Commentary by James Shott

Those who lived in or near the southern West Virginia and/or southwest Virginia coalfields during the peak of the coal business in the 50s and 60s know that state and local economies thrived because of the tens of thousands of people employed by mining companies and the dozens of companies that supported the industry.

Bluefield, WV’s Norfolk and Western Railway yard was always filled with coal cars, many of them full of the world’s most widely used fossil fuel, that were bound for Norfolk, VA’s port, or ready to be unloaded into trucks for delivery. The rest were empty, heading back into the coalfields to be refilled and brought back for distribution.

They remember the bustling downtown that was the financial, shopping and recreational center of the region’s coalfields, and Bluefield’s population of well over 20,000 residents during the time of peak coal. These are valued memories of the good times.

Today’s population is half that size, and the rail yard is often empty. To those who have seen first-hand the decline of the industry and its effects on local communities, the industry’s decline is a very real and painful thing.

The decline began with natural technological advances, as mechanization gradually began putting hundreds of miners out of work. Over time other forces developed, affecting the industry, including the very recent rise of cheap natural gas. Through all of that, there was always a market for coal.

But the federal government’s assault on coal through excessive environmental regulation, spurred by the hotly debated idea that burning coal pours too much carbon dioxide – a gas essential for life on Earth – into the atmosphere, is the greatest problem. President Barack Obama put this attack into high gear. However, today our air is cleaner than it’s been for 100 years, mostly through evolving technological improvements.

Cloistered away in their comfortable offices in Washington, DC, our public servants frequently have no idea what life is like for those toiling away to pay the taxes that fund their salaries. Perhaps if they got out of Washington more, they would understand the problems they create for the people they serve.

This may be the case with Energy Secretary Ernest Moniz, who at the invitation of Sen. Joe Manchin, D-W.Va., finally visited the state after many invitations over the eight painful years of the Obama administration. But while in the state last week, Moniz suggested there is no war on coal, arguing to the contrary that the Obama administration is working to keep coal as an important part of a low-carbon energy future. He also said that cheap natural gas prices are primarily responsible for coal’s downturn.

The absurd idea that there is no “War on Coal” today would be hilarious, if the reality wasn’t so tragic, and the suggestion that the very recent drop in natural gas prices is the principal reason for coal’s decline is simply false.

This general situation was foretold by Barack Obama back in the 2008 campaign: “So, if somebody wants to build a coal plant, they can — it’s just that it will bankrupt them, because they are going to be charged a huge sum for all that greenhouse gas that’s being emitted,” Obama declared.

Assuming that Moniz has the capacity to recognize the misery the administration for which he works has caused for this region, or really cares about the people affected by its policies, visiting West Virginia much earlier in the administration’s tenure might have made some difference.

Hillary Clinton is on that same path. While campaigning in Ohio earlier this year, she said, “We’re going to put a lot of coal miners and coal companies out of business.” Trying to make that sound better, she said she favored funding to retrain those put out of work, but she didn’t say what kind of jobs and how many of them are currently waiting for trained workers.

Not long thereafter, while campaigning in West Virginia, she was asked about that comment by a tearful out-of-work coal miner, to which she responded that what she meant was that coal job losses will continue, according to the Daily Caller. See the difference?

Obama’s energy policy is like putting a square peg in a round hole. If you want to put a square peg in a round hole, take some time and think it through: You should gradually and gently reshape the square peg so it will comfortably and appropriately fit into the round hole. Obama’s method is to place the peg on top of the hole and beat it with a hammer until enough of the corners are destroyed so that the peg will go into the hole. And even then, it is a poor fit.

Just as horse-drawn wagons and carriages gave way to motorized vehicles when they came to be, coal’s role as a primary fuel would have changed as better methods evolved. Such a process would have been not only more humane and less destructive, but infinitely smarter than what has transpired.

Through the centuries humans solved life’s problems and improved their lives through applied intelligence. Somehow, they managed to do this without Barack Obama and the EPA.

Cross-posted from Observations

Lipstick on a pig: Administration putting a spin on the U.S. economy

Commentary by James Shott

It is natural for politicians to put things in the most favorable light, and the worse the general situation, the greater the need to do so. That serves as an appropriate introduction to the White House’s June economic analysis, which is summarized thusly: “The economy added 287,000 jobs in June, as labor force participation rose and the broadest measure of labor market slack fell.” As far as that statement goes, it is true.

That new jobs number is a decent number – the best jobs figure since October – and miles ahead of May’s revised number of only 11,000 new jobs. But it is not an outstanding number, and is only one of several really significant numbers.

Back in December 2009, six months after the end of the recession and 11 months into Barack Obama’s first term, economist Paul Krugman said that 300,000 new jobs each month were necessary to make up the job losses of the recession over the next five years, so the June figure falls short of that number. In the weak Obama recovery new job production has only met or exceeded 300,000 six times in 89 months. The last was in November of 2014 at 331,000.

Whether the 287,000 number holds up after revision we won’t know until August. May’s preliminary number was revised down by more than two-thirds to a mere 11,000; therefore August may show a downward revision, an upward revision, or a number that is pretty close to the preliminary figure.

Other relevant numbers from the Bureau of Labor Statistics (BLS) data set for June include an increase in the U-3 unemployment rate, the one President Obama prefers to cite, from 4.7 to 4.9 percent. Despite the increase, the U-3 rate still looks good because it discounts all those marginally attached to the labor force that involuntarily work part-time instead of full-time, or have given up looking for work because they cannot find a job. Those workers are included in the U-6 rate, which more accurately represents reality, and stood at 9.6 percent in June, and improved one-tenth of a percent since May, as some of the previously disaffected workers started seeking employment again.

Even so, the Labor Force Participation rate was still at the late-70s level of 62.7 percent. From 66.0 percent in December of 2007 when the recession began, the trend in the participation rate has been steadily downward and has been below 63 percent since March of 2014. The labor force is made up of those age 16 and older that are working, looking for a job, and not in prison or in the military, and totaled 94,517,000 people last month. That means that 56,228,000 working age Americans are not working, and not in the military or in prison.

In June, 1.8 million persons were marginally attached to the labor force. These are individuals who wanted to work, were available for work, and had looked for a job sometime in the prior 12 months, but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Another 5.8 million individuals prefer full-time employment, but are working part time because their hours had been cut back or because they haven’t been able to find a full-time job.

The BLS reported, “Among the major worker groups, the unemployment rates [U-3] for adult women (4.5 percent) and Whites (4.4 percent) rose in June. The rates for adult men (4.5 percent), teenagers (16.0 percent), Blacks (8.6 percent), Asians (3.5 percent), and Hispanics  (5.8 percent) showed little or no change.”

The 9.6 percent U-6 rate tells one part of the story, but the actual harm of the administration’s policies that keep the economy from cranking up are another story.

“Today’s jobs number can’t hide the ongoing struggles facing the country’s main jobs producers – small businesses – which are overwhelmed by over-taxation, over-regulation, and a lack of access to credit,” said Jobs Creators Network (JCN) president Alfredo Ortiz. “And it shouldn’t distract us from an underwhelming labor force participation rate—still the lowest figure since the 1970s.”

National Federation of Independent Business president and CEO Juanita Duggan commented, “Each month our survey shows that small business owners are trying to hire qualified workers,” and, “The job openings are there, but owners are not going to invest in new employment when labor costs are becoming insurmountable, and the political climate is wildly uncertain.”

All the way back in November of 2010 President Obama was already claiming a “new normal” for the economy: “What is a danger is that we stay stuck in a new normal where unemployment rates stay high,” he said on CBS “60 Minutes.”

Today, with a real unemployment close to 10 percent, Obama may be viewed as a pretty good prophet. However, rather than seeing the future, he engineered it, and the term “new normal” is much less a reality than an excuse. As the JCN’s Ortiz noted, high taxes, rampant and intrusive regulation and limited credit do not a good recovery make.

America deserves better. November’s election provides the opportunity to elect as president someone who understands job creation.

Cross-posted from Observations

Democrats want to “help” people even when they don’t need help

Last July, Jeffrey Dorfman discussed the battle that began near the end of 2013 over maintaining extended unemployment benefits for up to 99 weeks. In Forbes Magazine the University of Georgia economics professor explained that during the debate the preceding December and January Congressional Democrats and President Barack Obama insisted that if the benefits were not extended, it would hurt workers who would lose benefits, but the nation’s economy would also suffer.

Adding a little background, he wrote: “After the 2007-2009 recession, Congress repeatedly authorized emergency extended benefits so that the unemployed could collect benefits for as long as 99 weeks [nearly two years]. When the extended benefits finally were allowed to expire in December 2013 they had lasted 20 months longer than following any previous recession. Yet, Democrats wanted to continue them even longer.”

But, he said, six months after the decision not to extend the benefits again, neither the unemployed nor the economy suffered as predicted, and in fact “the results have been quite positive.”

“Economic research seems to be clear that providing such extended unemployment benefits went beyond helping people transition to a new job,” wrote professor Dorfman, “instead allowing them to extend their job search. Instead of taking a job offer that might be suitable, unemployed people who still had some income thanks to Congress’ generosity looked for a great job. Thus, extending unemployment benefits led to higher unemployment and a slower recovery.”

Unemployment benefits are funded by an insurance premium paid by employers to provide benefits for a set period of time, which helps folks cope until they find a new job. In most states employees are covered for up to 26 weeks. During and immediately after a recession when unemployment rates are high, the federal government generally steps in and provides an extended period of benefits. However, in such cases, benefits paid after the period covered by unemployment insurance are paid for out of tax revenue, which is essentially welfare.

A recent study supports the professor’s assertion, this one by the National Bureau of Economic Research (NBER), which indicates that the labor market improvement President Obama so frequently uses to show his policies are working, occurred even though Congress did not follow the president’s wishes and extend the benefits again to 99 weeks. Rather than widespread doom and gloom, when extended benefits were not approved, job creation increased by about 1.8 million. NBER also noted that in 2013 the states with generous unemployment benefits created fewer jobs than the national average, but that job creation in those states increased in 2014 to above the national average when they cut back on benefits.

In examining this situation the Las Vegas Review-Journal opined: “Was long-term unemployment assistance necessary for some people? Yes. But, without question, millions of Americans at the margin — those who rejected offers to work for a little more than jobless benefits were worth, or those who supplemented jobless aid with under-the-table work in the gray economy — saw no point in re-entering the taxpaying workforce when they could be paid for so long to not work. And that simply wasn’t working for our economy.”

There is substantial support in these data for the idea that liberal/Democrat policies that are intended to help people beyond their actual need for help is good neither for the people they intend to help, nor for the best interests of the country at large.

The reality that government policies have failed shows up in the low level of people in the workforce who actually have jobs. The civilian labor force participation rate reflects the proportion of non-institutional civilians 16 to 64 years of age who are working or looking for work. The Bureau of Labor Statistics (BLS) reports that the participation rate hovered between 62.9 percent and 62.7 percent in the eleven months from April 2014 through February 2015, and has been 62.9 percent or lower in 13 of the 17 months since October 2013. 

It has been 37 years since the participation rate was below 63 percent, back in March of 1978. In February, the number of work-eligible civilians not working or looking for work totaled nearly 93 million people. 

BLS reported that the non-institutional population reached 249,899,000 in February, and only 157,002,000 of those were working or looking for work. The rest had become discouraged and stopped looking for a job.

So while job creation has been in positive territory lately, and the unemployment rate has dropped to near 5 percent, the economy has not produced enough jobs to get those 93 million people back to work, and when those numbers get figured in to the employment picture, the unemployment rate doubles.

The job market still has not returned to pre-recession levels nearly six years after the recession ended in 2009.

A vibrant economy depends upon people working and earning money they can spend on needs and wants. Business, not government, creates jobs. But government restricts job creation through over-regulation and high taxation.

Our elected leaders and bureaucrats seem immune from learning that less restrictive market conditions contribute to creating jobs. 

This immunity affects those of the liberal persuasion to a disproportionate degree.

More free stuff! Free community college tuition for everyone!

Earlier this month President Barack Obama issued the latest in his series of bad ideas: free community college for all. "No one with drive and discipline should be denied a college education simply because they can't pay for it," Mr. Obama said. "A college degree is the surest ticket to the middle class." While that assertion may or may not be true anymore, many people may be wondering what’s wrong with the free tuition idea.

First, we have to ask if he is really serious? Or, knowing that this idea has little chance of being approved, is he setting the stage for an issue in the 2016 campaign? But, assuming he is serious, here’s some of what is wrong with this idea.

If every state participated, the White House suggests that Mr. Obama’s proposal could help 9 million students and would save full-time enrollees an average of $3,800 a year. However, using the average cost, state and federal governments would have to pick up the tab of $34.2 billion each year. And, of course, these governments will get this money from … guess who: We, the taxpayers. Nothing is free.

Never having had to pay his own way, perhaps Mr. Obama is unaware that students with “drive and discipline” have in the past managed to pay their own way to a community college, a trade school, or to a four-year institution, through part-time or full-time jobs and/or work-study programs. That is a good process that over time has gotten millions of people through school and given them valuable work experience at the same time.

Giving things away is a slippery slope. An article in the Los Angeles Times has already suggested going farther. Michael Hiltzik writes, “But the proposal fails to address one glaring flaw in the nation’s overall system of public higher education: It should all be free.” Really? Why? Will this give-away mentality never end? And, furthermore, what exactly gives the president the authority to take care of kids’ college costs?

And, making significant things too easy deprives people of the ability to control their own lives. How will they ever be able to actually think about their life, develop goals, and work to achieve them? How will they become self-sufficient, and make their way in the world? The ease with which one obtains desired things is directly and inversely correlated with the appreciation one has for that which is obtained.

We can see this concept in action in federal support programs for children and unemployed adults, how dependency becomes a way of life.

Paying unwed mothers generous levels of support for themselves and their children has produced single-parent families where the mother is incentivized to have more children, not because she really wants more children, but because having more kids means getting a bigger support check.

People who have lost their job in the ultra-weak Obama recovery not infrequently turn down a new job because they can collect more in extended unemployment support than they can make at the new job. This is a significant influence in pushing the workforce participation rate to its lowest point in decades. “I can make more on unemployment than I can working one of the jobs that are available, so I’ll just drop out, and stop looking for work,” is how tens of thousands look at the situation.

This is not some unsupported theory. In March of 2013 The Huffington Post reported that the “number of days a job vacancy sits unfulfilled has gone up since the depths of the Great Recession in 2009. It currently takes an average of 23 business days for an employer to fill a job opening, compared to 15 days in 2009, according to an analysis of Labor Department data from economists at the University of Chicago and University of Maryland that was cited by The New York Times.”

In November of 2014, a study conducted by the Centre for Economics and Business Research (Cebr) reported that in the U.S. “33% of job vacancies remain open for three months or more. The cost of these unfilled jobs reaches $160 billion each year, a significant cost to the nation as a whole, businesses and individuals.”

Just as providing too much comfort through support for families and the unemployed has produced negative economic and social outcomes, so will giving away tuition to community colleges.

The truth is that Barack Obama and the others who share his poisonous ideals don’t want people to think for themselves or to be self-sufficient. Big government liberals want widespread dependency. They decry and oppose free market features and self-sufficiency at every turn, not because it is better for Americans or for the country at large, but because it suits their narrow, selfish ambitions.

Remember, back in late October of 2008, candidate Barack Obama told us he wanted to fundamentally transform the United States of America.

When those who think government is the answer to all problems, great and small, significantly outnumber those who prefer individual liberty and self-reliance, the country will have taken a step from which it will not be able to retreat. We are very near to that point.

What’s more important, a minimum wage hike, or fixing the economy?

Commentary by James Shott

An analysis by the Congressional Budget Office (CBO), a nonpartisan arm of Congress, shows that both sides in the debate over whether to raise the federal minimum wage from $7.25 an hour to $9.00, $10.10, or even $15 an hour have relevant points to make.

Advocates believe that the wage hike would lift nearly a million people out of poverty, increase productivity, reduce turnover and give those receiving the raise more money to spend, and that would translate to businesses recording higher sales, and an overall improvement in economic activity.

A $10.10 minimum wage, the CBO says, means 900,000 fewer people in poverty, and job losses will comprise only 0.3 percent of jobs affected by the wage hike.

The hike would boost wages for most low-wage workers, as about 16.5 million workers who make less than $10.10 an hour would see higher earnings once the higher minimum is fully implemented, which Democrats in the House and Senate have been calling for. And then, those making slightly more than the new minimum wage may feel they need a raise too, and employers would be virtually compelled to give them one in what the CBO calls a "ripple effect."

Let’s review: Advocates believe we should raise the minimum wage because the more low-wage workers make, the more they'll have to spend, and the better that will be for businesses selling products and services. People move out of poverty and spend more and consequently businesses prosper from greater sales. Our economic problems magically dissolve. Does it get any better than this?

Unfortunately for the advocates, good decision-making requires looking at all the factors, not just the ones that support a particular position.

Opponents point out that higher wages lead to higher prices, and lost jobs, and wages need to be related to the work involved and its value to the company, not artificially determined by Washington bureaucrats.

An essential factor that needs to be considered is what happens inside businesses when their labor costs increase? They must make adjustments in other expense areas, increase productivity or increase prices to maintain profitability and stay in business.

The other side of the CBO job loss estimate is that while only 0.3 percent of minimum wage workers will lose their jobs with the proposed wage hike to $10.10 an hour, and that sounds like a small effect, the number of actual people comprising that 0.3 percent is 500,000. So 900,000 will be lifted out of poverty, but more than half that number will lose their jobs. Thus, the picture painted by the CBO is somewhat less rosy than the advocates believe.

A study for the National Center for Policy Analysis by Richard B. McKenzie, explains that there are other forms of compensation to consider, nonmonetary benefits that may be as much as 30 percent over and above wages of all workers, a substantial percentage of the total compensation employees receive. Faced with higher labor costs, employers may make adjustments to these nonmonetary benefits to balance things. These benefits include relaxed work demands, workplace atmosphere, schedule flexibility, job security, and hours of work. Employers may also have to cut jobs, curb summer hiring, opt not to replace workers who leave; lower their profitability and/or raise prices to customers.

Despite what you may hear, read or think, most employers want the best employees they can get; the most productive, best trained, and most devoted workers they can find. They are willing to pay them to keep competitors from luring them away, however, there are financial limits to what businesses can pay without making other changes.

They may reduce jobs or cut worker hours, increase demands on existing employees and impose a stricter work atmosphere to increase productivity, replace workers with machines, or look for cheaper materials from overseas where labor costs are lower, affecting American suppliers.

The US economy is suffering, as evidenced by, among other indicators, the labor force participation rate, which shows that only 63.2 percent of Americans age 16 or older are participating in the labor force, the rate having fallen over the last several years to 1977 levels.

We need an atmosphere that encourages businesses to create jobs, not artificially raise the wages of the least skilled, least experienced people in the labor force, particularly when doing so will cost 500,000 jobs, and further depress the participation rate.

Among the many stunning failures of the Obama administration is its proclivity to pander to small constituencies to gain political support, all the while ignoring the broader problems facing the nation.

When an administration chooses to implement narrowly focused policies conceived for political gain, you get what the Obama administration has produced: an almost non-existent recovery from the recent recession, millions of Americans who can’t find a job, millions more who are too discouraged to keep looking and have dropped out of the labor force, and still millions more Americans on food stamps and other forms of welfare.

The Obama administration and Congressional Democrats have shown conclusively that the serious problems of the nation are far less important to them than winning the next election.

Cross-posted from Observations

New Jersey; a contender in America's Race to the Bottom

Last week New Jersey' leading newspaper conglomerate who's cornerstone print publication is the Star Ledger and online NJ.com announced massive layoffs in the wake of continuing decline in revenue and circulation.

The Question is WHY?

The Garden State
where yesterday's
Flower Children
became today's
Bloomin' Idiots

Is it the changes in technology that plagues the Star Ledger group?

Or is it that the people of New Jersey are finally turning their backs on the liberal propaganda that the Star Ledger is known to spread?

As a student of our nation economy I regularly read newspapers from coast to coast, the Sacramento Bee, the Oregonian, the Star Ledger, Santa Barbara Independent and the San Jose Mercury News.  I'm often shocked simply reviewing the headlines, often asking myself is this for real? I have to confirm the date the story lines are so void of substance. So many media sources skip the important stuff. Astounding at times how deceitful and  biased these large regional news sources can be.

Frankly I think it is good to see the demise of the liars. The economic landscape has been squandered and undermined by liberal media deceit. The lose of these  jobs are nothing compared to the ruinous economic events precipitated by decades of liberal lies.

The tripe and irrelevant drivel that makes it to their lead story lines is a testament to the the Star Ledgers failure and a contributor to a vast ignorance across large segments of NJ society.

Many people in New Jersey are detached from reality, vacant on the critical issues our nation faces. I wager few New Jersey residents are aware that their state is ranked as the most financially unstable in the country. Few know the state debt hit a record $40.4 Billion after rising 4.1 percent in 2013. Add to that their unfunded employee retirement liabilities which are estimated to be the highest of all the states on a per-capita basis. (This includes both the pension and "other" contracted retirement benefits.)

SCARY MIGRATION TREND 

Add to all that the fact that New Jersey is experiencing the highest outward migration of any state and, well it is not a pretty picture.

New Jersey's Poster Child; Jon Corzine
First he almost destroyed Goldman Sachs,
 then he added ruin onto New Jersey.
The third times the charm,
He led MF Global into bankruptcy
at a stunning pace and a billion
dollars disappeared at the same time.
I believe he is still facing charges on that.

The debts and excessive expenses that have grown to unmanageable levels will be born on the shoulders of a declining population. It could be even worse, in the last census period New Jersey lost a congressional seat. It is too early to know if that will happen again, but it may.

Once the spawning grounds of visionaries now left to the rot of a parasitic culture that feeds on corruption, thuggery and taxes. Bankrupt in morals and bankrupt financially.   A bifurcated society where the government and its corporatist cronies suck on the souls of those that chose to stay behind.

The ties that bind,
a generation so blind 

Yesterday's Flower Children turned into today's Bloomin' Idiots

A soul-less society that will feel the scorn of it's children.  It is far better to let New Jersey fail, let the death dealt by liberalism cleans the economy and the culture.

ARE BAILOUTS IMMORAL?

The "too big to fail" argument must end, PERIOD.  It should not be an acceptable concept,  it is not reflective of a balanced and healthy free market, in fact the existence of the premiss is evidence that there are improper inducements in the markets in the first place.

New Jersey can fail, Chicago can fail, LA can fail. California - maybe it is too big to fail and there are serious efforts to break it up. In fact Tim Draper the famous venture capitalist is working on qualifying a 6-state breakup concept to be on the 2016 ballot in California.  That will be interesting.

Good intentions with predictable bad results are bad choices, period. Criminal? Perhaps.

If New Jersey or any other state or company or bank is on the road to failure it must be left to fail. To do otherwise in light of all we know now should be considered a criminal act.

As the New Year begins, government’s policies are still failing us

Commentary by James Shott

As the economic non-recovery crawls into 2014, the “good news” on the jobs front – that the unemployment rate dropped .3 percent in December to 6.7 percent – is far less impressive when you look beneath the surface.

The reason the unemployment rate dropped was not that a strengthening economy produced a sharply higher number of new jobs, as should be expected in a true recovery. December showed only a puny 74,000 new payroll jobs were added. Data from the Bureau of Labor Statistics (BLS) indicates that the drop resulted because five times that many people – 374,000 – became discouraged that they couldn’t find work and dropped out of the labor force.

Adding even a small number like 74,000 to a smaller labor force misleads us into thinking things have improved.

The BLS identifies June of 2009 as the official end of the recession, at which time the labor force participation rate was 65.7 percent (162 million workers). At the end of December, the rate stood at a pitiful 62.8 percent (155 million workers).

Using the size of the labor force in 2009 and the adding back into the equation the 7 million who have dropped out, the unemployment rate is just under 11 percent.

We should not celebrate a drop in the unemployment rate to 6.7 percent when 7 million Americans have given up looking for work because the economy still has not produced jobs for them.

Hopefully, the New Year will bring an infection of fiscal responsibility to our national leaders. It is interesting how liberals see global warming/climate change – a widely popular but unproven theory – as a true crisis, but don’t see years of budget deficits near and above a trillion dollars, and a national debt of nearly $17 trillion, as a problem.

President Barack Obama’s first year in office, 2009, saw a deficit of $1.4 trillion, which gets credited to George W. Bush, but contained the contribution of nearly $200 billion from the Obama stimulus. But over the next four years Mr. Obama racked up more than $4.2 trillion in deficits – FY 2010: $1,294 billion; FY 2011: $1,300 billion; FY 2012: $1,087 billion; FY 2013: $680 billion. This fiscal year the projection is a deficit of $744 billion, and the FY2015 deficit is projected at $577 billion.

To help put this in perspective, The Weekly Standard noted back in November of 2012 that, “According to the White House OMB, we ran up $1.8 trillion in real (inflation-adjusted) deficit spending during fiscal years 1942-45,” and that “we’ve now run up $3.4 trillion in real (inflation-adjusted) deficit spending under Obama — in less time than it took us to fight World War II.”

If there is good news in Obama deficit numbers it is that the deficits are coming down, but real good news would be Congress and the president taking concrete steps to get spending under control.

That seems unlikely, given Rep. Nancy Pelosi’s (D-CA) opinion that “The cupboard is bare. There’s no more cuts to make,” a position gleefully adopted by most, if not all, Congressional Democrats.

In her view there is no waste, fraud or abuse, despite more than ample evidence to the contrary, and there’s no unnecessary spending, either.

Senator Tom Coburn (R-OK) issues an annual report on government waste, and in “Wastebook 2013,” he lists 100 examples totaling $30 billion. Heaven only knows the total of all the wasteful spending of the federal government.

* The military has destroyed more than 170 million pounds of useable vehicles and other military equipment, approximately 20 percent of the total U.S. war material in Afghanistan, totaling $7 billion, rather than sell it or ship it home.

* The SuperStop is a $1 million bus stop complete with heated benches and sidewalks, and wireless zones for personal computers. Yet its roof doesn’t protect from the rain, snow, wind or blazing sun.

* One of NASA’s next research missions won’t be exploring an alien planet or distant galaxy. Instead, it is spending $3 million to go to Washington, D.C. and study one of the greatest mysteries in the universe — how Congress works.

* When officials at the Manchester Boston Regional Airport in New Hampshire installed new solar panels costing $3.5 million, they did not anticipate one quarter of them would not be used 18 months later because the reflection from the panels blinds pilots and controllers.

* The Treasury Department’s Inspector General for Tax Administration discovered the IRS paid up to $13.6 billion in false Earned Income Tax Credits in 2012.

* While millions of Americans continue to pay taxes on their hard earned wages, many federal employees are tax cheats, to the tune of $3.6 billion.

* The feds keep the lights on in empty and little used federal buildings, costing $1.5 billion.

* Out of the $33.5 billion in Pell Grants the federal government doled out last year, individuals posing as students took off with $1.2 billion.

When an elected public servant believes there can be no spending cuts in the face of such wanton waste, it speaks volumes about the integrity and motivation of that individual.

Federal spending is a giant problem that we had better address soon.

Cross-posted from Observations

What do minimum wage demographics say about raising the wage?

There has been a lot of uproar in the media lately about raising the minimum wage so that those people earning it would earn a “living wage.” But what do demographics about those earning the minimum wage tell us?

According to the Current Population Survey (CPS), which is a joint effort of the Bureau of Labor Statistics and the Census Bureau, 3.7 million workers reported earning the minimum wage of $7.25 or less per hour. Now 3.7 million is a lot of people, but when looking at the entire workforce, it’s a small portion – only 2.9 percent. Slightly more than half of them are aged 16 to 24, and 62 percent of that group are students.

Nearly 80 percent of those earning the minimum wage work part-time jobs and belong to families that earn nearly triple the poverty level for a family of four at $65,900 a year, while only 22 percent live at or below the poverty line. Three percent have finished college and obtained a degree, and 5 percent are married.

Many of those aged 25 and older work in jobs where they also earn tips, like restaurant workers, so their total pay most nearly always exceeds the minimum wage. While most do not live in middle- and upper-income families, they also are not living in poverty, having an average family income of $42,500, just less than double the $22,350 poverty line level for a family of four.

Advocates of raising the minimum wage – and many minimum wage earners who respond to the hype those advocates produce – complain that you can’t raise a family or even live a decent life on the minimum wage, so therefore it should be raised to provide a “living wage.”

When you realize that only 3 of every 100 workers earn the minimum wage, the problem doesn’t seem as dire as the advocates for a wage hike want you to believe. And when you look at the kinds of work that minimum wage earners perform, and who minimum wage earners are, it seems even less dire. These jobs require little education or training, and are overwhelmingly held by young people living at home.

Based upon the demographics, there’s no economic reason for a higher minimum wage.

You won’t find trained and educated people like electricians, mechanics, carpenters, plumbers, nurses, pilots or teachers, or lawyers, doctors, CPAs, engineers, and others who have gotten an extensive education and additional training making minimum wage, or anything near it.

But more importantly, the number of minimum wage employees who really need a “living wage” because of family or unusual personal needs is very small, and there are better ways to help them.

Assuming all minimum wage employees worked 20 hours a week, a $2 increase in the minimum wage would cost employers $2,080 a year for each employee, plus increased payroll taxes. For all 3.7 million workers, the increase would cost $7.7 billion a year, plus increased payroll taxes. Those working more than 20 hours a week adds even more costs.

Additional costs arise when those making between the old and new minimums get increases to get them to the new minimum, and when those making close to the new minimum get increases to keep them proportionately higher than the new minimum. The costs would be substantially higher than $7.7 billion. And guess who bears that cost? Employers? No.

Consumers will pay higher prices, producing reduced sales, and those higher prices will also affect those who just got a raise.

A Heritage Foundation research report released last February notes that while many advocates of higher minimum wages suggest a higher wage “to help low-income single parents attempting to survive on just a minimum-wage job … just 4 percent of minimum-wage workers – or 148,000 – are single parents working full-time, compared to 5.6 percent of all U.S. workers.”

To add billions in increased consumer costs to benefit a relative few doesn’t make sense. They need to become qualified for better paying jobs, and if that is difficult or impossible for them, and if government is going to provide welfare, those people should receive help.

“Contrary to what many assume,” the Heritage report notes, “low wages are not [the] primary problem [of the poor], because most poor Americans do not work for the minimum wage. The problem is that most poor Americans do not work at all.”

The faction promoting a higher minimum wage consists primarily of two types of people: those who do not understand or don’t care about the most basic concepts of business economics, and politicians who benefit from pandering to minimum wage earners.

Current government policies are designed for purposes other than to help people escape poverty; therefore government needs to start encouraging job creation so that people in poverty have better opportunities to take control of their own lives and work their way out of poverty.

Returning America to the land of opportunity it used to be, where people were able to go as far in life as they were able, should be President Obama’s major goal.

Progressivism transforms “welfare to work” to “welfare to not work”

 Millions of Americans get some kind of financial support from the federal government. Some of them have earned it (Social Security and retirement recipients), some of them really need it (the poor and disabled), some need it temporarily (like those who can’t find a job in the non-recovering economy) and some don’t really need it, but get it anyway.

The widely reported number of Americans in poverty is 46.2 million, about 15 percent of the population. July’s Household Survey revealed that 11.5 million were unemployed; 2.4 million will work but aren’t actively looking; and 8.2 million wanted full-time work but could only a find part-time job. And the Civilian Labor Force Participation rate was a very low 63.4 percent.

Yet CBS News reported that a survey of 2,000 employers showed one-third of them said lots of jobs go unfilled for three months or more. Many of the roughly three million unfilled jobs are in skilled trades and pay good wages, making one wonder about the current “everybody needs a college education” mania that now grips the country.

Another reason that good jobs go unfilled is that the federal government’s assistance programs make it easy to not work, and frequently pay more than some jobs.

The Cato Institute’s Michael Tanner, writing in the Los Angeles Times (Online) notes that, “Contrary to stereotypes, there is no evidence that people on welfare are lazy. Indeed, surveys of welfare recipients consistently show their desire for a job.” Yet the “U.S. Department of Health and Human Services says less than 42 percent of adult welfare recipients participate in work activities nationwide,” he continued. “Why the contradiction?”

“Perhaps it’s because, while poor people are not lazy, they are not stupid either,” he writes. “If you pay people more not to work than they can earn at a job, many won’t work.”

In looking at federal assistance programs, Mr. Tanner noted that most reports on welfare focus on only a single program, the cash benefit program, Temporary Assistance for Needy Families. But he explained that “focusing on this single program leaves the impression that welfare benefits are quite low, providing a bare, subsistence-level income.” However, most get assistance from more than one of the federal government’s 126 separate programs for low-income people, 72 of which provide either cash or in-kind benefits to individuals.

In order to analyze how the federal assistance programs affect recipients, the Cato Institute created a hypothetical family consisting of a mother with two children, ages 1 and 4, and then calculated the combined total of seven of the most common benefits that the family could receive in all 50 states.

In Washington, D.C., and Hawaii, Vermont, Connecticut, Massachusetts, New York, New Jersey, Rhode Island, Maryland, New Hampshire and California, that group of seven programs provide benefits worth more than $35,000 a year. The value of the package in a medium-level welfare state is $28,500.

Since welfare benefits are not taxed, to put the benefits issue in perspective the Cato study calculated how much pretax income the family would need to earn in order to provide the same amount as a 40-hour-per-week job. This calculation took federal and state income taxes, earned income tax credits and the child tax credit into account.

The study found that welfare pays more than an $8-an-hour job in 33 states and the District of Columbia, and that in 12 states and the District of Columbia welfare pays more than a $15-an-hour job. And, in Hawaii, Massachusetts, Connecticut, New York, New Jersey, Rhode Island, Vermont and Washington, D.C., welfare pays more than a $20-an-hour job.

Comparing the results with specific jobs, the Cato study found that in California and 38 other states, it pays more than the starting wage for a secretary and in the three most generous states, welfare benefits exceed the entry-level salary for a computer programmer.

While not every welfare recipient gets these seven benefits, many do, and some receive even more than the package used by the Cato study. “Still,” Mr. Tanner concludes, “what is undeniable is that for many recipients in the most generous states — particularly those classified as long-term recipients — welfare pays substantially more than an entry-level job.”

Welfare is supposed to be a temporary thing for most recipients, not a career. Yet in many cases able-bodied men and women do not look for work because they can do better on welfare.

Such a system discourages people from taking responsibility for themselves and their families. It creates a large faction of government dependents; a status that deprives people of self-respect and the pride of accomplishment that results when one succeeds in life because of their own efforts.

Even a low wage job is better than welfare, as it often is only a first step to better jobs. U.S. Census figures show that only 2.6 percent of full-time workers are poor, while 23.9 percent of adults who do not work are poor.

This country became what it once was not by millions depending upon government to feed and clothe them, but by Americans making themselves successful through determination and hard work. That is the goal our welfare system must have.

The Obama “War on Coal” is a disgusting government over-reach

President Barack Obama continues working to destroy the coal industry, most recently by changing carbon emission standards in such a way that a) coal-fired power plants will be heavily affected, b) encourages plant owners to convert to natural gas, and c) will discourage the construction of coal-fired plants overseas.

Rather than work to solve the very real problems of the nation – like unemployment, the economy, his scandal-ridden administration and the troubles on the international scene – he chooses to fight a war on coal through agencies like the Environmental Protection Agency, which impose extreme regulations and severe penalties on the industry.

Federal agencies routinely put regulations in effect without regard for the chaos and harm they will cause. Coal mining and related job losses and other financial repercussions just don't matter to the president and the bureaucrats. To them, the jobs of tens of thousands of Americans and the economies of 27 states are far less important than their narrow ideological goals.

These agencies criminalize behavior through regulations and impose fines or jail time as if those regulations were law. But according to Article I of the U.S. Constitution, only Congress can make law.

These agencies create regulations and penalties because Congress repeatedly fails to determine how measures it passes should be implemented, and allows or directs the Executive branch to decide how to do that. But the Constitution does not provide the Legislative branch the authority to transfer its law-making obligation to Executive branch agencies.

The Founders deliberately set up a tripartite government with specific and limited roles for each of the branches and a system of checks and balances specifically to prevent any of the three branches from assuming too much power, all based upon the concept of a limited government with few and specific responsibilities.

Briefly summarized, the Legislative branch makes laws, the Executive branch administers and enforces laws, and the Judicial branch rules on questions of law and operates the court system.

By abdicating its duty to complete the lawmaking process, and leaving part of that function to the Executive branch, the Congress has failed in its fundamental duty, which is a basic tenet of the Constitution, and it abets the Executive branch in developing its evolving tyrannical persona.

Since the nation's law-making authority resides with the Legislative branch, the rules and penalties federal agencies wield so freely and often arbitrarily are void of any true authority. It is time, therefore, for the people and the states to stand up and say, like Howard Beale in "Network": "I'm as mad as hell, and I'm not going to take this anymore!"

The federal government collectively does not have the authority to target a given industry for destruction, and the Executive branch darned sure doesn't have that authority all by itself.

If any one or more of the 27 states that mine coal want to mine continue doing so, they need to do it as responsibly as is possible and feasible, and tell the federal government officially and formally to buzz off. The time-honored mechanism for restraining an over-reaching federal leviathan is known as "nullification."

The United States seems to be infected by a philosophy like that expressed by entertainer Britney Spears, whose inferior talent actually looks good compared to her abysmal thinking: "I think we should just trust our president in every decision he makes and should just support that, you know, and be faithful in what happens."

Fortunately, Ms. Spears' naive reasoning was not shared by Thomas Jefferson, who had a better idea and suggested that rather than just sit back and allow a president or Congress or judges to arbitrarily alter the meaning of the Constitution, we must make only those changes that have popular consent and do so through the amendment process, which the Founders sensibly included in the Constitution.

Not all amendments have been good ones, of course, as evidenced by numbers 16, 17, and 18 (which was repealed), but that process is far superior to what we have done and are doing to the first 10 amendments the other way.

It is indeed sad to observe the embarrassing and shameful lack of knowledge and understanding of the founding principles of our country and how legions of Americans who don't know or understand them threaten our very survival as a free nation.

But as bad as that is, it is far worse when our elected officials, who took an oath to "preserve, protect and defend" the United States Constitution, share in this ignorance. Or worse, if they ignore their oath in favor of not preserving, protecting and defending the Constitution in order to "fundamentally transform the United States of America" to meet some foreign ideological vision.

Just how many of our 535 elected representatives in Congress and the hundreds of thousands of other federal employees – including the president and his cabinet – really understand the supreme law of the land, the United States Constitution, is unknown. But watching Mr. Obama's behavior and the behavior of the rest of the government suggests that number is horrifyingly small.

Ignorance is bliss, they say. But not in our government.