American Elephants

We Need To Add 200,000 Jobs Every Month. Not Happening. by The Elephant's Child

The media is loudly celebrating the bullish November jobs numbers, but, surprise, they’re lying to you. November preliminary jobs data show 146,000 new jobs and a drop in unemployment to 7.7% — so what’s the matter with that? The jobless rate fell slightly from 7.9% to 7.7 % but to make a real dent in unemployment, we have to add at least 200,000 jobs a month for a prolonged period.

Since 2011, businesses have added about 151,000 jobs a month. If you remember, just before the election, there were big payroll gains in September and October? Nevermind. The Labor Department has revised down its job estimates for those two months by 49,000. But we still have job growth in the private sector, right? Not really.  In the last six months, 621,000 of the 847,000 new jobs created have been in government. They’re all working in the White House for really big salaries. (Just kidding with that last sentence).

The atmosphere for business is poisonous. That big “drop” in unemployment was due to the fact that 540,000 Americans are no longer looking for work. They either dropped out, took early disability or retired.  Since the start of  2009, 9.7 million Americans have dropped out of the labor force. More than 24 million Americans who want jobs don’t have them, driving the labor force participation down to 63.6 %— just above August’s 31-year low of 63.5%. This is the worst labor market in a recovery ever.

For an even cheerier note, it may get worse. The quarterly Wells Fargo/Gallup small-business survey found that 21% plan to cut jobs over the next six months.

Small businesses account for nearly 80% of all new job creation in America. A small-business slump means no jobs. Small businesses are being threatened with huge new expenses because of ObamaCare. Their transportation costs are going up. Their energy costs are going up. The cost of goods is going up. New regulations are pouring out of Washington, with more uncertainty as to whether or not they are complying with new laws. Obama’s insistence on raising taxes on “the rich” will affect some 990,000 small businesses who file their taxes as individuals.

So why is the labor market not recovering rapidly as it has done in the past with millions of new jobs and rapid economic growth? One word. Obamanomics. His ideology points him in the direction of a second recession. The jobs climate is undoubtedly made worse by the debate over “the fiscal cliff.” Obama’s bad ideas have already had a negative impact on small business. We need four million private sector jobs to get back to the where we were before the “Great Recession.”


Obama Knows “The Buffett Rule” Is A Fraud. by The Elephant's Child

Remember Rick Santelli whose rant on the economy was the impetus for the founding of the Tea Party? Here he is again. Still ranting.

Here we’ve all been so worried about the deficit, what it will do to our economy and the burden on our children, but Obama explained that if we just pass the Buffett Rule, it “will help us close our deficit.”

Of course the Congressional Budget Office chimed in. Mark Steyn reminded us that the CBO are “the same nonpartisan bean-counters who project that the entire U.S. economy will cease to exist in 2027.” They predict that “Obama’s Buffett Rule will raise…$3.2 billion per year. Or what the United States government currently borrows every 17 hours. So in 514 years it will have raised enough additional revenue to pay off the 2011 federal budget deficit. If you want to mark it on your calendar, 514 years is the year 2526.”

He adds: “For what Obama’s spending, there aren’t enough of them, or us, or “the rich” — and there never will be.  There is only one Warren Buffett.  He is the third-wealthiest person on the planet. The first is a Mexican, and beyond the reach of the U.S. Treasury. Mr. Buffett is worth $44 billion.  If he donated the entire lot to the government of the United States, they would blow through it within four and a half days.

Doesn’t matter. That’s not what Obama is on about. He thinks if he can just get Americans riled up about “the rich” then he can point to Mitt Romney as one of the hated rich. If Congress doesn’t pass his Buffett Rule, which they won’t, then he can point to a recalcitrant Republican Congress that blocks his every effort to save the country.

Since he has no real accomplishments to run on, Obama clearly plans on taking the low road. He does not tolerate honest differences, and he will impugn the motives of anyone who dares to disagree with him. Envy of “the rich” and pointing out that rich and old-fashioned Mitt Romney and his stay-at-home wife are simply out of touch with ordinary people, is Obama’s strategy.  But that’s not what ordinary people are concerned about.

Ordinary people of both parties care about the 88 million unemployed. They care about an economy that is not creating jobs, and a debt and deficit that keep growing without the slightest effort to rein in spending.

Heritage did this handy little graph to show just how totally insignificant the amount raised by the Buffett Rule would be. Once again, a visual explanation helps to explain what is not so clear in numbers.

The Hill suggests that weak jobs numbers raise pressure on the Federal Reserve to adopt a new stimulus to boost the economy.

Arrrggggh! It is not another useless stimulus that the economy needs. It is a halt to reckless spending, the constant flow of new rules, the burden of over-regulation,  the coming Tax Armageddon, the rising cost of energy, and the crushing burden of ObamaCare. Businessmen and business organizations keep telling the folks in Washington why they are not hiring, why the economy is not growing, but nobody hears them. The smartest people in the world are fully in charge, and as soon as they enlarge the government a little more, all will be well. Or not.

No Recovery in Sight. Let’s Raise Taxes. by The Elephant's Child

One basic, large type entry in the Republican rulebook is that you don’t raise taxes in a recession. You try to ease the pressure on business and individuals so they have more freedom to grow and hire. And history has taught us that it works. It worked for Coolidge, Kennedy, Reagan and George W. Bush.  But President Obama is a Democrat, and a radical one at that. All that talk about not raising taxes on anyone earning less than $250,000, is just that — talk.

Yesterday, in an attempt to pacify those who are angry about higher gas taxes, the president called for higher taxes on the oil industry. He is attempting to blame the oil industry for high gas prices, and the rich, and the Koch brothers and Republicans in general. Translation: “Don’t blame me, it’s not my fault. Any first year Economics 101 student can tell you that if you raise taxes on the oil industry, the price of gasoline will go up — not down.

Obama also tried to claim that Republicans who oppose eliminating the tax breaks for the oil industry are puppets of the oil industry.

“You can either stand up for the oil companies, or you can stand up for the American people,” Obama said. “You can keep subsidizing a fossil fuel that’s been getting taxpayer dollars for a century, or you can place your bets on a clean energy future.”

There is no clean energy future, at least not any time soon. Corn ethanol has only very small environmental, price or energy benefits, and the unintended consequences on food prices are large and negative. Inflation in the cost of food is up by 8% and rising. The current E10 blend requires 4% more fuel than gasoline, and costs the consumer an extra 13 cents per gallon. Other biofuels and Biodiesel are flops, biodiesel is non-existent, but required by the EPA.The president tried to sound enthusiastic about algae, but that is not only 30 years away, but unlikely.

President Obama’s fiscal year 2013 budget proposal explicitly claims a $1,561 trillion tax hike over 10 years, as reported by the White House Office of Management and Budget (OMB). The actual numbers of his proposed tax hikes are $2,006.000,000,000 — 2 trillion, 6 billion — over the next ten years.  These are policies to allow the president to continue spending like a drunken sailor.

America is experiencing the slowest recovery since World War II. In every previous recession employment had fully recovered within four years. Now payroll employment remains 4% below the number of workers employed when the recession started in December of 2007. Obama alternately talks about the vigorous recovery and whines that he needs more time to fix things because it’s really, really hard. Raising taxes is not the answer.

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Weak Economic Numbers.Weak Job Creation. Weak President. by The Elephant's Child

Stephen L. Carter, a professor of Law at Yale, has an article at Bloomberg, in which a man in the aisle seat in a 737 heading east explains to him why he refuses to hire anyone.

The gentleman has a successful business, demand for his product is up but he will not hire. He doesn’t know how much it will cost, he says.

How can he hire new workers today when he does not know how much they will cost him tomorrow?  He is not referring to wages, but to regulation.  He has no way of telling what new rules will go into effect and when they will appear.  His business operates in several states, but operates on low margins. He cannot afford the risk of losing what little profit there is to some new round of regulatory changes. So he’s hiring nobody until he has some certainty about how much that employee will cost him.

At the Corner, Iain Murray explains:  (emphasis added)

Today’s much weaker than expected employment numbers show that the president’s agenda of more regulation and increased spending has undoubtedly failed. However much money he throws at the problem, entrepreneurs are not going to start adding jobs to the economy while the burden of regulation is so high. Regulations cost the economy $1.75 trillion each year. It is regulation that is dragging us back to recession.

Yesterday’s jobs announcement said that only 54,000 jobs were created in May. To get back to the employment levels in December, 2007, we would need to add 250,000 jobs each month for sixty-six months.

Democrats, for unknown reasons, believe firmly in Keynesian economics. The idea is that you can increase total demand in the economy by either having government spend, or by cutting taxes just enough to leave more money in people’s pockets in the hopes that they will spend.  This, they believe, will revive the economy.  It never works. We remind them that it never works. It doesn’t work for Republicans either. It’s non-partisan, and useless.

Keynesian economics is built on the assumption that government spending has a multiplier effect. As each dollar passes from hand to hand, it is creating more demand. What it ignores, is that you have to take money out of one pocket of the private economy— to put into the other pocket of the private economy.  If you take water out of one end of the swimming pool and put it in the other end, the pool doesn’t get any fuller.*

Liberals think of the revenue that comes in as their money, or at least ‘government money.’ They always forget that the government has no money of its own.

So all that stimulus, the bailouts, the TARP money, the subsidies, and the tax credits were all pretty much wasted.  And we have spent so much that, unless we stop spending and get our affairs in order, Moody’s and Standard&Poor are going to drop our national credit rating.

The Congressional Budget Office just announced that the Obama stimulus actually raised the deficit by $840 billion — significantly more than the $787 estimated cost.

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It didn’t have to be like this. This recession should have eased sooner, but was prevented by Obama’s vision of a “regulatory state in which regulators are seen as disinterested experts with the factual knowledge, practical wisdom, and unwavering integrity to manage the economy.  They alone are presumed to be capable of steering the nation toward prosperity.” (Todd Zywiki)

Slashing corporate tax rates, or eliminating them would have helped. Eliminating regulations would help, and refraining from adding new ones would give the economy a boost. As Steven Carter’s seat mate said, he needs some certainty.  He won’t hire anyone until he knows how much that employee will cost him.

Too much chasing rainbows and pots of gold. We need to try the things that are proven over and over, to actually work.

*This excellent analogy comes from Brian Reidl at the Heritage Foundation.

ADDENDUM: Powerline, today, takes up the same problem, with the same graph. They, however, publish a different one as well, at the prompting of an informed reader who says the current recession was quite average for the first year, and the red line would be clumped in the middle of all the other lines of ordinary recessions. The graph he claims as more representative (See Powerline) reveals that Obama “inherited” an average recession, used it to push radical measures, and extended the recession far longer than it should have been. I think this is probably far more correct, and worth pondering.

You Don’t Get Businessmen to Hire by Making it Hard for them to Conduct Business. by The Elephant's Child

This will be “Recovery Summer” they claimed.  Treasury Secretary Tim Geithner wrote in early August, how the $862 billion government stimulus was still rolling out, business investment was booming, and the economy was poised for sustainable growth.  “Welcome to the Recovery,” he said.

Mr. Geithner and President Obama really believe that government spending can stimulate growth by boosting private “demand,” that tax-rates don’t matter to investment decisions, that scads of new regulations have no impact on costs or on hiring for business, and that politicians can badmouth capitalists without having any effect on the movement of capital.

This quotation from the late Walter Wriston, who was once CEO of Citibank, would be worth printing out and framing, or sending to your Congressman, since they don’t seem to get it.

Capital will go where it is wanted and stay where it is well treated.
It will flee from manipulation or onerous regulation of its value or use
and no government policy can restrain it for long.

The downward revision for the second quarter was expected, with a big drop in home sales, more jobless claims and weak corporate profits.  Many economists believe that third quarter growth could be negative.  The pace of growth is very sluggish, and will not create many new jobs.

If government spending stimulated growth, the economy should be booming by now.  Trillions of dollars of spending, loan guarantees, tax credits, grants and much more.  Even taking over whole industries and paying people to buy cars and appliances hasn’t worked.  Democrats always think anything can be fixed with more spending.

The 1982 recession is the last one with a jobless rate exceeding 10 percent.  The path to recovery was steady.  Companies will take the risk to invest and hire when they know what government plans to do to them — what costs, what regulations.

Capital will go where it is wanted and stay where it is well treated.  It will invest and hire.  Perhaps we need to start treating the people who actually create jobs well.  Free markets and free people have always worked for America.  We need to stop hoping that more spending will fix things,  and go for some real change.

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