Showing posts with label unemployment. Show all posts
Showing posts with label unemployment. Show all posts

Thursday, April 30, 2015

The Baltimore Riots, The Problems In The Black Inner Cities, & The Failure Of Progressive Ideals (Updated)



The following is Judge Andrew Napolitano, appearing on Fox News, opining that the investigation into the death of Freddie Gray in Baltimore, the ostensible justification for the recent riots there, has not been properly handled and that the riots might well have been avoided had the Baltimore City Police Department reacted with greater swiftness. That assumes of course that the investigation could have been concluded much quicker, and I do not know if that is accurate:



Regardless, Judge Napolitano is right about what should happen going forward. Freddie Gray is owed justice. There is also no question that Freddie Gray's wrongful death was the ostensible justification for the Baltimore riots. That said, the real issues plaguing a very substantial portion of the black community, particularly those in the inner cities, go far deeper than the issue of Freddie Gray's death or police misconduct.

Senator Harry Reid, the Democrat majority leader, though repeating the utter canards that racism is at the root of the problems experienced by inner city blacks, in fact came close to hitting the mark from the floor of the Senate Monday:

"[T]he underlying problem [giving rise to the Baltimore riot is] that millions of Americans feel powerless in the face of a system that is rigged against them.”

Reid stressed that “it’s easy to feel powerless when you see the rich getting richer while opportunities to build a better life for yourself and your family are nonexistent in your own community.”

“It’s easy to feel devalued when schools in your community are failing. It’s easy to believe the system is rigged against you when you spend years watching what President Obama called today ‘a slow-rolling crisis’ of troubling police interactions with people of color,” he continued. “No American should ever feel powerless. No American should ever feel like their life is not valued. But that is what our system says to many of our fellow citizens.”

“No American should be denied the opportunity to better their lives through their own hard work. But that is the reality that too many face. In a nation that prides itself on being a land of opportunity, millions of our fellow citizens live every day with little hope of building a better future no matter how hard they try. We cannot condone the violence we see in Baltimore. But we must not ignore the despair and hopelessness that gives rise to this kind of violence.”

The reality is that Democrats own the inner cities as well as this nation's response to the plight of our black citizens since the start of the Great Society and the welfare state. They try to maintain the canard that the only things holding back blacks in the inner city today are rampant (conservative) racism, white police racism, and but a bit more application of government spending. The reality is that racism is absent from all but the fringes of society today, that inner city black youths have exponentially far more to fear from other black youths than from white police, and that the Great Society welfare state has not just failed a substantial portion of the black community, but actually worsened their situation over the past half century.

Several writers have addressed this issue today. The Editorial Board of the WSJ points out the obvious, that the progressive blue-city model is a failure. As to Baltimore city in particular, the authors note:

The latest figures from Maryland’s Department of Labor show state unemployment at 5.4%, against 8.4% for Baltimore. A 2011 city report on the neighborhood of Freddie Gray—the African-American whose death in police custody sparked the riots—reported an area that is 96.9% black with unemployment at 21%. When it comes to providing hope and jobs, we should have learned by now that no government program can substitute for a healthy private economy.

Then there are the public schools. Residents will put up with a great deal if they know their children have a chance at upward mobility through education. But when the schools no longer perform, the parents who can afford to move to the suburbs do so—and those left behind are stuck with failure. There are many measures of failure in Baltimore schools, but consider that on state tests 72% of eighth graders scored below proficient in math, 45% in reading and 64% in science.

At National Review, Michael Tanner notes that Maryland maintains one of the highest tax rates in our nation, as well as a very generous welfare system, a highly unionized work force, and an environment largely hostile to private business. Baltimore city itself suffers from declining population, high crime, very high unemployment, high out-of-wedlock births, and poor schools. As he concludes:

Once order is restored in Baltimore, there will be time to take stock. We can expect to hear the usual chorus about neglected neighborhoods and the need for government jobs programs or additional social spending. Instead, we should take to heart President Obama’s admonition that “When what you’re doing doesn’t work for 50 years, it’s time to try something new.”

Big government has failed Baltimore. If we learn nothing from what just happened — if we simply go back to throwing money at the same tired old programs — it will be just a matter of time until this happens all over again."

In yet another article, Michelle Malkin makes the same point, that the left is out of ideas to address the problems in the black inner city communities beyond spending ever more money on exactly the same type of programs that have utterly failed to this point. But probably the most articulate on these issues today is Kevin Williamson writing at National Review:

St. Louis has not had a Republican mayor since the 1940s, . . . the city is overwhelmingly Democratic, effectively a single-party political monopoly from its schools to its police department. Baltimore has seen two Republicans sit in the mayor’s office since the 1920s — and none since the 1960s. Like St. Louis, it is effectively a single-party political monopoly from its schools to its police department. Philadelphia has not elected a Republican mayor since 1948. The last Republican to be elected mayor of Detroit was congratulated on his victory by President Eisenhower. Atlanta, a city so corrupt that its public schools are organized as a criminal conspiracy against its children, last had a Republican mayor in the 19th century. . . . Atlanta is effectively a single-party political monopoly from its schools to its police department.

Black urban communities face institutional failure across the board every day. American cities are by and large Democratic-party monopolies, monopolies generally dominated by the so-called progressive wing of the party. The results have been catastrophic, and not only in poor black cities such as Baltimore and Detroit. Money can paper over some of the defects of progressivism in rich, white cities such as Portland and San Francisco, but those are pretty awful places to be non-white and non-rich, too: Blacks make up barely 9 percent of the population in San Francisco, but they represent 40 percent of those arrested for murder, and they are arrested for drug offenses at ten times their share of the population. Criminals make their own choices, sure, but you want to take a look at the racial disparity in educational outcomes and tell me that those low-income nine-year-olds in Wisconsin just need to buck up and bootstrap it?

There are people who should be made to answer for that: What has Martin O’Malley to say for himself? What can Ed Rendell say for himself other than that he secured a great deal of investment for the richest square mile in Philadelphia? What has Nancy Pelosi done about the radical racial divide in San Francisco?

. . . [The rioting] we have seen in places such as Ferguson and Baltimore is much more ordinarily criminal than political. But there is a legitimate concern here — from which no one seems to be willing to draw the obvious conclusion: There is someone to blame for what’s wrong in Baltimore.

Would any sentient adult American be shocked to learn that Baltimore has a corrupt and feckless police department enabled by a corrupt and feckless city government? I myself would not, and the local authorities’ dishonesty and stonewalling in the death of Freddie Gray is reminiscent of what we have seen in other cities. There’s a heap of evidence that the Baltimore police department is pretty bad. This did not come out of nowhere. While the progressives have been running the show in Baltimore, police commissioner Ed Norris was sent to prison on corruption charges (2004), two detectives were sentenced to 454 years in prison for dealing drugs (2005), an officer was dismissed after being videotaped verbally abusing a 14-year-old and then failing to file a report on his use of force against the same teenager (2011), an officer was been fired for sexually abusing a minor (2014), and the city paid a quarter-million-dollar settlement to a man police illegally arrested for the non-crime of recording them at work with his mobile phone. There’s a good deal more. Does that sound like a disciplined police organization to you?

Yes, Baltimore seems to have some police problems. But let us be clear about whose fecklessness and dishonesty we are talking about here: No Republican, and certainly no conservative, has left so much as a thumbprint on the public institutions of Baltimore in a generation. Baltimore’s police department is, like Detroit’s economy and Atlanta’s schools, the product of the progressive wing of the Democratic party enabled in no small part by black identity politics. This is entirely a left-wing project, and a Democratic-party project. When will the Left be held to account for the brutality in Baltimore — brutality for which it bears a measure of responsibility on both sides? There aren’t any Republicans out there cheering on the looters, and there aren’t any Republicans exercising real political power over the police or other municipal institutions in Baltimore. Community-organizer — a wretched term — Adam Jackson declared that in Baltimore “the Democrats and the Republicans have both failed.” Really? Which Republicans? Ulysses S. Grant? Unless I’m reading the charts wrong, the Baltimore city council is 100 percent Democratic.

The other Democratic monopolies aren’t looking too hot, either. We’re sending Atlanta educators to prison for running a criminal conspiracy to hide the fact that they failed, and failed woefully, to educate the children of that city. Isolated incident? Nope: Atlanta has another cheating scandal across town at the police academy. Who is being poorly served by the fact that Atlanta’s school system has been converted into crime syndicate? Mostly poor, mostly black families. Who is likely to suffer from any incompetents advanced through the Atlanta police department by its corrupt academy? Mostly poor, mostly black people. Who suffers most from the incompetence of Baltimore’s Democratic mayor? Mostly poor, mostly black families — should they feel better that she’s black? Who suffers most from the incompetence and corruption of Baltimore’s police department? Mostly poor, mostly black families. And it’s the same people who will suffer the most from the vandalism and pillaging going on in Baltimore, too. The evidence suggests very strongly that the left-wing, Democratic claques that run a great many American cities — particularly the poor and black cities — are not capable of running a school system or a police department. They are incompetent, they are corrupt, and they are breathtakingly arrogant. Cleveland, Philadelphia, Detroit, Baltimore — this is what Democrats do.

And the kids in the street screaming about “inequality”? Somebody should tell them that the locale in these United States with the least economic inequality is Utah, i.e. the state farthest away from the reach of the people who run Baltimore.

Keep voting for the same thing, keep getting the same thing.

What happened to Freddie Gray demands justice. What has happened with a substantial portion of the black community over the past half century started as a tragedy, Today, in a nation as rich as ours, it has now reached the point of obscenity. It is every bit as equally deserving of justice.

Update: This from Powerline:

The Washington Post reports that a prisoner who was in the police van with Freddie Gray says he could hear Gray “banging against the walls” of the vehicle and believed he “was intentionally trying to injure himself.” According to the Post, the prisoner’s statement is contained in an affidavit that’s part of an application by the police for search warrant seeking the seizure of the uniform worn by one of the officers involved in Gray’s arrest or transport.

I can’t tell for sure from the Post’s report whether the prisoner executed the affidavit or whether the affidavit is from a police officer who relates what the prisoner allegedly told him. It looks like the Post is saying it’s the latter.

It seems counter-intuitive to suppose that Gray inflicted serious bodily injury on himself. However, without knowing Gray’s state of mind at the time — e.g., was he high on drugs; was he trying to set up a claim of police brutality — it’s impossible to evaluate the plausibility of the perception that this is what happened.

In any event, if Gray’s fellow prisoner does indeed say he heard Gray banging against the walls and that Gray seemed to be trying intentionally to injure himself, this will cast doubt on claims that police mistreatment caused Gray to sustain injuries while he was in the van. Such evidence will also make it difficult to attribute Gray’s death to the police.

The Post says that “video shot by several bystanders to Gray’s arrest shows two officers on top of Gray, their knees in his back, and then dragging his seemingly limp body to the van as he cried out.” Thus, some of his injuries may be due to what happened during the arrest, while others may be due to what happened in the van.

There is also the police commissioner’s statement that officers violated policy by failing properly to restrain Gray via a seat belt while he was in the van. However, the police union is pushing back on this assertion.

The union president says that the policy mandating seat belts wasn’t emailed to officers until three days before Gray was arrested. Moreover, it was emailed as part of a package of five policy changes.

Officers should, of course, read about all policy changes. But human nature being what is, the union president’s statement that officers tend not to do so is plausible. It would be one thing if the officers who dealt with Gray had violated a longstanding, widely known policy on seat belts. It’s another if, as seems to be the case, the policy was brand new and had only just been communicated by email as part of package of policy changes.

In any event, the Post’s report suggests that the facts surrounding Gray’s unfortunate death may not be as straightforward as those who have rushed to condemn the police assert them to be. The best approach remains what it has been all along — wait for the facts before forming a judgment.







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Friday, September 6, 2013

Left & Right Agree - Obama's Economic Policy Has Been "An Astonishing, Horrifying Failure"

Another month into the Obama presidency, another horrid economic report. This from Hot Air:

The August jobs report from BLS offers yet another installment on the four-year stagnation period after the Great Recession. The US economy added 169,000 jobs, just above the 150,000 needed to keep pace with population growth. The U-3 jobless rate edged downward to 7.3%, but that’s because the labor force participation rate hit another 35-year low. . . . [A]lmost twice as many people [312,000] left the work force as found new jobs.

Obama, and indeed, the entire left, are simply economically incompetent. They shouldn't be allowed to run a lemonade stand. They see businesses as, at once, an enemy to be regulated and punished and as a cow to be milked for all they want.

The only thing keeping this economy afloat, even in this sad state, has been the Federal Reserve's "quantitative easing" - running the printing presses overtime, printing money to buy up government bonds in something akin to the world's biggest ponzi scheme. The danger of that is run away inflation, and indeed, the Fed has indicated that it intends to start unwinding this massive accumulation of debt at some point here in the near future as unemployment numbers fall.

The only part of the U.S. economy that is doing well is the stock market - and that is a bubble derived by Quantitative Easing (QE) that will burst the moment QE and the Fed's easy money policy stops. There is a reason today that Wall St. is celebrating the horrid economic numbers from the August BLS report - it means that QE will continue. This via Bizzy Blog:



Speaking today, at least one very famous economist says that we have suffered through five "years of tragic waste" under Obama:

[B]y any objective standard, U.S. economic policy since Lehman has been an astonishing, horrifying failure.

I couldn't agree more. That is indeed a damning indictment, but who is the economist that said this? Thomas Sowell? Art Laffer?

No. It is former Enron Advisor, Obama cheerleader and far left economist Paul Krugman writing in the NYT. As Krugman points out:

[T]he failure of policy these past five years has, in fact, been immense.

Some of that immensity can be measured in dollars and cents. Reasonable measures of the “output gap” over the past five years — the difference between the value of goods and services America could and should have produced and what it actually produced — run well over $2 trillion. That’s trillions of dollars of pure waste, which we will never get back.

Behind that financial waste lies an even more tragic waste of human potential. Before the financial crisis, 63 percent of adult Americans were employed; that number quickly plunged to less than 59 percent, and there it remains.

Do remember that Krugman blessed off on Obama's "stimulus" plan several years ago, both in design and size. Now he claims that the real problem is that the stimulus was three times too small. As Powerline describes it:

Of course, Krugman thinks the problem with Obama’s policies is that the stimulus was too small, the United States isn’t far enough in debt, and we don’t have a big enough public sector. More cowbell! The salient point, I think, is that we can say it is now unanimous: Left and Right agree that Obamanomics has been an utter failure. The only question at this point is whether to go even farther left–to, what, the policies of Fidel Castro or Kim Jong-un?–or return to the principles of limited government and a free market that produced our prosperity in the first place. Seems like an easy choice.







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Monday, October 29, 2012

A Jobs Report That Might Never Come - Before Nov. 6 At Least

With unemployment being one of the top issues in this election, the October jobs report scheduled for Friday could have an impact on the election - likely a negative one for Obama. This from Hot Air:

{D]uring yesterday’s This Week on ABC. George Stephanopoulos asked former Obama administration economist Austan Goolsbee about the political impact of the jobs report coming up this Friday, just four days before most voters cast their ballots. Goolsbee notes that only “unbelievable outliers … crack through the shell” of the electorate’s consciousness for a single-month’s report. Goolsbee then admits that last month’s jobs report was “artificially too optimistic” — an “unbelievable outlier,” in other words.

So why admit that now? Well, that “unbelievable outlier” is likely to get corrected in this month’s household survey, and that will drive the jobless rate up. . . .

Not so fast. According to the WSJ, the Dept. of Labor is considering putting off the jobs report until after the election because of the superstorm currently bearing down on the East Coast. This in fact might be legitimate, but why do I feel that, if it is anywhere near a close call, the decision will be to put it off until after the election. Hey, maybe it will come out on the same day the State Dept's investigation into the Benghazi scandal is published. And that may come on the same day the MSM starts to pay attention to what is unarguably one of the worst scandals in our nation's history.







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Saturday, October 6, 2012

An October Unemployment Surprise: Putting the BS in BLS

Mirable dictu. Just in time to impact the election, the Bureau of Labor Statistics reports that the Obama economy is not merely showing some signs of life, but is in the midst of a miraculous recovery. The BLS claims that, while only 114,000 jobs were added in September, the U-3 unemployment rate dropped from 8.1% all the way down to 7.8%. Morning Joe on MSNBC laid out clearly why these numbers just don't add up.



Make no mistake, this is still a horrid number, but it is the first time the economy has had a U3 unemployment figure below 8% during Obama's term. The left is in full squawk mode, hailing this as a sure sign of the success of Obama's economic policies and Obama is warning against any attempt to criticize this number by "talking down" the economy. If you can stomach it, watch the first few minutes of this from MSNBC yesterday:



History teaches that, with an economy growing at an anemic 1.3%, we are going to see stagnant or declining job growth - and indeed, 114,000 jobs added in September (per the BLS's large scale institutional survey) is actually well below the approximately 150,000 new jobs needed just to keep even with the growth in our job market. It is what we would expect with this level of GDP growth.

And yet, in a separate Household Survey (see discussion of the two surveys at Hot Air) that the NLS uses to calculate the U-3 unemployment rate, the BLS is showing job growth of 837,000. The last time our nation saw job growth like that, it was under Reagan when GDP was growing at 9.8%. It is simply impossible to reconcile the the Household Survey number either with September's Institutional Survey, or with historic economic reality.

This has a distinct odor of corruption, cf cooking the books. That said, it is possible that this is really the mother of all coincidences - that in the month before the election, with jobs being the central issue, the BLS Household Survey really did come up with an outlier - a number not cooked, but wildly wrong nonetheless. Charles Krauthammer explains:



Going beyond that, even if we assume the Household Survey number of 837,000 new jobs in September is correct, it does not change the reality of our economic distress. It does, however, greatly muddy the water and makes Romney's job, during the next critical month, of explaining economic reality to Americans that much harder.

Note that the September 2007 BLS report, before the recession, showed unemployment at 4.7% and a labor force participation rate of 66%. This September's report showed unemployment at 7.8% and a labor force participation rate of 63.6%. Note also that we are an expanding nation. Some 200,000 new people enter the potential work force each month - thus we need to be creating about 132,000 new jobs each month just to keep unemployment where it is at the time. What that means is that Obama would have needed to have created, from Feb, 2009 through Sep. 2012, approximately 6 million new jobs just to keep up with the increasing work force. But on top of that, we lost 8 million jobs during the recession that lasted from Dec. 2007 to June, 2009. So for Obama to have led us to a full recovery, he needed to preside over the creation of about 14 million new jobs.

That takes a long time for someone to explain. It is much quicker for Obama to claim "5.2 million new jobs" under his watch and 837,000 jobs in September. Therein lies Romney's challenge.





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Tuesday, February 7, 2012

Thomas Sowell On Romney, Conservativism, & The Minimum Wage Law

My own view of Mitt Romney is that he is a person who has mastered the vocabulary of conservativism in as much as a native speaker of English might master, say Mandarin Chinese.  Romney speaks the language of conservativism with perfect diction, but it is obvious that he is not a conservative by nature. I pointed that out in response to his statement that he is not concerned with the poor.  Today, Thomas Sowell makes the same point in his latest IBD column, finding Romney's statement that he would index the minimum wage law to inflation to be "defining."  This from Dr. Sowell:

. . . Romney's statement about not worrying about the poor — because they "have a very ample safety net" — was followed by a statement that was not just a slip of the tongue, and should be a defining moment in telling us about this man's qualifications as a conservative and, more important, as a potential president of the United States.

Romney has come out in support of indexing the minimum wage law, to have it rise automatically to keep pace with inflation. . . .

. . . [T]o people who call themselves conservatives, and aspire to public office, there is no excuse for not being aware of what a major social disaster the minimum wage law has been for the young, the poor and especially for young and poor blacks.

It is not written in the stars that young black males must have astronomical rates of unemployment. It is written implicitly in the minimum wage laws.

We have gotten so used to seeing unemployment rates of 30% or 40% for black teenage males that it might come as a shock to many people to learn that the unemployment rate for 16- and 17-year-old black males was just under 10% back in 1948. Moreover, it was slightly lower than the unemployment rate for white males of the same age.

How could this be?

The economic reason is quite plain. The inflation of the 1940s had pushed money wages for even unskilled, entry-level labor above the level specified in the minimum wage law passed 10 years earlier. In other words, there was in practical effect no national minimum wage law in the late 1940s.

My first full-time job, as a black teenage high-school dropout in 1946, was as a lowly messenger delivering telegrams. But my starting pay was more than 50% above the level specified in the Fair Labor Standards Act of 1938.

Liberals were of course appalled that the federal minimum wage law had lagged so far behind inflation — and, in 1950, they began a series of escalations of the minimum wage level over the years.

It was in the wake of these escalations that black teenage unemployment rose to levels that were three or four times the level in 1948. Even in the most prosperous years of later times, the unemployment rate for black teenage males was some multiple of what it was even in the recession year of 1949. And now it was often double the unemployment rate for white males of the same ages.

This was not the first or the last time that liberals did something that made them feel good about themselves, while leaving havoc in their wake, especially among the poor whom they were supposedly helping.

For those for whom "racism" is the explanation of all racial differences, let me assure them, from personal experience, that there was not less racism in the 1940s.

For those who want to check out the statistics — and I hope that would include Mitt Romney — they can be found detailed on pages 42 to 45 of "Race and Economics" by Walter Williams.

Nor are such consequences of minimum wage laws peculiar to blacks or to the United States. In Western European countries whose social policies liberals consider more "advanced" than our own, including more generous minimum wage laws and other employer-mandated benefits, it has been common in even prosperous years for unemployment rates among young people to be 20% or higher.

The economic reason is not complicated. When you set minimum wage levels higher than many inexperienced young people are worth, they don't get hired. It is not rocket science.

Milton Friedman explained all this, half a century ago, in his popular little book for non-economists, "Capitalism and Freedom." So have many other people. If a presidential candidate who calls himself "conservative" has still not heard of these facts, that simply shows that you can call yourself anything you want to.

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Sunday, January 8, 2012

Cooking The Employment Numbers

The Labor Dept.'s December's job numbers - 200,000 jobs created and 8.5% unemployment - were celebrated throughout the MSM as proof that the economy is turning around.  The numbers, as always, are seasonally adjusted.  But what is different about this year's seasonal adjustment is that the Labor Dept. deviate's significantly upward with past December adjustments.  Tom Blumer at BizzyBlog has the analysis:  

Yesterday’s raw result, if achieved in either of those two Decembers [2004 and 2005}, would have led to a seasonally adjusted result of about 140,000 — 60,000 less than reported.

In the private sector (blue boxes at right), the raw result in December 2005 of 94,000 jobs lost was only 14,000 jobs worse than the -80,000 reported for December 2011, yet yesterday’s seasonally adjusted result was 74,000 jobs higher (212K vs. 138K). What’s more, the nearly breakeven raw result in December 2006 (only 6,000 jobs lost) led to 37,000 fewer job additions after seasonal adjustment than yesterday (175K vs. 212K).

It would seem that the Labor Dept. has learned new math. In any event, as I have pointed out so often before, the focus on Labor's U-3 number, in this case 8.5%, is ridiculous because it discounts a vast number of long term unemployed, deeming them to have voluntarily left the workforce. The U-6 unemployment number captures more of the long term unemployed, as well as those who are working part time simply because they cannot find full term employment. A comparison of the U-3 and U-6 numbers gives a better feel for true unemployment situation - and it is not 8.5%


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Friday, December 2, 2011

NYT's Curious Definition Of "Hope"

The Bureau of Labor Statistics reports that in November, 315,000 people "dropped out of the labor force," while only 130,000 new jobs were added.  In other words, the jobs situation took yet another significant turn for the worse.  Yet in the unique math practiced by today's BLS - not accounting for those who have dropped out of the labor force in the U-3 unemployment number - that means the our nation's job situation actually improved, on paper only of course.  The reality is that we still have "13 million unemployed workers, whose periods of unemployment averaged an all-time high of 40.9 weeks" and that number continues to grow, far outpacing job creation.  Nonetheless, the BLS calculates that the unemployment rate dropped from 9% to 8.6% in November, thus leading the New York Times to trumpet:

Signs of Hope in Jobs Report; Unemployment Drops to 8.6%

Many more signs of hope like that and our nation will be completely wrecked. 


Update:  The broader unemployment number, U-6, which includes the underemployed, is at a staggering 15.6%.


Rush Limbaugh has a colorful rant dealing with both the fraud in the unemployment number and the reaction of the drive-by media to the 8.6% number.  Meanwhile, TIME magazine's Stephen Gandell suggests that this drop below 9% could be a "game changer," a sure sign of a strengthening economy.  That level of intellectual dishonesty is stomach churning.


That said, not all left of center pundits are intellectually dishonest.  My hats off to The New Republic for publishing this Brookings Institution analysis of the current job situation:

Three points are worthy of note.

First: Despite the growth of the working-age population over the past four years, the labor force (roughly, the sum of those employed plus job-seekers) has not expanded. For various reasons, more and more Americans have been dropping out of the labor force. If Americans of working age were participating in the labor force at the same rate as they were at the onset of the recession, the labor force would be nearly 5 million people larger, and unemployment would be significantly worse in both absolute and percentage terms.

Second: Despite the modest economic recovery since the recession ended in mid-2009, total employment remains more than 5.5 million below the level of 2007 and about 1.6 million below where it was when President Obama took office.

Third: To regain full employment (5 percent, which happens to be the same as the level when the recession began) with the pre-recessionary labor force participation rate, we would need 150.7 million jobs—10.1 million more than we have today. That’s a reasonable measure of the hole we’re still in, two and a half years since the official end of the recession.

The American people are unlikely to cheer up about the economy until we get appreciably closer to the top of the hole.

This graph, from Doug Ross, shows the depth of unemployment during this recession in comparison to all of the other recessions since WWII:


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Saturday, May 7, 2011

Time To Spike The Ball?



That about sums it up.

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Saturday, February 12, 2011

Quick Hits

Unemployment -
Instapundit - [Gallup reports] unemployment up to 10.3 Percent. I’ve noticed a divergence between the Gallup numbers and the “official” numbers lately. I wonder why that is? Is it seasonal adjustment, or something else? Underemployment is up to 19.7 percent.

BizzyBlog comments on an IBD editorial explaining why businesses aren't accepting Obama's offer to "get in the game."

CPAC -
The speeches at Hot Air: Coulter, Cain, Romney, Bolton, Daniels

Globull Warming -
I have several core concerns with global warming theory, with the single most fundamental being that I don't trust the historical temperature record for all the reasons set forth here and here. We learn today that several scientists, inlcuding Anthony Watts, are about to set up an independent temperature monitoring program that addresses those concerns. Whatever data this produces, the concept - the actual practice of transparent science in the climate field - sounds quite promising.

Egypt
Mark Steyn critiques the dismal performance of our intelligence agencies.

Michael Totten on Tariq Rammadan and the false face of moderation in the Muslim Brotherhood

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Thursday, February 10, 2011

CBO: Obamacare Will Cost 800,000 Jobs

This is the smoking gun that needs to be replayed and replayed between now and 2012.

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Friday, February 4, 2011

Unemployment & Statistical Games


Great news - the Obama Bureau of Labor Statistics (BLS) is reporting that unemployment in January dropped from 9.4% to 9%. Expect to hear Obama beating his chest and singing paeans to himself in the near future.

The extremely bad news - we only added 36,000 jobs - that is about 100,000 shy of the number needed just to keep up with the expanding pool of avaiable workers. Indeed, the labor force participation chart above shows the reality - that the percentage participation of Americans in our work force continues a precipitous decline.

So somewhere, there is a huge disconnect. Our unemployment situation got worse in January. How the BLS got its number was by dropping half a million from the number of available workers. That adjustment makes just no sense, to me at least. Our available workforce is expanding, not contracting - everywhere but in the math Dept. at BLS apparently.

More on this and possible explanations at Bizzy Blog and Hot Air.

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Wednesday, January 26, 2011

SOTU 2011 Post-Game Analysis - Spend Spend Spend

To summarize Obama's SOTU, stay the course on spending and don't change the substance of the agenda. As Rand Paul noted, Obama still sees government as the solution to all of our problems (both real and imagined, I would add). If anyone heard in Obama's SOTU speech a move to the center, they were listening to the mellifluous tone of Obama's voice and not paying any attention to the lyrics of his siren song.

Obama stepped up to the teleprompter at a time when our economy is in deep trouble. Growth is tepid and far below where it should be coming out of a recession. A record forty one million people in the U.S. are on food stamps. Housing prices have sunk faster and lower than Katy Couric's Nielsen ratings. The cost of basic commodities - oil, gas and food - are going through the roof. Real unemployment, UH-6, is at 16.7% - and that is actually up from a year ago. So how does Obama address these problems in the opening of his SOTU speech? He puts a happy face on it:

“Two years after the worst recession most of us have ever known, the stock market has come roaring back. Corporate profits are up. The economy is growing again.”

It was a disingenuous start to a disingenuous speech.

Two days ago, I forecast what Obama would say in his State of the Union speech with fair accuracy. The majority of Obama's speech was given over to justifying more spending for his radical green agenda, to hire more teachers, and to pay for another stimulus under the guise of infrastructure spending. And when it came to deficit reduction, Obama tried to portray Obamacare as the heart of deficit reduction. To my surprise, he mentioned entitlements, but he did so only in passing. Obama also offered a freeze of entitlement spending in an act of symbolism over substance. Lastly, when it came to “reforming government,” Obama hyped reducing the regulatory burden, yet said nothing about the tsunami of regulations waiting in the wings.

To give the devil his due, Obama did make some very good proposals in his speech:

: Reforming the corporate tax – As a general principal, this is a positive step. Obama said he wants Congress to reduce our corporate tax from the current rate of 35%, the highest in the developed world. He did not propose a new rate, but said that any such reform should be “revenue neutral." That is bad news, as it means it will not promote growth. That said, if it means getting rid of ALL the subsidies that special interests have worked into our tax code, then great. But Obama made crystal clear that he wants to heavily subsidize his favored industries, particularly the green ones. So it would seem that Obama's call for tax reform may in reality be a backdoor way to soak businesses in America to fund Obama's version of crony capitalism. We have to see the details on this one.

: Medical Malpractice reform – this is incredibly important if we are ever to bend down the cost curve of medical expenses. I am glad that he mentioned it, but it is likely a red herring. The left, owned in part by the trial lawyers lobby, would sooner chew off their right arm than pass national med mal reform. To date, neither Obama nor Congressional Dems have shown the slightest interest in anything beyond lip service to med mal reform.

: Race to the Top – this relatively inexpensive program program, $4 billion, is in fact a good program aimed at encouraging reform in state educational systems. It deserves full support from both sides of the aisle.

: Earmarks – Obama announced that he won't sign any bills with earmarks in them – weeks after the House promised not to send him any bills with earmarks. This was like watching the movie Dragonslayer, where at the end of the flick, the King walks up to the recently slain dragon, puts his sword through it, and has himself proclaimed "King Casiodorus, Dragonslayer." What a tool.

: A Reorganization and streamlining of our regulatory agencies – On the surface, this sounds like a very good idea. But I suspect there will be an infinite number of devils in the details.

Okay, now on to the ridiculous assertions and other low points of the speech:

I. Innovation -

Obama called for “innovation,” using the symbolism of a “Sputnik moment,” the point when America turned its attention to manned space flight and a lunar landing. He then stated that government spending was a necessity for innovation and made clear that his main concern was funding his radical green agenda:

"This is our generation's Sputnik moment."

The irony here is amazing. Our efforts at manned space flight did pay a lot of dividends for America – velcro, teflon, robotics, scanning technology, and scratch resistant lenses to name just a few. Yet Obama, who now calls for a “Sputnik moment,” is the man who killed off our manned space program so that he could spend more money on Obamacare – no doubt to increase innovations in socialism.

Our free enterprise system is what drives innovation. But because it's not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support that they need . . .

Apparently our corporations are incapable of conducting research and coming up with ideas without government intervention and massive infusions of our tax dollars. One, Obama wants to pick winners and losers in our economy – he fully embraces crony capitalism. Two, the proposition that our scientists and businesses cannot innovate without government subsidies and direction is simply too ludicrous to seriously entertain. Perhaps Obama should do some research on the issue over his I-pad, or make a call to the patent office on his cell phone.

In a few weeks, I will be sending a budget to Congress that helps us meet that goal. We'll invest in biomedical research, information technology, and especially clean energy technology . . .

Already, we are seeing the promise of renewable energy. Robert and Gary Allen are brothers who run a small Michigan roofing company. After September 11th, they volunteered their best roofers to help repair the Pentagon. But half of their factory went unused, and the recession hit them hard.

Today, with the help of a government loan, that empty space is being used to manufacture solar shingles that are being sold all across the country. In Robert's words, "We reinvented ourselves."

The left destroyed our housing industry – and with it, many of the businesses involved in that industry. Yet Obama has the audacity to hold out two failed roofing manufacturers as shining icons of our new economy. These would be green entrepeneurs had the sense to take some of the massive government subsidies Obama is passing out like candy to open up a solar panel manufacturing plant. Solar power, which provides less than 1% of our energy needs and is not price competitive, is a massive boondoggle. Heavily subsidized solar power has nearly bankrupted Spain and is having negative impacts throughout every other economy in Europe. And the day the subsidies for solar power end in the U.S. is the day Robert and Gary Allen declare bankruptcy and close up shop.

With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have 1 million electric vehicles on the road by 2015.

One, electric cars are not going to lessen our dependence on fossil fuels. The electricity to run them has to be generated by . . . hint, its not unicorn excreta. Two, a major concern with electric cars is the destabilizing impact large numbers of these vehicles would have on our energy grid.

Biofuels are another major boondoggle (well, but see here). None have proven cost-effective at scale and, in the case of ethanol, Obama has us pitting fuel against food. Over a fourth of are farmland is now given over to producing fuel that is inefficient, expensive, ecologically worse for the environment than fossil fuels, and driving food prices to world records. It is insanity. And that is what Obama wants more of?

[J]oin me in setting a new goal: by 2035, 80% of America's electricity will come from clean energy sources. Some folks want wind and solar. Others want nuclear, clean coal, and natural gas. . . .

Is this guy nuts? We should be embracing nuclear power for the future of our electrical needs, but we haven't broken ground on a new nuclear plant in decades – and Obama insured that we wouldn't be doing it at any point in the future when he closed off our only nuclear waste repository. Clean coal is both untested and looks to be far too expensive. Wind and solar are absolute pipe dreams. The bottom line is that, if we are getting 80% of our electricity from “clean energy sources” by 2035, our nation will be broke and half of our nation will be blacked out.

And as predicted, Obama is continuing his brutal war on our domestic oil production:

We need to get behind this innovation. And to help pay for it, I'm asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don't know if you've noticed, but they're doing just fine on their own. So instead of subsidizing yesterday's energy, let's invest in tomorrow's.

Regardless of Obama's radical green dreams, we aren't getting off oil at any point in the near future. Obama's policies will only make oil and gas prohibitively expensive in America and make us ever more dependent on foreign oil. In the not too distant future, that will prove catastrophic for our economy.

II. Education:

I said Obama would make a pitch for sending even more money into the black hole of public education, and lo and behold . . .

over the next ten years . . . we want to prepare 100,000 new teachers in the fields of science, technology, engineering, and math.

We desperately need better teachers in each of these areas. But the answer is not to hire more teachers – as I pointed our here, we know empirically that neither more teachers nor more per pupil spending have improved the quality of our science and math education. We need people competent in their fields and who perform well as teachers. To get there, we need to end the stranglehold of teachers unions on our public school system. Obama studiously ignored that point.

Obama's call for more teachers is nothing more than a push to further strengthen teachers unions and, thus, the Democratic Party. Expect this issue to be demagogued to the fullest over the coming months.

III. Illegal Aliens – Obama made a one paragraph pitch for amnesty. It was a shout out to the Hispanic Caucus.

IV. Infrastructure:

Over the last two years, we have begun rebuilding for the 21st century, a project that has meant thousands of good jobs for the hard-hit construction industry. Tonight, I'm proposing that we redouble these efforts.

Yeah, let's do that again since it worked so well in 2009 to help our economy. This is just Obama wanting to do more Keynesian spending without mentioning the word "stimulus."

V. Deficit Reduction:

Obama is a magician at deficit reduction - all misdirection and illusion. His points and proposals were one joke after another. Obama did as predicted, pointing to his regulatory review and Obamacare's fairy tale CBO numbers as "proof" that he is focused on deficit reduction.

Beyond that, Obama added a promise to freeze current discretionary spending – 7% of our spending – at current levels for five years in order to save $400 billion. Given that he increased discretionary spending by an incredible 20% over the past two years, that is like an alcoholic saying he won't pay for another drink after he just stocked a 5 year supply of rum.

Our deficit is over $14 trillion and is on a trajectory to hit a crisis number of $20 trillion in less than a decade. What we need is deficit reduction. What Obama offers instead is a slightly slower march to Armageddon. Not exactly a profile in leadership.

Obama did manage to work in a criticism of the right's proposal to save $2.5 trillion by actually reducing discretionary spending:

“let's make sure that we're not doing it on the backs of our most vulnerable citizens.”

Let there be no doubt of the new Democratic meme – any and all cuts proposed by the right will hurt the poor and/or the children.

That is just so insane. What poor people need are decent jobs, low fuel prices, low food prices and reasonable housing costs. EVERYTHING this administration is doing is falling heaviest on the poor. We are hemorrhaging good jobs, fuel and food are going through the roof, and housing is a mess. Obama and the left are the enemies of the poor. They give a little with the left hand and take away twice as much with the right.

VI. Entitlements:

Medicare, Medicaid and Obamacare

In the only prediction I got wrong, Obama did mention entitlement spending and the need to reform entitlements. He mentioned the need to make savings in Medicare and Medicaid, then segued into a claim that Obamacare would reduce the deficit. What he didn't say was that every bit of savings he just made in Medicare and Medicaid is being pumped into Obamacare. It was a shell game, just like the Obamacare CBO numbers.

Entitlements: Social Security

We should also find a bipartisan solution to strengthen Social Security for future generations. And we must do it without putting at risk current retirees, the most vulnerable, or people with disabilities; without slashing benefits for future generations; and without subjecting Americans' guaranteed retirement income to the whims of the stock market.

Someone explain to me how, under those conditions, any reform to Social Security is possible.

Charles Krauthammer, in his post-speech analysis, noted that Obama paid only lip service to entitlement reform, thus indicating that Obama would not initiate any effort at entitlement reform over the next two years and that any attempt by the right to do so would be demagogued. Bottom line, Obama has no intention of doing anything to reduce our deficit and is daring the right to even make an attempt.


VII: Foreign Policy:

Obama's comments on foreign policy seemed like they were appendix to his speech. We face real foreign policy challenges, but you wouldn't get any of that from the SOTU speech. Are we in the Afghan war to win it? Obama gave no answer. He did not address the problem of nuclear proliferation. The Middle East is on fire. Lebanon just became a satellite state of Iran. Iraq may yet become a satellite state of Iran. China is arming at an alarming rate to challenge us militarily. And what about Wikileaks and the greatest assault on our state secrets in the history of our nation? If you expected Obama to substantively address any of that, you were sorely mistaken. Obama considers foreign policy a mere annoyance. He sees himself as Clement Attlee, not Winston Churchill.

Conclusion: Two years ago, the general consensus was that Obama, if elected, would serve out Jimmy Carter's second term. That was overly optimistic. Obama makes the disastrous Carter seem a paragon of Presidential prudence and competence in comparison. 2012 can't get here fast enough.

Update: Patterico makes a great point:

Obama said . . . in the speech . . .:

The bipartisan Fiscal Commission I created last year made this crystal clear. I don’t agree with all their proposals, but they made important progress. And their conclusion is that the only way to tackle our deficit is to cut excessive spending wherever we find it – in domestic spending, defense spending, health care spending, and spending through tax breaks and loopholes.

(emphasis added).

You got that? When you are allowed to keep your money, that is considered “spending” by the Federal Government. Because in reality all of the fruits of your labor belong to us, the government.

Is it wrong to say it almost the attitude of a master toward his slaves? . . .

Also see the AP, that surprisingly has a passable fact check of SOTU: "The ledger did not appear to be adding up Tuesday night when President Barack Obama urged more spending on one hand and a spending freeze on the other."

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Tuesday, August 24, 2010

The Dregs Of Drudge

Today is a tsunami of horrid news, each deserving of attention but which I do not now have time to blog seperately. Except where noted, all are from Drudge:

Marine General: Obama giving 'sustenance' to Taliban...

HOME SALES PLUMMET TO RECORD LOW

'Beat Whitey Night': Iowa police probe racial attacks at state fair...

U.S. Second Fleet in jeopardy as DOD continues to trim budget

CLAIM: Obama's stimulus program cost more than Iraq war...

'Hindenburg Omen' creator exits stock market...

Economy in 'Depression, Not Recession'...

Cramer: 'Very Negative' Trend...

US admits human rights shortcomings in UN report...

Obama's Washington: No Experience Necessary (Hot Air)

RASMUSSEN: Forty-eight percent (48%) of U.S. voters now regard President Obama’s political views as extreme. (Instapundit)

JAMES TARANTO: Suddenly, it’s not “racist” to criticize the president. “Obama was no less black when he took office with very high approval ratings. To the extent that voters have soured on him since then, it is because they have exercised judgment, not yielded to prejudice.” (Instapundit)

Inventing Moderate Islam: It can’t be done without confronting mainstream Islam and its sharia agenda (Andrew McCarthy at NRO)

Cops & Robbers: More Blue Flu courtesy of local public sector unions (NRO)

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Saturday, August 7, 2010

Let Them Eat Argula


(H/T Instapundit)

First lady Michelle Obama, our “modern-day Marie Antoinette” takes a $375,000 Spanish vacation, closing entire beaches for her private use and "booking 60-plus rooms in a five star Marbella hotel for her entourage."

Meanwhile, the number of people on food stamps back home in America is at an all time high, exceeding 40 million people, the government has just cut funding for the food stamp program, we lost 131,000 non-farm jobs in July, and we lost 221,000 jobs in June. The Dept. of Labor's U-6 unemployment numbers are at 16.5%, but more than a few economists think that even that number is being significantly undercounted, with the actual unemployment at upwards of 22%.

As Hot Air points out, "[i]n a normal recovery with proper economic policies of lower barriers to investor entry, we would see a rapid replacement of jobs . . ." But there are in fact many barriers, as one budding young entrepreneur, seven year old Julie Murphy, found out recently when she opened up a lemonade stand in Portland, Oregon. In what seems a perfect metaphor for the war our government is waging on private business, a health inspector shut her down for failing to have a $120 temporary restaurant license. (The soon to be ex-county Chairman has since apologized for his regulators run amok)

As Peggy Noonan noted recently, America is getting ever closer to "boiling over." That's a nice euphemism for it. As she notes:

In Washington they don't seem to be looking around and thinking, Hmmm, this nation is in trouble, it needs help. They're thinking something else. I'm not sure they understand the American Dream itself needs a boost, needs encouragement and protection. They don't seem to know or have a sense of the mood of the country.

And so they make their moves, manipulate this issue and that, and keep things at a high boil. And this at a time when people are already in about as much hot water as they can take. . . .

When the adults of a great nation feel long-term pessimism, it only makes matters worse when those in authority take actions that reveal their detachment from the concerns—even from the essential nature—of their fellow citizens. And it makes those citizens feel powerless.

Inner pessimism and powerlessness: That is a dangerous combination.

Indeed. Were I the left, I would not fear a second American Revolution in our country. I'd fear a second French Revolution in our country.

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Wednesday, July 21, 2010

The Real Reason Obama Needs To Extend Unemployment Insurance

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Monday, July 19, 2010

Parsing Obama's Weekly Radio Address (Updated)

Obama's Radio Address was pretty outrageous this past week. As usual, if there was a Congressional Republican response, it was whispered privately in a sound proof room from a secret underground bunker deep below RNC headquarters. No word of it having leaked out, I offer my own response:

Obama: This week, many of our largest corporations reported robust earnings – a positive sign of growth.

The fact that some large businesses are prospering - those businesses which have sufficient size to be able to cut workers and trim fat in order to improve productivity - is hardly a sign of the health of our economy. That is kind of like saying that business is good during a plague because the undertakers are prospering.

Obama: But too many of our small business owners and those who aspire to start their own small businesses continue to struggle, in part because they can’t get the credit they need to start up, grow, and hire.

This is the orphan asking the Court for mercy after killing his parents. Obama - with his massive new entitlements, financial regulation, and a $787 billion dollar stimulus of which only 2.6% went to fund small business loans - is the number one jobs killer in America. As Wayne Root colorfully put it, "This "community organizer" knows as much about private-sector jobs as Pamela Anderson knows about nuclear physics."

Obama: And too many Americans whose livelihoods have fallen prey to the worst recession in our lifetimes – a recession that cost our economy eight million jobs – still wonder how they’ll make ends meet.

Indeed, many are still wondering why Obama's focus for the past year seems to have been on everything but jobs and the economy.

Obama: That’s why we need to take new, commonsense steps to help small businesses, grow our economy, and create jobs – and we need to take them now.
We are still waiting for his first idea. Despite all of the hype, the stimulus didn't do it. And the truth is, the government cannot create private sector jobs. It can redistribute money out of the private sector and into areas that are not economically competitive, such as Obama's latest plan, to spend $2 billion to create 5,100 massively subsidised "green" jobs, only 1,500 of which may become permanent. Create many more jobs like that and Obama will break our national piggy bank sooner rather than later.

Obama: For months, that’s what we’ve been trying to do. But too often, the Republican leadership in the United States Senate chooses to filibuster our recovery and obstruct our progress. And that has very real consequences.

Consider what that obstruction means for our small businesses – the growth engines that create two of every three new jobs in this country. A lot of small businesses still have trouble getting the loans and capital they need to keep their doors open and hire new workers. So we proposed steps to get them that help: Eliminating capital gains taxes on investments. Establishing a fund for small lenders to help small businesses. Enhancing successful SBA programs that help them access the capital they need.

I admit here, I am at a bit of a loss. Is Obama referring to the massive House bill that they wanted to push through, the one that was something like 90% payoffs to more public unions and few billion to help small businesses? Regardless, the bottom line is that if Obama, instead of spending hundreds of billions of the stimulus to keep public sector union employees subsidized for a year, had redirected those payoffs towards the private sector and small business loans, we would not be where we are today.

Obama: Think about what these stalling tactics mean for the millions of Americans who’ve lost their jobs since the recession began. Over the past several weeks, more than two million of them have seen their unemployment insurance expire. For many, it was the only way to make ends meet while searching for work – the only way to cover rent, utilities, even food.

Three times, the Senate has tried to temporarily extend that emergency assistance. And three times, a minority of Senators – basically the same crowd who said “no” to small businesses – said “no” to folks looking for work, and blocked a straight up-or-down vote.


Some Republican leaders actually treat this unemployment insurance as if it’s a form of welfare. They say it discourages folks from looking for work. Well, I’ve met a lot of folks looking for work these past few years, and I can tell you, I haven’t met any Americans who would rather have an unemployment check than a meaningful job that lets you provide for your family. And we all have friends, neighbors, or family members who already knows how hard it is to land a job when five workers are competing for every opening.

Obama needs to called on this lie. Republicans have repeatedly offered to pass another extension of unemployment benefits so long as it was paid for - not on more borrowed money. Who remembers all of the promises from the left when they passed "Pay Go," requiring all new spending to be paid for without borrowing. Obama promised that it would be the magic bullet to bringing fiscal discipline to Congress. Instead, quite literally as quickly as it was passed, the Democrats put that bill under a glass case marked "Do Not Open Until Needed For October 2010 Press Releases."

Unemployment payments have been extended now for eighteen months. It is no longer an emergency measure - its another entitlement. All that Republicans are demanding is that at least a portion of it be paid for. With a budget for this fiscal year of $3.55 trillion, if the Democrats can't find the spending for less than $30 billion to actually pay for unemployment, then they are, one, lieing through their teeth, and two, incompetent to run the budget of a high school student government.

Obama: Suddenly, Republican leaders want to change that. They say we shouldn’t provide unemployment insurance because it costs money. So after years of championing policies that turned a record surplus into a massive deficit, including a tax cut for the wealthiest Americans, they’ve finally decided to make their stand on the backs of the unemployed.

That one is lie upon lie. The "record surpluses" came about through a change in accounting for the Ponzi scheme that is Social Security. As to actual deficits, under Pelosi-Reid control of Congress, then the Obama presidency, our deficit has gone from $200 billion to $1.8 trillion.

Obama: They’ve got no problem spending money on tax breaks for folks at the top who don’t need them and didn’t even ask for them; but they object to helping folks laid off in this recession who really do need help. And every day this goes on, another 50,000 Americans lose that badly needed lifeline. . . .

Perhaps no statement so personifies the arrogance of Obama as the one above. It is impossible to "spend money" on tax breaks. America's wealth is not the government's to begin with. Obama is a class warrior of the first order, but as I heard someone say once, when was the last time you had a paycheck signed by a poor person? Obama wants to use taxation to punish the wealthy rather than asking what tax policy is best for the economy. Every time that tax cuts have been tried since the days of JFK, they have ended up increasing government coffers. The "why" is simple, with more money retained in the private sector, there is more money to expand. Our national pie grows bigger. It is not growing right now because of the new taxes and regulations on the horizon. Allowing the Bush tax cuts to expire will only further the shrinking of the pie.

Obama: The fact is, most economists agree that extending unemployment insurance is one of the single most cost-effective ways to help jumpstart the economy. It puts money into the pockets of folks who not only need it most, but who also are most likely to spend it quickly. That boosts local economies. And that means jobs.

If any of that were true, we would be out of our economic mess by now. Certainly economists Art Laffer and Nial Ferguson disgree strongly with yet another extension of unemployment benefits. As Laffer points out, "[I]n an economy, the income effects from a transfer payment always sum to zero. Quite simply, there is no stimulus from higher unemployment benefits."

In sum, responding to Obama is not too hard. It would be nice if some Congressional Republican were to start doing it. Ceding the narrative to Obama and the far left is unforgivable.

Update: Mort Zuckerman, at US News & World Report, has written yet another scatching critique of our Community Organizer in Chief's ability to run the economy and set the stage for the regrowth of business in America:

The growing divide and tension between the Obama administration and the business world is a cause for national concern. As Clive Crook wrote in the Financial Times, Obama is "a president under business attack." He is certainly under sharp criticism and for good reason: He has lost the confidence of much of the business community, whose worries over taxes, the dramatically increased costs of new regulation, and a general perception that the administration is hostile toward them and may take yet harsher steps, are holding back investment and growth. In the midst of a weak economy accompanied by levels of unemployment unprecedented since the Great Depression, it is critical that the government in Washington appreciate that confidence is an imperative if the business community is to invest, take risks with start-ups, and altogether get the economy going again to put the millions of unemployed back to productive work.

This is what businessmen do when they are free to conduct business. For example, in the two decades of the 1980s and 1990s, the United States created 73 million new private sector jobs—while simultaneously losing some 44 million jobs in the process of adjusting its economy to international competition. That was a net gain of some 29 million jobs. A stunning 55 percent of the total workforce at the end of these two decades was in a new job, some two-thirds of them in industries that paid more than the average wage. By contrast, continental Europe, with a larger economy and workforce, created an estimated 4 million jobs in the same period, most of which were in the public sector (and the cost of which they are beginning to regret). . . .

The unique danger today is the possibility that we may face longer-term stagnation as a consequence of relying too heavily on borrowed money. When the housing and credit bubbles burst in 2007 and 2008, the unemployment rate soared to double digits and caused a cascade of shock throughout the credit markets and the banking system. Washington's ability to initiate a resurgence is now limited by the long-term dangers of our deficits and our debts.

But one unfortunate pattern that has emerged in the last 18 months is to lay all the blame for our difficulties only on the business community and the financial world. This quite ignores the role of Congress in many areas, but most glaringly in forcing Fannie Mae, Freddie Mac, and the Federal Housing Administration to back loans to people who could not afford them. And not to mention the role of the Securities and Exchange Commission, which in 2004 sanctioned higher levels of leverage for financial firms, from 12 times equity to over 30 times equity.

This predilection to blame business is manifest in the unnecessary and provocative anti-business sentiment revealed by President Obama in a recent speech that was supposed to be seeking the support of the business community for a doubling of exports over the next five years. "In the absence of sound oversight," he said, "responsible businesses are forced to compete against unscrupulous and underhanded businesses, who are unencumbered by any restrictions on activities that might harm the environment, or take advantage of middle-class families, or threaten to bring down the entire financial system." This kind of gratuitous and overstated demonization of business is exactly the wrong approach. It ignores the disappointment of a stimulus program that was ill-designed to produce the jobs the president promised—that famous 8 percent unemployment ceiling.

But it's not just the rhetoric that undermines the confidence the business community needs to find if it is to invest. Consider the new generation of regulatory rules, increased bureaucracy, and higher taxes created by the Obama administration. For example, the new financial regulation bill includes nearly 500 "rule-makings," studies, and reports, compared with just 14 in total for the controversial Sarbanes-Oxley bill, passed after the financial scandals of Enron and WorldCom. The disillusionment has spread to the Business Roundtable, the U.S. Chamber of Commerce, and the National Federation of Independent Business (NFIB), which represents small businesses that normally account for roughly 60 percent of job creation.

The chief economist of the NFIB, William Dunkelberg, put it clearly: Small business owners "do not trust the economic policies in place or proposed." He also said, "The U.S. economy faces hurricane force headwinds and the government is at the center of the storm, making an economic recovery very difficult."

Our economic Katrina, in short.

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Friday, July 9, 2010

Obama and Keynes, Hayek and Laffer


Let us be honest. The US is still trapped in depression a full 18 months into zero interest rates, quantitative easing (QE), and fiscal stimulus that has pushed the budget deficit above 10% of GDP.

The share of the US working-age population with jobs in June actually fell from 58.7% to 58.5%. This is the real stress indicator. The ratio was 63% three years ago. Eight million jobs have been lost.

The average time needed to find a job has risen to a record 35.2 weeks. Nothing like this has been seen before in the post-war era. . . .

"Legions of individuals have been left with stale skills, and little prospect of finding meaningful work, and benefits that are being exhausted. By our math the crop of people who are unemployed but not receiving a check amounts to 9.2m."

. . . This really is starting to feel like 1932.

- Ambrose Evans-Pritchard, The Telegraph, With the US trapped in depression, this really is starting to feel like 1932, 4 July 2010

. . . With significantly lower revenues and higher outlays, debt would reach 87 percent of GDP by 2020, CBO projects. After that, the growing imbalance between revenues and noninterest spending, combined with spiraling interest payments, would swiftly push debt to unsustainable levels. Debt as a share of GDP would exceed its historical peak of 109 percent by 2025 and would reach 185 percent in 2035.

The CBO warns of potentially devastating consequence for the United States if this debt mountain is not tackled, and even points out that its “projections understate the severity of the long-term budget problem because they do not incorporate the significant negative effects that accumulating substantial amounts of additional federal debt would have on the economy” . . .

With his reckless big government policies, Barack Obama threatens to run his country into the ground, with American decline the inevitable end result. . . .

- Niles Gardner, The Telegraph, America is sinking under Obama’s towering debt, 2 July 2010

We are in a recession - if not a depression - that finally came to the fore in 2007 after two decades of Democrat social engineering of our financial sector. And we today are still in a recession - if not a depression - because of the election of a President who is deeply anti-business and who has demonized the profit motive. Indeed, it is those, along with his twin drives to socialize our economy and empower unions which have been the defining features of Obama's nearly eighteen months in office. Well, those four in addition to world record profligate spending. And on the horizon, Obama promises us massive new taxes ("don't read my lips"). Moreover, the centerpiece of his proposed financial regulations is to reinstall the same social engineering into our financial sector that led to our current economic mess in the first place. For the sake of brevity, I will stop my list there.

And yet now, Obama, in advance of November, is trying to convince America that he is not anti-business. According to Obama, all problems are the result of Republicans, he is struggling mightily to correct the situation (pay no attention to his projections in January 2009 that promised solutions if we immediately passed the Stimulus), and that he is a friend of business, both large and small. All of that is at least as outlandish as it would have been for Bill Clinton, during his last year in office, to try to convince America that he had always been deeply committed to monogamy.

I doubt much of America is fooled at this point:




(H/T Hot Air)

And then there was this the other day:

You’d think the well-heeled and enlightened eggheads at the Aspen Ideas Festival . . . would be receptive to an intellectually ambitious president with big ideas of his own.

In a way, the folks attending this cerebral conclave pairing the Aspen Institute think tank with the Atlantic Monthly magazine might even be seen as President Obama’s natural base.

Apparently not so much.

“The real problem we have,” Mort Zuckerman said, “are some of the worst economic policies in place today that, in my judgment, go directly against the long-term interests of this country.” . . .

“If you’re asking if the United States is about to become a socialist state, I’d say it’s actually about to become a European state, with the expansiveness of the welfare system and the progressive tax system like what we’ve already experienced in Western Europe,” Harvard business and history professor Niall Ferguson declared during Monday’s kickoff session, offering a withering critique of Obama’s economic policies, which he claimed were encouraging laziness.

“The curse of longterm unemployment is that if you pay people to do nothing, they’ll find themselves doing nothing for very long periods of time,” Ferguson said. “Long-term unemployment is at an all-time high in the United States, and it is a direct consequence of a misconceived public policy.”

Ferguson was joined in his harsh attack by billionaire real estate mogul and New York Daily News owner Mort Zuckerman. Both lambasted Obama’s trillion-dollar deficit spending program—in the name of economic stimulus to cushion the impact of the 2008 financial meltdown—as fiscally ruinous, potentially turning America into a second-rate power.

“We are, without question, in a period of decline, particularly in the business world,” Zuckerman said. “The real problem we have…are some of the worst economic policies in place today that, in my judgment, go directly against the long-term interests of this country.”

Zuckerman added that he detects in the Obama White House “hostility to the very kinds of [business] culture that have made this the great country that it is and was. I think we have to find some way of dealing with that or else we will do great damage to this country with a public policy that could ruin everything.”

Ferguson added: “The critical point is if your policy says you’re going run a trillion-dollar deficit for the rest of time, you’re riding for a fall…Then it really is goodbye.” A dashing Brit, Ferguson added: “Can I say that, having grown up in a declining empire, I do not recommend it. It’s just not a lot of fun actually—decline.”

Ferguson called for what he called “radical” measures. “I can’t emphasize strongly enough the need for radical fiscal reform to restore the incentives for work and remove the incentives for idleness.” He praised “really radical reform of the sort that, for example, Paul Ryan [the ranking Republican on the House Budget Committee] has outlined in his wonderful ‘Roadmap’ for radical, root-and-branch reform not only of the tax system but of the entitlement system” and “unleash entrepreneurial innovation.” Otherwise, Ferguson warned: “Do you want to be a kind of implicit part of the European Union?

This was greeted by hearty applause from a crowd that included Barbra Streisand and her husband James Brolin. “Depressing, but fantastic,” Streisand told me afterward, rendering her verdict on the session. “So exciting. Wonderful!”

Brolin’s assessment: “Mind-blowing.”

What does it say when even rabid lefties Brolin and Steisand start to think that you are too far to the left and are leading us into economic Armageddon?

The reality is that what Zuckerman and Ferguson point out is apparent to very many Americans. On a similar note, Wayne Allen Root colorfully described the situation in his column in the Las Vegas Review-Journal:

The current occupant of the White House claims to know how to create jobs. He claims jobs have been created. But so far the score is Great Obama Depression 2.2 million lost jobs, Obama 0 -- a blowout.

Obama is as hopeless, helpless, clueless and bankrupt of good ideas as the manager of the Chicago Cubs in late September. This "community organizer" knows as much about private-sector jobs as Pamela Anderson knows about nuclear physics.

It's time to call Obama what he is: The Great Jobs Killer. With his massive spending and tax hikes -- rewarding big government and big unions, while punishing taxpayers and business owners -- Obama has killed jobs, he has killed motivation to create new jobs, he has killed the motivation to invest in new businesses, or expand old ones. With all this killing, Obama should be given the top spot on the FBI's Most Wanted List.

Meanwhile, he has kept the union workers of GM and Chrysler employed (with taxpayer money). He has made sure that most government employee union members got their annual raises for sleeping on the job (with taxpayer money). He made sure that his voters got handouts mislabeled as "tax cuts" even though they never paid taxes (with taxpayer money). And he made sure that major campaign contributors collected billions off government stimulus (with taxpayer money).

As far as the taxpayers -- the people who actually take risks with our own money to create small businesses and jobs and pay most of the taxes -- we require protection under the Endangered Species Act. . . .

The days of believing the Obama propaganda about a jobs recovery are over. The trillion-dollar corporate handouts (neatly named "stimulus") may have kept big business in the money for the past 18 months, and artificially propped up the stock market, but small business is the real canary in the coal mine.

My small business-owning friends aren't creating one job. Not one. They are shedding jobs. They are learning to do more with fewer employees. They are creating high-tech businesses that don't need employees. And many business owners are making plans to leave the country. In a high-tech world where businesses can be run from anywhere, Obama has a problem. His one-trick pony -- raise taxes, raise taxes, raising taxes -- is chasing away the business owners he desperately needs to pay his bills. . . .

For less color, but more facts, there is this frightening report from the LA Times:

For the recovery to gain steam, most economists believe small businesses need to be strong enough to hire new workers. But according to one measure, the employment picture in this sector is weakening.

Intuit Inc., which provides payroll services for small employers, says the nation's tiniest companies had fewer new hires last month than any time since October.

The data are further evidence of a trend that has had many economists worried for months and intensifies concerns that smaller firms may not be robust enough to help lead the country out of its financial slump. The slowdown in hiring is particularly troublesome, experts say, because small businesses typically hire first during a recovery. A reluctance by little companies to add positions could mean that the big firms, which typically lag behind, will add jobs even more gradually.

"It's a bad sign," said Susan Woodward, an economist who tracks small business employment for Intuit. "Small businesses hire first — and they're losing their steam."

To calculate its estimate of national hiring, Intuit uses payroll information from its 56,000 small-business customers. The company defines small businesses as those with fewer than 20 employees.

Intuit's data show that small businesses hired just 18,000 additional workers last month. That's still positive territory, but it's less than a third of the 60,000 that were added in February, when it seemed that an employment recovery was imminent. Additional hiring dropped steadily during the spring, to 40,000 in April and 32,000 in May. Another payroll company, Automatic Data Processing Inc., painted an even gloomier picture, saying that small businesses lost 1,000 jobs nationwide in June. . . .

Robert Alva, who owns Super Cool Air Conditioning in South El Monte, said he's been trying for months to expand his four-person shop to about 10 people to break into the potentially lucrative business of installing solar energy systems. But customers are reluctant to buy new cooling systems right now or even repair their old ones, he said. Whereas he would normally be able to finance a modest expansion by obtaining a loan, Alva said, he's been turned down twice for a small-business loan — squeezed by the credit crunch that has affected thousands of small firms.

To understand the oversized importance of these little businesses to the U.S. jobs picture, consider that the smallest firms — those with fewer than 20 employees — employ more than one-sixth of the nation's workers. But so far this year, these companies have provided about one-third of all new private-sector jobs, said Brian Headd, an economist with the Small Business Administration. So any cutbacks would be felt disproportionately throughout the economy.

"Small-business hiring is right at the heart of it because small businesses usually are the engine of job creation in the U.S.," said John Challenger, president of the employment consulting firm Challenger, Gray & Christmas. "It's small businesses that drive the unemployment rate down, and if the small businesses are faltering, that suggests that the risks of recession are growing." . . .

As I pointed out in prior posts, Obama has done anything but help businesses generally or small business in particular. Every one of his goals for America, from Obamacare to cap and trade to a complete revamp of our financial regulations, involve vast increases in costs, both to individuals and businesses. And as to small businesses, well, Obama pays little beyond lip service. Of the $787 billion Stimulus, only 2.6% was earmarked to help with small business loans. The vast majority of the remainder was wasted subsidizing profligate state governments and public union employees for a year.

Which brings us to a final point. In the Depression of the 1930's, there were two schools of thought as to how to handle a deathly sick economy. One, that of John Maynard Keynes - and beloved of the budding socialists then and now - suggested that massive government spending was necessary to stimulate the economy and restore confidence. The second school of thought, that of Friedrich Von Hayek, was that the government needed to limit spending and reduce or remove regulations that stifled private sector growth and inhibited trade. Indeed, you can find dueling letters between Keynes and Hayek, setting forth their positions, printed in the 1932 newspaper, The Times.

The question of who was correct was never definitively answered at the time. FDR adopted the Keynesian approach, but we were still in the grips of the depression in 1941 when World War II intervened and solved the problem of double digit unemployment. Most economists agree that it was WWII that drove the end of the depression. So today, the question remains, what should we be doing to treat an economy in deep distress.

Clearly, Obama, like FDR before him, has followed Keynes, at least partly. Obama counted on the massive government stimulus - and Bush's TARP - to put the economy well on the road to recovery, projecting that unemployment would top out below 8% and then recede. But he also did something else that Keynes clearly never supported. Obama has attacked confidence in our economy by promising ever greater spending and taxes and by attacking the private sector and the profit motive.

On the other hand, there is economist Arthur Laffer. He recently wrote an artice in the WSJ taking Crazy Nancy to task for her wildly false assertion that funding yet another extension of unemployment benefits (on even more borrowed money - the left refuses to pay for it with existing borrowed funds) is the best way stimulate the economy and create new jobs. Indeed, even without an explanation from Dr. Laffer, the fact that extending such benefits hasn't worked for two years now ought to be a clue that Crazy Nancy is either being disingenuous or that she is clinically insane (I, in all honesty, think she is both). At the conclusion of his article, Laffer writes:

Any government program that would reduce unemployment has to make working more attractive for both employer and employee. Since late 2007 the federal government has spent somewhere around $3.6 trillion to stimulate the economy. That is a lot of money.

My suggestion would have been to take all $3.6 trillion and declare a federal tax holiday for 18 months. No income tax, no corporate profits tax, no capital gains tax, no estate tax, no payroll tax (FICA) either employee or employer, no Medicare or Medicaid taxes, no federal excise taxes, no tariffs, no federal taxes at all, which would have reduced federal revenues by $2.4 trillion annually. Can you imagine where employment would be today? How does a 2.5% unemployment rate sound

Interestingly, Laffer is a bit between Hayek and Keynes. He would use government revenues to ease the burden on the private sector.

I happen to agree wholeheartedly with Laffer. Whether Laffer is right will likely be a question argued in the halls of academia many years into the future. But in any event, what is quite clear today is is that a pure Keyesian answer to the problem, as instituted with an Obama twist, has proven a disaster. And it seems, to me at least, that he will lead us into a true depression if allowed to continue on his current path.

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