Freedom Line Blog

In our recent Liberty Update commentary “Obama Didn’t Save the Economy, He Subdued It,” we noted the depressing fact that the current cyclical economic “recovery” under Obama is the worst since accurate recordkeeping began after World War II.

Unfortunately, it gets worse.  The U.S. Labor Department reports that economic productivity remains in the midst of its longest decline since the 1970s:

It was the third consecutive quarter of falling productivity, the longest streak since 1979.  Productivity in the second quarter was down 0.4% from a year earlier, the first annual decline in three years.  That was further down from an already tepid average productivity growth of 1.3% in 2007 through 2015, itself just half the pace seen in 2000 through 2007, and the trend shows little sign of reversing…  Productivity is a key ingredient in determining growth in wages, prices and overall economic output.”

And the culprit?  As The Wall Street Journal notes, “The slowdown in recent quarters has likely been reinforced by weak business investment in new equipment, software and facilities that could help boost worker efficiency.”  Of course, that’s what tends to happen when an administration saddles the economy with record levels of regulation and makes no real advance toward finally reducing the developed world’s highest corporate tax rate.

Thanks, Barack!

In an interview with CFIF, Patrick Hedger, Policy Director of American Encore, discusses why Obama made the wrong decision on Keystone XL pipeline project and what it means for jobs, the economy and gas prices. 

Listen to the interview here.

Amid an excellent piece detailing the perils of minimum wage increases in today’s Wall Street Journal entitled “A Post-Labor Day, Minimum-Wage Hangover,” CKE Restaurants CEO Andy Puzder provides yet another depressing snapshot of the emerging legacy of Barack Obama:

The real problem is that more than six years of progressive economic policies – higher taxes, more regulation, ObamaCare, Dodd-Frank and more – have eliminated opportunities.  The poverty rate remains at levels generally observed during recessions.  Child poverty is at its highest point in 20 years.  The U.S. Census Bureau reports that for the first time since it began compiling the data, business closures each year have been exceeding new business startups.  This is the result of an economy limping along at a 2.2% growth rate.”

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

As we’ve noted on multiple occasions, the cyclical economic recovery under Barack Obama is objectively the worst in recorded U.S. history.  Recessions and recoveries come and go, but never have we suffered one with declining median incomes, such low economic growth or this level of employment sluggishness.

Unfortunately, today’s unemployment report brought additional bad news and only serves to further cement Obama’s disastrous legacy.  Economists expected 250,000 new jobs for the month of March, but we only saw 126,000, the lowest since 2013:

The 126,000 increase was weaker than the most pessimistic forecast in a Bloomberg survey, and followed a 264,000 gain a month earlier that was smaller than initially reported, the Labor Department in Washington said.  The median forecast in a Bloomberg survey of economists called for a 245,000 advance.

‘There’s really no way to sugarcoat this.  This is a soft print all the way around, no matter how you slice it,’ said Omair Sharif, rate sales strategist at Newedge USA LLC in New York.  ’It seems that it’s corroborating that the U.S. definitely hit a soft patch in the first quarter.’”

Making matters even worse, the labor participation rate continued it’s decline to 62.7%, the lowest since 1978, before women fully entered the U.S. workforce.

The unprecedented weakness of the economy under Obama establishes the backwardness of his policies.  Although he and his supporters remain unwilling to internalize the obvious lesson that lower taxes and less federal regulation lead to a stronger economy, the American electorate fortunately maintains the opportunity to do so as 2016 brings the opportunity to select new leadership.

Not one to wait his turn, today U.S. Senator Ted Cruz (R-TX) became the first person to announce he is running for the presidency.

The first-term senator declared his ambition during a speech at Liberty University, the world’s largest Christian university and the symbolic epicenter for the conservative grassroots Cruz is trying to represent.

In the Age of Obama, Cruz’s red meat speech seems almost like a throwback to the days when conservatives were unabashed in their support for the three-legged stool of the movement’s issues: social, economic, and national security.

If you’re looking for a candidate to double-down on first principles, Cruz might be the one.

Though his pre-announcement polling numbers haven’t been stellar, Cruz will be working hard to move the needle higher now that he is officially in the race to replace Barack Obama.

Welcome to the job interview, Senator. We look forward to hearing more from you.

President Barack Obama is on pace to have the most polarized approval ratings in history, according to a new Gallup poll.

Polarized approval ratings mean the gap between those in a president’s party that approve of him compared to those in the opposition party that don’t. “So far in his presidency, there has been an average party gap of 70 points in Obama’s approval ratings, which, if it continues, would be easily the highest for a president to date,” says the Gallup summary.

For context, former President George W. Bush “is second with a 61-point gap throughout his presidency, followed by Clinton (56) and Reagan (52). The other presidents [going back to Eisenhower] had party gaps of no more than 41 points.”

As Tim explained in his column last week, it’s no surprise that people concerned about the country’s fiscal future disapprove of Obama’s job performance. Economic growth is in a nine-year rut, the percentage of the U.S. population with jobs is as low as when Jimmy Carter was in office, and the median income has actually declined since Obama’s economic “recovery” was announced.

The real question after reading through the Gallup results isn’t, What’s the matter with Republicans? It’s, How in the world can Democrats see the current president as worthy of such lofty praise?

“By boosting our energy production, the U.S. could restore its diminishing influence in the world without expending blood and treasure – in fact, we would reap major economic benefits,” writes Rep. Devin Nunes (R-CA).

Nunes is an up-and-coming member of the House Ways and Means Committee and is known for thinking big on how to use tax reform as a means to reestablish American leadership in the global economy.

Rationalizing our energy policy would go a long way too.

Thanks to improvements in technology large, untapped domestic oil and natural gas reservoirs are now reachable. States like North Dakota, Texas and Oklahoma are moving to capitalize, while huge potential awaits enterprising politicians and businesses in California and Colorado.

The benefits are many. More energy production means more jobs in extracting, refining and shipping. For example, an entry-level rig worker in North Dakota averages about $66,000 a year, while the average oil industry job in the state was $112,462 as of 2012. That also means more jobs for people serving workers flush with disposal income.

There’s also a national security angle. With Iraq’s oil fields under siege by Islamic militants, Venezuela constantly swayed by demagogic collectivists and Russia threatening to cut off natural gas shipments, it’s time for the United States to take the steps necessary to ensure greater energy independence.

Unsurprisingly, Nunes wants President Barack Obama to approve the Keystone XL pipeline, as well as implement other measures to put the nation in a game-changing position. Of course, that isn’t happening unless Obama adopts Bill Clinton’s triangulation strategy.

Don’t hold your breath.

Still, Nunes makes a compelling case for using national energy policy as a way to improve both our domestic economy and global prestige.

It’s an angle that economically recessed, war-weary Americans might soon embrace.

“The number of jobs requiring medium levels of skill has shrunk, while the number at both ends of the distribution – those requiring high and low skill levels – has expanded,” says a new research report from the Dallas Federal Reserve.

This employment polarization is changing the standard of living for those in the middle class since, “The number of people performing low-skill, low-pay, manual labor has grown along with the number undertaking high-skill, high-pay, non-routine, principally problem-solving jobs.”

Moving to the wealthier pole requires adapting to non-routine cognitive work since computer automation and off-shoring makes jobs such as “brokers, clerks, tellers, cashiers, telemarketers, title examiners, bookkeepers, insurance underwriters, travel agents and technicians” increasingly irrelevant.

This is sobering news for those aspiring to middle class status. There was a time when a college degree qualified a person’s cognitive abilities, and working according to a companywide routine virtually guaranteed a middle class lifestyle. That time is past. Going forward the likelihood that a person will escape the perils of low-income will depend greatly on her ability to be increasingly entrepreneurial in every facet of her work; whether as a full-time employee or independent contractor.

It’s a reality many formerly comfortable middle class workers would like to avoid. But with computing power and automation spreading quickly everywhere, it looks like the only option available.

Welcome to the brave new job market.

An article at the website Accounting Today starts with the headline, “ObamaCare Weighing Less on Hiring Plans.” In it, the author analyzes new poll results asking accountants who work with small businesses how the health law is impacting their hiring practices.

Last year, an identical poll found that 66 percent of small businesses said ObamaCare made it less likely they would hire new employees. This year’s survey reported a drop to 54 percent.

This is great news, according to the firm that commissioned the poll. “[W]hile planning for the Affordable Care Act is still impacting many businesses’ plans for hiring, it is causing significantly fewer businesses to slow hiring in the coming year in comparison to last year, which is positive.”

It would be more accurate to say, “less negative.”

Imagine the euphoria if ObamaCare wasn’t a factor at all. That would allow 54 percent of small businesses to base hiring decisions on opportunities to win market share. Instead, a stout majority are holding tight on their headcount because they can’t afford ObamaCare’s increased compliance costs.

Going forward, we’re likely to see more poll numbers and reporting like this that makes it seem like ObamaCare’s influence on economic growth is diminishing, when in fact businesses have already absorbed the initial hit that comes with ObamaCare, and have fundamentally changed their operations.

There is a ‘new normal’ of less full-time jobs, more part-timers and an increasing reliance on independent contractors. Dramatic year-to-year changes are likely to diminish over time as employers factor in ObamaCare’s increased labor costs and staff accordingly.

The real story here isn’t how many businesses will hire less people because of ObamaCare; it is how many jobs are not being created because of ObamaCare.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

In this week’s Freedom Minute, CFIF’’ Renee Giachino discusses the special interest-driven politics that is to blame for the ongoing delays preventing construction of the Keystone XL Pipeline.

Toyota is moving its U.S. headquarters from Torrance, CA to Plano, TX. The move is estimated to generate a combined $140 million annually in local property and sales taxes for the Dallas suburb.

The announcement comes on the heels of at least 250 other California-based companies heading to the Lone Star State, according the Dallas Morning News.

Industry icons include Occidental Petroleum Corp. moving some of its facilities from Los Angeles to Houston; Raytheon Co. transferring aerospace units to McKinney from Southern California; and Trend Micro Inc. changing its corporate address from Silicon Valley to Irving.

For his part, California Governor Jerry Brown isn’t concerned. “We’ve got a few problems, we have lots of little burdens and regulations and taxes, but smart people figure out how to make it [in the state],” he said at an event when asked about Toyota.

Then again, maybe smart people will opt for pro-business locations that don’t inflict “lots of little burdens and regulations and taxes.”

Ben Domenech says that one way for conservatives to reframe their economic message before the 2014 midterms is to start using the phrase, “free market fairness.”

“Those on the right should be prepared to make the case that the warped relationship between Wall Street and Washington needs to be fixed, that socialized risks and privatized profits are fundamentally unfair, and that… equality-focused policy solutions, and those of the left, would hurt income mobility and systematically destroy wealth and growth,” he writes in the Wall Street Journal.

Free market fairness can be thought of as the alternative to crony capitalism. The latter can be defined as “government efforts to tilt markets in favor of preferred firms [to] reward political connections and lobbying money.” Troy’s recent article on eliminating the elite-driven Export-Import Bank is an excellent example of how conservatives can show they are serious about removing barriers to equal economic opportunities.

Adopting the free market fairness frame also strengthens the GOP’s insistence on a government dedicated to the rule of law. As Solyndra and other Recovery Act era abuses fade from memory, the rule of law critique has been increasingly focused on abuses of executive discretion like Deferred Action for illegal immigrants, Justice Department refusals to defend the Defense of Marriage Act and the growing litany of delays and waivers of ObamaCare. Refocusing on how crony capitalism picks winners and losers would bring the rule of law argument full circle.

Maintaining a fair playing field isn’t the same as giving one team extra points. The only way the American dream can remain open to everyone is if the people in charge of the rule book fairly to all participants.

That is the interesting idea being floated by commentators looking for ways to halt Russia’s military adventurism in Ukraine.

If direct military intervention is off the table – and at this point it’s hard to imagine the Obama administration going that route – then exporting America’s vast new reservoir of liquefied natural gas to Europe could be a way to deter Russian aggression in the region while at the same time strengthening our allies.

Gazprom, a huge state-controlled gas provider in Russia, supplies much of Europe. Hesitancy on the part of some European governments to respond to Russia’s invasion of Ukraine is tied to Russia’s use of Gazprom to raise prices or restrict access when confronted with political situations it does not like. Increasing United States exports of its natural gas stock to Europe would diminish this threat substantially, allowing America’s European allies to take a more assertive stance against further Russian force.

In order to wean Europe off of Russian gas, President Barack Obama “should order the Energy Department to expedite authorization for roughly 25 liquefied natural gas export facilities. Demand all decisions within six weeks. And express major U.S. support for a southern-route pipeline to export Caspian Sea gas to Europe without traversing Russia or Ukraine,” writes Charles Krauthammer.

This solution puts an abundant natural resource to work for America’s national security interests, and also increases the number of domestic production and manufacturing jobs. The only hitch is that it requires President Obama to commit his administration to an energy policy opposed by liberal environmentalists. That alone probably dooms an otherwise win-win alternative to direct military intervention or sitting pat while Russia reconstitutes the Soviet Union. If so, it’s more confirmation that current Oval Office decisions are based more on pleasing special interest groups than helping domestic workers or our foreign allies.

Up to 38% of people who qualify for Obamacare exchange subsidies may have to pay some or all of the money back to the IRS. That’s because the amount of subsidy dispensed is based on a sliding scale. As income rises, the amount of subsidy decreases. In practice, many people who currently qualify for a subsidy could wind up paying back the amount if they earn just a little bit more in income.

“At biggest risk are people who annual household income put them near the thresholds where the Obamacare subsidies make steep declines,” explains AEI expert Scott Gottlieb. “These cliffs are steepest for those people who earn 150% of the federal poverty level (family of four earning $35,000 in annual household income); 250% (a family of four earning about $55,000 annually); and 400% (a family of four earning about $95,000 annually).”

The upshot of this is that people may become much more sensitive to family budgeting since their financial stability depends on which side of the subsidy wall they fall. The downside of course is that we’re likely to start seeing people decline job promotions and salary hikes to avoid becoming a net loser at tax time.

As I’ve noted before, Obamacare’s War on Work is just beginning.

“Tucked deep in the Affordable Care Act is language requiring all restaurants with at least 20 locations to list nutritional information alongside each and every item on the menu,” writes Peter Doocy at Fox News.

The purpose is to inform customers about the nutritional value of a menu item before ordering.

This regulation hits made-to-order eateries particularly hard, since in practice the restaurant would have to provide customers with things like calorie counts on-the-fly – a nearly impossible task for places like Domino’s where up to “34 million different pizza combinations [are] available at the chain, when all crusts and cheeses and toppings are factored in.”

To make matters worse, the cost of compliance will fall on franchisees; i.e., the small business owners most at risk under the new regulation.

Domino’s and other groups are pushing for a solution that would deem restaurant owners compliant if they provide the nutritional information online or through an app.

But if that fails, it’s easy to see eateries cutting back on menu options and clamping down on substitutions. “Have-it-your-way” may soon become “Talk to the FDA.”

If the proposed nutritional rule goes into effect as-is, Americans can add food to the growing number of health-related choices – including doctors, hospitals and insurance plans – that are being reduced thanks to Obamacare.

CFIF Senior Vice President Timothy Lee discusses how the U.S. has fallen from the top ten most economically free nations in the world and how, in unrelated news, temperatures have fallen too despite the warnings from the global warming alarmists.

Listen to the interview here.

Get ready for more presidential overreach.

Today, Barack Obama convened his first Cabinet meeting of the year. Unwilling to negotiate with Republicans in Congress, the President threatened to bypass the legislative process in order to impose his preferred policies through executive orders.

“I’ve got a pen and I’ve got a phone,” CBS’ DC affiliate quotes the President telling Cabinet members. “And I can use that pen to sign executive orders and administrative actions that move the ball forward in helping to make sure our kids are getting the best education possible, making sure that our businesses are getting the kind of support and help they need to grow and advance, to make sure that people are getting the skills that they need to get those jobs that our businesses are creating.”

Quick, grab the pen and unplug the phone!

What Obama is promising is to intervene in every stage of an American worker’s lifecycle, without any input from the 535 people elected to represent their diverse interests in Congress. Instead, he will rely on the accumulated wisdom of the bureaucratic and trade association elites to impose change in a centralized, top-down fashion.

It’s as if after five years of running annual trillion dollar deficits, destabilizing the health insurance market, destroying the coal industry and presiding over the largest increase in food stamp use in history the President thinks he needs to increase his influence over the nation’s economy.

It would be better if instead of rushing to issue a flurry of short-lived orders President Obama instead took the remainder of his lame duck tenure for what it is: An opportunity to see the big picture and exercise some humility.

Republicans are interested in talking about poverty reduction. Obama – whose upcoming State of the Union speech is rumored to include a section on income inequality – should meet them half way. Have a real conversation. In private and in public. Elevate thoughtful opponents like Paul Ryan so that the American people see two powerful intellects engaging a serious issue in a respectful way. In short, dabble in statesmanship.

Obama’s executive orders will expire the moment he leaves office. They will also incite partisan opposition, and rightly so since each will represent an end-run around the lawmaking process.

Mr. President, you can do a lot better than your so-called “pen-and-phone” strategy. America deserves it.

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.