February 26, 2013, Bob Brinker's Moneytalk Guest Summary

February 26, 2013....Bob Brinker's Moneytalk guest Sunday was Dean Clancy. Brinker seemed less than enthused about the interview. He gave Clancy no build up whatsoever and he was only on the air for 14 minutes.  Maybe there's a clue about Brinker's view of Dean Clancy in this summary.

Guest-writer, Frank J. wrote this summary of Brinker's third-hour Clancy interview:

Feb 24, Moneytalk third hour interview with Dean Clancy, VP of Public Policy, Freedom Works.

The third hour interview was with Dean Clancy, VP of Public Policy with Freedom Works.  The interview finally got underway at 3:38 pm and ended abruptly at 3:53.   Speculating here, maybe there was a mix up on when the guest was expected.  This might explain the filibustering Bob did during the first half of the final hour.   I began to suspect something was amiss when his review of housing prices went from thorough to exhaustive!   

In any event, here is a link to Freedom Works’ website.  Freedomworks

Bob started off by asking the guest about the sequester and the $44 billion in cuts that would affect the final 6 months of the federal government’s fiscal year.  Mr. Clancy said it only represents a small trimming of federal spending and if plotted on a graph showing projected spending, both with and without the reductions, you’d need a magnifying glass to see the difference. 

There was a little back and forth about the predictions swirling around about the dire consequences of cutting government spending, Bob mentioned a 57 item list put out earlier this week.   Here is a link to an article that lists all 57 items, in case anyone would like to see them.  57 Terrible Consequences of the Sequester

A short sampling:

#6. Nationwide Meat and Poultry Shortage.

#28. An Even More Porous Border. 

#51. Slower Reporting on Economic Data, Less Analysis of It

#55. Fewer Air-Quality Forecasts

To the list of 57, I would like to add one I read today:  bears in Yosemite National Park will be frequenting the campgrounds in greater numbers, raiding the garbage cans because trash pickup will be cut back. 

The guest sounded like he had seen the list, and said modest reductions can and should be done.  There was agreement that politicians and others with a vested interest in government spending are afraid if the cuts go through, people will actually see that we can cut spending without the sky falling -- and they will want MORE cuts. 

Clancy said if we get some relief it will be an important milestone for the fiscal conservative movement.  He is hopeful it will show we can do more to slow down government growth. 

Bob said that government spending has been essentially flat since 2009 at about $3.5 trillion and the deficit has come down.   There was some discussion of spending as a percent of GDP, as to what would be acceptable.  Clancy made the point that reducing spending may have a negative short term effect on the economy but this is outweighed by the positive long term effect of lower government spending.

Discussion then turned to income taxes.  Bob had asked what level of spending is appropriate.  Mr. Clancy answered by talking about the income tax and said if 10% is good enough for God, then it should be good enough for Uncle Sam.  Bob asked him if the income tax should be progressive and Clancy was emphatic in his answer that he did not think the government should levy an income tax, but if we are going to have one, it should be flat.    Clancy said graduated income taxes are bad because they lead to corruption and income redistribution. 

He recommended that the tax be as close to 10% as possible, mentioning that Sen. Rand Paul (R. Kentucky) calls for 17%; the  Heritage Foundation proposed 28% payroll tax and income combined.  Clancy said we should get rid of the income tax and fund government tariffs and excise taxes.   Government would then focus on only the powers given to it by the founders.

Bob pointed out that private sector jobs are  growing and public sector ones are declining.  Is this the trend you want to see?   Yes, said Clancy.  Grow the private sector and shrink the public sector because dollars that go out of the private sector into the public sector are used less productively.   There has been growth both in government jobs and in pay rates.   

Bob quoted Sen. Coburn from Oklahoma who said 10% could be cut from the Defense budget.  The USA spends $740 billion on defense and the Chinese spend about $90 billion.  How much should we spend on defense?   Clancy said conservatives are divided on defense but Freedom Works thinks the Pentagon is like any other bureaucracy and reductions are possible.  Then he said, the people best qualified to tell you the needs are the generals and senior officers.   Defense is projected to grow by 16% over the next 10 years vs. 20% so the cuts under discussion are really about cutting the rate of growth.

Bob commented that he has difficulty with the “Armageddon cloak” they’re putting over these tiny cuts.  And he mentioned he has a hard time trusting the generals on what to spend. 

Bob said that Medicare recipients get $3 in benefits for every $1 they paid in … what kind of reductions in benefits can we look forward to?   Clancy mentioned that Medicare is projected to be cut to help pay for the people under 65 who will be receiving health care benefits under the newly passed Affordable Health Care Act.  (Obamacare).    The Democrats want to ratchet down on payments, not realizing that this simply leads to rationing.  The Republicans want to get more choices out there, bring in more competition and get savings.  Clancy said that Medicare is a “giant check writing system” and the program contains 10% fraud, possibly up to 20%.  Only after the payments are already made, does any policing take place.   

Honey here: Many thanks to Frank J!  Please scroll down to read my show summary. 

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