August 9th, 2010
It’s no coincidence that Christina Romer, chairwoman of the White House Council of Economic Advisers, announced her retirement the day before Friday’s brutal unemployment report. With 131,000 more jobs lost in July, and downward revisions of 97,000 for the previous two months, it’s easy to see why she would start looking for the exits.
Romer is best known for drafting the February 2009 report “The Job Impact of the American Recovery and Reinvestment Plan,” which the White House used as an ammunition belt in the fight to gain passage of its $862 billion economic stimulus bill (the actual cost of which exceeds $1 trillion when interest is included). Romer predicted that following passage of the stimulus bill, unemployment would plateau below 8 percent last fall and by this month register at 7 percent. That’s not close enough for government work, as unemployment stands at 9.5 percent today. It would be higher except that hundreds of thousands of frustrated job seekers have given up looking for new jobs and dropped out of the labor force.
Predictably, the stimulus bill has proven to be an extraordinary waste of borrowed money that has failed to create jobs, generate economic growth or do much of anything other than line the pockets of White House political allies. That and give $308 million in subsidies to BP before the Gulf oil spill disaster, and subsidize a study on what happens when monkeys snort coke.
As Romer fades back to her teaching post at Berkeley, Obama is adding to the economic misery by creating an environment of regulatory uncertainty. The Wall Street reform law Obama recently signed potentially requires 533 new regulations, 60 studies and 93 reports, according to the U.S. Chamber of Commerce. Obama’s Environmental Protection Agency has 29 active rulemakings, and there are 100 new rules on the Labor Department’s agenda and 26 at the Transportation Department.
Add Obama’s determination to raise everybody’s taxes by allowing the Bush cuts from 2001 and 2003 to expire Jan. 1, 2011, and it’s easy to why banks, businesses and consumers are hoarding trillions of dollars that could otherwise spur economic growth. And we haven’t even addressed the destructive effect on economic growth of Obama’s nationalization of major portions of the economy, including the banks, health care and the auto industry.
The economy is stalling, unemployment seems stuck at European levels of idleness, the federal deficit and the national debt are at historic highs, public confidence in Congress is at its lowest-ever level and big majorities of Mainstream Americans say Obama has the country on the wrong path. Obamanomics has failed miserably and it’s time for everybody in this town to admit it so we can move on.
July 9, 2010
By: Peter Ferrara
Every year, the Annual Report of the Social Security Board of Trustees comes out between mid-April and mid-May. Now it’s July, and there’s no sign of this year’s report. What is the Obama administration hiding?
The annual report includes detailed information about Social Security and its financing over the next 75 years, produced by the Office of the Actuary of the Social Security Administration.
The Congressional Budget Office reported last week in its Long Term Budget Outlook that Social Security was already running a deficit this year. According to last year’s Social Security Trustees Report, that was not supposed to happen until 2015, with the trust fund to run out completely by 2037.
With the disastrous Obama economy, the great Social Security surplus that started in the Reagan administration is gone completely.
Every year, the federal government has been raiding the Social Security trust funds to take that annual surplus and spend it on the rest of the federal government’s runaway spending, leaving the trust funds only with IOUs backed by nothing but politicians’ promise to pay it back when it’s needed. Now even that annual surplus is gone. How soon will the trust funds run out completely now?
President Obama keeps telling us a fairy tale that he saved us from another Great Depression. But he is actually leading us into another Depression.
The National Bureau of Economic Research scores the recession as officially starting in December 2007. Thirty-one months later, with unemployment still near 10% and the work force still declining, the NBER says it still cannot determine an official end to the recession.
The longest recession since World War II previously was 16 months, with the average being 10 months. By next month, it will be twice as long as the previous postwar record since the latest recession started. The markets echoed by many pundits are now suggesting a renewed double-dip downturn may be starting, with the comprehensive Obama tax rate increases next year poised to pour napalm on this developing bonfire.
How soon will the trust funds run out with this utter failure of 1930s-style Obamanomics?
The implications for Social Security aren’t what the Obama administration is hiding by delaying the annual trustees reports. Those annual reports also include information regarding Medicare over the next 75 years. What the administration is trying to hide are sweeping draconian cuts to Medicare resulting from the ObamaCare legislation, which the annual report will document.
October 2, 2009
By James Pethokoukis
Does President Obama have a secret plan to raise taxes on middle-class Americans — and,well, pretty much everybody else — with a European-style, value-added tax? Actually, it’s not such a big secret. Connect the dots:
1) The joint statement from the just-concluded G20 Summit in Pittsburgh called for balanced global growth — which means Americans must spend less and save more and reduce its budget deficit.
2) That same weekend, John Podesta, co-chairman of Obama’s presidential transition team and an outside White House adviser, tells a Bloomberg reporter that a value-added tax is “more plausible today” than ever, adding that “there’s going to have to be revenue in this budget.” A VAT is a kind of consumption tax.
3) Yesterday, the Center for American Progress, the liberal think tank with close White House ties, holds a conference on the rising national debt. While speaker after speaker — Paul Krugman, Roger Altman, CAP President Podesta (again), Laura Tyson — admits entitlement spending must be reduced, they also agree that taxes must be raised. Altman suggests $400 billion in new tax revenue is needed almost immediately to calm financial market fears, and a VAT would be a great way of doing it. That’s $400 billion a year, by the way, not over ten years.
4) Also, yesterday was the first meeting of President Obama’s tax reform panel led by former Federal Reserve Chairman Paul Volcker. In a two-part interview with Charlie Rose airing yesterday and today, Volcker says that if Washington can’t get spending under control, either a VAT or a carbon tax would be effective revenue raisers. “Those are two big ones,” he says.
5) As they used to say in the Soviet Union, “It’s no coincidence.” This is also the conclusion of one Washington insider with ties to the White House economic team: “Does this all add up to a trial balloon? Of course, it’s a trial balloon. And I expect the administration will propose major tax reform, including a VAT.”
Obama’s campaign promise to not raise taxes on households making less than $250,000 a year was always considered a joke here inside the Beltway. It’s the economic “consensus” — and this was true even before the financial meltdown and recession — that rising entitlement costs would eventually mean a higher tax burden for the American people.
Maybe it was a joke inside the campaign, too. Since being elected, Obama has raised cigarette taxes and has advocated raising healthcare taxes, energy and small business taxes, in addition to corporate taxes. What’s more, economic advisers like Larry Summers seem eager to get rid of all the Bush tax cuts, not just those on so-called wealthy Americans.
And it’s also no secret that economists love the idea of a VAT. It promotes savings over consumption, and its hidden nature may mean it has less behavioral impact on taxpayers. Conservative economist Bruce Bartlet puts it this way, “As a broad-based tax on consumption, it creates less economic distortion per dollar of revenue than any other tax–certainly much less than the income tax.” Indeed, a VAT is part of cash-strapped California’s newly proposed tax reform.
Liberals love the idea of a VAT because it’s, well, so European — also because it does raise tons of revenue to expand government. And that is what Obama wants: more revenue to pay for bigger government. Is a VAT better than the soak-the-rich approach favored by Democrats such as Nancy Pelosi and Charlie Rangel? Sure. Of course, the concern is that a VAT would be in addition to new soak-the-rich taxes.
See, even after the recession, there might be a 6 percentage point difference between what Uncle Sam spends as a percentage of GDP and what it takes in. Liberals like Krugman have no problem with making up that difference purely through higher taxes, even though that translates into raising the national tax burden by at least a third. And that, even though such a massive hike might well have a crushing effect on growth.
Obama wants a VAT? First, it should be part of broader tax reform, including getting rid of capital gains and corporate taxes. Second, it should accompany an Economic Bill of Rights much like Ronald Reagan used to suggest. Its elements: a) a balanced budget amendment, b) a line-item veto, c) a spending limit such as inflation plus population growth, d) and a two-thirds vote in the House and Senate for any tax increases. (Reagan also wanted a prohibition on wage and price controls. That would likely kill ObamaCare.)
And come to think of it, let’s cut spending and streamline government before cash-strapped, wealth-reduced taxpayers are forced to pony up a penny more, OK?