American Elephants

Obama’s Approval Rates Down. Inflation Up. Spending Up. Taxes—Going Up. by The Elephant's Child

Talk radio has been full of Obama’s declining poll numbers.  A new Washington Post-ABC News Poll this week finds about two our of three Americans now disapprove of the president’s job on gas prices.  59% disapprove of Obama’s job on the sluggish economy, including 50% who intensely disapprove. That’s the worst yet in a Post poll.

The election, of course, is not until November.  But people start to really notice when reality arrives at their pocketbook. High gas prices hurt those who drive long distances or spend time stuck in traffic, but they also add to the inflation in the cost of everything you buy. Obama’s numbers are particularly down among women.  How can this be when the carefully planned strategy of the “Republicans’ War on Women” was supposed to sway emotions?

Women do most of the grocery shopping, as well as buy a lot of gasoline. Prices at the grocery store are up significantly. Some firms have chosen to make their packages smaller,for the same price, assuming that you won’t notice.  A can of Solid White Albacore Tuna used to be 8 oz. The can size looks the same, but it now contains 5 oz. News reports have pegged inflation as over 8%, but the shrinking content of the tuna can has that beat all hollow.

James Pethokoukis, writing at The American, said that:

The Obama administration has already conceded it has no long-term plan to deal with rising U.S. debt, driven for the most part by social insurance spending. Testifying before the House Budget Committee recently, Treasury Secretary Tim Geithner told Chairman Paul Ryan the following: “We’re not coming before you to say we have a definitive solution to that long-term problem. What we do know is we don’t like yours.” Even Obama’s ten-year plan doesn’t keep the debt burden from increasing.

A new book The Escape Artists; How Obama’s Team Fumbled the Recovery says that “in 2009, the president asked then White House Budget Director Peter Orszag to draft a secret memo laying out the government’s options in the event of a fiscal crisis in which a runaway deficit sent interest rates spiraling upward.”

So instead of developing a long-term plan to reduce the risk to the economy, Obama plowed ahead with his environmental agenda and ObamaCare, and if it all doesn’t work, then there is the Orszag plan to rely on.  We don’t know, but Orszag, who now works for Citigroup, believes that Americans are undertaxed. Scheiber writes elsewhere in Escape Artists that Orszag believed in repealing all the Bush tax cuts, not just the top-income variety. That would be a $4.5 trillion tax hike right off the bat. Orszag was the one behind ObamaCare’s Independent Medicare Payment Advisory Board, which will have the power to cut medicare provider payments if Medicare costs rise too fast. And Orszag really liked the idea of a VAT. This is Pethokoukis speculation, but informed speculation.

Economist Greg Mankiw notes that the president is now calling for an all-in dividend tax rate of almost 45 percent — the highest rate in 27 years. First he would allow the 2003 dividend tax rate to expire which would push the top dividend tax rate up from 15 to 39.6 percent. On top of that he wants to phase out deductions for high-income taxpayers. Then ObamaCare will impose an additional 3.8% percent tax on dividends and other investment income. The top rate wold be 44.6 percent —almost triple today’s 15 percent rate.

Obama talks a lot about “the expiration of the Bush tax cuts,” as if that was something done only by the hated Bush, but they were approved by Congresses of both parties, and presidents of both parties, including Obama. Democrats look at tax rates in the Roosevelt administration, and the Clinton administration during the dot-com bubble — and say see, we got through that just fine, without ever understanding the drag of high taxes on the economy, and the misery for ordinary people.

Grover Norquist, president of Americans for Tax Reform, has a list of what you can expect from the taxman, coming up. It’s pretty scary. The other thing Democrats never understand is that high income people have lots of options. They can invest their money in ways that shelter them from high taxes (think Warren Buffet), they can move  (think John Kerry mooring his yacht in another state to avoid taxes),  they can invest their money abroad, or they can move abroad.  It’s ordinary people who don’t have as many options.

You can look at the states. States governed by Democrats  have, in general, tried to raise taxes to cover their budget deficits, and triggered an exodus of high income people moving to lower tax states.  States with Republican governors, have, in general, cut back on spending and lowered taxes. Guess which states are in better fiscal condition, have more growth, more jobs.Some people are just incapable of learning from the evidence.


There is a Higher Education Bubble. Taxpayers Beware! by The Elephant's Child

Sixty-one percent of folks with a student loan are not paying back their loans.  Many of the non-payers are still in school, but many others have long since graduated and are failing to make payments on their student loans. After the housing collapse, 28% of mortgages were underwater.  Could we be worrying about the wrong bubble?

There supposedly is $870 billion in outstanding loan balance. There is $85 billion  that is held by those who are past due. The numbers seem to be somewhat unreliable.  There’s a category defined as loans under forbearance: that’s a temporary postponement or reduction of payments for a period of time because you are experiencing financial difficulty. You can get forbearance if you are not eligible for deferment.  A deferment is a temporary suspension of loan payments for specific situations such as reenrollment in school, unemployment or economic hardship. These are for people who are not making their payments, but they are officially considered as people who are making their payments, so the “default rate” is probably not a meaningful number.  It may just be a measure of the number of students who never made any payments at all.

We have this gigantic and growing government, full of certified “experts,” and they can’t keep their numbers in some form that makes them intelligible to those who want to understand the problem. Federal loans are growing — up 25%this last year — but when people who aren’t paying are counted as paying, and over 50% of those in either forbearance or deferment end up defaulting, we don’t seem to know what is happening at all.  I just read some scary numbers about food stamp fraud. We are constantly informed that there are enormous amounts of fraud in Medicaid and Medicare. Conservatives talk about the need for an audit of the Fed, and no one seems to have a clue about the real financial state of Fannie Mae and Freddie Mac in terms that make it clear that everybody is scared to really ask.

Government numbers come in first guesses, then revised numbers and revised again. If it is a bad number, like unemployment, it usually gets progressively worse: if it’s a good number like new jobs created, that usually gets worse too.  Hans Bader of the Competitive Enterprise Institute notes how much the Obama administrations has done to make things worse:

Although for-profit colleges have been demonized by the Obama Administration (which has forced some of them to jack up tuition through tightening of the 90-10 rule, and subjected career colleges — but not traditional colleges — to “gainful employment” rules),  education expert Richard Vedder says that “the for-profits care more for their students” and care more than other colleges about whether their students get jobs and are able to repay their student loans.

The Obama Administration has also done other things that increase college costs and drive up tuition.  It has harmed American industry and students who choose not to go to college by discouraging the vocational training needed for well-paying, skilled factory work, contributing to a severe shortage of certain types of skilled factory workers.

Government subsidies over the years have encouraged colleges to raise their tuition, and to dumb down their offerings to attract marginal students. “Thirty-six percent” of college students learn little in four years of college, and students now spend 50% less time studying compared with students of a few decades ago. Thirty-two percent never take “a course in a typical semester where they read more than 40 pages per week.” The conversation and the demand for change is increasing.

Obama wants everyone to go to college, which means the trends will increase. He wants more student loans, and more forgiveness for the defaulters. (Which means the taxpayers get to pay). He wants more control over the curriculum. (More indoctrination).  He wants to stamp out for profit schools.  And desiring to be the education president, he won’t even continue the DC Opportunity Scholarships that are such an enormous help for poor black children in the nation’s capitol.

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