Today's revisions to the GDP estimate for third quarter 2009 are stark testimony to the failure of the Obama economic agenda. There is no real recovery in this data. The new reality is Obama stagnation, soon to be made significantly worse if the health care legislation floating through Congress becomes law.
This Administration is beginning to make Jimmy Carter look good. Obama seems to think that the way to resuscitate a beaten fighter is to hit him with a two by four. Every part of the Obama agenda will cost jobs and run the national debt to a level unheard of in American history. All of this probably sounded good in the coffee houses of Harvard, but it is slowly destroying the great American economic engine. What used to the be the envy of the world is becoming the sick patient whose life support is being removed piece by piece.
Fortunately, Americans live in a democracy and when an Adminstration takes a sledge hammer to crush their hopes and dreams, the public has its own chance to talk back -- in the voting booth in 2010 and 2012. There is no popular support for any part of the Obama agenda and a declining minority support for the President himself. This self destructive Administration and its fawning Congress has now received another terrible report card.
Tuesday, November 24, 2009
Saturday, November 21, 2009
Change You Can Believe In
You have to wonder about the slogan: "Change You Can Believe In." This sounded good back when the poll numbers showed that Barrack Obama was a fresh new face with fresh new ideas. Now, it seems the haunting background to a growing nightmare.
The recently released Gallup Poll shows that Obama's favorables have now slipped below 50 percent. Support for his health care proposals vanished long ago. Various polls show that approximately 60 percent of the public are opposed to Obama's health care proposals. There is no public support left for any of the Obama agenda.
Wow! What a difference ten months makes.
Perhaps the new slogan should be: "Change You No Longer Believe In." .
There seems to be a "death wish" in the rush by the Democratic Congress to impale themselves on the bureacratic and costly disaster known as health care reform. This seems a way to take a majority party and turn it into a perpetual minority. Republicans should quietly pray for a victory for Obama in the health care battle in Congress. This will assure a Republican takeover in 2010 and 2012.
The recently released Gallup Poll shows that Obama's favorables have now slipped below 50 percent. Support for his health care proposals vanished long ago. Various polls show that approximately 60 percent of the public are opposed to Obama's health care proposals. There is no public support left for any of the Obama agenda.
Wow! What a difference ten months makes.
Perhaps the new slogan should be: "Change You No Longer Believe In." .
There seems to be a "death wish" in the rush by the Democratic Congress to impale themselves on the bureacratic and costly disaster known as health care reform. This seems a way to take a majority party and turn it into a perpetual minority. Republicans should quietly pray for a victory for Obama in the health care battle in Congress. This will assure a Republican takeover in 2010 and 2012.
Friday, November 20, 2009
Early Death Rattles
An Administration in chaos. There were calls yesterday for Tim Geithner's resignation as Secretary of the Treasury from both sides of the aisle, Democratic as well as Republican. Why?
The Administration made a dramatically wrong guess back in January of this year. They thought that the economic slide would be mild. Their own forecast, part of the paperwork supporting their $ 800 billion stimulus package, estimated that unemployment would go no higher than eight percent. As a result, the stimulus package was no stimulus at all. It simply provided relief to very select groups picked by the Obama Administration, mostly along political grounds. There was no real effort to help struggling employers and employees battle the economic problems that they were facing.
The result, perfectly predictable, was that the economy proved to be far worse than the Obama folks thought. Now, they blame the Bush Administration. No one is buying that...not Democrats, not Republicans. Obama and his Treasury Secretary are in the crosshairs of the public anger over the economy. They have earned that spot by foolish policies and their policies to dramatically expand the national debt.
Now, having added a trillion dollars to the national debt and proposed even higher future debt levels in their health care plans, the Obama Administration is feeling the heat from the public. That will continue. Unemployment is not going to get any better for quite some time. For that, the Administration deserves full credit. Every plank of the Obama Administration program destroys jobs.
The public's downbeat view of the Obama economic plan will continue until someone in that Adminstration wakes up. That probably won't happen until sometime in November of 2010.
Until then, American businesses and workers will continue to suffer the predictable effects of an Administration in chaos.
The Administration made a dramatically wrong guess back in January of this year. They thought that the economic slide would be mild. Their own forecast, part of the paperwork supporting their $ 800 billion stimulus package, estimated that unemployment would go no higher than eight percent. As a result, the stimulus package was no stimulus at all. It simply provided relief to very select groups picked by the Obama Administration, mostly along political grounds. There was no real effort to help struggling employers and employees battle the economic problems that they were facing.
The result, perfectly predictable, was that the economy proved to be far worse than the Obama folks thought. Now, they blame the Bush Administration. No one is buying that...not Democrats, not Republicans. Obama and his Treasury Secretary are in the crosshairs of the public anger over the economy. They have earned that spot by foolish policies and their policies to dramatically expand the national debt.
Now, having added a trillion dollars to the national debt and proposed even higher future debt levels in their health care plans, the Obama Administration is feeling the heat from the public. That will continue. Unemployment is not going to get any better for quite some time. For that, the Administration deserves full credit. Every plank of the Obama Administration program destroys jobs.
The public's downbeat view of the Obama economic plan will continue until someone in that Adminstration wakes up. That probably won't happen until sometime in November of 2010.
Until then, American businesses and workers will continue to suffer the predictable effects of an Administration in chaos.
Sunday, November 15, 2009
The US Savings Rate
Why does the US have the lowest savings rate in the world? This was a question that would not have been asked in the 1950s and 1960s, because the US did not have the lowest savings rate in the world back then.
So, why did the US savings rate plunge to zero after the mid 1970s?
The answer to this question tells us what will happen to the savings rate for the US of the future.
Most pundits argue that Americans will increase their savings in the future because "they have learned" that leverage is dangerous. Is that what Americans have learned? Or have they learned the exact opposite?
Americans began to save much more of their income after the great economic difficulties of the 1930s battered the economic prospects of average Americans. The new higher savings rates persisted right through the second World War and right up until the mid 1970s. Then what happened?
What happened is that Richard Nixon and a Democratic Congress expanded the entitlements known as Social Security and Medicare to the point that the vast majority of Americans realized that the need to save was now greatly reduced. Why save for the future, if the government will take care of that future? After the expansion of Social Security and Medicare, the savings rate collapsed.
Savings has increased over the past sixteen months, but that increase will dissipate when (and if) the economy begins to show some signs of life. Why should anyone save for medical emergencies, if the government takes over the medical system and outlaws insurance schemes designed to deal with medical emergencies? No reason. Why should Americans save for their old age if the government guarantees income for their old age? No reason.
Americans rationally choose not to save. Once the fear of the current economic climate goes away, Americans will return to that rational choice and the savings rate will slide back to zero or negative territory.
Why do the Chinese save over forty percent of their income? Because they have to. There is no government safety net to encourage Chinese to spend as much of their current income as possible, as there is in the United States. The Chinese high savings rate will persist. The US savings rate will go to zero once more.
What is the significance of the savings rate? Those who save will eventually own everything and those who dissave will work through their assets till they no longer have any. What this means is that, over time, the great wealth of the United States will be transferred to those who save. Americans' wealth will be reduced and Chinese wealth will be increased.
These trends have been in place for decades and will, once the US regains its economic footing (presumably, after Obama has been retired back to the community organizing world), resume. Entitlements reduce and perhaps eliminate the need and the desire to save.
So, why did the US savings rate plunge to zero after the mid 1970s?
The answer to this question tells us what will happen to the savings rate for the US of the future.
Most pundits argue that Americans will increase their savings in the future because "they have learned" that leverage is dangerous. Is that what Americans have learned? Or have they learned the exact opposite?
Americans began to save much more of their income after the great economic difficulties of the 1930s battered the economic prospects of average Americans. The new higher savings rates persisted right through the second World War and right up until the mid 1970s. Then what happened?
What happened is that Richard Nixon and a Democratic Congress expanded the entitlements known as Social Security and Medicare to the point that the vast majority of Americans realized that the need to save was now greatly reduced. Why save for the future, if the government will take care of that future? After the expansion of Social Security and Medicare, the savings rate collapsed.
Savings has increased over the past sixteen months, but that increase will dissipate when (and if) the economy begins to show some signs of life. Why should anyone save for medical emergencies, if the government takes over the medical system and outlaws insurance schemes designed to deal with medical emergencies? No reason. Why should Americans save for their old age if the government guarantees income for their old age? No reason.
Americans rationally choose not to save. Once the fear of the current economic climate goes away, Americans will return to that rational choice and the savings rate will slide back to zero or negative territory.
Why do the Chinese save over forty percent of their income? Because they have to. There is no government safety net to encourage Chinese to spend as much of their current income as possible, as there is in the United States. The Chinese high savings rate will persist. The US savings rate will go to zero once more.
What is the significance of the savings rate? Those who save will eventually own everything and those who dissave will work through their assets till they no longer have any. What this means is that, over time, the great wealth of the United States will be transferred to those who save. Americans' wealth will be reduced and Chinese wealth will be increased.
These trends have been in place for decades and will, once the US regains its economic footing (presumably, after Obama has been retired back to the community organizing world), resume. Entitlements reduce and perhaps eliminate the need and the desire to save.
Saturday, November 14, 2009
State Budgets Imploding Too
California is not the only state in big, big trouble. Governor Patterson of New York state announced this week that New York state will run out of cash in four weeks. New Jersey, Oregon, and California all have income tax rates north of ten percent and they are likely to raise them even higher. Why?
The states suffer from the same malady that afflicts the federal government: entitlements and income transfers. In truth, what most of us think of as government costs very little. In our first century and a half as a nation, the US government absorbed barely one percent of the nation's national product. That was back in the days when government was supposed to provide police, a court system, deliver the mail, provide for the national defense, build roads and bridges and provide for basic education. All of these items are absurdly cheap to produce and would require only a modest government expenditure at all levels.
Instead of one percent of national product, the Obama agenda, if enacted, would move government to nearly forty percent of national product (if you include state and local government activities in the mix). Why? Does government cost that much more? No. Government, actual government, is dirt cheap. What isn't cheap are entitlement programs and income transfers?
Social security, medicare and medicaid are enough, by themselves, to bankrupt the nation and will bankrupt the nation and the various states unless curtailed or eliminated. But these are just the beginning. The vast bulk of government activity since the early 1930s has been to take wealth and income from one group of citizens (mostly from citizens not yet born) and give to another group of citizens (current voters).
States are unwilling partners in this grand scheme of income transfers. That's why they are going broke too. You can only borrow so much from unborn Americans. Eventually those holding US and state debt will balk. They are beginning to balk already.
Not only do these income transfers suggest bankruptcy within a generation for the US government and for most states (especially the larger states of California, New York, New Jersey, Illinois, Michigan and Massachusetts), it distorts incentives for ordinary people, reducing the efficiency of the economy, slowing the growth of technology, and dampening entrepreurial enthusiasm.
One side effect of all of this is a growing and permanent group of unemployed Americans. While the economy will probably stagger along (at Japanese growth levels), those who are adversely effected by the government's overwhelming new role in the economy, will not recover quickly. Minorities, old folks, women are the most likely victims of the Obama economy. Obama folks will attribute this to racism, sexism, etc.
The real truth is that government programs that favor groups, end up hurting the very groups that they favor. If Joe can sue you, then you would be better off hiring Sam not Joe. If you are going to force feed your employee benefits program into a new Orwellian Obamacare, then why not outsource? Why not do that part of your business that requires employees by importing that part from China. They don't have Obamacare and aren't going to have Obamacare. The Chinese can see clearly where the US is taking itself.
Gradually, the American public is waking up to the disaster of the Obama Administration. Public opinion polls have turned dramatically against the President and against his political party. That doesn't mean that the President and his party won't ram their unpopular programs through this Congress. The President and the Congress seem unconcerned about what the public thinks and unconcerned about the number one problem facing the economy -- unemployment. Fortunately, 2010 and 2012 aren't that far away.
The states suffer from the same malady that afflicts the federal government: entitlements and income transfers. In truth, what most of us think of as government costs very little. In our first century and a half as a nation, the US government absorbed barely one percent of the nation's national product. That was back in the days when government was supposed to provide police, a court system, deliver the mail, provide for the national defense, build roads and bridges and provide for basic education. All of these items are absurdly cheap to produce and would require only a modest government expenditure at all levels.
Instead of one percent of national product, the Obama agenda, if enacted, would move government to nearly forty percent of national product (if you include state and local government activities in the mix). Why? Does government cost that much more? No. Government, actual government, is dirt cheap. What isn't cheap are entitlement programs and income transfers?
Social security, medicare and medicaid are enough, by themselves, to bankrupt the nation and will bankrupt the nation and the various states unless curtailed or eliminated. But these are just the beginning. The vast bulk of government activity since the early 1930s has been to take wealth and income from one group of citizens (mostly from citizens not yet born) and give to another group of citizens (current voters).
States are unwilling partners in this grand scheme of income transfers. That's why they are going broke too. You can only borrow so much from unborn Americans. Eventually those holding US and state debt will balk. They are beginning to balk already.
Not only do these income transfers suggest bankruptcy within a generation for the US government and for most states (especially the larger states of California, New York, New Jersey, Illinois, Michigan and Massachusetts), it distorts incentives for ordinary people, reducing the efficiency of the economy, slowing the growth of technology, and dampening entrepreurial enthusiasm.
One side effect of all of this is a growing and permanent group of unemployed Americans. While the economy will probably stagger along (at Japanese growth levels), those who are adversely effected by the government's overwhelming new role in the economy, will not recover quickly. Minorities, old folks, women are the most likely victims of the Obama economy. Obama folks will attribute this to racism, sexism, etc.
The real truth is that government programs that favor groups, end up hurting the very groups that they favor. If Joe can sue you, then you would be better off hiring Sam not Joe. If you are going to force feed your employee benefits program into a new Orwellian Obamacare, then why not outsource? Why not do that part of your business that requires employees by importing that part from China. They don't have Obamacare and aren't going to have Obamacare. The Chinese can see clearly where the US is taking itself.
Gradually, the American public is waking up to the disaster of the Obama Administration. Public opinion polls have turned dramatically against the President and against his political party. That doesn't mean that the President and his party won't ram their unpopular programs through this Congress. The President and the Congress seem unconcerned about what the public thinks and unconcerned about the number one problem facing the economy -- unemployment. Fortunately, 2010 and 2012 aren't that far away.
Thursday, November 12, 2009
A Jobs Summit? Is He Kidding?
You have to admit that this President has a sense of humor if not a sense of direction. Now as the unemployment rate roars into double digit territory, the President, at last, seems to have taken notice. Having proposed one job killing measure after another since taking office, the President and his merry band now wonder why the unemployment rate is roaring along and the economy is mired in a very deep recession.
Get a message to this President....somebody, please....if you want people to hire people, give them some incentive to do so. Why make employees so expensive and so toxic (with litigation threats because of age, gender, race, etc.) that all employers want to do is reduce their work force. Isn't their anyone in the White House that gets it. Economics 101.
This White House seems to think that raising the minimum wage and making health care more expensive and more burdensome to businesses (and raising everyone's electrical bills to further cool off an already cooling global environment) is an inducement to hire employees. What a joke? No one in this administration seems to have any idea how jobs get created. The Obama folks seem to think that raising taxes on businesses, raising taxes on families and mandating more employer costs for employees will encourage hiring.
And now, a jobs summit. Obama's statement today is priceless:
"We all know there are limits to what government can and should do even during such difficult times, but we have an obligation to consider every additional responsible step that we can to encourage and accelerate job creation in this country."
Is he kidding? How can this be a serious statement, given the Obama jobs-killing agenda. I am surprised that they haven't proposed a law mandating that hiring an employee be made a criminal offense. It's getting pretty close to that already.
The polls now show clearly that the public has figured out that Obama has no idea about the economics of unemployment and they are angry. The public is nearly two to one opposed to Obamacare and they are taking it out on Democratic candidates according to recent polls in Connecticut and Ohio.
Even staunch Obama fans like Bob Herbert of the NY Times can see where this is going. Herbert's opinion piece in the NY Times on November 9th, entitled "A Word, Mr. President" shows that even liberal Democrats are fed up with the Obama Adminstration's preoccupation with destroying our health care system and are urging the President to shelve that agenda and focus on the economy and unemployment.
Health care is dead, cap and trade is dead, card check is dead. This is a failed presidency and it is only ten months old.
Get a message to this President....somebody, please....if you want people to hire people, give them some incentive to do so. Why make employees so expensive and so toxic (with litigation threats because of age, gender, race, etc.) that all employers want to do is reduce their work force. Isn't their anyone in the White House that gets it. Economics 101.
This White House seems to think that raising the minimum wage and making health care more expensive and more burdensome to businesses (and raising everyone's electrical bills to further cool off an already cooling global environment) is an inducement to hire employees. What a joke? No one in this administration seems to have any idea how jobs get created. The Obama folks seem to think that raising taxes on businesses, raising taxes on families and mandating more employer costs for employees will encourage hiring.
And now, a jobs summit. Obama's statement today is priceless:
"We all know there are limits to what government can and should do even during such difficult times, but we have an obligation to consider every additional responsible step that we can to encourage and accelerate job creation in this country."
Is he kidding? How can this be a serious statement, given the Obama jobs-killing agenda. I am surprised that they haven't proposed a law mandating that hiring an employee be made a criminal offense. It's getting pretty close to that already.
The polls now show clearly that the public has figured out that Obama has no idea about the economics of unemployment and they are angry. The public is nearly two to one opposed to Obamacare and they are taking it out on Democratic candidates according to recent polls in Connecticut and Ohio.
Even staunch Obama fans like Bob Herbert of the NY Times can see where this is going. Herbert's opinion piece in the NY Times on November 9th, entitled "A Word, Mr. President" shows that even liberal Democrats are fed up with the Obama Adminstration's preoccupation with destroying our health care system and are urging the President to shelve that agenda and focus on the economy and unemployment.
Health care is dead, cap and trade is dead, card check is dead. This is a failed presidency and it is only ten months old.
Sunday, November 8, 2009
The House is Not Enough
The narrow vote (five vote margin)in the House of Representatives for the passage of the Obamacare bill just shows how far away the road to victory for Obama really is. Senator Harry Reid has already announced that there will be no vote in the Senate until 2010, within months of the Congressional elections. Once the Senate votes, there will be need to be a new bill refashioned by a conference committee composed of House and Senate members to be brought back before both the House and Senate. This is likely not to occur until the Spring of 2010, at which time every member of the House of Representatives will be scrambling to get re-elected. 80 Democratic Congressman are in Congressional Districts that McCain carried over Obama in 2008. All of these folks are in trouble over Obamacare. Obamacare is dead regardless of the House vote on Saturday.
To see why, one need only read today's article in the NY Times by Peter Goodman entitled "The Recession's Over, But Not the Layoffs." Jobs are far more important than Obamacare to the voters, as one would expect since nearly 60 percent of voters are now polling against Obamacare. Barely 40 percent of the electorate supports Obamacare at this point. What matters to voters is the economy and their jobs. Obama has forgotten this, but the public has not.
Goodman's article is an interesting one. He notes that for some reason (unstated in the article) businesses are continuing to lay off employees and are reluctant to hire new employees even as business improves. Why? Goodman really gives no reasons, but the reasons are obvious. Government mandates have made employees much, much more expensive. This means that businesses will find other ways to produce goods rather than hire much more expensive employees.
The entire Obama program, whether one thinks of Obamacare, Cap and Trade, or card check, simply reinforces businesses in their determination to avoid hiring. Only die-hard leftwing Democrats like Paul Krugman deny the obvious. But, then, Klugman is not a businessperson and he doesn't care what their problems may or may not be. But, at the end of the day, businesses make the hiring decisions, not politicians. Obama policies and threatened Obama policies are enough to convince to any rational businessperson to put off hiring as long as possible and to outsource to China and India as much as possible.
No surprises here.
To see why, one need only read today's article in the NY Times by Peter Goodman entitled "The Recession's Over, But Not the Layoffs." Jobs are far more important than Obamacare to the voters, as one would expect since nearly 60 percent of voters are now polling against Obamacare. Barely 40 percent of the electorate supports Obamacare at this point. What matters to voters is the economy and their jobs. Obama has forgotten this, but the public has not.
Goodman's article is an interesting one. He notes that for some reason (unstated in the article) businesses are continuing to lay off employees and are reluctant to hire new employees even as business improves. Why? Goodman really gives no reasons, but the reasons are obvious. Government mandates have made employees much, much more expensive. This means that businesses will find other ways to produce goods rather than hire much more expensive employees.
The entire Obama program, whether one thinks of Obamacare, Cap and Trade, or card check, simply reinforces businesses in their determination to avoid hiring. Only die-hard leftwing Democrats like Paul Krugman deny the obvious. But, then, Klugman is not a businessperson and he doesn't care what their problems may or may not be. But, at the end of the day, businesses make the hiring decisions, not politicians. Obama policies and threatened Obama policies are enough to convince to any rational businessperson to put off hiring as long as possible and to outsource to China and India as much as possible.
No surprises here.
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