'MERICA - YOUR DREAM IS CURRENTLY BEING LIQUIDATED

After a mad dash sprint toward the election, I took a well earned break from politics and instead spent all my free time at my normal job filling in while my co-workers went out in search of Bambi's now grown grandchildren.  So in the 11 days since election day, I have worked just over 110 hours, with little time for any thing else except coaching my son's basketball team.

But you will not see me complain even one iota about working too much, since at the very least I still have a job post-election.  In the early days following President Obama's re-election victory, all hell has broken loose. 

In the past 11 days, we've seen dozens of companies announce layoffs, Europe has gone into recession, with the US to soon follow and our economy still sits at the edge of a fiscal cliff.  Our nation's top military figure and intelligence chief has resigned in scandal as we continue to seek information regarding the Benghazi coverup, precious energy land resources have been closed off from production by the government and Israel and Hamas have seen hostilities escalate again.

The census bureau's new report shows that an all-time high 49.7 million Americans are now living in poverty.  In addition, first-time jobless claims surged by a mult-year high of 104,548 for a weekly total of 466,348 new jobless claims. 

The Latinos that voted in record numbers to keep Obama and his policies, should also note another record milestone for Latinos - their poverty rate has now reached a high of 28%.  Bienvenido al 'Merica.

Denny's, Papa Johns, Applebee's and many other eateries and dining establishments have announced that keeping the Healthcare reform law intact will cause price increases on the menu and job cuts among their staff to remain profitable.  Employers across many industries have intimated that they may drop all health coverage for their employees.

It has now even reached the point that in 'Merica, the land of the massively obese, Hostess, maker of the Twinkie, can no longer make money and will close its doors, taking its 18,500 jobs with it.

Even as this is happening, my friends on Facebook are clamoring for a bailout for Hostess.  All I can say is, "Have we learned nothing?"

And I can sum up the mindset of everyone who has just read everything I just wrote and are thinking to themselves, "Yep, that's just like them greedy companies and Republicans.  Take from the workers to keep making their profit".  I will simply quote one of the soon to be unemployed Hostess workers.  Roger Harrison, a 56 year old who bags buns had this to say, 

"The people who are running this company are not interested in making bread...They are not in the baking industry; they are just interested in the money."

Uh, yeah, you think so?

Well, of course they're just interested in making money.  That's why they took their own money, $130 million of it, and invested it in the company to salvage it from bankruptcy just a few years ago.  If there was no hope of profit, they would have found a better place to invest their $130 million and Hostess may have folded at that time.  What Rex Harrison doesn't understand is that he kept his job an extra three years because a company that was not in the baking industry saw Hostess as an opportunity to make money and invested $130 million to do just that.

I mean, if someone had $130 million sitting around and an interest in baking but not making money, they could have just stayed home, grabbed an apron and a mixer, turned the oven on and let the flour fury fly.  And they could have done that while living on the interest for their $130 million.  So, no, they didn't buy Hostess because of a deepseated desire to be bakers; they did it to make money.

But alas, that effort has failed due to many reasons - a poor economy, stricter food standards in schools, more health conscious eating habits, high union labor costs, etc.  Businesses fail for many reasons.  Yet, I can tell you that the one thing that didn't cause Hostess to go under is that ownership was trying to make money.  I don't care how interested or vested one is in the baking industry or in the process of making bread, if one fails to understand that making money is the chief objective at the end of the day, then one will not be in business long.

My wife and I owned and operated a florist/gift shop a few years ago that ultimately failed to make money.  It didn't matter how much my wife was interested in flowers.  Because it was unprofitable, we closed it.  This made my wife jobless.  (There were no newstories written about my wife's jobless situation, that I can recall.) 

A few months back, we began a home based business promoting the ViSalus Body By Vi 90 Day Challenge that we feel very strongly about.  Our life has been transformed by the 90 Day Challenge, so we are very motivated to share our experiences with as many people as we can and hopefully, help facilitate the personal transformation of as many people as possible. (For info on our transfomation click here or for more info on the 90 Day Challenge, click here)

But its a business.  We need it to make money.  If it ever stopped being profitable, we would quit doing it.  As much as we may be helping people, we still have bills to pay at home.  We have children to feed, a mortgage to pay off.  If our business was not a profit making venture, we could not afford the gas to get to our appointments or the phone to make our calls or even the computer to take our orders and run our business.

In a business, you either make money or you don't.  When you don't, you don't stay in business long.  People once understood that.  Today I don't think they do.  Which I feel is a big reason why we had the election results we had last week. 

Once upon a time in America, any person could work and save his/her money and one day investe this money into a business, where he/she would scrimp and save and work to make it profitable.  But I'm not sure we live in that America anymore.  We seem to be living in a cheap knock-off country - 'Merica.  The American Dream is being shortchanged by a people who don't even understand what it is anymore.  Instead we are left with the notion that business is a government partnership where we all work together to make a better life and making money is optional.  But that doesn't work.  It can't.  Businesses exist for one reason - to make money.  That's it.

So even as the avalanche of bad news is falling around us, too many will fail to see the underlying truth.  Instead, we are a nation where nearly 50% of the voting electorate would agree with this poor misguided woman as she marched on the picket line Thursday outside a bankrupt Hostess factory in Indianapolis,

"Do it.  Shut it down."

Well 'Merica - you just got what you asked for.

A Cowardly Proposal

President Obama submitted his budget proposal on Monday.  This budget lays out the president's priorities and represents his vision for America.  As a sidenote, it shows that Obama is a coward and a colossal liar.

In 2009, the president made it clear that spending on a large stimulus was needed to end the recession and begin a recovery.  In 2010, his top priority was passing health care reform, which he argued was key to lowering costs.  In 2011, he came to realize that our booming deficits were an issue and pushed for a balanced program of tax increases and spending cuts.

But today, we can honestly say that President Obama is quite simply full of it.  In 2012, he proposes raising taxes well beyond anything ever discussed in the last 30 years and the final result is a larger deficit that last year.  Despite his words to the contrary, this budget makes it clear that raising taxes is not about fairness or lowering the deficit, it is only about spending more money; and spending it on his special interests, not America's interests.

This budget raises the tax deduction for buying an electric vehicle from $7,500 to $10,000.  This deduction has little effect on sales and the average income of those who purchase these $40,000+ cars is $177,000.  At the same time, the President would kill a Washington DC scholarship program for poor children that, by all marks, is succeeding. 

So the president who once said that he only cared about what works, has decided that putting more money into a failed effort for the rich is more important than a successful program for poor children.

When Obama took office he said that he would cut the deficit in half by the end of his first term.  Instead he doubled it.  If passed this budget would raise revenue from 15.4% of GDP to 20.1%, far above the post-WWII average of 18% and yet he spends even more, raising the projected deficit to $1.39 trillion.

The president has said that we need to temporarily spend more to fight this current crisis, yet his budget lays out a ten year plan that never spends less than 22% of GDP and is nearly 23% in 2022.  Given that spending was as low as 18% under Clinton, there is no way to call such a spending spree temporary.

The tax increases he proposes are unrealistic.  Dividend income would rise from it's current 15% to 39.6%.  The president has spent much time talking about the so-called Buffett rule that would tax the wealthy at a 30% minimum, but that is found nowhere here.  Why?  Because for Obama, 30% wasn't really enough.  With certain phaseouts on deductions, the actual tax rate for the wealthy will now be nearly 45%.  Is there a better way to kill economic activity than this?

Remember when Bill Clinton talked about the peace dividend from the end of the Cold War?  That peace dividend under Speaker Gringich went a long way toward balancing our budget.  President Obama's budget would make deep cuts in our defense budget, but this peace dividend would be transferred into more green boondoggles and high-speed rail projects. 

So what we have is a budget that would raise taxes beyond the thinkable, cut defense and still lose more money than before.  President Obama's budget claims to cut spending and lower the deficit but it doesn't.  He claims that this is a vision for an America built to last, but it isn't.  President Obama has talked a big game about being responsible and remaining true to our American values, but this budget makes that a lie; and the president is a coward for not having the temerity to level with the American people and tell them the truth.

Remembering 2006 - When $296 billion was a lot of money

Later today as President Obama submits a budget that will show a 4th consecutive year of $1 trillion plus deficts, it's helpful to put that into perspective.  Here is how ThinkProgress described President GW Bush's 2006 budget with a projected deficit of $296 billion:

Today, the Office of Management Budget projected a $296 billion federal deficit for fiscal year 2006. Bush held a press conference arguing that this is a vindication of his economic policies.
Actually, it would be the fourth largest deficit of all time. Here’s the top five:

1. 2004 (George W. Bush) $413 billion
2. 2003 (George W. Bush) $378 billion
3. 2005 (George W. Bush) $318 billion
4. 2006 (George W. Bush) $296 billion (projected)
5. 1992 (George H. W. Bush) $290 billion

In other words, Bush's 2006 budget (the last with a Republican majority) was not only on a downward trend over several years, but was similar to a budget deficit from 14 years prior. 

I will not be the first to defend Bush from the charge of being a big spender.  But despite the terrorists attacks and already burgeoning recession in 2001, policies were in place to bring spending under some modicum of control.  The following years of the Bush Presidency saw a democratic Congress, so the outlying years naturally told a different story even though it topped out at just under $500 billion.

What Obama proposes today will not be the actual budget that passes Congress.  Thankfully we now have a Republican Congress and a real hope of bringing the annual budget back under the $1 trillion mark.  But wouldn't it be nice if we could all be complaining about a record Obama deficit that was at least similar to any. other. President. we've. ever. had.  

Perhaps with a leader who actually cares about such things, we might even have a democrat-controlled Senate that would actually pass a budget - something that hasn't happened in three years.  Perhaps if the President could simply understand that free doesn't really mean free, we wouldn't have so many new "free" programs and mandates.  Perhaps if the President understood that the axiom "you have to spend money to make money" only works in the private sector.  Perhaps if the President wasn't too busy transforming America into something unrecognizable, he might notice we are in a perilous position.  Perhaps if the President cared about America as he does about himself.....well, nevermind.


UPDATE:  The budget has been released.  For an early analysis check out Veronique du Rugy's post on NRO's The Corner.

America Lost.....?

Now that the Obama administration has formally put in place new regulations stipulating that all health insurance plans will now have contraception coverage provided for free regardless of the wishes of the purchaser of the plan, at least we can look toward one silver lining.  The Federal government no longer needs to continue funding Planned Parenthood, right?  Sure, and I have some other Obama "compromises" I'd like to tell you about.

It's hard to pinpoint the exact moment, we stopped being America, but perhaps future generations will celebrate February 10th.  On that date, it became clear that we are no longer a free people.  Coincidentally, or not, that was also the date in 2007 that one Senator Barak Obama made his announcement that he would run for President of the United States of America.  Little did we know that he would be the last one.

Thus far, this President:

• has fired a private company's CEO
• played Robinhood by stealing the equity of a company from it's owners and gave it to it's workers
• had the head of the EPA to tell the American people what type of car they want to buy
• squashed energy production which raised energy prices in an attempt to force a transformation of supply
• mandated that every citizen purchase health insurance against their will
• told employers what health coverage plans must be offered and set fines for employers who don't offer health coverage
• told insurers what plans it may offer and that certain services must be offered free of charge to certain users
• forced banks to accept modify home loans against their will

This President has continually threatened banks, auto companies, the carbon energy sector, wealthy taxpayers and corporations, as well as average citizens.  In almost every instance, Obama felt free to take action due to the need to respond to a certain crisis or imminent issue.  But this week that argument cannot be made.  There is no crisis in access to birth control; not when Wal-Mart's pharmacy will sell you a birth control pack for $12.

Today, we can no longer kid ourselves into believing that we are citizens of the United States of America - we are now her subjects.  Once upon a time, being an American citizen meant that one were free to live one's life in the full knowledge that the U.S. Constitution held certain guarantees of rights that were not given by the state and could not be taken by the state.  But as her subjects today, we see that the President believes that those limitations placed on him by our constitution are not only unnecessary, but an impediment to achieving the results he desires.

That the former state legislator who voted to allow children born alive following a botched abortion to be killed, because it was unfair that the child survived despite the intentions of the mother, has no understanding of the issue of conscience and the Freedom of Religion in the 1st amendment of the Bill of Rights should come as no surprise.  

That this former candidate, who admitted on the campaign trail that he wished to raise the capital gains tax rate despite the likelihood of a decrease in revenue out of a sense of fairness, now wants to target only certain people for a special tax on them for the sake of fairness, it could not be unexpected.

That this President, who in his recent State of the Union address stated that when Congress would not act, he would, is now using his unconstitutional Health Care reform act as a vehicle to change the relationship of government and citizen, we can no longer be shocked.

The only question I have is whether we will look back at February 10th as the day America was lost or if that was the day the American people, the Congress and the Supreme Court heard the call to action and were moved to rescue her.

We Need an Economic "Gamechanger"

I've done my best over the past few days to emphasize that President Obama's "tax the wealthy" plan has the potential to do great harm to our floundering economy while doing nothing to overcome our pile of debt.  The idea that increased tax rates will result in associated revenue increases is not backed up by historical data. 

Throughout the past several decades, the top tax rate has fluctuated from as high as 91% in the early '60s to 28% at the end of the '80s to our current 35%.  Yet despite the huge difference between 91% and 28%, our revenue has consistently remained around 18% of GDP. 

The changes in actual tax revenue tracks more closely to economic contraction/expansion than tax rates.  In good economic times, even with an expanding GDP, revenue as a percentage of GDP increases, whereas as revenues decrease as a percentage of GDP during recession, despite a falling GDP.  During our current economic hard times, revenue sits at about 16% of GDP, but reached 21% at the height of the '90s tech bubble.

Conclusion #1:  If you want to increase revenue, you need to expand GDP.

It's time to toss aside the class warfare talk of what's fair and just talk about what works.  Raising tax rates is not stimulative and does not correlate with increased revenues or an expanding GDP, so there is no economic value in doing so.

But something must be done.  Doing nothing is not an option.  The following chart shows us that we can't just wait for something good to happen.

The biggest problem we face is not a true lack of revenue, but an explosion in our spending.  Even aside from the temporary spending measures put into place over the past few years, our entitlement growth will continue us on an unsustainable path.  Tax revenue in this chart is displayed at the historic average of 18% of GDP.

For those who believe that simply raising taxes will bring in enough additional revenue to fix this problem, here is another chart.

As it shows, even if we assume that we could hold revenue at our highest recorded percentage to GDP, we would still be swamped by the rising red ink.  What we are left with is this - we are not on a path to recovery, we have lagging revenue with no realistic plan to increase it and even if we could magically assume record revenues, it still wouldn't be good enough to bring our deficits under control.

The fact is we are at a crossroads.  We cannot continue down the path that we are on.  The same game of small adjustments here and there will not be sufficient.  It's at moments like this, that something drastic needs to happen.  What we need is a gamechanger and it is this - dramatically cut spending to expand the economy.

I can hear the collective gasp arising from the gallery, but wait a moment before you hit that "close tab" button.  I can show evidence of how this has worked before.

Our debt currently sits at 42% of GDP, the highest it has been since WWII.  But in the early '90s, Canada's overspending had put its debt at 53% of GDP.  At that point, they began a gamechanging plan.  They cut spending very dramatially and instituted new market reforms and tax cuts.  They consistently balanced the budget.  This chart shows the results.

The Canadian economy boomed as spending was cut.  Average growth matched the highs of the mid-90s U.S. economy until the 2009 recession took its toll.  Despite a small uptick, their debt is again on a downward trajectory and sits 10% less than before they changed course.  Their dollars are now more valuable than ours as our debt levels are heading in the opposite direction.

During that same time period, Japan was following the same Keynesian spending plans that Obama is proposing.  The results were atrocious.  Economists now refer to that time period as Japan's "Lost Decade".

The Keynesian economic model has been refuted time and again.  Look at how government spending affects states.  In data compiled from 1968-2008, here is a quick summary:

• When a state's Senator ascended to the chair of one of the top-three committees, earmarks in the following year increased between 40% and 50%, and discretionary state-level Federal transfers increased about 10%.  In the median case, that represented a $200 million increase in Federal spending directed to that state.

• In response, the average firm in the median state cut its employment growth rate by 3% to 13%, reduced capital expenditures by approximately 15% or $39 million, R&D expenditures by roughly 10% or $34 million and experienced a decline in sales.  They also increased their dividend payouts by 13%, suggesting fewer investment opportunities.  These results were even more pronounced for firms within industries targeted by the Federal spending and for firms that did not have overseas operations, and therefore were more exposed to the effects of the increase in Federal spending on their home state's economy.

Co-author Professor Coval says, "Our findings suggest that they (public policymakers) should revisit their belief that Federal spending can stimulate private economic development."

Conclusion #2:  Spending cuts expand the economy while increased government spending causes contraction.

In other words, cutting into the deficit by dramatically decreasing government spending can help grow the economy, producing jobs which will increase tax revenue helping pay down the (now reduced)deficit.

As Paul Ryan has stated many times, "We don't have a revenue problem, we have a spending problem".  They say the first step to recovery is understanding that you have a problem.  Getting both parties to admit that we have a problem can lead us to the real gamechanger that we need. 

Until then, expect more nonsense about what's fair as Congress and the President fight over who will be allowed to get in the lifeboats as the unsinkable United States of American slowly takes on more water.

Where's Obama?

Remember playing Where's Waldo? 

Even my eight year old son immediately saw the problem with this picture.  It seems the president's narcissistic streak just won't allow him to simply be one of many, even if his little "hey, I'm over here" gesture completely obscures someone else in the photo.  After all, isn't everything about The One?

So, what do you think the woman in black is thinking?

Why the "Buffett Rule" Can't Work

At first glance, President Obama's new tax on the wealthy - the so-called "Buffett Rule", in honor of Billionaire investor Warren Buffett - will appear to be a good step to bringing our sky-rocketing budget deficit under control.  This year's fight over the debt ceiling only produced $38 billion in spending cuts, so it's hard to see a way forward without some new revenue.  The wealthiest Americans, primarily those who can rightfully be called millionaires, can surely spare a little change to help the country out.

Daniel Indiviglio, puts pen to paper in the Atlantic to calculate just how much it will help us to have the rich pay their "fair share", but what he found isn't what you might expect. 

His chart (see right) shows the varying amounts of additional income that can be collected from our nation's millionaires.  The red line near the top is our current year budget deficit. 

(Invidiglio uses the actual reported incomes and makes no assumptions as to how increased rates may change behavior.  In reality, the actual amount of income reported would decrease were rates increased.)

As the chart shows, raising the baseline 29.1% to a flat 35% only brings in an additional $37 billion.  In fact, even if you confiscated 100% of the yearly income for all millionaires, we would still be a trillion dollars short of closing the deficit under Obama.  We might think that the wealthy have all the money, but they don't.  They have a lot, but there just aren't enought of them.  We must remember the top 1% is outnumbered 99-1.

Indiviglio's conclusion is this -

So this Buffett Rule is a great populist proposal if the president wants to score some political points, but it has little practical value. It might provide the government a little bit of additional revenue, but unless extremely aggressive, it wouldn't make a dent in the nation's deficit problem. To do that, you'll need to cut entitlements and/or raise taxes much more broadly.

One reason this seems contrary is because of how often it is said that the wealthy are not paying their fair share.  But in truth, not only are they paying their fair share, they're paying well above it.  The top 1% earn 19% of total income but pay 37% of all taxes. 

If that is not a fair share, then I need someone to explain to me what would be.  What share of the tax burden would one consider to be a "fair share"?

Isn't it time we stopped placing blame and pointing fingers at each other?  Instead of tearing each other down, can we just get back to finding a way to grow the economy rather than government?  After all, no one ever complains about a "fair share" when there is plenty to go around.

This is not Math; it's Class Warfare

President Obama has been woefully misinformed.  That is putting yesterday's speech in the best light.  Others, and I don't blame them for saying such, accept that the president is pushing an outright lie in order to aid his re-election.  I prefer to believe that Obama is not attempting to purposefully sabotage our nation, but it is becoming more difficult to do so.

In 2009, the president said that raising taxes during a recession would be bad.  Our economy is currently on the verge of another recession.  Apparently, someone needs to mention this to the president because yesterday, Obama proposed a $1.5 trillion tax increase.  If passed, that would be detrimental to a recovery by his own admission.

This year households earning more than $1 million will pay an average of 29.1% of their income in taxes.  Households earning $50,000 - $75,000 will pay 15% of their income in taxes.  The Associated Press fact check states,

On average, the wealthiest people in America pay a lot more taxes than the middle class or the poor, according to private and government data. They pay at a higher rate, and as a group, they contribute a much larger share of the overall taxes collected by the federal government.

Despite the obvious data, President Obama continued to argue that the wealthy shouldn't get a better deal on taxes than "ordinary families".  He added, "This is not class warfare, it’s math."  Maybe he needs to grab a calculator.

The Jobs Conundrum

All across America, the cry is, "We  need more jobs!".  But in truth, a better cry is, "We need more Jobs!".  Don't look at me like I'm messing with you.  I promise that what I just said will make sense in the end.

At one of the recent Republican primary debates, the question was asked how much out of every dollar that one earns do they deserve to keep.  I can't remember what the answer at the debate was, but the correct answer is this - a person deserves to keep every bit of what they earn*.  That such a question even needs to be asked is a testament to how far removed we are from our nation's founding.

(I will avoid the issue of church tithing as a matter affecting this issue.  As my Pastor likes to say, it's all His anyway, but he lets you keep 90%.  Even with the Almighty, he offers Free Will to allow us to make that choice.)

The problem with the question is that it confuses a level of taxation with the issue of who should the money belong to.  The idea that individuals deserve the entirety of what they earn has no implication on taxes anymore than what one might spend on electricity or gasoline.  Just as a person chooses how much of their "earnings" to allocate toward electricity or gasoline, they choose how much will be allocated toward taxation. 

Obviously, the manner we go about choosing how much to pay in taxes is different on a certain level.  As voters, we collectively determine the rates of taxation, whether property, sales, payroll or income taxes, we will choose to abide.  But even once rates are determined, we still have a tremendous amount of discretion in how much we will choose to pay.

How Not to Create a Job and Spend $447 Billion Doing It

Yesterday the U.S. Census Bureau released its annual report on the state of poverty in America which stated that 46.2 million Americans were poor last year.  That translates into the fact that one in seven of us are living in poverty.

Naturally, the quickest way to lower that number is to get the private sector business environment in gear so that good jobs are available to those in this demographic.  Unfortunately, President Obama's new jobs plan appears to be mostly rehashed spending from the first stimulus law in 2009.  Look inside and you will see (not shovel-ready) infrastructure projects, additional bail-out funds to states, along with subsidies and loan guarantees to fund Green jobs.

One of the proposals in the president's plan is the payroll tax cut.  Congress could do some good by following through on this one and perhaps extending it through 2013.  It's still difficult to see how much benefit can come from a temporary cut, but by having the lower rate in place for two years it would make employers definitely consider it in hiring.  The Republicans proposed this in 2009 as an alternative to Obama's spendathon, but he and his Congressional leaders refused to listen. 

Of course paying for it is problematic.  Obama's plan to raise taxes in 2013 on the very people that he expects to do all this hiring is absolute lunacy.  His plan is pretty straight forward.  To employers he's saying, "please take some money and hire some people, then after you help me get re-elected I'll ask for all that money back".

Better would be to reform the entire tax code into a flatter, wider and simpler system eliminating the massive loopholes in our current system.  This would have the side benefit of eliminating some of the accounting drag on businesses.  A simpler tax code has the same effect as loosening regulations.  It allows more of a business's activities to be about productivity which leads to less overhead, greater profits, greater growth which of course leads to more hiring.

Infrastructure plays a large part in Obama's jobs plan.  But this has no chance of helping create jobs in the near term.  Let's take a step back and evaluate our transportation funding.  For the year 2008, transportation funding was $10.7 billion.  For 2010 funding doubled to $21.3 billion.  On top of this was the $48.1 billion that was part of Stimulus I.  So in two years we increased spending by $58 billion and the president wants to add another $50 billion, which is utter nonsense if he wants the money to be stimulative.  There are not enough good quality projects where we can spend the money already allocated.  It will be years before this new money could be matched up with any projects of value.  You just can't increase spending by ten-fold in this way and expect to see short term results.

Yes we need to work on our infrastructure.  But we need to do it in a frugal manner and while instituting a real long term plan.  There was a large outcry about the Bridge to Nowhere, but how many "bridge to nowhere"-type projects will be wrongly funded as we try to spend money as quick as we can?

As for the Green job funding, keep the name Solyndra in your memory.  You will hear much about it over the next year.  The solar panel manufacturer received over $500 million in loan guarantees from Stimulus I, but went bankrupt recently and 1,100 people lost their jobs.  The FBI raided their offices last week, but recent emails point to the White House pressuring the OMB to make the loan in 2009.  One analyst even stated that Solyndra would run out of money in September 2011.  The date Solyndra filed for bankruptcy - September 6, 2011.

Also not mentioned is that nearly half of the original $36 billion renewable energy loan program in Stimulus I has yet to be given out.  Aside from that we have the millions of dollars spent for energy efficient upgrading and weatherization that have succeeded thus far in creating one job for every $5 million spent.  Pouring anymore down those money pits would be beyond foolish.

Then the president believes we need to send even more tax dollars to states so that they can once again put off making tough decisions.  The truth is a lot of states are in bad financial shape and cuts need to be made - the sooner the better.  A temporary bailout will not eliminate the problem.  When states refuse to make the necessary cuts, the threat of increased taxes loom.  In that environment, businesses are left to worry about those kind of changes to their bottom line.  So where is this type of stimulus creating jobs?

Finally, Obama believes we need to extend unemployment benefits even further.  At the risk of angering some readers, let me say that this is ridiculous.  In what world does the president believe paying people to stay home will get more people working?  If there was any substantial effect from the recipients of government aid helping stimulate the economy, then we wouldn't be in the fix that we find ourselves. 

If it's solely to help the unemployed, then we are doing the opposite of what we should be doing.  Basic economic textbooks, along with real life experience, will tell you that unemployment payments extend unemployment.  Even worse, chronic unemployment makes each potential worker unemployable in the eyes of the men and women who hire.  This is why, even when a government program helps an employer to create jobs, only half of those jobs went to the unemployed.  Instead, employers poached workers from other companies.

Contrary to popular thinking, the solution to our problems today is to simply put into place the type of common sense reforms that will help our economy at any time.  The idea that we need temporary efforts for a temporary problem comes from a misunderstanding of how the economy works.

Last year, the Cash for Clunkers was a good example of a failed temporary policy.  It didn't create new car buyers, but it did cause people who already planned on buying a care to move up the timing of their purchase to qualify.  In the end, it was not an incentive to cause people to purchase a car and the end result was that the price of used cars went up thanks to all the quality used cars that were taken out of circulation.  In effect, the government gave a lot of money to the middle class and affluent to buy a new car and caused the poor to pay more for a used car.

Thanks, but no thanks, Mr. President.  We don't need anymore of that type of help.  Stimulus II: Economic Boogaloo and Cash for Green Clunkers just won't work.  You talked a big game about reforming Washington.  Isn't it time we tried something we know will work, like tax reform?  See Reagan, Ronald Wilson, 1981-1988 in the White House records if you need some pointers on how best to proceed.  We're getting a little bit tired of waiting for you to become the one we've been waiting for.

Come Hither for the Rant (Clothed in Subduedness)

Due to football practice, a union meeting and the football game, I didn't watch President Obama's speech until nearly midnight last night.  I fell asleep throughout it (only 3 hours sleep the night before) but had the feeling that someone had been very rude to the president by continually shouting at him.

I awoke this morning and cued up the speech on the DVR.  Turns out the disrespectful person interrupting the speech was actually Obama shouting, "Pass this bill!"  It was like some awful Baptist* preacher shouting AMEN! after every statement.  What he seems to not understand is that the congregation will shout AMEN! when they are persuaded that what you have said is a true and worthy statement.

Obama's speech had several true and worthy statements.  He spoke of the need to address jobs (AMEN!), how we need to cut regulation (AMEN!), help small businesses (AMEN!), educate children (AMEN!), and lead the world (AMEN!).

But the solutions he would use to address these issues are utterly underwhelming.  To offer such a package is truly an act of treachery. AMEN!)  Treachery is defined as a willful betrayal of fidelity, confidence or trust.  If we had a parliamentary system of government, a vote of no confidence would have been taken against this president immediately following this speech.

This new package (Stimulus II:Economic Boogaloo) is just more of what we've already done that has failed spectacularly.  In 2009, we sent an enormous amount of money to states to stop layoffs and meet budgets, rebuild infrastructure, offer small and temporary tax cuts and invest in green technology.  That effort is exactly why we are (I'm so mad I can't see straight) DOOMED!!!  WHAT THE H!!!!!

Sorry, I've been trying to keep myself contained, but I can't.  This is ridiculous.  This is like a bad actor who thinks they're not getting hired because they have bad promo materials.  They're broke, but they think to get a job they need new promo shots, business cards, flyers, etc.  So this actor goes and runs up more debt to buy all this stuff, but it's useless.  No job is coming because they don't see the problem.  Buying an acting lesson may be a worthy investment, but that means admitting that you're not good enough

President Obama can't admit the truth.  Government can't fix this by making all these small changes.  Some of them may be worthy on their own given the right circumstances.  But they don't change the underlying problem - the government has inserted itself into the market place and spooked businesses.  Employers don't want to see a temporary tax credit.  They want to see a long term future without unnecessary regulations and interference in their business.

Gibson, the guitar manufacturer was raided by the Fed and had a supply of rosewood confiscated.  Gibson has some 40 employees who treat and and set the inlays on this rosewood which will become the fretboard on some of their higher end guitars.  The Fed told them that due to some law in India, that work needs to be done overseas.  WHAT THE????  Obama is trying to create (or save) jobs by spending all this money while at the same time, his administration is working to kill jobs with non-American regulations (my mind is about to explode).

Look at the history of economic downturns.  There are two that did not quickly rebound - the Great Depression and now our Great Recession.  Why is that?  The similarity between the two is that the government became overly involved in both.  Some have declared that this was because it was needed.  Most now say this was in fact, the reason why a recovery was delayed.

I can't do this anymore.  I'm TOO FREAKING UPSET!!!  I'm just sick.  This is stupid.  Has the president never read a history book? (AMEN!) Does he not understand math? (AMEN!) Can he not open up a newspaper and read about what is happening in Europe? (AMEN!) Do they not have an economic record of his predecessors in the White House? (AMEN!) Is he oblivious to the hurt and discontent in our nation? (AMEN!) Is he more concerned with his campaign rather than the economy? (AMEN!) Does he not care enough to put aside his politics and do the right thing? (AMEN!)

How any president could make that speech last night is beyond the pale.  As I said earlier, it was an act of treachery.  November 2012 cannot come soon enough. (AMEN!)

*I'm a Baptist minister, so that makes this okay

Rumblings (Ere the Rant)

Dear Readers, this is not the rant.  These are merely the rumblings that precede it.  Whether the actual rant will take place remains in the air.  We will know tomorrow by kick-off time of the Saints-Packers game.   I'm in the mood to let loose now, but it's not the right time.  I am a patient person.  I see far.  So I wait.....and wait.....and wait......

What, you the dear reader may ask, for what am I waiting?  I am waiting to hear the words come from the man himself.  I've seen the leaked plan, but I want to see if he would really dare to speak such words himself.  I will serve no wine before its time, and I will accuse no one before the deed is done.

As I gather my wits and calm down, I must share what bothers me.  It has been given to the press that President Obama, summoning all his wisdom and the advice of the wisest of his advisors over the past several weeks in preparation for tomorrow's speech, will seek to combat our current economic crisis by - are you ready for this? - proposing that we do the same thing we've already been doing. (Go ahead and release a very loud "WHAT???" or similar type exclamation silently in your mind)  All indications are that Obama is prepared to double down on a losing hand.  It's sort of an economic equivalent to W's Stay the course.

Obviously we know that such a plan would only be insanity.  The cliched definition of the word is to do the same thing repeatedly while expecting a different result.  Surely, the president and his inner circle have something else prepared to offer the nation.  There is absolutely no way that they can be so blind to reality.

(Calm down, Sam)  I am patient.  I see far.  I will wait.  This is not the rant.  That will wait until I hear the particulars of such a stimulus package (Stimulus II: Economic Boogaloo?*) come from his own lips.  I dare not rant today, because I'm so sure of the futility of such a plan that I feel it can only be a trap.  ("A trap?" you ask)  Yes, a trap.

By leaking a proposal that totals in the neighborhood of $350-500 billion and allowing everyone to criticize that plan, if he in fact, were to only propose spending a quarter trillion dollars in new stimulus spending, it will have the pretense of seeming bi-partisan and hailed as a compromise.  Naturally, offering to spend $250 billion just a few short months after haggling over cutting less than a tenth of that amount is far from bi-partisan, unless he can give it the appearance that he is moving toward the center.

Danger lurks in raising hell about what may be in the plan today.  Better to wait for him to own it first.  Then, and only then, the dogs of Hades shall be called forth to do my bidding.  But for now, my rant is on hold.  I am patient.  I see far.  I wait....and wait....and wait..........

* h/t to Ed Morrissey at HOTAIR for this one (He wrote Porkulus II: Economic Boogaloo, but I prefer Stimulus II instead.)

We Seem to Have Misplaced Your Green Jobs, Mr. President.

There is no Green economy - not today, not tomorrow, not ever. 

Of course, we don't have a carbon economy, either.  The truth is that we just have an economy.  Energy isn't the end all be all of our economy, it's simply the means to an end.

For our widget makers, the greatest consideration on energy is the relationship of cost, efficiency, safety and dependability.  Throughout mankind's development, as we moved from using our natural environment (sun, wind, water) for energy to wood to coal to oil to natural gas to nuclear power, that relationship has been the driver.  Depending on the application, location, the given industrial environment, resource availability, etc., whichever energy source will be used will naturally vary.  At my place of employment, we use charcoal briquettes to light a natural gas-fired lime kiln and natural gas to light a coal-fired lime kiln.

Any attempt to force everyone into using the same energy source no matter the external issues, would be as wrongheaded as telling me to use steam to power my handheld calculator.  I'm quite happy with the solar chip in my calculator and even in my patio lights.  But if cellphones were required to use the same energy source, smartphones would never have been developed.

Solar & Wind - paying more & receiving less

Later this week, President Obama will make a speech to outline his new jobs program.  I expect that we will hear much about Green jobs and the Green economy.  As I said earlier, they don't exist.  What he really means is that we will either a) reorganize the economy to make green energy cheaper by artificially raising the price of using oil and coal or b) spend tax dollars to further subsidize Green businesses that can't compete in the marketplace.

Under the first scenario, it's hard to see job creation when we raise the costs of production and in the second, Obama fails to see that cost is only one part of the consideration on energy use.  Making solar and wind power cheaper will not make it more efficient and dependable which are two very big drawbacks.  Of course when we check the above chart, we see that if you account for the subsidies, solar and wind are over 20 times more expensive than oil and coal.

This past week, Solyndra, a solar energy company closed its doors.  Obama gave them half a billion dollars in loan guarantees from the stimulus package in 2009 to prop up Solyndra as it sought investors.  The president had touted Solyndra as part of the future of the coming Green Economy.  Rich Lowry writes at National Review,

The stakes in the battle to manufacture solar panels are exceedingly small. Solar power accounts for less than 1 percent of the electricity generated in the United States. The Obama administration’s fervency for it has more to do with the romance of its clean, postindustrial image than with economics. Obama said last year, “The true engine of economic growth will always be companies like Solyndra.” If that were so, it never would have needed half a billion of our dollars in the first place.

How did it fail, even with that amount of money?  The real problem was that Solyndra was not a profitable business.  As analyst Peter Lynch told ABC news,

"Here's the bottom line," Lynch said. "It costs them $6 to make a unit. They're selling it for $3. In order to be competitive today, they have to sell it for between $1.5 and $2. That is not a viable business plan."

As the President imagines it, the move to Green Energy is not about cost, efficiency, safety and dependability, it is about fundamentally changing our economy.  He will try to entice us to make the change, but if people must be forced into changing, well, then so be it. 

Why the need for change?  I'm still waiting for someone to explain what pot of gold is waiting for us at the end of the Green Energy rainbow.  The President claims that jobs await us if we make the change, but ask Spain how that worked out for them.  Heck, ask the 1,100 employees who no longer have a job at Solyndra.

We can never forget that what we really have is a $$-based economy.  When the economy ceases to be about the almighty dollar, we cannot expect to see job creation.  On Thursday night, if President Obama's new plans are not about lowering the costs of doing business, but are instead about fundamental change to our economy, we will have a long wait for those new jobs.

How the Ball Lost Its Bounce

Zero.

0.00000

Nada.

That is how many jobs were added in the August jobs report - zero.  At this point can anyone even trot out the cliched "unexpectedly worse" line to describe this report?  It's absolutely not unexpected if you understand how our economy operates.

Let me provide a quick picture of how our economy works.

Imagine a bouncy ball - it represents the movement of our economy moving forward in time.  As the ball moves upward, our economy is experiencing growth.  But as the economy grows, poor decisions or wagers accumulate.  Think about the tech bubble or the housing bubble.  As people continue to overprice certain stocks or commodities, overhire & overspend, the ball begins to become weighted down by all this - we'll call it excess.

Burdened by the weight, the ball begins to fall.  Somewhere underneath is a natural floor which the ball will hit.  This is the downturn of a recession.  But when the ball hits this floor, all the excess will be broken off the ball and the bouncy ball will do what bouncy balls tend to do when they hit the floor quickly.  It will bounce back.  And the cycle will repeat itself if left alone.

The problem develops when the government tries to alter the cycle.  Can government help?  Yes, but only when it understands how.

In 2008-2009, both Presidents Bush & Obama saw an economy in a death fall and they believed they could and should do something about it and they did.  Rather than allow the ball to fall to its natural floor, they attempted to arrest the fall - which they did.

(Wait a minute.  Are you giving President Obama credit for ending the economic downturn?  Absolutely.)

The policies put into place, mostly by Obama, created a soft landing place for our economy, sort of like a pillow, in an attempt to protect Americans from being hurt by the fall.  It arrested the fall before it hit a natural floor, thus keeping the downturn from going as low as it may have. 

But, unlike what Obama says, that does not mean he prevented another Great Depression.  In fact, he has ensured that we would go through a depression.

By cushioning the fall, protecting homeowners, bailing out banks & the auto industry, funding states, Obama prevented the ball from shedding the excess that had accumulated on it.  Now it just sits there, overweighted with no bounce.  It's not going anywhere for a while.  This pretty much represents, if not a literal depression,  then at least the quagmire our economy is stuck in.

Even worse, the president's administration is putting in place new regulations that will represent obstacles to growth, so that even if we can get the ball bouncing, it will be hard to build any momentum.

Contrary to how this recession was handled, look at how Ronald Reagan reacted to taking office under a similar economic downturn.

Reagan understood that a falling economy could not be propped up.  Rather than attempt to stop the fall, he & Treasury Secretary Volker put into place policies that actually accelerated the fall.  By doing so, the economy hit the floor sooner and quicker.  This created an even larger bounce than would normally be expected.  The economy quickly shed the excess and took off. 

In addition, Reagan's tax & regulatory policies gave the economy room to grow so the ball bounced higher and higher than ever before and created a higher floor for the next bounce.

President Obama will give a speech next week on jobs.  I wish it mattered.  Unfortunately, I don't see how it does.  As long as our ball sits on the ground, covered in excess, surrounded by new regulations and the threat of higher taxes, it's not going anywhere anytime soon.

Big Brother Wants to Be Your Friend on Facebook - (Updated)

I am a poor golfer.  But that is to be expected since I don't play very often.  I played about 10 rounds of golf during 2009-2010.  I have yet to play this year, but that will soon be rectified on Tuesday when I finally have the time to head out with my brother.  We will hit two different courses, playing 36 holes with the benefit of coupons.  My ability to play depends heavily on time and money, which are not normally in large supply in my life these days.

Pro golfer Paul Azinger made the news recently, but it wasn't for his ability to make birdies in a golf match.  It was birdies of a different sort - his tweets - that got him into hot water with his employer ESPN. 

Azinger is not the first person to point out that President Obama may be playing a little too much golf.  In fact, Golfer-in-Chief has become a well used nickname for Obama.  During the same time span that I've played 10 rounds of golf, the President has played 80.  It goes without saying, that he does not suffer for a lack of time or money.  I guess my time is spent up trying to earn enough money to pay his salary and his green fees while he is in office.  I sure hope he's using coupons when they're available.

So for anyone to point out the disturbing number of golf outings by Obama was not off base.  But ESPN, for whom Azinger works as a golf announcer, has decided that this was "not consistent with the social media policy" of the company (Disney).  Of course, ESPN took no issue when another employee, Kenny Mayne, tweeted a desire to hit another vehicle because of a Sarah Palin bumper sticker.  Maybe that is consistent with the policy because the target is a Republican.

My question is "where is the real problem in all of this"?  Is it in a policy that limits social media expression?  Or just  one that limits political speech?  

On Sunday, in the state of Missouri, a law took effect limiting social media contact between teachers and students.  Our school district, Sainte Genevieve R-II, went even further in limiting "texts" between teachers and students.

Earlier this week, my daughter had a question about choosing a faculty adviser for a campus Christian club.  I suggested that she text one of our church's musicians who also happens to work as a school administrator for a suggestion.  Of course, that is no longer allowed.  So, I had to be the go between for this dangerous conversation, surreptitiously attempting to aid the formation of a church club. Now I feel all dirty.

Is this where we stand in America now?  No longer do we attempt to punish the wrong doer.  Instead, we simply punish everyone.  If Disney has a problem with an employee publicly criticizing a Democrat, then make that the policy.  If I don't want my child to text a teacher or friend them on Facebook, then that is my responsibility.  A teacher who intends to do wrong with my daughter, will not be held back by a new school policy.

Perhaps the bigger question is, where does it stop?

Is Disney attempting to control the public discourse of its employees or simply being wary of any potential embarrassment to the company's image?  If they can exert control over an employee's social media presence, can they exert control over an employee's social interactions?

The school district, as an arm of the state, is seeking to limit not only the public social media of its employees, but also private communications; even those that involve family or church relationships.  

I am an avid user of the social media, but we must not allow this to devolve into an Orwellian Big Brother allowing the state and quasi-fascistic corporations such as Disney, among others, to coerce our behaviors, relationships and discourse.  They should not be my brother's keeper.

These workers are not owned by their employers.  They are rented help.  It should be enough to simply ask them to comport themselves in such a way as to bring honor to their employer, then discipline those who fail.  But in today's world where a moral code is no longer recognized, it is far easier to simply withhold free will than expect us to use it wisely.

When we allow others to remove our ability to use judgment, rather than punish those who fail to use it properly, we begin a process of penalizing exactly what we need more of - wise men and women.  We are marching either toward 1984 or Idiocracy.

Welcome to COSTCO.  I love you.

*** Updated ***
Since posting, I've been informed that the Missouri law in question was blocked by a Missouri Judge prior to taking effect on Sunday.  For more info on this, click here.

O Waiver, Where Art Thou?

On May 2nd, I will personally become acquainted with our President's failed promise that under his health care reform law, we could keep our current insurance if we wanted to.  On that day, our union will begin negotiating a new collective bargaining agreement with management to replace the contract that will end on June 30th.  First order of business on May 2nd will be a presentation on health insurance.  Even now, many of our senior members are choosing to retire under the current agreement, rather than take a chance on what our health care benefit will look like on July 1st.

My employer has been self-insured for the vast majority of health care expenditures for many years now.  There are two primary exceptions to this.  One, they pay a third party insurance carrier for a catastrophic coverage plan for its employees and two, our insurance coverage has a lifetime benefit maximum.  On average, less that 1% of employee's health care expenses meet the catastrophic limit each year and as far as I know, none have ever met the lifetime cap.

Over the life of the current five year contract, the cost of our health care plan has averaged a yearly increase in the low single digits with a cumulative increase under 10% over the last four years.  Both management and our union have worked to keep expenses low.  Part of that plan was having our union members cover a greater portion of the health care costs.  Under the previous contract, employees paid less than 20% of expenses, but in the most recent year, employees paid just under 30% of the total cost of the insurance plan.

Additionally, management began offering certain preventative care provisions free of charge to employees.  As they examined the data, the company realized that less than 5% of covered employees would use over a third of the health care dollars spent each year.  It was cheaper to treat and find issues early rather than wait until they became health problems.

Despite the inherent faults in the health care system, my employer, working with my union brothers and sisters had found a way forward to bring what were formerly 15 - 20% yearly increases and created a sustainable program that worked well.  Negotiations for this next contract brought hope that any wage increases would do more than simply pay for the additional health insurance costs.  That, of course, is now out the window.