The meeting with Republicans by President Obama was a last ditch effort on his part to salvage the unsalvageable. The health care plan pushed by the President is dead. It cannot be revived. The Democrats know this; the Republicans know this. Only the White House remains in denial.
Obama's State of the Union Address received zero bounce in the opinion polls. His polling favorability numbers never increased and are now falling once more.
The President's national polling numbers reflect the views expressed by voters in Massachusetts, New Jersey and Virginia. The President's agenda is arguably the most politically unpopular agenda in American history.
Up to now, the polls showed that the President remained popular but his agenda was not popular. That is changing. Now the President is catching up with his agenda. They are both now unpopular. Most polls in the last few weeks show that more Americans view President Obama unfavorably than view him favorably. This can only get worse for the President.
Sarah Palin's favorables are now higher than Obama's. And all the polls show that the public agrees with Sarah Palin's views and disagrees with the views of Obama.
But, Obama trudges on. Hoping against hope that some Republicans will swim toward the sinking Obama ship and sign on to his health care plan. It's not going to happen. Continuing to push this lost cause will only lead to further erosion of support for the President.
Tuesday, February 9, 2010
Monday, February 8, 2010
Three Cheers for Glenn Hubbard
This morning's Wall Street Journal has a brilliant article written by Glenn Hubbard, currently the Dean of the Business School of Columbia University. The subtitle of the article, in the opinion section of the WSJ, is "Tax Increases Can't Plausibly Address the Coming Entitlement Crisis."
This article is a well reasoned and fully accurate picture of the problems that the entitlements have created.
The entitlement problem is compounded by the fact that the very existence of these entitlements (social security and medicare) have reduced the incentive to save to zero for most middle class Americans. Why save when the government guarantees money and health care in retirement for you? In the mid 1970s when social security and medicare were dramatically expanded, the savings rate in the US fell off the cliff and has never recovered. Not even the current recession will keep savings from collapsing back to zero.
Until the entitlements are effectively phased out, which is really what Hubbard is advocating with a velvet glove, there will be no aggregate savings in the United States. This means larger and larger trade deficits and certain bankruptcy for the federal government and most states. If the squirrels don't put away acorns in the summer and fall, then none are available come winter.
We have changed the behavior of the average American with the entitlements. They don't save anymore. As Hubbard notes, the entitlements will surely bankrupt the country unless they are phased out and until they are phased out the US will continue along the zero savings path.
This article is a well reasoned and fully accurate picture of the problems that the entitlements have created.
The entitlement problem is compounded by the fact that the very existence of these entitlements (social security and medicare) have reduced the incentive to save to zero for most middle class Americans. Why save when the government guarantees money and health care in retirement for you? In the mid 1970s when social security and medicare were dramatically expanded, the savings rate in the US fell off the cliff and has never recovered. Not even the current recession will keep savings from collapsing back to zero.
Until the entitlements are effectively phased out, which is really what Hubbard is advocating with a velvet glove, there will be no aggregate savings in the United States. This means larger and larger trade deficits and certain bankruptcy for the federal government and most states. If the squirrels don't put away acorns in the summer and fall, then none are available come winter.
We have changed the behavior of the average American with the entitlements. They don't save anymore. As Hubbard notes, the entitlements will surely bankrupt the country unless they are phased out and until they are phased out the US will continue along the zero savings path.
Sunday, February 7, 2010
Dimitris Damianidis Is On Strike
Mr. Damianidis is a high school teacher in Greece, expecting to retire soon on a government pension of 28,000 Euros annually. He is on strike because the Greek government is going broke and threatening to make cuts in his salary and pension.
You might wonder what Mr. Damianidis job was like before retirement and at what age Mr. Damianidis is retiring. As the New York Times puts it in this morning's story:
"Like many public-sector workers and civil servants in Greece, Mr. Damianidis has led a comfortable middle-class life over his 34 years working for the state. His house is paid for, he can afford to go away for a two-week vacation every year, and he has a daughter in private school. His job is protected by the constitution, and the pay of public sector workers has doubled over the last decade."
Not bad. Please note that Mr. Damianidis is retiring at the official retirement age in Greece -- 60 years of age!
But, Mr. Damianidis is now angry because this cushy deal is threatened by a Greek government that hovers on bankruptcy. Not surprising, no one wants to buy Greek government bonds anymore. Who is to pick up the tab for Mr. Damianidis? That is now the interesting question.
Greece has been following the plan of most countries in the world: provide massive government benefits and finance these benefits with debt. That works until it no longer works. For Greece, it no longer works.
Greece is a member of the European Union, so all eyes are on Germany. The German and French economies are the only EU nations that are experiencing any real economic recovery. For the EU to do a bailout, Germany would have to provide the wherewithal. That would work -- for a while. But, then Germany has the same problem as Greece, so, in time, that won't work either.
Greece is a harbinger of the future in two respects: 1) public sector jobs, protected by union political activity are ultimately not affordable by Greece or any other society (see California and New York, if you are looking for American examples); 2) the practice of promising benefits to large parts of the population without providing any means of funding these benefits other than debt will eventually fail (think social security and medicare in the US).
Now Greece is looking to the IMF (think USA) to bail out these protected characters like Mr. Damianidis. Why? Mr. Damianidis should go get a real job and Greece should go bankrupt. If not, the contagion will spread to other countries. The US is not too far down the chain.
You might wonder what Mr. Damianidis job was like before retirement and at what age Mr. Damianidis is retiring. As the New York Times puts it in this morning's story:
"Like many public-sector workers and civil servants in Greece, Mr. Damianidis has led a comfortable middle-class life over his 34 years working for the state. His house is paid for, he can afford to go away for a two-week vacation every year, and he has a daughter in private school. His job is protected by the constitution, and the pay of public sector workers has doubled over the last decade."
Not bad. Please note that Mr. Damianidis is retiring at the official retirement age in Greece -- 60 years of age!
But, Mr. Damianidis is now angry because this cushy deal is threatened by a Greek government that hovers on bankruptcy. Not surprising, no one wants to buy Greek government bonds anymore. Who is to pick up the tab for Mr. Damianidis? That is now the interesting question.
Greece has been following the plan of most countries in the world: provide massive government benefits and finance these benefits with debt. That works until it no longer works. For Greece, it no longer works.
Greece is a member of the European Union, so all eyes are on Germany. The German and French economies are the only EU nations that are experiencing any real economic recovery. For the EU to do a bailout, Germany would have to provide the wherewithal. That would work -- for a while. But, then Germany has the same problem as Greece, so, in time, that won't work either.
Greece is a harbinger of the future in two respects: 1) public sector jobs, protected by union political activity are ultimately not affordable by Greece or any other society (see California and New York, if you are looking for American examples); 2) the practice of promising benefits to large parts of the population without providing any means of funding these benefits other than debt will eventually fail (think social security and medicare in the US).
Now Greece is looking to the IMF (think USA) to bail out these protected characters like Mr. Damianidis. Why? Mr. Damianidis should go get a real job and Greece should go bankrupt. If not, the contagion will spread to other countries. The US is not too far down the chain.
Saturday, February 6, 2010
Mistakes Provide Information
The Intergovernmental Panel on Climate Change (known more commonly as the IPCC) presented a 938 page Fourth Assessment Report that was the basis for the panic-mode approach to climate change of the Obama Administration (think Al Gore). This report, ostensibly from experts, is so riddled with mistakes that one wonders if any of the authors bothered to read it themselves. The reported melting of the "Himalayan Glacier" story was one of the funniest. Now, we find out that 55 percent of the Holland is below sea level, according to the IPCC. Not so, says Holland. We are only 26 percent below sea level. The IPCC is now in the process of correcting another of the numerous errors in the report. No wonder folks are skeptical about the global warming siren song.
Errors occur, of course, in every report. Witness, the recent popular book, "Game Change." On page 392, you find the following curious statement:
"The following Monday, September 29, the Paulson bailout plan was voted down in the House of Representatives, 228-205; not a single Republican pulled the lever in its favor." Bullshit. Not only did the entire House Republican leadership including Boehner and Cantor vocally support the Paulson Bailout, only a bare majority of Republicans voted against the bailout. The tide was turned by near unanimity of the Democratic "black caucus" vote, which went almost solidly against the Paulson bailout plan.
This tells you that authors Heilemann and Halperin weren't paying attention during the debate over the Paulson bailout. The vote for and against the Paulson bailout was significant for its bi-partisan character, not as Heilmann and Halperin suggest. It was not a partisan vote at all. But, Heilemann and Halperin are men on a mission. They want to show that the Republicans were partisan but Democrats were not. Don't let facts get in the way. Heilemann and Halperin made numerous other mistakes in the book that are of the same character. Their reporting of the Sarah Palin candidacy is so one-sided that one wonders where they were during the campaign. Certainly, the didn't pay much attention to the Paulson bailout controversy and perhaps Katie Couric was their main source on Sarah Palin.
Mistakes are often telling. Some mistakes are trivial and inadvertant. But some mistakes can and do reveal biases and raise questions of motive and integrity.
Errors occur, of course, in every report. Witness, the recent popular book, "Game Change." On page 392, you find the following curious statement:
"The following Monday, September 29, the Paulson bailout plan was voted down in the House of Representatives, 228-205; not a single Republican pulled the lever in its favor." Bullshit. Not only did the entire House Republican leadership including Boehner and Cantor vocally support the Paulson Bailout, only a bare majority of Republicans voted against the bailout. The tide was turned by near unanimity of the Democratic "black caucus" vote, which went almost solidly against the Paulson bailout plan.
This tells you that authors Heilemann and Halperin weren't paying attention during the debate over the Paulson bailout. The vote for and against the Paulson bailout was significant for its bi-partisan character, not as Heilmann and Halperin suggest. It was not a partisan vote at all. But, Heilemann and Halperin are men on a mission. They want to show that the Republicans were partisan but Democrats were not. Don't let facts get in the way. Heilemann and Halperin made numerous other mistakes in the book that are of the same character. Their reporting of the Sarah Palin candidacy is so one-sided that one wonders where they were during the campaign. Certainly, the didn't pay much attention to the Paulson bailout controversy and perhaps Katie Couric was their main source on Sarah Palin.
Mistakes are often telling. Some mistakes are trivial and inadvertant. But some mistakes can and do reveal biases and raise questions of motive and integrity.
Friday, February 5, 2010
Job Losses Continue
Friday's unemployment reading was more bad news. Instead of net job creation, the economy had net job losses for January. 20,000 fewer jobs in January than a month earlier. The unemployment rate fell to 9.7% only because more Americans simply gave up looking. If everyone gives up looking, then I guess we can get the unemployment rate to zero (even with no new jobs).
There are few hopeful signs for the economy. It seems that everything is simply being put on hold until the Congresssional elections this November. The Administration has made minor cosmetic changes in its war on the economy in an effort to stem the dramatic erosion of public support. So far, the polls show that the public is not fooled. This Administration is committed to nationalizing much of the American economy and stifling whatever is left.
The combination of anti-business rhetoric and class warfare policies has undermined the business atmosphere, which won't improve until the policies changes. It looks like we have to wait another ten months to see if that will happen.
There are few hopeful signs for the economy. It seems that everything is simply being put on hold until the Congresssional elections this November. The Administration has made minor cosmetic changes in its war on the economy in an effort to stem the dramatic erosion of public support. So far, the polls show that the public is not fooled. This Administration is committed to nationalizing much of the American economy and stifling whatever is left.
The combination of anti-business rhetoric and class warfare policies has undermined the business atmosphere, which won't improve until the policies changes. It looks like we have to wait another ten months to see if that will happen.
Tuesday, February 2, 2010
The 29 Percent Solution
The budget proposal announced by the President on Monday provides for spending increases of 29 percent over levels in 2008, the last year of the Bush Administration. This puts federal spending at a whopping 25 percent of GDP, a peacetime record.
The budget assumes a booming economy to provide the revenues for this largesse. It includes an estimated $ 2 trillion in tax increases and, even at that, the national debt pushes on toward bankruptcy.
Here are the two biggest lies in the budget:
1) Increasing tax rates will increase tax revenues. To see why this can be predictably false when tax rates are exhorbitant (as they are), imagine that personal tax rates were raised to 100 percent. Would that rate raise a lot of revenue? There probably won't be anywhere near $ 2 trillion in new revenues, because of the damage that the Obama tax increases will do to the economy.
2) The economy is going to boom in the face of the most massive increase in tax rates in world history. No economic theory that I know of suggests a boom in the face of the largest tax rate increases in human history.
This is the anti-Reagan, anti-Kennedy prescription. Waste a lot of money and increase taxes to record levels.
If much of this budget becomes a reality, you can expect stagnation for more than a generation. Worse, bankruptcy of the United States government is now on the table as a likely outcome.
The budget assumes a booming economy to provide the revenues for this largesse. It includes an estimated $ 2 trillion in tax increases and, even at that, the national debt pushes on toward bankruptcy.
Here are the two biggest lies in the budget:
1) Increasing tax rates will increase tax revenues. To see why this can be predictably false when tax rates are exhorbitant (as they are), imagine that personal tax rates were raised to 100 percent. Would that rate raise a lot of revenue? There probably won't be anywhere near $ 2 trillion in new revenues, because of the damage that the Obama tax increases will do to the economy.
2) The economy is going to boom in the face of the most massive increase in tax rates in world history. No economic theory that I know of suggests a boom in the face of the largest tax rate increases in human history.
This is the anti-Reagan, anti-Kennedy prescription. Waste a lot of money and increase taxes to record levels.
If much of this budget becomes a reality, you can expect stagnation for more than a generation. Worse, bankruptcy of the United States government is now on the table as a likely outcome.
Monday, February 1, 2010
Same Old Obama -- Blame The Last Ten Years
This morning the President twisted history a bit to deflect attention away from the runaway spending that he, yes he, has initiated. George Bush did not have anything to do with the $ 800 billion bill wasteful spending that Congress passed at Obama's urgings last January. George Bush had nothing to do with enormous increase in discretionary spending done at President Obama's behest. George Bush did not propose the climate change bill and the health care bill that have frozen the business community into solidity. Take credit where credit is due: President Obama holds the record as biggest spender and deficit financer in the history of the planet. He seems out to break his own record with the $ 3.8 trillion spending announced today for the coming fiscal year. Maybe the Nobel Prize committee can come up with an award for profligacy. Obama would certainly win it on merit.
Someone needs to tell Obama that he is the President, not George Bush. Folks are getting tired of the same old excuse for incompetence. Obama is making the Bush Administration look like a model of transparency and competency. The hypocrisy in the President's talk on the budget today is amazing. All of this is fooling no one. The so-called post-State of the Union "bounce" in the polls did not happen this time -- one of the first times in history that a sitting president got no benefit from his State of the Union address. Gallup showed the President's popularity stuck at 47 three days after the SOTU address, meaning no change. The public is tired of partisanship and obfuscation. Somebody needs to get through to the White House: enough is enough.
The problem with the national debt and the deficit is the growth in entitlement spending, a subject the President did not mention in his talk today. You can eliminate all other spending but social security and medicare and it will not matter -- the country still goes bankrupt. Why can't the President see this?
Someone needs to tell Obama that he is the President, not George Bush. Folks are getting tired of the same old excuse for incompetence. Obama is making the Bush Administration look like a model of transparency and competency. The hypocrisy in the President's talk on the budget today is amazing. All of this is fooling no one. The so-called post-State of the Union "bounce" in the polls did not happen this time -- one of the first times in history that a sitting president got no benefit from his State of the Union address. Gallup showed the President's popularity stuck at 47 three days after the SOTU address, meaning no change. The public is tired of partisanship and obfuscation. Somebody needs to get through to the White House: enough is enough.
The problem with the national debt and the deficit is the growth in entitlement spending, a subject the President did not mention in his talk today. You can eliminate all other spending but social security and medicare and it will not matter -- the country still goes bankrupt. Why can't the President see this?
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