As they sit in the warm sun and listen to the celebrity speakers tell them about their bright future a grim reality will set in once the graduation cakes are cut and consumed.
economist
Tim Bishop likes manufacturing. The manufacturing of campaign issues, that is. In his effort to manufacture a campaign issue around overseas outsourcing, he got a lifeline from the White House yesterday when President Obama held an “insourcing” forum yesterday to encourage companies to “bring jobs back to America.” An editorial in the Wall Street Journal titled, “Insourcing for Dummies” describes the effort.
With gas prices on the rise, Bill O’Reilly, is once again targeting his favorite whipping boy, The Speculators. Like a 1940′s whodunit, we are told of those evil greedy speculators and how we need more government intervention to reign them in. The question that is never asked nor answered is, where do the speculators go when gas prices fall? If their evil intent is to drive up prices so they can make obscene profits, why would they ever stop?
Candidate Barack Obama said to Joe the Plumber, spread the wealth around, it’s good for everybody; he also said, I want to give those coming up behind the same chance you had. It sounds altruistic, caring, full of hope. But if Barack Obama turned and looked over his shoulder he might be surprised to see that there are fewer and fewer people coming up from behind. What he might see is the fear of reckoning for one hundred years of progressive policy and programs. Policy and programs that were sold to allay earlier generations’ fears coupled with the promise that the bill was easily paid and a long way off. But the bill collector is now at the door and the next generation is huddled in the corner with no sign of hope and no confidence that Barack Obama will change anything.
The common themes in each presidential race turn on a hope and dream for the future, defining a common purpose and a call to action. Candidates usually win on the success of their ability to marshal these themes into a cohesive series of arguments for their nomination and eventually election to office. Few were as effective as Ronald Reagan at recruiting the support of the average listener. If he could get your ear, he could get your vote. Candidate Barack Obama frequently compared himself with Ronald Reagan during his campaign. His media cohorts happily aligned themselves with this maladapted relationship, with the centrist and even right leaning (business friendly and low/fair taxes) themes hinted by Obama’s vague comparisons.
Tim Bishop has one reason that he consistently gives for sending him back to Congress and that is that his opponent, Randy Altschuler, started a company and Bishop claims it outsourced jobs overseas.
In a New York Post article yesterday, Raymond J. Keating informs us that the Small Business & Entrepreneurship Council, where he serves as chief economist, just released their Small Business Scorecard for the 111thCongress. The scorecard rates members of Congress on a wide range of votes (27 in the Senate and 22 in the House) that cover such things as workplace regulation, ObamaCare, government spending, tax policies, energy legislation, and bailouts. Overall, he tells us the New York delegation scored just 11 percent on the scorecard, the sixth worst of the fifty states. The two members of the delegation that scored well are Peter King, and John Lee. On the other hand Tim Bishop failed to vote even once with small business on big issues. A big fat zero.
I don’t know who Linda McGibney is, so when a friend tweeted a video she was in rebutting Ben Stein on the fast approaching massive tax increase, I first watched the video and then went about Googling her to find out more about her.
The video begins with a clip of Ben Stein saying basically that if you want to consider raising taxes in the future that may be fine, but right now is not the time to do it, it is just punishment. The video then cuts to Ms. McGibney, who like Barack Obama, begins to lecture us about what she knows so little.
“Ben Stein is wrong,” she intones. She continues to describe herself as an American, in the highest tax bracket, and working in the entertainment business, just like Mr. Stein. Wait a minute. From what I could gather, Ms. McGibney is a screenwriter, which hardly makes her an authority on tax matters. Mr. Stein on the other hand is an economist and a lawyer, besides being in the entertainment field. His father was Herbert Stein who served as an economist in the Nixon administration and Ben Stein was a speechwriter for both Nixon and Ford. So when it comes to speaking on matters, economic, I would tend to defer to Mr. Stein.
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.
The New York Times had some, what was to me, shocking news today. The article said that there was now consensus that the Obama stimulus plan was working. Is this the same kind of consensus that man-made global warming was settled science, despite the glaring evidence that carbon dioxide emissions continue to grow while the globe stopped warming ten years ago? This is also close on the heels of breaking stories of extraordinary misinformation if not outright deceit on how the $787 billion is being spent.
Smoke and Mirrors
Early on in the article we have this gem:
“The legislation, a variety of economists say, is helping an economy in free fall a year ago to grow again and shed fewer jobs than it otherwise would. Mr. Obama’s promise to “save or create” about 3.5 million jobs by the end of 2010 is roughly on track, though far more jobs are being saved than created, especially among states and cities using their money to avoid cutting teachers, police officers and other workers.”
There is no mechanism that exists to measure a job saved. None. So how do they do it? It goes something like this:
“Here, Mr. Stimulus Funds applicant, I have this check for you for $642,000. No can you tell me, if I give this to you, how many jobs would you create or save?”
“Create? Er, none.”
“Hmmm,” the bureaucrat mutters, staring down at the check in his hand, “what about jobs you would save? You know, if I don’t give you this nice, rather large check, how many of your people would you be forced to lay off?”
“Oh, I get it,” the potential recipient says with a wink and a smile, “probably all of them!”
The bureaucrat scribbles down a number, and hands over the check, walking away shaking his head.
That’s about how it’s done. The government surveys the people getting the money and asks them what would have happened if they didn’t get the stimulus. And what would you expect them to say? Keep the check?
Revenue Starved States
What a concept, “Revenue Starved States.” The article complains that not enough money was provided to “Revenue Starved States.” Does he mean states like California and New York? I believe the correct term is states where spending is out of control. It means states where taxes are so high that people are moving out in droves, and among them the “wealthy” people they love to tax to the eyeballs, meaning a dramatically shrinking revenue base. After all, if one of the wealthiest people in the state, who is part of the group that pays 70% of the taxes, moves out of the state or (out of the country when it gets bad enough), that means a lot of people are going to see their taxes raised to make up for it. So the statists seem to think a stimulus package that keeps these bloated bureaucracies fat, dumb and happy is the way to go, until when exactly?
The Multiplier Fallacy
The other great fraud being foisted on us is the multiplier effect, where for each dollar of stimulus money spent more than a dollar of economic activity results:
That sort of impact is what makes federal aid to state governments rank high in economists’ reckoning of the stimulus value of various proposals. Every dollar of additional infrastructure spending means $1.57 in economic activity, according to Moody’s, and general aid to states carries a $1.41 “bang” for each federal buck.
Even more effective are increases for food stamps ($1.74) and unemployment checks ($1.61), because recipients quickly spend their benefits on goods and services.
Okay, then how is this for a solution. Let’s spend $10 trillion on infrastructure, food stamps and unemployment checks, since they will result in $15 trillion or so in economic activity, because of the multiplier, right? For that matter, let’s have the government spend $100 trillion and we’ll really be rocking.
Where’s the So Called Consensus
From what I read in the article, there was only one economist that could be called a conservative, Martin Feldstein, that they were willing or able to quote, and this was his take on the stimulus.
While some conservatives remain as skeptical as ever that big increases in government spending give the economy a jolt that is worth the cost, Martin Feldstein, a conservative Harvard economist who served in the Reagan administration, said the problem with the package was that some of its tax cuts and spending programs were of a variety that did little to spur the economy.
“There should have been more direct federal spending that would have added to aggregate demand,” he said. “Temporary tax cuts and one-time transfers to seniors were largely saved and didn’t stimulate spending.”
That’s it? That’s the consensus? It seems to me that he is pointing out what was wrong with the package rather than what was right. He was in the Reagan administration and he knows what works: permanent cuts in marginal tax rates. Those dreaded tax cuts for the “rich.” The thing is that when the people above the subsistence level get to keep more of what they earn, yes it does belong to them and not to the government, they tend to invest it, which means the provide capital to businesses that grow and create jobs. Yes, capitalism. What the stimulus does is take money away from these people, or borrows it and steals it from future generations, and gives that money, as in the example above, to highway projects, food stamps and unemployment checks. The first of these may create jobs until the road project is completed, but the latter two only increase the dependency of those recipients on the government. So how exactly does the stimulus plan that puts money into a highway project and unemployment benefits, help a banker who got laid off? How does it help the unemployed executive from United Technologies? It doesn’t. It’s like a drug fix. You may feel good for a while, but then it wears off and you need another fix.
The Genius of Government
You would think that with all the examples of government planning lying on the waste heap of history, the statists will finally catch on that they can’t successfully pick the winners and losers in an economy. Government has to get out of the way and let the market work.
Government must be drastically cut down to size. Think of the popular TV show “The Biggest Loser.” Picture the governments of the United States, California, New York, New Jersey, Rhode Island, Michigan, Nevada, for starters, as contestants. Let’s see who can lose the most weight. Ready? Go.
The Obama Administration probably wishes they didn’t spend $18 million to build a website that is making a mockery of their vaunted stimulus package that if not passed might result in an economic calamity from which we might never recover. Well, here is a random sampling of six beneficiaries of stimulus money:
- Maine — Fish River Rural Health: $491,222. Jobs created — zero
- New Jersey — Southern Regional High School Board of Education: $119,622. Jobs created — zero
- Michigan — West Branch Rose City Area School District: $879,258. Jobs created — zero
- Georgia — Georgia Crisis Family Center: $16,425. Jobs created — zero
- Minnesota — Regents of the University of Minnesota: $294,200. Jobs created — zero
- Texas — Port Aransas Independent School District: $143,241. Jobs created — zero
Enough already, I think you get the picture. Lest you think my sampling was biased you can play along. Go to the website, pick a dot at random and see for yourself. The media seem to be starting to wake up and do their job. ABC News reported on data from non-existent Congressional Districts. The New York Times reported on a $1,000 grant that created 50 jobs and upon further investigation found out the $1,000 went to purchase a lawn mower. But don’t worry, President Obama put that pit bull Joe Biden in charge of making sure the money was spent carefully. President Obama: \”Nobody Messes with Joe\” Joe Biden, call your office.
We are on an express train to financial ruin. This is not just a financial problem but a national security problem as well. We won the Cold War, not with weapons, but with our economy. President Reagan ramped up our military and the teetering Soviet economy could not keep up and communism collapsed. China is becoming more capitalist every day as we chase the ghost of Karl Marx. I ask a simple question, “Do you trust this administration to spend your tax dollars wisely?” Do you believe any administration, Republican, Democrat, Independent, can effectively manage the federal government as it exists today?
A phrase we often heard in the midst of the financial crisis as justification for bailouts was “too big to fail.” One response to that was “make them smaller.” If the federal government is too big to manage and is growing without bound, then we, who are the government of the people, must make the government smaller. It is a fundamental truth of government that programs once started do not end, they just find other things to do. Here is a case in point.
When I worked for one of the phone company spin offs after the break up of AT&T, I came across a regulatory agency called the Rural Electrification Administration. Strange I thought, most of America has electricity, and I am not working for the electric company. It turns out, that agency was created to help bring electricity to rural America. Okay, that sounds like a good idea. However, once its mission was completed, instead of going out of business, it found a new mission: bringing phone service to rural America, and it will go on and on. One of the key problems is how the mission is defined. In this example, as long as one farm doesn’t have electricity, the agency will still have a reason to exist. As long as a log cabin in the woods doesn’t have a phone land line, the agency must soldier on. As any economist will tell you, the cost of serving each additional rural property, will eventually skyrocket.
If we were to take these functions and drive them down to the state and local level, eventually someone will stand up and say, “We’re done, it’s not worth the increase in taxes to prolong the life of this agency.” But ensconced in Washington, it costs more to fight it than let it go on. But we have reached a tipping point where if we don’t cut the beast down to size, the beast will have us for dinner. Chinese anyone?
