Freedom Line Blog

Unemployment remained unchanged at 9.1% last month, and has now exceeded 8% for 32 consecutive months since February 2009.  That’s the longest stretch since the federal government began issuing monthly reports in 1948.

And there’s a reason why that 8% benchmark is important.  When Obama passed his nearly $1 trillion “stimulus” bill that same month, his administration projected that unemployment would never exceed 8%, and be all the way down to approximately 6% today.  Instead, unemployment quickly climbed to 10.1%, and has remained above 9% for all but two months in that record 32-month span.  Moreover, the economy only added a lackluster 100,000 jobs for September, far below the estimated 200,000 necessary each month to reduce the rate by just 1% over the course of a year.  Compounding that depressing figure, keep in mind that approximately 45,000 of the jobs that were added came as a result of Verizon employees returning to work after striking in August.

It is helpful to compare the real-world results of Obama’s economic agenda with Ronald Reagan’s.  In the same 32-month stretch following the effective date of Reagan’s tax cuts, unemployment plummeted from 10.4% to 7.1%.  The comparison speaks for itself, yet now Obama demands that the country pass more of the same – his new “mini-stimulus.”  Mr. Obama, it’s time to return to what demonstrably works, not continue what demonstrably doesn’t.

Those of us who objected to the federal bailout of the automotive industry were delighted when Ford recently launched this ad, playing up the fact that it didn’t take taxpayer money:

Apologies for the handheld quality, but there’s a reason for it: Ford has now pulled the ad — including taking down the YouTube version. And at least one of the sources of their newfound timidity seems to be in the White House. Daniel Howes, a columnist in the Detroit News, writes:

Ford pulled the ad after individuals inside the White House questioned whether the copy was publicly denigrating the controversial bailout policy CEO Alan Mulally repeatedly supported in the dark days of late 2008, in early ’09 and again when the ad flap arose. And more.

With President Barack Obama tuning his re-election campaign amid dismal economic conditions and simmering antipathy toward his stimulus spending and associated bailouts, the Ford ad carried the makings of a political liability when Team Obama can least afford yet another one. Can’t have that.

The ad, pulled in response to White House questions (and, presumably, carping from rival GM), threatened to rekindle the negative (if accurate) association just when the president wants credit for their positive results (GM and Chrysler are moving forward, making money and selling vehicles) and to distance himself from any public downside of his decision.

Sources at the White House have been quick to insist that there was no actual pressure on the automaker. But there didn’t have to be. The fact that there was even communication on the issue was a major ethical breach. The idea that the executive branch would gripe at a private company over a perfectly legitimate ad campaign is antithetical to the American tradition of free speech. This is what we would expect from Vladimir Putin on a slow day, not the team surrounding the President of the United States.

Don’t think that the adminstration was simply peeved that a major corporation would have the temerity to criticize the visionary mandarins of the Obama White House. More than anything, they were terrified that it would work.

In my column last week, I detailed the devastation that the Pentagon will be in for should the bipartisan congressional “supercommittee” not enact major debt reduction by early next year. While paring back the size of the federal government is essential, the Obama Administration was unspeakably reckless in allowing defense cuts that could reach over $1 trillion to be triggered automatically should the committee fail to act.

The staff of the House Armed Services Committee has now released their analysis of the proposed reductions and, according to a report in Politico, the outcomes could be every bit as dire as warned:

The analysis notes that the Navy would need to take two aircraft carrier battle groups out of service and the Air Force would lose a third of its fighters. The Marine Corps would no longer be able to maintain forward-deployed amphibious forces around the world. New weapons systems, such as the Navy and Marine Corps’ versions of the F-35 Joint Strike Fighter, would be canceled. The U.S. nuclear arsenal would be drastically reduced and modernization plans scrapped.

Aside from the troop cuts, there would also be massive layoffs of Pentagon civilian employees and the elimination of many jobs in the defense industry, according to the analysis.

Today marks the release of Moneyball, a movie based on a book based on the true story of how the Oakland Athletics baseball team overcame a chintzy payroll to compete with high-dollar teams.  The book revolutionized the way many people think about baseball (and management in general) because of the A’s innovative use of player’s statistical data.

Today also saw top executives from Solyndra stonewalling Congress over how the company went from $535 million in federal subsidies to bankruptcy in less than three years.

Nine years after Moneyball was published – and eight years after Major League Baseball started testing for steroids – the A’s success tapered off in relation to falling production of steroid using players like Jason Giambi, Miguel Tejada, and others.  (National Review’s Neil Minkoff has the details here.)

So, despite the A’s perceived use of a superior technology, it looks more and more like they benefited from their proximity to the steroid capital of baseball: the San Francisco Bay Area (remember the Giants’ Barry Bonds?)

Something similar happened with Solyndra.  When the company’s solar technology was new it looked like the magic bullet for the “green economy,” so much so that investors and the Obama Administration threw caution to the wind, funded a fantasy, and put taxpayers on the hook for half a billion dollars.

The A’s only lost games and perhaps some credibility after their more-than-meets-the-eye initial success.  American taxpayers are losing their collective shirt with bad bets on Keynesian stimulus and market-distorting subsidies.  A’s fans might want to get new management.  Americans should demand it.

Bloomberg News reports the latest ultimatum from House Speaker John Boehner (R-OH) to President Barack Obama:

“We await the president’s submission of the three trade agreements sitting on his desk so the House can consider them in tandem” with the aid and preference programs, Boehner, an Ohio Republican, said in a statement yesterday. “If the president submits these agreements promptly, I’m confident that all four bills can be signed into law by mid-October.”

Apart from Rep. Paul Ryan’s budget resolution and the president’s deficit reduction proposal, there may be no better example of how different is each party’s idea of sound economic policy.

Boehner wants Obama to release three trade treaties negotiated by the Bush Administration so that Americans and their counterparts in Columbia, South Korea and Panama can start enjoying the benefits of free trade.

For his part, Obama wants to force Republicans into funding another round of unemployment benefits, this time for workers displaced by the yet-to-be-ratified agreements.  That’s right: the president wants to spend money on people who may never be fired.

First of all, it’s fallacious to assume that businesses operating at historically low worker levels will fire employees; especially since increased trade opportunities are more likely to lead to hiring increases.  Moreover, Obama fails to recognize the cost of not enacting the three free trade agreements.  For instance, the U.S. Chamber of Commerce estimates that failure to ratify the agreements will cost 380,000 jobs due to missed business opportunities.

At the heart of this dispute is the focus of each party.  Boehner and the Republicans want to spur economic growth.  Obama and the Democrats want to lock-in the growth of the entitlement state.

Boehner is right to demand action on both free trade and worker aid at the same time.  If Obama cries foul, it’s only because his childish attempt to spend more and get less was called out.

The Canadian Press reports that its government will hire consultants from Deloitte Inc. to devise ways to reduce annual spending by $4 billion by next March.  Cost of the contract: $19.8 million.

Here’s the Conservative government’s response to those badgering it for spending $90,000 a day to reduce spending:

A spokeswoman for Clement defended the contract, saying Ottawa needs the best advice available for reducing costs.

“Engaging private sector advisers who have been successful with cost-saving operational reviews will better enable ministers and deputy heads not only to compile their individual cost-savings proposals but also to provide practical advice on what to look for and how to execute their plans,” press secretary Heather Hume said in an email.

“As always, our government is committed to maintaining an open, fair and transparent procurement process while obtaining the best possible value for Canadians.”

If President Barack Obama and Congress are so willing to set aside the normal constitutional processes for writing budgets and tax policies (as evidenced by the creation of the congressional ‘supercommittee’ charged with finding $1.5 trillion in savings by Thanksgiving), why not go all the way and let experts in the private sector scrub the books and find the savings?

Warren Buffett has enjoyed a fair bit of celebrity over the last few weeks, acting as the iconic symbol of President Obama’s proposal for tax hikes by ubiquitously making it known that he hasn’t been debited enough by the feds. Buffett’s rhetorical trope of choice is to invoke the fact that he pays lower taxes than his secretary. That’s because most of Buffett’s income comes in the form of capital gains from his investment empire, which are taxed at 15 percent, not earned income like his assistant’s paycheck, which is likely taxed at a federal rate of either 25 percent or 28 percent, depending on whether her annual salary is above $83,600.

This sounds unjust at first blush — until you consider the fact that the capital gains tax is essentially double-dipping. That is, the money you have to invest is what’s left over after your earned income is taxed. In other words, the investment money on which Buffett is paying the cap gains tax was already skimmed by Washington when he earned it in the first place. If his assistant was investing, she’d be paying the same rate as Buffett. As pointed out by S.A. Miller in the New York Post:

Buffett actually was taxed twice on his investment income.

First, Buffett had to make the money he invested. Those earnings were taxed as corporate income, at about a 35-percent rate.

Then, Uncle Sam took another cut when Buffett invested the money and earned a profit. That’s when Buffett paid the 15 percent capital-gains tax rate.

All told, after combining corporate taxes and capital gains taxes, Buffett forked over about 45 percent of his earnings.

We’ll put Buffett in the same category as Albert Einstein and Noam Chomsky: experts in their field who should have never been given automatic credibility when it comes to politics.

NBC News reports a breath of fresh air for ailing U.S. manufacturing workers: Companies that once outsourced jobs to China are starting to bring some of them back.  Some of the reasons:

Labor costs are soaring by 40 percent a year, as migrant workers are becoming pickier, since there are more job opportunities at home. Also China’s one-child policy means there is no longer such a huge pool of young, dexterous workers. Bank lending is tightening and China’s currency is also appreciating by around 6 percent a year against the U.S. dollar, not quickly enough for US and European policymakers, but sufficient for factories on low margins to feel the pain.

Of course, slapping a new tax on USA-based job creators will stifle any trend towards manufacturing growth China’s growth might enable.

Mr. President, have pity on the working man…

Larry Summers, the economist whose resume includes helping create the kind of mortgage default swaps that crashed the financial system, being fired as President of Harvard for sexist remarks about female scientists, and resigning in disgrace as his infrastructure-heavy stimulus package failed, is back with a plan only a Soviet central planner could love.

Writing for Newsweek (itself an entity that’s seen better days), Summers tells his former boss, “Mr. President, We Need a 10 Year Plan.” Give Summers credit for brashness; in Soviet Russia the Communist Party considered it a success if it could make good on any of its 5 year plans.  (It never did.)

I’ll use Summers’ piece as an excuse to do something otherwise thought impossible: praise President Barack Obama for firing at least one bad economist.

It’s not about central planning, Larry; it’s about incentives.  Reform the tax code and streamline regulations with incentives for hiring and producing, and the economy will grow.

Our friends at Americans for Tax Reform compiled this helpful list of the 21 new or higher taxes President Barack Obama has signed into law since being sworn into office.  Of these, 20 come from ObamaCare.

Remember, try to laugh while you cry.

There’s been quite a bit of media buzz surrounding the recently announced bankruptcy of Solyndra, the California solar panel company that couldn’t turn a profit even after a $535 million loan from the federal government.

But what started out as Exhibit A in the case against subsidizing green jobs into existence has morphed into the latest scandal engulfing the Obama Administration.  At issue is a suspicious connection between a Solyndra investor’s work as a bundler for the Obama campaign and the sweetheart loan given to the company.

On Wednesday, the FBI raided Solyndra’s Fremont, California headquarters, and Republicans are promising increased scrutiny.  It would be bad enough if there is a pay-to-play scandal, but it’s even worse financially since the failure of Solyndra is both corrupt and incompetent.

Remember when in June 2009 President Barack Obama promised that under his health care reform bill, “If you like your doctor, you will be able to keep your doctor, period.  If you like your health care plan, you’ll be able to keep your health care plan, period.  No one will take it away, no matter what”?

Byron York makes this contradictory observation:

On the one hand, the new law orders the establishment of health care “exchanges” through which anyone can purchase government-subsidized coverage. On the other hand, the law levies fines on employers who fail to offer coverage to their employees — but sets the fine far below the cost of coverage. In 2010, the average employer paid $4,150 to cover a single employee and $9,773 for family coverage. (Both figures are about double what they were in 2000.) The new law sets fines for employers who don’t cover their workers at $2,000.

So when it takes effect in 2014, the law will give employers a choice: Continue to offer increasingly expensive health coverage, or pay a relatively small fine, save a lot of money, and let employees buy their own subsidized coverage on the exchange. The incentive seems pretty clear.

So too does the bold-faced lie Obama told (yet again) in the health care reform debate.  Whichever GOP candidate gets nominated for president should make this issue one of the main talking points of the general election.

Republican control of the House of Representatives may have stifled the Obama Administration’s grand statist designs in Congress, but the White House continues to push costly, job-killing regulation through the rulemaking power of the administrative state. Because new regulations enjoy nowhere near the media scrutiny of new legislation, however, the public often remains unaware of their role as silent predators on America’s economy. That’s why credit is due to House Speaker John Boehner for calling Obama to account for this economic poison. From Politico:

In a letter that will be sent to President Barack Obama on Friday, House Speaker John Boehner charges that planned regulations have jumped nearly 15 percent over the past year and he calls on the administration to calculate and publicize their economic impact.

“This year, the administration’s current regulatory agenda identifies 219 planned new regulations that have estimated annual costs in excess of $100 million each. That’s almost a 15 percent increase over last year and appears to contradict public suggestions by the administration this week that the regulatory burden on American job creators is being scaled back,” Boehner wrote.

“I was startled to learn that the EPA estimates that at least one of its proposed rules will cost our economy as much as $90 billion per year. The administration has not disclosed how many of the other 218 planned rules will cost more than $1 billion, nor identified these rules,” he noted.

If Obama is serious about “pivoting to jobs” (a promise we seem to hear on a quarterly basis), there’s no way he can ignore the costs of federal regulations, which are de facto tax increases. According to the Small Business Administration, the annual cost of federal regulation alone amounts to $1.75 trillion dollars. That’s nearly 12 percent of America’s GDP gone every year because of the Washington bureaucracy.

A failure to repeal many of these draconian monstrosities is economic malpractice. But a failure to simply reveal their costs is a dereliction of duty.

In a brilliantly written refutation of the Obama-as-Genius argument, Mortimer Zuckerman explains why even taking all the money from “rich” people and corporations won’t solve the deficit problem:

Even if the government instituted a 100% tax on both corporate profits and personal incomes above $250,000 per year, it would yield enough revenue to run the government for only six months. Why? Because under Mr. Obama’s presidency, government spending has swelled to 24% of GDP from 18%.

Spending is Obama’s original sin as president.  Unless he’s willing to repent of that folly and ratchet back on the flow of money, the American economy will stay mired in a recession.

Recently, I wrote about the Social Security Trust Fund being a piggy bank for other federal spending programs.  In return, federal spenders put worthless IOUs back in piggy with an implied promise to pay back the debt with higher taxes in future years.

Now, there is word that Social Security Disability Insurance – yet another expense drawn from the empty retirement Trust Fund – will go bankrupt by 2017.  The reason for the rapid insolvency of disability insurance is simple: eligibility for disability can begin before reaching retirement age.  Per the Associated Press:

Applications are up nearly 50 percent over a decade ago as people with disabilities lose their jobs and can’t find new ones in an economy that has shed nearly 7 million jobs.

The more President Obama’s Washington dithers on enacting policies to spur economic growth, the more unemployed people will be forced to find money wherever they can.  The vast majority of Americans want to work, but Obama’s job-killing policies just aren’t giving them the chance.

It would be an unnecessary irony if a liberal like Obama presided over an austerity government that not only raised taxes, but also cut services like Social Security that liberals love.  Yet that is the path we’re on as a recessed economy lurches from market plunges to debt downgrades to a contracting job market.

We need an “opportunity president,” and this one surely isn’t it.

Howard Portnoy at Hot Air offers to help redirect the frustration Rep. Maxine Waters (D-CA) vented recently against the Tea Party to a more appropriate target:

The situation creates a catch-22 for Waters and other black politicians. They can continue to rail out helplessly at forces they have no control over. Or they can accept the bitter reality that the messiah they thought they were electing is either mythical or yet to come. Is it possible that the calls to primary Obama will come from, of all places, the black community? It would certainly represent a healthy first step toward a post-racial America.

The liberal obituaries for the mostly-dead Huntsman for President campaign get an interesting addition from Michael Tomasky at the Daily Beast:

The Huntsman strategy here is obvious: position himself as the moderate and reasonable guy on the off chance Republicans decide to be moderate and reasonable. We must assume he is aware that his odds on this are rather long, so what he’s really hoping for is to be the consensus candidate of 2016. Maybe the party just has to go through this purge, this Reign of Terror; so just let it do that, and once it does and nominates an extremist who can’t beat a weak incumbent during a time of 9 percent unemployment rates, and the heads are piled high enough in the tumbrels and enough people finally have returned to their senses, he will ride the Thermidorian wave to victory after Obama leaves town.

So, the Tea Party in particular and the conservative movement in general is creating a “Reign of Terror” that is depriving liberals of the most progressive member of the GOP presidential pack from facing Obama next year?

There’s a frightful reality fast-approaching, but it isn’t a 2012 match-up seeing who’s less conservative.  It’s the fiscal and cultural time-bomb that is ticking ever closer to exploding if Barack Obama or Jon Huntsman’s views are put into practice.

H/T: Political Wire

Here’s an update from the New York Times about how the Obama Administration is implementing the DREAM Act without waiting for Congress to actually pass the measure into law.

The decision would, through administrative action, help many intended beneficiaries of legislation that has been stalled in Congress for a decade. The sponsor of the legislation, Senator Richard J. Durbin of Illinois, the No. 2 Senate Democrat, has argued that “these young people should not be punished for their parents’ mistakes.”

The next paragraph explains the motivation:

The action would also bolster President Obama’s reputation with Latino voters as he heads into the 2012 election. Just a week ago the leaders of major Hispanic organizations criticized his record, saying in a report that Mr. Obama and Congress had “overpromised and underdelivered” on immigration and other issues of concern to Latino voters, a major force in some swing states.

At least the Times is honest.  We’re still waiting for the White House.

Ever since the health care debate permanently damaged President Obama’s credibility with the American people, his administration has avoided major legislative confrontations. Instead, the White House has pursued many of its most controversial initiatives through the administrative process, hoping that Americans won’t notice major changes crafted through esoteric rule changes. Now’s your chance to prove the president wrong.

As the Daily Caller reports, the National Labor Relations Board is proposing a rule change that would dramatically shorten the period of time between when union organizers file a petition and when an actual unionization vote is held. The policy, intended to make it harder for management to counter union initiatives, would shorten the period from around six weeks down to 7 to 10 days. 

The Caller characterized one former board member as saying “the Board appears to be rushing to finalize its new policy before more Americans can flood the government with disagreeable comments.” But that looks to be a losing endeavor. The public comment period, which began on June 22, has already resulted in more than 17,000 comments, most of them negative.

There’s still time to stop the NLRB’s anti-business onslaught. The comment period remains open through Monday, August 22. If you’re interested in making your voice heard, you can comment here. The job you save could be your own.

In the Obama era, the news on any given day seems seems like a real-time seminar on the disutility of Keynesian economics and “green energy” faddishness. The latest such entry comes from KOMO-TV news in Seattle, which reports the following:

Last year, Seattle Mayor Mike McGinn announced the city had won a coveted $20 million federal grant to invest in weatherization. The unglamorous work of insulating crawl spaces and attics had emerged as a silver bullet in a bleak economy – able to create jobs and shrink carbon footprint – and the announcement came with great fanfare.

McGinn had joined Vice President Joe Biden in the White House to make it. It came on the eve of Earth Day. It had heady goals: creating 2,000 living-wage jobs in Seattle and retrofitting 2,000 homes in poorer neighborhoods.

But more than a year later, Seattle’s numbers are lackluster. As of last week, only three homes had been retrofitted and just 14 new jobs have emerged from the program.

Fourteen jobs instead of 2,000. That means the Administration’s estimates were off by 99.3%. Since this president is so fond of telling us how much he respects the private sector, how about a few analogies from the real world?

— A baseball player with this level of accuracy would be hitting .007

— A financial adviser with this level of accuracy would have invested $250,000 and ended up with $1,750.

— A doctor with this level of accuracy who saw 850 patients a year would misdiagnose 844 of them.

If you had that baseball player, you’d cut him. If you had that financial adviser, you’d fire him. And if you had that doctor, you’d find a new physician and probably report the old one for malpractice. If you had this president …