American Elephants

Where Does the Economic Nonsense Come From? by The Elephant's Child

Treasury Secretary Timothy Geithner appeared before the Senate Finance Committee yesterday.  He said some surprising things, surprising that they would come from a U.S. Treasury Secretary.  But then the Germans have been complaining that Mr. Geithner keeps coming over there and lecturing them about finances — which they find incredible in view of the state of the American Economy.

Geithner told the Senators that “modest increases in revenue through tax reform” are a must.

James Pethokoukis points out that Obama’s $1.7 trillion tax hike is not a “modest increase” and suggests growing the economy.

Geithner seemed unaware that fiscal sustainability (there’s that word again) is possible unless you get more taxes from those nasty rich people.

James Pethokoukis suggests cutting spending.

You really need to read the whole thing to grasp the mindset of this administration. James Pethokoukis is very good at  pointing out patent nonsense, and explaining why it is nonsense.

If we are to believe Obama’s own words, his view of his position is that the administration is completely a top-down affair. He gives the marching orders, The vision for change comes from him. So maybe Geithner knows better, but then again, maybe he doesn’t. It is a puzzlement.

The Mendacious Myth Of American Decline by The Elephant's Child

Richard Cohen is a liberal. Committed, always been a liberal. But even he is not, shall we say, completely happy with the president’s vision of an America in Decline.  In  Cohen’s words, the president read a lengthy essay by Robert Kagan about the Myth of American Decline. The president, Cohen says, “took the essay’s theme for part of his State of the Union Message saying ‘ Anyone who tells you that America is in decline or that our influence has waned doesn’t know what they’re talking about.'”

Among those who have done so is Barack Obama himself.

The president’s telling has been expressed sometimes in words, but more so in actions. He has conducted himself and his foreign policy as if the U.S. has indeed slipped in power, prestige and, more important, commitment. The same Obama who cited Madeleine Albright’s famous formulation — again, in the State of the Union — that America is the “indispensable nation,” dispensed with American power and prestige in failing to take the lead in confronting Moammar Gadhafi in Libya and instead was goaded into the fray by Britain and France.

This was called “leading from behind,” which is indistinguishable from panting to keep up.

Mr. Cohen goes on to elaborate the foreign policy failures of the Obama administration. It’s an odd piece. Obama has been mistakenly following a decline theme, but Republicans talk about an America that no longer exists. So America may be in decline, but Obama should stop acting like it is?

The basic concept of American decline seems to be based on the decline of manufacturing. We don’t manufacture anything any more. All the jobs have gone overseas. We don’t make anything in this country anymore. Everything we buy is made in China. You have read that on the nation’s editorial pages, and heard it daily.

Not true. America remains by far the world’s largest manufacturer. In 1972 the average U.S. factory worker was responsible for about $60,000 worth of annual manufacturing output.  Today the average U.S. factory worker is responsible for more than $180,000 of annual output. This country made $2.15 trillion (in 2005 dollars) worth of manufactured goods two years ago, while China made $1.48 trillion in goods.

Our agriculture sector produces far more today with only 2.6% of the workforce involved in farming than we did a hundred years ago when nearly 40% of the labor force was involved in farming. The tractor and the combine pressaged many changes.

The increases in production are a direct result of capital investment in productivity-enhancing technology. And the new technology has meant that fewer workers are producing more goods.  Is this a negative or a positive? Technological improvement is one of the drivers of economic growth.  The transition is a very difficult one for displaced workers, but economic growth in one sector spurs economic growth in another. The transition, which goes on all the time, is particularly noticeable during a recession when so many are out of work.

Change can be hard, or can be welcomed. We would be in deep trouble if we were still manufacturing typewriters, dial telephones and LP record players. Somehow those transitions were managed, but jobs surely changed, and probably some manufacturing plants went under. Lifetime learners have a real advantage.

Government is a lousy venture capitalist. Common sense should inform you, but Solyndra and its siblings offer extensive evidence. And if that’s not enough, there’s the Volt. Government does not create jobs. (People work for the government, but the government has only taxpayer dollars to pay their salaries—which are excessive because government managers don’t watch the bottom line). Government job-training is usually useless.

If we want economic recovery, we need to get the U.S. government out of the way.

There is more than one reason why the Constitution limits what the government is allowed to do. Progressives may believe that they can do a better job by telling everyone what to do, but the Founders knew human nature.

President Obama claims we are much more loved abroad, but he mistakes the need. We don’t need to be popular, we need to be respected. To be respected, we have to be dependable and inspire confidence. Foreign policy is not a popularity contest.

Obama Wants A Payroll Tax Extension So You Can Pay For Expensive Gas by The Elephant's Child
February 15, 2012, 6:27 pm
Filed under: Capitalism, Economy, Energy, Environment | Tags: ,

Gas prices are up.  They are hovering around $3.50 nationally and over that locally (WA) and suggestions are that they will keep rising until Memorial Day and perhaps all summer. Oil prices are, of course, dependent on the world price for crude oil; but rising gas prices will be blamed on President Obama.  The price of gas is up by 83% under his tenure.

The president is urging Congress to extend the payroll tax cut to counter the rise in gas taxes.He said that the price of gas is up because the economy is recovering and people are driving more.  Uh huh. The recovering economy is more hope than change.

The payroll tax cut lowers the Social Security deduction in the paychecks of 160 million working Americans from 6.2 percent to 4.2 percent. This will reduce the funding for Social Security by $119 billion over the next year, on top of the reduction in Social Security funding last year by $105 billion. This puts the Social Security trust fund (which is a bookkeeping entry and is already in the hole) deeper in deficit territory. But the $119 billion will be replaced by IOUs from the government (which is a bookkeeping entry) which will probably be borrowed from the Chinese when it actually has to be paid out.

The Social Security board issued a report in August 2011, admitting that Social Security aid out more money in 2010 than it had in receipts. The deficit for 2010 was $49 billion and the deficit for 2011 is projected to be $46 billion.

President Obama has actively supported a rise in the price of gasoline. He believes that higher gas prices will force people to use less gas (true) and be more amenable to switching to alternative energy (not true) and be more interested in electric cars (not true) except for hybrids which garner some interest. His subsidized alternative energy projects are going bankrupt one after another. The carbon trading market is dead. Wind and Solar are dying, but the government hasn’t given up and is still pushing subsidies.

In the pursuit of saving the Earth from global warming, the president has been aggressive in eliminating access to our own oil and gas supplies. Has this affected the price of oil? Of course. Futures prices for oil depend on expectations about what the future price will be. If our government said that America is turning on the oil spigot, and America has the world’s most bountiful supply of energy — it would affect expectations. Then you have Iran threatening to close the Straits of Hormuz, cutting off oil supplies to Europe, and frequent terrorist attacks on pipelines.

More oil from offshore rigs in the Gulf could be flowing to refineries. Oil just discovered has to flow through a field of permits, regulations, Big Green objections and lawsuits, all in multiple rounds.  This president has shut down oil from the Gulf, and then slowed permitting to a snail’s pace. The coastlines, except for existing drilling areas in the Gulf have been put out of reach, excuses have been manufactured to prevent offshore drilling in Alaska waters. And we have the Keystone XL debacle. There is an oil boom from the shale oil lands where drilling takes place on private lands.

Global warming is over, it’s just going to take time for governments to figure out how to get out of it without enormous embarrassment. And of course Big Green will keep insisting that the Earth is dying, and America is in decline. Watermelons.

Oh what a tangled web we weave when first we practice to deceive.


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