Freedom Line Blog

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses the dire need for meaningful tax reform – including lowering and simplifying the corporate tax rate – to make the U.S. more competitive in the global economy and put Americans back to work.

Today’s Department of Labor report that unemployment declined slightly from 8.5% to 8.3% in January will surely be celebrated and trumpeted by the Obama Administration.  Which only serves to illustrate the terrible quality of his economic performance in office.

First of all, today’s announcement means that unemployment has now exceeded 8% for 36 consecutive months, three entire years.  That’s an all-time record since recordkeeping began.  Second, that new record is not somehow a reflection of the fact that the most recent recession was “the worst since the Great Depression,” as Obama and his apologists constantly claim.  Unemployment actually reached a higher peak in the early 1980s recession, but quickly plummeted from 10.8% to 6.7% following implementation of Reagan’s tax cuts.  In contrast, unemployment has increased under Obama from 7.8% to over 10% and three straight years over 8%.  Moreover, inflation and interest rates were far higher in the early 1980s recession, and monetary policy was much tighter, meaning that conditions were less hospitable for economic improvement.  Third, for all of the deficit spending the Obama Administration heaped upon American taxpayers, it promised that unemployment under its agenda would be down to around 6% by now.

Instead, we’re barely treading water and mediocre news is characterized as wonderful.  This is the Age of Obama.

CFIF Contributing Editor Ashton Ellis discusses how President Obama’s decision to block the construction of the Keystone XL Pipeline will cost Americans roughly 20,000 new jobs and 700,000 barrels of oil a day, and how the decision ultimately could benefit China at the expense of the U.S.

Listen to the interview here.

Reading the text of Indiana Governor Mitch Daniels’ Republican response to President Barack Obama’s State of the Union Address gives us a bittersweet reminder of what might have been had he run for President this year.  Here are some phrases I hope the eventual nominee incorporates into his campaign – and governing – rhetoric:

“In three short years, an unprecedented explosion of spending, with borrowed money, has added trillions to an already unaffordable national debt. And yet, the President has put us on a course to make it radically worse in the years ahead. The federal government now spends one of every four dollars in the entire economy; it borrows one of every three dollars it spends. No nation, no entity, large or small, public or private, can thrive, or survive intact, with debts as huge as ours.

“The extremism that stifles the development of homegrown energy, or cancels a perfectly safe pipeline that would employ tens of thousands, or jacks up consumer utility bills for no improvement in either human health or world temperature, is a pro-poverty policy. It must be replaced by a passionate pro-growth approach that breaks all ties and calls all close ones in favor of private sector jobs that restore opportunity for all and generate the public revenues to pay our bills.

“The mortal enemies of Social Security and Medicare are those who, in contempt of the plain arithmetic, continue to mislead Americans that we should change nothing. Listening to them much longer will mean that these proud programs implode, and take the American economy with them. It will mean that coming generations are denied the jobs they need in their youth and the protection they deserve in their later years.

“We will advance our positive suggestions with confidence, because we know that Americans are still a people born to liberty. There is nothing wrong with the state of our Union that the American people, addressed as free-born, mature citizens, cannot set right. Republicans in 2012 welcome all our countrymen to a program of renewal that rebuilds the dream for all, and makes our ‘city on a hill’ shine once again.”

If Republicans win the White House this year I hope there’s an important place in the Administration for Mitch Daniels.

Today’s jobs report from the Labor Department shows that unemployment has now exceeded 8% for 35 consecutive months, the most since the federal government began keeping records.

The reason that 8% number is important is that the Obama Administration promised in January 2009 that unemployment would not exceed it under his $1 trillion spending “stimulus.”  They also projected that unemployment would peak in October of that year, and be down to approximately 6% today.  Instead, the jobless rate ascended past 10%, and has never come in below 8% since.  Moreover, the incremental decrease from November’s 8.7% rate was due to a decline in the size of the nation’s workforce.  Further, the 200,000 jobs added is barely sufficient to tread water with population growth.

By this point in our cyclical recovery, employment growth should be much stronger, and unemployment much lower.  To compare alternative economic strategies, Ronald Regan dealt with even higher unemployment than has Obama (not to mention far higher inflation and interest rates back then).  But Reagan’s tax-cutting and smaller-government policies slashed unemployment from 10.4% on the effective date of his tax cuts to 7.0% in the same 35-month span Obama has had.  The answer to the Obama jobs freeze is clear.  It’s simply up to the American electorate to demand it.

When Barack Obama entered office and proposed his nearly $1 trillion spending “stimulus” bill, his administration promised that unemployment would peak at 8% in the fall of 2009 if we passed his plan.  They also predicted that unemployment would be down to approximately 6% by now.

Instead, following today’s latest report from the Department of Labor, unemployment has now exceeded Obama’s promised 8% ceiling for a record 34th consecutive month.  Although some will focus on the decline from 9.0% to 8.6%, most of that statistical decline is due to people giving up and dropping out of the labor force, rather than from sudden job creation.  That is illustrated by the fact that only 120,000 net jobs were added, less than the anticipated number.  That’s also fell far below the 200,000 new jobs needed each month to reduce the unemployment rate by just 1% over the span of a year. Additionally, the broader labor participation rate again declined and now stands at 64%.

In contrast to the destructive effects of Obama’s borrow-and-tax-and-spend agenda, Ronald Reagan’s tax-cutting agenda saw unemployment plummet from 10.4% to 7.1% over the same period of time.  As the old Latin saying goes, “res ipsa loquitur” – the fact speaks for itself.

Glenn Beck’s The Blaze reports on a highly visible casualty of the economic downturn that is costing Americans’ jobs and now memories: decades-old restaurant chains.

Here’s a list of the Top Ten restaurants that are contracting in today’s tight  economy:

(1)   Bennigan’s Grill and Tavern

(2)   Ground Round Grill & Bar

(3)   Baker’s Square

(4)   Damon’s Grill & Sports Bar

(5)   Don Pablo’s

(6)   Gloria Jean’s Coffees

(7)   Big Boy

(8)   Tony Roma’s

(9)   Country Kitchen

(10) Black Angus Steakhouse

These corporate losses are just another source of lost jobs and opportunities.  Mr. President and the “super” committee, are you listening?

Under the false banner of “deregulation,” New Jersey state Senator Bob Smith (D) today introduced telecommunications legislation that would actually increase unnecessary and job-killing regulation over an industry critical to economic growth and jobs.

Smith claims that S-3062 relieves regulatory burdens, but it would in fact broaden regulatory authority for the Board of Public Utilities while heaping even more bureaucratic mandates and obligations upon telecom companies.  Among other things, the law would reinstate Board power over competitive services, even though such oversight was removed by the state legislature years ago.  The proposed bill would also mandate tariffs for services classified as competitive, while discriminatorily imposing filing requirements on some businesses but not others.  Moreover, the legislation would complicate and add uncertainty within the patchwork of overlapping federal and state regulations, and expand Board power in the video realm.

The fact that Sen. Smith attempted to characterize new regulatory proposals  as deregulatory shows that even he knows our current economic environment is not one in which the public desires even  more government interference.  Unfortunately, that’s what his bill would do.  What struggling New Jersey citizens need are more jobs and more telecom competition, not more bureaucracy.

Kim Strassel of the Wall Street Journal summarizes the winners and losers in the fight between the environmental left and blue collar union workers:

The EPA has labored over an ozone rule (estimated job losses: 7.3 million), power plant rules (1.4 million), a boiler rule (789,000), a coal-ash rule (316,00), a cement rule (23,000), and greenhouse gas rules (even Joe Biden can’t count that high). The administration blew up Louisiana’s offshore deepwater drilling industry, insisted Detroit make cars nobody wants to buy and, just to stay consistent, is moving to clamp down on the country’s one booming industry: natural gas.

Those going the way of the dodo are utility workers, pipefitters, construction guys, coal miners, factory workers, truck drivers, electrical workers and machinists. Many of these are union Democrats who don’t care if their union bosses are publicly sticking with the president. They are pessimistic about the future and increasingly angry over the president’s attack on their work.

The 2012 electorate is ripe for another GOP presidential candidate able to pick-up thousands of ‘Reagan Democrats’ in swing states like Ohio, Pennsylvania, and Michigan.  The fact that all three states elected Republican governors in 2010 sets the table for a nominee able to wrap free market principles in a populist appeal.  The question is, will someone craft a message in time to take advantage of Obama’s foolishness?

The nation’s unemployment remained at or above 9% again last month, and has now exceeded 8% for 33 consecutive months since February 2009.  That’s the longest stretch since the federal government began issuing monthly reports in 1948.

Here’s why that 8% benchmark and February 2009 are 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 four months during that record 33-month span.  Moreover, the economy only added a disappointing 80,000 jobs for September, less than the expected 100,000 and far below the estimated 200,000 necessary each month to reduce the rate by just 1% over the course of a year.

It’s instructive to compare the real-world results of Obama’s economic agenda with Ronald Reagan’s.  In the same 33-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 tells the nation that what we need is more of the same – more “mini-stimulus” government spending.  Obama’s agenda has demonstrably failed, and it’s time to return to what demonstrably works.

Ashton asks me if I know of businesses eager to expand. The answer is no. Or, rather, “Bleep no!” And today’s news about the dollar falling even farther will worry them even more. Obama regulatory policy, Obama/Reid fiscal policy, and Bernanke’s recklessly inflationary monetary policy all have given businesses the willies. Now comes word that consumer confidence, already low, has fallen even more precipitously. Nothing will give businesses confidence until the leftists in the executive branch are gone.

That said, I agree wholeheartedly with the main thrust of Troy’s excellent column about tax reform — bold reform of individual income taxes is desperately needed, and Mitt Romney’s failure to propose such a thing is another horrendous mark against him — but I disagree that individual tax reform should come first in this horrid economy, and I disagree that only four people still have a chance to win the Republican nomination.  Individual tax reform, no matter how designed, will take tremendous time and effort to work through the legislative process, with all sorts of trade-offs along the way. And in this economy, the problem isn’t really coming from individuals, it’s coming from a failure of corporations to re-invest the mountains of cash on which they now sit.

All of which is to say that the best way to cut the Gordian knot, for the current economy, is to completely eliminate corporate income taxes in one fell swoop. Almost as good is to cut them in half, and eliminate them entirely for manufacturers, as Rick Santorum would do.  Which leads us to the failure to mention Santorum as a real contender for the nomination. A word to the wise: Check out his grassroots organization in Iowa. It’s the single best one to date.

Sure, voters are focused on how their taxes, not corporate taxes, will change. That’s why 9-9-9 proved so sexy. But they care about jobs as well, and if the sale is made right, they’ll see that the good jobs will come fastest from corporate tax reform, not individual tax reform. All Santorum need add when he’s discussing his tax proposal is that he has always supported various versions of the flat tax, that the idea isn’t anything new, and that so many off-the-shelf flat-tax plans have been out there for a quarter-century that the exact details don’t matter. He’s for a flatter, simpler individual tax code, period. But you don’t worry about income taxes if you don’t have a job, and a one-stop corporate-tax slash is the best way to achieve that.

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.

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.

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…

An interesting critique is starting to surface: Big Government and Big Business are conspiring to enrich themselves at the expense of job and wealth creation for the middle and lower classes.  Demographer Joel Kotkin is noticing it.  So too, is potential GOP presidential candidate Sarah Palin.

As Kotkin notes, grassroots Democrats are noticing that President Barack Obama’s neglect of job creation is costing their members dearly.  (Just ask California Democrat Maxine Waters.)  Republican presidential frontrunner Rick Perry is weakest on the issue of crony capitalism.  Palin’s critique of the Big Business-Big Government axis could expand a core Tea Party theme into a viable national campaign.

Of course, this argument may fizzle, but it’s interesting to see quite different commentators coming out with the same idea.

While congressional investigators continue to probe into whether the Obama Administration broke federal laws in awarding a $535 million loan to now-bankrupt Solyndra, the Wall Street Journal details how crony capitalism prolonged a series of bad decisions by the solar company’s management.

Here’s the money paragraph:

In mid-2009, Solyndra had a choice: It could hunker down with its existing factory and try to slash costs to meet competition, drawing on additional private capital as needed, according to the people familiar with the company. Or, with a loan from Uncle Sam, it could gamble and build a brand-new, bigger factory in a bid to gain economies of scale and dominate the market.

Choosing to gamble, Solyndra overbuilt its manufacturing capacity, and continued rushing to market a product that was not marketed – or priced – correctly.

As the WSJ article makes clear, not all of Solyndra’s problems were the result of inept management.  An unexpected drop in the price of a competing product turned Solyndra’s profitability upside down.  The market was sending Solyndra’s management a message to rethink their strategies.  The Obama Administration bypassed that all-important-process with huge amounts of money to continue pursuing failure.

Come to think of it, that pretty much sums up the president’s thinking when it comes to government spending.  No wonder his new jobs plan is dead on arrival.

Speaker John Boehner’s jobs plan is well targeted. It was especially encouraging to see him lead with useful attacks on the regulatory state. As a matter of fact, if you look at the summary of his plan, you’ll see that item number one is about requiring congressional approval for “major” new regulations. What he’s referring to is the REINS Act, which we wrote about a couple of times while I was at the Washington Times. This is good stuff, and very important. Please do read those two links in the previous section for an explanation. The first of those came almost a year ago to the day; the numbers need updating, but this paragraph provides a sense of the problem:

Under the Obama administration, bureaucrats have gone wild, with the Code of Federal Regulations reaching a record 163,333 pages last year (and growing). That’s an increase of 22,000 pages since 2000. In 2008, the Small Business Administration estimated that the annual cost to the economy of these regulations was $1.75 trillion, which was even before the regulatory explosion under Mr. Obama.

On deregulation, Boehner is on the right track.

The Los Angeles Times reports that California’s unemployment is now 12.1 percent statewide, 25 percent higher than the national average, and second only to Nevada’s 13.4 percent.

For decades, California politicians have prided themselves on being “first in the nation” on numerous job-killing efforts such as fanciful global warming regulations, onerous land use regulations, and stupefying bans on products like Mylar balloons and plastic bags at grocery stores.

Recently, Troy wrote a painfully insightful piece on yet another attempt to wage war on business by Los Angeles Mayor Antonio Villaraigosa (higher taxes on commercial property).

California’s political class cannot resist the siren song of being the first to put the screws to the engines of economic growth.  If Villaraigosa’s plan becomes reality, perhaps the Golden State will finally be first in a category no one should want: unemployment.

In this week’s Freedom Minute, CFIF’s Renee Giachino analyzes President Obama’s “jobs plan,” which he outlined last week before a joint session of Congress.  While the plan has been advertised by the president as a bold new approach to job creation, Giachino says the details reveal that it is nothing more than “a new version of the same old song.”

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.