Economy slumping because of government efforts to turn it around

Commentary by James H. Shott


Try as he might, President Barack Obama just can’t put a pretty face on the latest economic figures.

Prior to the release of the May job numbers, economists surveyed by MarketWatch expected an increase of 540,000 nonfarm jobs, but when the jobs report came out, it showed only 431,000 jobs had been created.

Even so, Mr. Obama told us that the May job report is evidence that the U.S. economy is "getting stronger by the day," and then admitted that 411,000 of those were temporary government Census workers, which means, of course, that only 20,000 real jobs were created.

But even the new Census hiring is suspect. A number of Census workers have come forward saying that they were hired, trained, worked a day or two, were laid off, then rehired for a repeat of the cycle as many as three times. Each re-hire was counted as a new job, raising the new jobs total. But that doesn’t sound very much like a real job, does it? Not even a real “temporary” job.

This disappointing private payroll number was a much weaker result than many economists had expected, and that sentiment was shared by investors, who drove the Dow Industrials to a 323-point slide on Friday, the second time in two weeks the DJIA has closed below 10,000.

The small jobs increase was accompanied by a decrease in unemployment, which fell further than economists expected, dropping to 9.7 percent in May from 9.9 percent in April. But even that news has an asterisk beside it, since much of the decline came from 322,000 unemployed people who dropped out of the labor force and are no longer counted among the unemployed.

Looking deeper into the unemployment data, many analysts regard the number that includes discouraged workers – like those 322,000 who dropped out of the workforce, and those forced to work part-time because of the weak economy –as a more relevant measure of unemployment. That number is 16.6 percent.

Thirty months into the recession, unemployment continues at high levels. The low point in October of 2006, when the rate was 4.4 percent (five percent is considered full employment), is a distant memory, and the rate hovered just above that level until May of 2007, at which point it started to creep up, hitting 7.4 percent in December of 2008. Since then, there has been no good news on employment, and some economists predict the rate will bump up against 10 percent through the summer.

Employment is a lagging indicator of economic recovery, meaning that the economy will show improvement long before unemployment falls to acceptable levels. But the recovery is not gaining strength, either.

Gross Domestic Product was revised downward to 3.0 percent in the first quarter of 2010 from 5.6 percent in the fourth quarter of last year, supporting the idea that unemployment will continue at high levels for a long time. The lower GDP shows “that the recovery in the biggest economy in the world may not be as strong as many have expected,” according to analyst Anna Fedec. The downward revision in GDP “came from consumer consumption and business spending which are required components for growth to be called sustainable,” she said. “In fact, consumer spending, which is vital in elevating production levels, is weak, mostly due to [the] high unemployment rate.”

Unemployment is the most important thing on the minds of most Americans, and it also plays a role in stifling the recovery. People without jobs spend a lot less than people with jobs, and with demand for products and services reduced by high unemployment, new job creation also will languish.

Add to that scenario the fact that the Obama administration’s policies discourage job creation by keeping businesses wondering what tax, expense or government edict is going to be imposed on them next. This uncertainty breeds caution, and caution and uncertainty do not produce jobs.

A look at business cycle history shows that if left alone economic downturns self-correct rather quickly, and that includes every downturn up to 1930, at which point federal government bureaucrats and elected officials decided they knew more about business than business people. That was the blunder that created the Great Depression, and it is the blunder in this recession. Nobel Prize-winning economist Friedrich Hayek called such bureaucratic arrogance the “fatal conceit.”

Following Jimmy Carter’s disastrous economic policies in the late 70s, Ronald Reagan turned things around by cutting taxes. Economist Arthur Laffer points out that the. Reagan tax cuts – which were the engine of the 1983 expansion and unleashed the longest peacetime expansion the U.S. economy has ever experienced – are the mirror image of the Obama tax increases. And he said “the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010.” Mr. Laffer predicts that economic activity shifted to 2010 helps this year, but will produce an economic collapse next year. “If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet,” he said.

The Obama administration has failed to learn the lessons of 1930 and 1983, to our great detriment.

Cross-posted from Observations

Liberal politics putting nation at risk of depression

Commentary by James H. Shott


The Bureau of Labor Statistics reported last Friday that nonfarm payroll employment rose by 290,000 in April, a piece of good news on the job front. Gains occurred in manufacturing, professional and business services, health care, and leisure and hospitality, as did federal government employment, reflecting the hiring of temporary workers for Census 2010.

The rest of the story, as Paul Harvey used to say, is far less rosy, as the unemployment rate rose from 9.7 percent, where it had been for the first 3 months of this year, to 9.9 percent.

How can the nation increase jobs and increase unemployment at the same time, you ask? The number of people looking for a job increased, as new workers entered the job market, and 195,000 of those who had dropped out because they couldn’t find a job have begun looking for work again.

The unemployment rate is not the only negative news on the jobs front. The federal government, the largest employer in the United States, now employs more than 2,700,000, which is about 2.0 percent of the nation's work force and the federal workforce is expanding significantly under the Obama administration. Add state and local government workers into the mix, and approximately 17 percent of the 132,121,000 employed persons in the United States as of June 2009, or 22.6 million people, work for one level of government or another, according to the BLS.

Federal employees make an average annual salary exceeding $79,197 and the average total annual federal workers compensation in 2008, including pay plus benefits, was $119,982 compared to just $59,909 for the private sector, according to the United States Bureau of Economic Analysis.

Continued high unemployment, the growth in public sector jobs, the high level of union membership among public sector workers, the dangerously high budget deficits and national debt are ominous signs for the United States.

The Beatles’ John Lennon, who was regarded as somewhat of a guru, said many years ago that “America is Rome,” meaning that the United States was following the same sort of self-destructive path as the Roman Empire had centuries before. He was wrong: America was not and is not Rome; America is Greece.

While the ancient Greeks made marvelous contributions to culture, literature, philosophy and science, and gave us democratic government, the modern Greeks provide an unsatisfactory economic model.

Greece has spent itself into a crisis of immense proportions, with some observers predicting a depression not unlike the Great Depression of the 30s. The Greek government has subsidized everything from health care to vacations to pensions, and has a public sector comprising 20 percent of all workers, the vast majority of whom hold constitutionally protected jobs from which they cannot be fired. Some workers can retire with pensions at 45 years of age. Furthermore, tax evasion is rampant, depriving the government of needed revenue.

The Greek economy is tanking, and some observers believe Greece’s collapse signals the end of European-style socialist economies in general, with Portugal and Spain following not far behind Greece.

Athens rang up an outrageous and unsustainable debt, and the bill has come due. The government can’t pay it, so it has adopted an austerity program that includes cuts in government spending, reductions in the size of the public sector, decreases in tax evasion, reforms to the health care and pension systems, and improvements in competitiveness through reforms to the labor and product markets.

None of this sits well with the citizenry. When you have come to depend on the government to support you, as the Greeks have, and then it no longer can, that creates a crisis and the Greek people are in revolt. Violence has broken out across the country, resulting in deaths and anarchy.

Some economic data for Greece (estimated figures):
• In 2009 Greece collected $108.7 billion, but spent $145.2 billion
• Its public debt was 113.4 percent of GDP, up from 97.4 percent of GDP in 2008
• It has an unemployment rate of 9.0 percent
• 20 percent of Greek workers are employed by government

We don’t want to become Greece, but we’re on the same path. Consider:
• Estimated receipts for fiscal year 2010 are $2.381 trillion, an estimated decrease of 11percent from 2009. The President's budget for 2010 totals $3.55 trillion.
• The U.S. public debt is 94.27 percent of GDP
• Unemployment rose in April to 9.9 percent
• 17 percent of American workers are employed by government

Our tax receipts are dropping, we have spent more than we have collected, we owe nearly as much as we produce in a year, one-in-ten of us is unemployed, and nearly one-in-five of us is paid by taxes collected from the other four.

We have not taken the right steps to speed the economic recovery, but have made the same mistakes that were made in the 1930s, when money circulated more slowly and banks lent only a little of the money available. Anti-business rhetoric and anti-business policies emanated from Washington, creating a lack of confidence.

Unless a good dose of common sense overcomes Washington, we are likely to replay the 1930s and follow Greece into a depression.

Cross-posted from Observations

Economic confusion, nonsense, obfuscation, distortions and falsehoods

Commentary by James H. Shott

Recently at a fundraiser for the Democratic National Committee in Miami President Barack Obama said he was “amused” by the Tea Party tax day protests going on around the country highlighted by criticisms of his policies. “You would think they would be saying ‘thank you.’ That’s what you’d think,” he said.

Those petulant and non-presidential remarks were based upon his expectation that Americans would drop to their knees before him in grateful appreciation because of his pledge not to raise taxes for most people. “I can make a firm pledge,” Mr. Obama declared on the campaign trail. “Under my plan no family making less than $250,000 a year will see any form of tax increase; not your income tax, not your payroll tax, not your capital gains taxes; not any of your taxes.” Rather than raise taxes on middle and low income earners, he said he’ll raise taxes on the “rich.”

The nation’s tax system is so badly skewed that approximately 47 percent of U.S. citizens paid no federal income taxes last year, up 17 percent from 2004. An analysis by Deloitte Tax found that "a family of four making as much as $50,000 will owe no federal income tax for 2009." At this rate, by 2012 the majority of voters will pay no federal taxes, will contribute nothing to the operation of their federal government, and currently between 40 million and 50 million people are getting some form of support from the government – about one in six people, including children.

Those making less than $32,879 a year – the 108 million in the bottom 50 percent of earners – paid less than three percent of federal income taxes, while the nearly 11 million comprising the top five percent, making $160,000 and up, paid more than 60 percent of federal income taxes.

So, a relative few pay most of the cost of government and nearly half of us pay nothing, about which a few questions arise. Is this really fair? Is it healthy? As a matter of good citizenship and personal responsibility, shouldn’t nearly everyone pay something? If you pay nothing to support your government, do you really care what it does? And, how much say-so should you have about what it does?

Despite President Obama’s pledge not to raise taxes on most Americans, since taking office 15 months ago, he and Congressional Democrats have pushed through measures that include tax increases totaling more than $670 billion, which is more than $2,100 for every man, woman and child in the United States. And there are at least 14 new taxes that violate his “no tax increases” vow.

The health care reform bill, of which the Democrats are so proud, creates 20 new taxes, including the following:

~ A new tax on individuals who do not purchase government‐approved health insurance
~ A new tax on employers who fail to fully comply with government health insurance mandates
~ A new 40 percent excise tax on certain high‐cost health plans
~ A new ban on the purchase of over‐the‐counter drugs using funds from FSAs, HSAs and HRAs
~ An increase in the Medicare tax on wages and self‐employment income by 0.9 percent
~ An increase, from 7.5 percent to 10 percent of income, in the threshold after which individuals can deduct out-of-pocket medical expenses
~ A new annual tax on health insurance and a new annual tax on brand name pharmaceuticals
~ A new 2.3 percent excise tax on certain medical devices, and a new tax on insured and self‐insured health plans

Most of these will affect people well below the president’s $250,000 threshold, which reminds us that there are people who will do and say anything to win elections or push their hidden agendas through. It’s all a big game to them, and it’s a game the people invariably lose.

Mr. Obama’s chief of staff Rahm Emanuel said, “Never let a good crisis go to waste.” Following that advice, the Congress and the administration sold the idea that the economic crisis could only be cured by massive spending, and in passing the so-called stimulus bill Congress doubled the deficit George Bush left behind. The plan failed to stimulate much of anything, because it was primarily an excuse to hand out money to favored special interests.

In the confusion surrounding the economic crisis, and in opposition to the will of a majority of Americans, Congress passed the radical health care reform bill in one of the ugliest episodes in the history of the House of Representatives. That bill created a new entitlement of approximately $2 trillion, and imposed taxes on middle and low income earners. And, the enormous Obama deficit increased the national debt to $8.2 trillion, which will grow to $20.3 trillion by 2020, according to the Congressional Budget Office.

Since Democrats hate spending cuts, we’ll be told that only new taxes and higher rates can solve the deficit/debt problem, so get ready. A lot of “not rich” Americans are going to feel the pain of the president’s broken promises.

Cross-posted from Observations

Guests of Vlad the Impaler

Dear Reader:

This is the kind of writing that makes Alan Caruba stand out from the multitude of Conservative commentators in the press and on the Internet today. Alan is insightful. He probes deeper than most. Plus, his wit is as sharp as a double-edged sword.

Alan’s abilities as a wordsmith are unsurpassed. Once you read his article below, I’ll bet you will agree with me – and -- be ready to add a few superlatives, describing Mr. Caruba’s writings, yourself.

Alan has studied Mr. Obama and his administration and with the accuracy of a laser is able to cut through the layers upon layers of propaganda to offer his readers an analysis of the Obama Administration unmatched anywhere else on the web.

We are proud to offer the piece below to our readers, especially during this time of tribulation in America.

Please scroll down and read Mr. Caruba’s comments below.

Thanks.

J. D. Longstreet
************************

Guests of Vlad the Impaler
By Alan Caruba
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Lately I have been reading and hearing a lot of psychoanalysis of Barack Hussein Obama and it reflects a growing need by pundits and regular folks to figure him out.

The reason is obvious. We are all now the guests of Vlad the Impaler, version 2.0.

As several million unemployed already know, he doesn’t give a rat’s patoot about what it’s like to not have a salary, not have health care coverage, and not be able to make the mortgage or car payment.

Having been abandoned by his birth father, his step-father, and finally by his mother, Barack figured out how to bottle up all that anger, put on a happy face, and pay back America for failing him.

Obama has lived a virtually invisible life whereby no one who ever attended college with him recalls him. He taught at the University of Chicago and not one student has ever come forward to acknowledge having been in one of his classes. Among the friends he did choose, all shared a common theme of hatred for America. If there is a paper trail, it has been carefully sequestered, out of reach, sealed.

Less than a year and a half into his first and, hopefully, last term, all the polls including those of the mainstream media show that people don’t merely “disapprove” of his performance in office, they are seriously worried whether he should even be in office.

If you don’t like America, Barack Hussein Obama knows exactly how you feel and why.

All this was on display throughout the campaign, up to and including delusions of grandeur and omnipotence that in any other setting would have instantly identified him as a mental case. “Yes, we can” shouted the crowd.

What they got, however, was the biggest collection of left-wing nut-jobs one could gather in one spot; most of them designated “czars” and exempt from any investigation by Congress.

Communists, dedicated socialists, weird “scientists” who think reducing the population is the only way to save the Earth; others who think we should abandon all the traditional and known energy sources that keep the lights on and the cars rolling in favor of windmills, solar panels; and bicycles. You know, crazy people!

We got a kind of machine politics that hasn’t been seen in Washington, D.C. since the early days and years of the Franklin D. Roosevelt administration when the Great Depression so frightened people they were willing to watch the federal government expand in ways that were never intended. From time to time, the Supreme Court would staunch the flood of horrid legislation. FDR’s answer was to try to “pack” the court by expanding it.

Today, we have witnessed a Democrat-controlled Congress that just passed a huge “reform” of the nation’s healthcare industries, effectively destroying the relative handful of insurance companies that provided coverage.

With healthcare now under government control and virtually every other commercial and financial activity to suffer the same fate, it is only time before everyone will be issued an ID card to control everything one does.

Where in the Constitution is the federal government authorized to literally own an automobile manufacturer destroyed by its own unions? An insurance company that was so big it was not allowed to fail despite billions in bad transactions? Why, in fact, is the federal government in the business of buying and selling housing mortgages?

For most of the beginning of his first year in office, Obama was everywhere on television, granting interviews to reporters who listened in amazement at his detachment from the reality of the economy. “Are you punch drunk?” asked Steve Kroft of Sixty Minutes. Bret Beir of Fox News fought to keep him focused on the questions being asked.

People swiftly noticed he could not speak extemporaneously. Without the Tele-Prompters, he lost the aura of being all knowing and all seeing. It became a joke. A response to a simple question about taxes recently elicited a rambling 17-minute “answer” that made everyone listening wonder why he could not deliver a simple answer.

And then there are the critical, unanswered questions that will not go away.

Where was he born? Hawaii? Okay, but his father was a British subject, a citizen of Kenya, so rule out his eligibility to be president. Why won’t he produce a real birth certificate? Why are his university records unavailable? What nation’s passport did he travel on when he visited, of all places, Pakistan? Questions, questions, questions.

There is the growing fear that he is not eligible to hold the office, but he has already named one Supreme Court judge and will soon appoint another. He is issuing executive orders. He is signing laws.

In my life, I saw Richard M. Nixon driven from office for official misconduct resulting from the Watergate scandal. I saw Bill Clinton survive impeachment despite having broken several laws that would have put most people in jail.

It is hard to get rid of a really bad president. It may prove harder to get rid of an imposter, a provocateur, a revenge-filled destroyer of the economy and the nation.

I saw this all before he won the office, wrote about it then and wrote about it since. If I did, others did. Indeed, some wrote entire books about it.

So why has no court in America demanded that Barack Hussein Obama produce a birth certificate or any other proof of eligibility?

If a cover-up got Nixon booted and both a real estate deal and a sexual dalliance with a White House intern merited a special prosecutor for Clinton, when doesn’t this question rise to a point of critical concern for the nation?

Alan Caruba
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Alan Caruba writes a daily post at http://factsnotfantasy.blogspot.com/. An author, business and science writer, he is the founder of The National Anxiety Center.
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© Alan Caruba, 2010

State Of The Nation

by Findalis of Monkey in the Middle

Book of Obama:  Chapter 10

 


e placed The Holy Suit and Tie once again upon His body, and ascended once again to the Dome.  There the assembled chapter of the Congress, the Holy Justices of the land, the members of the anointed Cabinet and guests from near and far sat awaiting His words.  Unlike the year before, He wasn't popular.  Every plan, every idea He had, was rejected by the people.

"We do not want your Cap and Trade, Health Care, or other Moonbat ideas.  Your bowing down to dictators, despots and tyrants around the world does not put us at ease You have apologized to everyone for all the supposed evils that we were suspected of doing.  You are getting ready to destroy our laws, by declaring the Holy Document invalid.  We have heard enough lies from you, your dogs Emanuel, Axelrod, Pelosi and Reid.  We've heard them all and we've learned a couple of things."

The Anointed One just smiled and then addressed the Nation:

short year ago I took office, but that is just a breeze in time.  Look back upon our Founding Fathers, our struggles during the Civil War, the Depression.  We did not flounder or despair.  Nor did we despair through out the struggles of the Civil Rights Movement.  And I will not despair now.

For I inherited a bad economy that was shaken to its core.  I opposed all of the bailouts done, for I saw the harm they will do.  My stimulus plan has created jobs in teaching, rescue, construction and other sectors.

We need Health Care now!  I demand Congress to pass.  Cap and Trade too.  Forget about the Holy Document.  There is too much to do.

I am a man of the people, representative of the Middle Class, My values are the same as yours.  I love this country so much I would never bad name it.  But we did wrong with the Muslim world, and other places too.  I said to them I am sorry, there is nothing you can do.

I said I would create jobs, and that I will do.  For every man and woman.  New industries, new factories, Red, White, Blue, and Green.  We must compete with China, Korea, and Germany too.  This we must excel in if we are going to continually survive.

I will eliminate the nukes of the world, starting with our own.  For did not the Great Reagan of old try to achieve this very goal.

People through out the land write to Me with their problems.  A businessman in Denver*, or in Philadelphia, a teacher in the city, the cop on the beat, a child who wants to know why Mommy and Daddy lost their jobs, another who just lost his home.  I read all their letters, I know all their problems, and I will solve them all.

I could go on all night, but that will do no good at all.  I promised you Hope and Change, and did not lie to you on that, for I am not President #43.

And after The Anointed One had finished His speech, His  followers were full of glee.  For they just knew that once again He had saved the day.

But from right across the river, from the city of Richmond in the land of Virginia, came a new prophet from the right.  Bob The Wise McDonnell.

The Prophet spoke of those with a job, how 1 in 10 lost theirs.
He spoke of the despair the nation felt, of how the economy  was gone.
He spoke of the need for smaller government, how The Anointed One did spend.
He said that the time for spending cuts and freezes were last year, not when your polling number has shown you have failed.

The Prophet McDonnell told the people that it isn't too late.
That the time has come to sit and wait,
So The Anointed One could not shove His agenda down our throats.

He told the assembled people and media the truth.
And our solutions aren't 1,000-page bills that no one has fully read,
After being crafted behind closed doors with special interests.
In fact, many of our proposals are available online at solutions.gop.gov, and we welcome your ideas on Facebook and Twitter.

He told them this and more.

 And through it all, the world went on, the nation will endure.

The GOP got Teddy's seat, they can get more they will.
For the people have seen the truth, heard the lies and broken promises.
Unlike those on the left, the right will not just yell.
They are the ones, in Midterm years, come out in droves to vote.

Reid, Frank and Boxer, plus many more are running scared tonight.
For the GOP has the will, the drive and the clout,
To drive the Moonbats back into the dark.

We just have to wait for November to do it!


*  The President mentioned many people in his speech, but none by name, nor did he recognize any of them in the balcony (he only recognized his wife).  Could it be they are all named:  Ellie Light?