Daily Archives: 18 February 2013

Return of Taxation without Representation

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As John Smith writes at BIZPAC Review,

Aggressive prosecuting [of regulation violations] is the newest form of taxation, a money tree for government.

This is only part of the problem, though (eliding the legitimacy of the regulations).  The regulations themselves exist as a form of taxation in the fees they require, and the regulations and their fee structures are enacted by appointed, functionally anonymous bureaucrats, not by our elected representatives.

Regulatory costs extant prior to Obamacare, combined with Obamacare’s regulatory fees, will cost Americans in the aggregate $1.8 trillion per year just to comply.  HHS’ regulatory requirements alone cost $184 billion/year.  A couple of others picked at random:

Environmental Protection Agency: $353 billion per year Department of Transportation: $64 billion per year Federal Communications Commission: $142 billion per year

Much of these costs, to be sure, are costs of compliance, and not payments to the Federal government.  But much of these costs are.  Think about the uses you, or private enterprise, have for that money if it were left in your pockets and cash registers.

Look also at the “negotiated” settlements between the SEC and its victim banks.  One example: in 2011 the SEC browbeat Citibank into a $285 million settlement (the money would have come to the government, not to reimbursement of any putative victims) over its involvement in mortgage debt securitization and sale (the practice of which has never been found to be criminal or otherwise illegal).  The deal the SEC forced Citi to take was so egregious that US District Judge Jed Rakoff, who had to approve the deal for it to take effect, rejected it out of hand, ruling that

the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest.

Rakoff founded his ruling in his rejection of a long-standing technique the SEC had been using to…cajole…such settlements: allowing its victims to say they didn’t do the deed, but they’ll pay up anyway.  Absent guilt, what’s the basis of the penalty?  Rakoff didn’t think there was any.  He’s just one judge, taking on one Federal agency, though.  And the SEC isn’t done demanding collections without guilt.

 

H/t The Spirit of Enterprise

Fact Checking the Fact Checker

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The AP has a series of “fact checks” on President Barack Obama’s Tuesday State of the Union claims.  Here’s one of particular interest to me.

OBAMA: “After years of grueling recession, our businesses have created over 6 million new jobs.”
THE FACTS: That’s in the ballpark, as far as it goes.  But Obama starts his count not when he took office, but from the point in his first term when job losses were the highest.  In doing so, he ignores the 5 million or so jobs that were lost on his watch, up to that point.
Private sector jobs have grown by 6.1 million since February 2010.  But since he became president, the gain is a more modest 1.9 million.
And when losses in public sector employment are added to the mix, his overall jobs record is a gain of 1.2 million.

As the checker says, that’s true enough “as far as it goes.”  I wrote just last fall about what our jobs numbers should have been had certain events come to pass as Obama promised they would under his policies.

He promised in 2009 a 5.5% unemployment rate by now.  How many new jobs would have been created had we actually reached his promised number?  In December 2009…the civilian labor force was 153,059,000, of which 137,792,000 Americans were employed, a 10% unemployment rate….

In September 2012…the civilian labor force was larger, at 155,063,000….  There were some 142,974,000 Americans actually employed—that increase of 5,000,000 of which Obama is so proud.

However, a 5.5% unemployment rate corresponds, if my 1st grade arithmetic serves me well, to 94.5% of the civilian labor force actually employed: 146,535,000 Americans.  …there are some 3,561,000 Americans that should be employed but aren’t—because Obama’s proudly proclaimed policies have come up short, and we aren’t anywhere near 5.5% unemployment.

Let’s look at this another way.  ….  A normal recovery coming out of a downturn as deep and steep as was the Panic of 2009 typically sees growth rates of 5%-6% per year, or more.  This Obama recovery has been 6.7% over the entirety of his term in office….  Had we seen a normal recovery (and using a pessimistic 5%/year growth rate), we would have reached today’s unemployment rate after a shade over one year—in 2010—and we would have been back to full employment (in the range of 4.8%-5.5%) in just under 2 years—by [2011].

There’s more to it (and the links there) even than that, though.  Under Obama’s policies, our labor force participation rate has been shrinking rapidly as Americans despair of getting a job and quit looking, with its own impact on Obama’s jobs claims [emphasis in the original].

The labor force participation rate fell to 63.6% from 63.8% in October [2012].  If it had just held steady since then, the unemployment rate would be back over 8%.  Indeed, if the LFP rate was just where it was in November 2011, the unemployment rate would be 8.3%.  Some 542,000 Americans left the labor force just last month.

and

The number of long-term unemployed remains at a sky-high 40.1%, the same as in August.

The following graph tells the tale.