The President and the False Blame Game

This article was brought to my attention by a friend of mine (shoutout to Kovarik Glasco, fellow Georgia Tech grad and fellow fan of the “Song of Ice and Fire” series).

There is a narrative that President Obama and many on the left engage in when discussing the economy.  Even two-plus years into the new presidency, the “blame Bush” technique is still used.  In this narrative, the picture painted shows runaway spending and runaway deficits during the Bush years.  And the main point he uses is that the year he entered office he inherited a deficit of nearly $1 trillion.

But in an article found on the Huffington Post, Dean Baker, Co-Director of the Center for Economic and Policy Research, shows how this narrative just isn’t true:

This is simply not true. In its budget projections from January 2008, the last set before the impact of the collapse of the housing bubble was clear, the Congressional Budget Office (CBO) projected a deficit of just $198 billion for 2009. This is less than one-fifth of the “on track to top $1 trillion” figure that President Obama gave in his speech. This is a serious error. One trillion is a much bigger number than $198 billion.

This difference is central to the budget debate. People can argue that the $198 billion deficit projected for 2008 was too large. But it would be absurd to claim it was out of control or represented any remotely serious threat to the nation’s solvency. In fact, over the five years 2003-2007 the country’s debt to GDP ratio was virtually unchanged, meaning that the country could run deficits of the same size (relative to the economy) literally forever.

This changed with the recession caused by the collapse of the housing bubble. It was the recession, and the response to it, that pushed the deficit in 2009 from the $198 billion projected by CBO to the over $1 trillion noted by President Obama in his speech.

Further, Dick Morris explains where the President is getting his numbers from:

In 2008, George W. Bush ran a deficit of $485 billion. By the time the fiscal year started, on Oct. 1, 2008, it had gone up by another $100 billion due to increased recession-related spending and depressed revenues. So it was about $600 billion at the start of the fiscal crisis. That was the real Bush deficit.

But when the fiscal crisis hit, Bush had to pass the Troubled Asset Relief Program (TARP) in the final months of his presidency, which cost $700 billion. Under the federal budget rules, a loan and a grant are treated the same. So the $700 billion pushed the deficit — officially — up to $1.3 trillion. But not really. The $700 billion was a short-term loan. $500 billion of it has already been repaid.

So what was the real deficit Obama inherited? The $600 billion deficit Bush was running plus the $200 billion of TARP money that probably won’t be repaid (mainly AIG and Fannie Mae and Freddie Mac). That totals $800 billion. That was the real deficit Obama inherited.

Then … he added $300 billion in his stimulus package, bringing the deficit to $1.1 trillion. This $300 billion was, of course, totally qualitatively different from the TARP money in that it was spending, not lending. It would never be paid back. Once it was out the door, it was gone. Other spending and falling revenues due to the recession pushed the final numbers for Obama’s 2009 deficit up to $1.4 trillion.

One important note that both writers mentioned: the important thing being missed is JOBS. Job creation will create income earners, which will boost the economy and help revenues. This is what the debate in Washington should be all about.

Random Thoughts: Obama/Boehner Disrupting Prime Time, “Fair Share,” Political Garbage Speak, ect

Just some random thoughts:

Why did the President and the Speaker waste our prime time last night?  President Obama took his time to get in front of the mic and say the same things he has said in his press conferences the past few weeks.  He threw in some statements about negotiations, made some nice statements about Speaker Boehner, and made sure to trot out his tried-and-true, base-energizing catchphrases:  “corporate jet owners;” “millionaires and billionaires;” “breaks we don’t need” (paraphrased).  You pushed back the start of our 8 pm shows for this??  Even worse, I listened to Chris Matthews afterwards and heaven forbid, he said something I agree with; he said usually, Presidents only request prime time to make an announcement or to make news.  This speech was neither and shouldn’t have been done in prime time.  Write it down somewhere–I agreed with Chris Matthews!  Then, House Speaker Boehner jumps up with the canned response.  There are really only two things I pulled out of his speech:  1)he had a couple of zingers at Obama’s expense that were funny, and 2)Republicans are now going to position the President’s stance as wanting a “blank check” since he did not support their Cut, Cap, and Balance bill.  The election may be next year, but the game is already afoot.

Speaking of corporate jets:  First, if the tax break in question was eliminated, it would save a whopping $3 billion.  Over ten years.  Yes, ten.  Trillions in deficits and we’re talking $3 billion.  Second, Obama is responsible for the very tax break he criticizes.  See the stimulus bill for more details.  Third, he has people thinking these “corporate jet owners” are just average wealthy individuals with money to burn.  For the most part, based on the tax break, the owners of corporate jets tend to be…wait for it…CORPORATIONS!!  Way to muddy the issue for duh masses, Mr. President.

Did he really mention Reagan?:  Obama referred to Ronald Reagan in his speech in order to take a swipe at Republicans.  Reagan’s quote somewhat supported what the Left has been saying.  The irony is, I noticed Obama didn’t quote HIMSELF from 2006, when he was talking about how raising the ceiling was a failure in leadership.  Or what about Harry Reid, who  fought against a debt-celing increase that same year and asked  “How can (Repubicans) explain that they think it’s fair to force our children, our grandchildren, our great grandchildren tofinance this debt through higher taxes?”  Now THOSE are quotes that should’ve gotten some airtime.

If all else fails, let’s create some wealth and income envy:  My friends on the left need to own up to this.  Their belief in raising taxes creates a need to make the rest of America mad at the wealthy.  You can hear it when the President speaks of the previously mentioned corporate jet owners.  Or when he talks about tax breaks that high-earners “don’t need.”  You even get it when he speaks of the oil companies.  Lest we forget, Dems want to take a tax break away from the top 5 oil companies, since they are making so much money.  Absurdity, not only because we’re talking about a small amount of money ($21 billion over 10 years), but because it would then be a break that every company in America EXCEPT those 5 oil companies could take advantage of.  But hey, Big Oil is evil and they need to pay up!

Can someone define “fair share?”:  Sometime soon this will get its own post.  I’ve heard my friends and the President refer to fairness in various terms when it comes to taxes.  But I don’t understand what that means, since I’ve never heard it defined.  What is fair?  Based on the proportion of taxes paid, high-income earners pay a ton.  We hear about hedge fund managers paying less than their secretaries, but is it unfair that they take advantage of lawful tax deductions and such?  And do they really pay less than the secretary, or is that just another one of those garbage speak political catchphrases referred to earlier?  I would go with the latter.

Related articles

• In Dueling Speechs Obama And Boehner Talk Past Each Other, Accomplish Little (outsidethebeltway.com)
• The Note’s Must-Reads for Tuesday, July 26, 2011 (blogs.abcnews.com)
• Barack Obama Speech Addresses the Nation on Raising the Debt Ceiling Video – Watch Now! (binsidetv.net)
• Unable to Deal With Each Other, Obama and Boehner Invade Prime Time (swampland.time.com)

The Left in Canada Led the Country out of Economic Doldrums; Maybe the Left in the US Can Take Note

When looking at how the ongoing debt negotiations have gone back and forth for weeks, there is one thing that my friends on the Left can’t deny–that while the President and the liberal members of congress have repeatedly criticized the plans put forth by Republicans, they haven’t put forward a plan of their own. Further, the notion of making cuts to entitlement programs (even though most of the cuts aren’t really cuts) causes the Left to jump up and down and talk about how much the cuts are going to negatively affect Li’l Jimmy and how it’s only fair if we increase taxes on high income earners.

(Sidenote: “Li’l Jimmy” is a fictitious character being used as part of a WWE storyline each week by wrestler R-Truth. I and my other wrestling fan friends who also talk politics have found “Li’l Jimmy” to be useful in these conversations.)

Fred Barnes in a Wall Street Journal piece talks about how Canada made it’s way out of financial crisis and has arguably created a stronger economy than the US. The irony? It was the Left in Canada that led the reversal, and they did it through spending cuts, not tax increases:

Mr. Chretien and his finance minister, Paul Martin, took decisive action. “Canadians have told us that they want the deficit brought down by reducing government spending, not by raising taxes, and we agree,” Mr. Martin said. The new administration slashed spending. Unemployment benefits were cut by nearly 40%. The ratio of spending cuts to tax increases was nearly 7-to-1. Federal employment was reduced by 14%. Canada’s national railway and air-traffic-control system were privatized.

The economy rebounded. Between 1995 and 1998, a $36.6 billion deficit turned into a $3 billion surplus. Canada’s debt-to-GDP ratio was cut in half in a decade. Canada now has faster economic growth than America (3.3% in 2010, compared to 2.9% in the U.S.), a lower jobless rate (7.2% in June, when the U.S. rate was 9.2%), a deficit-to-GDP ratio that’s a quarter of ours, and a stronger dollar.

What’s most remarkable about the Canadian turnaround: It was led by liberals. Mr. Chretien and Mr. Martin were leaders of the Liberal Party. Yet they responded to the clear wishes of Canadians and, to the surprise of the political class, shifted to the right. Or to the center, the two leaders would say.

I wonder what the likelihood of this happening in the US would be.

For Those Who Are Interested: Obama’s Top 10 Lies

Interesting article from Human Events of what they consider to be Obama’s Top 10 Lies. Its really 9 since #10 is just a goofy accusation. Speaking of #9, its my favorite:

9. Transparency: Obama pledged that transparency would be a top priority, but his administration refused to grant one-third of the Freedom of Information Act requests, according to an Associated Press analysis. He also was dishonest about transparency when he said that health-care negotiations would be televised on C-SPAN and that he would wait five days to sign a bill so people would have a chance to read it online.

Is the Death Penalty Really Necessary?

I’m sure a lot of my conservative pals will completely disagree with me, but it’s past time that we got rid of the death penalty in America.

3  states–New York, New Jersey, and New Mexico–have done just that in the past 2 years.  Recently, Illinois joined the club

The governor of Illinois signed a law on Wednesday ending capital punishment, saying it was impossible to fix a system that wrongly condemned 20 men who were later found to be innocent.

When the law signed by Democratic Governor Pat Quinn takes effect on July 1, Illinois will become the fourth state in the past two years to dispense with the death penalty after New York, New Jersey and New Mexico.

“To have a consistent, perfect death penalty system … that’s impossible in our state,” Quinn told reporters. “I think it’s the right and just thing to abolish the death penalty and punish those who commit heinous crimes — evil people — with life in prison without parole and no chance of release.”

The ultimate punishment will remain an option in 34 states and for federal inmates. No other Western democracies carries out executions.

Anybody catch that last line? We are the only Democratic nation in the West that puts people to death. That really jumps out at me. I’m sure folks will say that just means the other countries are soft, but does it?

Aside from that, here are my other reasons why we should abolish it across the board:

1.  It’s  not a deterrent for crime

If someone could show me that the possibility of getting the death penalty has stopped someone from committing murder (which is typically the level of crime that nets execution), then I may be open to changing my mind.  I don’t believe the stats exist.  People will still kill.  They will still maim, assault, ect.  The death penalty just isn’t something that sticks in the mind of someone about to do something bad.

2.  It’s not necessary

Back in the old days, I’m sure that it was easier for criminals to escape from jail and go back to doing whatever it was they were doing in the first place.  Now?  Escape is a rare occurrence.  The logic behind having a death penalty is to ensure that the criminal never gets back into the general population to become a menace again.  You going to tell me sending someone to a supermax prison doesn’t do the same thing?

3.  Its costly

I’m sure this reason may get dismissed out of hand, but do the research.  It costs more for the state to pay for dealing with the appeals process involved with someone on death row than it does to actually house them as an inmate.

4.  Its barbaric

Every time I hear “Death Penalty” and “closure” used in the same sentence, i cringe.  I’m not ridiculing those who lose someone and feel the only way they can get closure is if the person responsible is put to death.  No, I have a problem with the fact that no one has told them “an eye for an eye” doesn’t work.  To put it bluntly, killing the murderer does not bring back that person’s loved one.  Closure comes in accepting that that person is gone.  As for “justice,” to me justice is making that murderer live the rest of their natural life knowing they no longer have freedom because of their crime.

I would be interested in hearing a case for the other side of this discussion.  But under the circumstances given, other than “it’s justice,” I don’t forsee much coming from the other side in this.

Related articles

• Dalai Lama Praises Illinois For Death Penalty Ban (huffingtonpost.com)
• Using the Death Penalty to Get Re-Elected (theroot.com)
• James Clark: The Myth of California’s Death Penalty (huffingtonpost.com)

My Support For Herman Cain is Dropping Faster Than…

There are so many analogies I could use, but my friend Rev. Ken reads these and I don’t want to get called to the Rector’s office on Sunday.

When Herman Cain announced he was running for president, I smiled.   I’ve listened to his radio show on WSB in Atlanta often enough, and I was happy to find out we’d have a candidate in the race who wasn’t afraid to speak his mind.  Plus, I wanted to see how having a Black candidate in the race–but coming from the Right–would affect all the “you just hate him because he’s Black” rhetoric.  Here we had a man who had actually run a business running for POTUS!!

Alas, my joy is fleeting.

Cain is on some type of anti-Muslim kick.  Yes, it is true that the folks trying to do us harm are Muslim fanatics.  But it seems that Cain has taken things to a different level.  Previously, he stated (and clarified during the first Republican candidate debate) that he would basically test any Muslim who wanted to be in his administration to make sure they were loyal.  That was dumb enough.  But now, he’s backing the notion of communities banning mosques.  Why?  Because Sharia Law is going to take over the US!

Republican presidential candidate Herman Cain said Sunday that communities have a right to ban Islamic mosques.

Appearing on “Fox News Sunday,” the former Godfather’s Pizza CEO said protests and legal challenges to a planned mosque in Tennessee city are an example of local residents pushing back.

Cain said his view doesn’t amount to religious discrimination because he says Muslims are trying to inject Shariah law into the U.S.

So, Cain’s reasoning is that the Muslim’s are using the mosques as cover, and that any member of the mosque could be shadow agent for the Sharia movement. Let’s all run in fear.

I don’t find myself agreeing with Eugene Robinson all that often, but he hit it on the head:

Let’s return to the real world for a moment and see how bogus this argument is. Presumably, Cain would include Roman Catholicism among the “traditional religions” that deserve constitutional protection. It happens that our legal system recognizes divorce, but the Catholic Church does not. This, by Cain’s logic, must constitute an attempt to impose “Vatican law” on an unsuspecting nation.

Similarly, Jewish congregations that observe kosher dietary laws must be part of a sinister plot to deprive America of its God-given bacon.

If Mr. Cain keeps this up, the word in front of “candidate Herman Cain” won’t be “longshot.” It will be “fringe.”

Related articles

• Herman Cain: Communities have right to ban mosques (seattletimes.nwsource.com)
• Herman Cain continues to rail against Islam, endorses mosque ban (shortformblog.tumblr.com)
• Herman Cain: We Should Be Able to Ban Mosques (newser.com)

A Nice Visual Explanation of How the Government Can “Cut” Spending…and Increase Spending at the Same Time

Been curious as to whether or not the government was really cutting spending in all these negotiations?  Wondered what “baseline spending” is?  Didn’t realize that all the crying about cutting programs for the poor is crap?  Check out this video.  You’ll never look at “spending cuts” the same again!

Let’s Put the “We Can’t Guarantee the Checks Will Go Out” Myth to Bed, Shall We?

Once more, with feeling!

If you haven’t heard, President Obama said he couldn’t guarantee that Social Security checks would go out on August 3rd, the day after the US is projected to go past the debt ceiling and somehow default on every debt under the sun.  While some of us recognize that even after that point, the money coming IN to the Social Security Administration will still be coming in, which means the money going OUT in terms of checks will still be going out, the scare tactic is being echoed by those on the left as though its a done deal that recipients (along with recipients of veterans benefits) won’t be getting their money.  How could the mean, rich-loving Republicans do that?

Then we find out that there is plenty of tax revenue to cover the benefits:

he Daily Treasury Statement for June 30—which any American, including the president, can look up on the U.S. Treasury Department’s website at this link—says the government took in $196.994 billion in revenue during the month.

The same statement says that the government paid out $50.719 billion in Social Security benefits in June, $4.196 billion in veterans’ benefits, and $2.961 billion for other Veteran Affairs department programs.

The combined $57.876 billion that the federal government paid out for Social Security benefits, veterans’ benefits and other veterans programs during June equaled 29.4 percent of federal revenue for the month.

The only way the checks don’t get paid is if the government DECIDES not to send them out.  And we know who is in charge of the government in DC right now, no?

So, let’s do the math. The government had about $140 billion extra over what they paid out in benefits. And unless time stops, there is a very good chance the same thing could happen during July as well. So it wouldn’t be a stretch to say that there will be money to pay out those benefit checks, right?  Ding  Ding!  Ding!  We have a winner!  Now, go to the front of the line and get that Social Security check!

It will be waiting for you on August 3rd.

Guliani: the Republican Party should stop focusing on gay marriage and “get the heck out of people’s bedrooms.”

So much for Guliani running for President in2012.

In a recent article, former NY mayor Rudy Guliani addressed the recent vote to allow gay marriage in NY. He took aim at his own party in a way that I suspect will raise some hackles among the base:

“I think that marriage should be between a man and a woman, but I think that the Republican Party would be well-advised to get the heck out of people’s bedrooms and let these things get decided by states,” Giuliani said. “I think it’s wrong, but there are other things that I think are wrong that get decided by democratic vote.”

As I have mentioned previously, I’d say the party that is supposedly big on individual liberties takes a turn to the hypocritical by “defending” marriage.  Mr. Guliani raises what I consider the second biggest reason why the GOP should move on from gay marriage–there are bigger things to worry about than gay people tying the knot.

President Obama says “Hey! You Don’t Need That Money!”

Yesterday amongst my online pals, I was lamenting a new law that pushes for light bulbs to be more efficient, but in effect ends up pushing the masses to use more efficient but also more expensive and more hazardous CFC bulbs.  The focus of my complain was a statement from Energy Secretary Steven Chu, who said: “We are taking away a choice that continues to let people waste their own money.”  Yes, we the masses would be lost if we didn’t have the government guiding our way.

Now, we have President Obama, who is currently trying to get a deal done to raise the debt limit.  During a press conference, he stated:

I don’t want a deal in which I am able to keep hundreds of thousands of dollars that I don’t need, while a parent struggling to send her kid to college finds they have a couple thousand dollars less in grants and student loans.

For now, let’s move past the second part of the statement, where he invokes the time honored tradition of scare tactics. Let’s talk about the “need.”

On the surface, Mr. Obama is talking about himself not needing a tax break, and not needing money he considers to be extra money.  It’s quite humorous that he states this, since as President, he has everything taken care of.  But let’s go below the surface.  Obviously, his statement implicitly implies that the higher income earners should be happy to pay more in taxes because they don’t “need” the extra money they have in the bank.  Once again, here is the government to our rescue, to guide us!

Hey!  You’ve earned enough money!  It doesn’t matter what your plans are for you money, we the government have decided FOR you that you have more than you need!  Ignore that we are notorious for overspending!  Its your patriotic duty to pay up anytime we feel we need more money!

Oh, and let’s do revisit the second part of the statement, regarding grants and loans. We are in a dire financial situation.  Isn’t it a natural assumption that folks are going to feel the pain? And even if taxes go up, wouldn’t that money go to pay down the debt?  Evidently, even in a situation where cuts should be the priority, and paying down deficit and debt right behind that, the administration will find ways to either increase spending somewhere or attempt to keep things status quo.  Hello!  McFly!  Is that what Joe Public does when he needs to cut spending in his own household?

Just remember:  the government knows what’s best!

When Spending Cuts Aren’t Really Spending Cuts (or, “They Think We’re Stupid”)

In the ongoing battle between the parties to negotiate a debt-limit increase, there has been much talk of spending cuts.  Republicans are strongly taking a stand on cutting spending but no new taxes.  Democrats are open to spending cuts but are looking for ways to increase revenue to increasing taxes or cutting tax breaks.  But people won’t be surprised to know that both sides are choosing not to be up front with we the people.

When we the people look at a budget, we base it on what we have coming in at the time.  We then decide where we will spend those funds.  We won’t get into the notion that if we were out of money and needed more, if we did as the government does sometimes and print our own, we’d be hauled off to jail rather quickly.  In general, most people don’t have the luxury of just going out and getting loan after loan while continuing to spend above their means.

Not so with the government.

I got a call from a good friend of mine who was watching a show on CNBC.  He said a guy was on talking about how spending cuts weren’t spending cuts and how he’d remembered hearing it from me months ago.  You see, the government doesn’t operate the way normal people do.  Matter of fact, the government doesn’t even operate like a good company does.  And here is where they pull the wool over our eyes.  Let me explain using an example.

When Joe Public is doing a budget, he bases it off of how much he has coming in, and how much he as going out.  If he has more going out than coming in, he has no choice but to cut spending.  If he decides that he must make a spending cut, typically its going to result in him spending an amount less than what he is spending now.  So, where he may be spending $1,000 per month now, a budget cut may result in spending $950 per month next year.  That is a budget cut.

Now, the government doesn’t do that.  The government uses a nice little trick called baseline budgeting.  The government has already planned ahead as to what spending increases will be.  For example, while the budget for program A is $1,000 for 2011, they have already planned that in 2012 it will be $1,100, for 2013 it will be $1,200, and so on (sidenote:  the government tends to project increases in terms of percentages.  I’m using real numbers so I don’t have to use a calculator.).  So when there is talk of a spending cut, it is not like Joe Public, who takes his spending below what he was spending before.  Instead the government says, “well, instead of spending $1,100 in 2012, we’ll spend $1,050, and in 2013 we’ll spend $1,100.”  As you can see, overall spending still goes up, just not as fast.

This is why complaints about spending cuts have to be taken with a grain of salt.  Politicians will make things seem like a program is going to die due to budget cuts, but that is making the assumption that the reduced spending increase won’t be enough.  They also assume (correctly) that the majority of the people have no idea of how they are pulling the wool over their eyes.  If there is to be a serious, authentic discussion about spending cuts, then lets see some serious, authentic reductions in actual spending!

Good Reasons Why the GM Bailout Was Not a Good Thing

I came across an opinion piece that reminded me of the reasons why the GM bailout was not a good thing.  Shikha Dalmia explains why in an article at Reason.com called “Driving to Delusionville.” He mentions many reasons that have been stated before, but here is my favorite:

It gave Chrysler’s secured creditors, who would have had priority in a normal bankruptcy, 29 cents on the dollar. Chrysler’s unions, on the other hand, got more than 40 cents, even though they are equivalent to low-priority lenders. This made a mockery of longstanding bankruptcy law, something that will make credit markets wary of lending to political sacred cows in the future.

The administration favored union workers not only over creditors, but also other workers. All United Auto Workers retirees at Delphi, GM’s auto supplier, got 100 percent of their pension and retirement benefits. But 21,000 nonunion, salaried employees lost up to 70 percent of their pensions, and all of their life and health insurance. The Treasury could have covered 93 percent of the benefits of all employees for the same funds it spent on full union benefits, testified Bruce Gump, a representative of the Delphi Salaried Retirees Association.

So, not only did the government meddle when it wasn’t necessary, they managed to make sure union workers (who tend to vote Democrat) got good deals, while pretty much sticking it to the non-union employees and creditors. I would love for someone (anyone!) to get the White House to explain why the unions should get special treatment. The way the non-union Delphi employees were treated is absurd and indefensible.

Related articles

• HOW’S THAT BAILOUT GOIN’ FOR YA’? Uh oh: GM backlog looking a lot like 2008. “The bailed-out autom… (pajamasmedia.com)
• Private Emails Detail Obama Administration’s Involvement In Cutting Non-Union Worker Pensions Post-GM Bailout (thedaleygator.wordpress.com)
• Harshing the Government Motors Buzz (reason.com)

White House Disputes the Findings of Their Own Economic Advisors

Earlier I posted about how a group of economists picked by President Obama issued a report that showed the stimulus saved or created 2.4 million jobs at a cost of $278k per job.  Evidently the White House disagrees with those findings:

“That’s a cost to taxpayers of $278,000 per job,” according to the Weekly Standard, a Washington, D.C.-based magazine. “In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the ‘stimulus,’ and taxpayers would have come out $427 billion ahead.”

But the White House said that study is based on “partial information and false analysis.”

“The Recovery Act was more than a measure to create and save jobs; it was also an investment in American infrastructure, education and industries that are critical to America’s long-term success and investment in the economic future of America’s working families,” White House spokeswoman Liz Oxhorn said in a statement to FoxNews.com.

Read more: http://www.foxnews.com/politics/2011/07/05/white-house-disputes-study-saying-stimulus-cost-taxpayers-278000-per-job/#ixzz1RGDNjWuj

The story goes on to say that the WH points at a CBO report that says the number is closer to 3.6 million jobs, that the stimulus lowered unemployment, and helped spark economic growth. Republicans point out that unemployment is higher than it was, in addition to a substantial increase in the national debt. Still another person quoted says that there is no point in measuring effectiveness based on “cost per job.”

Whether or not the stimulus was effective will continue to be debated, it seems.

 

$278k Per Job “Created or Saved.” So the Stimulus Worked?

From Jeffrey H. Anderson at The Weekly Standard:

When the Obama administration releases a report on the Friday before a long weekend, it’s clearly not trying to draw attention to the report’s contents. Sure enough, the “Seventh Quarterly Report” on the economic impact of the “stimulus,” released on Friday, July 1, provides further evidence that President Obama’s economic “stimulus” did very little, if anything, to stimulate the economy, and a whole lot to stimulate the debt.

The report was written by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, and it chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus” (which it describes as a “natural way to estimate the effects of” the legislation), the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.

Wow.  Not very efficient, right? I would say that in corporate America, and you were running a company that was that inefficient, you’d get canned. When hiring an employee, there is the employee’s salary. Then, factor in another 30%-40% of the salary, which is what it costs the employer to train the new employee. Then, factor in another 20% of salary to account for benefits, social security, and other costs. Even if every employee accounted for in the stimulus numbers were new hires, and they were all paid $100,000 salaries, it STILL wouldn’t cost $278,000 to hire them. So one has to wonder why the cost was so high.

In the face of these numbers, as well as the fact that unemployment post-stimulus is higher than pre-stimulus, the argument made by Obama supporters that things were “worse than they thought” doesn’t justify the inefficient spending. Then again, I have to agree with Anderson–that maybe the stimulus would’ve worked better if the money had not been spent “mostly on Democratic constituencies rather than in a manner genuinely designed to stimulate the economy.”

 

GOP Claims “Reagan Conservatism” but Reagan Would Disagree

I’d written before that if Ronald Reagan ran for president, he wouldn’t make it our of the Republican primaries these days. Why? Because of his stance on taxes. You see, for all the railing today’s GOP is doing about no tax increases or ending of tax breaks, what gets overlooked is Reagan’s overall record on taxes and revenue.

Surely we’ve all heard that Reagan cut taxes. The storyline goes “Reagan cut taxes and the economy grew.” But therein lies some serious policy omission. After a massive tax rate cut in 1981, Reagan along with Congress (which included a Republican-led Senate) proceeded to pass a number of measures designed to raise revenue. Any of those measures would be criticized today as tax increases.

I’d been surprised that little has been said about this. But finally, an article in Politico spells it out:

The Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA) is the most famous, because of its historic size and timing, a dramatic course correction that quickly followed Reagan’s signature income tax cuts in 1981. But in the six years after were four more deficit-reduction acts, which combined to almost double TEFRA’s revenue impact on an annual basis.
…
Translated into current dollars, the total revenue increases for the five bills would then be equal to about $190 billion a year. That’s far in excess of anything that has been proposed by the White House in recent deficit talks led by Vice President Joseph Biden, yet most of these increases were approved when Republicans controlled the Senate in the 1980’s.

Democrats could really bash Republicans’ heads with this. Instead of the insipid arguments we keep hearing about “tax breaks for millionaires and billionaires” and “tax breaks for Big Oil” a simple tack of “well, Reagan did it” would be nearly impossible for Republicans to counter. After all, Reagan is patron saint of conservatism.

Related articles

• No, the Reagan Tax Cuts Did Not Raise Revenues: For the Virtual Green Room (delong.typepad.com)
• When Reagan raised taxes (cnn.com)
• Is the GOP willing to obey a leader? (macleans.ca)