Wednesday, January 21, 2009
God Help Us...
No. I didn't post yesterday. No "Age of Obama Day One."
And today...? Again... no "Age of Obama Day Two."
In fact... this first post of "The Age of Obama" has little to do with Obama, but rather, focuses on Congress and its institutional compulsion to ever expand the scope of government and to impoverish the People while all along misidentifying such policies as progressive and laudable.
While specifically occasioned by "The Latest Entitlement," an editorial in today Wall Street Journal, readers may look upon this post as the latest "Open Thread" depository here at Usually Right.
I'll address the aforementioned Wall Street Journal editorial within the Comments Section of this post and then go on to utilize that same space as an ongoing informational clearing house for the next several days or so.
Anyway... you folks know the drill. I'll be posting facts and analysis which I consider worth sharing. As always, feel free to add your own "must read" suggestions.
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15 comments:
http://online.wsj.com/article/SB123249769747600423.html
Excerpting...
-- With the new bill, SCHIP will be open to everyone up to 300% of the federal poverty level, or $63,081 for a family of four. In other words, a program supposedly targeted at low-income families has an eligibility ceiling higher than the U.S. median household income, which according to the Census Bureau is $50,233. Even the 300% figure isn't really a ceiling, given that states can get a government waiver to go even higher. Tom Daschle's folks at Health and Human Services will barely read the state paperwork before rubberstamping these expansions. --
(*SIGH*) And even if the Journal editorialist is wrong concerning Tom Daschle's folks at HHS, isn't the 300% figure itself, standing alone, reason enough to despair? It is to me.
Continuing to excerpt...
-- The political purpose behind SCHIP has always been to capture the middle class. Every time the program grows, it displaces private insurance. Even before Democrats struck down rules limiting crowd out, research indicated that for every 100 children signed up - now more than 7.1 million - there is a reduction in private coverage for 25 to 50 kids. Exactly the same thing will happen if Messrs. Obama and Daschle end up introducing a "public option," a government insurance program modeled after Medicare but open to anyone of any income. As with SCHIP, any net increase in insurance coverage will come by having taxpayers gradually supplant the private system. --
Continuing...
-- SCHIP money is delivered as a block grant, which states are supposed to match, though national taxpayers end up paying 65% to 83% of the total cost. When states make health-care promises they can't afford - such as New York, which expanded the program to 400% of poverty - the feds always step in with, yes, a bailout. The House bill creates a "contingency fund" precisely for that purpose, and also allots bonus payments to states that boost SCHIP enrollment, so Governors will be further rewarded for overspending. --
(*SIGH*) Insanity piled upon insanity.
Oh... and get this...
-- All this is propped up by a permanent increase in the tobacco tax, which will rise to $1 a pack from the current 39 cents - thus financing a permanent and growing entitlement with a declining corps of smokers. --
Well... Congress has, continues to, and will no doubt in the future drive me to drink via their actions... they won't drive me to smoke - even though apparently in a sense they're sending out the message that smoking - by generating tax revenue - is patriotic.
(*SNORT*) (*RUEFUL SMIRK*)
BILL
http://article.nationalreview.com/?q=ZGFlMzQ2NDA2MWFmOTMwMjAxYzZhOWI4ZGU5NTAzNzU=
Although he's back in Midland Texas, once more a private citizen, allow me to reiterate a common theme of the last few years...
BUSH IS AN IDIOT...!!!
Thank God for Mark Steyn and National Review.
UNFRIGG'NBELIEVEABLE...
(*SIGH*)
Just... just... just copy, paste, and read the article the above link will take you to.
(*HEADACHE*)
BILL
http://fabiusmaximus.wordpress.com/2009/01/20/milestone/
-- We now have more poeple employed in government than manufacturing and construction. --
The Age of Bushbama... (*SIGH*)
BILL
http://www.realclearmarkets.com/articles/2009/01/obamas_economic_solutions_are.html
The author, John Tamney (Editor of RealClearMarkets.com) is a cyber-acquaintance of mine and as a bit of "inside baseball," to those believe nothing stands between my ego and me... (*GRIN*)... it's guys like John Tamney who keep me... err... humble. Tamney is truly a brilliant guy - whereas I'm just... err... usually right. (*WINK*)
Excerpting...
-- Obama’s solutions meant to aid the economy—at least on paper—won’t fix anything. Indeed, if implemented it’s easy to see how they might actually cause the economy harm. --
Yep. I see stagflation by late 2009/early 2010. (*SIGH*)
-- The tax cuts Obama has in mind might attract votes, but they have very little to do with economic growth. First up are income credits described as tax cuts. The latter are meant for low-income families, and as the Wall Street Journal described them, they will allow “more families that earn too little to pay income taxes to claim at least some of the $1,000-per-child tax credit.” At present, a household must have income of $12,500 per year to be eligible for tax credits, but under the Obama plan, the cutoff will be reduced to $3,000. So what Obama and his advisors call a tax cut is really only a transfer payment from one set of hands to another. Such redistribution fosters no new production, and with that, no subsequent demand. --
"Transfer payment." (*SHRUG*) In other words... welfare.
-- Whether the government is borrowing or taxing in order to redistribute, capital is being removed from the private pool of available funds meant to create new industries, new companies, and new jobs. --
A basic economic truth. (*SIGH*)
-- With regard to corporate taxation, according to another Wall Street Journal account, a key provision of Obama’s plan is to “allow companies to write off huge losses incurred last year, as well as any losses from 2009, to retroactively reduce tax bills dating back five years.” Translated, failing companies will write their losses off on the backs of successful individuals and companies alike. --
EXACTLY...!!! My God... how can self-described conservatives OR self-described liberals not oppose such ass backwards economic reasoning...?!?! Talk about corporate welfare... (*VOICE RAISED IN OUTRAGE*)
-- ...if failing companies are kept alive not by a simple reduction in the tax rate on their profits, but rather thanks to a bailout of the non-financial variety, entrepreneurs waiting in the wings to redeploy mismanaged physical and human capital will be hampered in their efforts to bring the economy out of its slump. In the end, entrepreneurs can only innovate to the extent that they’re able to purchase the assets of failed business combinations with visions of more profitable future combinations. So when governments prop up failed or dying businesses, far from saving the economy, they only hurt it by delaying the process whereby people and capital are managed productively. --
(*NOD*)
It seems we have checkers players - at best - making economic policy in Washington when what is required are chess masters. (*SIGH*)
-- To the extent that businesses keep workers employed for non-productive reasons, the economy will surely be rendered poorer in time. Workers are like capital. When either labor or capital is wasted, the end result is less growth. --
Yep.
-- The tax portion of the Obama package includes write-offs for business expenditures, and it’s safe to assume here that companies producing business equipment will be the beneficiaries of this new rule. Equipment write-offs recall a frequent Wainwright theme over the years that when the Federal Reserve moves around its target interest rate, it merely reschedules economic growth, as opposed to fostering new economic activity. Write-offs should be viewed in much the same way. Businesses will simply move up equipment purchases in the near-term; those purchases will detract from capital spending over the long-term. --
Makes sense, doesn't it? And beyond Tamney's point, let me add, just buying to buy... not because there's actually a need, but rather because the tax code artificially makes the purchase more attractive, is waste in and of itself.
-- ...the tax portion of Obama’s recovery plan was only put in place to give Republicans the political cover necessary to vote for the various spending initiatives that the new administration envisions. This is the alleged “stimulus” part of Obama’s economic package, and as Wainwright publications have emphasized over the years, government spending can in no way stimulate economic growth. Beyond the negative work incentives created by wealth redistribution, the basic reality is that no one—least of all government—can profit from the same transaction twice. That’s the assumption the government is making when it claims it can grow the economy through the transfer of wealth already created. In a sense, the very notion of stimulus turns routine economics on its head. --
And damn the Republicans to hell who accept this corrupt bargain!
Folks... the inmates are running the asylum. God help us. (*SIGH*)
BILL
Drink heavily Bill.
File Under: Rodak, This One's For You, Buddy!
http://online.wsj.com/article/SB123268029210209143.html
The title of the editorial...
Don't Distract Me With Facts:
Let's close our eyes and believe in "stimulus."
(*SIGH*)
BILL
File Under: A Prime Example of How Democrats Intend to (Mis)rule.
http://www.ibdeditorials.com/IBDArticles.aspx?id=317519130010578
Excerpting...
-- Litigation was up 9% last year, driven in part by a 6% rise in employment cases. But that'll seem modest in comparison if the Lilly Ledbetter legislation is passed by Congress and signed by President Obama....The bill would let plaintiffs bring suits decades after the discrimination had allegedly occurred, thereby driving up the damages available and weakening memories needed for testimony. It would also allow juries to award unlimited monetary damages. And depending on how the courts interpret the legislation's language, the bill could also create, according to Sen. Kay Bailey Hutchison, R-Texas, a "new right" for "a person who may not be the person with the injury" — for instance, "an heir, a child, a mother, a father" — to file suit claiming they had been harmed. It's possible that, under the law, even co-workers who are not the aggrieved party would be free to sue, too, if they say they've been affected by the alleged discrimination. --
God help us. (*SIGH*)
-- There's no question that passage of the bill will do harm, with businesses being the primary casualty as lawsuit-happy trial attorneys will have an open field from which they can sue employers. It won't be long before companies begin racking up pay-discrimination suits they have no choice but to defend. While it isn't impossible to expand a company and hire more workers while dealing with a lawsuit, handling a legal headache, particularly one that is abusive and baseless, steals time and resources that should be dedicated to building the business. But harm will also come to the very women the bill's supporters say they are trying to protect. When forced to choose between a male and a female candidate who might allege discrimination if there are disagreements over pay, businesses will, for reasons of self-preservation, hire the male. --
(*HEADACHE*)
-- Obama is expected to sign the Lilly Ledbetter Fair Pay Act as soon as it reaches his desk. We encourage him to slow down and try to appreciate the consequences — both the intended and unintended — that the legislation will sow. The president might feel that he owes the trial lawyers. But his first obligation is to the country, not a group whose interest is far more narrow. --
Amen. (*GAZING UPWARDS*)
BILL
File Under: Rodak... I'm Still Trying to Get Through to You and People Like You
http://www.forbes.com/2009/01/22/stimulus-keynes-taxes-oped-cx_bb_0123bartlett.html
Excerpting...
-- In a few weeks, Congress will likely enact the largest fiscal stimulus legislation in history. --
And in so doing cast in cement the mistaken economic monetary policies of the previous Bush administration and set the stage for the coming stagflation. (*SIGH*)
Continuing...
-- In the 1980s and 1990s, economists came around to the view that only monetary policy could act quickly enough to reverse or moderate a recession. But they never really came to grips with the Fed's responsibility for causing recessions in the first place. It always tightened a little too much when inflation was the problem and eased too much when slow growth was the problem. --
Note: The weak dollar policy of the Bush administration (not opposed by Democrats) was the match that lit the fuse of our present economic dislocation which began in 2005 with the oil spikes.
Yes, of course, structural disconnects within our economy would have eventually led us to the same place, but the Bush administration's (BIPARTISAN!!!) weak dollar policy ultimately set the stage for the breaking of the camel's back with regard to the economy.
Continuing to excerpt...
-- For a time, a cult grew up around Fed Chairman Alan Greenspan. Many who should have known better convinced themselves that the "Maestro," as journalist Bob Woodward called him, would fix everything. Investors began seriously talking about a "Greenspan put"--the idea that the Fed would always protect them from a severe decline in the market. Nitwits wrote and bought books predicting astronomical levels for the stock market because Greenspan had permanently reduced the level of risk. --
"Nitwits." Ha! Ha! I like that! (*GRIN*)
Continuing...
-- ...Keynesians think that just putting dollars in peoples' pockets in order to stimulate consumption is the key to growth. We have now had several tests of the Keynesian idea - most recently with last year's $300 tax rebate, which was supposed to prevent a recession. According to a new paper by University of Michigan economists Matthew Shapiro and Joel Slemrod, only a third of the money was spent, thus providing very little "bang for the buck." The failure of rebates has shifted the focus to public works and other direct spending measures as a means of stimulating aggregate spending. A study by Obama administration economists Christina Romer and Jared Bernstein predicts that the stimulus plan being debated in Congress will raise the gross domestic product by $1.57 for every $1 spent. Such a multiplier effect has been heavily criticized by a number of top economists, including John Taylor of Stanford, Gary Becker and Eugene Fama of the University of Chicago and Greg Mankiw and Robert Barro of Harvard. The gist of their argument is that the government cannot expand the economy through deficit spending because it has to borrow the funds in the first place, thus displacing other economic activities. In the end, the government has simply moved around economic activity without increasing it in the aggregate. --
"$300" rebate...? My wife and I received a joint $1,200 "rebate" check. Anyway... (*SHRUG*)
The overriding point is that the supposed "stimulus" didn't perform as advertised; it was a bust. Furthermore, it was a DOUBLE bust in the sense that the money was not only "wasted" in terms of not achieving the advertised purpose, but since the money was BORROWED... it added to last year's deficit... added to the national debt... and before it's repayed even MORE money will be pissed away in the form of INTEREST PAYMENTS connected to debt repayment.
Bush and the Democrats pursued the WRONG economic policies in 2008... in 2009 it appears Obama and the Democrats will REDOUBLE and far, far surpass Bush's counterproductive and wrongheaded policies.
(*SIGH*)
We're so $crewed...
BILL
File Under: My First "Thumbs Up" to President Obama
http://historycoalition.org/2009/01/21/president-obama-revokes-bush-presidential-records-executive-order/
(*CLAP-CLAP-CLAP*)
Very good, Mr. President!
BILL
http://www.weeklystandard.com/Content/Public/Articles/000/000/016/048htmyx.asp
And AGAIN...
I approve.
(*NOD*)
BILL
And btw...
(Hat tip to Daily Dish)
...kudos to NY Gov. David Paterson.
http://blogs.tnr.com/tnr/blogs/the_plank/archive/2009/01/23/ten-things-you-didn-t-know-about-kirsten-gillibrand.aspx
re: #2 - YEAH!!! YIPPEE!!!
re: #'s 7, 8, and 10 - (*THUMBS UP*)
re: #9 - Well, well... (*SMILE*)
BILL
http://www.ibdeditorials.com/IBDArticles.aspx?id=317606948241548
Sounds strangely familiar...
(*SCRATCHING MY HEAD*)
Oh, YEAH... it's what I've been saying for YEARS!!!
(*GRIN*)
Obama wants to "stimulate" our economy while addressing present and future needs... here's one smart way to do so.
BILL
File Under: The Age of Obama
http://online.wsj.com/article/SB123292993332813959.html
Excerpting...
-- President Obama has announced that a big check to state governments is part of his stimulus spending plan...but the main reason so many states are broke today is because lawmakers thought the days of living well would last forever. The state spending binge of the last five years has been almost unprecedented in American history. Since 1998 state and local budgets have nearly doubled to $2 trillion, according to the Census Bureau. State and local expenditures rose 34% from 2003-2007 compared to inflation of 19% and population growth of 5%. They also loaded up on debt, which doubled to $2.23 trillion in 2008 from $1.14 trillion a decade earlier. This doesn't include nearly $1.5 trillion in unfunded health and pension liabilities. The states with the biggest deficits tend to be the most profligate. California has by far the biggest gap -- $40 billion -- thanks in part to a 40% increase in spending over the last five years. Arizona, Florida and Nevada also have deficits of roughly 20% of their operating budget; each of these states allowed their expenditures to grow by more than 50% faster than the average state budget over the last decade. New York politicians are confronting an estimated $12 billion deficit. But New York's government has annual outlays that are $1,000 a year more per family than in the average state. New York would have a $5 billion surplus if it simply cut its spending to the 50-state norm. New Jersey has added some 58,000 employees to its public payrolls since 2001. For every new private sector job in the state, Trenton has added about 15, according to the U.S. Department of Labor. --
So much for "The Era of Responsibility," huh?
Continuing to excerpt...
-- A federal bailout for these distressed states means redistributing income to these big spenders from the most fiscally responsible states. Federal aid also creates a disconnect between the people who pay for the local services and those who benefit from them. Under Mr. Obama's plan, people in Mississippi will wind up paying for swimming pools in California, taxpayers in Colorado will pay for the sewer system in Detroit, and residents of Arkansas will underwrite health care subsidies in Philadelphia. This creates an incentive for state and local officials to pad their budgets as their lobbyists race to capture as many federal dollars as they can. One especially ill-designed idea from the Obama Administration is to allow the federal government to pay a greater share of state Medicaid costs. So instead of reforming policy to slow the stampeding cost of medical care, states will have an incentive to spend lavishly, because every health-care dollar lures more money from Washington. --
Not rocket science, folks. (*SIGH*) As I keep on noting, "Captain" Obama seems determined to order the USS Ship of State full speed ahead... in the WRONG direction.
Continuing...
-- The pattern of recent economic cycles is that states overspend during boom years while tightening their budgets during recessions. A federal bailout will convert this spend and retrench cycle into a new regime in which states spend during good times and bad. That may explain why the public employee unions are the biggest cheerleaders for a federal bailout to states. --
Where's President Ford when we need him? I'm a New Yorker and I say, "New York, Go To Hell," in other words, you've gotten yourself into this mess, don't expect the rest of the country to bail you out.
BILL
File Under: "B" is for Booze!
http://www.bloomberg.com/apps/news?pid=20601039&refer=columnist_baum&sid=aPJkziibdxM8
Economic Cures Are Like Booze for an Alcoholic
by Caroline Baum
Excerpting...
-- Someone returning to Earth from a yearlong sojourn in outer space could be excused for feeling disoriented. After all, when said space traveler departed our fair planet, the U.S. economy was buckling under the weight of the burst housing bubble. The blame game was in full swing, with the villains ranging from Alan Greenspan and his easy money policies to consumers borrowing and spending beyond their means to financial institutions enabling profligate spending to a misallocation of capital to housing. Fast forward one year, the crisis is still going strong, the villains are still under attack, yet something curious has happened: The policies and actions responsible for the economy’s illness are now being prescribed as cures. How can that be? It’s not just our space traveler who’s confused. --
(*CLAP-CLAP-CLAP*)
Damn straight!
The answer? Hank Paulson was Secretary of the Treasury; Paul Bernanke was - and still is - Chairman of the Fed; George W. Bush was President of the United States; John McCain was running for the presidency; Barak Obama was running for the presidency and is now President; Nancy Pelosi was and is Speaker of the House; Harry Reid was and is Majority Leader of the Senate; John Boehner was and is House Minority Leader; Mitch McConnell was and is Senate Minority Leader.
(*SIGH*)
In other words, folks... the inmates were - and largely still are - running the asylum.
Continuing to excerpt...
-- Let’s start with the Federal Reserve. In the beginning, there was a boom in technology and Internet stocks followed by a predictable bust. Easy money, which had inflated the stock market bubble, came to the rescue, in the process fomenting another bubble of greater magnitude. Then-Fed Chairman Greenspan let the benchmark overnight interest rate overstay its welcome at 1 percent, raising it so slowly that anyone with or without a good credit rating had time to get in on the housing boom. --
(*SIGH*)
And let's not forget the insanity of a tax code that favors short term over long term, that worships at the alter of stock price inflation (capital gains) rather than reasonable dividends and a focus on long term real growth measured not by stock appreciation, but by actual profitability, market share, and reasonable expectations of future growth of both.
Continuing...
-- The bubble burst with a ferocity that surprised even the most ardent bears. --
(*FILING MY NAILS*) (*SMUG EXPRESSION*)
Not me. (*SHRUG*)
Listen... AGAIN... as with any expenditure... housing costs MUST be anchored to the reality of income expectations. (*SIGH*)
Continuing...
-- The price of overnight credit is now 0 percent to 0.25 percent, and the quantity of credit (the Fed’s balance sheet) has more than doubled in the past year. If removing the monetary stimulus was tough back in 2004, 2005 and 2006, just imagine what it will take this time when the magnitude of the task will necessitate Fed action well before politicians think it’s feasible. --
Yep.
Things are gonna get worse - FAR worse - before they get better. (IF they ever truly get better in the sense of the pendulum swinging back to boom...)
Folks. America is comparatively deindustrialized. I don't see 2012 echoing 1982; we just don't have the same global playing field. (*SHRUG*) (*SIGH*)
Continuing...
-- Now let’s move on to housing, an asset whose price had never declined on a nationwide basis since the Great Depression. At least until home prices started to roll over in 2006. During the height of the condo-flip frenzy, too much capital was being allocated to housing, a tax-advantaged, unproductive asset. And it was housing, the mortgages used to finance their purchase and the intertwined web of securitized loans that sent the economy into a tailspin. --
To reiterate: A TAX-ADVANTAGED, UNPRODUCTIVE ASSET.
Continuing...
-- Now that we’re here, with more homes for sale than buyers at the current price, what’s the government’s solution? Why, make it easier -- and cheaper -- to buy homes. The Fed has embarked on a program to buy $500 billion of mortgage bonds in the first half of 2009 in an attempt to lower actual mortgage lending rates, which fell to an all-time low of 5 percent earlier this month. Rather than let the market “clear” -- or let prices seek their own level -- policy makers are stimulating artificial demand for housing to prevent prices from falling. Welcome back to square one. --
Homicidal. Suicidal. Homicidal. Suicidal. Homicidal. Suicidal. (*RUEFUL SMILE*)
(Oh, why, oh, why do I read the newspapers...???) (*SIGH*)
Continuing...
-- Then there’s the over-indebted consumer. From 1952 to 1998, the U.S. household sector was a net supplier of funds to the rest of the economy, acquiring more financial assets than debt, according to Paul Kasriel, chief economist at the Northern Trust Corp. in Chicago. That changed in 1999, when the household sector’s “net acquisition of financial assets,” as it’s called in the Fed’s Flow of Funds Report, turned negative. Households were “net demanders of funds” until 2008, at which point the gap turned positive again, Kasriel says. “It wasn’t because they were acquiring more assets. It was because they couldn’t acquire as much debt.” --
Ahh... but that's the rub. If "growth" was prefaced upon DEBT...
(*SIGH*)
Bottom line, far too many politicians think MORE DEBT is the ANSWER...!!!
(*HEADACHE*)
Finishing up...
-- President Barack Obama’s crack economics team, including Larry Summers and Christina Romer, and Fed officials from Ben Bernanke on down have to understand that the problem of too much leverage can’t be fixed with more borrowing; that a misallocation of capital to housing can’t be cured with incentives to buy more homes; that consumers (and the nation) can’t spend their way to prosperity. At least I hope they do. --
(*SIGH*) Yeah. Me too. I'm not going to borrow money to bet on it though. (*RUEFUL CHUCKLE*)
BILL
File Under: Full Speed Ahead - In the Wrong Direction!
http://www.platts.com/Oil/News/6106580.xml?src=Oilrssheadlines1
Hey Rodak... even YOU know what a bonehead move support for ethanol is!
(*SIGH*)
Excerpting...
-- Expanded loan guarantees for the US ethanol industry will be a key Obama administration tool to help the struggling biofuels industry survive lean times, US Agriculture Department Secretary Tom Vilsack told reporters Monday. --
Ethanol is a DISASTER!!!
(*PRIMAL SCREAM*)
-- Vilsack expected more aid to the industry would be forthcoming in a later energy package, though he said that aid from the Farm Bill provisions for the ethanol industry "would be the first step in stimulating the economy." The grant program guarantees loans up to $250 million, the USDA said. --
(*HEADACHE*)
-- The ethanol industry must also move beyond corn-based sources for biofuels, said Vilsack, with USDA providing research funds for farmers to convert more of their products into biomass that can be used for fuel. About 11.1 billion gallons of biofuels will be required under the federal Renewable Fuel Standard, which calls for 36 billion gallons to be used by 2022. About a third of the US corn crop currently goes to ethanol production. --
(*STOMACHACHE*)
BILL
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