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.

The reality is that, particularly on Long Island, the job outlook is bleak, affordable housing is out of reach, our elected leaders are clueless and whatever opportunity can be found will be found in other parts of the country.

While some of us fight to cut the government leviathan down to size so that is doesn’t suck up the resources that productive people are better suited to employ, those in office are fighting for their own survival and will stop at nothing to hold onto office.

College Loans

As someone paying for their children’s college education, I don’t like paying any more than I have to, but the focus on holding interest rates constant is misguided. College graduates need jobs, not more debt. President Obama and local representatives like Tim Bishop already have piled up enormous debt that our children and grandchildren will have to pay back. Making it more affordable to take on more debt is not a winning strategy. Congressman Bishop used to run a local college, Southampton, that had to be bailed out via a purchase by Stony Brook University. As Einstein said, “We can’t solve problems by using the same kind of thinking we used when we created them.”

Bishop Touts Highway Bill

On his website Tim Bishop boasts about his support for the two-year transportation bill. While keeping our roads in good repair is important, a closer reading of what Mr. Bishop says is revealing. The highway bill, “would create or sustain 113,300 construction jobs in New York alone: 61,100 in highway construction and 52,200 in mass transit construction, according to the US Department of Transportation.” There it is: “create or sustain.” Well, Congressman, which one is it? How many jobs will be created and how many will be sustained? Any economist, and almost anyone else for that matter, can count a new job. After all, there is a bit of paperwork associated with filling a new job, W-4 forms, I-9 forms, etc. But there isn’t a soul who can count a job sustained.

Created vs. Sustained

Why is that important that we know the difference? Because if you recall with the great stimulus bill, in Tim Bishop’s district, $105 million dollars was spent on school districts to create seven new jobs. In that case the teacher’s union, a big Bishop supporter, got a lot of money and our children and grandchildren got the bill. So how many new jobs will the transportation bill create? We also know that those highway jobs are heavily unionized and the unions back Bishop. Coincidence?

Perhaps another reason Bishop doesn’t want to say how many jobs will be created  is that he could be held accountable. Remember how that pesky promise to keep unemployment below 8% if we gave Obama nearly a trillion dollars blew up in his face?

A Coherent Policy?

On the one hand Bishop is pushing to drive more people into going to college whether they can afford it or not or whether they belong there or not. On the other hand he is pushing spending on construction jobs. How many of our college graduates are going to take those construction jobs? It’s more government spending coming and going. No spending cuts, just more spending, more debt, kick the can down the road.

What we need is less government and more entrepreneurs; less taxes sucking resources out of the economy and more investors putting money where it will generate the most returns; the realization that college isn’t for everyone and we need skilled blue-collar workers who can operate computerized machines in our factories; lower energy costs so that we can afford to actually run factories. We need to unleash the imagination and brainpower of hundreds of millions of Americans in the private sector and not count on bureaucrats picking and choosing winners and losers based on their left-wing ideology.

That’s my opinion; I’d like to know yours. Please comment below.

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.

Having spent his entire adult working life at either Southampton College, which went out of business and was acquired by the State University of New York, and the House of Representatives, Mr. Bishop should be forgiven if his grasp of economics is lacking. So let’s try to help get him up to speed.

Coming from academia, I am sure Mr. Bishop will give due deference to a study on outsourcing from an Ivy League University. Matthew J. Slaughter, an economist at Dartmouth’s Amos Tuck School of Business, conducted a study where he found that for every job outsourced overseas, two jobs were created in the U.S. How could that possibly be? It works something like this.

Let’s say a company has an opportunity to outsource its call center overseas and takes advantage of doing so. It utilizes a well-educated work force in India, and let’s say it cuts its cost allocated to that call center in half. It now has additional capital to invest in growing the business. To do so, it hires more sales people, who in turn need sales engineers to explain their widgets to their perspective customers, and when the customers buy more widgets, more people are needed to process the orders and build the widgets. This boost of growth results in a boost in jobs.

Slaughter studied Bureau of Economic Analysis data, reported annually between 1991 and 2001 for 2,500 multinational companies. This was a time when India and China were ramping up their operations to take on outsourcing roles. What Slaughter found was that while employment in their foreign affiliates grew by 2.8 million jobs, U.S. based employment in the parent firms grew by 5.5 million jobs. Taking it a step further, when that job growth is compared to total job growth, those multinational created more jobs faster than the economy as a whole.

Tim Bishop’s Plan

So what is Tim Bishop’s big idea? He wants companies to shut foreign outsourcing or have two call centers that callers can choose between. That means there is no savings from the call centers, which translates into fewer profits to use to grow the business and hire fewer people. Also lower profits, means less tax revenues because what are companies taxed on? Correct! Profits!

So in the midst of a dastardly economy with high unemployment, and staggering deficits, Tim Bishop wants to curtail corporate growth, reverse conditions for job growth, and reduce tax revenues. What a trifecta! This is all so that Tim Bishop can have something, anything, to build a reelection campaign around. There no major call centers in his district, so this is a bald-faced effort to cling to office. If he was serious about the economy, he would be advocating for slashing the corporate tax rate or even backing the Fair Tax, so that money held overseas could flow back to the U.S. and perhaps other countries would build factories here and create even more jobs. But that would require a grasp of economics, instead of an iron grasp on his House seat.

That’s my opinion; I’d like to know yours. Please comment below.

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?

It was only about three years ago when gas prices were similarly on the rise. The O’Reilly Factor was all over the speculators and how they were greedy, selfish, and had to be stopped. But from June 2008 to December 2008 the price of a gallon of regular gasoline dropped from $3.99 to $1.66 and no mention was made about the speculators. Why? Did they disappear? No.

The speculators were still there, but this time they were driving prices down. Huh? Speculators don’t care if the price goes up or the price goes down. All they care about is that the price moves in the direction they predict it will. If speculators predict prices will rise because of supply and demand, which could be affected by growth in China or political upheaval in the Middle East, they will help push prices up. If they predict prices will fall because of a severe economic contraction, they will help push prices down. They are performing a legitimate market function by providing liquidity, they are not out to get “the folks,” as Bill likes to say. Economist Walter Williams explains it here using other commodities to take some of the emotion out of the discussion where oil is concerned:

Here’s a non-rocket science question: If you expect a reduced harvest of wheat, corn, rice or any other commodity some time in the future, what would be the wise thing to do about your consumption today? I bet that the average person would answer: Consume less now so that more will be available in the future.

But how in the world can people be encouraged to consume less now? Enter the futures market, which consists of a worldwide group of millions upon millions of traders, often called speculators. Speculators, betting on a future shortage, buy up wheat, corn and rice today in the hopes of making money selling it for a higher price when the bad harvest hits. As speculators buy more and more wheat, corn and rice, they drive up today’s prices. As today’s price gets higher, people consume less, but more importantly, people do the intelligent thing without bureaucratic edicts. The vital role of the futures trader, or speculator, is to allocate goods over different time periods. And, it’s not just wheat, corn and rice that must be allocated over time but all commodities including oil.

Okay, that may explain the speculators but some have also said there is ample supply of oil, so why are prices rising?  If it is not the speculators, who is at fault? To that I say turn your eyes toward Washington. Oil is an international commodity that is priced in U.S. dollars, because U.S. dollars are the world’s reserve currency. But what has our government been doing to the dollar? With the reckless spending and unprecedented borrowing and indebtedness, we are printing money like crazy which is driving down the value of the dollar. As the value of the dollar falls, you need more of them to buy the same amount of oil.

Gold vs Gasoline prices

As you can see from this chart, the trend in gasoline prices closely matches the trend in gold prices. At one time our dollar used to be backed by gold, so you can look at gold as value based money rather than fiat money. Fiat money is where a government issues paper and says it has a worth that the government determines. There isn’t any real commodity or thing of value behind it, it has value because the government says so. Let’s look at it a different way. Let’s say you could buy your gasoline by using gold instead of paper dollars. In 1990 it would have taking 0.003 ounces of gold to buy a gallon of gasoline. In April 2011 it would take 0.0025 ounces of gold to buy the same gallon of gasoline. So while we are starting to worry about gasoline costing nearly $4 a gallon nationwide, it is really relatively cheap on an historical basis, so watch out.

Price of a gallon of Regular gasoling in ounces of gold

Historically you can see a slight upward trend in the price of gasoline when using gold as the standard of value. It has been climbing, but not ridiculously so.

So lay off beating up on the speculators and start turning your firepower on Washington. If we don’t get our fiscal house in order and soon, we will be in very deep trouble indeed. This has to be fixed and it has to be fixed now; not in ten years, not in twenty years, NOW.

That’s my opinion; I’d like to know yours. Please comment below.

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.

Destroying Public Schools

I had an opportunity to watch the documentary Waiting for Superman that chronicles the hopes of five school children desperately trying to get the education they have a right to from the public school system. Their hopes hinged on winning a lottery for a seat in a charter school.

Ponder these two statistics.

1. Fully 70 percent of eighth-graders are not proficient in reading, and most of them will never catch up. To parents, if their child is failing in their early teen years, it means failure for life.
2. Each year, more than 1 million high school seniors fail to graduate. Everyone understands the consequences of education failure, and this number quantifies that failure in black and white – Research from the Bill and Melinda Gates Foundation and the Broad Foundation

Kids fall behind and drop out because the feel they are losing ground, they have no future, they have no hope. It is not necessarily because of individual teachers, but because of the system and the system is welded in place by the teachers’ unions.

One of the key elements is teacher tenure. The concept of tenure started in colleges and universities as a way to protect professors from dismissal for political views or controversial positions. It was that tenure would allow independent research and inquiry without fear and reprisal. It was hard for a professor to get tenure. It required years of teaching and surviving a tough vetting process. Tenure was copied by the teachers unions and in most schools all that it requires is to show up and keep breathing for two to three years to have a job for life.

Michelle Rhee, as superintendent of the Washington DC public schools, tried to offer an alternative. She proposed giving teachers a choice. They could choose to keep tenure and their contract would give them a modest raise. Or, they could forego tenure and be eligible for additional merit pay that could double their salary. The teachers union would not even let the proposal come up for a vote.

So  the first reason we need to redistribute the wealth is that we are rapidly producing an underclass that doesn’t choose not to take care of themselves, but is unable to take care of themselves because the progressive movement and teachers unions care more about keeping incompetent teachers employed and paying union dues ahead of educating the children. It is estimated that 80% of our public schools will fall short of the No Child Left Behind goals targeted for 2014. The Obama administrations answer for this is, naturally, to move the goal posts. The program has changed to Most Children Left Behind the Rest of the World. Billy Joel summed it up in one of his songs No Man’s Land:

 I see these children with their boredom and their vacant stares,

God help us all if we’re to blame for their unanswered prayers.

Minimum Wage

Okay so you can’t graduate high school. Maybe you can get an entry level job and learn the ropes from there. What’s  that you say? What the young adult brings to the table isn’t yet worth $7.25 an hour?  Too bad. That is the least amount of money you can be paid by law. It is called the minimum wage.

Earlier this year, economist David Neumark of the University of California, Irvine, wrote on these pages that the 70-cent-an-hour increase in the minimum wage would cost some 300,000 jobs. Sure enough, the mandated increase to $7.25 took effect in July, and right on cue the August and September jobless numbers confirm the rapid disappearance of jobs for teenagers.

The September teen unemployment rate hit 25.9%, the highest rate since World War II and up from 23.8% in July. Some 330,000 teen jobs have vanished in two months. Hardest hit of all: black male teens, whose unemployment rate shot up to a catastrophic 50.4%. It was merely a terrible 39.2% in July. – Wall Street Journal, Oct. 3, 2009

In the midst of the most prolonged high level of unemployment since the Great Depression a progressive policy is enhanced that costs 330,000 teen jobs, just as predicted. So first we destroy their education and then we tell them they can’t get a job because they are not skilled enough to earn $7.25. But that’s not all. Local bureaucrats join in the fun.

A 575,000 square foot armory in the Kingsbridge section of the Bronx in New York City was given to the city by the National Guard who no longer needed the space. The city tried to find developers for the space and finally succeeded, choosing Related Companies as the developer. The project was to develop retail space and other amenities, create 2200 jobs and invest $300 million in the neighborhood. However, because it came with $17 million in tax breaks to attract a developer it also came with the stipulation that no job could be offered in the space that paid less than $10 per hour plus benefits or $11.50 per hour without benefits. When it was clear that the developer couldn’t get any tenants to bite on the higher minimum wage, the project was killed. The progressives crowed that they stopped a developer who wouldn’t commit to paying a living wage but people in the neighborhood had a different view.

“It’s sitting here and it’s wasting space and a lot of people around here definitely need jobs,” said Joel Bekker, a teacher at Kingsbridge International High School. “We keep talking about raising taxes and paying for the poor, but here’s an opportunity for people to earn their own way.” – New York Post, December 12, 2010

There is another battle I will call the Wal-Mart Wars. Wal-Mart has tried unsuccessfully to open a store in New York City running up against the progressives and the unions every step of the way. Wal-Mart’s tag line is “Save money, live better.”  With all the hubbub about a living wage, you would think that allowing a company that eats, lives, and breaths low prices would be welcomed as a hero to help those living wages go further. But nothing could be further from the truth. Wal-Mart is non-union. Wal-Mart pays low wages but it also touts opportunities for advancement saying that 70% of its managers started out as hourly workers. But that’s not good enough to fit in the progressive mold despite being able to bring jobs to the city and lower prices to the community.

Reason number two for redistribution of wealth is a large number of unemployed, not because they don’t want to work, but because progressives have decided for them the parameters by which they can be hired. You can’t eat, but at least no one’s exploiting you. The progressives have made sure of that.

Crime and Drugs

If you drop out of school uneducated and can’t get a job what do you do? If your morals went the way of your dreams and aspirations you can always turn to crime. Go into the drug business, the money is good while it lasts if you stay one step ahead of the odds. You can walk around flush with cash and if you die young, so what. What else were your prospects?  If you go to jail, at least you get “three hots and a cot,” that is, meals and a bed and free medical care

If a life of crime is not for you, perhaps you can use some drugs as sort of a cheap mini-vacation from your dismal life. That is, of course, until you reach the point where you become addicted to your escape, and then you can check into a new hell hotel.

Reason number three for the distribution of the wealth. If you sign up with the government to redistribute your wealth you may have some level of control over how much that turns out to be. Otherwise you may be negotiating with people who have little regard for your life but a lot of lust for your belongings.

The Forgotten Man

While these and other progressive programs and union initiatives were put in place, who is left with the bill. For those pulling the wagon they are finding it harder because more and more people are riding on the wagon. The forgotten man is handed the bill but has little say in the negotiations. So, should the forgotten man accept this fate or should he fight back?

Education

One of the bargains the forgotten man did agree to was to provide tax dollars in return for a public school system. It benefits all of us if we have an educated work force not predicated on the ability to pay for a private education. But what the forgotten man did not agree to was to provide lifetime employment to teachers without regard to the quality of the education provided to the children in their charge.  

“Every morning in Africa a gazelle awakens knowing it must today run faster than the fastest lion or it will be eaten. Every morning a lion awakens knowing it must outrun the slowest gazelle or it will starve. It matters not whether you are a gazelle or a lion, when the sun rises you had better be running. – African proverb

The forgotten man wants the teachers to wake up each morning running, not sauntering to the schoolhouse to put in their time.

Right to Work

Everyone should have a right to work and not have to be forced to join a union to hold a job or be told he can’t work for a wage less than some bureaucrat says is fair. It is called individual responsibility. The employer and employee should be able to negotiate over the terms and conditions of employment freely without government interference.

Crime

One of the striking examples illustrated in the documentary Waiting for Superman, was that for the cost of incarcerating a prisoner for four years, you could pay for twelve years of private school and still have money left over for college. It is not about money. It is about freedom. But freedom has a cost and to the unions that cost is stark. They stand to lose hundreds of millions of dollars in union dues. Here it is in their own words:

http://www.youtube.com/watch?v=OwxiRXqH_hQ

Educating our children before giving teachers a comfortable and unchallenged lifetime position is anathema to the teachers unions.

The issue is clear. Either surrender the wealth you have accumulated for your family through your hard work to the progressives, or turn the tide to make our future generations self sufficient and productive. Make no mistake it will be a battle. Are you ready for the fight? If so, let’s get to work.

That’s my opinion; I’d like to know yours.  Please comment below.

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.

He then has compared the first half of his first term to Ronald Reagan, again with the support of an eager media. They both inherited a terrible economy, with high unemployment, handed to them by unpopular presidents, and a world on the brink of disaster. That is basically where the comparisons end in real life and thus spurring a misunderstanding in comparing the two I call The Great Reagan Mistake. When Ronald Reagan was elected, interest rates were double digits, as a result of years of an economic condition known as “stagflation”, a term rarely used because Reagan’s economic policies essentially made the condition obsolete. Or so we thought. A couple more years of this recovery, especially if interest rates rise as they are predicted by many economists to do, and the term will come back into vogue sooner than one may think.

After a year and a half of the Barack Obama recovery (2009-2010), the results of his economic policies could not be more divergent from the results of the first 18 months of the Reagan recovery (1983-84). Unemployment is chronically high, even though interest rates are historically low and we are told to expect 8% unemployment as the “new normal”. We are also told to expect trillion dollar deficits as far as the eye can see.

According to Larry Kudlow, an economist in the Reagan administration, we have anemic 3% growth in GDP and a microscopic 121,000 new jobs created in the Obama recovery. Get ready for this: in the Reagan recovery, 5.3 million jobs were created by 7.7% GDP during the same period of recovery. Mr. Obama’s government centric high tax and suffocating business climate marked by presidentially led animosity for business in America, has stunted the very growth for which he longs, the absence of which is causing increasing frustration among the administration as well as the American people. Contrast that with the economic launch pad created by the then maligned “Reaganomics”. While his clueless Vice President Bush called it “Voodoo economics” to the howling delight of the liberal media, the business community knew better, and jumped on the rocket and rode it into unparalleled prosperity for the next twenty years. Reagan was the first president to shatter then accepted economic theory that low unemployment, low inflation and high GDP could NEVER exist at the same time. After the Reagan recovery began, those conditions coexisted continuously until 2008. Mr. Obama is turning back the clock, printing money and driving up inflation, while telling us to get used to high unemployment, leading us back into the “stagflation” era of Jimmy Carter.

While Reagan was accused of being an actor who was empty of substance and only made people feel good, this is the sadly unfolding truth about the Obama presidency. While they both had/have a gift for the rhetorical flourish, calling upon Americans to get in touch with their internal longing for a new vision for America, a dream and an awakening spirit, Mr. Reagan’s words were a separate and distinct tool for inspiration of the American people, guiding them through very tough times, while he took decisive action based on sound economic theory, with courage and conviction. Mr. Obama’s need to latch onto that legacy is resulting in the truly hollow rhetoric, lacking the substance so badly needed in the American domestic agenda today. Why can’t liberals just admit they were wrong and go back to what Reagan showed us worked? I always said it was the single most important thing Bill Clinton did to insure his presidential popularity: he didn’t mess with Reaganomics. He kept that his dirty little secret only supply side devotees like me would recognize. He never had to explain it to his liberal base because they were living in such nonchalant prosperity most Americans took for granted by then. He knew better than to make the Great Reagan Mistake. Mr. Obama is losing his window of opportunity to turn the tide and make actual changes. In two years, he will follow Jimmy Carter into oblivion. Hopefully the next President will not make the same mistake.

Please share your thoughts below.

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 111^thCongress.  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.

But isn’t Tim Bishop an expert on jobs?  It appears to be the only issue he is running on.  He doesn’t mention the rest of his record, at least not on any ads that I have seen or heard.  He seems to be very confident proclaiming on who, what, where, when, and how to create jobs.

In another article in 27east news, the difference between Bishop and Altshuler is contrasted.  Mr. Bishop says of his opponent, “He was a very successful businessman, and every single thing he did was legal. But given the way he made his money, there are certain things you don’t get to do, and one of them is be a member of the United States Congress.”  Really?  Wow, where is that in the Constitution?  According to my copy of that venerable document, the requirements for Congressman are as follows:

1. Twenty-five years old. Check (Mr. Altshuler is 39)
2. Seven years a citizen of the United States. Check (Mr. Altschuler was born here)
3. When elected, be a resident of the state in which chosen. Check (Mr. Altschuler lives a couple of blocks from here, on Long Island)

What hubris Mr. Bishop demonstrates that he requires a higher standard than the Constitution to serve in Congress.

Mr. Altschuler denies that Office Tiger, the company he and a classmate founded, resulted in American Workers losing their jobs.  He says that Office Tiger bolstered other companies by providing mostly new services, not by replacing existing operations.  But Mr. Bishop says that is “impossible to believe”.  Perhaps Mr. Bishop can believe an opinion piece in the Wall Street Journal, on Tuesday, “Obama and the Politics of Outsourcing.’  In it, William Cohen points to a 2007 study by Matthew Slaughter, an economist at Dartmouth’s Amos Tuck School of Business.  The comprehensive study looked at the hiring practices of 2,500 U.S. based multinational companies. 

“He found that when U.S. firms hired lower-cost labor at foreign subsidiaries overseas, their parent companies hired even more people in the U.S. to support expanded overseas operations.  Between 1991 and 2001, employment at foreign subsidiaries of U.S. multinationals rose by 2.8 million jobs; during that same period, employment at their parent firms in the U.S. rose by 5.5 million jobs.  For every job “outsourced” to India and other foreign countries, nearly two new jobs were generated here in the U.S.”

He also found that the jobs in the U.S. were higher-skilled and better paying.  So it would seem that Mr. Altschuler was probably helping create two new jobs at his client’s companies in the U.S. for every person he hired overseas.

Mr. Bishop on the other hand voted for TARP and the stimulus bill.  Unemployment, we were told would rise to 9% unless we did something, but held to 8% if we acted quickly.  Mr. Bishop acted quickly and now the unemployment rate is 9.6%; sounds like doing nothing was the better option.  Mr. Bishop also voted to bail out GM.  In a Washington Post article entitled, “Under Restructuring, GM To Build More Cars Overseas” we learn that the percentage of cars that will be built in low-wage countries will increase from 15% to 23% over the following five years.  So doesn’t that make Mr. Bishop a pretty big outsourcer?

Mr. Bishop goes on to tout that his district is the recipient of $433 million in stimulus funds. That created 315 jobs (according to Recovery.gov)  at about $1.4 million per job.  What a bargain!   But he doesn’t like to talk about the debt that is linked to the stimulus.  By my calculation Mr. Bishop’s district pays about 0.37% of the personal income taxes in the U.S. If you take 0.37% of $825 billion it comes out to about $3 billion of the stimulus debt that the taxpayers of his district will have to repay.  That’s about $10 of debt to pay back for every $1 of stimulus received.  Anyone who likes that deal, I have a bridge I’d like to talk to you about.

Mr. Bishop’s entire career has been in academia and in Congress.  He sounds a bit like the sex therapist who has never had sex.  Sure he’s read the books and knows the theory, but he’s never done “it”.  Do you really feel confident he knows what he is talking about?  It seems as if whatever Mr. Bishop says you should do (borrow and spend on stimulus, TARP, GM bailouts) and what you shouldn’t do (start companies, hire people, create products and services and make profits) you’ll be fine if you do exactly the opposite.

So when you next hear Mr. Bishop’s tired commercial about Randy Altschuler outsourcing jobs, stand up and cheer.  If Mr. Bishop says it’s wrong, it’s probably the right way to go.

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.

It becomes clearer when Ms. McGibney misses the whole point and assesses the issue on a purely personal level.  She talks about her taxes and her ability to pay them, and says the same holds true for Mr. Stein.  Mr. Stein’s point was not about the taxes unfairly punishing him, boo hoo,  but about a $700 billion increase in taxes as the economy staggers out of the recession under the weight of all the spending Mr. Obama has committed us to.

She goes on to parrot Joe Biden, about paying more taxes being our patriotic duty.  You probably recall Mr. Biden saying, when President Obama put him in charge of making sure the stimulus money was not squandered, that he himself knew little about finance or economics.  She then scolds us that she is not talking about charity, before proving the well known fact that conservatives give more to charity than liberals/progressives, by saying as much.  “This is about being a grown-up and accepting the fact that we made money during the bogus uptick in the economy,”  Continuing, “I suppose he [Stein] thinks he is beyond sharing his good fortune with the rest of Americans who are suffering financially.”  From each according to his ability, to each according to his needs.  You have been schooled well, grasshopper, in the ways of Marx.

She says, “I have always understood that the ‘haves’ are greedy,” before continuing a few words later to say, “I am a ‘have’.”  She just called herself greedy!

Ms. McGibney, we still have some freedom in this country and while we do you have every right and ability to send a check for as large as you like to the federal government, you are not required to stop at that line on your tax form that has your tax liability.  You are not allowed to give less, but feel free to give more.  May I suggest 90% of your taxable income?  Better yet, why don’t you host a little party of your like minded friends and suggest that they do the same in the name of “Hope and Change?”

But the reality is the policies of the current administration have burdened the economy with such uncertainty that even Nancy Pelosi can’t figure out the laws that she’s passing (we have to pass the bill to know what is in it).  There is so much uncertainty, that small and medium businesses are not hiring because they can’t figure out what their health care will cost, what their taxes will be, how much new regulation they have to deal with, and on, and on.  The recession ended over a year ago and instead of roaring back the economy is slowing down.  The stimulus did nothing.  The recession ended before the money hit the streets.  But now the economy is saddled with an $800 debt to pay back and you want to pile another $700 billion rock on top of this feeble recovery?

Ben Stein is speaking as an economist.  You are speaking as a self righteous, greedy, partisan.  You are as clueless about what to do as this administration is.  Go back to writing screenplays.  I hope they are successful.  If you want to do your part, hire an assistant; give your staff a raise; eat at a restaurant every night; buy a new car.  I would rather that you take your wealth and spend it lavishly than turn it over to the government, which will only waste it on trying to get themselves reelected.  Join the free market.  If we get the government out of the way, this economy will come roaring back.  If we keep sending money to Washington it will only encourage them.

I, for one, am glad that all those people you see at Tea Party rallies, that you and your cranky friends like to mock, are better informed about how the economy works and the proper role of government than you will ever be.  I hope that they will change Washington.  It’s the spending, stupid.

Click the link to see the video. Linda McGibney Lectures Us on Paying Taxes

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?