Monthly Archives: August 2010
Yup, as Tim Geithner would say – “welcome to the recovery”. And, given the trends, I would guess this isn’t the last of the “unexpectedly” high unemployment report we’ll see. Again, ad nauseam, there’s been no incentive provided by government, but plenty of disincentives that are keeping businesses on the sidelines and consumers from spending:
Initial jobless claims climbed by 19,000 to 479,000 in the week ended July 31, the most since April and exceeding the highest estimate of economists surveyed by Bloomberg News, Labor Department figures showed today in Washington. The number of people receiving unemployment benefits dropped, while those getting extended payments rose.
A cooling economy means employers will resist taking on more staff in coming months, raising the risk consumer spending will weaken further. The jobless rate rose last month as payroll increases weren’t large enough to keep up with gains in the labor force, economists forecast a government report tomorrow will show.
As if anyone has to be told, this is not good. And it wouldn’t surprise me to see the U6 unemployment rate tick up over 10% again in the next few months:
“There really is no upside momentum in the labor market, and that’s a critical long-term determinant of where the economy is going,” said Steven Ricchiuto, chief economist at Mizuho Securities USA Inc. in New York. “People just aren’t getting jobs.”
That’s because jobs aren’t being created and offered. Name the incentive, at this point, to do so? Tax increases are in the offing, health care laws, 1099 requirements, Democrats still pushing for cap-and-trade, new financial regulations that impact the market and economic policies which give the impression the administration is at war with business.
Why would any sane business owner invest in his business in times as unsettled as these?
Answer: he or she wouldn’t. And that’s the biggest reason unemployment continues to “unexpectedly” rise. Headcount is the easiest thing to add when times are good. It’s also the easiest thing to reduce when times are bad. And if they stay bad – as we’re seeing now – few if any are going to be adding jobs.
Economics 101 – provide incentives to get the behavior you want. Provide disincentives to discourage the behavior you don’t want. The administration’s economic policies have, to this point, provided business with all manner of disincentives to hiring. And then the “experts” are surprised when jobless rates are “unexpectedly” higher than estimated.
That’s primarily because the current administration has been in power 18 months, it has spent like there’s no tomorrow with borrowed funds and the economy is still in the tank. Most adults consider that more than enough time to do address the "inherited" problems and if not fix them, be on the road to doing so. But blaming the previous administration is no longer a viable option.
Forty-eight percent of likely voters blame Obama’s policies for the nation’s economic condition, compared to 47 percent who fault former President George W. Bush, according to Rasmussen Reports.
Although the difference is small and within the margin of error, the poll marks the first time in Obama’s presidency that more people blame him than Bush for the economy.
Obama’s 48 percent also shows a three percentage point increase over the past month, according to Rasmussen. As noted, the margin is small and within the margin of error but is, for the first time, against the Obama administration. More importantly, that’s the way it has been trending in past polls.
So essentially what you should expect to see, as the months pass and the unemployment rate remains high, GDP growth sluggish, consumer confidence down and businesses sitting on the side lines is more and more Americans coming to consider this mess the "Obama economy".
The White House has repeatedly tried to inoculate the president from economic blame with the message that Obama inherited a bad economy from Bush, and has made difficult, unpopular decisions to turn it around.
In a speech to the AFL-CIO, Obama made the case that the problems he faces are the result of Bush economic policies.
"We’re not going to go back to digging the hole," he said. "We’re not going to go back to the policies that took Bill Clinton’s surplus and in eight years turned it into record deficits."
That’s obviously not how the American people are seeing those policies and their effect. There’s nothing in the Bush years that even approach the record deficits being piled (and projected) by this administration.
So that old song and dance seem to finally be getting old. And it is surprising the White House is still trying to push it. You’d think they’d understand that it was a perishable excuse and it has long since passed its expiration date. And, as the poll indicates, people have grown tired of it and just don’t accept it as a reasonable excuse anymore.
Not that it will stop the "Blameshifter-in-Chief” and his henchmen from continuing to trot it out there at every opportunity. Their problem is it just isn’t viable anymore.
James Pethokoukis is hearing the rumors of something which might put a number of you in the situation where you’re paying down your neighbor’s mortgage – all in the name of politics. I’ll let him explain:
Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.
Essentially Fannie Mae and Freddie Mac would be the vehicles for this $800 billion bailout. As mentioned above, the “$400 billion limit” for financial assistance to the two institutions was waived by Congress. And, HARP has been extended. The ability to do what Pethokoukis is hearing certainly exists.
As I mentioned in the previous post, the election this November isn’t shaping up well for Democrats. And the administration knows that without the majority in the House and Senate, its agenda is dead. As Pethokoukis points out, the midterms are expected to be a blood bath for Democrats and this sort of a move may be seen as a last hour way to change that outcome. The GSEs (Freddie and Fannie) are about the only “levers” left for the White House to pull. And with the economy slowing and the President’s approval ratings tanking, those levers are looking mighty tempting:
The mortgage Hail Mary would be a last-gasp effort to prevent this [loss of House and working majority in Senate] from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.
And, of course, it would be a backdoor “stimulus” that many on the left think is needed.
It may not happen, but as pointed out, the rumors are pretty darn strong with Wall Street firms privately warning their clients it is a distinct possibility. It would be an incredible move that, given the mood of the country, could backfire spectacularly if done. But the political calculation may be that if Democrats are supposed to lose badly in November anyway, why not try.
The financial consequence? Bah … we’re talking politics here, the “religion of the left”. They’re likely to do whatever they think is necessary, consequences be damned. And we’ll be left, as usual, holding the bag.
When asked what the Missouri vote on health care meant, White House spokesman Robert Gibbs said, "nothing".
And that may end up being true – at least temporarily. However, what Michigan and Missouri did demonstrate is how deep the water is for the Democrats this November.
Both had hot primary races for governor to draw voters and both states also have open primaries, where voters don’t have to vote in a particular party’s primary.
As it turns out, the GOP carried the day. In, Michigan, which Obama carried by 16 points, the turn out was 2 to 1 for the GOP candidates. 66% voted in the Republican primary in the state. In Missouri, where John McCain won by 0.2%, 65% voted in the Republican primary.
The pattern also held for Congressional primaries in the two states as Michael Barone reports. These sorts of actual results seem to confirm the polls that have warning about this for months. Enthusiasm is definitely on the side of the GOP.
Democrats, as they analyze these results, are going to find it a bit more difficult to whistle past the graveyard as they’ve tended to do with the polls. It is obvious, even in deeply blue states such as MI, that the natives are restless and not at all happy with the Dems.
If you’re unfamiliar with the broken window fallacy, here’s a great short video to explain it and why things like a trillion dollar “stimulus” and most of what Paul Krugman whines about concerning what the federal government should be doing right now are nonsense:
I looked at an iPad, and played with it a bit. I think I'd rather wait for an Android tablet. #
You know, there's an easy way to keep the nasty Muslims from building the Ground Zero mosque: Buy the property from them. #
That’s the question Rich Lowery asks and answers in a piece today at NRO. By "adult" in government he means, "political leaders who make tough choices, take on problems directly, and combine principle with pragmatism in a manner consistent with true statesmanship."
What he doesn’t mean is political leaders who push an extremist agenda regardless of the reality of the situation that surrounds them – such as what we have today.
Unsurprisingly, he finds his adults in government not at a federal level, but at the state level. Two in particular are making both waves and progress against daunting problems. And they should be the new proto-type GOP candidate for federal executive office:
Look in particular to New Jersey and Indiana, where Govs. Chris Christie and Mitch Daniels are forging a limited-government Republicanism that connects with people and solves problems. They are models of how to take inchoate dissatisfaction with the status quo, launder it through political talent, and apply it in a practical way to governance.
Christie has just concluded a six-month whirlwind through Trenton that should be studied by political scientists for years to come. In tackling a fiscal crisis in a state groaning under an $11 billion deficit, he did his fellow New Jerseyans the favor of being as forthright as a punch in the mouth. And it worked.
Christie traveled the state making the case for budgetary retrenchment, and he frontally took on the state’s most powerful interest, the teachers’ union. He rallied the public and split the Democrats, in a bravura performance in the lost art of persuasion. At the national level, George W. Bush thought repeating the same stalwart lines over and over again counted as making an argument, and Barack Obama has simply muscled through his agenda on inflated Democratic majorities. Christie actually connected.
He matched unyielding principle (determined to balance the budget without raising taxes, he vetoed a millionaires’ tax within minutes of its passage) with a willingness to take half a loaf (he wanted a constitutional amendment to limit property taxes to 2.5 percent, but settled with Democrats for an imperfect statutory limit). He’ll need an Act II to get deeper, institutional reforms, but New Jersey is now separating itself from those other notorious wastrels, California and Illinois.
What Chris Christie has done, if nothing else, is prove the point that a) voters want to hear the truth, the whole truth and nothing but the truth, unvarnished and without the usual nebulous rhetoric. And b) tell them what is necessary to fix the problem in the same manner.
Voters, given the problem and his plan, have backed him as he’s tackled what was considered previously untouchable and insolvable. And he’s made progress – much more progress than anyone previously and against two powerful entities, the teacher’s union and the Democratic legislature.
It is my opinion, given the present situation in the White House, that voters are going to insist on two things. One is they’re going to want executive experience as a “must have or no deal” criteria for the next president. And two, they’re going to insist the media actually spend the time doing their job vetting the candidates vs. taking on a cheerleading role as they did in the last election.
Speaking to the first point, this new breed of tough, small-government conservative politician emerging in some of the states may be the prototype for the GOP’s next successful challenge. Mitch Daniels of Indiana may be another one to look at:
He inherited a $200 million deficit in 2004, which he turned into a $1.3 billion surplus — just in time for it to act as a cushion during the recession. He has reformed government services and rallied his administration around one simple, common-sense goal: “We will do everything we can to raise the net disposable income of individual Hoosiers.”
What most voters don’t want is the current crop of GOP front runners. Whether anyone viable (I’m even upbeat about Bobby Jindal again) will actually show up in 2012 remains to be seen, but the Romney (damaged goods), Palin (too partisan and not enough exec experience), Gingrich (too much baggage), Huckabee (scares the hell out of me) cabal is not what will win, or if one of them does, won’t keep it long.
Guys (and gals) like Christie and Daniels should be groomed carefully by the GOP and convinced to consider a run on a national level. And others who fit their profile should be identified as soon as possible and supported at the state level to get the experience, exposure and the resume together that will put them in a position to go national as well.
Thanks to Obama and friends, this is a real opportunity for the limited government, fiscally conservative majority in this country. And that’s plenty to run on, given this mess we’re in. What the GOP has got to do is stay away from the social con nonsense that always polarizes the electorate and drives independents to distraction and into staying at home (or voting for the other team) on election day.
The so-called "stimulus", upon closer examination, looks like most government spending – excessive, poorly targeted, poorly monitored and not at all accomplishing what was intended.
Senators Tom Coburn and John McCain have issued a report that details some of the most dubious "stimulus" spending. That’s over and above the money that just disappeared after being sent to non-existent congressional districts and zip codes.
$700,000 for a researcher to study improvised music. For a project on interactive dance, 44 percent of the money goes to "overhead."
The $1.9 million spent to photograph ants in foreign countries has created two jobs created so far. That’s better than other ant research stimulus projects: $451,000 has created one job,
$276,000 spent on another created six one-hundredths of a job, and the $800,000 spent on a different one created no jobs.
The $144,000 spent to study the behavior of monkeys on cocaine created four-tenths of a job. To study why monkeys respond to unfairness cost $677,000 – and has created no jobs yet – except maybe for the monkeys.
And my guess is that they will find that monkeys react to cocaine much the same way humans do. Of course the White House claims, most likely through some model in which they plug in a factor (something like x number of jobs are created when y dollars are spent), that 3 million jobs have been "created or saved". But at what cost? Note the amounts spent above to "create" each job. And then there’s the ironic side of the story:
In the state of Washington, another stimulus project may be hurting those it was designed to help. Construction began one year ago today in front of the Archery Bistro Restaurant. The owner says it’s shut off business like a fly in a bowl of soup. He’s had to stop serving lunch, close two days a week and, ironically, lay off 12 workers.
The "stimulus" has been an expensive bust.
What positions have been “created” are temporary at best and will disappear when the tax dollars run out. Additionally, much of the money is consumed in bureaucratic overhead – certainly “saving” and perhaps expanding those non-productive jobs.
But as for “stimulating” the economy – well, look around. As my mom used to say, “the proof is in the pudding”.
In the most telling poll of all – a vote – the citizens of Missouri overwhelmingly voted not to participate in ObamaCare. 71% voted for Proposition C which prohibits Missouri from compelling people to pay a penalty or fine if they fail to carry health coverage.
Of course that obviously doesn’t mean that percentage isn’t going to or doesn’t carry health coverage. Instead it is a grassroots rejection of the premise that the federal government has either the power or authority to make them. And they’ve just prohibited their state from enforcing such a law.
The Missouri vote is likely to have little immediate practical effect because the mandate doesn’t take effect until 2014. If federal courts uphold the federal law as constitutional, it would take precedence over any state law that contradicts it.
And, of course, I loved this:
Opponents included the Missouri Hospital Association, which said that if the mandate isn’t enforced some who can afford insurance will get a free ride and pass the costs on to those who are insured.
Really? You mean like what is done now under Medicare and Medicaid?
But I think this Missouri state senator may have the best point:
“This really wasn’t an effort to poke the president in the eye,” said State Senator Jim Lembke, a Republican. “First and foremost, this was about defining the role of state government and the role of federal government. Whether it’s here in Missouri with health care or in Arizona with illegal immigration, the states are going to get together on this now.”
States have been getting the short end of the mandate stick for decades. Yet many of them work under two constraints the federal government doesn’t. One, most of them are required by law to have a balanced budget. Unfunded mandates of the sort imposed by ObamaCare take a wrecking ball to that sort of requirement. Secondly, the states can’t print money at their whim. Therefore they must borrow any money to fulfill the mandates.
This and the Arizona law may be the first shots in a long war that sees the states again asserting their rights. It will mostly be fought out in the courts and its outcome is going to be critical to the America we are a part of in the future.
If the courts side with the Obama administration, then there’s just about nothing the federal government can’t do or which it can’t involve itself. And as we’ve seen in the last 18 months, it doesn’t take long, if the circumstances are right, for it to intrude to levels never before seen.
But regardless of the outcome in court, the Missouri vote is important. The “Show Me” state is a rather purple state, so I think most expected the vote to be somewhat close with those rejecting ObamaCare winning out. Instead, we see a huge margin rejecting the premise.
It should send a signal to both parties, and it should certainly have Democrats quaking in their boots about November.
Whether or not the parties will heed the message remains to be seen, but the voters of Missouri have pretty much voiced what I think the majority of this country feels – “thanks, but no thanks”. Back off, downsize and cut spending. And stay out of our lives and our health care.
.@ewerickson The really horrible thing about liberty is that some people will use their rights to do things you don't like. Liberty is bad. #
The other angle you can take on Sharron Angle's press comments is that she just wishes she got the same supine press as Democrats. #