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In early September, President Obama asked Congress to pass the American Jobs Act, a bill that would call for $447 billion to create jobs. Immediately Republicans were opposed to the idea as the proposal itself asks for higher taxes on the top earners in the US who are responsible for creating jobs as well. If that’s not enough, Starbucks has teamed with the Opportunity Finance Network for the “Create Jobs for USA” initiative, which designed to help small business to create jobs and stimulate the economy.
243,000 new jobs? This is more than respectable. No unseemly disparagement by Republicans welcome, nor victory lap by Democrats. A pox on both their houses.
Proto-Supply Sider (who, among other things, generously cut oppressive tariffs) King Canute achieved mythic status by ordering the tide to cease rising. What often is forgotten is that he did so to show his sycophants the limits — not extent — of his powers.
As medieval chronicler Henry of Huntington wrote:
[A]t the summit of his power, he ordered a seat to be placed for him on the sea-shore when the tide was coming in. Then, before a large group of his flattering courtiers, he spoke to the rising sea, saying, ‘Thou, too, art subject to my command, for the land on which I am seated is mine, and no one has ever resisted my commands with impunity. I command you, then, o waters, not to flow over my land, nor presume to wet the feet and the robe of your lord.’
The tide, however, continued to rise as usual, dashing over his feet and legs without respect to his royal person.
Then the King leaped backwards, saying: ‘Let all men know how empty and worthless is the power of kings, for there is none worthy of the name, but He whom heaven, earth, and sea obey by eternal laws.’
“Obey … eternal laws.” The business cycle is as sacrosanct as the law of gravity. Utopians sacrifice Virgins and pray (Cut Entitlements!) for Endless Summer; Neo-Keynsians chant mumbo jumbo (Stimulate Aggregate Demand!) and command winter to end. Harry Truman famously once said (long safely retired from the presidency): “My choice early in life was either to be a piano player in a whorehouse or a politician. And to tell the truth, there’s hardly any difference.”
By Charles Kadlec
This blopost originally appeared on Forbes.com, February 6, 2012
The Federal Reserve Open Market Committee (FOMC) has made it official: After its latest two day meeting, it announced its goal to devalue the dollar by 33% over the next 20 years. The debauch of the dollar will be even greater if the Fed exceeds its goal of a 2 percent per year increase in the price level.
An increase in the price level of 2% in any one year is barely noticeable. Under a gold standard, such an increase was uncommon, but not unknown. The difference is that when the dollar was as good as gold, the years of modest inflation would be followed, in time, by declining prices. As a consequence, over longer periods of time, the price level was unchanged. A dollar 20 years hence was still worth a dollar.
By Charles Kadlec
This blogpost originally appeared on Forbes.com, February 20, 2012.
The federal budget is a dense document totaling hundreds of pages of numbers. Yet, for all of the digital precision, the use of various “base line” budgets, numbers that span 11-year time frames and other arcana known only to Washington insiders and budget mavens obscure more than they reveal about what the federal government is up to.
To cut through the haze and spin, I chose to focus on President Obama’s “Proposed Budget”, and to compare all projections with actual 2011 levels. I came away with four observations:
By Charles Kadlec
This blogpost originally appeared on Forbes.com, March 5, 2012.
Last Friday, Treasury Secretary Timothy Geithner charged in a Wall Street Journal op-ed that those who oppose the Obama Administration’s regulatory regime for the financial services industry “seem to be suffering from amnesia about how close America came to complete financial collapse under the outdated regulatory system we had before Wall Street reform.” Au contraire, Secretary Geithner, it is you who choose to ignore and misrepresent the lessons of the financial crisis by perpetuating the myth that the source of the crisis was a lack of regulation.
By Charles Kadlec
This blogpost originally appeared on Forbes.com, March 19, 2012.
Do you know why oil and prices are moving sharply higher? Some blame the oil companies, charging they are manipulating prices. Others cite U.S. sanctions on Iran and the threat of a military encounter that would disrupt the flow of oil from the Middle East.
Speculators, too are blamed for ostensibly bidding up the price of oil. In the political arena, President Obama is taking credit for increased domestic oil production even as his critics point out the slow pace of drilling permits issued by his Administration soon will hamper additional increases in the U.S. oil production.
Yet, the basic reason for higher energy prices is being overlooked, even though it is right before our eyes: Oil prices are up because the value of the dollar is down. Our common sense hides this source of higher prices because we view the dollar as fixed, and prices as moving. News reports explain the sharp rise in consumer prices in February were caused by higher energy and food prices, implying that higher prices cause inflation. Of course, higher prices do not cause inflation. Higher prices are inflation.
When explaining the dangers of America’s ballooning national debt, fiscal conservatives unwittingly sabotage their cause by invoking “the children.” They should spend lots more time discussing how federal red ink harms adults today.
Tying debt reduction to future generations causes two problems:
First, if America’s children will pay off the national debt, why sweat it now? Washington’s spendaholics will clutch at any available excuse to keep federal spending grinding forward. If the debt only will vex America’s kids, it clearly needs no attention for another decade, maybe two. So, until then, PARTY!
As the entire country (except for that area known as Washington, D.C.) works to get out of this financial rut, we are starting to see the same economic problems on the local level as we have seen on the national level.
Last week California Gov. Jerry Brown announced that the Golden State has a projected deficit of $15.7 billion. At least it wasn’t the same as our national deficit of $1.3 trillion.
By Richard Callahan
Job creation almost nil, unemployment increasing, the left is angry, the right is up in arms and the center is grumbling. What is wrong with this great experiment that promised so much?
Almost 4 years ago an eloquent, energetic, charismatic political outsider, Barack Hussein Obama, burst upon the scene. He arrived at a time of great economic turmoil and dissatisfaction with the regime in power and promised sweeping change. He promised change from an economic downturn gripping the country. He promised new, forceful leadership in which all citizens of the country would be united as one and prosperity and economic vibrancy would once again be restored. He promised American international leadership and the restoration of the American dream. Sadly, his promises have proven to be empty rhetoric and his policies have wreaked destruction on the unity of America, it's economy and the hope of so many Americans who believed his false prophecy.
By James D. Agresti and Dustin Siggins
If the U.S. government continues with its current tax and spending policies, children born this year will be saddled with a crippling publicly held debt that is more than twice the size of Japan's by the time they turn 30 years old. This grim picture, projected by the Congressional Budget Office (CBO) in its newly published annual long-term budget outlook, expects U.S. publicly held debt to grow from 73% of GDP by the end of 2012 to 247% of GDP by 2042.
Worse still, the CBO projects that current policies will continue to drive the U.S. deeper into debt, and by the time today's newborns reach 38 years of age in 2050, the major federal healthcare programs and Social Security will consume all federal revenues, leaving nothing for any other function of federal government or even interest payments on the national debt.
By Charles Johnson
July 7th, 2012
Four years into a dangerously long recession, we must re-evaluate the green ideology’s stranglehold on environmental policy.
The command-and-control approach to protecting nature—regulation under the Clean Air Act, Clean Water Act, and Endangered Species Act—has done some good in the last four decades. We have a healthier environment because of it. But unfortunately this approach, like government entitlements, seems to have no stopping point.
By John Merlin
This piece originally appeared in Investors Business Daily on July 6th 2012
More workers joined the federal government's disability program in June than got new jobs, according to two new government reports, a clear indicator of how bleak the nation's jobs picture is after three full years of economic recovery.
The economy created just 80,000 jobs in June, the Bureau of Labor Statistics reported Friday. But that same month, 85,000 workers left the workforce entirely to enroll in the Social Security Disability Insurance program, according to the Social Security Administration.
The disability ranks have outpaced job growth throughout President Obama's recovery. While the economy has created 2.6 million jobs since June 2009, fully 3.1 million workers signed up for disability benefits.
‘We’ll invest $15 billion a year over the next decade in renewable energy, creating five million new green jobs that pay well, can’t be outsourced, and help end our dependence on foreign oil,” candidate Barack Obama pledged in a radio address on November 1, 2008.
Three years and eight months later, as unemployment has exceeded 8 percent for 41 straight months, Obama seems incapable of keeping this promise. With the worst employment figures since at least 1948, when the Bureau of Labor Statistics started measuring them, Obama has made a dog’s breakfast of jobs — green and otherwise.
"I’d like somebody to get rid of the death tax. That’s what I want. I don’t want to get taxed just because I died. I just don’t think its right. If I give something to my kid, I already paid the tax, why do I do I have to pay again just because I died?"--Whoopi Goldberg
“This study confirms that the cost of the estate tax far exceeds any benefits it produces.”
So begins “Cost and Consequences of the Federal Estate Tax” published last week by the Republican Staff of the Joint Economic Committee, whose vice chairman, Representative Kevin Brady of Texas, continues to make his mark as a leader of the pro-growth wing of the House GOP. The report’s documentation of how the death tax fails as both fiscal and social policy stands as a timely rebuttal to the politics of envy promulgated by President Barack Obama and the leadership of the Democratic Party.
My conclusion: the death tax deserves the sobriquet: the “dumb tax.”
By Charles S. Johnson
August 4th, 2012
The “8 percent unemployment” rate in recent months, unfortunate though it is, paints a too- optimistic picture of our economy.
Real unemployment is a frightening 15 percent, if we count the officially unemployed plus two other categories—people who have stopped seeking work but still want a job, and those who are working only part-time (and thus probably aren’t meeting their financial needs) because that is all they can find.
The U.S. Labor Department compiles two separate job reports. The economy gained 163,000 jobs in July, which helps to explain why the uptick in official unemployment was only marginal. But the Labor Department also found that 195,000 fewer people are considered employed than a month ago.
To learn how many jobs the economy gained or lost, the government surveys businesses. To learn how many people are working, it surveys households. From households, it obtains both the widely reported “unemployment rate” that’s based on active job-seekers who aren’t working and a less-publicized “U-6” unemployment rate.
By Laurence Kotlikoff and Scott Burns
"Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade.
In the course of that year, the U.S. government’s fiscal gap -- the true measure of the nation’s indebtedness -- rose by $11 trillion.
The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones.
Some question whether “official” and “unofficial” spending commitments can be added together. But calling particular obligations “official” doesn’t make them economically more important. Indeed, the government would sooner renege on Chinese holding U.S. Treasuries than on Americans collecting Social Security, especially because the U.S. can print money and service its bonds with watered-down dollars.
For its part, economic theory sees through labels and views a country’s official debt for what it is -- a linguistic construct devoid of real economic content. In contrast, the fiscal gap is theoretically well-defined and invariant to the choice of labels. Each labeling choice changes the mix of obligations between official and unofficial, but leaves the total unchanged."
Slip slidin’ away . . .
Why does America seem to be slouching? Multiple measures have found this country going down, down, down since President Obama’s inauguration.
“Budget deficit twice as high, 3.7 million more Americans unnecessarily searching for work as a result of Obama’s poor economic choices,” says GOP economic leader
Washington, D.C.— In a jobs report unaffected by Hurricane Sandy, the Bureau of Labor Statistics reported today that the U.S. economy added 171,000 nonfarm payroll jobs during October with a gain of 184,000 jobs in the private sector. The unemployment rate increased to 7.9%.
The elevation of reform of our broken monetary system to a bi-partisan economic issue may be the biggest positive development of the next two years. Just last week, two-thirds of the Delegates in the Virginia House voted to “establish a joint subcommittee to study the feasibility of a metallic-based monetary unit.” That follows the lead of the Republican Platform’s call for a commission to consider the feasibility of a metallic basis for the U.S. currency, and last year’s decision by Utah to recognize gold and silver coins minted by the U.S. government as legal tender.
Importantly, there is nothing inherently partisan about favoring a metallic-based monetary unit. George Bernard Shaw, co-founder of the London School of Economics and ardent socialist, in his 1928 book, The Intelligent Women’s Guide to Socialism and Capitalism wrote this about the gold standard: