American Elephants

Obama Fiddles While America Burns. by The Elephant's Child

U.S. economic growth is dangerously slow. The media is not about to talk about it, the president is campaigning and doesn’t want anyone to know, so he’s telling whoppers again; and he’d rather talk about how Romney is rich and doesn’t care, and makes gaffes.  We’re coming up on stall speed, and the president is still trying blame someone else, deny reality, and pretend that everything is turning out just fine.

Stephanie Cutter, Obama campaign spokesperson, says not to worry, the economy is going to create 12 million jobs all by itself over the next four years. Magic. Just lie, get voted back in, and maybe they can think of something — after the election — that moment in time where everything unpleasant is being hidden.

The second quarter Gross Domestic Product — the output of goods and services produced by labor and property located in the United States — has been revised downward to 1.3 percent. $16 billion less than the estimate issued last month. The downward revision and a chillingly large drop in Durable goods orders is bad.  “There is growing risk that a 2013 tax shock could push the economy back into recession” and there is little that the Fed can do.

Four major business groups see gloomy times ahead for the job market and the economy, according to a string of separate surveys and polls released this week that cast fresh doubt on hopes that the economic recovery may have turned the corner. Top executives and small-business owners polled by the Business Roundtable, the National Association of Manufacturers, the National Federation of Independent Business, and chief financial officers surveyed by Deloitte pointed to uncertainty posed by new regulations, shaky demand overseas and the “fiscal cliff” facing the federal government as prime reasons keeping companies from investing and hiring at a faster pace.

Clyde Wayne Crews, a Competitive Enterprise Institute vice president has made a working project of his “Tip of the Costberg”report which he regularly updates. In it, he compares the cost of regulations estimated by federal agencies to a much broader list of estimates from several federal and independent sources.Even then, he said, it doesn’t include hard-to-calculate costs associated with antitrust intervention, regulation of electricity networks, or the cost of constrained access to natural resources.

When Congress or a federal agency issues a new regulation, it’s in the guise of fixing something, making somebody stop doing something, or wouldn’t it be nice if they…In other words, they think in terms of what they want to force someone else to do. They don’t think much in terms of the consequences of their big idea.

Whatever-it-is probably requires a lot more paperwork. The government loves paperwork, but more paperwork requires more people to do the paperwork, they require salaries and benefits and parking places. If the regulation says you can’t use this ingredient in your product, then there is a long search for a different way to produce the product, which may require new machinery, or more electric power. The new costs of the new people and the new machinery may require cutting expenses elsewhere.

“While the Office of Management and Budget (OMB) reports amounts of up to $88.6 billion in 2010 dollars,” says Crews, “the non-tax cost of government intervention in the economy, without performing a sweeping survey, appears to total up to $1.806 trillion annually, and in many categories perhaps even considerably more, is a defensible assessment of the annual impact on the economy.”

The Small Business Administration has estimated $1.7 trillion, which the White House rejected. For comparison, the total U.S. GDP is $15 trillion. Taking$1.7 trillion out of GDP to satisfy the bright ideas of a bunch of politicians who have never worked in the private sector and have no understanding of how you make a business turn a profit, seems absolutely insane.  But then you have to consider the Democrats who, at their convention, thought banning profit was a good idea.  Elizabeth Warren, Democrat candidate for the Senate in Massachusetts, actually said much the same thing in her speech to the convention.

It is hard to adequately explain the problem of overregulation.  The administration rejects the idea, and Obama on the campaign trail, sneers that Republicans just want to eliminate all the regulations on Wall Street so they can cause another financial crisis. There’s so much wrong with that idea that it is breathtaking. Compliance with ObamaCare is estimated at 80 million man hours per year.

Last week, 1.571 new pages of regulations were published in the 2012 Federal Register That is the equivalent of a new regulation every 2 hours and 13 minutes — 24 hours a day, 7 days a week.

According to a recent study,  the Pew Research Center said that only 15 percent of Democrats believe that recent economic news is mostly poor.

Headline in the Heritage Foundation blog this morning: “Obama and Congress Are Choosing to Cause a Recession.” “The very fact that we can see a  recession coming is shocking. ‘Economic forecasters almost never forecast recessions” explained Heritage’s J.D. Foster. “Those who do forecast recessions do with great frequency and belong to the doom-and-gloom school of economics.’ Yet we can see this one a  mile away;”

What makes this recession different, and predictable, is that the disruptive force is Washington policies and, even more, Washington behaviors—policies and behaviors for which the nation can thank the Congress and especially President Obama. The policy is Taxmageddon. The behavior is intentional, insistent inaction. The consequence is recession. The response should and will be outrage.

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