Freedom Line Blog

During a television appearance over the weekend former Clinton Treasury Secretary Robert Rubin stumbled onto a hard truth for liberals when it comes to proving they can be trusted to reduce the deficit.

“If you could do it and it was credible and people believed it and it was real, I think that could do a lot for confidence.”

Let’s reword that a bit: If a deficit reduction plan was credible – meaning people believe it can work based on its assumptions and terms – and real – meaning the people proposing it are committed to implementing it – then the public would have confidence that the government could reduce the deficit.

Put another way: Credibility + Reality = Confidence

Applying that formula to ObamaCare and the Recovery Act shows just how much liberals fail to make the grade.

• Credibility: For months President Obama and Congressional Democrats swore that the individual mandate was not a tax, before claiming it was an excise tax so it can survive charges of being unconstitutional.
• Reality: A key argument for passing the Recovery Act was to keep unemployment below 8%.  Nearly $800 billion later, the number is 9.5%.
• Confidence: The latest RealClearPolitics average shows 60% of Americans agreeing that the country is on the wrong track.

So far, the liberals running Washington, D.C. have shown themselves anything but credible and based in reality.  No wonder nearly two-thirds of Americans have no confidence in them.

The recession is not getting better.  In a “snap” analysis by Reuters the following lowlights from the jobs front is not encouraging.

* Temporary jobs dropped by 5,600, reversing a streak of strong gains that economists had viewed as a hopeful sign that hiring would pick up.

* Normally, companies load up on temps at the beginning of a recovery when they are waiting for confirmation that growth is gaining momentum. This recovery has been unusual in that temporary hiring did not herald a jump in private hiring.

* Private hiring totaled a lackluster 71,000 in July, below expectations for 90,000 in a Reuters poll. June’s tally was revised down to just 31,000 from an initially reported 83,000.

* Government hiring was another worrisome sign. The loss of 202,000 positions reflected the loss of 143,000 temporary Census jobs.

* The total also included 38,000 jobs lost in local government. For most municipalities, the fiscal year began on July 1, and government associations have been warning that huge budget gaps would force aggressive job and spending cuts. July’s report suggests local governments got a quick start.

With the evidence mounting of a prolonged economic downturn, it’s time for someone – Republicans, Tea Parties, etc. – to start making the moral case against the liberal approach to (mis)managing the economy.  People are losing their ability to support themselves independently, making welfare a more attractive – and necessary – option for increasing numbers of middle class workers.  Not only is expanding the welfare state unsustainable, it harms the entrepreneurial spirit that makes economic recovery possible.

In order for America to get back to work, the incoming wave of office holders this November needs to remove the barriers to productivity that are killing employment growth.

Earlier this month, we noted the sad irony that leaders from welfare states like Germany now lecture President Obama about fiscal discipline.  At the recent G-20 summit in Toronto, Obama attempted to strongarm other industrialized nations into more of the deficit-inflating “stimulus” spending that has failed here, but to no avail. Germany has actually announced budget cuts, whereas Obama admitted that this year’s $1.5 trillion deficit will exceed even last year’s $1.4 trillion pit.

Yesterday, German labor market data provided additional evidence that they were right, and Obama was wrong.  For the thirteenth consecutive month, German unemployment fell, and Germany has now recovered its jobs lost during the recession.  Meanwhile, U.S. unemployment remains near its recessionary high at 9.5%, compared to Germany’s 7.6%.  Obama continues to employ his mindless “jobs saved or created” talking point, but Germany suggests that fiscal discipline and spending restraint are the better course.

Perhaps Obama can go on the German version of “The View” and explain to them why his agenda works better despite the stark evidence.

Senate Majority Leader (for the time being, at least)  Harry Reid (D – Nevada) mistakenly believes that he’s got a winning card with his scheduled vote today on yet another unemployment benefit extension.  Reid, along with co-conspirators Nancy Pelosi and President Obama, predictably mischaracterize Republican opposition to the vote that will immediately follow the introduction of replacement West Virginia Senator Carte Goodwin.

But here are some facts.  First, Senate Republicans only request that unemployment benefit extensions be offset with cuts in other forms of runaway federal spending.  Second, Harry Reid’s proposed extension will add $30 billion to this year’s projected $1.4 trillion deficit.  Third, unemployment benefits already stretch for 99 weeks – almost two full years.  Fourth, there have already been seven extensions in unemployment benefits during the period in which Obama’s $1 trillion “stimulus” spending has instead managed to stifle what should be a robust cyclical rebound by this point.  Fifth, even Obama’s own economic advisers have proclaimed that jobless benefits actually perpetuate and exacerbate unemployment itself.

Here’s the better policy prescription:  prevent upcoming tax increases, slow the federal government’s breakneck spending expansion and reduce the threat of anti-growth regulatory uncertainty.  When we implemented those prescriptions during the Reagan Administration, we witnessed astounding two-year gross domestic product growth of approximately 7% over eight consecutive quarters in 1983-1984.  How much longer will it take Harry Reid, Nancy Pelosi and Barack Obama to finally learn that simple lesson?

Take a look at Table 2.1, “Receipts by Source: 1934-2015” here on the White House Office of Management and Budget website.  For the year 2009, the federal government took in $915 billion in income tax receipts.  Then take a look at this Congressional Budget Office report that the Obama “stimulus,” which was originally estimated to cost $787 billion, in fact cost $862 billion.

And to what effect?  The Obama White House promised that his “stimulus” would keep unemployment below 8%, but we’ve instead suffered months of approximately 10% unemployment.  Gross domestic product reports are tepid and often revised downward, and the Labor Department reported this week that unemployment claims increased just as Obama and Biden embarked on their “Recovery Summer” tour.

Obama’s “stimulus” has only succeeded in adding almost $1 trillion to our nation’s unsustainable debt, while failing in its stated goals.  For the same cost, we could have completely eliminated the income tax for an entire year.  That’s right – no income tax at all for 2009.  Imagine the real-world stimulative effect that would have had.  Unfortunately, Obama and liberals prefer more government spending and control of taxpayer dollars to the true stimulative effect that the income tax elimination would have instead provided.  They know that once Americans suddenly saw those dollars in their pockets, it would be nearly impossible to corral them back into Washington’s usual tax-and-borrow-and-spend ranch.

The U.S. Senate this afternoon voted 47-53 to reject a resolution (S.J. Res. 26), sponsored by Senator Lisa Murkowski (R-AK), to prevent the EPA from unilaterally regulating all greenhouse  gas emissions  in the United States (in other words, regulating pretty much the entire U.S. economy).

Six Democrats joined with all 41 Republicans in voting “Yes.”    They included Senators Evan Bayh (IN), Mary Landrieu (LA), Blanche Lincoln (AR), Ben Nelson (NE), Mark Pryor (AR) and Jay Rockefeller (WV).  

During a floor speech prior to his vote in support of the resolution, Senator Rockefeller said he was voting “Yes” because “I don’t want EPA turning out the lights on America.”  Kudos to him.  Unfortunately, however, 53 of his Senate colleagues decided it best to relinquish Congress’ authority to a merry band of now unchecked, free-wheeling EPA bureaucrats for no other reason than the realization that their beloved Cap-and-Trade “climate change” bill is destined for failure in the normal legislative process.

Those 53 Senators, together with President Obama who lobbied hard to defeat the resolution, now must take full responsibility for the negative economic consequences sure to come.

The May special election for the seat Rep. John Murtha (D-PA) vacated when he died in February is nearing its conclusion, setting itself up as a potential bellwether for the November 2010 midterm elections.  The main issue is spending.  Loyal readers will recall CFIF’s earlier commentary on the race; specifically the focus on Murtha’s legacy for creating jobs with pork barrel spending.

His former aide and Democratic hopeful Mark Critz continues to promise more of the same.  If elected, he’s promising to “keep important economic development initiatives moving forward.”  At some point, the district’s voters must realize that jobs funded by other peoples’ tax money aren’t free, or unlimited.  If Republican challenger Tim Burns can convince the people of Johnstown, PA, to vote for fiscal sanity, then Democrats nationwide are in for a world of hurt in November.

It looks like there will be more jobs next year as the American economy struggles free of the recession; it’s just that half of them won’t be full-time.  Or come with a retirement plan.  Or offer health coverage.  Or even sick days.  But hey; it’s work!

In a sobering report, Eve Tahmincioglu – herself an independent contractor – writes about the emergence of the “contingent workforce,” an umbrella term for freelancers, temps, and pay-for-project workers.  According to a study released by Littler Mendelson, a leading employment law firm, up to 50% of the new jobs in the next economy will be contract work.  The benefit to the company is payroll flexibility.  The benefit to the worker is a job, or more likely, multiple jobs for less pay than a full-time equivalent position.

A bit surprising is the projection that managers and professionals like engineers, scientists, and attorneys are joining the ranks of the temporarily employed.  So, what does all this mean for public policy?  Plenty.  With millions of workers on the hook for their own health care, retirement, and payroll taxes don’t be surprised if many of them default into “public options” like ObamaCare; especially if the government offers it at a lower price than the private sector.  Just what The One wants: more jobs, more dependency on government!

Even after recent declines, the level of unemployment claims is higher than one would expect it to be if private nonfarm payrolls were really poised to begin sustained gains.”

That is the observation of Joshua Shapiro, an economist at MFR Inc., speaking about the employment and economic climate more than one year after Barack Obama’s trillion-dollar borrow-and-tax-and-spend “stimulus.”

Mr. Shapiro’s assessment echoes a a survey of economists released by the National Association of Business Economics (NABE) this week.  Almost 75% of surveyed economists reported that Obama’s “stimulus” had no effect on the nation’s natural economic healing cycle or employment:

About 73% of those surveyed said employment at their company is neither higher nor lower as a result of the $787 billion Recovery Act, which the White House’s Council of Economic Advisers says is on track to create or save 3.5 million jobs by the end of the year.  That sentiment is shared for the recently passed $17.7 billion jobs bill that calls for tax breaks for businesses that hire and additional infrastructure spending.  More than two-thirds of those polled believe the measure won’t affect payrolls, while 30% expect it to boost hiring ‘moderately.'”

In other words, Obama pointlessly heaped almost $1 trillion more upon our nation’s unsustainable debt to be repaid via some toxic combination of future borrowing and higher taxes.  In pushing that “stimulus,” he promised that it would keep unemployment under 8%, but unemployment continues to fester at 10% and economists say that the “stimulus” had no effect on employment or the natural cyclical recovery.

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

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

The numbers don’t lie: Californians are voting with their feet when it comes to protecting their pocketbooks…all the way to Texas.

Though it’s hard to believe that more taxes don’t create more jobs, it’s down right shocking to realize that taxpayer financed commercials like this one are failing to draw people to the Golden State.

To answer the Governator’s question: as soon as Sacramento adopts a tax and regulatory regime WAY more friendly to businesses.

H/T: Reason.tv

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses why another taxpayer-funded stimulus package and government “investments” in so-called green jobs are not the answers to the nation’s future prosperity.

Are you wondering how all that stimulus money is being spent to create jobs in this country? 

No, not those “stimulus jobs” in nonexistent congressional districts.  Real wage-paying jobs.

CNSNews.com reports:

The Social Security Administration (SSA) spent $30 million in stimulus money in 2009 to hire 585 new bureaucrats who will be responsible for certifying whether people are eligible for disability so they can be paid by the taxpayers not to work.

A report from the SSA’s Office of the Inspector General says that the SSA’s Office of Disability Adjudication and Review (ODAR) hired 35 new administrative law judges and 550 staffers to determine whether people are eligible to receive federal disability payments for not working.

That, my friends, is your hard-earned taxpayer dollars at work.

The Labor Department this morning reported that nonfarm payrolls fell by a seasonally adjusted 85,000 in December, bringing the total number of jobs lost in 2009 to a whopping 4.2 million.

As Center for Individual Freedom (CFIF) Vice President of Legal and Public Affairs Timothy Lee wrote this week in a commentary posted on CFIF’s website, “the latest economic data continue to suggest that our recovery is weaker than it otherwise should be, due to malignant federal policies.”

Lee points to a recently released survey  by the National Federation of Independent Businesses (NFIB), which makes his point:

According to the National Federation of Independent Businesses (NFIB), a tiny 7% of small businesses (which account for approximately 2/3 of new jobs) expect near-term expansion and the type of risk-taking necessary for sustained prosperity.  Further, only 8% of NFIB respondents expect near-term employment opportunities.  The same NFIB report also states that capital investment and expenditures have dropped to a 35-year low.”

The reason?  Lee writes:

According to the NFIB survey, businesses report that the current political climate stands high among the reasons for tepid recovery, even ahead of the ability to secure loans.  The survey goes on to cite ‘the level of uncertainty being created by government, the usual source of uncertainty for the economy.  The ‘turbulence’ created when Congress is in session is often debilitating, this year being one of the worst.’ …

“…The continuing onslaught of more government spending, borrowing and regulation will not bring the type of recovery that we should expect, but rather perpetuate an inhospitable economic climate.  When we return to time-tested policies that encourage private investment, risk-taking and hiring – less confiscation of wealth, greater protection of property rights and fewer oxygen-depleting regulations – is when sustainable, long-term growth will return.”

In other words, when it comes to job losses and the slow economic recovery, It’s Washington, Stupid!

Read Lee’s full commentary piece here.

Boy, those fictitious Stimulus jobs just keep piling up.

Yesterday, we highlighted an analysis done by David Freddoso and Mark Hemingway of The Washington Examiner, which points out that at least 75,343 jobs the Obama Administration claims have been “created or saved” by “Stimulus” funds are bogus.

Now, Jonathan Karl with ABC News reports that at least some of those jobs “saved or created” are in Congressional districts that don’t even exist.  Karl writes:

Here’s a stimulus success story:  In Arizona’s 15th congressional district, 30 jobs have been saved or created with just $761,420 in federal stimulus spending. At least that’s what the Web site set up by the Obama administration to track the $787 billion stimulus says.

There’s one problem, though:  There is no 15th congressional district in Arizona; the state has only eight districts.

And ABC News has found many more entries for projects like this in places that are incorrectly identified.

Officials with the Recovery Board, which was set up by the Obama Administration to track Stimulus spending, are chalking up the mistake to “human error.”  Fine… but such an error, together with the ever-increasing reports of fictitious Stimulus job numbers, begs the question:  How are the American people supposed to trust an Administration that claims to want to create jobs when it can’t even perform due diligence to provide an accurate count of the jobs that may or may not have been “created or saved?”

The answer:  We can’t and we shouldn’t.  Not because of the aforementioned errors and inflated Stimulus job numbers, but because the laws of economics say so.  As the editorial page of The Washington Times reminded readers last week, “Jobs created by government come at the expense of the jobs lost when government takes wealth from one part of the economy and moves it to another.”

Here’s a not-so-unique but tried-and-true idea to stimulate job growth:   How about the Administration abandon its tax-and-spend agenda and just get out of the way? 

Hey Mr. President, maybe it’s time to give FREEDOM a whirl?

More than ten percent — or 75,343 — of the jobs the Obama Administration claims have been “created or saved” by the $787 billion Stimulus package are “doubtful or imaginary.”

That’s the conclusion of a comprehensive analysis performed by David Freddoso and Mark Hemingway of The Washington Examiner, who compiled and analyzed media reports on the Stimulus over the course of the last two weeks. 

According to Freddoso and Hemingway:

The Obama administration has claimed that the $787 billion economic stimulus package ‘saved or created’ some 650,000 jobs. But almost as soon as the White House trotted out this figure, news organizations found huge exaggerations in the reported data. Many of the jobs reportedly created do not exist or cannot be accounted for.

The Examiner has created a handy interactive map highlighting the exaggerated job claims, broken down by state and locality.  The map is accompanied by a chart fully documenting the jobs “not really created or saved” by the Stimulus.   Check both out here.

Freddoso and Hemingway write that the project “remains a work in progress because relatively few newspapers have scrutinized stimulus spending so far.”  They plan to update the map and chart as new revelations are reported on by the media.

During a week in which Nancy Pelosi force-fed her job-killing healthcare bill to America, it was timely that the Kauffman Foundation released a report on how jobs are created in this country.

According to their study released last week, two-thirds of jobs created as recently as 2007 came from enterprises less than five years old.  Indeed, according to the U.S. Census Bureau, almost all of America’s net job creation since 1980 came from new businesses.  This stands to reason in our dynamic economy, where giant firms tend to become complacent and wither, whereas new innovators with novel ideas rapidly expand and create new jobs.  Think of General Motors and Microsoft, for instance.   Before that, the horse-and-buggy industry lost employees to the auto makers.  This is the nature of our economic system.

With this in mind, what are Barack Obama, Nancy Pelosi and Harry Reid doing to create jobs?  We’re not referring to temporary work funded by dollars borrowed from future generations or wrenched from more productive uses via taxation – actual jobs?  Stated differently, what entrepreneur in his or her right mind would consider this a promising moment to take risks and hire new employees?  From healthcare “reform” to carbon cap-and-tax legislation to higher taxes to financial regulation, Obama, Pelosi and Reid see employers as mere scapegoats who should be saddled with even higher costs of employment.  They bail out dinosaurs like GM and Chrysler, but leave smaller entrepreneurs to suddenly subsidize ObamaCare and the ever-expanding federal government.

The unemployment rate just jumped to 10.2% despite Obama’s promise that it wouldn’t exceed 8% if we swallowed his “stimulus” medicine.  At what point does he wake up and smell the real-world coffee?  Will he ever?

From USA Today:

The $787 billion economic recovery package … is stimulating growth in the federal government as agencies hire thousands of workers and spend millions of dollars to oversee and implement the package, according to government records and spokesmen. … That’s helped fuel the continued growth of the federal government, which increased by more than 25,000 employees, or 1.3%, since December 2008…”

Have no fear:  John Berry, head of the federal government’s Office of Personnel Management, says the increase is small and temporary.  Believe that, then there’s a bridge in Brooklyn for sale with your name written all over it.

In related news, the Labor Department this morning reported that the number of newly laid-off workers seeking unemployment benefits this week was 530,000.  While the number was less than economists expected, that brought the total number of jobs lost since December, 2008 to nearly 4 million, most coming from the private sector.  This, despite Congress’ passage of the $787 billion taxpayer-funded stimulus bill.

If the Waxman-Markey Cap-and-Trade bill (H.R. 2454) becomes law, U.S. economic growth could be slashed by 2.4 percent and the legislation would cost 2 million jobs by 2030.  This, according to a recent study conducted by the Science Applications International Corporation (SAIC) and released today.

The study, which was commissioned by the National Association of Manufacturers (NAM) and the American Council for Capital Formation (ACCF), assesses the impact of the Waxman-Markey bill on manufacturing, jobs, energy prices and the overall U.S. economy.  According to a summary of the study, “The NAM and ACCF released national data as well as the analysis for 15 industrial states that would be impacted greatly if this or similar legislation is signed into law.  The full report, including the data covering the remaining 35 states will be released in the coming weeks.”

The Senate is expected to take up its version of climate change legislation in September.  This latest study is yet another in a growing list of reasons why it shouldn’t.

Read the full national report here.

Access the analysis of each of the 15 states that have released so far here.