call manmade global warming, or anthropogenic global warming, or climate change, or global climate disruption.  It keeps changing.  It has to keep changing.  Because now the warming has stopped, they've got to think of a new name to make it all make sense.  So now it seems -- since global warming stopped in 1998, it seems that global cooling is a sign that global warming is happening.  Go figure.


I must say I'm slightly concerned about Newt Gingrich's candidacy, given that only a few years ago he was sitting on a loveseat with Nancy Pelosi, singing the praises of Cap and Trade.  I hope he gets over that.  I do think that you should come down very hard on any Republican candidate who even flirts with the idea that manmade global warming is a problem.  Because it ain't.

Perhaps you'll have some questions to ask me later.  I always think it's nice to keep it short.  Thank you very much.


Craig Snider: Those Brits are so polite.  We didn't even have to get out the hook.

You know, it's funny -- I don't know if this is true, but I heard somewhere that the temperature of Venus is actually rising a little bit, too.  So how is it that man could've made that happen?  Is that -- have you heard about that?

James Delingpole: It's one of their favorite things, you know -- Venus, the greenhouse effect.  Yeah, we'd all be like Venus, we're all going to fry.  I don't believe it; it's all junk science.

Craig Snider: Yeah.  And somehow we'll be blamed for that, too.

John Fund is our next speaker.  I think you all know who John is.  He was a columnist at The Wall Street Journal.  I'm sure he'll be making many contributions there over the years to come.  And he's currently the Senior Editor at The American Spectator.  He's also the author of "Stealing Elections: How Voter Fraud Threatens Our Democracy."

John, is that actually on sale now, or is that coming out?

John Fund: Well, that's a completely revised and updated account based on everything the Obama Justice Department has been doing to try to steal our elections.  But I do have -- people have been asking since my introduction of Catherine Engelbrecht last Thursday what can they do to stop the stealing of the elections?  And I do have a new update to my book, which is brand new, which I'll be happy to sign just outside after the panel.  This is everything the Obama Justice Department under Eric Holder and his mismanagement agency are doing.  And I'd be happy to do that.

Craig Snider: You know, by the way -- and I'd like to let you get started -- but I will say that that introduction to Catherine -- and I thought Catherine Engelbrecht's presentation last night was terrific -- I think she's left already, she had to leave last night or early this morning.  But for the person that asked -- what can I do in my community, I'll tell you -- if voter fraud is the problem that she thinks it is -- and I think John will be able to explain more in his book -- that's something you can do right away, right in your own neighborhood.  And I would urge all of you to look into

Okay, John, you've got 10 minutes, starting right now.

John Fund: James asked what planet President Obama is from.  He's from the planet Union.  Because the only group in America that's gotten everything it wanted out of the Obama Administration are the unions, especially the public sector unions.

This actually has a connection to some of the interests of people in this room in foreign policy.  Because in the next few years, we are going to see the great budget crunch.  There is not going to be any money for anything near the obligations that we have, domestic and foreign.  And if you don't think that our military budget and our foreign aid budget and our international relations budgets aren't going to be strained because of all of the obligations and promises, many of them to unions, you have to wake up.

How serious is the budget crunch?  Well, first of all, my friend Steve Moore has a very good definition of what a trillion dollars is.  Who's the biggest sports player in the country?  LeBron James.  What is his contract worth? $40 million a year.  How many seasons would LeBron James have to play to [reach] a trillion dollars?  The answer -- as Steve has calculated, and I trust his math -- 25,000 seasons.  That's how big a trillion dollars is.

Well, how much do the 20 million people who work for federal, state and local government -- one out of seven workers in America -- how much of their salaries and benefits a year?  They're $1.5 trillion, 10 percent of our gross domestic product.  Ten percent.  They spend an additional $2 trillion.  If government could be run more efficiently by just 30 percent, we would save a trillion a year.  And there wouldn't be any discussion about cutting the military budget and cutting the foreign aid budget.

How bad is the waste and the abuse and the fraud with the public sector unions?  Well, in New York, when new equipment is installed, the city must reopen collective bargaining in the union contract for the sole purpose of "negotiating on the practical impact that any such equipment has on the affected employees."  When the Deputy Mayor of New York tried to get ideas for budget savings from public employees, he was told it would be illegal by the union leader.  He was told, "You're warned not to talk with employees in order to get suggestions because it might violate the union contract."

Well, what do these union contracts include?  Well, in Long Island, New York, it means that 90 percent of Long Island railroad workers retire with a disability.  That is not a verbal typo -- 90 percent.  In my home state of California, 82 percent of senior California state troopers manage to get disabled in the last year before their retirement, boosting their pensions by over 30 percent by that one action.

It also means featherbedding and protecting incompetent employees.  The city of Los Angeles, the largest school district in America, succeeded in firing five teachers out of 33,000 in the last 10 years.  Five teachers out of 33,000.  The costs of litigating all of the appeals processes of those teachers added up to $3.5 million.  In other words, to fire one teacher, it cost Los Angeles $700,000.  Why would you fire anyone?  It's too expensive.

The unions used to be at least valuable in foreign policy.  Because under Lane Kirkland and George Meany and some of those other great labor union leaders, they were anti-communist, and they stood up for American values abroad.  Today, they are part of the blob, the Find The Networks website that David Horowitz has set up.  They are part of the international leftwing movement.

ACORN -- ACORN was not really ACORN.  ACORN was the bullyboy section of the Service Employees International Union.  They were the people that the Service Employees International Union hired to do all the stuff they didn't want to do openly.  ACORN has, of course, fallen on hard times.  But it has reassembled.  Because ultimately, it was a network of 196 front groups, back groups, side groups; [functioning] under one umbrella.  They are re-coalescing for this next election under new mismanagement.

And now, admittedly they're a little disorganized.  As you can see, they were behind the Occupy Wall Street movement.  The Internal joke inside ACORN is that -- we are so confused sometimes that our left wing doesn't know what our extreme left wing is doing.

So, as chaotic as they are, though, they have enormous resources for one reason.  And this is my point.  The single most important public policy issue in this country right now regarding political power is follow the money.  We have seen this fought out in two states in the last year -- Wisconsin and Ohio.  It's the issue of public sector unions and their political power, and the money, and how they derive it.  We won in Wisconsin, we lost in Ohio.  There's some lessons which we can bring out in the questions and answers.

But here's what it's important.  I interviewed Governor Scott Walker in Wisconsin.  The day after he announced his union reforms -- because he had to close a $5 billion state budget deficit over the next few years -- the day after he announced his reforms, the union leaders came into his office and said -- look, we don't like these health and pension changes you're trying to make, but we can live with them.  We will fight you, but not to the death, if you just remove two things in your package -- one, get rid of this end to the mandatory collection of union dues that we've enjoyed for lo these many decades.  Don't make it voluntary.  And two, don't force the union leadership of all the public sector unions to be certified and reelected every year by a vote of the membership.  This democracy thing is very messy.

And Governor Walker told me he was astonished at the extent to which the union leaders were willing to throw their own members under the bus in terms of health and pension benefits, if they could just keep their money and their posts.

So all of those demonstrators that you saw in Wisconsin, in Madison, were there not over the health and pension benefits; they were there about the mandatory union dues.  And they came from all over the country to try to defend that privilege.

Why is it important to have this mandatory collection of union dues?  Well, first of all, it is a privilege that almost no one else has.  There is not a single private entity in this country that has the power to extract money from your wallet without your permission.  The American Association of Retired Persons can't do it, no charity can do it, no church can do it; but unions can do it.

And this is even unprecedented in the world.  In Germany, which is one of the leading lights of the labor union movement of the industrialized West -- did you know that labor union dues are voluntary in Germany?  You don't have to pay them.  If you don't want to pay them, you don't have to.  But in the United States, you do have to pay them.  And here's why.

Mitch Daniels was able to end the mandatory collection of union dues in Indiana by executive order.  Because it'd been imposed by a previous governor's executive order.  He ended it in January 2005, the second day he took office.  He got a lot of heat.  But he held firm, and he won.

Today, what percentage of Indiana state employees do you think belong to the public sector unions?  Five percent.  Five percent.  And he was able to reorganize, reenergize and re-imagine state government, because he didn't have to go through negotiating 37,000 separate paragraphs of the union contract.

This has happened elsewhere.  In Utah, they ended the mandatory collection of union dues in 2001.  Ninety-five percent of public schoolteachers opted not to pay.  In Washington State, the same story.  In Colorado, basically, the same story.

The unions recognize this.  Robert Chanin was the General Counsel of the National Education Association for 40 years -- from 1968 to 2009.  This is what he said in a US District Court testimony a few years ago.  This is the General Counsel of the National Education Association -- It is well recognized that if you take away the mechanism of payroll deduction -- other words, the mandatory collection of union dues -- you will not collect a penny from these people.  It has nothing to do with voluntary or involuntary.  I think it has to do with the nature of the beasts who are our members, the beasts who are our teachers.  They simply will not come up with the money, regardless of the purpose.  You can't trust them -- unquote.  They have contempt for their own members.

So when Governor Walker was able to win in Wisconsin, on July 1st, the mandatory collection of union dues ended.  And immediately thereafter, the unions sent out a swarm of people.  You know, you've heard of going door to door?  They went desk to desk.  They went desk to desk with nice little forms called direct deposit slips, to every state employee, and said -- would you please fill this out?  It'll just mean your union dues keep coming to the union coffers.  Everything will be the same, don't worry about it.

And the union members looked at this.  And they said -- you know, my union dues are between $800 and $1,000 a year.  I don't think I'm getting much from my union dues, because most of it is going to politics.  And some union members disagree with the politics that it's going towards.  The best anecdotal evidence is that between 15 and 20 percent of employees are filling out those direct deposit slips.  This is having a devastating effect on the political clout of the unions.

Finishing up -- all right, I get the message.


The Wisconsin Education Association just laid off 40 percent of its headquarters staff.  Forty percent.


They've taken a second mortgage on their headquarters building.  They ended their statewide convention for the first time ever.  They didn't hold it.

And lastly -- this is the most important -- the largest AFSCME local in the country -- because AFSCME, the Association of State and Municipal Workers, was founded in Madison, Wisconsin in 1936 -- the largest chapter in the country is Local 23 -- it has 29,000 members.  Last month, they announced -- very quietly, I can assure you -- they're no longer a union.  They've become an association.  The reason?  The leaders of that union local, 29,000 strong, did not want to go through the certification election, which would've meant their jobs if they'd lost it.

We have discovered the soft underbelly of the Left in this country.  It is mandatory payment of union dues to unions to pay for politics, to elect politicians, to make government grow bigger, so the unions can grow bigger.  It's a vicious circle.  If we stop this, if we learn from our defeat in Ohio, and we learn from our victory in Wisconsin, we have discovered the secret to disassembling their political power base and finally saving the money which can make all taxpayers once again the recipient of efficient, honest government services, without the 30 to 40 percent overhead the unions represent.

Thank you.


Craig Snider: John, I want to thank you for another great contribution to the insights this weekend.  That coupled with voter fraud, I think, is something we can all follow.

I'd like to add that if follow-the-money is the single most important issue, you know, two things -- one is, when you see things happening in places like Wisconsin and Ohio, and there are organizations out there raising money to see if you can help -- you can help, even though it's not your own back yard.  Because these statewide referendums have really become national referendums to the issues we care about.  So as you hear about these things happening in other states, pay attention.  And please be open-minded to support those efforts with your pocketbook.

The other thing I would say is, also, school choice is very much related to this issue.  The teachers unions in this country -- I don't know the statistics, but I know they're among the strongest of the unions in terms of financial capability and wherewithal.

And in Pennsylvania, where I come from, they have just recently passed a school voucher program for school choice.  If it's not an issue that you're actually aware of, please find out more about school choice.  Because in Pennsylvania, if it passes through the House of Representatives, it means that every inner-city student is going to be able to take that tax money and take it where they want to go to school.  And this will break the teachers unions in the United States.  And it'll help the kids, and it'll help our country.  So big, big issue.


Craig Snider: Thank you.  Our next speaker is Ed Royce.  He's a congressman from California in his eighth term, serving Southern California's 40th District.  He serves as a senior member of the two important committees, in the House Foreign Affairs and Financial Services.  Congressman Royce is a ranking member of the Subcommittee on Terrorism, Nonproliferation and Trade.

Ed Royce: Thank you.  I thought I would just talk to you about a couple of issues here that concern me in terms of our strategic position in the world, vis-à-vis energy.

And one of the realities on the Foreign Affairs Committee is we see China locking up their energy needs long term.  We see them all over Africa, developing -- putting in place what they're going to need to access for the future.  We certainly see them in Latin America, locking down sources of energy.  And now you see them in Western Canada doing the same thing.

I want to contrast what China is doing right now, in preparing in this direction, with what the United States is doing.  Because we had an opportunity last week with the Keystone project.  The third-largest, the third-largest, oil deposits are in Canada, are in Alberta.  And up until last week, the expectation was that we were going to let gravity feed a pipeline project which brought that oil to our refineries in the United States, and along the way would not only provide a great number of jobs -- I think James mentioned 20,000 jobs -- that's just on the pipeline itself -- if you consider the heavy equipment, and all the ancillary jobs that are connected to that, the Chamber of Commerce here anticipated 250,000 jobs.

We also had a situation where we anticipated that we were going to drive down the price of energy in the United States because of the proximity.  We also had the situation where, economists tell us, when you spend money in Canada, it comes back to the United States.

Now, if you think about why we were a little concerned about diversifying our source of energy, it was because so much of our petrodollars go to the Middle East.  And basically, because OPEC has the ability to sort of enact monopoly pricing on this, we are building up -- we're having a huge wealth transfer out of the United States into the coffers of these regimes in the Middle East.

So until last week, we had before us a long-term solution to this problem, to which, after going through all of the environmental reviews, and the government determining it was safe; after going through three years of a drawn-out process, taking much longer than usual in order to get all the approvals; we now have the President of the United States saying that we've got to put this off until after the next election, to which, to which Prime Minister Stephen Harper had a response.  And he met with the Chinese Premier, Hu Jintao.  And Hu Jintao told him that China had a different vision.

Now, the Prime Minister has talked about Canada having to depend upon, you know, sort of a source for this market.  Dependability was important.  China was offering dependability.  China would like, out of Vancouver, to ship this oil into the refineries on the Eastern Coast of China, rather than to have this oil access our market here.

And before our very eyes, we're watching a situation where what would've been 250,000 American jobs -- a project supported by the building trades, as well as industry across the United States -- is being substituted for an alternative, which will now give China not only access long term to what they've already nailed down -- in Africa, in Latin America -- but now Canada.

And you have to ask yourself, from a strategic standpoint, what is the President thinking, when he boxes the US in terms of our long-term -- Canada is not going to wait.  They're not going to wait until after the next election, not with China laying out a scheme to get the pipeline to Vancouver.

And by the way, they can now buy the pipe, which has already been made in anticipation of this deal, for pennies on the dollar.  Because the pipe is now out there.  And I can tell you, from listening to those who were involved in this project -- now left holding the bag, having produced a lot of the material that was going to go into this project -- this is a real opportunity for China long term.

Now in the meantime, in the United States, I watched as this initiative to put $1 trillion into a stimulus program produce nothing, other than an expansion of every government agency and department in the United States.  I remember, after the passage of that legislation, going to a reception being hosted by the US Department of Agriculture.  They were giddy with excitement over all the new slots, all the new positions, they were getting.  This is when I began to really look at how this money was being used to ramp up, in double digits, the growth of every agency and every department.

You would think, right about now, we would be thinking -- you know, with commodity prices as high as they are, and the necessity to cut government spending, shouldn't we be ramping down the subsidies to agriculture; and with it, since we've got so many employees over there in the US Department of Agriculture -- I mean, when I looked at the budget, it was about the number -- little less than the number in the Air Force -- isn't it about the time we sent people into productive labor at these government agencies, rather than always ramping up?

And yet, here we stand, on the verge of another downgrade of our Treasury -- of our status in the world market, which is going to hit every municipality and is going to hit the cost of capital of large firms afterwards.  Here we sit in this situation, with this economic opportunity before us, turning our back on this.  Here we sit with a super-committee trying to come up with a strategy originally designed by Dick Armey.

I don't know how many of you remember the BRAC process, the BRAC Commission, but his concept was this -- you're never going to get a member of Congress to vote to kill something in his district.  And since there's a base in every district, and since the Pentagon says we've got to close 30 percent of them, the way to do it is one up or down vote that can't be filibustered in the Senate and can't go in committee in the House.  Well, this is this process that we've now designed in order to try to get an additional 1.2 trillion in reductions here.

If we look at some of the opportunities before us in order to reach this goal on the governmental side, think for a minute about where we are with our corporate tax rate, and contrast that to the average corporate tax rate, marginal rate in Europe.  We have -- we've got an eight percentage higher rate here in the United States.

If we were able to close off some of the corporate welfare, you know, shut down some of the loopholes and trade it off -- we're getting that corporate rate down to the average European rate -- you know, 28 percent -- the consequence of that would be, economists tell us, three quarters of a trillion in new revenue, because of economic growth, into the coffers -- that would come back from the companies that hold those earnings overseas, into our economy here.  Investment would go to highest and best use, we'd get economic growth -- this is agreed to by everybody.  We'd be able to better compete, it would put us in a better position for the next 10 years.  And here we sit -- for those of you who've watched this Occupy Wall Street movement -- with a demand that rather than reduce those marginal rates on corporate tax, that we increase them.

Ladies and gentlemen, we're moving in exactly the wrong direction.  But you're here today in order to try to get the intellectual ammunition to advance this argument down the field in our direction.  Let's hope that, by the time the debate is over in this select committee of 12 members, that at least one of those six Democrats sees reason and will vote with the six Republicans to pass out something that will actually generate economic growth and opportunity and jobs for this nation, and not continue down the road we're on, which is one that is totally unsustainable.

Thank you all very much.


Craig Snider: Congressman Royce, thank you very much.  You have a unique insight into the workings of government.  The fact that our stimulus money went to increase programs that will never necessarily be reversed -- or, if so, it'll be hard to do -- is really disturbing.  And it's a story that should be told.

I'd also add that in thinking of your comments here about the Keystone project -- and something, of course, I wasn't even really aware of -- just one of the many things that we can pay attention to and lobby our congressmen and our senators about.  Also along the lines of what can we do -- I think that one thing that we all know, and we can share with our children and our neighbors, is that our country has been traditionally a wealth creator.

We create wealth.  This country created more wealth in a short period of time than has ever been seen in the history of the earth.  And it elevated the standard of living for most people around the planet.  We should be talking about creation of wealth, not redistribution of wealth.  And I know you all know that.  But perhaps it's an idea we can carry with us.  Creation of wealth is really what we're about.  And we cannot do it with massive regulation and overprotection of the environment to the extent that the green movement tries to do.

Finally, I appreciate all of your patience.  Obviously, you're here because we've got great speakers.  Steve Moore is a perennial favorite here at this Weekend.  And you all know him, undoubtedly, from Greta.


Actually, that's how I first encountered Steve Moore.  But as you know, he is the founder of the Club for Growth and the former -- its first president.  He is a Fox News contributor and author of "Return to Prosperity."  He worked as a senior economist of the US Congressional Joint Economic Committee in the '90s, and he is currently a member of The Wall Street Journal's Editorial Board.



Steve Moore: Thank you so much.  This is -- I do a lot of conferences every year, and I always tell David Horowitz this is my favorite one of the year.  I just love being with you.  And David, you did a great job again this year.


So, thank you so much for the invitation to be here.  I got quite a thrill yesterday.  My son and I were -- after the sessions were over yesterday, we went over to the pool.  And this just beautiful woman -- she was in about her mid-30s, in a red bikini -- she just ran up to me, and she threw her arms around me.


And I thought she was with this conference, but she wasn't.  And she said -- I know you, don't I?  And I said -- well, ma'am, I'm not really sure.  She said -- don't I see you on TV?  And I said -- well, I don't know, what do you watch?  And she was very adorable, she said -- wait a minute, didn't I see you on "Wheel of Fortune" last week?


I said -- yes, ma'am, that was me.

But anyways, one other quick story -- I am here with my son, David, who is in the yellow shirt over there.  And last night --


Last night, we were watching a movie together after the dinner last night, and his tooth popped out.  He's 10.  And so, you know, we cleaned it out and stuff.  And then, right before he was about to go to sleep, he turned to me, and we had the lights turned out.  And he said -- Dad, is there a tooth fairy?  And I said -- well, Barack Obama thinks there is, right?


Because when you think about it, you know, everything we have done in the last three years in Washington has been this belief -- right, Ed -- that there's a tooth fairy, right?  That the federal government can spend money, and somehow that this money comes from a tooth fairy, and that it creates growth and it creates jobs.  And I would make the case to you that what we've lived through in the last three years has been the greatest failure of Keynesian economics in the history of civilization, right?


It has been an incredible failure.  And if anything good comes out of this, Ed, it should be that Keynesian economics does not work, right?  We've had an incredible laboratory experiment.

John Fund mentioned, you know, the dimensions of the trillion dollars.  These numbers are gigantic.  Just to give you a sense of this -- in the last three years, the US government -- by the way, it was the last year of the Bush Administration, so we're bipartisan here -- the last year of the Bush Administration and the first two years of the Obama Administration, we have borrowed $4 trillion.  $4 trillion.  The debt -- how many of you saw what happened this week -- that the debt clock just passed $15 trillion for the first time in American history?  If we stay on the course we're on -- you know these numbers, Ed -- if we stay on the Obama baseline, we will borrow 10 more trillion dollars in the next 10 years.  I mean, these are frightening numbers.

These are -- I am aghast at how much our nation has faltered, quite frankly.  This is the greatest episode of fiscal child abuse in the history of this country.  And it's not just going to be -- you know, we used to talk, Ed, about -- well, the next generation is going to have to pay these debts.  It's not the next generation.  It's not even our grandchildren's generation that's going to have to pay for our mistakes.  It's our grandchildren's children's generation that are going to have to unwind this enormous debt that we have built up.

And it is a very scary situation.  If you look at that debt that I just mentioned -- over 10 years, $10 trillion -- that is more money than the United States government borrowed from 1776 through 2005.  Think about that.  We're going to borrow more money in the next 10 years than we borrowed to finance the Revolutionary War, the Civil War, World War I, World War II, the Great Depression?  Those are pretty horrendous numbers.

Now, here's the point -- I wouldn't be so upset about all this borrowing if we got something in return for it.  But we've gotten nothing in return for this.

Now, I had a piece in The Wall Street Journal a couple weeks ago that just infuriated my liberal and Democratic friends.  And it was just innocently titled "Reaganomics vs. Obamanomics."  And what I pointed out in this piece -- and you can Google it and see it -- I was very proud of it, got a big response -- and I basically said -- look, Ronald Reagan and Barack Obama had something very much in common.  They both came in during incredible economic crises.  Right?

I mean, Reagan came in -- you all remember the failure of the Carter years.  How many of you remember 14 percent inflation and 20 percent mortgage interest rates, and the country was de-industrializing?  I always say the reason I know that God smiles on America -- that Jimmy Carter was not reelected in 1980.  The economy was in a freefall.

And similar, when Barack Obama came in, the economy was in a freefall.  So they inherited very similar situations.  But what they did to deal with the crisis was diametrically the opposite, right?  Reagan came in.  John worked for Reagan back then -- you remember this, John.  We cut the tax rates, we deregulated the economy, we cut domestic spending, we got inflation under control.  We didn't print money; we stopped printing money back in 1981, '82.  The information rate -- remember, under Reagan -- went from 14 percent in 1980 -- under Reagan and Volker, it fell to 3 percent, you know, in a miracle that nobody thought could happen.

Meanwhile, look at what Obama's come in -- he's come in and spent $3 trillion, we've had massive increases of money situation.  The Keynesians have thrown everything they've got in their tool chest at this recession.  Now let's look at the results.

If you look at September of 1983 -- almost exactly the same juncture of Reagan's presidency versus where Obama is today -- anybody want to take a guess, in September 1983, how many jobs were created by the US economy in that single month?  Nobody's going to believe the number.  You can look this up, because I didn't believe -- I had to look it up three times to validate the number.  In September of 1983, the US economy created 1.1 million jobs, in one month.  That's an awe-inspiring number, isn't it, 1.1 million.  We're not going to create one million jobs this whole year.  And we did it in one month.  As you know, in September of 2011, we didn't create 1.1 million jobs; we created less than 100,000, just to give you the dimensions.

Now, let's look at the GDP growth rate.  Under Obama, this year so far, we've been growing at just about a 1 percent rate of growth.  I hesitate to even call this a recovery that we're in right now.  For most Americans, they don't believe, Ed, that we're in a recovery; they believe this recession has simply gone on.  And it's, as a recovery, almost without a pulse.

One percent under Obama.  Third quarter 1983, under Reaganomics -- anybody want to take a guess at what the economic growth rate was?  Eight point two percent.  Remember that, John?  Eight point two percent.  That’s unbelievable.  And remember -- John remembers this -- remember all the talk back in '83 and '84 was the economy was overheating.  Remember?  We were creating so many jobs, and the economy was expanding so rapidly under Reaganomics, people thought there was too much growth, and we had to slow it down.  That would be a wonderful problem to have right now.  And so the only point I was making is one of these formulas worked, and the other has been a complete catastrophe.

Now, that brings me to the issue of the super-committee.  And Ed, I guess I’m even more cynical than you are on this.  I want the super-committee to fail.  I think this thing is completely a train wreck, and Republicans should simply go for the automatic across-the-board sequester of spending.  Right?  Let's just cut spending -- if we can do this in 2013, we can cut every agency's spending by 10 percent.  Now, that does mean the defense budget.

But when is the last time we've cut the budget in this town?  I mean, my goodness, I am so frustrated, obviously, with the Democrats.  But I got to say this, Ed -- I'm frustrated with the Republicans on the budget.  I am frustrated --


-- Republicans -- they said they were going to cut $100 billion out of this budget, and we haven't.  Now, I know good people like Ed Royce and Mike Pence and Jeb Hensarling -- you're doing everything you can to get this.  But why haven't they kept their promise on this?  The Republicans have a one-house veto.  Why -- at the end of this year, why are we still spending money on the Legal Services Corporation?  Why are we still spending money on the EPA?  Why are we still spending money on the National Public Radio?


I mean, my goodness, Ed, we can do this.

Ed Royce: You got me.

Steve Moore: Okay.  I mean, look, ladies and gentlemen, can't George Soros pay for National Public Radio himself?


I mean, why do we have to pay for this?

So I'm very frustrated about this pace of no progress on the budget.  We cannot -- the reason I think that this super-committee has got to blow up is because if Republicans agree to raise taxes, they will lose the election in 2012.  It is simple as that.


John Fund: Absolutely.

Steve Moore: Am I right about this, John?  I mean, this is why the Democrats keep insisting they want the Republicans to cave on this.  When is the last time Republicans caved in on taxes?  Do y'all remember?  It was in Andrews Air Force Base in 1990?

John Fund: Read my lips.

Steve Moore: Read my lips.  What happened?  That's, ladies and gentlemen, what got us eight years of Bill Clinton's presidency.  George Bush would've been reelected if he had not raised taxes.  So Ed, I hope -- I mean, I know you're -- you know, you're as solid on this as anybody.  Please tell these guys they cannot compromise on the no-tax position.


This is the most important position.  Look, if you want to be a member of the Republican Party, you have to be against tax increases.

My old friend Bob Novak, who -- I loved him -- you used to work for Bob -- said it so well.  Remember this, John?  He used to say -- the only reason God put Republicans on this earth was to cut our taxes, right?  If they're not cutting our taxes, we don't need Republicans.  So this is a very important thing for the economy and politics.

I've only got a minute left.  But let me just say this about the top 1 percent -- you know, the evil top 1 percent, the people like, you know, Warren Buffett and Bill Gates, and Tiger Woods, Lady Gaga -- all those terrible people like that.  You know, if you look at these statistics -- and I know you guys know this, because you read The Wall Street Journal Editorial Page -- what percent do the top 1 percent pay in taxes right now?  Forty-one percent.  The top 10 percent pay 68 percent of the taxes.  The bottom 50 percent in America today -- they pay less than 2 percent of the taxes.

We have an incredibly highly progressive tax system already.  In fact, I'm as anti-tax as anybody in this room.  But I will say this -- I think Michele Bachmann is exactly right -- that if you are a citizen and a voter in this country, you should pay taxes, right?


Everyone who votes and is a citizen should pay some taxes.

One -- can I just take 30 more seconds?  Because I want to make one other point, if I could.  On this energy issue -- you are so right about this, Ed.  And we have such an incredible opportunity right now on energy to be -- we can, within the next 10 years -- if we get our energy policies right, we can be an exporter of oil and natural gas.  This is the most amazing story that nobody is talking about -- why it's so criminal that we're not building that Keystone pipeline.

You look at what's happening in the Marsalis Shale -- we've got 60 years of natural gas in Pennsylvania, New York, Ohio, West Virginia.  You look at what's happening in North Dakota.  I wrote a piece on Harold Hamm.  He's the one who discovered this Bakken shale in North Dakota.  We have about 50 years of oil that we found in the great state of North Dakota.  This is -- we have twice as much oil that we found in North Dakota as we have in Prudhoe Bay in Alaska, which is our single-biggest, you know, current deposit of oil.

We can do this.  We can be completely independent of OPEC oil.  And here's the point -- Obama is doing everything he possibly can to stop United States production of oil and natural gas.  It is almost criminal what is going on.  And it's not just Keystone, as you know, Ed.  It's in every project.  When you talk to Harold Hamm, what he says -- everything Obama's trying to do -- here we have this treasure chest of oil, right?  I mean, this is like a gift from God.  And Obama is doing everything he can to stop it from happening.

And my point about this, Ed -- I’m even more cynical than you are on this.  This doesn't have anything to -- why did they block the Keystone pipeline?  It doesn't have anything to do with the environmental impact of that pipeline.  I mean, we built the Great Alaska pipeline.  That didn't have any negative effects on the environment.  What this is about, ladies and gentlemen, is the Left doesn't want America to produce fossil fuels.  It's as simple as that.


They want us to believe in this fairy tale of wind and solar power.  I mean, my God, Barack Obama runs around the country saying that wind and solar power are the energy sources of the 21st century.  Folks, wind and solar power are the energy sources of the 15th century, not the 21st century.


So we should be independent on our oil.

Finally, I want -- one quick point on optimism.  Because I think the only criticism I have -- we've been a little too pessimistic.  We are going to see -- once we -- I think, in 2013, we're going to see the biggest expansion you ever saw in the economy.  And when that is going to happen -- I can tell you the exact date that is going to happen -- November 5, 2012, when the American people trade in Barack Obama and Joe Biden under the Cash for Clunkers program.

Thank you very much.


Craig Snider: Everybody, we did leave a little time for questions.  And I just want to -- before we go to questions, I just want to say one thing -- I think all of you should give yourselves a round of applause for being here at the last session, and being so engaged.  You are amazing!


Nina, you're going to have the first question.

I just also want to make a brief editorial, and that is this -- Steve, you made a great point -- Republicans versus conservatives.  And I didn't -- I don't know if Bernie Goldberg is still here.  I had hoped to be able to make a comment yesterday on all that.  But Bernie kind of seemed to disparage the Tea Party movement, and kind of brought in the Birther discussion.  And I really felt that was unfair.  I think that the Tea Party and people that are purists on the conservative side have really helped Republicans be conservative.  And if they can't be conservative, they need to be replaced.


Okay, we're going to open up some questions.  Nina Rosenwald?

Do we have a microphone, or not?

Unidentified Audience Member: I've got one, and I have a question.  I have got a question and a comment for Steve.

Steve, you had an editorial in the Journal within the last probably eight or nine months, talking about -- and you did a lot of legwork and a lot of study that tax increases never seem to help the spending situation.  And this is so critical, now that we've got the super-committee.  And as you very well point out, the worst thing in the world the Republicans can do is cave on tax increases.  Maybe you want to just make a couple of comments about some of the studies that were included in that editorial?

Steve Moore: Just a quick response on that.  Yeah, I mean, you're exactly right.  We looked at data over the last 65 years.  I did this with Professor Richard Vedder of Ohio University.  And what we found is that for every one dollar of additional tax revenues that was raised in taxes, the federal government spent $1.50.  So in other words, the deficit went up after tax increases, not down.  And Ed, that's a message I think you all -- and you know what, Ed?  The public is with us.  In other words, they understand that.

Ed Royce: I've got your editorial right here.  I'm with you.

Steve Moore: So (inaudible).


Craig Snider: Okay, Nina Rosenwald?

Nina Rosenwald: John, I was wondering -- based on everything that was said today, it sounds as if, you know, Osama bin Laden said we want to bring down the American economy.  It sounds like Obama wants to bring down the American economy by sort of saying -- how can we waste more money to, you know, crash the Treasury?  To be able to have us taken over by Islamists, or who?  Or am I being a little bit over the pale?

John Fund: Well, it all goes back to Saul Alinsky.  And one of the most astonishing things about the new Left in this country is -- we had a 2008 election which, on the Democratic side, completely marginalized the moderates.  I mean, they ran Joe Lieberman out of the Democratic Party, they forced Evan Bayh to leave the Democratic Party and retire.

And the Democratic nomination contest in 2008 was between Hillary Clinton, whose graduate thesis at Wellesley was on Saul Alinsky, in which she compared him to Martin Luther King, Jr.; and who was offered a job by Saul Alinsky, and she turned it down -- only because the only law firm in my home area, the Bay Area of San Francisco -- the only law firm in which every partner was a member of the Communist Party offered her an internship.

Now, Hillary is not the same Hillary as she was back then.  But she certainly remembers Saul Alinsky.

Unidentified Participant: She better, or worse?


John Fund: That's bait I'm not going to take.

But she was running against Barack Obama, who told the Washington Post a few years ago -- the biggest and most important education I ever got was reading Saul Alinsky.  So that was the contest in the Democratic Party.

So given that they want redistribution of wealth, given that they want at best a socialist system, and at worst something even more insidious, it shouldn't surprise us that they are completely indifferent.  Because remember, if you inherit the ruins, it's sometimes more important than if the ruins have any value to them.  It's important to inherit the ruins.

One final point -- even Hillary Clinton has had enough of this administration.  I'm told she wakes up every morning and says -- I lost to this guy?


Mark Penn, who was her consultant and pollster, was at a recent dinner party in Washington, sitting next to a friend of mine.  And my friend said, you know, the whole table was just filled with complaints about the Obama Administration, its incompetence -- they don't know what they're doing, you could walk through their deepest thoughts and not get your ankles wet -- all of that.

And my friend turned to Mark Penn and said -- you know, you had a great TV commercial against Barack Obama in 2008.  It was that 3:00 a.m. phone call commercial.  It's late at night in the White House, the phone is ringing at 3:00 a.m., there's a big crisis somewhere.  And who do you want to answer that phone?  Hillary Clinton, or the completely unseasoned Barack Obama?  If you were doing this campaign again, knowing what we now know about Barack Obama, how would you -- what kind of commercials would you run?  And Mark Penn sort of stroked his chin a little bit, and he said -- you know, I kind of liked the 3:00 a.m. commercial.  If I were doing to the 2008 campaign over again, I think I'd run exactly the same commercial.  Except this time, I'd make the phone call come in at 3:00 p.m.


Craig Snider: Okay.  We're going to get -- I see a few of you in the back.  We're going to get one here, Barry Wolfe; and then Steven Stern, and then we'll head to the back for a few more.  And then we got to wrap it up.

Barry Wolfe: Okay, two questions -- Ed Royce, is it too late to stop the pipeline going to China?  I mean, do we still have a chance here?  And number two, Steve -- the deal is, if this committee doesn't work, it's not a 10 percent across-the-board; it's 50-50, 50 percent cut in military defense.  You were talking about 10 percent across-the-board.  Help me understand that.

Ed Royce: Barry, to respond to your first question -- the only thing we could do now -- we have passed legislation into the Senate to try to force the President's hand.  But it would take Harry Reid supporting our legislation.  So perhaps a massive countrywide effort to get the Senate onboard.  If we don't act soon, the Chinese will seal a deal.  This is at the top of their priority list.

Steve Moore: You know, on this sequester issue -- it's a great question about how it works.  And it looks like it's going to come to this.  And basically, starting in 2013, half of the savings would have to come from the defense budget, and half of them would have to come from nondefense.  Now, that's not really fair, because defense is only 20 percent of our budget, but they'd have to take 50 percent of the cuts.

Now, my feeling is, first of all, we should definitely do the automatic across-the-board cut in the domestic programs.  I mean, after all, they got -- what was it, Ed -- 30, 40 percent increases under Obama, so they can certainly live with a 10 percent cut.

The big issue -- and maybe Ed can even speak to this -- is what happens if we have to go this -- you know, what -- even Leon Pennetta, Barack Obama's own Defense Secretary, says it would be catastrophic to do these cuts.  Now, I'm not so sure about that.  Look, I think the Pentagon -- there's a lot of waste in the Pentagon -- I think can absorb some cuts.  Whether it can take 10 percent, I don't know.

But here's the -- I was on with one of your colleagues on Fox this week.  I forget which congressman it was, but he was one of the Democrats.  And I pointed this out to him.  And I said -- Congressman -- I said -- are you willing to take a cut of 10 percent in the national security budget if it imperils our ability to protect this country, and to protect our national security?  And he said to me -- Congressman, on the air, you can look this up -- he said yes.  He said -- I'm willing to do that.

Now, think about this.  I mean, you all know the Constitution -- the single most important priority for the United States government, and one of the few things the federal government is actually chartered to do, is to provide for the national defense.  Right?  And these guys want to take this massive cut out of the defense budget, so they can preserve Medicare or Social Security, Medicaid -- tiny slivers in these cuts.

I mean, to give you a sense of what Republicans have put on the table -- if we did the Republican plan for entitlements for these big programs, which are the big boulders that are driving the debt -- you know these numbers, Ed -- even under the budget you guys pass, these programs still over the next 10 years grow by 50 percent.  Right?  So you're just saying -- we're not going to not let them grow by 80 percent; we're going to let them grow by 50 percent, and the Democrats won't do that.

I think it is unpatriotic for the Democrats to basically say -- we want to take the biggest whack out of defense in American history so we can protect these programs.  I just think it's outrageous.


Barry Wolfe: Are we going to do that, Ed?  I mean --

Craig Snider: Okay, listen, with charity to all and malice towards none --


-- we're going to only have time for one question.  You two guys in the back, please come up right when it ends, so you can get your questions asked.  But -- oh, I’m sorry.  I thought you already did answer.

Ed Royce: Well, of course -- and this is the whole point of avoiding the sequestration process.  If it goes to that process, that 50 percent is in security.  So if it goes to that, then it's defense or Homeland Security, or the security portion in addition, of the State Department budget.  So if we find ourselves in that position, Barry, then what we've got to do is to try to cut Homeland Security and reorganize that, right?  And the Secretary of State's budget, you know, and so forth.

But there's no doubt that the better process is to reach an agreement on all of these issues that I discuss, like ending crop subsidies, you know, drawing down the size of the federal bureaucracy, so that we don't have to go there on the defense side.

Unidentified Participant: But Ed --

Craig Snider: Guys, guys --

Ed Royce: And entitlement reform, and what know what those are.

Steve Moore: Ed, you know, you've talked to these guys.  I've talked to Toomey, I've talk to Jon Kyl.

Ed Royce: Right.

Steve Moore: Here is the truth of what's happening on that super-committee that you're not going to read in the New York Times.  The New York Times had a big article -- oh, this is going to blow up because Republicans won't raise taxes.  Folks, the Democrats have not put a single dollar of spending cuts on the table.

Ed Royce: There's not one plan from the Democrats.

Steve Moore: It is amazing.  They don't want to cut anything.

Ed Royce: They have no plan.

Steve Moore: Right.

Ed Royce: And the plan we're talking about lowers the corporate tax rate in exchange -- marginal rate, in exchange for closing some loopholes to get economic growth.  That's where we're coming from, just so you know.  And what we're trying to get them to do is to buy into entitlement reform.  And that's where the AARP are out there running ads against it.

John Fund: Actually, Steve, I'd have to disagree with you there.  The Obama Administration has done one budget cut very successfully and very surgically.  If you go to the Department of Labor, there is a budget for monitoring union corruption --


-- and looking at all these forms that unions fill out --

Craig Snider: Okay, look, we got --

John Fund: And we got to --

Craig Snider: I promised -- I got --

John Fund: -- cut that budget by 70 percent.

Craig Snider: I've got to interrupt.  We got one more question, from Steven Stern.  And then, we're going to wrap it up.

Steven Stern: This question is for John Fund.  They were successful at rolling the unions out of the taxpayers' lives in Wisconsin.  They failed in Ohio.  Could you enlighten us as exactly what went wrong, and what should be done right the next time?

John Fund: Well, part of it -- and this is a little painful, because John Kasich is a former colleague of mine at Fox News -- John Kasich's personality is not always Mr. Sunshine.  Scott Walker is a happy warrior in Wisconsin; John Kasich can often get a little petulant.

There was a famous incident during the 2008 campaign for governor in which John Kasich was stopped by a state trooper for speeding.  And the state trooper had his video camera on and captured John Kasich calling the state trooper an idiot and various other things.  You know, calling law enforcement stupid didn't work for Barack Obama; it certainly doesn't work for John Kasich.

John Kasich also included firefighters and cops in his anti-union restrictions, and that perhaps was a tactical mistake.  Because police and firefighters are often willing to vote in behalf of more conservative causes.

And lastly, Wisconsin did not have this unusual voter referendum, where you can call a snap referendum on anything the legislature passes, and pick a very unusual election time, November of an off, off-year election.  The turnout can be skewed by massive union spending far more than it can in other places, when the election is held at a more normal time.

For that and other reasons, in addition to the fact that John Kasich spent a whole lot of money on television and media consultants -- and the Wisconsin Republicans in those recall elections spent a lot more money on grassroots and get-out-the-vote effort at the local level -- never, never give your money over to consultants.  They make 15 percent on media buys, they make 0 percent on get-out-the-vote efforts.

Craig Snider: Okay.  I want everybody to give a great round of applause to yourselves and this panel.


And if you would, just one moment -- David Horowitz is going to say one last couple of words to all of you.  Thank you.

John Fund: Thank you.  And I'll be signing my new pamphlet.

David Horowitz: Just wanted to make one comment in Nina's question about Barack Obama and bankrupting the country.

Barack Obama is a radical.  Came from my radical Left that I came out of, only the worst part of it.  This is the Billy Ayers part.  Anybody who's a radical wants to bankrupt America.  Because America's the Great Satan.  And if you bring America down, you raise all those people that we oppress up.  It's very simple.  So he wants -- the bankruptcy of America is a good thing.  That's the mentality.

And I think the super-committee -- there's also this element of -- I don't pay attention to the super-committee, because -- just too depressing.  So I don't know the individuals.  But there's a very large element in the Democratic Party, which is a communist element, that has been salivating over bringing the American military down.

John Kerry -- didn't he propose 25 percent cuts when he was a senator, or 50 percent cuts?  So they're very happy.  They have no incentive to settle when they see the prospect of taking the American military down.  That's -- you have to focus on who this enemy is, how malicious they are.  And then you can -- and Republicans are always doing the right thing.  And it's always -- you know, let's make a reasonable deal.  These people aren't reasonable.

Anyway, I'm exhausted from this weekend.


So I want to thank you all for coming.  Your support is hugely important to what we do.  And I hope that we have given you something yourselves back for the support that you give us.  Thank you.


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