Revised GDP numbers suggest that going down is exactly what the economy is doing.  The government revised second quarter GDP growth from 2.4% down to 1.6%.  Even Paul Krugman is saying the stimulus didn’t work, but his solution is to drive the country into bankruptcy faster.  Krugman’s complaint was that the stimulus wasn’t big enough.  He also believe we should,” use Fannie Mae and Freddie Mac, the government-sponsored lenders, to engineer mortgage refinancing that puts money in the hands of American families.”  Fannie and Freddie have already sucked $160 billion out of the Treasury and Mr. Krugman wants to back up and re-inflate the housing bubble.  Talk about failed policies of the past, sheesh!

The solution to the jobs issue is private industry.  The problem is that this is the most anti-business government in memory.  Business is the target of the administration’s ire, tax policies, health care policies, cap and trade schemes, repeal of the Bush tax cuts, card check, financial regulation, have I left anything out?  So business is sitting on its hands.  No matter how much cash it may be accumulating it does not want to take any steps, like expanding, until the full weight of all these choking policies are understood and priced out or until the Democrats are run out of the Congress and the anti-business sentiment is lifted there.

So let the Joe Biden show continue.  The man who says he know little about economics and proves it with every speech will go on telling us how the stimulus is working exactly as planned.  President Obama will continue to take a new vacation about every 90 days and we will cross our fingers that there is something left to recover when we recover our government from these inexperienced, clueless dolts.

In the August 23, 2010, New York Times, Paul Krugman decries that if we don’t let the Bush Tax cuts expire and thus have a massive tax increase in the midst of a weak Obama recovery, it will be so unfair, so evil… 

First let’s look at how twisted the logic of the left has become.  Mr. Krugman says, “These same politicians are eager to cut checks averaging $3 million each to the richest 120,000 people in the country.” Er, not really, Paul, unless the richest 120,000 people are stupid enough, with all their financial advisors, to have that much tax withheld from their incomes.  You see, Paul, the only reason the government would have to cut them checks is if they paid too much in taxes during the year, and since the current rates are already in place it is unlikely that they would change their behavior to suddenly have an extra $3 million sent to Washington.  Here’s the problem with your thinking, Paul.  It is not your money, it is not my money, it is not the government’s money to begin with.  It belongs to the people who have earned it.  It is the people to provide revenue to the government.  It is not the government who gives money to those who produce.  Got it?

Like most on the left Mr. Krugman always associates tax cuts with a loss of revenue and tax increases with a gain in revenue, and ignores how people change their behavior with regard to these changes.

As this chart shows, at the end of the Clinton administration and the dot.com bubble the economy fell into recession.  The Bush tax cuts were implemented in 2001 and they were across the board tax cuts, not just for the wealthy.  A second set of tax cuts came in 2003.  As you can see revenues started to fall before the tax cuts, but bounced back sharply after the cuts in 2001 and 2003.  But Mr. Krugman would have you believe that if you cut taxes, revenues fall and if you leave them along or increase them, revenues increase.  You can also see that Clinton’s tax increase in 1993, didn’t have much effect in changing the rate of revenue growth, but when the Republicans took over Congress in 1994 and instituted tax cuts in 1997 you can see the slope of the curve bend upwards and it is even steeper with the Bush tax cuts.  So in the absence of the 2001 recession, revenues collected increased with tax cuts, not tax increases.

Let’s look at who is paying what share of the taxes.  The follow chart shows what percentage of the tax burden was paid by what percentile of the income earners by Adjusted Gross Income.

So even as the Bush tax cuts reduced tax rates across the board, the “evil” rich still ended up carrying a larger share of the overall tax burden than they did before the cuts.  So just what is Mr. Krugman’s beef? 

I argue that were are nearing a dangerous threshold politically, where the majority of voters may soon find they pay no taxes and the minority pays all.  If that tipping point is reached, what is to prevent this majority from voting for massive tax increases that will only affect the minority?  All Americans should carry some share of the cost of government.  It should not be a free ride for some and a minority pays the tab. 

To further emphasize the fairness issue look at the following chart from the IRS in 2004.  The brown bars show the share of the income that the percentile on the vertical axis earns.  The blue bar shows the share of the total income tax bill they pay. 

The problem folks is spending.  As the first chart makes pretty clear, we have not been suffering from a revenue problem, we have been suffering from a spending problem.  This administration and their instigators, like Mr. Krugman, have been urging reckless spending upon reckless spending and even decrying that the administration has not spent nearly enough.  Krugman is sloppy in making his case and tries to convince his readers that we will be carrying buckets of money to the wealthy when the truth is that he wants to open the spigot wider from those who produce in this country to the profligate government who can then spend it on more turtle crossings in Florida, and to prop up the unions, and bankrupt states.  Stop spending, cut taxes, shrink the federal beast, and we will be in good shape in short order.

As many people have said, “I never got a job from a poor man.”  In looking back at my own career, I have worked for several companies that were started by entrepreneurs and who became wealthy. Do I care if they were wealthy?  No.  Do I wish they were taxed to the eyeballs?  No.   If they were, those are jobs I would probably wouldn’t have had.  Opportunity is what made America the country where people around the world fight to get into, not bashing the successful.  All who stive to come here want to become those wealthy successful people and give the same opportunity to their children.

In today’s New York Times there is a story about Rick Lazio latching on to the Ground Zero mosque issue as his new campaign theme.  The first television ads I have seen regarding his run for governor are about this issue.  He is strongly opposed.  Okay, but he wants us to  elect him governor to do what, exactly?  New York has a lot of problems, from a state government that is completely dysfunctional to being broke and since everyone seems to agree that the mosque at Ground Zero is not about the right to build there but about the propriety of building there, what does it have to do with the office of governor?

When he pinch hit for Rudy Giuliani running for the senate against Hillary Clinton, after Mr. Giuliani dropped out of the race with prostate cancer, Mr. Lazio took a similar tack.  You probably remember their first debate when Mr. Lazio famously walked across the stage to a startled Mrs. Clinton and asked her to sign his pledge on campaign finance reform.  She refused and that was his theme.  The problem is that although many people feel our political process is corrupt, when it comes to campaign finance reform, most people don’t care about it.  Those who care about it are incumbents, who want to cripple those who run against them.  Some of the so called “reforms” have politicians spending so much time chasing $50 donations that they can’t do what they were elected to do.  Either that or we can only run multi-millionaire candidates who can spend their own money without limits.  (Simple solution: let anyone contribute any amount to any campaign at any time and just post the information on the Internet within 72 hours in a database that is fully searchable. Done.)  It only took a little time for the novelty of the debate video to fade and Mr. Lazio had no campaign.

Another challenger in this year’s governor’s race, Carl Paladino, one of the aforementioned millionaires, has been hitting the airwaves more frequently and more effectively than Mr. Lazio.  He is not a one trick pony.  His first ads hit Andrew Cuomo on being a career politician and that he, Paladino, was a business man who knows how to create jobs.  What do we desperately need now?  Jobs.  What are we sick of? Career politicians, like Mr. Cuomo, who played a role as HUD Secretary in the Clinton administration of feeding the real estate frenzy and the subsequent housing collapse that created the financial crisis.

On the mosque situation, agree or disagree with him but Mr. Paladino says exactly what he will do about it.  He will take the property away under Eminent Domain (thanks to the activist judges on the Supreme Court who gave us Kelo v. City of New London) and use the property to create a war memorial.  He doesn’t just say he will oppose it he tells us what he will do about it.

In the interest of full disclosure, I contributed to Rick Lazio’s senate run in 2000 and I have no connection with the Paladino campaign.  But if Mr. Lazio is serious about defeating Andrew Cuomo for governor, he has to find some issues that not only resonate with the people of New York but that are the responsibility of the governor to address.  If not, rather than split the conservative vote, he should step aside and help ride the anti-incumbent wave that Carl Paladino is surfing.

The Dodd-Frank Act that in a mere 2,000 pages sought to put the control back in financial regulation skipped right over Fannie Mae and Freddie Mac the Government Sponsored Enterprises that were at the heart of the fiscal crisis and are bleeding red ink.  Focusing instead on those evil bankers on Wall Street the Dodd-Frank Act really put those guys in a box, until Goldman Sachs slipped its fetters faster than Houdini.  So who’s buried under the pile of rubble that is the latest masterpiece of our massive government, Betsy Jensen.  Who is Betsy Jensen?

Betsy Jensen is a farmer in southwest Minnesota.  She and her family grow wheat and soy beans.  She doesn’t have a mortgage, so she didn’t cause the housing bubble.  But she does use derivatives to control the risk in farm prices which can be rather volatile.  For example, a bushel of wheat went for $18.69 in February of 2008 whereas it was selling for $3.49 in July of 2010.  A farmer has to buy their seed and fertilizer at the beginning of the growing season and they don’t sell their product until the harvest.  If prices fluctuate wildly during that interval, it isn’t hard to imagine what that can do to your business, let alone your sleep patterns.

So where do derivatives come in?  Farmers like Betsy can negotiate a guaranteed price for their grain with their customers.  Betsy risks missing out on some profits if the prices go up as they have recently (45%) due to fires in the wheat producing region of Russia, but she also is protected against a price drop, for similar reasons beyond her control.  She recently negotiated a price of $7.15 per bushel and with that knowledge, she can manage her farm business and sleep a little more peacefully.  For her purchases she can also use derivatives to buy fuel and fertilizer, where the latter has seen price fluctuations of $435 to $685 per ton.  Then along come Barney Frank and Chris Dodd, a couple of career politicians who never worked in the private sector.

The Dodd-Frank Act says it is unlawful to enter into swaps (derivatives) “in excess of such amount as shall be fixed from time to time” by the Commodities Futures Trading Corporation (CFTC).  That doesn’t sound like a free market to me.  What if, in Betsy’s example, the CFTC didn’t get around to raising the amount on wheat above $5 per bushel?  Betsy couldn’t arrange to sell it for $7.15.  What if the grain elevator couldn’t turn around and sell Betsy’s wheat for the 45% increase in price due to the Russian fires?  Do you think with a cap on the upside they might not be willing to pay as much for Betsy’s wheat?

From Dodd-Frank to Bill O’Reilly we hear about the evils of speculators.  O’Reilly used to rail against the speculators when gas prices were rising toward $5 per gallon.  The evil, greedy speculators were driving up the price of gas!  But little mention was made of speculators when the price of gasoline fell back down?  Did the speculators retire?  Go on vacation?  The reality is that speculators don’t care if the price goes up or down, they only care it moves in the same direction on which they are betting.  They can drive the price down just as fast as they can drive it up.  But they are useful, not evil.

Speculators bring liquidity, that is, money to the market.  Betsy Jensen estimates that about one-third of the purchasers of wheat contracts are traders who never take physical control of the product.  But by adding their view and their money to the market they keep prices from fluctuating wildly.  If these traders are banned then, as she put it, one-third of her customers would disappear.  With one-third fewer customers the price swings will increase rather than decrease.  Remember, a trader who does not take delivery of the wheat can make money on small swings in the price and is likely to get in or get out on smaller moves and thus change the market price accordingly.  If only those who take physical possession of the product are in the market, then other factors such as transport, storage, spoilage, must be factored into each transaction and the price swings will be wider and wilder.

But Betsy said it best, “I may not be able to manage Mother Nature, but I can manage my risk with derivatives.”  If only our government would get out of her way and let her do so.

Many states have a constitutional requirement to balance their budgets while the federal government has no such limitation.  As such, a number of stately are longingly looking toward Washington to throw some cash their way so they don’t go bankrupt.  It is not going to get better.

If you think Washington awash in debt, is a problem, it is chump change compared to what is brewing at the state level.  Trillions in unfunded pension liabilities are looming and those who are benefiting from those generous plans or who are going to, don’t care about the rest of us who have to pay for them and then go provide for ourselves.

Lawsuits are starting to be filed to stop states from altering the terms of these plans.  The time to act is sooner rather than later, but that is lost on one teacher in Colorado who says, “Why is the state so quick to break its promises.”  Perhaps we should explore how these promises were made, in both directions. 

Unions backed Democrats almost exclusively.  Democrats riding union support into office had a debt to repay.  They repaid it by supporting the kinds of contracts that the unions wanted and the unions returned the favor with their loyalty.  Who paid the bill?  The rest of us.  How much say did we have in the process, next to none.  In private industry, unions negotiate with management.  Unions have almost no say in who gets hired into management and will sit across from them at the bargaining table.  So the adversarial relationship has management supporting the shareholders and unions backing the workers.  As management became more enlightened and took better care of their employees, the need for a union middleman faded away.  That is why in private industry union representation is down to about 7% and falling while in the public sector is around 37% and growing.

The public employees argue that their generous pension plans is merely deferred compensation to make up for their salaries during the time they worked.  The only problem is that the unions did a good job not only on the pensions but on the salaries as well, so that the average public sector employee makes about 34% more than his private sector counterpart.  Fair being fair, our public sector friends would probably recognize their good fortune and agree to help fix the problem, right?  No chance.  As one put it, “I shouldn’t be responsible for past pension underfunding and foolish risks managers made with my money long after I retired,”  Okay, let’s give that a closer look.

Why do you think the pension is underfunded?  Could it be that the government entity could not afford to make the extravagant  payments the union contract required and still balance the budget?  If they tried to raise taxes to cover the shortfall then even the unions with all their political muscle couldn’t get those responsible re-elected.  So it was better to sweep it under the rug for a future administration to deal with.  What about those risky investments?  Well, with risk goes reward.  If you need bigger payoffs on your pension assets to make up for the shortfalls in funding that you didn’t want to make, you may take bigger chances to make a bigger payoff.  But if you are wrong, instead of fixing the problem, you make it worse.  So the real problem is that the unions and the politicians they fought to elect negotiated contracts that were unrealistic and unsustainable.  What does the union member say. “I’ve got mine, you go get yours.”

What are some of the onerous changes that states are asking for?  In New Jersey, Chris Christie asked for a one-year freeze on public employees pay and for them to contribute 1.5% of their salary toward their retirement.  Outrageous!  How about in Colorado where they asked for a 2% cap in the Cost of Living Adjustment (COLA) for retirees instead of 3.5%, in an environment with 0% inflation.  Dastardly!  One individual’s justification was that he does not and cannot pay into Social Security so the pension is all retirees have to live on.  He fails to point out that being prohibited from contributing to Social Security puts 6.2% more of his salary in his pocket, since he pays no Social Security taxes, and if he had the self discipline to take that and invest it in the Dow Jones Industrial Average he would have far more money of his own than he would ever get from Social Security.

This problem is not going away.  Once upon a time, public sector employees did earn less in salary than those in the private sector, but those days are long gone.  They earn more, can retire earlier, can retire with more money for longer periods of time and put the burden on all taxpayers who have to cover their pension while providing for their own.  Their “too bad” attitude is shameful.

Republicans have to learn to stop fighting by the Marquis of Queensbury rules, while Democrats, bite, kick, pull hair, scratch and hit below the belt.  Yes, Christ told us to turn the other cheek, but he also overturned tables, formed a whip out of cords and drove the money changers from the temple.  In other words, sometimes you have the hit the bully hard between the eyes before he learns to stop being a bully.

So if the Republicans regain control of Congress in November, they should open the new Congress in January with detailed hearings on what happened to Fannie Mae and Freddie Mac and don’t pull any punches.  By that I mean if they need to put Andrew Cuomo in the witness chair, even if he is the governor of New York, which he probably will be, then they should do so.  It’s time to stop playing patty-cake.

For all the hoopla of the Dodd-Frank Act, Fannie Mae and Freddie Mac were left out of the new regulations.  Oh, we’ll get to those later.  Okay, let’s get to them with the Republicans in charge.  Let’s expose how it was our government that got us into the housing mess and let’s do this before the Democrats re-write history and paper over their culpability in the greatest financial crisis since the Great Depression.  It’s time to put the big lie to “it’s all Bush’s fault and Republican policies.”

The papering over has already started by none other than Franklin Raines the former head of Fannie Mae who received bonuses of over $90 million while at the helm of Fannie Mae and was also charged with cooking the books that helped him receive those bonuses.  He reached a settlement with the SEC and gave back about $1.8 million from the profits in the sale of Fannie Mae stock and gave up $5.3 million in future benefits related to his pension.  But he essentially kept the rest, what the Wall Street Journal called a “paltry settlement.” 

Mr. Raines claims the demise of Fannie Mae and Freddie Mac, to which taxpayers have already coughed up $145 billion, was due to bad credit decisions made after he left the firm.  To put it in his own words:

 “The Journal had been warning for years that the on-balance sheet portfolios of Fannie and Freddie would lead to their demise. Mr. Carney suggests that excessive leverage was the culprit. Unfortunately, neither of these were involved. Nope. Just bad credit judgments. Decisions made, by the way, while operating under close regulatory scrutiny.”

According to the Wall Street Journal “What he doesn’t say is that Fan and Fred had a political and legal mandate to support low-income housing.”  To meet this mandate which had increasing goals each year, Fannie and Freddie had to cast a wider net to find these borrowers and the wider they cast the net the lower their standards had to be.  Thus more creative types of mortgages were created to lower the bar such as, interest only loans.  This scheme would continue to work as long as housing prices kept rising but that could not go on forever.  When the music stopped a lot of people were left standing without chairs and we all lost.  People’s credit ratings were destroyed, mortgage securities were worth far less than face value, people walked away from houses, and taxpayers were forced to pick up another “too big to fail” enterprise.  By the way, where in the Constitution does it authorize the federal government to get involved in helping people buy houses?

The secret veil put in place by the main stream media has been lifted.  With the Internet and the bloggers and cable television and talk radio, the main stream media can no longer keep information that does not comport with their agenda hidden from the American people.  The American people are energized and informed but that may not last long after the election, if we don’t continue to engage them.  Uncovering the true “swamp” that is our federal government and draining it should begin by letting the sun shine in.  So let’s do away with the good ol’ boy politics of not rocking the boat when you gain control so that they won’t rock the boat when they get it back.  If we don’t have a new class of non-incumbents who are willing to go to Washington and clean it up, really clean it up, we need to get rid of them and put new people in their place.  If that means replacing Republicans with better Republicans or Democrat incumbents with better Democrats, so be it.  We have to end the process of only being able to choose between two pathetic life time politicians who have never lived in the real world.

The talking points have been established that it was eight years, eight, of failed Bush and/or Republican policies that got us into this mess and President Obama and the Democrats are working hard to get us out of it.  Let’s take a closer look.

What blew up in 2008?  It was the housing market.  The underlying cause of the problem has Democrat/liberal/progressive fingerprints all over it going back to Franklin Roosevelt who created Fannie Mae.  Add into that mix Lyndon Johnson privatizing Fannie Mae to hide it from the budget and creating HUD; Jimmy Carter creating the Community Reinvestment Act; Bill Clinton pushing for more home ownership among those who could least afford it, Andrew Cuomo as HUD Secretary pushing Fannie and Freddie to take on riskier mortgages; Barney Frank and Chris Dodd fighting against regulation before they were fighting for it (and where have we heard that formulation before?); and when housing prices run out of gas and the house of cards that the Democrats built collapses, it’s all Bush’s fault.

Let’s look at the timeline.  When he took office, President Bush was handed a recession from Bill Clinton resulting from the dot.com bubble.  In less than a year we had 9/11.  In spite of that, Bush pushed through tax cuts and got the economy to grow through most of his presidency.  The Democrats took control of Congress in January 2007 and in December 2007 the economy went into recession.  One year later Barack Obama is elected President of the United States.  Now, more than a year and a half after Obama is in office the economy looks like it is slipping into a double dip recession, and this is the Republican’s fault?  Who has been spending like a drunken sailor?  Who wasted almost $1 trillion on a stimulus plan that was so ineffective the Obama administration had to invent a new statistic, “jobs saved”, to hide its dismal performance.  They add on ObamaCare, which no one in Congress read before voting on it and no one knows what is in it and so no small business is going to hire anyone until they know what it costs.  How is that the Republican’s fault or Bush’s?

We are just a few months away from the tax cuts put in place by President Bush expiring.  President Obama wants them to expire.  This will place an additional massive burden on small businesses and just about everyone else and he wonders why aren’t companies hiring?  The man came into office with no executive experience and the year and a half he has been in office he hasn’t seemed to pick up any.  Could it be because he is surrounded by advisors who have little to no executive experience themselves?

To my fellow Americans I say, hang in there it is less than 100 days to vote the bums out.  Perhaps not all of them, but at least we can bring in some adult supervision.  It’s time to stop steamrolling the American people with the socialist programs and to let “We the People” take back our government.

The rush to push through the Dodd-Frank Act, unread by those who voted for it, is working to bring the greatest economy on earth to a grinding halt.  Here is exhibit A.

The Wall Street Journal reported that The Ford Motor Company wanted to issue bonds that were backed by packages of auto loans, but had to pull the issue because of the new Dodd-Frank Act.  Dodd-Frank requires that issuers include credit ratings in its offering documents, that is, it has to disclose what credit rating agencies such as Moodys, Standard and Poors, and Fitch say about the quality of the bonds.  Those rating agencies, however, have refused to allow companies like Ford to use their ratings in their offering statements because  the Dodd-Frank Act now holds them legally liable for the quality of their ratings.  In other words, if those credit rating agencies say the bonds are high quality, and it later turns out they don’t live up to that rating, the rating agencies could be sued for damages.  This has brought the $1.4 trillion asset-backed securities market to a standstill.

Ratings companies argued that the new law effectively would render them “experts,” which brings with it potential new liability akin to those held by auditors and lawyers.

“The inclusion in the offering documents are an unacceptable risk,” Dan Curry, president of DBRS Inc., a bond rater, said. He said the expert liability is “really the standard for an auditor” and shouldn’t be used for rating agencies, since their opinions are “an attempt to predict future outcomes.” – WSJ, July 21, 2010

Gee, how long did that take to gum up the economic works?  Less than twenty-four hours.  This legislation was rushed through without waiting for the report from the Financial Crisis Inquiry Commission to tell Congress what the root causes were so, perhaps like grown-ups, they could actually craft legislation that would address the root causes rather than hamstring the economy.

The Securities and Exchange Commission just issued a six month waiver to the requirement that credit ratings must be included in bond offerings.  That should give us enough time to send all these overpaid progressive chowderheads packing and reclaim our country.

Back on the campaign trail where he feels comfortable that he knows what he is doing, Barack Obama traveled to Las Vegas to stump for Harry Reid.  Harry Reid used to be a boxer and when he told Barack Obama this he said, “Barack, I wasn’t the fastest.  I wasn’t the hardest-hitting, but I knew how to take a punch.”  Based on all the legislation that has been passed since 2008 that an  overwhelming majority of the American people have opposed, makes one wonder if Harry Reid took a few punches too many.

Shortly after taking office and settling into his “bash business” mode Obama blasted businesses for their extravagant meetings held in places like Las Vegas.  Someone then whispered in the president’s ear that extravagant business meetings in Las Vegas were good for Las Vegas and Harry Reid. Oops.  And there you have the crux of the problem.

What, exactly, is government’s role to tell private companies how to spend their money?  What is the role of governments to say to a BP, “Give us the $20 billion, or we’ll take it from you,” as was attributed to Joe Biden, without first going to court?  What is the role of government to say to its citizens, you must buy this health care product or pay a fine?  Well in Hugo Chavez’s Venezuela, it is probably all fine and dandy, but in America?

Barack, the standup comic, used the analogy that he and Harry Reid had mud on their shoes, were pushing hard to get the car back on the road, and were making progress little-by-little and when they finally got one wheel on the pavement the Republicans want to throw the car into reverse.  Really?  I would compare it more to conservatives telling everyone to get out of the car and help push, instead of waiting for Nancy Pelosi to come back from Dunkin Donuts with free food for all the overweight union bosses jammed in the car squawking that they didn’t do manual labor.  Their contract didn’t call for pushing cars out of ditches. 

So, while this car should have been out of this ditch and well down the road by now, Harry and Barry will try to convince us that what they’re doing is absolutely brilliant; it’s just that we are too stupid to see it.  After all, it took the greatest president in history, FDR, over eight years and a World War to get us out of the Great Depression, so relax we have another 6 ½ years to go.

Imagine what would have happened if the ever resilient American economy was allowed to work on its own without all the government intervention in the 1930s.  Perhaps the Depression would have been shorter like the recession of 1920-1921, and perhaps we would not have had World War II, and Fannie Mae, and a bankrupt Social Security, and a couple of generations later all of us swimming in debt.  It’s time the tow truck of the most powerful economy on the face of the earth to come along and be allowed to do its job.  Tell Harry and Barry to go sit down on that stump over there, and watch how it is really done.  “You’re making a mess of yourselves and embarrassing the rest us.”

Well the cat’s finally out of the bag and it’s been loosed by none other than President Obama himself.  Once again out on the stump where he is most comfortable and away from the Oval Office where decision making is required, the president is now taking a new tack, or it is an old one?  He is now saying how much worse things could have been if not for his stimulus program.  This is the standard progressive/statist line that we didn’t do enough… if only we spent more money our program would have worked.

But here’s the problem.  To get the $787 billion stimulus package passed the president said that if we did nothing, unemployment would rise to 9%, but if we passed his stimulus package it would go no higher than 8%.  Where is the unemployment rate?  It is at 9.7%.  So if things could have been worse if they did nothing, his economic team is totally clueless because they were the ones who put forth the 8% vs. 9% argument.  Now Obama is trying to tell us that if we did nothing, the unemployment rate could have been in the double digits.  Who says so?  Is this his own projection or is his economic team back at the Ouija board?  Is anyone from the economic team being fired?

Here is an alternate theory.  If the stimulus plan was not implemented and the president cut taxes by $787 billion instead and promised not to introduce any new government programs for two years, that the unemployment rate would be much lower.  How can I make such an outrageous claim?  Let’s look to history.  In 1920-1921 there was a steep recession where the unemployment rate hit 11.7%.  Back then, government didn’t saddle businesses with regulations and businesses were free to cut wages and make other adjustments without government meddling.  Within one year the unemployment rate fell to 6.7% and the following year it was down to 2.4%  Contrast that to the Great Depression where we had massive government intervention and massive government spending and the unemployment rate never fell below 14.7%.

Bringing Jobs Back to America

Another brilliant example of your government killing the economy comes from the company Bucyrus Erie.  They were bidding on a job in India to provide heavy equipment to help them mine coal for a power plant the Indians were building.  Bucyrus Erie went to the Export/Import bank, a government agency, to try to get a loan guarantee to finance the deal.  Because a coal plant would increase the carbon footprint of India, the Ex/Im bank turned down the request.  This didn’t stop the plant being built, it just meant that the heavy equipment was going to be provided by China or Russia instead of the USA.  There would be no effect on the carbon footprint, a big effect on jobs in the US.  At the same time, President Obama is on the stump talking about how hard he is working to bring jobs back to the US.  Really?  They must have read his speech over at the Ex/Im bank, because they are reconsidering Bucyrus Erie’s request.

More government is killing our economy.  Our economy is very tough and it is extremely hard to bring down, but the current administration is trying its best to do so.