Category Archives: Economics

Miscellaneous economy stuff

The Obama Economy

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We have a choice of two paths, both the Republicans and the Democrats say.  But in order to decide which of two paths we want our country to take—even accepting Obama’s characterization of the two paths—we have to look at the record away from which Obama is running so hard.  It is that record that demonstrates the value of his path, and it is that record that is a subject he is so desperate to avoid with his non sequitor of paths.  It is that record that must inform Republican reasoning of why their path is better.

As Obama himself said at Harlem’s Apollo theater on the 19th,

We have not seen a choice this stark in years.  The contrast this year could not be sharper. So the question is not whether people are still hurting; people are still hurting profoundly.  A lot of folks out there still out of work looking for work.  The question is, what do we do about it?

The Republican candidates agree that we have a choice to make, and it’s substantially the same one that Obama offers.  Newt Gingrich described the choices this way:

The debate we’re going to have with President Obama over the next eight or nine months [involves] the outlining of the two Americas.

The America of the Declaration of Independence; the America of Saul Alinsky. The America of paychecks; the America of food stamps. The America of independence; the America of dependence. The America of strength in foreign policy; the America of weakness in foreign policy.

Those two choices, I believe, will give the American people a chance to decide permanently whether we want to remain the historic America that has provided opportunity for more people of more backgrounds than any country in history, or whether in fact, we prefer to become a brand new secular, European-style bureaucratic socialist system.

What has Obama done about his just above acknowledged performance, so far?  His record actually is pretty clear from the fact that he’s still saying those things three years into his term.   Here is the path down which he wants us to continue, as demonstrated by his record.

Joblessness remains high at historic highs, for an historic duration: 8.5 percent unemployment only last month, and even higher unemployment for most of the Obama three years.  Millions of Americans out of work for a year or more—for a third of Obama’s term so far.

Repeated claims of millions of jobs saved (not so much anymore of jobs created, even though job creation actually has been ticking up slightly).  But with these claims, the Obama administration stubbornly declines to offer any evidence that this improvement—such as it is—is due to his profligate spending policies and not due to an ordinary cyclic economic recovery, one that has been depressed these last three years by that same spending and his extreme regulatory policies.

Democratic party has refusal—for 1,000 days—to offer a budget in the Senate, and its refusal to allow the Senate take up the House-passed budget bill for FY2012, passed in Jan 2011.  Absent a budget, the Progressives have run up deficits that require the government to borrow 36 cents of every dollar spent.  Beyond that, Obama now is delaying for a week the release of his budget proposal for the 2013 fiscal year.  House Budget Committee Chairman Paul Ryan (R, WI) points out that

This will mark the third time in four years the president has missed his statutory requirement to present a budget on time, while trillion-dollar budget deficits continue to mount.  As the president announces another missed deadline, tomorrow marks the 1,000th day Senate Democrats have gone without any budget at all.

Democratic party refusal to allow the Senate take up more than 20 House-passed jobs bills.

Active destruction of jobs and job opportunities, such as his willful cancelation of the Keystone XL pipeline with all those prompt jobs and even greater numbers of longer-term follow-on jobs; and his EPA regulations that are closing down coal-fired electricity generating plants, with the loss of jobs at those plants, and the potential loss of vastly more jobs from closing of businesses that depended on that power.

Further active interference in the energy sector of our energy economy.  Tom Steyer and John Podesta write, in all seriousness

…the Production Tax Credit, first passed in 1992, has generated massive amounts of new growth in the wind industry, a sector employing 85,000 Americans.  But each time Congress allows this credit to expire after a mere two years, investment grinds to a halt….

Notice that: since 1992, a whole 85,000 jobs, out of 14 million Americans currently out of work.  Notice further: this “green” industry cannot survive—it is not economically viable—without massive investments of your money.  Sort of like Solyndra, Beacon, Evergreen Solar, AES Eastern Energy LP, et al.

Class warfare, and the politics of rank envy.  Obama has chosen to frame his campaign as a fight for fairness for those who are struggling to keep a job, a home or college savings and losing faith in how the country works.  And yet his policies actively interfere with growing our economy so that Americans can actually get jobs, much less won’t need to “struggle to keep a job,” and so that savings for a home or an education become possible.  Instead, Obama simply promotes jealousy of those who have on the part of those whom he wants to buy with his wealth redistribution, funded by selective taxes.  This is Obama’s nation of “You have, and I want,” not the nation of “haves and soon to haves,” as Governor Mitch Daniel described.

That class warfare now has the IRS implementing new rules that will require employers to calculate and report the cost of health insurance provided to employees on each W-2 beginning in 2013, for the 2012 tax year.  Since this benefit is not taxable, what possible reason could the Obama administration have for demanding the data—except that they plan to tax these, too.

In the end, as Ryan put it,

We deserve better than a president unwilling to meet his legal and moral obligation to tackle our nation’s most pressing challenges.  We deserve better than the President’s path to debt, doubt and decline.

And in a statement released jointly with Senator Jeff Sessions (R, AL), Ryan added this:

The President and his party’s leaders have yet to detail a credible budget plan to prevent the fiscal crisis that awaits us should we continue down the current path to debt, doubt, and decline.  Such a crisis would threaten the economic security, health security, and retirement security of every American.  If the President wishes to begin a genuine dialogue with the American people…then he must hold his own party accountable for its dogged refusal to produce a plan to prevent this crisis and lift this cloud of uncertainty from the economy.  The President must also deliver what he has so far refused: serious reforms to change our debt course and prevent fiscal disaster.

It is a choice of two paths: Obama’s performance record or a path of American resurgence in freedom, reduced government interference, economic growth.  The danger for the Republicans is they’ll let Obama stick to a debate of choices and not keep Obama tied to, and having to explain, his record as the demonstration of where his path leads us.

State of the Union

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Third verse, same as the first.  President Obama’s speech Tuesday night before the Congress, although couched in rousing terms of “teamwork” and “rebuilding America,” was in the end just more of the usual Progressive fare of class warfare, higher taxes and spending, and bigger government.

While promising to work toward job creation, Obama already has cancelled the Keystone XL pipeline, which would have been worth a prompt 20,000 construction and construction-related jobs and an additional 100,000 plus follow-on, more permanent jobs.  While promising vast reductions of intrusive regulations (he actually cited only a single elimination, that of 40-year-old regulation concerning treating spilled milk as an oil spill), his EPA has been running amok with intrusive regulations, from dictating the light bulbs we’re allowed to have in our bed- and bathrooms, to closing down badly needed electricity power plants (with their jobs and the jobs of the businesses that need that power) with excessive “pollutant” regulations that will do nothing to improve our environment or our health, to expanded regulations in the medical device industry that will stifle innovation in that vital area, and on and on.

He wants to reform our tax system, he said, but only to raise taxes on disfavored groups while “reforming” it through extending a payroll tax holiday that guts funding for Social Security;  “double[ing] the tax deduction” for businesses that manufacture in the US, adding to the Byzantine complexity of our corporate tax code; taxing revenue (all of it) from the sale of those severely regulated medical devices; and so on.  But he refuses to accept an overall reduction in income taxes in substitution for that general payroll tax reduction, he refuses to simplify the code and reduce the rates for all corporations—or for all individuals.  Instead, he wants to raise taxes on his “wealthy,” the top 5% of whom pay nearly 60% of the nation’s income taxes, while he refuses to talk about the taxes of the 50% of Americans who pay around 3%-4% of the nation’s income taxes while.  He wants to eliminate the tax breaks for

an [oil and gas] industry that’s rarely been more profitable, and double-down on a clean energy industry that’s never been more promising. Pass clean energy tax credits….

Yes—he refuses to eliminate the same subsidies for his “green” energy efforts, like Solyndra, et al.

Obama said he wants an “an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.”  This from the president that shoved senior creditors (at least as defined by existing bankruptcy law) to the back of the bus and gave preferential treatment to his union donors in the government-union takeover of GM and Chrysler.

And he promised openly to continue to govern by fiat whenever our democratic process won’t let him get his way:

With or without this Congress, I will keep taking actions….

Next, there are factual errors in Obama’s speech.  He claimed that Obamacare “relies on a reformed private market, not a government program.”  But the fact is that fully half the more than 30 million currently uninsured are expected to receive coverage through government programs, while the other half are expected to be enrolled in government-approved “private” health insurance through state-based insurance markets.  Moreover, many of these will be get federal subsidies to do so.  Further, Medicaid will be expanded drastically.

And there’s this:  “On the day I took office, our auto industry was on the verge of collapse. Some even said we should let it die. With a million jobs at stake, I refused to let that happen.”  I’ve addressed above some of the corrections to this claim.  Here’s more: the bailout actually began under President Bush the Younger.  Ford, though, the other member of the American auto industry as Progressives define it (eliding Toyota, Nissan, Honda, Volkswagen, etc. that also have major manufacturing plants in the US and so are key participants in the American auto industry) took none of the bailout money.  Furthermore, if we’re limiting the “American auto industry” in the Obama manner, Chrysler is no longer a part: it’s owned by Fiat, an Italian company.

Finally, although Obama gave short shrift to America’s foreign affairs, he did claim this.  “The Taliban’s momentum has been broken, and some troops in Afghanistan have begun to come home.”  However, the latest National Intelligence Estimate says that the Taliban will grow stronger, and it’ll use Obama’s unilateral offer of “negotiation” for delay.  The NIE adds that the Taliban in fact will end controlling the Afghan countryside—which gives it the cities

Hasn’t Our Economy Been Managed Disastrously Enough?

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Congressman Dennis Kucinich (D, OH) considers that the oil and gas businessmen are greedy b*stards, and they cannot be trusted.  He wants to put their business’ profits under government control—and not just any part of government; he wants to cut the Congress out of the picture and set up another Board for President Obama.  He’s joined by five more Democrats.

The Democrats, worried about higher gas prices, want to set up a board that would apply a “windfall profit tax” as high as 100 percent on the sale of oil and gas, according to their legislation. The bill provides no specific guidance for how the board would determine what constitutes a reasonable profit.

This “Reasonable Profits Board” is intended to control gas profits in the industry.

Further, in an amazing display of economic ignorance, the bill Kucinich proposes actually requires, in all seriousness, that it’s the oil and gas companies who must pay the tax.  They really don’t believe that the cost increase would be passed on to the customers.  They really don’t understand that the tax, and the cost bump to the end user, would simply depress the business’ ability to fund their own operations, expand hiring, search for more oil and gas supplies, conduct R&D, and so on; and it would similarly reduce consumers’ ability to put food on their tables and pay their rents.

But it’s all for a good cause.  Kucinich earmarks the taxes for funding alternative transportation programs when oil-and-gas prices spike.  This is just ridiculous on its face.  If those “alternative transportation programs” were any good, they wouldn’t need government subsidies—your tax monies—to compete in the market.  Just look at how the Obama High Speed Rail boondoggle, including the California bullet train, for instance, have turned out.  See who’s left holding the bag for that “alternative transportation program” stuff and nonsense.

I’m a bit confused by another aspect of this proposal, though.  It’s a lot of trouble to get such legislation passed these days, especially with unruly Republicans running amok in the House.  It would be a lot easier just to have the EPA issue a rule.

The other Democrats who are pushing this invasion of the free market are these

  • John Conyers, Jr. (D, MI)
  • Bob Filner (D, CA)
  • Marcia Fudge (D, OH)
  • Jim Langevin (D, RI)
  • Lynn Woolsey (D, CA):

All six need to be replaced at the 2012 election, if not in the Democratic Party primaries leading into the election.

A View of Fairness

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Spiegel Online International reports that the Italian Pime Minister Mario Monti wants his participation prize for the austerity measures the Italian Parliament talks about enacting.  And this prize ought to be in the form of Europe lending him yet more money, this time disguised as Euro bonds—for which Monti expects Germany to put up the lion’s share.  After all, goes his argument

Germany is benefiting from the crisis—interest rates on German bonds are way down and the weak euro favors German exporters—and should therefore share its favorable interest rates with its partners[.]

This is like arguing that, because I ruined my credit rating with profligate spending and irresponsible borrowing, which makes the sound credit rating you built with discipline and care seem even better, you, neighbor, owe me access to your credit card.

Moreover, Monti’s threatening to stage a temper tantrum, if his new-found “austerity” isn’t properly funded with other people’s money.

If this strong movement towards discipline and stability is not recognized as taking place, and a certain approach to financial aspects does not gradually evolve, then there will be a powerful backlash in the countries which are being submitted to a huge effort of discipline[.]

A discipline that other nations have been applying as a matter of course.

Hmm….

Keystone XL: Too Many Jobs

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Take some of them out.  President Obama has chosen to kill the Keystone XL pipeline project, which aside from contributing to reducing our dependence on overseas (literally—and so especially vulnerable) oil, would have generated some 20,000 jobs in the near term and a few hundred thousand long term jobs from work in follow-on and associated enterprises.

Naturally, it’s those evil Republicans, who imposed an arbitrary deadline on his “environmental” assessment process, that are to blame, he says.  Of course, he ignores the fact that the environmental assessment—which had already taken three years—was complete, and that’s why it was in the State Department’s hands in the first place last fall, when he first tried to duck the question.  What’s arbitrary is his decision to cancel the project, a decision that he thought needed to be delayed for more than a year that has now been made fully a month ahead of a deadline set solely to stop his stalling.

It’ll be interesting to see the justification Obama is required by law to provide Congress to explain his decision (which explanation he would have been required to provide had he approved the pipeline, also).

In the meantime, we have these Alinsky-esque obfuscations to keep us distracted.

When President Obama took office, the United States imported 11 million barrels of oil a day. The President has put forward a plan to cut that by one-third by 2025 by…transitioning to a wide range of clean energy technologies [among other means].

and

[T]he Department of Energy’s (DOE) Loan Guarantee Program has already supported more than 40 clean energy projects….

Clean energy projects like Solyndra, Beacon, Evergreen Solar, AES Eastern Energy LP.

The White House goes on:

[T]wo of the Administration’s programs – the DOE Loan Guarantee Program and the EPA’s Mercury and Air Toxics Standards – will create more than 10 times the amount of jobs generated by the Keystone XL pipeline, which will only generate a few thousand temporary jobs.

The DoE’s Loan Guaranty Program’s effectiveness can be seen above.  The EPA’s Mercury and Air Toxics Standards already are costing jobs as coal-fired electricity generating plants are shut down, eliminating jobs permanently in those closed plants.  The EPA’s program also is costing jobs at the small businesses that depended on those plants for their power.  These jobs are lost, at best, for the intermediate term, until the businesses can restart when new plants come on line in a few years—for those businesses that can restart.  Yes, the EPA’s Standards will provide jobs for the conversion and compliance tasks mandated—but it’s these jobs that are the temporary ones.

Obama has opened another front in his class warfare election campaign: this time between his overzealous “green” backers and (erstwhile) working Americans.