We know that Tim Bishop hates outsourcing. He has gone so far as to introduce new legislation to prevent outsourcing of call center jobs. Tim Bishop may be a very big oursourcer himself.
Economic history
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Most presidents view an address to a joint session of Congress for serious non-partisan purposes. Outside the annual State of the Union address they are rare. President Bush only did it once, in the aftermath of 9/11, and while jobs are very important to the country at this time, it is no place for a lecture (saying pass this bill seventeen times) from the most inexperienced president in our history.
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“While Washington has been absorbed in this debate about deficits, people across the country are asking what can we do to help the father looking for work,” Obama said. “That’s part of the reason that people are so frustrated with what’s been going on in this town. … Our economy didn’t need Washington to come along with a manufactured crisis to make things worse.” — President Barack Obama, August 2011
President Obama likes to look to history, going as far back as 2008, to explain ad nauseam the mess he was handed. So let’s take a longer look at his performance among American Presidents.
As we approach the mid-point of his term we, once again, hear President Obama with another scheme to create jobs. This time he really, really means it. For a mere $50 billion we can build roads, rails and runways and we can create an “infrastructure bank” to boot. I guess the government wants to get into the banking business now that they have swallowed up two thirds of the domestic auto companies and passed a law to take over health care. But, hey, who are you calling a socialist?
The infrastructure bank has supporters: Arnold Schwarzenegger, Ed Rendell the Democratic governor of Pennsylvania and Michal Bloomberg the Democratic, Republican, Independent mayor of New York, but they want it to support more projects such as water and clean energy projects. But here’s the really good news, according to the New York Times “They say such a bank would spur innovation by allowing a panel of experts to approve projects on merit, rather than having lawmakers simply steer transportation money back home.” We get a brand new panel of experts to tell us morons what is good for us!
How about this idea, get the Federal government out of the roads, rails and runways business. Unless the road is part of the Interstate highway system, and that means interstate, the feds should stay away from it. If a road within a city needs maintenance, that city and its citizens should pay for it, not taxpayers elsewhere in the country. That’s how the whole process got screwed up. You build my road, I’ll build your road and nobody will know who pays for what, until we find out we are $13 trillion in debt.
One of the good ideas Jimmy Carter had was to deregulate the airlines. Airlines became competitive and prices came down. The problem is that air travel consists of three components: the airlines, the airports and air traffic control. Complete the process, deregulate the airports and air traffic control. If you do that, airports can charge different prices for takeoff and landing slots. No more will we see thirty-two flights all scheduled to take off at 7:30 AM from one airport. Private investors would also have an incentive to build a state of the art air traffic control system.
By the way, what happened to all those “shovel ready” projects from the first stimulus plan? Did we actually finish building all the turtle crossings that this country needs?
On another front, Obama continues to tinker with the mortgage market rather than getting out of the way, letting housing prices find their bottom and then going from there. George Mason economist Anthony B. Sanders said in the New York Times, ““Housing needs to go back to reasonable levels. If we keep trying to stimulate the market, that’s the definition of insanity.” Even Democrats are piling on:
“The administration made a bet that a rising economy would solve the housing problem and now they are out of chips,” said Howard Glaser, a former Clinton administration housing official with close ties to policy makers in the administration. “They are deeply worried and don’t really know what to do.”
Who would have thought that a president and vice president with no executive experience prior to taking office would not know what to do once they got there? After all everyone knew that Obama was a really nice guy with an even temperament, what went wrong? Now we hear that Fannie Mae wants to back mortgages with nothing down. But not to worry, this time they are actually going to require the lenders to check to make sure the borrower has income. I feel better already.
Since this administration seems to like experts how about listening to these experts:
“We have had enough artificial support and need to let the free market do its thing,” said the housing analyst Ivy Zelman.
Michael L. Moskowitz, president of Equity Now, a direct mortgage lender that operates in New York and seven other states, also advocates letting the market fall. “Prices are still artificially high,” he said. “The government is discriminating against the renters who are able to buy at $200,000 but can’t at $250,000.”
It’s time for President Obama and his administration to get his boot off of the neck of the economy. Ours is the strongest most resilient economy in the world, if you set it free. All of the tinkering and the anti-business threats have pushed employers to the sidelines. The uncertainty over the economy has led businesses to take a wait and see attitude.
The rhetoric the Democrats have been trying to muster to save their skins is that “eight years of failed policies,” yada, yada, yada. The reality is that this recession started one year after Nancy Pelosi and Harry Reid took over Congress. This recession started in the last year of the Bush administration, not the first seven. This recession has lasted nearly twice as long and counting under Obama than it did under Bush, and it shows no sign of changing anytime soon. A recent poll in Ohio by Public Policy Polling asked respondents who they would prefer to see in the White House right now and the results were George W. Bush 50%, Barack Obama 42%; what does that tell you?
So, Mr. Obama, keeps your hands were we can see them and slowly step away from the economy.
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.
Did anyone not see this coming? An article in yesterday’s Wall Street Journal reports that new home sales plunged. Why? The government’s meddling tax credit for first time home buyers expired and gee, the trend didn’t continue? What a surprise. Meanwhile the government has another program, Making Home Affordable, to help homeowners refinance their home mortgages that they can no longer afford. Instead of letting the chips fall where they may and have prices find a bottom and adjust, we have the drip-drip-drip torture of these programs and the recession drags on.
New home sales fell 32.7% from April to a record low seasonally adjusted annual rate of 300,000. Compared to last year the sales fell 18.3%. In addition the previously reported sales numbers for March and April were adjusted downward.
Here is what we have. Our government is taking our tax dollars and giving them to people to help them buy a house. You may be struggling to pay your own mortgage and instead of the government letting you keep more of your own money and perhaps make an extra payment on your own mortgage to lower your outstanding debt or increase spending which would help grow the economy, you are paying for your mortgage and your neighbor’s. Instead of letting those who can’t afford their mortgage face that reality, the government steps in and drags out the process. If government got out of the way, then the banks would have the incentive to negotiate in good faith rather than looking for a government bailout. If a mortgage is salvageable, they should renegotiate with the homeowner and take a small loss rather than a big one. If the mortgage is not salvageable, then foreclose or short sell it and be done with it. The housing overhang on the economy would get quickly sorted out and we could return to a more stable housing market. Get the government out of the way and let us keep our tax dollars.
In 1920-21 there was a steep and serious recession. This was before the age of government intervention of Hoover, FDR and all who followed. Businesses were able to cut wages and react to the circumstances in that freer market. Unemployment peaked at 11.7%, almost 2% higher than we have now, but by the following year it was down to 6.7% and they year after it fell further to 2.4%. We are a year and a half into the current mess and the current administration seems intent on matching FDR’s record of stretching this out for eight years. We have a robust economy that can rebound sharply, if the government gets out of the way. But this government keeps tinkering and the economy keeps bouncing along the bottom. And let’s not forget fraud.
The Treasury’s Inspector General for Tax Administration, J. Russell George, reported that 19,000 filers for the first time home buyers credit hadn’t purchased a home and there were 74,000 filers had purchased a home but it was not their first. In additiona there were 53 cases where IRS employees filed “illegal or inappropriate” claims for the credit and today we learn that $9 million was stolen by prisoners who were incarcerated when they filed for the credit. So don’t worry folks your tax dollars are not only prolonging the recession, but they are being stolen as well. Feel better about your benevolent government? Aren’t you glad we live in a country where your government can forcefully take the fruit of your labor and throw it to the wind?
Government that governs least governs best. Let’s cut the beast down to size.
We have had several bubbles before, but if the Obama administration has their way, “you ain’t seen nothin’ yet.” Currently the budget for the federal government is $4 trillion dollars. That’s right, your federal government will spend approximately (which means probably more) $4 trillion in one year. Of that amount $202 billion is interest on the national debt. In an article in the New York Times today by 2019, a mere ten years from now, the portion of the budget directed to interest payments will be over $700 billion, or three and a half times what it is today. Many people have trouble grasping how much a trillion dollars are, and within ten years we will be paying three-quarters of a trillion dollars just to cover the interest without paying off any of the principle.
Family Budget Analogy
We all understand the dramatic effects of too much debt, as the point has been driven home every day throughout this financial crisis. Bankruptcy filings, home foreclosures, bailouts, all resulting from more debt than we can pay the interest on, let alone pay back the principle. You see commercials on television every day for companies that will help you renegotiate your credit card debt, your mortgage, intervene on your behalf with the IRS. None of those programs are available to the federal government as a debtor.
Obama’s Out of Control Spending
The Obama administration seems oblivious to the problem. As bad as it is they just keep on spending or want to spend more:
- Stimulus package — $787 billion. Despite evidence that it is not working and widespread opposition from the American people, the Obama administration is simply declaring that it is working and we need to do it again with a second stimulus
- Cap and Trade — this is a program that will drive energy costs through the roof for no real benefit. After all if, as is becoming more and more apparent, global warming is not man made then it cannot be stopped by man either. Higher costs will lead to businesses closing down, laying off people, and generating less tax revenue from both the businesses and the individuals it laid off. Result — an increase in the deficit.
- Health Care — another $1 trillion of IOUs piled on our children’s back and if Medicare’s history is any guide, these numbers are well below what will really happen.
The Truth About Government
The truth is that government doesn’t create anything. They don’t generate income. Everything that government has to spend comes from you and me. The government takes it from us (or throws us in jail for tax evasion) and then spends it. If they can’t get enough from us, they borrow the difference. But somewhere down the line, that money has to get paid back. A news report today said we have the opportunity to just write a check to the Treasury if we are concerned about the deficit and want to help pay it down! Let’s see how many of Obama’s wealthy supporters sign up for that program.
Runaway Train
Our federal government is a runaway train and if we don’t stop it very soon and pare it back to the functions enumerated in the Constitution, we will get hit with a bubble so big, that there is no Hollywood screenwriter that could even begin to conceive of how to portray it. $700 billion folks, that’s $2,059 in INTEREST for every man, woman and child in America. Ask yourself this, if you are a family of four are you prepared to write a check for $8,235 to the federal government for interest alone? You don’t get anything for your money, it just keeps your government from defaulting on what they already borrowed. This will be on top of your regular tax bill. And the next year you will have to pay it again and probably more. It’s time to stop the madness. It’s time to stop the spending. It’s time to stop the expansion of government and start shutting down departments. It’s what you would do at home in a financial crisis, it’s what a small business would do in a crisis. This is a crisis that we can still get under control, but if the debt continues to grow to the point where we can no longer afford to pay even the interest, America will be a footnote in history.
Do I have your attention now?
Honest Barack?
Unless and until President Obama is willing to recognize that government has played a significant role in the economic mess we are in, the solution to the problem will be beyond his grasp. In mentioning the causes of the current economic problem he lists greedy banks, predatory lenders and he even is willing to admit there are irresponsible people who bought houses that they could never afford. But President Obama refuses to admit or mention the creation of Fannie Mae under Roosevelt (D); moving Fannie Mae off the books of the federal government under Johnson (D); the creation of the Community Reinvestment Act under Carter (D) to push more lending in poor neighborhoods; the further push for more low income lending with threats from the government under Attorney General Janet Reno in the Clinton (D) administration; the refusal to put in place more regulation of Fannie Mae by Barney Frank (D), Christopher Dodd (D), and a threatened filibuster of Fannie Mae reform by, yes, Senator Barack Obama (D).
He repeatedly talks about the deficit he inherited, but doesn’t admit how he doubled down and maybe tripled down on that deficit and based on his speech to Congress tonight, he isn’t even close to starting to spend. It’s time for him to accept responsibility for his actions.
Until he is willing to honestly put all the cards on the table, and all the players who are responsible both Republicans and Democrats, the problem cannot be adequately addressed nor solved. He cannot hide the source of a major part of the problem and expect to fix the problem once and for all. By giving those bad actors a pass, they will be able to repeat their mistakes again and again and put us in this mess in the future.
We heard President Obama say pretty starkly that the enormous Wall Street bonuses were outrageous. While I stop short of government dictating compensation to private businesses, I do put the Wall Street clowns in the same category of the Big Three auto CEOs flying to Washington in their private jets looking for handouts. Very bad form.
The more I pondered the idea of salary caps, whether they were fair or not, whether it was government taking away another liberty, it finally hit me, that this just might work. So I now propose a salary cap, on the FEDERAL GOVERNMENT. And why not?
Who Got Us Into This Mess?
It was the housing bubble that triggered the financial debacle. What drove the housing bubble? Let’s start with Fannie and Freddie. They were created by Congress. Next came the Community Reinvestment Act that forced banks to make riskier housing loans. Next the Clinton Administration under the direction of Janet Reno, drove the banks harder to make more housing loans to people who couldn’t afford them. Then was the Federal Reserve that kept interest rates too low for too long. And right up until the end we had Barney Frank and Christopher Dodd saying all was well with Fannie and Freddie.
We have Charlie Rangel, chairman of the House Ways and Means Committee, the committee responsible for writing the tax laws, cheats on his income taxes.
Bernie Madoff runs a Ponzi scheme that bilks people out of $50 billion while a guy named Markopolis figured the whole thing out in five minutes and spent the last nine years trying to get someone in government to care.
The government imposes CAFE standards on the auto industry and drives them to the brink of bankruptcy and then says we have to bail them out.
Now they are proposing a “stimulus” package that is just a bunch of pork.
Solution
So I propose that we, their employers, cap their salaries at $100,000 (from their current $162,500) until such time as they fix this mess. I further propose that if a congressman/woman can prove that they didn’t vote for any of the crap that got us into this mess, that they be exempt from the cap.
What say you?
