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August 31, 2012

GAO Finds More Duplication in Federal Government

That may not surprise most Growls readers, but it does reveal the continued fecklessness of virtually all Congressional politicians in rooting out waste, fraud, and abuse in the federal government. According to a story yesterday in the Federal Times, “GAO finds duplication in programs intended to help new entrepreneurs.” The Federal Times story begins:

“The government has dozens of programs that overlap in their efforts to help Americans start new businesses, the Government Accountability Office says in a new report.

“Four agencies — the Small Business Administration and the Commerce, Housing and Urban Development, and Agriculture departments — offer 52 different economic development programs that help entrepreneurs create business plans, learn to manage start-ups and obtain funding, according to the Aug. 23 report.

“Many of the programs overlap in the types of technical and financial assistance they provide. For example, 24 of the programs offer entrepreneurs in any industry a range of technical assistance, such as business training and counseling. Sixteen programs offer loans to entrepreneurs in any industry.

“Many programs target similar entrepreneurs, in particular businesses in rural areas, businesses in economically distressed areas, disadvantaged businesses and small businesses.

“Since programs overlap, an entrepreneur could receive assistance from multiple programs, the report shows. For example, a small business in a rural, economically distressed area, such as Susquehanna County, Pa., could receive technical assistance through at least nine programs, GAO said.”

But Congress’s fecklessness is not alone. It’s joined by the White House. According to the Federal Times:

“USDA and SBA entered into a formal agreement in 2010 to coordinate their programs for businesses in rural areas; however, the agencies have not yet defined their responsibilities, found ways to leverage their resources or established compatible policies, the report said.”

The 52 programs reviewed by GAO are funded with $2 billion of your tax dollars, as noted in the GAO report (GAO-12-819, dated August 23, 2012).

Imagine the waste in just this small sliver of the federal government ($2 billion for a small number of programs is small?). Then multiply it by the waste in the virtually countless number of federal programs. It may not be sufficient to make a significant dent in the federal deficit, but it would be a start. But, will Congress and the executive branch even try?

August 30, 2012

New Chapter of Arlington County Playing Reverse Robin Hood

The online Arlington Patch’s Jason Spencer has a story posted that says Arlington County will spend $80,000 “to expand a program that helps cover the costs to property owners who reduce stormwater runoff through practices like rain gardens or replacing pavement with permeable pavers.” According to Spencer:

“The county was awarded an $80,000 grant this week through the Chesapeake Bay Program to expand its StormwaterWise Landscapes Program, which incentivizes such practices. Arlington County Board Vice Chairman Walter Tejada said at the time the county was "delighted" to work with groups dedicated to protecting the bay and its tributaries, and pledged that Arlington would continue to do its part.

“The StormwaterWise Landscapes Program launched this year as a pilot program and received about 110 applicants. Forty were chosen through a lottery system.”

Let me get this straight, remembering that money is fungible. Take tax money at McDonalds from a large family living in a small rental apartment with no yard, etc., and give it to people with a million dollar house who want to go green with other people's money As always, the Arlington County Board is happiest when money is going thru its hands. It doesn’t matter whether it’s from the rich to the poor or poor to the rich.

Resources: More information about Arlington County's so-called StormwaterWise Landscape Program is available at this webpage.

August 29, 2012

Growth in Arlington County Board's Slush Fund?

The online Arlington Sun Gazette reported this morning that "(s)ales-tax revenue distributed from the state government to Arlington in the fiscal year ending in June was up 4.7 percent over a year before, and exceeded both the county government’s budgeted amount and projections of the county treasurer’s office." The news item went on to say:

"A total of $38,630,486 was distributed to Arlington based on retail sales recorded in the county in fiscal 2012, according to figures from Treasurer Frank O’Leary. That’s up from $36,889,895 transmitted from the state to the county government in fiscal 2011.

"County officials had budgeted for $36,850,000 during the fiscal year, while O’Leary had anticipated $38,054,135 in revenue.

"O’Leary said the amount of retail sales in the county during the fiscal year was something the community should applaud.

“Arlington’s businesses have once again proven their stability and worth to our community,” he told the Sun Gazette. “They can be rightfully proud of their success.”

Let's do the math: $38.6 million collected minus $36.85 budgeted means the County Board potentially has an additional $1.78 million to spend for "one-time expenditures" later this year. And while the Treasurer is correct that taxpayers should "be rightfully proud" of the success of "Arlington's businesses," Mr. O'Leary's comments sound far too statist. Rather than producing more tax revenue for local government, our political leaders should be concerned with greater freedom, liberty, and prosperity.

August 28, 2012

Thought for the Day

"If you look carefully at those who are attacking “the rich” for not paying high enough tax rates and having some of their money outside the United States, you will find people who are economically ignorant, hypocritical or just making silly arguments."

~ Richard W. Rahn, Senior Fellow, Cato Institute and Chairman, Institute for Global Economic Growth

HT Rahn's August 28, 2012 Washington Times Column

August 27, 2012

It’s a Bad Idea When . . . .

A story was posted to the Washington Examiner website last evening (HT ARLnow) discussing a video  that cost Arlington County taxpayers $3,400 so the Arlington County Board masterminds could promote their ‘next generation of transit' vanity project. The Examiner news item began by saying:

“As existing streetcar lines continue to struggle, Arlington County officials are forging ahead with plans for their impending lines, even spending thousands of dollars to create a video promoting them.

“Officials spent $3,400 to make a video called "the next generation of transit," because they felt there was a general "lack of public awareness and education" surrounding the streetcars, said Arlington spokeswoman Shannon Whalen McDaniel.

“In addition to creating animated depictions of the lines running through the county, officials hired contractors in Portland, Ore., to shoot footage of their streetcars and interview business owners and riders who use the system to include in the video.

"Arlington is choosing to invest in streetcars, just as it invested a half-century ago in Metrorail," the video says, noting its commitment to Metrorail transformed the community from a fading innersuburb to a dynamic model of transit-oriented development.

“The video also says property values around streetcar lines are expected to increase in value, but Marcia Mejia, a spokeswoman for a streetcar line in Tampa, Fla., said declining property values have led officials there to delay services.”

The County Board has approved the Columbia Pike streetcar initiative, but yet the bureaucrats still want to increase “public awareness and education.” Just who do they want to educate? The many residents who have taken strong positions opposing the trolley?

Let me get this straight. The masterminds spent taxpayers money promoting the Loop Bridge in Rosslyn, which we now know they screwed-up and we didn't need, a Home Depot in Clarendon, which fortunately, was turned back by the residents with their own resources, and a baseball stadium in Crystal City, which county taxpayers  have done quite well without. Perhaps the five masterminds should listen to the taxpayers more rather than viewing them as a source of vanity project funding.

The Board masterminds should take a few minutes to read the staff report that said Clarendon would fail without Home Depot as an anchor!

Reference. Mr. O’Toole’s paper about the “streetcar conspiracy” mentioned in the Examiner can be accessed at our August 16, 2012 Growls.

August 26, 2012

Is the Real War the ‘War on Children’?

The inimitable Mark Steyn argues in his weekend column posted at Investor’s Business Daily that there is no “war against women.” After devoting more than half of the column to knocking down the progressive argument about a “war on women,” he gets into the “fiscal stuff.” For example:

“A "non-partisan" Pew Research study says the American middle class faces its "worst decade in modern history" — and the first bump down starts on Jan. 1. The equally "non-partisan" Congressional Budget Office now says that the tax and budget changes due to take effect at the beginning of 2013 will put the country back in recession and increase unemployment. This is a revision of their prediction earlier this year that in 2013 the economy would contract by 1.3%. Now they say 2.9%.

“These days, CBO revisions only go one way — down. They're gonna need steeper graph paper. In a global economy, atrophy goes around like syphilis in the Gay Nineties: A moribund U.S. economy further mires Europe, and both slow growth in China, which means fewer orders for resource-rich nations . . . Four wheels spinning in the mud, and none with a firm enough grip to pull the vehicle back on to solid ground.”

He then closes with this stinging analysis:

“Indeed, the bloating of government, of entitlements, of debt, and the growth in obesity track each other pretty closely over the last four decades. If all those debt graphs showing how we've looted our future to bribe the present are too complicated for you, look out the window: We're our own walking (or waddling) metaphor for consumption unmoored from production.

“And, to the Chinese and many others around the world pondering whether America has the self-discipline to get its house in order, a trip to the mall provides its own answer.

“So we can't fight a war in Afghanistan, but we can fight a "war on women" that only exists in upscale liberal feminists' heads. We can't do anything about exploding rates of childhood obesity, diabetes and heart disease, but, if you define "health care" as forcing a Catholic institution to buy $8 contraception for the scions of wealth and privilege, we're right on top of it.

“And above all, we're doing it for the children, if by "doing it" you mean leaving them with a transgenerational bill unknown to human history — or engaging in what Boston University's Larry Kotlikoff, speaking at the International Institute of Public Finance in Dresden last week, called "child fiscal abuse."

“If that sounds a trifle over-heated, how about ... hmm, "legitimate fiscal rape"? No? Then let's call it a "war on children." Unlike the "war on women," it's real.”

Need I say more?

To read more about “fiscal child abuse,” see this October 19, 2011 article by Kotlikoff at Project-Syndicate.” Or, here's Mr. Kotlikoff's August 8, 2012 Bloomberg column in which he writes:

"Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade.

"In the course of that year, the U.S. government’s fiscal gap -- the true measure of the nation’s indebtedness -- rose by $11 trillion."

And his Forbes August 11, 2012 column where he writes:

"Mitt Romney’s choice of Paul Ryan for VP shows he’s serious about protecting our children from the ongoing fiscal child abuse that six decades of Republican and Democratic administrations have taken turns practicing."

UPDATE (8/26/12): A year ago on June 30, 2011, we growled about "America's Fiscal War Against Children," and cited one of Mr. Kotlikoff's Bloomberg columns.

August 25, 2012

Even Worse Than Economic Stagnaton?

Bloomberg's Jeff Kearns reports on an analysis of U.S. Census Bureau data by Sentier Research LLC on Thursday, saying:

"American incomes declined more in the three-year expansion that started in June 2009 than during the longest recession since the Great Depression . . . .

"Median household income fell 4.8 percent on an inflation- adjusted basis since the recession ended in June 2009, more than the 2.6 percent drop during the 18-month contraction, the research firm’s Gordon Green and John Coder wrote in a report today. Household income is 7.2 percent below the December 2007 level, the former Census Bureau economic statisticians wrote.

"Almost every group is worse off than it was three years ago, and some groups had very large declines in income,” Green, who previously directed work on the Census Bureau’s income and poverty statistics program, said in a phone interview today. “We’re in an unprecedented period of economic stagnation.”

More precisely, Kearns wrote:

"Real median annual household income fell to $53,508 from $54,916 during the 18-month recession from December 2007 to June 2009, according to the firm’s study of income data for the 36- month period ended in June 2012. Incomes kept falling during the 36-month period since then, dropping to $50,964 in June 2012."

Meanwhile, in an editorial this weekend, the Wall Street Journal was even more precise -- entitled "Negative $4,019" (subtitled, "The Obama years have been brutal on middle-class incomes.")." The editorial began this way:

"The Presidential race is boiling down to one dominant issue: which party's policies will do more to help the financially stressed American middle class. President Obama's campaign theme is that Mitt Romney and the Republicans cater to the rich, while Mr. Obama cares about struggling families.

"He may care, but he sure hasn't done much for them. New income data from the Census Bureau, tabulated by former Census income specialists at the nonpartisan economic consulting firm Sentier Research, reveal that the three-and-a-half years of the Obama Presidency have done enormous harm to middle-class households."

The following chart is from the Journal's editorial:

Think it can't get worse? You could be wrong, however. The Wall Street Journal's economic blog reports that "new jobs come with lower wages," citing a new Labor Department report. The blogger, Sudeep Reddy wrote:

"From 2009 to 2011, 6.1 million workers lost jobs they had held for at least three years. Just over half — 56% — of them were reemployed by this January, the department found in its latest survey of displaced workers. Two years ago, the survey found that 49% of people who lost such jobs from 2007 to 2009 were reemployed.

Could the "fiscal cliff" and Taxmageddon be even worse than the Great Depression?

August 24, 2012

'Mood Disorders' at the Social Security Administration?

At CNS News today, Terry Jeffrey reports on the annual statistical report on federal disability insurance that the Social Security Administration released last month. Jeffrey reports that "at the end of 2011 there was a then-record of 8,575,544 workers collecting federal disability benefits and among them were 1,304,851 doing so because they suffered from 'mood disorders.'" He then goes into further detail, saying:

"The incidence of “mood disorders” among disability beneficiaries was not proportionately distributed among the states and territories, according to the official SSA statistics. Some locations had much higher percentages of disability beneficiaries diagnosed with mood disorders than other locations.

"In American Samoa, for example, only 3.1 percent of the workers collecting federal disability benefits had been diagnosed with a “mood disorder.” In Puerto Rico, by contrast, 33.3 percent of disability beneficiaries had a mood disorder.

"Massachusetts led the 50 states for disabling mood disorders. In that state, 22.8 percent of disability beneficiaries had been diagnosed with a mood disorder. New Hampshire was second with 22.2 percent, and Rhode Island was third with 20.7 percent.

"Among the states, North Dakota--with 9.2 percent--had the lowest percentage of disability beneficiaries diagnosed with a mood disorder. Louisiana was second from the bottom with 9.7 percent, and Montana was third from the bottom with 9.8 percent."

Jeffrey also adds: "According to the SSA report, 11.2 percent of men collecting disability were doing so for a mood disorder and 19.7 percent of the women collecting disability were doing so for a mood disorder."

Makes you wonder if the diagnosis of "mood disorders" was identified through the Social Security Administration's "Compassionate Allowances" program. You can read more about the program at this SSA webpage. But no, "mood disorder" is not one of the 165 "compassionate allowances conditions" currently listed at this SSA webpage. By my cursory count, there are 52 conditions that were added "effective August 11, 2012." From the SSA description of the Compassionate Allowances program, it appears the program was put in place to work around SSA's bureaucracy. So, rather than reducing bureaucratic bloat in order to effectively and efficiently deliver disability benefits, the Commissioner puts in place additional bureaucracy.

August 23, 2012

A U.S. Tax System Tutorial, and Who Really Pays?

The market-oriented Manhattan Institute has a very informative tutorial about the U.S. income tax system. Written by Stephen Moore, senior economics writer at the Wall Street Journal and author of the forthcoming book, "Who's the fairest of them all?, Moore supplements the tutorial with many helpful charts.

He begins with a 1963 quote by President John Kennedy, and continues from there:

“It is a paradoxical truth that tax rates are too high today, and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the tax rates…. [A]n economy constrained by high tax rates will never produce enough revenue to balance the budget, just as it will never create enough jobs or enough profits.” —John F. Kennedy, 1963 (italics in the original)

"Even if most policymakers and members of the public instinctively understand the wisdom of President Kennedy’s words, tax rates are set to go way up, not down, next year because of the scheduled expiration of the Bush tax cuts at the beginning of 2013. The Obamacare law also raises tax rates on wealthy individuals by an additional 3.8 percentage points next year. President Obama and others in Congress argue that these higher tax rates are justified because of the growing consensus that the rich don’t pay their fair share of taxes. Unless we do something to spread the burden more equitably, the argument goes, American society will become more unfair and the economy more unsustainable with each passing year."

Although the overall paper is 12 pages, it's a rather easy read. It's structured around "a series of statements reflecting popular conceptions and misconceptions about the impact of tax rates on economic productivity and fairness" addressing the "statements (and debunk attendant myths) one at a time." For example, statements such as:

  • To become fairer, the tax code needs to tax the rich more heavily;
  • Tax cuts are just Robin Hood in reverse, taking from the poor to give to the rich;
  • Lower tax rates can make the tax burden fairer;
  • Ordinary Americans pay more than their fair share of taxes; or,
  • It is increasingly harder to climb the economic ladder, and changing the tax code will help.

As noted above, Moore's paper has very many helpful charts, perhaps none more so than the following one, which shows the United States taxes it's "rich" more than "many of the more socialized economies of Europe" although "taxes are 10 to 20 percent lower in the United States than they are in most other industrialized nations."

After spending time with Moore's paper, you'll be able to explain to your liberal/progressive friends the correct facts about who really pays taxes. Moore may even encourage you to read "Who's the fairest of them all?" when it is published. A check of Barnes & Noble and Encounter Books shows it is not yet available.

August 22, 2012

CBO Puts Taxmageddon and Fiscal Cliff on Public's Radar

The Congressional Budget Office (CBO) released its report, “An Update to the Budget and Economic Outlook: Fiscal Years 2012 to 2022” today, according to a post at the CBO Director’s Blog. Issued annually in the late summer, the report provides “the agency’s updated economic and budget projections spanning the period from 2012 through 2022.

They also published an infographic, which condenses the report into a single graphic -- showing the economic consequences of fiscal tightening in 2012. CBO also provides a 14-slide briefing document and a 45-minute video clip of the CBO Director’s appearance on C-SPAN talking about the updated budget and economic outlook.

In short, the CBO Director said:

“In January 2013, substantial changes to tax and spending policies are scheduled to take effect under current law. Whether lawmakers allow those policy changes to take effect or alter them will play a crucial role in determining the path of the federal budget over the next decade and the outlook for the economy in the near term and beyond.

“If those changes come to pass, they will boost tax revenues and cut spending, yielding a deficit in 2013 almost $500 billion less than the $1.1 trillion shortfall projected for 2012. As shown in the first figure, if current laws governing taxes and spending remain in effect over the next decade (CBO’s baseline projection), debt held by the public will fall from 73 percent of GDP in 2012 to 58 percent of GDP in 2022. In contrast, if policymakers altered those laws to maintain many policies that have been in effect in recent years (CBO’s alternative fiscal scenario), deficits would be much larger and debt would climb to nearly 90 percent of GDP by 2022. (In either case, debt would be relatively high by historical standards.)

“In CBO’s judgment, the sharp increases in federal taxes and reductions in federal spending that, under current law, are scheduled to begin in calendar year 2013 are likely to interrupt the recent economic progress, resulting in what will probably be considered a recession That forecast is summarized in the table below.”

CBO forecasts economic growth (“under current law”) of 2.1% for 2012, -0.5% for 2013, 4.3% for the years 2014-2017, and drop to 2.4% for the years 2018-2022. On unemployment rates, CBO projects an 8.2% rate for all of 2012, increase to 9.1% in 2013, and drop to 5.7% and 5.3% in the out years. I’m not sure I’d bet the family farm on those numbers. However, take the time to become more familiar with the federal budget and economy than virtually all of your neighbors.

August 21, 2012

Unsure What Ruling by Presidential Decree Means?

If you're not sure what it means to rule by decree, then Thomas Sowell’s column today at Investor’s Business Daily is absolutely a 'must read.' He begins:

“There are some very serious issues at stake in this year's election — so many that some people may not be able to see the forest for the trees. Individual issues are the trees, but the forest is the future of America as we have known it.

“The America that has flourished for more than two centuries is being quietly but steadily dismantled by the Obama administration, during the process of dealing with particular issues.

“For example, the merits or demerits of President Obama's recent executive order, suspending legal liability for young people who are here illegally, presumably as a result of being brought here as children by their parents, can be debated pro and con. But such a debate overlooks the much more fundamental undermining of the whole American system of constitutional government.”

As Dr. Sowell explains, “No president of the United States is authorized to repeal parts of legislation passed by Congress. He may veto the whole legislation, but then Congress can override his veto if they have enough votes. Nevertheless, every president takes an oath to faithfully execute the laws that have been passed and sustained — not just the ones he happens to agree with.”

In addition to his immigration ruling, the President has also waived provisions of the No Child Left Behind Act as well as the work requirements of welfare reform, according to Sowell. He concludes the column by writing:

“John Stuart Mill explained the dangers in that kind of government long ago: "A government with all this mass of favours to give or to withhold, however free in name, wields a power of bribery scarcely surpassed by an avowed autocracy, rendering it master of the elections in almost any circumstances but those of rare and extraordinary public excitement."

“If Obama gets re-elected, he knows that he need no longer worry about what the voters think about anything he does. Never having to face them again, he can take his arbitrary rule by decree as far as he wants. He may be challenged in the courts but, if he gets just one more Supreme Court appointment, he can pick someone who will rubber stamp anything he does and give him a 5-to-4 majority.”

If you expect to vote for president in November, this column is a ‘must read.’  If you haven’t previously read anything by Dr. Thomas Sowell, you’ll quickly understand why Kyle Stone, in a column about the ten best conservative columnists at PJ Media's blog, describes Sowell as “eminently logical.” And you will certainly understand why our country's future is at risk.

August 20, 2012

Another Month, New Porkers of the Month

Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.

New Porkers of the Month have been named by Citizens Against Government Waste (CAGW). The August 2012 Porkers are Senate Appropriations Committee Chairman Daniel Inouye (D-Hawaii) and Ranking Member Thad Cochran (R-Miss.). The two Senators were awarded the dubious honor "for including a $380 million earmark for the wasteful and widely-criticized Medium Extended Air Defense System (MEADS) in the Senate Appropriations Subcommittee’s version of the fiscal year (FY) 2012 Department of Defense (DOD) spending bill.  The earmark was included in the bill despite being rejected by the House Armed Services Committee, the House Defense Appropriations Subcommittee, and the Senate Committee on Armed Services (SCAS)."

CAGW's justification included the additional background below:

"The senators’ smarmy move comes on the heels of a letter from Defense Secretary Leon Panetta to the Senate Appropriations Committee urging further funding for MEADS, which is being developed jointly with Germany and Italy.  Sec. Panetta stated that cancelling the program would “negatively affect allied willingness to join future cooperative endeavors, [and] likely would lead to a dispute with Germany and Italy, both of which have indicated that they would assert that the United States has unilaterally withdrawn from the [Memorandum of Understanding] (MOU).”

"However, a confidential DOD report to the SCAS in April 2012 and obtained by CAGW concluded that the U.S. can withdraw from the contract without committing additional money or paying termination fees.  The report cited language in the 2005 MOU among the three countries stating that activities related to MEADS were subject to “the availability of funds appropriated for such purposes.”  The DOD interpreted this to mean that if Congress fails to appropriate funding for MEADS, the U.S. can extricate itself from the program without penalty.  In other words, the objections of Germany and Italy would not matter.

"The Obama Administration has previously advocated cancelling MEADS after the completion of the so-called Proof of Concept phase that was to run for two years ending after fiscal year (FY) 2013. To this end, the President requested $400.9 million for MEADS.  Secretary Panetta also indicated his preference for the U.S. to complete funding for the final year of the Proof of Concept before cancelling the program.

“Since no authorization exists for MEADS, the funding added by the Senate subcommittee clearly qualifies as an earmark under CAGW’s longstanding criteria,” said CAGW President Tom Schatz.  “Eliminating MEADS would be a good start in trimming waste regardless of whether sequestration occurs or not.  The continuation of its funding by the Senate Defense Appropriations Subcommittee represents a squandered opportunity.”

Express your outrage by calling the Capitol Hill offices of Senator Inouye at (202) 224-3934, or call Senator Cochran at (202) 224-5054.

August 19, 2012

Income Inequality vs. Inequality of Life Spans

It’s not just the radicals in the Occupy Wall Street protest movement, but many on the political left who seem absolutely obsessed with income inequality. For example, this article in the March/April 2011 issue of Mother Jones uses 11 charts to “explain what’s wrong with America.”

But President Obama is equally concerned with income inequality, as evidenced by his December 2011 speech in Osawatomie, Kansas, in which he mentions “inequality” at least six times.

With that as context, a recent article posted in the Library of Economics and Liberty by economist Dwight Lee is of interest. He asks, “Should government reduce inequality in life spans?” He begins the article this way:

“The concern that so many people have over large inequality of income is puzzling for two reasons. First, some of those most adamantly in favor of reducing income inequality using government taxation and transfers also dismiss the importance of additional income for most people. They tell us that money doesn't buy happiness once we have such basics as adequate housing, food, clothing and access to health care (which is different than having health insurance). Because the vast majority of Americans have these basics, the focus on income inequality does not make much sense.

"The second reason this focus is puzzling is that there is a far more important inequality: that is the inequality in life expectancy. Precisely because income in excess of a fairly modest income (modest, at least, by U.S. standards) is not very important, what matters more for happiness is the amount of time we have on this earth to be happy. Few would deny that a few additional years of life would be more precious to most Americans than the extra money they might receive from government transfers. If inequality in things that matter is important, there is a basic inequality that the worriers about inequality should be paying attention to: the inequality in life expectancy between men and women.”

Readers can read the entire article, which is only four pages long, to obtain Lee’s well-reasoned explanation. According to Lee, “research on the economics of happiness” is what led to the idea for his article. To bring this Growls full-circle, here is Lee’s concluding paragraph:

“Gender inequality in life expectancy is something that government's forced transfers can do little, if anything, to reduce. Fortunately, politicians have not yet seen an electoral benefit from attempting to reduce this inequality. Greater longevity for men is desirable independent of comparisons with the longevity of women, and it is best achieved when government is largely limited to enforcing the general rules of private property and voluntary exchange that promote freedom and prosperity. By contrast, politicians have found it politically advantageous to exaggerate income inequality and convince the public that it is a serious problem demanding more government transfers. The reality is that political attempts to reduce income inequality with transfers are frustrated by the same considerations that would frustrate an attempt to reduce gender inequality in life expectancy with transfers. Helping the poor by reducing poverty is desirable independent of comparisons with the wealth of the rich. And, as with greater longevity for men, improving the income of the poor is best achieved by the freedom and prosperity that result when government is restricted to enforcing the general rules of private property and voluntary exchange.” (emphasis added)

References. In addition to those cited by Lee in the article, readers can turn to this article on the income-inequality myth by Michael Tanner or this post by Scott Hodge at the Tax Foundation’s blog that says, “Census data shows inequality linked to education, not taxes.”

August 18, 2012

Why Markets Hate Uncertainty?

Because of the poor economy over the past few years, many pundits ascribe a lot of the cause to uncertainty. For example, in a column posted at MarketWatch yesterday, Kirk Spano counseled about the need for a “balanced alternatives during uncertainty.” But exactly what is meant by uncertainty?

Let’s turn to business and financial historian John Steele Gordon, who recently lectured about the economic lesson from American history. The lecture was adapted for the July 2012 issue of Imprimis (requires Adobe), a publication of Hillsdale College.

One of the lessons is that “markets hate uncertainty.” That portion of the lecture follows:

“The Great Depression that started in the fall of 1929 ended, at least technically, in early March 1933. The stock market, almost always a leading indicator, had bottomed out the previous June, down 90 percent from its high in September 1929. 1933 would be the second best year for the Dow Jones average in the entire 20th century, coming off, of course, a very low base.

“But recovery was very slow in coming. Unemployment, over 25 percent in 1933, was still at 17 percent as late as 1939. Indeed, in 1937, when the economy suddenly turned south again, there was a problem: what to call the new downturn. Most people thought the country was still in a depression, so that word wouldn’t do. But economists, delighted to have a problem that they could actually solve, came up with the word “recession,” and that’s what we have been using ever since.

“Usually, when there has been a steep decline in economic activity, recovery is equally steep. The valley is V-shaped. That is what happened in 1920, when there had been a severe post-war depression and then a strong recovery. So why was the recovery so slow in the 1930s? One reason, according to an increasing number of economic historians, is that Franklin Roosevelt had a bad habit of changing his mind. While highly intelligent, he was no student of economics and seldom read books as an adult. So much of his program was, essentially, seat- of-his-pants policy. First there was the National Recovery Administration, which amounted to a vast cartelization of the American economy. When the Supreme Court threw it out—by a unanimous vote—FDR moved on to other remedies, including big tax increases on the rich.

“But markets, which can function even in disaster with ruthless efficiency, hate uncertainty. When uncertainty regarding the future is high, they tend to tread water. As a result, there was what is known as a “strike of capital.” While corporations often had large cash balances—General Motors made a profit in every year of the Great Depression—and banks had money to lend, there was little investment and few loans made. Both the banks and the corporations were too uncertain about what the government was going to do next.

“That is precisely what is happening today. Banks and corporations have plenty of money. Apple alone is sitting on about $100 billion worth of corporate cash. And yet the recovery from the crash of 2008 has been tepid at best. The valley is U-shaped. Undoubtedly a big reason for that is the enormous uncertainty that has plagued the country since 2008. Will health care—one-sixth of the American economy—be taken over by the folks who run the post office? Will the Bush tax cuts be ended or continued? Will the corporate income tax go up or down? Will manufacturing get a special tax deal? Will so-called millionaires—who, when you listen carefully to what liberal politicians are saying, can earn as little as $200,000 a year—be forced suddenly to pay “their fair share”?

“Who knows? So firms and banks are postponing investment decisions until the future is clearer. Perhaps the clearing will happen on November 6.”

"Imprimis is the free monthly speech digest of Hillsdale College and is dedicated to educating citizens and promoting civil and religious liberty by covering cultural, economic, political and educational issues of enduring significance.  The content of Imprimis is drawn from speeches delivered to Hillsdale College-hosted events, both on-campus and off-campus.  First published in 1972, Imprimis is one of the most widely circulated opinion publications in the nation with over 2.5 million subscribers." Subscription is free upon request.

August 17, 2012

Thought for Today

"Unless we defend the moral right of the rich to own and enjoy all of their property without fear or guilt, we will not have the moral right to keep and enjoy ours, and the U.S. will cease to exist as a free country."

~ Arnon Rosenthal

HT His August 16, 2012 Column at American Thinker

August 16, 2012

Columbia Pike Streetcar Post-Mortem

For more information about the Columbia Pike streetcar, we growled on June 17, July 8, and July 20, 2012. Most include background information as well as links to county documents.

The Arlington Sun Gazette editorial page today gives a "thumbs up" to the Fairfax County Board of Supervisors. Why?

" . . . for being honest about the real purpose of the planned Columbia Pike streetcar system.

"In reiterating its support for the five-mile, quarter-billion-dollar transit line two weeks ago, the supervisors who voted in favor (it was a 7-2 vote, with one abstention) made it clear that economic-development issues were the biggest factor in their decision.

"Building the line, they say, will help in the redevelopment of the Baileys Crossroads corridor."

But then the editorial questions the motives of the Arlington County Board, saying:

"Contrast this with the Arlington County Board, clinging to its mantra – despite the evidence – that the whole project is mostly about transportation. Anybody believe that?

"There continue to be persuasive arguments, both pro and con, about the streetcar system. But in having the discussion, we would prefer that proponents be as honest as the Fairfax supervisors were: This is mostly an economic-development project.

"There’s no sin in that, yet Arlington officials seem leery of acknowledging it."

What is the likelihood, however, that the dreams of the Board masterminds will bear fruit for county taxpayers? An article in yesterday's Wall Street Journal by Caroline Porter notes:

"Other cities have had less operational success with their projects. Last year, officials in Tampa, Fla., scaled back the hours of operation and the frequency of rides in order to balance the annual $1.3 million operating budget for a 2.7-mile streetcar, according to Marcia Mejia, public information officer for the area's regional transportation agency. Ridership numbers for a streetcar in Little Rock, Ark., were 112,000 per year, rather than the estimated 130,000. City officials say construction work hampered its usage."

Mr. Randal O'Toole, who is quoted in the Wall Street Journal article, summarizes the executive summary of the study (Policy Analysis No. 699, June 14, 2012), also cited in the Journal article, this way:

"Streetcars cost roughly twice as much to operate, per vehicle mile, as buses. They also cost far more to build and maintain. Streetcars are no more energy efficient than buses and, at least in regions that get most electricity from burning fossil fuels, the electricity powering streetcars produces as much or more greenhouse gases and other air emissions as buses.

"Based on 19th-century technology, the streetcar has no place in American cities today except when it functions as part of a completely self-supporting tourist line. Instead of subsidizing streetcars, cities should concentrate on basic — and modern — services such as fixing streets, coordinating traffic signals, and improving roadway safety."

Arlington taxpayers, unfortunately, will have to wait to learn whether the County Board masterminds have launched their latest vanity project, not to mention the final costs, which almost always seem to increase astronomically.

August 15, 2012

$47 Million in Stimulus Money Creates Zero Jobs

The following graphic appeared at the Foundry blog with their report on how stimulus money was used by some rural utilities.

Lachlan Markay of the investigative reporting unit of the Heritage Foundation's blog, The Foundry, reports:

"A stimulus program designed to create jobs by funding rural utility projects has created only about 12% of the jobs projected at the outset of the program in a sample of towns recently examined by the Agriculture Department’s Inspector General.

"The IG examined 22 local utilities and government agencies to receive stimulus money. The Rural Utilities Service (RUS), a division of the USDA, projected that the sample of companies would create 3,384 jobs. To date, however, those companies have used their stimulus awards to create a mere 415 jobs."

But here's the wacky part of story enters the picture:

"Some of the recipients have not used their stimulus awards to create a single job. The Wholesale Water Commission of Atchison County, Missouri, for instance, received a $22 million stimulus award, but has yet to even begin construction on the project for which the money was earmarked. Result: no jobs created.

"The cities of Elkins, WV; Thomasville, AL; Ruidoso Downs, NM; Big Bend, WV; and City of War, WV, likewise have not created a single job between them, despite having been obligated, with Atchison County, a combined $47 million in stimulus funding through the RUS."

Markay also makes the following important point:

"While proponents of the stimulus would likely point to even this tepid job creation as a success, the effectiveness of economic stimulus is generally gauged against alternatives. In this case, the issue is not whether jobs have been created at all, but rather how many jobs these funds could have created if they had not been drained from the private sector or piled on top of the federal government’s record-high national debt.

“Every dollar Congress injects into the economy must first be taxed or borrowed out of the economy,” explained Heritage’s Brian Riedl in a 2010 Backrounder. “No new spending power is created. It is merely redistributed from one group of people to another.” That redistribution likely creates few jobs, and may even be a net drag on employment.

"But while this RUS program, like a number of the stimulus’s attempts at job creation, has performed remarkably poorly, a primary purpose of the President Obama’s first legislative initiative was not immediate job creation, as Scribe has noted, but in fact geared towards long-term left wing objectives."

There is also a spreadsheet of the 22 rural utilities that were sampled by the USDA IG, and includes both the projected number of jobs created and the number actually created for each utility. All that stimulus money really worked, didn't it? Read it and weep!

Resources: the source for Markay's reporting is the USDA's Inspector General's report titled "Rural Utilities Service’s Controls over Water and Waste Disposal Loan and Grant Program for the Recovery Act" (number 09703-0001-AT, dated July 24, 2012, requires Adobe).

August 14, 2012

How Stupid Can a Government Bureaucrat Be?

Over the nine years we've been blogging here at Growls, and even before that on the pages of the ACTA Watchdog, we've reported on some stupid decisions by government bureaucrats -- federal, state and local. But the decision by bureaucrats in the bowels of the Department of Labor in 1964 that led to millionaires in 2008 and 2009 receiving unemployment compensation must rank as the height of stupidity.

Here's the lede from a CNS News story yesterday:

"(CNSNews.com) - There were 2,362 people who earned a million dollars or more in taxable income in 2009 and who also received federal unemployment benefits that year, according to a report by the Congressional Research Service.

"In fact, these millionaires collectively raked in more than $20 million in unemployment benefits.

"The Congressional Research Service report--Receipt of Unemployment Insurance by Higher-Income Unemployed Workers (“Millionaires”)--was published on Aug. 2 and was based on the most recent data available from the Internal Revenue Service."

But what about that stupid decision by the DoL's bureaucrats? Here's more from CNS:

"Department of Labor regulations require that unemployment benefits must be paid to all unemployed workers regardless of their income.

"This requirement is based upon a 1964 U.S. Department of Laobr (DOL) decision that precludes states from means-testing to determine UC [unemployment compensation] eligibility," the CRS said in its report. (emphasis added)

"Under this interpretation, federal law requires entitlement compensation to be determined from facts or causes related to the individuals state of unemployment," said CRS. "Thus, the DOL requires that states pay compensation for unemployment to all eligible beneficiaries regardless of their income level because individual or household income would not be considered to impact the fact or cause of unemployment."

But isn't the unemployment compensation system broke? Well yes it is. As CNS News writes:

"Unemployment insurance is a joint federal-state program and is funded by a payroll tax assessed against all workers. In the four years preceding 2012, according to the Tax Foundation, the unemployment insurance system was in the red. "Between 2008 and 2011, $174 billion was paid in unemployment taxes while $450 billion was paid out in benefits, a gap of $276 billion," the Tax Foundation said."

The Department of Labor apparently needs to help the federal government husband its dollars. At least they can't share any welfare dollars with the U.S. Department of Agriculture, which sends a niece living in a Midwest state a $2 check each month for food stamps. Incredible. Absolutely incredible. See our August 8, 2012 Growls for contact information for Arlington County's member of Congress.

Resources: 1) Congressional Research Service report R42643, August 2, 2012, titled "Receipt of Unemployment Insurance by Higher-Income Unemployed Workers (“Millionaires”). 2) The Tax Foundation cited by CNS News is Background Paper No 61, October 2011, titled "Unemployment Insurance Taxes: Options for Program Design and Insolvent Trust Funds Businesses Face Higher Taxes as States Exhaust Trust Funds and
Incur Interest Payments
.

August 13, 2012

U.S. Economy Looks Weaker, Federal Reserve Survey

According to the Federal Reserve Bank of Philadelphia, "The outlook for growth in the U.S. economy looks weaker now than it did three months ago, according to the participants in the Third Quarter Survey of Professional Forecasters. The forecasters also see weaker conditions in the labor market." (HT Breitbart's Big Government, August 13, 2012. Above graphic is from the Big Government story.)

Here's what the Bank had to say about growth:

"The forecasters expect real GDP to grow at an annual rate of 1.6 percent this quarter, down from the previous estimate of 2.5 percent. The forecasters see real GDP growing 2.2 percent in 2012. Three months ago, they expected growth of 2.3 percent. Projections for real GDP are 2.1 percent in 2013, 2.7 percent in 2014, and 3.1 percent in 2015."

They also project the unemployment rate will be 8.2% in 2012, and then fall to 7.9% in 2013 before dropping to 7.0% in 2015. On inflation, the Bank said:

"The forecasters expect current-quarter headline CPI inflation to average 1.5 percent, down from the last survey’s estimate of 2.3 percent. The forecasters predict current-quarter headline PCE inflation of 1.5 percent, 0.4 percentage points lower than their previous estimate.

"Measured on a fourth-quarter over fourth-quarter basis, headline CPI inflation is expected to average 1.8 percent in 2012, down from 2.3 percent in the last survey; 2.2 percent in 2013, up from 2.1 percent; and 2.3 percent in 2014, down from 2.5 percent.

"Forecasters expect fourth-quarter over fourth-quarter headline PCE inflation to average 1.7 percent in 2012, down from 2.1 percent in the last survey; 2.0 percent in 2013, unchanged from the previous estimate; and 2.2 percent in 2014, also unchanged from the previous estimate."

Excuse the spate of pessimism that goes back to at least our growls on August 1, 2012. BTW, the survey of macroeconomic variables first began in 1968.

August 12, 2012

Jobs: Which President’s Tenure Gained The Most?

We’ve now growled on several occasions about the monthly jobs report, most recently on August 4, 2012. But as the Kansas City Star reported when the July jobs report came out on Friday, August 3, 2010:

“As the November elections draw near, each monthly jobs report puts added pressure on the campaigners, on a gridlocked Congress and on the Federal Reserve to propel economic growth."

Also, as Veronique de Rugy points out in a publication of the Mercatus Center at George Mason University, “Polls show over and over again that jobs are a major concern for Americans. While presidents don’t create jobs, their policies can influence the direction of the economy. Presidents can create an environment that is more or less conducive to job creation—hence, the close scrutiny of employment statistics during presidential campaigns.”

The chart that follows provides an extremely informative view of just how many jobs were gained during each president’s tenure going back to World War II:

At the Corner, a blog of National Review Online, Ms. de Rugy explained:

“This chart isn’t meant to compare President Obama (who’s completed just under one term so far) to President Clinton (who completed two terms.) Rather it is meant to look at how each president did during their tenure. Also, considering that population grows and labor participation varies over time, this data is probably slightly biased in favor of President Obama for both the job numbers and unemployment rate.”

So when your liberal, progressive, or partisan friends tell you how many jobs President Obama claims he “saved or created,” tell her or him to get a copy of the above chart.

August 11, 2012

Past the Tipping Point?

According to Merriam-Webster's online dictionary, the term tipping point was first used in 1959, and means "the critical point in a situation, process, or system beyond which a significant and often unstoppable effect or change takes place."

With less than three months before what may be the most important election in America's history, it's worth looking at one of the important topics of the elections. Especially since there is so much talk of fiscal cliffs, tax increases, and Taxmageddon. See, for example, our growls on April 18 and May 7, 2012.

That said, the Wall Street Journal's weekend interview today is very timely. The Journal's Stephen Moore interviews Dave Camp (R-Michigan), chairman of the Ways & Means Committee in the House of Representatives, and asks whether tax reform is politically possible. According to the Journal, Camp "may be the last optimist in Washington, but the House Ways and Means chairman says the need for faster economic growth and some cultivated bipartisanship can fix the tax code."

Moore notes that Camp is looking to the 1986 tax reform act as the model he hopes to use, "one of the true bipartisan triumphs of modern times, passing with 97 Senate votes, including those of current Senate Democratic leaders Harry Reid and Charles Schumer." More importantly:

"The 1986 tax reform eliminated most special-interest deductions and loopholes, lowering the top income-tax rate to 28% from 50%. Harvard economist Dale Jorgenson says the gains to economic growth from the lower rates and the simplified code increased GDP by more than $1 trillion, and that a similar reform now could increase national wealth over the long term by $7 trillion in net present value.

"But in the 1990s and 2000s Congress began tinkering again, a lot of the junk removed from the code "has been put right back in," and tax rates started rising. Mr. Camp's calculates that "we've made 5,000 changes to the tax code just in the last 10 years." He says the whole system is so complicated that even the corporate lobbyists who form long lines outside his office seeking tax favors "are now telling me, 'Please fix the code. Give us less paperwork and a 25% rate and we'll gladly give up our loopholes.'"

Moore concludes this lengthy interview, but well-worth reading in its entirety, by writing:

"Mr. Camp is contemptuous of the Democratic inclination to "demagogue every Republican proposal," such as last year's Democratic television ad showing a Republican tossing an elderly woman in a wheelchair off a cliff. He dismisses out of hand the standard Democratic fix of squeezing doctors and hospitals on reimbursement rates: "This only exacerbates the problems and makes it more difficult for seniors to find Medicare physicians who'll treat them."

"With a $16 trillion debt and trillions more in unfunded liabilities embedded in these programs, does he think it is getting too late? "I'm an optimist, I think we are still at a point where if we act, we can address these problems before it's a situation like Europe. They may be past the tipping point."

"The trick for Mr. Camp to realize his dream of creating a pro-growth, comprehensible, 21st-century tax code is not just to get Democrats to agree to lower tax rates, which will be hard enough. Even tougher may be to get Republicans to give up those popular deductions and carve-outs that many in the middle class and Chamber of Commerce have come to regard as rights."

Kudos to Mr. Moore for a most informative interview with Dave Camp from northern Michigan's 4th Congressional District.

August 10, 2012

Your Tax Dollars NOT At Work

Almost too unbelievable to be true, the Daily Caller reported  today the U.S. Department of Agriculture spent $2 million on an internship program for just one full-time intern. According to the Daily Caller lede:

"The United States Department of Agriculture spent $2 million on an internship program that only hired one full-time intern, a recent audit of the USDA’s Office of the Chief Information Officer reveals.

"A USDA Inspector General’s report detailing the mismanagement of the agency’s multi-million dollar attempt to beef up the USDA’s information technology security found that after an infusion of millions, “[b]ecause these projects were not effectively managed, the Department’s information systems are still at risk, even after expending $63.4 million of funding increases received in FY 2010 and 2011.”

"Among the most striking findings in the IG’s report was the fact that OCIO had spent $2 million on an internship program that ended up hiring just one full-time intern."

Sound preposterous? Take a look at the executive summary of the USDA Inspector General's report (requires Adobe). The item was first reported by Lachlan Markay at the Heritage Foundation's blog, The Foundry, this morning.

August 09, 2012

100 Million Americans Now Getting Federal Welfare

According to Daniel Halper at the Weekly Standard's blog, yesterday:

"A new chart set to be released later today by the Republican side of the Senate Budget Committee details a startling statistic: "Over 100 Million People in U.S. Now Receiving Some Form Of Federal Welfare."

And here's the chart that Halper posted yesterday:

Halper provides the context:

"The federal government administers nearly 80 different overlapping federal means-tested welfare programs," the Senate Budget Committee notes. However, the committee states, the figures used in the chart do not include those who are only benefiting from Social Security and/or Medicare.

"Food stamps and Medicaid make up a large--and growing--chunk of the more than 100 million recipients. "Among the major means tested welfare programs, since 2000 Medicaid has increased from 34 million people to 54 million in 2011 and the Supplemental Nutrition Assistance Program (SNAP, or food stamps) from 17 million to 45 million in 2011," says the Senate Budget Committee. "Spending on food stamps alone is projected to reach $800 billion over the next decade."

"The data come "from the U.S. Census’s Survey of Income and Program Participation shows that nearly 110,000 million individuals received a welfare benefit in 2011. (These figures do not include other means-tested benefits such as the Earned Income Tax Credit or the health insurance premium subsidies included in the President’s health care law. CBO estimates that the premium subsidies, scheduled to begin in 2014, will cover at least 25 million individuals by the end of the decade.)"

Now that sure seems like something to differentiate the two major political party candidates when you step into the voting booth on Tuesday, November 6, 2012. Makes you wonder what the Washington Post's Ezra Klein is talking about in writing about "(T)he massive policy gap between Obama and Romney."

Thanks to Ranking Budget Committee Member, Sen. Jeff Sessions (R-Alabama) for the many charts available at the Senate Budget Committee (GOP) website.

UPDATE (8/15/12) At Human Events on Monday, columnist David Harsanyi wrote:

"Dependency is growing, exploding actually, and it’s no accident.

"Most readers will remember that one of President Barack Obama’s first reelection campaign offerings, “The Life of Julia,” an ode to an imaginary woman who lived her entire life benefiting from government dependency and other people’s money rather than individual initiative and hard work.

"Americans, the administration’s case goes, should be able to enjoy housing aid, student loan forgiveness, food stamps, free birth control, government retirement plans, universal internet service, medical insurance, and that’s just for starters. If all of that doesn’t cut it, there is always welfare for those who need it—and often for those who do not. The percentage of Americans paying the tab for this utopian state of affairs is shrinking and the growing number of people supposedly “benefiting” threaten to change the dynamics of politics and government.

"Last week, the Romney campaign finally took the Obama administration to task for weakening requirements in the popular bipartisan 1996 welfare reform, which allows states to waive work requirement as a condition of receiving welfare. In July, using a request by a number of governors seeking more flexibility in welfare management, Health and Human Services Secretary Kathleen Sebelius issued a memorandum in July allowing the work requirements to be stripped.

"According to a recent Rasmussen poll, even today, 83 percent of Americans surveyed support such requirements."

August 08, 2012

"IRS Workers Discouraged From Finding Fraud"

A report by Siobahn Hughes, posted at the Wall Street Journal's website this afternoon, says that is just what the Treasury inspector general for tax administration (TIGTA) found. according to an agency report issued Wednesday. Here are the two lede paragraphs ($ - access requires subscription):

"Internal Revenue Service supervisors discouraged employees from rooting out fraud in a program that assigns taxpayer identification numbers to non-U.S. residents and others who don't qualify for a Social Security number, according to a report Wednesday from the Treasury inspector general for tax administration.

"The management failures—including a focus on processing applications quickly instead of accurately—allowed the creation of fictitious identities, meaning that some people who didn't qualify ended up with a taxpayer identification number, the Treasury inspector general for tax administration found. The result could be fraudulent tax returns, the report said. It didn't quantify the number of such returns, if any, or the extent to which people may have received tax refunds they didn't deserve."

Access to TIGTA's website is available here. You may be able to access the report after it is posted there.

The Journal said the TIGTA report looked only at "one corner of the tax system, a segment that consisted of 2.9 million returns last year and resulted in $6.8 billion in refunds sent to people with taxpayer identification numbers."

And just what are the masterminds on Capitol Hill doing to curb waste, fraud and abuse? Ask them! Here's contact information for Arlington’s two Senators on Capitol Hill so you can either call them or e-mail them:

  • Senator Mark Warner (D) -  write to him or call (202) 224-2023
  • Representative Jim Moran (D) -- write to him or call (202) 225-4376

August 07, 2012

ACTA Earns Kudos

The Arlington Sun Gazette reported this morning the Arlington County Taxpayers Association was one of 11 members of the Arlington County Civic Federation that made the "perfect-attendance list." According to the Sun Gazette report:

"Eleven of the 83 member organizations that comprise the Arlington County Civic Federation have won (figurative) gold stars for perfect attendance during the federation’s 2011-12 year.

"The organizations had representatives present at all 10 monthly program meetings from September to June, based on a count conducted by Mileva Hartman, the Civic Federation’s membership chairman."

Thanks to ACTA's four delegates and four alternate delegates.

August 06, 2012

The Young Are Losing

Robert Samuelson's column in today's Washington Post discusses the social and economic reasons for Generation Squeezed, which would be America's young people. Below are just the first and last three paragraphs, but Samuelson's entire column is a 'must read.'

"I worry about the future — not mine but that of my three children, all in their 20s. It is an axiom of American folklore that every generation should live better than its predecessors. But this is not a constitutional right or even an entitlement, and I am skeptical that today’s young will do so. Nor am I alone. A recent USA Today/Gallup poll finds that nearly 60 percent of Americans are also doubters. I meet many parents who fear the future that awaits their children.

< . . . >

"As a parent, all this rattles me. We judge our success by how well our children do. We love them and want them to succeed, even if most of us recognize — at some point — that our ability to influence and protect them has expired. Peering into the unfathomable future, we don’t like what we think we see. We’re dispatching them into a less secure and less prosperous world. These parental anxieties, I think, are the presidential campaign’s great, unacknowledged issue. Many voters will decide based on a calculus of which candidate would minimize the economic perils for their grown children.

"But the calculus will be selective. To aid the young, we could tighten Social Security and Medicare, raising eligibility ages and reducing payouts for wealthier retirees. Unlikely. Younger voters seem clueless about advancing their economic interests. In 2008, 18-to-29-year-olds supported Barack Obama by 34 percentage points. They love his pseudo-youthfulness. Or his positions on other issues (immigration, gay rights) trump economics. As president, Obama has done nothing to improve generational fairness.

"If the young won’t help themselves, their parents and grandparents might. They might champion revising retirement programs. Dream on. Parents and grandparents may be worried about their offspring’s prospects, but they’re not so worried as to sacrifice their own. There are real conflicts between the young and old; so far, the young are losing." (emphasis added)

Kudos, Mr. Samuelson, for a most informative column.

August 05, 2012

Today's Quote

"The alternative to capitalism -- whatever one would like to call it -- is the loss of freedom, loss of choices, government corruption, and moral decay.  What do we get in return? The vague promise of economic equality."

~ Oleg Ahbashian

HT His American Thinker Column

August 04, 2012

Where are America's Missing 11 Million Workers?

When we growled about the disastrous July jobs report yesterday, we cited a post by James Pethokoukis at the American Enterprise Institute's blog, AEIdeas. Actually, he had several posts related to the July jobs report (here, here, here, here, and here).

In this one, though, he notes an AEI colleague likes to look at the U.S. labor market using "the employment-to-population ratio," which Pethokoukis defines this way:

"This number is simply the number of folks holding any jobs as a percentage of population. Before the Great Recession, that number was around 63%. In the July jobs report, that numbers was 58.4%. To get back to the pre-Great Recession level, we need to create an addition 11 million workers." (emphasis in the original)

Here's the graph that Pethokoukis used:

Walter Russell Mead opines at the American Interest blog, Via Meadia, the jobs report was "bad for the White House, but no knock out blow," adding:

"It’s bad news for President Obama: job creation isn’t keeping pace with population growth, and no president in recent history has managed to get re-elected with such high unemployment figures. And the increase in the headline unemployment rate will have more impact on the public mood than the actual jobs number.

"It’s also bad news for the young. The youth unemployment rate for 20-24 year olds is 13.5 percent and is probably higher when you count the number of people who have simply quit looking for a job. The under-25 subset of the millennial generation has been trending away from President Obama; the new unemployment numbers suggest that trend could be around for a while." (emphasis added)

A Bloomberg report before noon yesterday said the "July jobs report is clear as mud." By mid-afternoon, the headline of another story read "jobs surveys offer conflicting views of U.S. employment outlook." The lede read like this:

"Depending on which data you look at, employment in the U.S. either picked up in July or dropped by the most in a year.

"Employers added 163,000 workers to payrolls last month, the biggest gain since February, according to the Labor Department’s so-called establishment survey released in Washington today. A separate poll of households showed hiring dropped by 195,000, the largest decline since June 2011, as the jobless rate climbed to a five-month high of 8.3 percent."

Terence Jeffrey talks about the 195,000 fewer Americans who had jobs in July and the 150,000 labor force dropouts at CNS News.

In today's Washington Post, Peter Whoriskey has a comprehensive, front page, top-of-the-fold story about the July jobs report. In addition, at Wonkblog, Brad Plummer whines that "if you want to get technical," the unemployment rate just "went from 8.22 percent to 8.25 percent" rather than from 8.2% to 8.3%.

Finally, an Investor's Business Daily editorial includes this: "We had to look twice at Obama's comments to make sure they weren't cribbed from Jon Stewart or some other late-night-TV jokester, because in truth, the real jobs economy is imploding in an unprecedented way." The following chart is from the IBD editorial:

 

August 03, 2012

Another Disastrous Jobs Report. But Obscuring the Recovery?

First, the July jobs reports. As James Pethokoukis reports at the American Enterprise Institute’s blog, AEIdeas, “America’s labor market depression continues.” He summarizes it this way:

“Only in a world of lowered, New Normal expectations was the July jobs report anything less than another disaster for U.S. workers. Nonfarm payrolls rose 163,000 last month as the unemployment rate rose to 8.3%. In addition, employment for May and June was revised by 6,000 jobs.”

Several of the key points Pethokoukis makes include the following:

  • “Not only is the 8.3% unemployment rate way above the 5.6% unemployment rate that Team Obama predicted for July 2012 if Congress passed the $800 billion stimulus plan. It’s way above the 6.0% unemployment rate they predicted if no stimulus was passed.
  • “Job growth, as measured by nonfarm payrolls, has average about 75,000 jobs a month during the Obama recovery for a total of 2.7 million jobs. Context: During the first three years of the Reagan Recovery, job growth averaged 273,000 a month for a total of 9.8 million. If you adjust for the larger U.S. population today, the Reagan Recovery averaged 360,000 jobs a month for a three-year total of 13 million jobs.
  • “This continues to be the longest stretch of 8% or higher unemployment since the Great Depression, 42 straight months.
  • “If the labor force participation rate was the same as when Obama took office in January 2009, the unemployment rate would be 11.0%.”

With the jobs information in mind, let me turn to an American Spectator column posted by Northern Virginia’s Peter Ferrara (HT Mark Levin Show) who discusses what he says is the “rhetorical practice” of the president “of trying to take advantage of what he calculates the average person does not know, and his party-controlled, so-called mainstream media won't report.” According to Ferrara, it “can be seen over and over in the Obama campaign.” For example, he writes:

“President Obama and his chairman of the Council of Economic Advisors, Alan Krueger, brag that private sector jobs have now grown for "28 straight months." Obama and Krueger apparently think most Americans do not know that job growth is the norm and not the exception for the American economy. In the 62 years from January 1946, after World War II, until January 2008, jobs grew in 86% of the months, or 640 out of 744. Reagan's recovery produced job growth in 81 out of its first 82 months, with 20 million new jobs created over those 7 years, increasing the civilian workforce at the time by 20%. Even George W. Bush oversaw 52 consecutive months of job growth, including nearly 8 million new jobs created after his 2003 capital gains and dividends tax rate cuts became effective (which Obama is dedicated to reversing).

“The relevant streak of Obamanomics was extended in the June jobs report. That report established that under President Obama America has suffered 41 straight months of unemployment over 8%, which the Joint Economic Committee of Congress confirms is the worst recovery from a recession since the Great Depression almost 75 years ago. Indeed, the last time before Obama unemployment was even over 8% was December 1983, when Reaganomics was bringing it down from the Keynesian fiasco of the 1970s. It didn't climb back above that level for 25 years, a generation, which is a measure of the spectacular success of Reaganomics.

“But Krueger tells us about that June jobs report, "It is important not to read too much into any one monthly report." The Obama Administration, however, has said the exact same thing for each of the last 30 months, as documented July 6 by Bryan Preston for PJMedia."

Ferrara cites a Wall Street Journal op-ed by Ed Lazear, former chairman of the President’s Council of Economic Advisors. If you want to better understand today’s economic situation, Ferrara’s piece is a great starting point. He also discusses “the rich” and whether they are paying their “fair share.” Kudos, Peter.

Note the link in Peter's third paragraph to the July 6 effort of Bryan Preston in PJ Media. Sheesh, White House staff can't even be creative.

August 02, 2012

Bipartisan Porkers Named for July

Porker of the Month is a dubious honor given to lawmakers, government officials, and political candidates who have shown a blatant disregard for the interests of taxpayers.

Citizens Against Government Waste (CAGW) recently "named House Agriculture Committee Chairman Frank Lucas (R-Okla.) and Ranking Member Collin Peterson (D-Minn.) its July 2012 Porkers of the Month for sponsoring the Federal Agriculture Reform and Risk Management Act (FARRM)," according to this press release.

CAGW justifies the award of the the dubious honor this way:

". . . Like its counterpart in the Senate, FARRM is a massive waste of taxpayer dollars at a time of record profits for farmers, maintains the command-and-control system that has been in place for decades, and falls far short of the $180 billion in savings for the Farm Bill that was included in the House-passed budget resolution.  The bill would reduce Farm Bill spending to $957 billion over ten years, a difference of $35.1 billion and a paltry savings of 3.5 percent.

"While FARRM terminates many of the wasteful programs that were eliminated in the Senate bill, such as the Average Crop Revenue Election (ACRE) program, direct payments, and counter-cyclical payments, many profligate programs are left largely unreformed and new ones have been created.  For example, the Price Loss Coverage Program (PLC), set to replace the egregiously wasteful system of direct payments, would reimburse farmers for revenues lost due to lower commodity prices.  In today’s climate of historically high prices, PLC will almost certainly come at a very high cost to taxpayers when prices inevitably drop.

“Recent arguments urging the farm bill’s immediate passage due to droughts across the country should be ignored,” said CAGW President Tom Schatz.  “Taxpayer-subsidized crop insurance prevents those farmers who have enrolled from losing more than 15 percent of their expected revenue, and a raft of private options, such as hedging, forwarding, and diversification, remain available.  Further, the farm bill covers much more than farm supports, as evidenced by the fact that 79 percent of farm bill expenditures go to food stamps.  Passing a bad farm bill will not end the drought, but will do a great deal of damage to future food and farm policy.”

"Left intact is the absurd Market Access Program (MAP), which could more accurately go by the name Corporate Welfare Access Program.  MAP hands taxpayer dollars in the form of advertising subsidies to successful agricultural firms like Butterball, Tyson, Monsanto, and Sunkist Growers, Inc. to help them sell their wares abroad.  Also untouched is the sugar program, which has been criticized by CAGW many times for inflating the price of sugar and benefiting the wealthiest one percent of sugar farmers at the expense of consumers.

“The renewal of the farm bill should be viewed by members of Congress as an opportunity to address duplication, cut wasteful spending, and make reforms to allow the free market to function efficiently,” added Schatz.  “Instead, taxpayers are likely to get stuck with a bill that hardly rocks the boat for a part of the federal budget that, in an already waste-addled government, stands out for its inefficiency.”

Congratulations to CAGW for their continuing effort to expose government waste.

You can express your outrage about the farm bill by calling Rep. Frank Lucas at (202( 225-2171 or Rep. Collin Peterson at (202) 225-216. And let Rep. Jim Moran, who represents Arlington on Capitol Hill by writing to him, or by calling (202) 225-4376.

August 01, 2012

"Economy Losing Strength," Says Federal Reserve

In an Associated Press story posted at both Breitbart's Big Government and at Huffington Post: "The Federal Reserve said (today) that the U.S. economy is losing strength and repeated a pledge to try to boost growth if hiring remains weak." The AP story went on to say:

"The Fed took no new action after a two-day policy meeting. But it acknowledged in a statement released after the meeting that economic activity had slowed over the first half of the year, with job creation slackening and consumer spending tapering off."

The Huffington Post version went on to add:

"The statement was slightly different than the one issued after the Fed's last meeting, June 19 and 20.

"In addition to noting that the economy had "decelerated," the Fed's policymaking committee said it would "closely monitor incoming information" and "will provide additional accommodation as needed" to stimulate the economy and job creation. In the June statement the central bank said "the economy has been expanding moderately" and that it "is prepared to take further action as appropriate."

The short version in the Washington Post says, "The Federal Reserve said that the U.S. economy is losing strength with job creation slackening and consumer spending tapering off."

We growled about the economy on July 27, 2012, saying that economic news was getting downright ugly, on July 25, 2012 about the weakness of the economic recovery, and July 17, 2012 about the economic news that Federal Reserve chairman provided to the U.S. Senate Banking Committee.