American Elephants

Visualizing the Debt of the United States. by The Elephant's Child

This you need to see!  Here is a visualization of the United States debt from the felicitously named, totaled up in $100 bills.

Obama Has Created an Intolerable Business Climate say America’s CEOs. by The Elephant's Child

— Las Vegas CEO Steve Wynn, a Democrat , has in a boardroom rant, denounced the intolerable business climate created by the White House.

Wynn, a casino magnate, blasted President Obama, declaring him “the greatest wet blanket to business, progress and job creation in my lifetime.”

This blast was remarkable as Wynn has been a staunch supporter of the Obama administration from the beginning.  It has been uncharacteristic for CEOs such as Wynn to express their views in such blunt terms on political matters.

A lot of people don’t want to say that. They’ll say, ‘Oh God, don’t be attacking Obama.’ Well, this is Obama’s deal, and it’s Obama that’s responsible for this fear in America.  The guy keeps making speeches about redistribution, and maybe “we ought to do something to businesses that don’t invest or (are) holding too much money.’ We haven’t heard that kind of talk except from pure socialists.

Business is being hammered. And I’m telling you that the business community in this country is frightened to death of the weird political philosophy of the president of the United States.

— Last February, 3M’s George Buckley blasted Obama as anti-business.  “We know what his instincts are,” Buckley said.  “We’ve got a real choice between manufacturing in Canada or Mexico —which tends to be more pro-business—and America.”

— Boeing’s Jim McNerney, in the Wall Street Journal last May called Obama’s handpicked National Labor Relations Board’s suit against his company a “fundamental assault on the capitalist principles that have sustained America’s competitiveness since it became the world’s largest economy nearly 140 years ago.”

— Intel’s Paul Otellini, told CNET last August that the U.S. legal environment has become so hostile to business that there is likely to be “an inevitable erosion and shift of wealth, much like we’re seeing today in Europe — this is the bitter truth.”

— Bernie Marcus co-founded Home Depot in 1978 and brought it public in 1981, as the US was suffering from the worst recession and unemployment in 40 years. The company not only redefined home improvement retailing, but thrived while creating thousands of jobs. He said that Home Depot would never have succeeded if it started up today due to onerous regulation.

I can tell you that today the impediments that the government imposes are impossible to deal with. Home Depot would never have succeeded if we’d tried to start it today. Every day you see rules and regulations from a group of Washington bureaucrats who know nothing about running a business. And I mean every day. It’s become stifling.

If you’re a small businessman, the only way to deal with it is to work harder, put in more hours, and let people go. When you consider that something like 70% of the American people work for small businesses, you are talking about a big economic impact …I’m not sure Obama would understand anything that I’d say, because he’s never really worked a day outside the political or legal area. He doesn’t know how to make a payroll, he doesn’t understand the problems businesses face.  I would try to explain that the plight of the businessman is very reactive to Washington. As Washington piles on regulations and mandates, the impact is tremendous.

The Chamber of Commerce has spoken out, as have many more CEOs like Jeffrey Immelt, one of Obama’s biggest supporters, Warren Buffet, and CEOs of media companies, oil companies  and energy suppliers. Bur Obama is not listening.

He wants to keep on doing just what he is doing — spending, regulating — oh wait, he calls it investing, and revenue.  Yes, raising taxes in a recession simply extends the problem, but  investing — everybody knows that’s a good thing, don’t they?

A very large percentage of people in this country complain about American business taking their operations overseas.  Does Obama really not understand why they do that?

The Economy, the White House Says, Is Vastly Improved! by The Elephant's Child

White House Press Conference this morning:

Q— In the New York Times a couple of days ago, there was a report on White House officials entertaining the idea that they can run for reelection without being able to point to a strengthening economy.

Mr. Carney — well, two things remain uncontestably true. The economy is vastly improved from what it was when Barack Obama was sworn into office as President. We were in economic freefall, there were predictions that we were headed to the second Great Depression. We were losing up to —over 700,000 jobs a month. We were contracting at a greater than 6 percent, our economy was. (emphasis added)

Obama promised, when he signed the stimulus, that it would keep the unemployment rate below 8%.

Jobless claims increased by 10,000 to a seasonally adjusted 418,000 in the week ended July 16, the Labor Department said today.

The president has touted his federal worker pay “freeze”, as making adjustments that are necessary  during these difficult fiscal times.  “We froze federal pay for federal workers for two years,” Obama claimed. ” Now that was not real popular, as you might imagine, among federal workers.

Well that one wasn’t true either.  “Step increases” were not affected.  1.1 million federal employees will receive pay increases totaling more than $2.5 billion through the standard “step increases” federal pay system.  And of course the White House staff received hefty pay increases of up to 15%.

The federal government simply does not keep its books the way that a corporation does.  When a corporation gets in trouble, they reduce their work force, shed lines of business, close stores or factories, it is not a “default,” but a restructuring.

A “default” is when a borrower does not make scheduled payments of interest or principal.  When it’s a corporation that defaults, the interest payments they have to make go up, they have a harder time borrowing, and it sometimes leads to insolvency.

If the United States Congress had submitted fiscal year 2010 financial reports like a corporation does— the U.S. would show a negative net worth of $44 trillion, an operating loss of $817 billion, and $1.3 trillion of negative cash flow.

The federal government needs restructuring. The most important policy prescription is for an economy focused on growth. If we could sustain average growth of 5% for the next 10 years, we wouldn’t need a debt-ceiling debate. The average growth for the past 40 years has been 2.83%, but 5% is a splendid goal.

The federal budget records long-term liabilities as entitlements when they are paid in a mysterious “cash basis” budget methodology. Corporations must reflect the net present value of liabilities as they occur. This leads to short-term, distorted thinking. Politicians believe that the country is in better financial shape than it is, and think the country is able to take on more obligations.

Some facts about the federal bureaucracy seep out to the public occasionally. It is fairly well-known that the Agriculture Department has more bureaucrats than America has farms. States are politely turning down federal grants for high-speed rail, as boondoggles that they cannot afford, but Obama will not relinquish his dreams of high-speed rail.

A startling fact is that many departments have as many as 18 levels of management.  That leads to one of my favorite economists and a little ‘Bureaucracy Humor’, probably created by somebody at Homeland Security of HUD.

Do read the whole thing.


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