Tibor Machan on the American Job Creation Act

Machan writes:

Jobs are created when people who have earned an honest buck go to the market and purchase goods and services that other people need to produce. If a good many go to the market to do this, there will be many jobs; if only a few, there will be few jobs. Moreover, only if the people get to choose what purchases they make in the market will the resulting jobs be more than make-believe or artificial jobs, like digging holes and filling them up again...

The entire plan of the jobs bill amounts to nothing more than artificially manufacturing jobs, from phony money, creating phony demand. And this doesn't even address the issue of Mr. Obama's favorite superstition, namely, his idea that he can somehow turn America into a showcase of green life without incurring massive expenses for this, expenses the country cannot afford.

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Obamanonics vs. Reaganomics

Stephen Moore writes:

The two presidents have a lot in common. Both inherited an American economy in collapse. And both applied daring, expensive remedies. Mr. Reagan passed the biggest tax cut ever, combined with an agenda of deregulation, monetary restraint and spending controls. Mr. Obama, of course, has given us a $1 trillion spending stimulus.

By the end of the summer of Reagan's third year in office, the economy was soaring. The GDP growth rate was 5% and racing toward 7%, even 8% growth. In 1983 and '84 output was growing so fast the biggest worry was that the economy would "overheat." In the summer of 2011 we have an economy limping along at barely 1% growth and by some indications headed toward a "double-dip" recession. By the end of Reagan's first term, it was Morning in America. Today there is gloomy talk of America in its twilight.

My purpose here is not more Reagan idolatry, but to point out an incontrovertible truth: One program for recovery worked, and the other hasn't...

There is something that is genuinely different this time. It isn't the nature of the crisis Mr. Obama inherited, but the nature of his policy prescriptions. Reagan applied tax cuts and other policies that, yes, took the deficit to unchartered peacetime highs.

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My thoughts: Moore is forgetting a few things about Reagan.

Let's not forget that Reagan raised taxes six times (including the then-two biggest tax increases in American history), massively increased welfare and warfare spending, ran huge deficits, stepped up the police state, ended financial privacy as part of his drug war, made Greenspan Fed chairman, undid the healthy "Vietnam syndrome" with his great victory over tiny, unresisting Grenada, and much, much more.

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Rothbard on Reagan

Obamamonics

Actually, Obamanomics already has failed. It didn’t work for Hoover and Roosevelt. It didn’t work for Bush. It isn’t working in Europe. And now it’s failing for Obama.

It doesn’t matter what you call it or when the policies are imposed, expanding the size and scope of government is bad for prosperity. So the real question is when will the establishment press finally admit that Obamanomics has failed?

The unemployment numbers released today certainly will not be easy to spin. Here’s the chart I periodically update, showing the actual unemployment rate compared to what the White House claimed would happen if we flushed $800 billion down the Washington rathole.

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Cartoon: Stimulus

Cartoon: Book Burning

Cartoon: Book Burning

Cartoon: Double Dip Recession

Cartoon: If I Had a Hammer

Did the Stimulus Work?

A recent paper by Alan Blinder and Mark Zandi claims that if not for the response of the federal government, the unemployment rate would be 15.7 percent, far higher than the current 9.5 percent. The press quickly reported that this vindicated the Obama stimulus plan. But the fact is that most of the positive effects cited in their paper came not from the stimulus but from stabilizing actions of the Federal Reserve, the FDIC, and TARP...

The Romer-Bernstein paper has often been cited as saying that if the package passed, the unemployment rate would peak below 8 percent in the middle of 2009 and would decline to below 7.5 percent by now. Obviously this has not happened. The administration, along with Blinder and Zandi, argue that it is not fair to conclude that this proves the package was a failure since Romer and Bern-stein underestimated the severity of the recession and that unemployment was already 8.2 percent in the first quarter of 2009, higher than the assumed peak.

I am sympathetic to their argument and Chart 1 corrects for their complaint by raising their estimate of where unemployment started in their experiment. The lowest line provides the original estimate of the path of unemployment provided by Romer and Bernstein on January 9, 2009. The second line replicates the Romer and Bernstein path, but raises the initial unemployment rate from their assumed 7.5 percent to 8.2 percent. This was the actual average of the unemployment rate in the first quarter of 2009, the period in which the stimulus was passed. The third line provides a more extreme alternative by raising the initial unemployment rate to the 9.3 percent average of the second quarter 2009. The first modification fully compensates for their objection while the second modification more than compensates for their concern...

Our policy problem today is that the bill that was actually passed into law was both so expensive and so badly flawed that it gives the whole concept of macroeconomic stimulus a bad name.

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The National Debt in Perspective

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Private Sector v Government Sector

Bill Bonner writes:

A chart that showed past presidents and the percentage of each president’s cabinet appointees who had previously worked in the private sector – you know, a real life business, not a government job? Remember what that is? A private business?

• Roosevelt – 38%
• Taft – 40%
• Wilson – 52%
• Harding – 49%
• Coolidge – 48%
• Hoover – 42%
• FDR – 50%
• Truman – 50%
• Eisenhower – 57%
• Kennedy – 30%
• LBJ – 47%
• Nixon – 53%
• Ford – 42%
• Carter – 32%
• Reagan – 56%
• GHWB – 51%
• Clinton – 39%
• GWB – 55%

And the Chicken Dinner Winner is…………………….

• Obama – 8%*

This is the guy who wants to tell YOU how to run YOUR life!

ONLY ONE IN TWELVE in the Obama Cabinet HAS EVER HAD A JOB.

*YEP, EIGHT PERCENT!

And these are the guys holding a “job summit”; going to tell us how to run our businesses, make our decisions for us? Do you want to trust them with every aspect of your life?

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Obama's Budget Deficits

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Penn and Teller Explain Obamanomics

"The utopian schemes of leveling, and a community of goods are as visionary and impracticable as those which vest all property in the Crown, are arbitrary, despotic, and, in our government, unconstitutional."
Samuel Adams

"I can find no warrant for such an appropriation in the Constitution; and I do not believe that the power and duty of the General Government ought to be extended to the relief of individual suffering which is in no manner properly related to the public service or benefit. A prevalent tendency to disregard the limited mission of this power and duty should, I think, be steadily resisted, to the end that the lesson should be constantly enforced that, though the people support the Government, the Government should not support the people. ... The friendliness and charity of our fellow countrymen can always be relied on to relieve their fellow citizens in misfortune. This has been repeatedly and quite lately demonstrated. Federal aid in such cases encourages the expectation of paternal care on the part of the Government and weakens the sturdiness of our national character, while it prevents the indulgence among our people of that kindly sentiment and conduct which strengthens the bonds of a common brotherhood."
Grover Cleveland

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Economists Rate Obama

When I look at other areas in the economy, I think their tax policy will be a disaster, and their budget proposals are jaw dropping. The types of budget deficits he would run, the amount of government debt he would propose is staggering and would stagger the economy if they were allowed to be implemented. We can't function in a good sense with debt levels in the 60% to 80% debt-to-GDP range. These are numbers that are beyond the pale.

Martin Regalia

I think he inherited a real mess. But my view is he's compounding a mess and not really putting the economy on the right track. I think he really botched the whole stimulus package. Most of it comes into play 2010, 2011 rather than 2009 when it's really needed.
There are two things that worry me. One is, Are they laying the basis for a good recovery from the current recession? The second issue is, Where are they putting this country from a long-run point of view? When I see the fiscal numbers the Congressional Budget Office is projecting, it's really scary. They're rather cavalier with how much health care is going to cost, how are we going to finance it. I just think they're being plain irresponsible.

Desmond Lachman

read the CNN article

Cartoon: Cash for Clunkers

Obama: The First 200 Days

The nation's economy has continued to shrink since President Obama took office. But the rate of decline has been less severe and there are signs the 18-month old recession is winding down.

Gross domestic product, the broadest measure of economic activity, fell at an annual rate of 1% in the second quarter. That came after a 6.4% drop in the first quarter, which was the worst drop in GDP since the early 1980s.

Many economists believe the economy may register modest growth in the current quarter. "There's no doubt that the speed of the decline has slowed," said Bernard Baumohl, chief global economist at the Economic Outlook Group. "I think the recession is history."


The stock market has rallied since Obama took office, with the Dow Jones industrial average up nearly 17% since Inauguration Day.

After last year's historic declines, investors have been wading back into the market as the economy has shown some signs of stabilization. Still, the blue-chip average is 35% below the highs of November 2007.


Since the administration took office in January, the economy has lost a total of 3.38 million jobs. The unemployment rate, which stood at 7.6% when Obama was inaugurated, has risen to 9.5% as of June.

"Employment is going to continue to be weak for the next few quarters," said Ed Friedman of Moody's Economy.com. "The unemployment rate is going to peak above 10% around the end of the year."

The deficit grew by $776.51 billion from January to June, and has already topped $1 trillion since the government's fiscal year started in October. The administration has said it expects the fiscal 2009 deficit to reach $1.75 trillion. That would be 12.3% of U.S. gross domestic product -- the highest since World War II.

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Gerald Celente on the Economy

"How often does the government have to be wrong, and how wrong do they have to be before people and the media stop taking them seriously?" wondered Celente. "The first spending package didn't deliver as promised, and now Obama's advisors want another stimulus, as if doubling up on failure will achieve success."...

Celente contends there are but three possible explanations for President Obama and his "brilliant" team of economic advisors "misreading how bad the economy was":

1. They're ignorant, despite PhD's and impressive résumés.
2. They are so arrogant they are incapable of acknowledging that anyone outside the incestuous Beltway circle could possibly get it right ... when they've got it wrong.
3. They actually do know better, but are lying.

"None of these suffice as excuses," concluded Celente, "but the inability or unwillingness to make accurate forecasts appears to be a Vice Presidential prerequisite." This past January, departing VP Dick Cheney sloughed off his administration's central role in accelerating the financial crisis and failure to head it off, claiming, "Nobody anywhere was smart enough to figure it out."...

The Greatest Depression is at hand. The stimulus, bailout and buyout packages being forced on the nation by an Administration that "misread how bad the economy was" will only lead to "Obamageddon": The Fall of Empire America.

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Mankiw Calls Out Krugman

The Obama administration is basing its budget forecasts on the economy growing an eyebrow-raising 15.6 percent above inflation between 2008 and 2013 - a drop of 1.2 percent this year followed by an average of 4 percent growth over the following four years. That's very impressive growth for any period of time. Even small deviations in growth rates can mean hundreds of billions or even trillions of dollars in the federal budget deficit...

If President Obama is correct that the economy will only shrink by 1.2 percent this year, despite all the rhetoric comparing our current plight to the Great Depression, this will be a relatively moderate recession. During the first four years of the Depression the economy shrank by 27.5 percent. For a more recent example, the economy shrank by 1.9 percent in 1982.

Harvard economics Professor Greg Mankiw thinks that Mr. Obama's growth forecasts are overly optimistic and that the federal deficit will be a lot larger than Mr. Obama thinks. He was chastised by Princeton's Paul Krugman, a Nobel Prize winner in economics, who on his New York Times blog claims that Mankiw can only make the predictions that he does because of "more than a bit of deliberate obtuseness." He titled his post on Mankiw, "Roots of Evil."

Last Wednesday, Mankiw responded to Krugman's attacks by suggesting: "Well, Paul, if you are so confident in this forecast, would you like to place a wager on it and take advantage of my wickedness?" Krugman has still not responded. It seems even a Nobel Prize winner isn't willing to lay money on Mr. Obama's rosy projections.

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My thoughts: Krugman does not have a leg to stand on. He is a partisan hack.

Markets and the Stimulus

Spending is stimulus, the president augues, but one has to be a true believer to ride the Keynesian test car all the way to a $1.75 trillion 2009 deficit. At 12 percent of gross domestic product, it doubles the previous post-war deficit high, 6 percent in 1983. That was when unemployment topped out at 10.8 percent; the Congressional Budget Office projects the jobless rate to go "only" to 9.2 percent in this recession. Last summer, President George W. Bush's projected $482 billion deficit was blasted by Democrats as profligate. Team Obama's first month added an increment larger than that entire amount...

Will the U.S. strategy work? Because we have never run peacetime deficits close to this size, predictions are tenuous. Keynesian models see a pickup in growth, but others forecast none. For its part, the CBO sees long-run fiscal costs with little short-term benefit...

The Obama administration has much to blame on its predecessor. But its own fiscal strategy is highly leveraged on a theory that has not scored well in previous runs. Markets are dubious that the "stimulus" will stimulate. And investors are losing patience with the federal fixes offered for the banking crisis. If the warning signs of the Dow are not heeded by policymakers, they will be by others.

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My thoughts: You can not spend yourself into prosperity.

Cartoon: Obamanomics