Art Laffer in today’s Wall Street Journal on how the bailout mentality is bad news for our economy:

Whenever the government bails someone out of trouble, they always put someone into trouble, plus of course a toll for the troll. Every $100 billion in bailout requires at least $130 billion in taxes, where the $30 billion extra is the cost of getting government involved.

If you don’t believe me, just watch how Congress and Barney Frank run the banks. If you thought they did a bad job running the post office, Amtrak, Fannie Mae, Freddie Mac and the military, just wait till you see what they’ll do with Wall Street. …

Giving more money to people when they fail and taking more money away from people when they work doesn’t increase work. And the stock market knows it.

The stock market is forward looking, reflecting the current value of future expected after-tax profits. An improving economy carries with it the prospects of enhanced profitability as well as higher employment, higher wages, more productivity and more output. Just look at the era beginning with President Reagan’s tax cuts, Paul Volcker’s sound money, and all the other pro-growth, supply-side policies.

Bill Clinton and Alan Greenspan added their efforts to strengthen what had begun under President Reagan. President Clinton signed into law welfare reform, so people actually have to look for a job before being eligible for welfare. He ended the ‘retirement test’ for Social Security benefits (a huge tax cut for elderly workers), pushed the North American Free Trade Agreement through Congress against his union supporters and many of his own party members, signed the largest capital gains tax cut ever (which exempted owner-occupied homes from capital gains taxes), and finally reduced government spending as a share of GDP by an amazing three percentage points (more than the next four best presidents combined). The stock market loved Mr. Clinton as it had loved Reagan, and for good reasons.

The stock market is obviously no fan of second-term George W. Bush, Nancy Pelosi, Harry Reid, Ben Bernanke, Barack Obama or John McCain, and again for good reasons.

Did the free market fail? Well, that seems to be what Alan Greenspan, the former Federal Reserve System chairman, said yesterday to Congress. But before we follow the lead of those in Congress who are using Greenspan’s comments to exert more government control and regulation of our economy, we should consider whether the free market failed.

First, the notion that Greenspan is a “free-marketeer” should be disabused. How could he be given his role with the government as a central planner of the economy? Indeed, in a free-market economy, there would be no such thing as the Federal Reserve, with a handful of people making decisions that affect the entire economy of the United States and, ultimately, the rest of the world.

So while Henry Waxman and other central planners are having a heyday with Greenspan’s comments to condemn capitalism, Pepperdine University Professor Emeritus of Economics George Reisman reminds us that:

the politico-economic system of the United States today is so far removed from laissez-faire capitalism that it is closer to the system of a police state than to laissez-faire capitalism. The ability of the media to ignore all of the massive government interference that exists today and to characterize our present economic system as one of laissez-faire and economic freedom marks it as, if not profoundly dishonest, then as nothing less than delusional.

So, no, Mr. Greenspan, it wasn’t the failure of tens of thousands of people simultaneously making bad decisions in a free-market economy that caused the current financial crisis. That would be the economic equivalent of believing the “infinite monkey theorem” — that a monkey randomly typing for an infinite amount of time could produce the complete works of Shakespeare - caused the problem.Wouldn’t it make far more sense that our financial mess is the result of the poor decisions by the central planners at the Federal Reserve and in Congress?

Of course, I argue that the economic crisis is a failure of government, not deregulation, and Mr. Greenspan deserves plenty of blame-not for his unyielding commitment to the free market, but for his abandoning it as the central-planner-in-chief.

Cross-posted at Capitol Domes.

The National Taxpayers Union (NTU) and Competitive Enterprise Institute (CEI) have a new website: BeyondBailouts.org.  The site is dedicated to exposing the government’s role in creating the financial “crisis”, as well as promoting solutions that go beyond the financial bailout (and should have been done instead of the bailout).

BeyondBailouts on What do We Do Now:

As markets and businesses take corrective action themselves for the excesses of the past few years, there are things that Congress can do to address some of the root causes:

• Privatize Fannie and Freddie
• Prosecute Corrupt Officials
• Suspend Destructive Accounting Rules
• Repeal the Community Reinvestment Act
• Clean Up the Tax Code

Instead of shoveling more taxpayer money into the bailout hole, Congress should change the government policies that helped create this mess in the first place. That means privatizing Fannie Mae and Freddie Mac, reforming destructive accounting rules, and getting rid of lending laws that force banks to make bad loans.

The site features an email sign-up, a petition to Congress, videos, and a blog. One of the best posts for today is Deregulation Didn’t Do It, via the Heritage Foundation.

GrassrootsPA has a roundup of stories on the Philadelphia man, working with ACORN, who was charged with 108 counts related to forgery and fraud in voter registration.  In the Tribune-Review Story, an ACORN spokesman call it “a case of one bad apple.”

Of course, eating the number of “bad apples” that ACORN has produced would probably be as hazardous to your health as eating an actual acorn.  (NOTE: after further research, my metaphor is flawed, as eating an acorn is not hazardous to your health.  I was thinking of buckeyes, which are poisonous.  Coincidentally, the Buckeye Institute has filed a Rico suit against ACORN).

In related news, the Pennsylvania GOP has launched a new site - www.wewantafairelection.com.- aimed at reporting voter fraud.  Right now, there isn’t anything useful on there, but there might be by election day.

The PA GOP filed a lawsuit today against ACORN and the Secretary of the Commonwealth for incidents of voter fraud.

The lawsuit makes a number of requests, including requiring first-time voters to show valid identification before voting and providing provisional ballots for applicants whose registrations have not been processed. You can view the full GOP press release here.

A short research paper from three economists from the Federal Reserve of Minneapolis find that the so-called credit crunch, which led to the bailout, was based on a number of false claims (HT: Marginal Revolution).

1. Bank lending to nonfinancial corporations and individuals has declined sharply.
2. Interbank lending is essentially nonexistent.
3. Commercial paper issuance by nonfinancial corporations has declined sharply and rates have risen to unprecedented levels.
4. Banks play a large role in channeling funds from savers to borrowers.

Here we examine these claims using data from the Federal Reserve Board. At least based on data up until October 8, 2008, we argue that all four claims are false. [emphasis added]

Meanwhile, the Club for Growth notes that the moral hazard from government intervention has already begun - i.e. people not paying their mortgages, because they are certain the government will intervene to prevent anything bad from happening to them.

An article in the New York Post today describes how ACORN employees in Ohio were pressured and bullied to meet voter registration quotas. Some workers were driven to bribing applicants with money and cigarettes.