Freedom Line Blog

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?

Following a meeting with business groups earlier today on  the issue of job creation, House Minority Leader John Boehner floated one of the best ideas suggested this year:  A one-year moratorium on all new federal regulations.

“I think having a moratorium on new federal regulations is a great idea,” Boehner told reporters.  “[I]f the American people knew there was going to be a moratorium in effect for a year that the federal government wasn’t going to issue thousands more regulations, it would give them some breathing room.”

Now that’s a Stimulus Plan we can all support!

This should be a period of robust cyclical recovery from the past recession, but we received yet another troubling sign from the Federal Reserve yesterday. For the month of June 2010, American manufacturers utilized only 71.4% of productive capacity, down from 71.7% utilization in June.

What this means is that instead of cranking up and increasing velocity, manufacturers decelerated from May to June.  Moreover, this 72% capacity utilization compares with the post-war historical average of 81%.  Translation:  there exists a lot of slack in our economy at a time when we should be expanding.  This news comes on the heels of reports that American companies are hoarding a record $2 trillion rather than spending it on expansion or job creation, and adds to the sense that Obamanomics are subduing our recovery, not stimulating it.

America’s technology sector can provide a wellspring of economic dynamism and new employment.  As long as government doesn’t poison that potentially abundant font, that is.

At a seminar today entitled “Technology and Economic Recovery” hosted by Americans for Technology Leadership, panelists Shahin Kohan, Dr. Joseph Fuhr and Karen Kerrigan explained that our information technology (IT) sector offers a much-needed vehicle by which we can overcome economic stagnation.  Dr. Fuhr explained that IT spending is expected to grow 2.3% per year between today and 2013, compared to expected gross domestic product (GDP) growth of just 0.5% during that span, and that employment in the IT industry will grow by over 1 million jobs compared to expected employment shrinkage in other fields.

For her part, Ms. Kerrigan, who serves as President and CEO of the Small Business & Entrepreneurship Council and founded Women Entrepreneurs, explained the destructive consequences of federal overregulation and taxation for small enterprises that create most new jobs in America.  Ms. Kerrigan pointed out that the prospect of even more suffocating regulations and taxation on small business and technology entrepreneurs only discourages innovation, expansion and hiring.  Mr. Kohan, an apparel entrepreneur from Los Angeles who is CEO of Focal Technology Solutions, Inc., illustrated ways in which new technology can assist creative entrepreneurs in a highly competitive worldwide market, along with terrifying examples of how state, local and federal bureaucracy can destroy American jobs and businesses.

The message was simple:  give technology enterprises freedom, and innovation, and critical job growth will soon follow.

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.

In this week’s Freedom Minute, CFIF’s Renee Giachino discusses the Obama Administration’s “Recovery Summer” public relations tour. 

As Giachino points out in the video, “If initiatives like the stimulus package and Obamacare really worked, [the President] wouldn’t have to be touring the country trying to promote them after they have already passed. No amount of speeches will put Americans back to work or plug the gusher in the Gulf of Mexico. It’ll take long hours, hard work and tough decisions.  And unfortunately, those don’t come loaded into the teleprompter.”

Are Barack Obama’s economic policies sucking oxygen from our precarious economic recovery?  Economic numbers released at the end of last week provide the latest evidence of that troublesome possibility.

On Thursday, the Federal Reserve reported that American businesses were hoarding an all-time record $1.84 trillion in cash and other liquid assets at the end of March.  This inclination to sock away their accumulated dollars rather than spend on expansion or new hiring suggests trepidation regarding the prospects of near-term economic recovery.

Then, on Friday, the Commerce Department reported that consumer spending – which constitutes over 2/3 of our economy – unexpectedly plummeted 1.2% from April to May.  This was the first month-on-month decline in seven months, and prompted The Wall Street Journal to report that, “the surprisingly poor sales cast fresh doubt on the durability of a rebound in consumer spending that had allowed economists to raise their forecasts for U.S. growth this year despite a moribund housing market, a dismal job market and tepid business investment.”

Obama and his allies continue to claim credit for the cyclical end of the 2008-2009 recession, but it appears more likely that their policies are stifling it.  Coming out of our most recent severe recession, the U.S. achieved rapid gross domestic product (GDP) growth of 8%.  Now, in contrast, we’re witnessing lukewarm 3% growth and depressing employment numbers.

With Obama promising even more tax hikes, deficit spending and unpredictable new regulations, it’s becoming increasingly apparent that both businesses and consumers are bracing for an Obamanomics storm, not a spring bloom.

One of the pillars of Barack Obama’s 2008 campaign was that America had become too didactic toward the rest of the world, particularly toward the more anti-American elements of Europe.  A kinder, gentler Obama would be the ointment to soothe all international discord, they promised.

But the Obama Administration has proven even more didactic than the Bush Administration.  The primary difference is that Obama bows to antagonists like Russia and the Palestinians, while disrespecting friends like Israel.

Now, Obama is even reneging on his “reset” stance toward Europe and self-righteously instructing them on how to pilot their economies.  Consider this opening paragraph from today’s Wall Street Journal front-page article entitled “U.S. Chides Europe’s Crisis Response:”

U.S. Treasury Secretary Timothy Geithner landed in Europe and reasserted a traditional American role of dispenser of financial advice to the world, telling European governments to get their fiscal houses in order.”

That’s pretty amusing stuff from an administration that quadrupled America’s deficit in its very first year.  What’s worse, his administration is insisting on more of the very policies that caused Europe’s economic and budgetary maladies.  Greece’s welfare spending required a $1 trillion bailout, and Portugal, Spain and England may not be far behind. Despite this self-evident reality, the Obama Administration instructs them to pursue more of the same.  According to the report, Geithner admonished European leaders “to keep pumping stimulus into their economies.”

This prompts the question of whether there exists any remaining tether whatsoever between the Obama Administration and reality.  The euro has plummeted following Greece’s bailout, and even the American Dow Jones Industrial Average fell below 10,000 yesterday on fears that the contagion will spread.

A word of advice to Europe:  reconsider your love affair with Obama before he steers you toward even greater catastrophe.

Only in Washington, D.C. does the title of this post make any sense.  When gauging the state of jobs in our country, most look to the figure produced by the Bureau of Labor Statistics referred to as “unemployment.”  That number rose last month from 9.7 to 9.9 percent.  Yet the economy added 290,000 non-farm jobs to payrolls.

Obama is upbeat about the numbers as 290,000 people who were not working last month are today.  The silver lining of the unemployment figure is the assumption that some people who gave up on job searching are back at it and thus are counted in the unemployment number again.

But there are plenty of reasons to be skeptical about any assertions the jobs market is rebounding.  Since Obama came into office, Washington has exploded with public sector jobs.  The most illusory job creator is the Census Bureau, which balloons every ten years with temporary positions to complete the national survey.  Of the jobs created last month, the Census created 66,000, building up to the expected 1.2 million temporary jobs at the Bureau, which will not exist next year.

Furthermore, the underemployment rate, which also includes the unemployed who have quit job searching or have taken part-time work because they can’t find a full-time position, continues to climb.   Underemployment has risen from 16.5 percent to 17.1 percent since the beginning of the year.

And Obama has the gall to keep telling us the stimulus, the emergency $787 billion porker that if passed would prevent unemployment from rising above 8 percent, is working.

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.

Perhaps nothing symbolizes our nation’s sad state of political affairs than the fact that government-town Washington, D.C. thrives relative to other major American cities.

As noted by a recent Wall Street Journal report, home prices in the D.C. area rose 2% in 2009, compared to a 3% decline in 20 areas covered by the S&P/Case-Shiller Index.  The capital’s unemployment rate stands at 6.9% compared to 9.7% nationally, and restaurants have added workers in D.C. while other metropolitan areas bleed such jobs.  The reason?  Federal government employment in the area increased by over 20,000, whereas approximately 100,000 private-sector jobs were lost there.  Not only has our bloated federal government increased its employment rolls even as the rest of our society cuts back, but $78.5 billion in federal contract work and the flurry of bureaucratic activity brings domestic and foreign visitors to town.

Americans everywhere have had to trim their budgets and expectations during the downturn, but not the expanding federal government.  What sad, albeit fitting, symbolism.

With five Republicans voting for cloture in the Senate– Olympia Snowe, Susan Collins, Kit Bond, George Voinovich, and (surprise!) Scott Brown — we should expect the Congress to pass its new “jobs bill” this week (in reality, this is like a 100-calorie pack version of the stimulus).

It’s not surprising that some Republicans are feeling the pressure to get behind this legislation. The perennial temptation in times of economic crisis is to get behind anything that seems like it could make a difference. This is not that piece of legislation.

Let’s start with the basics: At $15 billion, this package could be financed with what’s between the cushions of the sofas in the Oval Office. But that’s still $15 billion in new debt that can’t be justified without a commensurate kick to the economy. This package can’t deliver that kick.

The big hooks for Republicans are going to be the exemption from payroll taxes for new employees through the rest of the year and the $1,000 tax credit for new employees who are retained for a year. These provisions will have positive economic effects, but they will be very subtle. Because this bill only aims to jumpstart the employment side of the market without addressing broader economic conditions, it will make it slightly cheaper to hire new employees, but won’t create enough economic activity to justify employers adding many new hires to their payrolls. As with the similar plan that was tried during the Carter years, this most likely means that the majority of the benefits will go to hires that would have been made with or without the package. Given the limited time horizon of the bill, we should also expect its net effects to be similar to “Cash for Clunkers” — that is, just moving up hiring decisions instead of changing the fundamentals behind them.

The other provisions are no more impressive. This package will subsidize further borrowing by local and state governments, which only continues the sugar-high spending that simply can’t be sustained even in the best of economic times. And while infrastructure spending is certainly a legitimate function of government, it’s hard to sell as a strategy for increasing employment. After all, the mark of good infrastructure development — quick, efficient construction — is fundamentally at odds with the idea of creating jobs that are meant to endure for the long-term.

This certainly isn’t the worst piece of legislation to come out of the Age of Obama, but it also isn’t much more than a placebo. Until Washington begins to focus on shrinking the size of government, however, we shouldn’t expect the prescription to change much.

In April 2009, Senator Arlen Specter (D – Pennsylvania) announced that he was leaving the Republican Party and hitching his political fortunes to Barack Obama, just as Obama began his decline toward political radioactivity.

Obama’s approval has since plummeted worse than any elected President in the history of scientific polling, and Specter became the equivalent of someone abandoning a lifeboat to climb aboard the Titanic just before it hit the iceberg. Yesterday, however, California Governor Arnold Schwarzenegger did Specter one better, moving him down to second place on the list of most foolish Republicans to join Team Obama.

In an appearance on ABC’s This Week, the Governor who has presided over California’s decline to basket-case status heaped endless praise upon Obama, applauded Obama’s failed “stimulus” bill and missed no opportunity to attack his own Republican Party.  In fact, Schwarzenegger failed to substantively defend his own party (whose political fortunes are skyrocketing) even a single time even while Democrat Pennsylvania Governor Ed Rendell sat beside him and launched his own litany of predictable anti-Republican attacks.

Among other things, Schwarzenegger – we’re not making this up – offered the following advice for an Obama Administration whose policies and tactics have turned American voters decisively against it in just one year:  “I think the key thing for the Obama Administration is just to keep staying on track.”  The same track that brought it to this point, Governor?

Schwarzenegger also advised fellow Republicans that their primary concern should be to ask themselves, “how do we support the President, how do we support him,” and attacked them for criticizing the Obama-Pelosi-Reid “stimulus.”  He continued by labeling his own GOP “the party of ‘no,'” and added “the Tea Party is not going to go anywhere.”

Earth to Schwarzenegger:  the Tea Party already has “gone somewhere.”

So the man who is quite possibly the most failed governor in America advises Obama to stay the course that has brought him political ruin, labels his own Republican Party “the party of no,” proclaims that the Tea Party that has transformed American politics at the grassroots level “is not going to go anywhere” and claims that the smart course is for Republicans to ask not what they can do for their country, but what they can do to “support the President.”

Great timing, Governor Schwarzenegger.   Got any hot tips on Enron stock while you’re at it?

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.

For a man of such supposed intellectual prowess, Barack Obama certainly seems oblivious to any sense of irony.

Attempting to stanch his hemhorraging public aproval numbers, Obama yesterday retreated to phony populism by proposing $90 billion in new taxes upon American banks. It must be noted that many of these banks have already repaid the questionable bailout funds that they received, and are now staring at a form of double jeopardy.

Obama’s misguided proposal contradicts his own stated goal of encouraging bank lending in this choppy economy, because the new tax will undercut banks’ ability to create new loans.  Further, the tax will merely be passed on to strapped American consumers, as all corporate taxes ultimately are.  It’s such a terrible idea that even Democrat Senator Kristen Gillibrand voiced opposition, saying it “could disproportionately affect New York City’s economic recovery, which relies on a growing financial services industry.”

Disregarding this reality, Obama was undeterred, sanctimoniously thundering, “we want our money back, and we’re going to get it.”

We feel the same way, Mr. President.  In just the first year of your administration, we have seen you squander our hard-earned dollars on failed “stimulus” behemoths and bureaucratic boondoggles on behalf of labor unions and other favored special interests.  We have seen you triple the budget deficit after telling us duirng your campaign that you were going to reduce it by scouring the budget “line by line.”

Yes, Mr. President, we also want our money back.

Lost during the health care fight in the Senate over the holidays were the votes in the House over yet another round of central planning stimulus provisions.

On its last roll call vote, the House narrowly, 217-212, passed an $180 billion “jobs for main street” bill that will exacerbate the federal deficit by another $64 billion, according to the Congressional Budget Office (CBO).

Not surprisingly, not a single Republican offered to support a third/fourth stimulus bill filled with pork-barrel spending and empty wealth transfers.  Democrats defected as well, with 38 voting “No.”

Now, the CBO has officially panned the legislation.  The final price tag over the next decade will be more than $180 billion, meaning Congress authorized $967 billion in 2009 alone for “stimulus” spending.

With all this, the unemployment rate remains at 10% and poll numbers indicate that no amount of wealth redistribution will increase Democratic majorities come Election Day.

The party of the donkey might have a 257-178 advantage in the House of Representatives but Alabama Representative Parker Griffith has just announced that he’s switching over to the GOP.

Griffith has spent most of his time in Congress opposing Speaker Pelosi’s legislative priorities, including the government takeover of health care and the $787 billion failed stimulus.   In fact, he was one of just eleven House Democrats to oppose the stimulus.

Griffith evidently saw the writing on the wall and recognized that having a “D” after his name would be a political liability in 2010.  His district, AL-5 (northern Alabama), gave President Obama 38% of the vote in 2008.

There is no official announcement yet from Representative Griffith.  Check back for further details.

The Obma White House has long followed the idea that there’s no problem that the federal government shouldn’t fix.

Now, it’s telling us that there’s no improvement that the federal government shouldn’t fix, either.

That appeared to be the message from White House Council of Economic Advisors Chairman Christina Romer and National Economic Council Chairman Lawrence Summers, both of whom made the rounds on yesterday’s Sunday talk shows.  In his comments to George Stephanopoulos on ABC’s This Week, Mr. Summers said that, “most professional forecasters are now looking for a return to job growth by spring.”  And appearing on NBC’s Meet the Press, Ms. Romer predicted “positive job growth sometime in the first quarter.”

But as noted by The Wall Street Journal today, we must ignore federal deficits in favor of more “stimulus” spending.  According to both Summers and Romer, shifting focus to the deficit instead of spending even more during a period of record deficits would be “suicide.”

So let’s get this straight:  Obama’s first “stimulus” was supposed to cap unemployment at 8%.  It’s now at 10%.  But despite the fact that the White House expects job growth to return in the next quarter, it wants to spend even more to “stimulate?”

One is left to wonder whether the Obama Era more closely resembles a work of Orwell or merely an issue of The Onion.

What do Obamanomics and global warming hysteria have in common?

A numbers hoax.

As anyone outside the deepest redoubts of the Daily Kos and MSNBC’s Countdown with Keith Olbermann knows, the foundation underlying the global warming agenda is crumbling.  This is the result of revelations of politically-correct climate scientists explicitly attempting to distort data, blacklist opposing viewpoints and redefine what constitutes scholarly publication on the subject.  Even the shameless Al Gore has been embarrassed enough to avoid the climate change summit taking place in Copenhagen this month.

In a similar manner, the data trumpeted by the Obama White House to justify its “stimulus” efforts has been exposed.  Last week, the chief of the board tracking stimulus spending announced that inspectors will review the data underlying Obama’s claim that he “saved or created” approximately 650,000 jobs.  This number was announced in October of this year, only to be quickly refuted.  Among other things, the estimate included non-existent Congressional districts, and dozens of jobs purportedly created by grants of less than $1,000.

Although these two news items have received well-deserved attention, few people have connected them.  The simple fact is that two of the greatest icons of liberal thought – global warming and government spending – have been exposed as reliant upon fraudulent data.  When the White House wonders why its poll numbers continue to plummet to unprecedented lows and voters begin to smell the coffee, perhaps they merely need to read the news.