Category Archives: Economy

The Tea Party Was Right

The government’s credit rating was cut today.  For the first time in the history of the planet the United States of America is no longer a sure bet on it’s credit.  To be sure, AA+ isn’t nothin to sneeze at, but it’s not, ahem, Money.

The impact:

S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about the government’s budget deficits and rising debt burden. The move is likely to raise borrowing costs eventually for the American government, companies and consumers.

And the why:

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics,” S&P said in a statement.

The deal reached by Congress and signed by the President doesn’t do anything about our fiscal woes.  Cries from the Left that we aren’t raising revenue ring hollow as the United States regularly see year over year revenue gains of over 7%; revenue is NOT the trouble.

Spending is the problem.

And the liberal Left will not listen and take action.  They continue down the path that somehow someone isn’t paying their fair share yet irresponsibly care to put pen to paper and define what that fair share really is.

What we are seeing now is the natural result of the kind of quasi socialism that exists in the world today.

The Tea Party is right.

This Is Obama’s Economy

‘Nuff said.

Recession Recovery: Unemployment – Obama, Bush, Clinton and Reagan

I have posted on a comparison of the last major recessions.  The first such comparison featured the GDP growth as we march through that recovery.  Each President; Obama, Bush, Clinton and Reagan had a shot at a recovery.

This post will feature the unemployment rate as we continue from recession to recovery.  This specific comparison, or feature, will look at the raw unemployment rate.  All data is taken from the BLS.gov website.

So, what does the data show?

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We Are Socialist: And So Can You

I’m pretty free market.  I’m also of the mind that the best incentives are the ones that you remember your dad teaching you or that you teach your kids.  Hard work, eat your vegetables, save your money, do your homework….stuff like that.

I like to think that most America teaches these things to their kids.  And to the extent that some of us are better or worse, I guess that’s okay.  But the idea is the same.  This is a place where, if you work hard enough, you can have anything you want.  Which, I’ve always thought the inverse were then true as well.  This is a place where if you DON’T work hard enough, you can’t have anything you want.

So, I don’t like socialism.  Either as a way to teach our kids how to live or as an economic system where we organize our society.

But we are.

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Spending: Obama vs Bush

I think that I am consistent with the Republican party’s claim that one Mr. Barack Obama spends too much.  Further, I think that I am consistent with the same Republican party in their view that it’s spending, not revenue that’s the problem.  After all, I’ve demonstrated that receipts increase year over year at a 7.2%.  And by simply slowing the growth of government, we can balance the budget in as little as 19 years.   God forbid what happens if we actually REDUCE the year over year of the government spend.

To that end, there has been much talk in the nation about that government spending.  Where it came from and who is actually spending it.

Remember, the subject is spending.  And that Barack is doing more of it than anyone else.

The context is “who is contributing to the massive increase in government spending we are seeing?”

And the answer to that question is being answered by this graph:

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Unemployment and Long Term Unemployment

For a long time I have railed on the current policy of providing long-term unemployment benefits to people out of work.  I’ve gone further and documented available jobs in my area.  Granted, the jobs are rather unattractive and have, in some cases, offended friends and family who maybe themselves or know someone who has been or is currently, unemployed.

I’ve suspended that series.

However, my point all along is not that people who aren’t taking those jobs but relying on benefits are lazy, it’s that they are rational.  The incentives are all wrong.

For example, if I’m unemployed and collecting $350.00 a week what is the marginal value of me taking a job that pays, say $8 an hour for 40 hours?  Well, it works out like this:

  1. $8*40 hours equals $320.00
  2. The first $50.00 is “burden free”, so that means only $270.00 of my $320  counts against me.
  3. Because my benefits are $350 and I “earned” $270.00, my unemployment benefit check is now $80.00.
  4. Adding my wage and my check, my new take is $400.00.
  5. Because I was earning $350.00 BEFORE my job, my incremental “raise” is 50 bucks.
  6. For 40 hours of work I earned an extra $50.00.
  7. That is about $1.25 an hour.  And when I say about, I mean exactly.
  8. Who expects anyone to work for 1 twenty 5 and hour American?
  9. No one.

And THAT is why our unemployment rate is so high.

Anyway, that’s not my point.  This is:

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The Debt Limit, Budget, Deficit and Debt: Update

So, yesterday I posted about a possible solution to the deficit and the debt. In those plans I accommodated those on the right who insist on a plan that includes no new revenues due to tax increases.  Further, I accommodated those on the left who insist on a plan that doesn’t cut; in fact my plan GROWS government each and every single year.

As I ended my analysis I demonstrated a method by which both of those targets were met AND we backed away from the debt limit that we are struggling with today.  The solution began to reduce the the deficit in year 1.  And it balanced the budget in year 19.  It’s the perfect trifecta.

But what if we can do better?  What if we can reduce the amount of time in which we are free of the deficit?

I think we can:

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The Debt Limit, Budget, Deficit and Debt: Framing the Picture

The talk of the town is the debt limit.  Raise it or not raise it; and what it would take TO raise it.

Reasonable people can agree on a couple of things:

  1. We are in debt and it’s getting worse.
  2. To balance the budget, there needs to be a combination of an increase in revenue and a decrease in spending.

I honestly feel that if you were to ask this question, hidden in such a way as to bypass the normal political partisanship, every single American would agree.  If the checking account is overdrawn, a second job becomes something to consider and a review of the household spending becomes a priority.

But, how do we agree on such a combination when the discussion changes from the household budget to the federal budget?  How can we get folks who demand that we raises taxes together with folks who demand we don’t?  How do we get people who refuse to cut spending to shake hands with those who feel we HAVE to cut spending?

I propose that we do it by doing neither.

Watch:

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Government Shutdown of 1995-1996

I wasn’t paying attention back in 1995-1996.  I was managing a jazz club at the time and national politics couldn’t have been further from my mind.

If I could go back in time I might have been able to tell you that the government shut down, but maybe not.  It certainly didn’t impact my life one iota.

Come to think of it, that simple fact, that I wasn’t impacted in the least, speaks volumes to the import of most of what the Federal Government has become.

I digress.

As it turns out there are some similar themes between then and now:

The United States federal government shutdown of 1995 and 1996 was the result of a conflict between Democratic President Clinton and the Republican-controlled Congress

A majority of Congress members and the House Speaker, Newt Gingrich, had promised to slow the rate of government spending; however, this conflicted with the president’s objectives for education, the environment, Medicare, and public health.

Congress had passed a continuing resolution for funding and a bill for debt limit extension, each of which was vetoed by Clinton,who denounced them as “backdoor efforts” to make cuts.

And then this:

The government shutdown took place in two phases. The first lasted five days in November 1995, until the White House agreed to congressional demands to balance the budget within seven years. But talks on implementing that agreement failed, and the second shutdown lasted 21 days, from Dec. 15, 1995 to Jan. 6. 1996. (Then a blizzard struck Washington and local federal workers could not get back to work for days after that.)

The sticking point was the GOP demand that Clinton agree to their version of a balanced budget. In months of negotiations, Clinton had actually given a far amount of ground, infuriating Democrats on the left. He agreed to a balanced budget over seven years, to tax cuts, to changes in mandatory spending programs such as Medicare. But the two sides were remained far apart on the pace of spending cuts — and even further apart on the policies behind those cuts.

Two things seem clear:

  1. It was Clinton who shut the government down the first time until finally agreeing to Republican demands.
  2. History is too kind to President Clinton.  He most certainly did not balance the budget.  That honor falls to the Republican held House of Representatives.

We’re seeing the same thing here.

We have a Democrat spender who wants to not only ignore cutting spending but wants to INCREASE spending.  Add to that his incessant “Class Warfare” and you have the perfect villain.  The set up is pretty close.

Then, as now, it’s the conservative movement that is driving the government to a balanced budget.  It’s conservatives who are holding the line on spending and insisting on cuts.  It’s the democrats who are refusing to give in.

The difference?  Boehner.  He was there in ’95.  He saw the mistakes Newt made:

  1. Seeming to relish the idea of a shutdown
  2. Allowing himself to be caricatured as a crybaby

The result is that you have a Republican caucus that knows it’s values are supported by America.  They know how the Democrats are going to act and they know that a government shutdown will force those Democrats back to the table.  And America will support the will of the conservatives.

They did in 1995 and 1996.

They did in Minnesota.

They will again in 2011.

The lesson is this:  When the Democrats come back and agree to your deal; TAKE IT!

 

Boehner and Obama Debt Limit Negotiations

The Hill is reporting that Boehner has ended negotiations with the White House over raising the debt limit ceiling:

House Republican leaders have called off negotiations with the White House over a broad deficit-reduction deal tied to an increase in the federal debt limit and will begin exclusive talks with Senate leaders to avert a government default on Aug. 2, Speaker John Boehner (R-Ohio) announced Friday.

Boehner told House Republicans in a letter that President Obama is “adamant” about raising taxes and would not agree to “fundamental changes” to entitlement programs.

This shouldn’t come as a surprise to anyone.  Obama’s time in the Oval office to date is nothing but speeches that say one thing followed by policy that does another.  To have thought that Obama was serious when he claimed he was willing to cut spending, reform medicare and social security is wishful thinking at best

There isn’t a bone in Barack’s body that’s willing to reduce government spending.  The whole of his life has been spent enlarging government for the benefit of the “less fortunate”.  I’m convinced Obama can’t envision a world where government shrinks.  And reforming the entitlement programs?  HA!  If he speaks about reforming ’em, he isn’t talking about it in the way that you and I would reform ’em.  In his mind those reforms take the shape of ADDING to the revenue side to reduce the deficit of the programs.  Again, there is simply no way this man will shrink that aspect of government either.

There is no way that Obama means “spending cut” in any way that resembles reality as it relates to the common everyday American.

So, the fact that Boehner walked on him is the most positive thing that’s happened in a week.  Or weeks, for that matter.

With only 1 week before the government shuts down, it looks like we’re facing exactly that; a shutdown.  And judging by the reaction in Minnesota, namely — who cares? — and the fact that the Democrat gave in and accepted the Republican’s deal, I say let ‘er go.

America is fed up with the spending and it’s time we address it.