The December jobs report was a disappointment for this Administration.  They expected a mere decline of 10,000 jobs and were hit with an 85,000 loss.  They will, of course, downplay the numbers and say how many jobs they “saved” even though that is a statistic no one can measure.  But what are this administration’s priorities?

Upside Down Priorities

Let’s look at the priorities of this administration:

1. Bailouts
2. Health care
3. Cap and Trade
4. Jobs
5. National Security

Leaving aside that the top three are questionable as being within the constitutional authority of the president, what does it mean to job growth? 

The Little Engine That Can’t

The engine of job growth in this country are small businesses.  If you run a small business and you don’t know what your expenses are going to be, you will be very cautious about hiring.  In the list of items above, the first four have this administration on a spending binge that can only result in higher taxes because despite the rhetoric, that’s what statists do.  They will claim they only tax the rich, but many small business owners will fit into that definition of rich without having the cash to pay the taxes because their income is plowed back into their businesses.  So until they know how big the tax bill will be, they cannot afford to commit any cash to increased payroll.  They are more likely to use overtime rather than hiring to tide them over because they can just as quickly turn off that spigot.  While that might mean more economic activity, it doesn’t translate into new jobs.

Health Care is another looming question mark.  Since no one in the administration nor Congress seems to care about reading the bills they are voting on, it carries enormous risks to small businesses when the bureaucrats start crafting regulations based on any approved regulations.  If a small businesswoman doesn’t know what the impact will be on the cost of her existing workforce, she is certainly not going to hire new workers until she knows if the impact on her bottom line will be positive or negative.

Cap and trade is another potential whack to the small business bottom line.  Either through new taxes or carbon credits, who can tell a small businessman what this is going to cost?  When in doubt, stand pat.

Righting the Ship

Until this administration jettison’s the useless cargo that is sinking this administration, their new top priority should be ”man the lifeboats!”  If this administration hopes to avoid being a lame duck for two years, they need to come forward and say health care is dead, cap and trade is dead, bailouts are over.  Don’t even say that they will take them up again when the economy recovers.  Throw them over the side and start the pumps to empty the Treasury of IOUs.  If they don’t do this, any recovery in the jobs area will be slow indeed. 

It’s the Uncertainty, Stupid

Until the uncertainty is lifted, unemployment will remain stubbornly high.  When Reagan came into office and boldly stated his goal to shrink government and cut taxes, small businesses could see immediately that the effect on them would only be positive.  Less government and lower taxes meant more money on the bottom line and with more money on the bottom line they could start hiring and they did.  The result?  Twenty-five years of economic growth.  Obama is following the Franklin Roosevelt model of spend, spend, spend.  It didn’t work then.  It’s not working now.

In Harry Reid’s Senate, this qualifies as dereliction of duty, as the Majority Leader said himself on Monday in defense of his frantic deal-making to get 60 votes. “I don’t know if there is a Senator that doesn’t have something in this bill that was important to them,” Mr. Reid said at a press conference that offered an unintentional commentary on modern democracy. “And if they don’t have something in it important to them, then it doesn’t speak well of them.” – Wall Street Journal, December 23, 2009

It kinda makes you feel warm all over, that our Congressional leaders are representing their constituents, selflessly doing what’s best for America in line with the consent of the governed (55% opposed according to latest Rasmussen poll). 

 Have you seen some of the commercials for Ally bank, where a man asks one little girl if she wants a pony and she gleefully says yes, so he hands her a toy pony.  He then asks the next girl if she wants a pony and she says yes, so he calls out a live pony.  The first girl, crestfallen, says, “You didn’t say I could have real pony.” To which he replies, “Well, you didn’t ask.”  By now you probably know how Blanche Lincoln of Arkansas and Evan Byah of Indiana feel.  They didn’t ask for a bribe in return for their vote on the health care bill, and like the creep in the commercial Harry Reid tells the world what a couple of saps they are for not doing so.

While Obama’s first stimulus plan lies sputtering on the ground, and he and his team tee up another one, they fail to realize that many small businesses that create most of the new jobs in this country, simply do not know what all this (health care, cap and trade, stimulus after stimulus) is going to cost them.  Until they do, this uncertainty is what is keeping many of them from doing any hiring.  How can you hire a new person when you no longer know how much your existing staff is going to cost when the music stops?  So the unemployment picture will drag on no matter how may stimulus plans Obama rams through.

Coming to Their Senses

This is not over yet. The House version and the Senate version still have to be reconciled in committee.   In the House Bart Stupak says he has 30 Democrats ready to vote against the bill, if his amendment against abortion is tampered with.  The chumps in the Senate that Harry just made fools of, may re-think their support. The far left demands a public option be put in.  Lieberman and a few others vow to vote against any public option. In addition, the members of Congress, when they return home to their districts, may not find them full of good cheer this Christmas, as incensed constituents express their opinions on why every Democrat in the Senate doesn’t understand 55% opposition, while they vote yea.  Better watch out for flying fruitcakes, they can be lethal.

Let’s say you were having a problem with your knee.  So you go to the doctor and tell him your problem. The doctor examines you and says he has to act quickly.  He says you need an operation and if you have it, you will experience some mild pain for a brief time, but if you don’t  the pain will get worse.  How bad you ask?  On the pain scale, designed by Andrea Mankoski, you are currently at a 6, described as, “Can’t be ignored for any length of time, but you can still go to work and participate in social activities.”  He says without the operation you will probably reach a 9, “Unable to speak.  Crying out or moaning uncontrollably — near delirium.”  With the operation you will probably peak at 8, “Physical activity severely limited; you can read and converse with effort; nausea and dizziness set in as factors of pain,” but then things will progressively improve.  The pressure he is putting on you to decide is intense, so you give him the go ahead.

The good doctor performs the operation and as he predicted the pain does get worse, but it doesn’t stop.  You are beyond delirium, you are reaching level 10, “Unconscious.  Pain makes you pass out.”  Your medical proxy, demands the doctor tell her what went wrong.  The doctor shrugs and says it was worse than anybody thought, but then says the surgery is working better than expected. ”What the hell did you do in that surgery, you screw-up?” your proxy demands.   The doctor, just smiles, and turns on his heel ands walks away, leaving your proxy standing there sputtering, desperately trying to find the words to express her disbelief and outrage.  When she finally regains her composure, standing there all alone, she reaches for her cell phone to call a malpractice attorney.

Economic Stimulus Surgery

Dr. Obama told us, upon taking office, that we desperately needed a stimulus package or the unemployment rate would continue to rise.  He said without a stimulus package, the unemployment rate would rise to 9%, if we did NOTHING!  His able assistants, Harry “the Healer” Reid, and “Nurse” Nancy Pelosi, slammed through the $787 billion package.  We were saved!  Unemployment would not rise above 8% before starting to fall.  But there isn’t a happy ending to this fairy tale.  The unemployment rate rose past 8%; it rose past 9%; it rose past 10%.  So when Dr. Biden steps to the microphone and says the stimulus is working better than expected, why isn’t someone putting a straight-jacket on him and carting him off?  Why isn’t someone pointing out that the stimulus may have actually made the problem worse?  Team Obama said themselves that it would have been better to do nothing. The unemployment rate would have peaked at 9%.  Why are they getting  pass?

Non-stimulating Stimulus

Look more closely at the stimulus, which we now have had time to do.  Extending unemployment benefits does not create jobs.  Giving teachers a raise, does not create jobs.  Spending 80% of the stimulus funds so far in the Department of Labor, the Department of Health and Human Services, and the Department of Education doesn’t speak to job creation.  It speaks to a sop to their union backers and the creation of their impossible to measure metric “jobs saved.”  Only $4 billion so far has gone to the Department of Transportation and their “shovel ready” projects.  Even these, while a help to construction workers, doesn’t do a thing for laid off bank tellers, software engineers, or FedEx employees.

The Obama administration is spending us into oblivion,  while pouring gasoline on to the unemployment fire with their ill conceived and basically botched stimulus plans.  What is needed are tax cuts that will allow the market to direct the resources where they will do the most good and get the economy moving again.  Instead Obama is taxing and spending our way to economic disaster. What we need is a sharp curtailment in government spending and to shrink the size of the federal beast. Is there a good economic malpractice trial lawyer out there?

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 contestents.  Let’s see who can lose the most weight.  Ready? Go.

As FDR Tinkered with the Economy, the Depression Dragged On for Years

As pointed out in a previous post, the Department of Labor does not and cannot count the number of jobs that have been saved by any action or policy.  But that doesn’t stop the svengali of spin Barack Obama:

“Now I know that there are some who {THERE’S THE STRAWMAN – notation mine}, despite all evidence to the contrary, still don’t believe in the necessity and promise of the recovery act,” Mr. Obama said, “and I would suggest to them that they talk to the companies who, because of this plan, scrapped the idea of laying off employees and in fact decided to hire employees. Tell that to the Americans who receive that unexpected call saying, ‘Come back to work.’ “ — NY Times June 9, 2009

He knows he is spending an enormous amount of money, it is having little effect, and people are beginning to notice.  Only about 10% of the money has been spent, unemployment continues to rise, interest rates are starting to climb due to the massive borrowing by the federal government, so what’s the President to do?  Go back on the campaign trail and once again convince the American people he is someone he is not.  An inexperienced executive, who wants government to tighten its grip on our lives and squeeze out the last drops of our liberty.

“The president’s top aides spent the weekend trying to tamp down expectations that the unemployment rate would turn around anytime soon. One adviser, Austan Goolsbee, told Fox News the nation was in for “a rough patch,” a phrase often invoked by Mr. Obama’s predecessor, George W. Bush” — NY Times, June 9, 2009

Tamp down expectations?  Wait a minute.  Wasn’t this the stimulus package that had to be past immediately?  Wasn’t this the plan that no one in Congress had time to read before voting on it?  Wasn’t this the plan that Congress had to sign immediately or catastrophe would result, but President Obama could wait four days to sign so that the photo op could be set up and the teleprompters put in place?  Now his aides are telling us it’s not going to work as they told us?  I’m shocked, shocked!

“The Obama administration is continuing to fabricate job creation numbers related to the stimulus,” Tony Fratto, a deputy press secretary in the Bush administration, said in an e-mail message to reporters. He added, “Their so-called models would not stand the light of day.”

The administration maintains that 150,000 jobs were either created or saved in the first 100 days after Mr. Obama signed the stimulus bill on Feb. 17. The 600,000 figure the president discussed Monday is not new; it was made public by Mr. Biden on May 13. It includes 125,000 part-time summer jobs for teenagers, which the administration counts as 62,500 full-time job equivalents.

Created or Saved?

Well which is it, were jobs created or saved?  Created jobs are counted by the Department of Labor.  As a small business owner, I know the paperwork that has to be prepared when you add a new employee: W-4, W-9, state filings,etc.  However, if I am a business owner and I am thinking about laying people off and I change my mind, where is that reported?  If I want to know that, President Obama tells me to go take a private poll of companies and ask them if they changed their minds. ARE WE SUPPOSED TO FALL FOR THIS?

So while the economy sheds hundreds of thousands of jobs, he tells us don’t worry, his plan is adding 125,000 part time summer jobs for teenagers.  Have you gotten the hope and change you voted for?

I’ve said it before.  Barack Obama is a masterful politician.  It is almost like a magician.  His slights of hand are so subtle, you have to be watching very closely the hand that is not the center of attention to catch what he is really doing.

Creating Jobs

As he tried to builld up support for his stimulus package the number of jobs his package would create steadily grew.  It went from 3 million jobs to 4 million jobs.  Further it went from 80% private sector jobs to 90% private sector jobs.  Pretty impressive stuff. But what is the other hand doing?

Saving Jobs

When public opinion got behind needing to do something, the rhetoric started to shift.  From creating jobs it became creating or saving jobs.  Saving jobs?  Just how do you measure that?  How do you link that a particular employer didn’t lay off an employee because of a stimulus package to save the salt marsh harvest mouse?  Once, you slipped in that innocent change and got the media to buy off on it, which is not a stretch with this president, you can really go full bore.  “Why, we saved 15 million jobs!”  Go ahead, prove we didn’t.

“Well the package was intended to create jobs, but then the economy went into a free fall.  No, we weren’t able to create the 3 (not 4) million jobs we promised but, by golly, we saved 25 million jobs from being lost if we didn’t implement the stimulus package.”  If repeated often enough and lapped up by the slobbering main stream media, a complete failure will be hailed as a masterstroke.

What Happened in the Great Depression?

FDR is still revered as the president who got us out of the Great Depression.  His own Treasury Secretary, Henry Morganthau, said that eight years of spending failed to reduce the unemployment rate.  But Roosevelt is still considered a hero, not a failure who couldn’t end the Great Depression after ten years.  He couldn’t end it at all, reallly, because World War II was what eventually ended it.

Conservative Battle Plan

Conservatives lost the battle to keep this stimulus plan from going forward, and putting one in place that would work, led by tax cuts.  We must expose this slight of hand.  Just like sitting in the theatre watching a magic show we have to stand up and shout, “Did you just see what he did with his left hand?!!”  We need to perempt this by asking liberals, “You’re not going to start saying now that the package is designed to save jobs rather than create them, are you?”  If we don’t expose them, they’ll pull it off.

Despite the economic turmoil, the bruising two year run for the presidency, and the continued danger around the world there is still much to be thankful for.

• We have not been attacked since 2001 due to the efforts of President Bush and his administration
• We have had another election, this one a particularly historic one, and we are in the midst of another peaceful transition of power, something that is the marvel of the world that we have been able to do this for over two hundred years.
• There is talk about the worst economic times since the Great Depression, which is what we typically hear each election season such that it trivializes those hard times.  These are probably the worst economic times since the Carter Administration, but even with that interest rates are no where near the 20%+ they were back then, unemployment is still in single digits, lower than in the Carter years and no where near the 25% of the Great Depression
• Business is being conducted,  jobs are being posted, and we will get through this

It is a time to reflect on what we have, despite the challenges, and how great this country is.  To help me stay grounded I have always enjoyed reading two articles that are published each year at this time in the Wall Street Journal.  The first tells the story of the Pilgrims and their journey to the New World and how having made that decision there was no turning back. You can follow the link to it here, The Desolate Wilderness.

The second article is called And The Fair Land which was written in 1961.  It seems that a number of the things it mentions are still current.  It is a testament to the fact that we will always have challenges, but as Americans, we will find a way to overcome them.  The key to this is to allow the American people the freedom and liberty to try, experiment, and find solutions.  The less government gets in the way, the more confident I am that we are only limited in by our imagination.

Have a Happy Thanksgiving