Obama’s big win of 2010:extending Bush’s biggest win of 2001

Victory, Immortal Fame!  So cries the last warrior standing, ironically right before he himself dies, after defeating his surrounding army.  The warriors of the mythical army, raised from serpent’s teeth planted in the ground, are tricked by Jason into battling each other.  So ends this humorous battle in Argonautica.

Not so different was the media coverage of the passing of the Bush tax cut extension.  After Obama defeated his fellow Democrats in passing this extension, the media hailed it as a much needed victory for the White House.

Wait.  What?

If you read Obama’s Tax Cuts of 2010, you shouldn’t be too  surprised.  In fact, the only thing that should surprise you is exactly how much of the Republican agenda Obama acquiesced to in this tax rate extension.  I predicted back in October, 2009 that Obama would extend the Bush tax cuts for at least the middle class, and that he would herald them as tax cuts instead of merely extensions of the Bush tax rates.  But at the time I figured it would come at the cost of no estate tax fix, higher rates for upper income earners, and other built in tax hikes.  Instead, this “White House victory” looks more like something from the last 8 years that supposedly “got us into this mess in the first place”.

The question then, if this is truly a White House victory, is if Obama has become a born again Capitalist.  The tax extension doesn’t just extend Bush tax rates for two years, it also gives a generous estate tax system that increases the exemption from $1 million to $5 million and lowers rates to 35%.  It also gives businesses of any size 100% bonus depreciation on new asset purchases in a tax gift to huge corporations.  And lastly, it replaces the Making Work Pay Credit with a 2% across the board cut in Social Security taxes.

The 2% Social Security cut was Obama’s answer to the expiring Making Work Pay Credit and is perhaps the greatest evidence of either a change of heart on Obama’s part, or a total victory on the Republican’s part.  In 2010, the Making Work Pay Credit will give families making less than $40,000 a credit of $800, while denying families making more than $175,000 any credit.  It was a perfect Liberal tax cut.  It was even poorly administrated.

On the other hand, the 2% Social Security cut is an across the board flat cut that is easy to administer and has no AGI cap.  So in 2011 a family that makes less than $40,000 will actually be paying more taxes, while a family with  a working husband and wife who make $200,000 combined will get a tax cut of $4,000.  This year they would have no tax break.  This non-progressive change is a White House victory?

The 2010 tax rate extension was an acknowledgment by the left that the policies of the last 8 years did not get us into this mess.  The Bush tax cuts got us out of the last mess and just might work this time too.  How they can claim that this Republican victory was anything else is beyond me.

The only thing the Democrats got out of this deal was not having to pay for the next unemployment benefits extension.  But in the end, Obama found it easier to defeat his own majority party than to take out the minority Republicans.  The result?  Your taxes aren’t going up next year no matter who you are.  And just as expected, Obama is saying it is because of him.

On Unemployment, Republicans are right and wrong

Get ready for the Sally Struthers commercials about to be produced by the DNC.  Republicans blocked an extension of unemployment benefits.

But what is being missed on a large scale is why Republicans blocked the extension.  Democrats have extended unemployment benefits four times and have not paid for any of the extensions.  In the most recent extension, they allowed people to find temporary work without losing benefits, all unpaid for.  With deficits over a trillion dollars, the Democrat argument has been that unemployment benefits create jobs.  I’m sure we can all come up with a time we were down on our luck and were hired by an unemployed person.  Right?

The Republican argument is simple.  Pay for the benefits, and they will vote to extend them.  In fact, since they are good Republicans, they don’t even want Democrats to cut other programs to pay for the benefits.  Simply take surpluses from Stimulus and TARP to pay for them.  Seems simple enough, but the Democrats appear to have local stimulus funded pork projects on their priority list above paying for unemployment benefits.  You won’t see that on their “Feed the Children of Detroit” tv special.

This one seems cut and dry.  But the Republicans are wrong too.  Saying you have a surplus in the stimulus program is like saying you have a surplus if you go shopping and don’t quite hit your credit limit.  The word “surplus” and “stimulus” (which was 100% in the red from day one) do not belong in the same sentence together.  Does it really matter which account we take the money from when every account is debt funded already?

Unemployment benefit extensions have become unregulated welfare.  No, unemployment benefits do not create jobs.  Businesses who are paid to create and produce goods and services that people want and need at prices they can afford create jobs.  But instead of throwing money at those job creators, we are raising taxes on them and telling them they can no longer conduct business.  A good example is Obama deciding we no longer need the energy independence that oil exploration and drilling would have provided.  That is thousands of jobs lost in his one decision.

Towards the beginning of Obama’s Presidency, he said that “There will be a time for profits, now is not that time”.  And that thinking is why Congress is looking for a fifth extension of unemployment benefits.

Trickle up has not worked

Considering the last time trickle down was tried was 2003 and it resulted in a record number of quarters of economic growth, job growth, increased tax revenues, and low unemployment, I really don’t see how people can argue that trickle down doesn’t work.

On the other hand, we have been trying trickle up since 2007.  We raised the minimum wage, we reduced requirements for poor people to get loans, we handed out stimulus checks with AGI limits, we poured a trillion dollars into shovel ready jobs for middle class and union workers (that Obama lied about, and has since admitted that those jobs never existed in the first place), we passed healthcare legislation that taxes the healthcare industry and insurance companies and gives breaks to tiny companies who can’t afford to pay their employees a living wage, and we had the government buy and steal ownership in failed companies.  No aspect of trickle up has worked.

We have a record number of Americans on food stamps.  We extended unemployment benefits until it became a type of unregulated welfare.  We had cash for clunkers.  We had the making work pay tax credit.  We made credit for poor people and failing businesses even easier to come by.  We gave tax credits for hiring unemployed people and all the people the minimum wage squeezed out of the market.  But poor people with subsidized incomes don’t hire people.  Employers and companies do.  And not just failing companies with subsidized loose credit; companies that are successful and are growing hire people.

What have we gotten from trickle up?  When Pelosi gave her inaugural speech as Speaker of the House, she promised no new deficit spending.  Since then US debt has increased by $5 trillion dollars.  The entire 8 years of George W. Bush’s Presidency saw our debt increase by less than that, even with 9/11, the tech bubble, two wars, and two years of Pelosi/Reid. Companies are getting ready to drop insurance coverage as rates continue to spiral out of control and Obama’s penalty taxes become far cheaper than Obama’s healthcare taxes. Official unemployment (those still looking) is steady at 9.5% while real unemployment is around 17%.  Tax revenues have fallen, wages have fallen, and the only economic recovery we have in the stock market is 2/3rds Fed injections as the government has continued to buy bad debt-backed securities.

The scariest thing about the left today is that they think the Obama/Pelosi/Reid economic plan of trickle up worked.

Out of jobs to lose

After we threw a trillion dollars in debt at our economy, Obama was finally able to boast positive job growth in November.  That was short lived as December and January both saw job losses once again.  But it is one year since Obama passed the stimulus  and only 6% of Americans actually think the stimulus has created or saved a single job. That 6% represents the Obama administration, Pelosi/Reid congress and most of their extended families.  The rest of us know better.

Obama has decided to return to campaign mode in an attempt to cast his debt spending in a positive light.  On his facebook Obama is promising that he will finally focus on jobs in 2010.  As part of his new campaign, Obama is highlighting how job losses have slowed.  He has produced a graph showing how Bush made things really bad, and Obama has fixed things and put them back where they were.  This graph depicts net job growth for every month going back to 2007:

What Obama Sees When He Looks At Our Economy

Can anyone figure out what is wrong with this graph?  Eventually, you run out of jobs to lose.  If we continued to lose jobs at the rate we did in January and February of last year, unemployment rates would be so high right now that they would drop significantly every time a kid opened up a lemonade stand.   This chart doesn’t show that unemployment is getting better, it shows that we can’t get much worse.  Can’t get worse, that is, until taxes go up by 5% on employers next year and Cap and Trade laws make the cost of doing business out of reach for most Americans.

The chart that Obama isn’t putting on display is what has happened to the unemployment rate since Republicans lost the congress in 2006:

What The Rest Of Us See

The Stimulus has produced debt not jobs.  Even the dip at the very end of this unemployment rate chart is due only to people giving up looking.

Obama can continue to make speeches and declare 2010 to be the year that job growth returns, but until we rid ourselves of this anti-business administration, with their magic wand promises and band-aid solutions, we will continue to see unemployment around 10%.

The Experts Are Catching Up

Someone once said that debt spending doesn’t equal wealth.  That same individual said that stimulus dollars on so-called “shovel ready” projects  was nothing more than short term revolving door jobs that would not result in growth.   Now I don’t claim to be an economic genius or some sort of scholar or market guru, but it is nice when the experts finally catch up to me and I can once again say told ya so.

Allow me to quote: “But AP’s analysis, which was reviewed by independent economists at five universities, showed the strategy of pumping transportation money into counties hasn’t affected local unemployment rates so far.”

“”My bottom line is, I’d be skeptical about putting too much more money into a second stimulus until we’ve seen broader effects from the first stimulus,” said Aaron Jackson, a Bentley University economist who also reviewed AP’s analysis.”

“Even within the construction industry, which stood to benefit most from transportation money, the AP’s analysis found there was nearly no connection between stimulus money and the number of construction workers hired or fired since Congress passed the recovery program. The effect was so small, one economist compared it to trying to move the Empire State Building by pushing against it.”

This last month we were surprised to learn that 85,000 jobs were lost.  It was supposed to be the first month in two years that we had positive job growth.  Now, with the poor economic progress, Obama is planning a second stimulus bill to give the appearance that he is doing something to solve the problem.  Will another stimulus plan bring unemployment below 10%?

Compare the result of the pork stimulus bill to the results of the Bush tax cuts.  In the six months leading up to the 2003 Bush tax cuts we lost 267,000 jobs.  In the six months after the 2003 tax cuts we gained 307,000 jobs.  We went from 1.7% GDP growth to 4.1%.   And before you argue about Bush’s tax cuts increasing the deficit, it took Obama 7 months to increase the deficit more than Bush did in 7 years.

If we want economic growth we need to take more money out of the hands of government and put it in the hands of small businesses and individuals.  How long until the experts figure out that Cap and Trade, mandatory insurance, and more pork bills are not going to fix our economy?

Only Government Can

Only government can build a rocket that would take us to the moon.  I’m not sure how many times I’ve heard that argument recently being applied to universal healthcare, the economy, ending global warming through oppressive taxes, etc.  Of course, this begs the question, why would any private enterprise want to go to the moon?  For the billions of dollars we have spent to send a man to the moon, the best thing we can claim out of it are some cool pictures and stories, definite proof that the Earth is round, an early real estate claim on lifeless rock (with no ocean view), and that we got there before the Soviets.  (Mommy, Mommy, what’s a soviet?  Ask your Grandpa, dear)

On the other hand, we put men in conditions that OSHA would never allow today, lost several men and women in rocket related disasters, violated all sorts of affirmative action quotas with our majority white male astronaut population, and probably caused more global warming with each rocket launch than you could in three lifetimes with your SUV, regular lightbulbs, occasional steak dinner, and failure to recycle.  When you start paying an extra $150 a month in your utility bill to fund Cap and Trade legislation, you can at least look up at the moon at night and say “hey, someone’s been there.”

I suppose that’s really why only government could go to the moon.  Not so much that NASA costs hundreds of billions of dollars with almost no financial return, meaning that no one would invest in it unless under compulsion.  More that with all the government regulation of private enterprise, only a government entity could get away with building something that burns tons of fossil fuels to create a hazardous explosion strong enough to send a group of white males into space.  If NASA had the same EPA regulations as the US private auto industry, we’d eventually have to sell our space shuttle production to Fiat too.

Can only government solve our economy?  That was the claim when Bush bailed out the banks. That was the charge from the Obama administration when they put together the $700 billion dollar pork stimulus bill.  Only the Government could take us to the moon, therefore, only the government can fix the economy.  We weren’t borrowing enough to keep our economy rolling along, so the government borrowed for us.  We weren’t buying enough cars and houses, so the government kept those bubbles artificially inflated through subsidies.  We weren’t getting jobs, so the government took our money and hired a bunch of us on short term government projects (in some cases in districts that don’t even exist).

Can only government make sure everyone is insured?  Why not, only government could make sure that everyone had a decent retirement.  Now our seniors get Social Security and they are no longer the poorest demographic in our country.  Instead, the poorest demographic are young people.  But at least those young people will grow up to have Social Security some day.  Right?

Get ready, the stage is set.  Only government can reduce unemployment.  Already Obama has attacked small businesses for being so greedy that they are not hiring people.  Nevermind that if you hire someone for $12 an hour you will end up paying twice that to cover their Social Security, Medicare, Obamacare, unemployment compensation tax, workers comp, and lawsuit when you discriminate against them and fire them for not showing up.

Actually, in this case, only government can reduce unemployment.  They can do that by no longer increasing unemployment.  Unlike a walk on the moon, in many cases hiring more workers can be very profitable.  When the economy is good and people are buying your products, unless you have no profits because you are paying them all in taxes, you are going to invest in a larger workforce.  It’s economics 101.

Unfortunately, the government is not interested in building a strong free economy.  We have a government that runs on the premise that only government can regulate businesses, only government can create jobs, only government can solve a crises, and only government can ensure your healthcare, welfare and retirement.  We have a government that made teens, college students, and veterans as unemployable as convicts and people with massive disabilities by artificially increasing the wage base in every state regardless of that state’s economy.  We have a government that takes 15% of your income straight off the top in order to fund your grandparents retirement.  We have a government that illegally and unconstitutionally favors union bosses in exchange for votes.  And of course we have a government that levies oppressive taxes on small and large businesses so that we can build large rockets and buy billions of dollars worth of fossil fuels to hurl them into space.

Don’t get me wrong.  This is not a critique of NASA.  God knows I appreciate the childhood dreams of seeing the Earth from space, a weightless environment, and wearing one of those cool space suits.  And we have many great technological inventions from our space explorations, such as dried ice cream and the ability to fly nuclear warheads all the way around the world in matters of minutes.  But when it comes to things that have tangible value to our real lives, such as creating jobs, insuring our families, saving for retirement, and borrowing at levels that are in line with our values, I think we should be able to manage such things on our own.