A non-partisan study commissioned by the New York Federal Reserve Bank sheds new light on the home mortgage catastrophe that cratered the economy and spawned a government bailout of the banking industry.
Although the study has attracted scant media attention, the blockbuster report casts serious doubt on conventional wisdom about the cause of the housing market collapse.
Until the Fed released its data December 5, it was widely acknowledged both in the media and in Washington that Wall Street's shenanigans were largely responsible for the worst financial crisis in 80 years. While bankers are certainly not blameless, the report fingers housing speculators as the chief culprit.
The exhaustive study ordered by the New York Fed is entitled, "Flip This House: Investor Speculation and the Housing Bubble." Using unique data, the authors of the report found that speculators played a "previously unrecognized, but very important role" in the destruction of the housing market.
In analyzing volumes of data, the report documented how investors helped push up real estate prices during the period from 2004 through 2006. When prices plummeted in 2006, millions of mortgage holders defaulted, contributing to the steep downward trend in prices and property values.
Real estate speculation is not a new phenomenon. However, the difference this time was that policies in Washington encouraged lax lending standards that fueled the growth of sub-prime mortgages. This enabled even credit-challenged borrowers to load up on risky debt.
The report spells out how speculators acquired properties with little or no down payment with the purpose of selling quickly to reap a capital gain. This practice, called "flipping," was aided and abetted by mortgage companies that parcelled out loans without traditional due diligence.
These unscrupulous speculators began acquiring multiple homes in a mad race to maximize their profits. The New York Fed's study shows that 35 percent of borrowers who purchased new homes in 2006 owned two or more properties.
In the four states with the worst default rates, speculation was rampant. The Fed data reveals that 45 percent of borrowers who purchased homes in Arizona, California, Florida and Nevada in 2007 owned two or more homes.
Looking back decades, the study found that the share of housing sales by multiple property owners has never been as high as it was during the period from 2006 to 2007. This helps explain why defaults soared when borrowers saddled with expensive debt were unable to quickly unload their homes.
This speculative buying spree also contributed heavily to spiraling housing prices by reducing the available inventory of properties. In addition, excessive borrowing helped drive up interest rates for all prospective home buyers, including those with no interest in flipping their investment.
While some have conceded speculation contributed to the housing mess, it was seen as only a minor cause. Wall Street shouldered most of the blame because it repackaged the mortgages and sold the assets to investors. However, if the underlying mortgages had been solid, there would have been no housing crisis and no need for a bailout.
That fact has been lost on the Obama Administration and the media. They prefer to lay the blame at the feet of Wall Street because it plays better with voters, while turning a blind eye to the role of greedy individual investors who gamed the system.
That's the reason the mainstream media has ignored the New York Fed study. The findings get in the way of the media's narrative to make Wall Street the scapegoat for wrecking the economy.
Sunday, December 18, 2011
Monday, December 12, 2011
Biden Stricken With Hoof-and-Mouth Disease
Vice President Joe Biden, whose feet are permanently implanted in his mouth, recently unleashed a crass accusation that even the normally supportive Washington Post felt compelled to label "absurd." Of course, absurdity is Biden's middle name so his utterances only polish his reputation as a buffoon.
Speaking to a group of union thugs, Big Mouth Joe railed against Republican opposition to the president's misnamed American Jobs Act. The vice president claimed the bill's defeat has led to police layoffs and as a result "murder rates are up, robberies are up, rapes are up."
What really ticked off the vice president was that local and state governments are slicing jobs as tax receipts have declined because of the economy. In deciphering the cutbacks, Biden equated fewer police with higher crime. As usual, his assessment was more hot air than cold hard facts.
According to the Department of Justice, violent crime is down 47 percent since 1992. Property crime has tumbled 75 percent. These reductions have been achieved despite the fact that the ranks of police officers have been thinned.
To hear Biden tell it, you would also think police departments have been stripped bare. Actually, police forces have lost less than one percent of their manpower since 2000. The tiny decline follows steady growth in police officers which included a nine percent increase in a single year (2000).
Biden gets piqued over any suggestion of cutbacks in state and local government workers, most of whom are represented by Democrat Party lapdog unions. Yet taxpayers in states and local municipalities are having to bankroll ever expanding government payrolls.
In 2010, states and local governments employed an astonishing 16.6 million full-time and 4.8 million part-time workers. That eclipses the payrolls of all the Fortune 500 companies combined. These numbers are courtesy of U.S. Census Bureau's Annual Survey of Public Employment and Payroll.
Despite Biden's assertion about reductions in the size of government, his facts are only half-right. Twenty-two states and the District of Columbia have more state and local government jobs today than they did when the recession began.
For example, growth continues unabated in Wyoming, where the rolls of government workers have surged 14.75 percent since 2007. The District of Columbia increased its government jobs by 6.66 percent during the same period. Texas cranked up government employment by 4.37 percent.
While the nation's economy has wallowed in the depths of economic doldrums, states and local municipalities have been flush with cash from the federal government. Federal aid to state and local governments totalled nearly $700 billion in 2010.
This flow of big bucks from taxpayers has allowed states and local governments to keep adding employees even in the face of private sector downsizing. Since 1960, federal subsidies to state and local governments have risen a mind-numbing 1,173 percent.
All that money has led to an unhealthy dependency on the federal government, which helps insulate states and cities from economic downturns and falling tax receipts. It also removes any incentive to trim payrolls when federal taxpayers pick up the tab.
In addition, the gusher of tax dollars has encouraged a proliferation of local governments, including cities, townships, counties, special districts and school districts. The end result is more government than citizens can afford.
Figures from the Census Bureau document there are now 90,740 state and local government entities in the United States. Local governments employ 12.2 million people. The majority work in education, hospitals and police departments.
Paying for all those government employees means increased taxes and fees. But that doesn't faze Vice President Biden. He is already on record as favoring higher taxes to pay for even bigger government.
Poor Joe. The vice president doesn't understand taxpayers want less government and more truth. If only he could keep his feet in his shoes instead of his mouth.
Speaking to a group of union thugs, Big Mouth Joe railed against Republican opposition to the president's misnamed American Jobs Act. The vice president claimed the bill's defeat has led to police layoffs and as a result "murder rates are up, robberies are up, rapes are up."
What really ticked off the vice president was that local and state governments are slicing jobs as tax receipts have declined because of the economy. In deciphering the cutbacks, Biden equated fewer police with higher crime. As usual, his assessment was more hot air than cold hard facts.
According to the Department of Justice, violent crime is down 47 percent since 1992. Property crime has tumbled 75 percent. These reductions have been achieved despite the fact that the ranks of police officers have been thinned.
To hear Biden tell it, you would also think police departments have been stripped bare. Actually, police forces have lost less than one percent of their manpower since 2000. The tiny decline follows steady growth in police officers which included a nine percent increase in a single year (2000).
Biden gets piqued over any suggestion of cutbacks in state and local government workers, most of whom are represented by Democrat Party lapdog unions. Yet taxpayers in states and local municipalities are having to bankroll ever expanding government payrolls.
In 2010, states and local governments employed an astonishing 16.6 million full-time and 4.8 million part-time workers. That eclipses the payrolls of all the Fortune 500 companies combined. These numbers are courtesy of U.S. Census Bureau's Annual Survey of Public Employment and Payroll.
Despite Biden's assertion about reductions in the size of government, his facts are only half-right. Twenty-two states and the District of Columbia have more state and local government jobs today than they did when the recession began.
For example, growth continues unabated in Wyoming, where the rolls of government workers have surged 14.75 percent since 2007. The District of Columbia increased its government jobs by 6.66 percent during the same period. Texas cranked up government employment by 4.37 percent.
While the nation's economy has wallowed in the depths of economic doldrums, states and local municipalities have been flush with cash from the federal government. Federal aid to state and local governments totalled nearly $700 billion in 2010.
This flow of big bucks from taxpayers has allowed states and local governments to keep adding employees even in the face of private sector downsizing. Since 1960, federal subsidies to state and local governments have risen a mind-numbing 1,173 percent.
All that money has led to an unhealthy dependency on the federal government, which helps insulate states and cities from economic downturns and falling tax receipts. It also removes any incentive to trim payrolls when federal taxpayers pick up the tab.
In addition, the gusher of tax dollars has encouraged a proliferation of local governments, including cities, townships, counties, special districts and school districts. The end result is more government than citizens can afford.
Figures from the Census Bureau document there are now 90,740 state and local government entities in the United States. Local governments employ 12.2 million people. The majority work in education, hospitals and police departments.
Paying for all those government employees means increased taxes and fees. But that doesn't faze Vice President Biden. He is already on record as favoring higher taxes to pay for even bigger government.
Poor Joe. The vice president doesn't understand taxpayers want less government and more truth. If only he could keep his feet in his shoes instead of his mouth.
Monday, December 5, 2011
Washington Whine Leads To Drunken Spending
Liberals' favorite whine, harvested from the vineyard of intentional deceit, goes like this: attempts to rein in the federal budget will harm the poor, seniors and children. They view any reduction in spending as anathema because they believe the government should solve all the nation's ills.
Yet there exists a mountain of evidence that the bloated federal budget could be reduced by billions of dollars with virtually no impact on sacrosanct social programs. Waste, fraud, duplication, swollen government payrolls and pork barrel projects are bleeding taxpayers and draining the budget.
No one in Congress or the executive branch can claim ignorance. The independent Government Accountability Office (GAO) has been sounding the alarm bells for years. Their warnings have fallen on deaf ears as Congress has ignored the calls for reform while shoveling more money into flawed programs.
In fact, the government watchdog agency is now required under a new statute to identify duplication in federal programs, agencies, offices and initiatives. Its first annual report issued in March, the GAO found 34 major examples of overlapping services provided by various agencies.
In one case, the GAO discovered that the federal government administers 47 different employment and job training programs at an annual cost to taxpayers of about $18 billion. Despite the duplication and inefficiency, Congress unflinchingly continues to stuff money into every one of the programs.
Eliminating overlapping services represents a major opportunity for slicing the federal budget, but there are a whole litany of other financial sins the government commits annually. Here are just a few areas where the feds are bungling away billions of taxpayer dollars.
1. The Washington bureaucracy is replete with examples of waste. For instance, the Internal Revenue Service flushes billions down the toilet every year. A recent audit by the Treasury Department's Inspector General showed that the IRS made payments of $4.2 billion last year to illegal aliens who paid no federal income taxes. Unfortunately, this is not an isolated case. The IRS also delivered $112 million in refunds to prisoners who filed fraudulent returns. By its own estimate, the IRS has admitted it wastes about $10 billion a year. The IRS is not the only violator. Every year the GAO issues reports exposing bureaucratic waste in a myriad of federal programs.
2. In a country founded on limited government, the federal bureaucracy is the largest employer in the United States. The fed payroll includes more than 2.1 million civilians, which excludes the Post Office. The executive branch of the government, which consists of the office of the president, 15 cabinet departments and 70 independent agencies, accounts for 97 percent of all federal civilian workers. In addition, there are 945 federal advisory committees and commissions stretching across 52 government agencies, employing thousands of people. The feds have continued to fatten payrolls while most Americans businesses downsize. Since 2007, the executive branch has grown 14.8 percent while 6.5 million private sector jobs have disappeared during that timeframe.
3. Pork Barrel Projects are rampant, despite repeated promises to eliminate funding for programs designed to ingratiate lawmakers to their constituents. In fiscal 2010, the Citizens Against Government Waste organization identified 9,129 pork projects that cost taxpayers $16.5 billion. Examples include such doozies as handing out $615,000 so the University of California at Santa Cruz could digitize memorabilia from rock band Grateful Dead and supplying $443,340 to the National Institute of Health for a study of the habits of male prostitutes in Vietnam.
4. Fraud permeates every government agency, sapping taxpayer funds and adding to costs. Over the last decade, entitlement programs have been a favorite target, including these examples from past years: Medicare's overpayments to providers once totaled $12.1 billion. The Food Stamp Program was bilked out of $1.3 billion. The Department of Housing and Urban Development forked over $3.3 billion in payments as a result of fraud and errors. The Department of Agriculture recently was unable to account for $5 billion in receipts and expenditures. Read enough? The bureaucracy is simply too big to manage and there are no incentives to reduce fraud when taxpayer funding allows the government to act irresponsibly without penalty.
Weary taxpayers have every right to demand that Washington clean up this mess before asking for one penny more in taxes from its citizens. Not only do the feds need to end waste, duplication, fraud and pork barrel spending, but the enormous size of government must be addressed.
As President Reagan once famously observed, a government agency "is the closest thing to eternal life we will ever see on earth." A nation saddled with $15 trillion in debt can no longer afford to stand by and watch its government grow fatter and more wasteful.
Taxpayers are finally sobering up after suffering the hangover effects of the liberals favorite whine. They don't want more binge spending.
Yet there exists a mountain of evidence that the bloated federal budget could be reduced by billions of dollars with virtually no impact on sacrosanct social programs. Waste, fraud, duplication, swollen government payrolls and pork barrel projects are bleeding taxpayers and draining the budget.
No one in Congress or the executive branch can claim ignorance. The independent Government Accountability Office (GAO) has been sounding the alarm bells for years. Their warnings have fallen on deaf ears as Congress has ignored the calls for reform while shoveling more money into flawed programs.
In fact, the government watchdog agency is now required under a new statute to identify duplication in federal programs, agencies, offices and initiatives. Its first annual report issued in March, the GAO found 34 major examples of overlapping services provided by various agencies.
In one case, the GAO discovered that the federal government administers 47 different employment and job training programs at an annual cost to taxpayers of about $18 billion. Despite the duplication and inefficiency, Congress unflinchingly continues to stuff money into every one of the programs.
Eliminating overlapping services represents a major opportunity for slicing the federal budget, but there are a whole litany of other financial sins the government commits annually. Here are just a few areas where the feds are bungling away billions of taxpayer dollars.
1. The Washington bureaucracy is replete with examples of waste. For instance, the Internal Revenue Service flushes billions down the toilet every year. A recent audit by the Treasury Department's Inspector General showed that the IRS made payments of $4.2 billion last year to illegal aliens who paid no federal income taxes. Unfortunately, this is not an isolated case. The IRS also delivered $112 million in refunds to prisoners who filed fraudulent returns. By its own estimate, the IRS has admitted it wastes about $10 billion a year. The IRS is not the only violator. Every year the GAO issues reports exposing bureaucratic waste in a myriad of federal programs.
2. In a country founded on limited government, the federal bureaucracy is the largest employer in the United States. The fed payroll includes more than 2.1 million civilians, which excludes the Post Office. The executive branch of the government, which consists of the office of the president, 15 cabinet departments and 70 independent agencies, accounts for 97 percent of all federal civilian workers. In addition, there are 945 federal advisory committees and commissions stretching across 52 government agencies, employing thousands of people. The feds have continued to fatten payrolls while most Americans businesses downsize. Since 2007, the executive branch has grown 14.8 percent while 6.5 million private sector jobs have disappeared during that timeframe.
3. Pork Barrel Projects are rampant, despite repeated promises to eliminate funding for programs designed to ingratiate lawmakers to their constituents. In fiscal 2010, the Citizens Against Government Waste organization identified 9,129 pork projects that cost taxpayers $16.5 billion. Examples include such doozies as handing out $615,000 so the University of California at Santa Cruz could digitize memorabilia from rock band Grateful Dead and supplying $443,340 to the National Institute of Health for a study of the habits of male prostitutes in Vietnam.
4. Fraud permeates every government agency, sapping taxpayer funds and adding to costs. Over the last decade, entitlement programs have been a favorite target, including these examples from past years: Medicare's overpayments to providers once totaled $12.1 billion. The Food Stamp Program was bilked out of $1.3 billion. The Department of Housing and Urban Development forked over $3.3 billion in payments as a result of fraud and errors. The Department of Agriculture recently was unable to account for $5 billion in receipts and expenditures. Read enough? The bureaucracy is simply too big to manage and there are no incentives to reduce fraud when taxpayer funding allows the government to act irresponsibly without penalty.
Weary taxpayers have every right to demand that Washington clean up this mess before asking for one penny more in taxes from its citizens. Not only do the feds need to end waste, duplication, fraud and pork barrel spending, but the enormous size of government must be addressed.
As President Reagan once famously observed, a government agency "is the closest thing to eternal life we will ever see on earth." A nation saddled with $15 trillion in debt can no longer afford to stand by and watch its government grow fatter and more wasteful.
Taxpayers are finally sobering up after suffering the hangover effects of the liberals favorite whine. They don't want more binge spending.
Tuesday, November 29, 2011
The Untimely Death of the Personal Computer
As the venerable personal computer turns 30 years old, it may seem heretical to predict its demise. However, the PC appears headed for an early grave as demand for mobility and portable information is pushing consumers toward new high-tech devices.
No less authority than Mark Dean has predicted the personal computer will go the way of the "vacuum tube, typewriter, vinyl records, CRT and incandescent light bulbs." Dean's words carry added weight because he once held the title of chief technology officer at computing Goliath IBM.
Market trends support Dean's prediction. Sales of personal computers have slowed dramatically in the past 18 months, while demand for tablets and smartphones has exceeded forecasts. Mounting evidence suggests that tablets, in particular, are being snapped up as replacements for personal computers.
The news could not come at a worst time for the computer industry. PC shipments declined 6.6 percent in the fourth quarter of last year. In the most recent quarter, shipments rose only 3.2 percent, significantly below historical averages. Analysts had forecast sales growth this year of 13.6 percent.
Despite the modest quarterly gain, consumer appetite for personal computers in the United States, Canada and Europe has waned. The computer industry was able to eke out a sales increase, thanks to growing demand in emerging markets, such as China, India and Turkey.
Even with a three-decade head start, personal computer firms are in danger of being swamped by a tsunami of competition. Data indicates that for the first time in history more smartphones have shipped this year than personal computers.
Smartphone sales reached 115 million in the third quarter, a 42 percent increase from the same period a year ago. Worldwide sales of smartphones are predicted to top 468 million this year, according to Gartner, a tech research firm. By comparison, Gartner forecasts 352 million PC's will be sold in 2011.
If smartphone sales are sizzling, then tablets are on fire. Apple, the market leader with its iPad, expects to sell 40 million tablets this year. The year over year growth is north of 342 percent. iPads are selling at a rate of 1.22 every second of every day. Data shows consumers are junking their notebook computers in favor of iPads.
The Apple juggernaut has captured 61 percent of the tablet market in spite of fierce competition. In its most recent quarter, iPad sales topped $6 billion. The tablet has become the top selling consumer electronics device ever in a little over 18 months.
While tablets are cannibalizing consumer PC sales, smartphones are invading the personal computer's business turf. More smartphones are being linked to enterprise applications once reserved for PC's. Medical centers, universities, small businesses and even auto companies are swapping smartphones for PC's.
Worst of all, most of the largest computer makers have no PC alternatives. None offer smartphones or tablets, except HP. The firm purchased Palm in April of last year, but has stumbled in the market. HP introduced a flashy tablet earlier this year then quickly withdrew it because of moribund sales.
What's behind the rapid ascent of smartphones and tablets? There are two chief reasons for the growth: technology advancements are leveling the playing field between smartphones, tablets and PC's; and, users are demanding anywhere-anytime access to personal and public data and information.
Today's smartphones have more computing power than the average PC's of just a decade or more ago. Most smartphones have storage capacity of 16 to 64 gigabytes. A desktop computer in 1998 typically could store up to two gigabytes. The computer of that era had 64 megabits of memory, compared to more than 256 megabits of random access memory for today's smartphones.
The other disruptive trend for the computer industry is the demand for portable information. Consumers no longer want to be shackled to a single computer to access their videos, photos, email, documents and music. They want to get data and information whenever and wherever they happen to be.
While PC's are busy fending off smartphones and tablets, another competitor has emerged. Smart televisions are entering the marketplace. The new sets have built-in Internet connectivity, offer games, high-tech applications and a myriad of features that mimic those available on personal computers.
Despite all the competition, PC's will not disappear overnight. Increasing sales in foreign markets will continue to prop up the industry. However, in time death will come slowly but surely for the PC.
For a 30 year old, that's a foreboding prospect.
No less authority than Mark Dean has predicted the personal computer will go the way of the "vacuum tube, typewriter, vinyl records, CRT and incandescent light bulbs." Dean's words carry added weight because he once held the title of chief technology officer at computing Goliath IBM.
Market trends support Dean's prediction. Sales of personal computers have slowed dramatically in the past 18 months, while demand for tablets and smartphones has exceeded forecasts. Mounting evidence suggests that tablets, in particular, are being snapped up as replacements for personal computers.
The news could not come at a worst time for the computer industry. PC shipments declined 6.6 percent in the fourth quarter of last year. In the most recent quarter, shipments rose only 3.2 percent, significantly below historical averages. Analysts had forecast sales growth this year of 13.6 percent.
Despite the modest quarterly gain, consumer appetite for personal computers in the United States, Canada and Europe has waned. The computer industry was able to eke out a sales increase, thanks to growing demand in emerging markets, such as China, India and Turkey.
Even with a three-decade head start, personal computer firms are in danger of being swamped by a tsunami of competition. Data indicates that for the first time in history more smartphones have shipped this year than personal computers.
Smartphone sales reached 115 million in the third quarter, a 42 percent increase from the same period a year ago. Worldwide sales of smartphones are predicted to top 468 million this year, according to Gartner, a tech research firm. By comparison, Gartner forecasts 352 million PC's will be sold in 2011.
If smartphone sales are sizzling, then tablets are on fire. Apple, the market leader with its iPad, expects to sell 40 million tablets this year. The year over year growth is north of 342 percent. iPads are selling at a rate of 1.22 every second of every day. Data shows consumers are junking their notebook computers in favor of iPads.
The Apple juggernaut has captured 61 percent of the tablet market in spite of fierce competition. In its most recent quarter, iPad sales topped $6 billion. The tablet has become the top selling consumer electronics device ever in a little over 18 months.
While tablets are cannibalizing consumer PC sales, smartphones are invading the personal computer's business turf. More smartphones are being linked to enterprise applications once reserved for PC's. Medical centers, universities, small businesses and even auto companies are swapping smartphones for PC's.
Worst of all, most of the largest computer makers have no PC alternatives. None offer smartphones or tablets, except HP. The firm purchased Palm in April of last year, but has stumbled in the market. HP introduced a flashy tablet earlier this year then quickly withdrew it because of moribund sales.
What's behind the rapid ascent of smartphones and tablets? There are two chief reasons for the growth: technology advancements are leveling the playing field between smartphones, tablets and PC's; and, users are demanding anywhere-anytime access to personal and public data and information.
Today's smartphones have more computing power than the average PC's of just a decade or more ago. Most smartphones have storage capacity of 16 to 64 gigabytes. A desktop computer in 1998 typically could store up to two gigabytes. The computer of that era had 64 megabits of memory, compared to more than 256 megabits of random access memory for today's smartphones.
The other disruptive trend for the computer industry is the demand for portable information. Consumers no longer want to be shackled to a single computer to access their videos, photos, email, documents and music. They want to get data and information whenever and wherever they happen to be.
While PC's are busy fending off smartphones and tablets, another competitor has emerged. Smart televisions are entering the marketplace. The new sets have built-in Internet connectivity, offer games, high-tech applications and a myriad of features that mimic those available on personal computers.
Despite all the competition, PC's will not disappear overnight. Increasing sales in foreign markets will continue to prop up the industry. However, in time death will come slowly but surely for the PC.
For a 30 year old, that's a foreboding prospect.
Saturday, November 19, 2011
News Media Exposes Its Unseemly Underbelly
Media ethics are an oxymoron in an era when news outlets thrive on assassinating the reputations of public figures with unproven allegations while sacrificing what few principles they profess on the altar of shameless exploitation.
Two recent high-profile cases underscore this sleazy brand of journalism. The pillorying of presidential candidate Herman Cain and the savaging of college football coach Joe Paterno are recent examples of how the media has abandoned all pretense of fairness and objectivity in reporting.
Once standards dictated that journalists wait for law enforcement officials to file charges before reporting on allegations, heresy or gossip. But in the race for ratings, media organizations now turn to sensationalism, shock and sex to pander to their audience's worst prurient interests.
Before taking up the Cain and Paterno cases, a caveat is in order. What follows is NOT a defense of either man, but an indictment of the reporters and editors who have allowed their own bias and views to trample journalistic professionalism.
Weeks ago unfounded allegations surfaced regarding Cain's alleged sexual harassment of women. The media smelled blood when Cain stumbled in his initial denials. That was all the license they needed to air innuendo and salacious statements from alleged and often anonymous victims.
After some crawfishing Cain did admit that a sexual harassment settlement was made without his knowledge by his former employer. That became a lightning rod for the media, which treated the legal deal as an admission of guilt.
News coverage of the Cain allegations stands in sharp contrast to similar sexual harassment charges against President Clinton. In 1999, Clinton quietly reached an out-of-court settlement in the sexual harassment case filed by Paula Jones after his repeated claims of innocence.
The legal maneuver came on the heels of a federal district judge's criticism of Clinton for "willful failure" to obey her repeated orders to testify truthfully in the lawsuit lodged by Ms. Jones. The judged fined Clinton for his conduct. News of the settlement was either buried or not mentioned.
Judging from the news treatment of the allegations against Cain, there can be no question of the media's double standard. It also begs the question: If Clinton was fit to remain as president despite a sexual harassment settlement, why should a similar legal agreement disqualify Cain from that office?
While Cain continues to soldier on in the presidential race, Penn State's Joe Paterno has been forced out by the board of trustees after 46 years as head football coach. The action follows a grand jury investigation of former assistant coach Jerry Sandusky, who has been charged with 40 counts of sexual abuse of children.
Once the scandal broke, several top Penn State officials, including the athletic director, stepped down. Immediately the news media, including influential sports media giant ESPN, demanded Paterno's resignation, even though prosecutors had indicated the coach would not be charged with a crime.
Among the few facts released by the prosecutors was a report that once Paterno was made aware of the allegation, the head coach advised the athletic director as required. In a later statement, Paterno publicly admitted remorse for not doing more to investigate the allegation.
That admission didn't satisfy the media's unquenchable thirst to humiliate Paterno. The media's suffocating coverage bullied the university's trustees into a hastily called meeting that ended with Paterno's firing, depriving the coach of an opportunity to gracefully step down days before it was revealed he had lung cancer.
One only has to remember the Duke lacrosse case as a cautionary tale of media justice. To refresh your memory, three members of the Duke lacrosse team were charged in 2006 with raping a woman at a party. Because of the university's pristine reputation, the media enthusiastically reported the allegations and battered Duke's reputation as if it was a piñata.
After more than a year of unrelenting coverage, the charges were proven false and the unscrupulous prosecutor in the case was disbarred. Unfortunately, the facts surfaced after the Lacrosse coach had been fired, player reputations were ruined and the team's season cancelled by the university president.
Paterno and Cain may indeed be guilty of crimes. If so, they deserve our scorn. But until they are charged in a court of law and a jury finds them guilty, they remain innocent. The heinous nature of the allegations do not justify the media's rush to judgment.
Fairness and objectivity may seem like quaint values to today's journalists, but they are standards worth upholding. Media consumers should demand nothing less.
Two recent high-profile cases underscore this sleazy brand of journalism. The pillorying of presidential candidate Herman Cain and the savaging of college football coach Joe Paterno are recent examples of how the media has abandoned all pretense of fairness and objectivity in reporting.
Once standards dictated that journalists wait for law enforcement officials to file charges before reporting on allegations, heresy or gossip. But in the race for ratings, media organizations now turn to sensationalism, shock and sex to pander to their audience's worst prurient interests.
Before taking up the Cain and Paterno cases, a caveat is in order. What follows is NOT a defense of either man, but an indictment of the reporters and editors who have allowed their own bias and views to trample journalistic professionalism.
Weeks ago unfounded allegations surfaced regarding Cain's alleged sexual harassment of women. The media smelled blood when Cain stumbled in his initial denials. That was all the license they needed to air innuendo and salacious statements from alleged and often anonymous victims.
After some crawfishing Cain did admit that a sexual harassment settlement was made without his knowledge by his former employer. That became a lightning rod for the media, which treated the legal deal as an admission of guilt.
News coverage of the Cain allegations stands in sharp contrast to similar sexual harassment charges against President Clinton. In 1999, Clinton quietly reached an out-of-court settlement in the sexual harassment case filed by Paula Jones after his repeated claims of innocence.
The legal maneuver came on the heels of a federal district judge's criticism of Clinton for "willful failure" to obey her repeated orders to testify truthfully in the lawsuit lodged by Ms. Jones. The judged fined Clinton for his conduct. News of the settlement was either buried or not mentioned.
Judging from the news treatment of the allegations against Cain, there can be no question of the media's double standard. It also begs the question: If Clinton was fit to remain as president despite a sexual harassment settlement, why should a similar legal agreement disqualify Cain from that office?
While Cain continues to soldier on in the presidential race, Penn State's Joe Paterno has been forced out by the board of trustees after 46 years as head football coach. The action follows a grand jury investigation of former assistant coach Jerry Sandusky, who has been charged with 40 counts of sexual abuse of children.
Once the scandal broke, several top Penn State officials, including the athletic director, stepped down. Immediately the news media, including influential sports media giant ESPN, demanded Paterno's resignation, even though prosecutors had indicated the coach would not be charged with a crime.
Among the few facts released by the prosecutors was a report that once Paterno was made aware of the allegation, the head coach advised the athletic director as required. In a later statement, Paterno publicly admitted remorse for not doing more to investigate the allegation.
That admission didn't satisfy the media's unquenchable thirst to humiliate Paterno. The media's suffocating coverage bullied the university's trustees into a hastily called meeting that ended with Paterno's firing, depriving the coach of an opportunity to gracefully step down days before it was revealed he had lung cancer.
One only has to remember the Duke lacrosse case as a cautionary tale of media justice. To refresh your memory, three members of the Duke lacrosse team were charged in 2006 with raping a woman at a party. Because of the university's pristine reputation, the media enthusiastically reported the allegations and battered Duke's reputation as if it was a piñata.
After more than a year of unrelenting coverage, the charges were proven false and the unscrupulous prosecutor in the case was disbarred. Unfortunately, the facts surfaced after the Lacrosse coach had been fired, player reputations were ruined and the team's season cancelled by the university president.
Paterno and Cain may indeed be guilty of crimes. If so, they deserve our scorn. But until they are charged in a court of law and a jury finds them guilty, they remain innocent. The heinous nature of the allegations do not justify the media's rush to judgment.
Fairness and objectivity may seem like quaint values to today's journalists, but they are standards worth upholding. Media consumers should demand nothing less.
Saturday, November 12, 2011
Entitlement Reform: A Grim Fairy Tale
The prospect of a far-reaching budget agreement from the Congressional "super committee" is looking more every day like another Washington fairy tale. With a November 23 deadline looming, the 12-member panel seems destined to fumble the opportunity to end runaway deficits.
Unlike discretionary spending, entitlement expenditures are mandated in the budget. That means Congress has no authority to cut entitlement budgets. Each year's budget is based on several factors, including estimates of expenditures and the anticipated number of recipients. The only way lawmakers can address entitlements is to change the laws that created the programs.
Many political pundits are blaming partisan bickering for the gloomy outlook. They are only half-right. There likely will be no overarching deal, but it will be because President Obama has no intention to be party to any agreement that reduces funding for Social Security, Medicare and Medicaid.
The president long ago signaled his intentions. In February, he was asked why his proposed 2012 budget failed to tackle soaring entitlement spending. He dodged responsibility, tossing the issue back in the laps of lawmakers to hammer out a deal to fix entitlements.
"If you look at the history of how these deals get done, it's typically not because there's an Obama plan out there," the president said at a news conference. In other words, Americans should not look to their leader for solutions to thorny issues when they can be sloughed off to another branch of government.
As written in this space months ago, President Obama clearly intends to make saving Social Security, Medicare and Medicaid a key plank in his reelection campaign. A bipartisan deal robs the president of stump speeches accusing Republicans of trying to scuttle entitlements for seniors.
Politics aside, without drastic entitlement reform, nothing can be done about the yawning budget deficits. No amount of tax increases would bring spending in line with revenues. The math doesn't work, no matter how many times Obama and the Democrats trot out the line about millionaires paying more taxes.
For starters, the sheer size of entitlement costs dwarfs all discretionary programs. In 2011, all spending on entitlements topped $2 trillion, exceeding all the taxes collected by the federal government. That figure includes not only the Big Three, but also food assistance, unemployment insurance and smaller aid programs.
Only a few years ago, the budget picture was not so dire. In 2007, federal revenues exceeded mandatory entitlement spending by $1.17 trillion. The following year, the last of the Bush Administration, tax revenues covered entitlements with $914 billion to spare.
Since Obama assumed the presidency, the situation has reversed as deficits have swamped the nation's tax resources. Under President Obama's latest budget, entitlement spending is pegged at $2.109 trillion this fiscal year, widening the deficit.
Entitlements costs trend sharply upward in future years. Obama's own forecasts show entitlement spending will reach $5.7 trillion by 2021, nearly triple this year's budget. If the estimates are accurate, the cumulative deficit with top $7 trillion by that year.
Since Obama assumed the presidency, the situation has reversed as deficits have swamped the nation's tax resources. Under President Obama's latest budget, entitlement spending is pegged at $2.109 trillion this fiscal year, widening the deficit.
Entitlements costs trend sharply upward in future years. Obama's own forecasts show entitlement spending will reach $5.7 trillion by 2021, nearly triple this year's budget. If the estimates are accurate, the cumulative deficit with top $7 trillion by that year.
The astronomical increases are expected to occur as the population ages and health care costs continue to escalate. The problem will be exacerbated by the fact there will be fewer workers per retiree paying taxes into Social Security, Medicare and Medicaid.
Unlike discretionary spending, entitlement expenditures are mandated in the budget. That means Congress has no authority to cut entitlement budgets. Each year's budget is based on several factors, including estimates of expenditures and the anticipated number of recipients. The only way lawmakers can address entitlements is to change the laws that created the programs.
If every discretionary spending program, including national defense, ended tomorrow the nation would still have to trim entitlements to lower deficits. To underscore that point, since 1976 entitlement spending has eclipsed budget expenditures on national defense in every fiscal year. In 2011, entitlement expenditures were three times larger than the military budget.
Despite all the evidence supporting the need for entitlement reform, the president and his party seem oblivious to the obvious. That's why no one should expect comprehensive entitlement reform as part of any deal to meet the objective of reducing the deficit by at least $1.2 trillion over the next decade.
Instead, the committee will produce a modest plan polished with eye-popping dollar signs aimed at duping the public into thinking Congress has taken bold steps to prune creaky entitlements. However, in the fine print you will likely read that entitlements survive unscathed with only minor tweaks while discretionary items shoulder the brunt of the budget snipping.
Once the deal is announced, the media will gush over the "landmark" agreement. Credit rating agencies won't be fooled, however, and will likely downgrade U.S. debt. For his part, the president will sharpen his attacks on Republicans, blaming them for not raising taxes on the rich and threatening to end entitlements for seniors.
Hopefully, most Americans will see through the shabby political charade. Those who don't will be ones who still believe in fairy tales.
Despite all the evidence supporting the need for entitlement reform, the president and his party seem oblivious to the obvious. That's why no one should expect comprehensive entitlement reform as part of any deal to meet the objective of reducing the deficit by at least $1.2 trillion over the next decade.
Instead, the committee will produce a modest plan polished with eye-popping dollar signs aimed at duping the public into thinking Congress has taken bold steps to prune creaky entitlements. However, in the fine print you will likely read that entitlements survive unscathed with only minor tweaks while discretionary items shoulder the brunt of the budget snipping.
Once the deal is announced, the media will gush over the "landmark" agreement. Credit rating agencies won't be fooled, however, and will likely downgrade U.S. debt. For his part, the president will sharpen his attacks on Republicans, blaming them for not raising taxes on the rich and threatening to end entitlements for seniors.
Hopefully, most Americans will see through the shabby political charade. Those who don't will be ones who still believe in fairy tales.
Saturday, November 5, 2011
Obama's Uneducated College Gambit
President Obama's executive fiat to relax the rules for repaying college loans was a calculated political ploy aimed at placating student voters and liberal academia. However, his gambit will do nothing to solve the national crisis of skyrocketing costs for tuition at private and public universities.
Instead of addressing the real problem, the president choose once again to rely on the federal government as the remedy. Yet by providing financial aid and subsidized loans, the federal government is enabling colleges to raise tuition costs without any concern for the impact on students' ability to pay.
A 2007 study by University of Oregon economists produced compelling evidence to support that claim. Their research found that universities "tend to absorb most federal student aid by increasing their tuition revenue." In other words, as grants increase, universities are embolden to raise tuition costs.
Patrick Callan, president of the National Center for Public Policy and Higher Education, took note of the same issue in a recent interview. "For 25 years we've been putting more and more money into financial aid and tuition keeps going up. We're on a national treadmill."
In the midst of an anemic economy, tuition and fees at public colleges soared eight percent this year. Private universities raised tuition and fees by 4.5 percent On average over the last 30 years, college tuition rates have increased at double the general inflation rate.
As a result, the average tuition at a four-year public university for in-state students now stands at $21,447 annually. The same costs at a four-year private college average $42,224. However, with financial aid, the average net price paid at both private and public universities is significantly less than those costs.
Students at public colleges pay on average about 75 percent of the advertised tuition costs. Their counterparts at private universities only shell out an average of 66 percent of the sticker price for a higher education, according to the College Board. As these figures illustrate, financial aid helps insulate students from price increases.
To keep pace with escalating costs, financial assistance to college students has ascended at a blistering 438 percent over the past three decades, the College Board estimates. This spike in funds is the result of dramatic increases in federal grant and loan programs.
For example, last fiscal year the government doled out a record $12.2 billion in Pell Grants to needy students. Government student loans totaled $130 billion. Throw in another $250 billion in private loans and you have $392.2 billion in financial aid funneled to college students in a single year.
Those billions are only the tip of the iceberg. The federal government estimates there are more than 88,500 loan and aid programs administered by Washington, the states, private foundations and scholarship organizations in the United States.
But often government financial aid comes with a catch. Students must repay the money, except in the case of Pell Grants. The College Board estimates that the average student graduates with $24,000 in debt. A full 10 percent of students have loans of $40,000 and more. Two-thirds of students who graduate owe money for college loans.
All those billions in loans are adding up to a potential giant headache for the economy. This year total outstanding student loan debt passed $1 trillion, which exceeds consumer credit card debt in America. By easing rules on loan repayments, the president risks triggering a wave of student defaults and adding to the growing problem of unpaid balances. If that happens, the government will be faced with the prospect of another costly bailout.
Public and private universities have dodged any blame for escalating costs. They point to price increases for everything from scholarly journals to pay for professors. However, studies have shown that the lion's share of the tuition increases at many institutions have gone to add buildings, facilities, gyms, technology and to upgrade dorms.
Academic leaders also justify tuition increases by pointing to cuts in state funding. They act as if the only solution is higher prices to offset reduced subsidies. Unlike any other business, they reject the idea of paring budgets to reflect new economic realities.
Meanwhile, there is no credible evidence that the added spending has improved the quality of higher education. Parents and students are paying more money for the same education, albeit in fancier buildings fitted with high tech gadgets.
That's why the president's pandering to young voters and the elitist university establishment is such a pathetic gesture. Too bad the president's own college degree did not better prepare him to address the issue of runaway higher education costs affecting students and their parents.
Instead of addressing the real problem, the president choose once again to rely on the federal government as the remedy. Yet by providing financial aid and subsidized loans, the federal government is enabling colleges to raise tuition costs without any concern for the impact on students' ability to pay.
A 2007 study by University of Oregon economists produced compelling evidence to support that claim. Their research found that universities "tend to absorb most federal student aid by increasing their tuition revenue." In other words, as grants increase, universities are embolden to raise tuition costs.
Patrick Callan, president of the National Center for Public Policy and Higher Education, took note of the same issue in a recent interview. "For 25 years we've been putting more and more money into financial aid and tuition keeps going up. We're on a national treadmill."
In the midst of an anemic economy, tuition and fees at public colleges soared eight percent this year. Private universities raised tuition and fees by 4.5 percent On average over the last 30 years, college tuition rates have increased at double the general inflation rate.
As a result, the average tuition at a four-year public university for in-state students now stands at $21,447 annually. The same costs at a four-year private college average $42,224. However, with financial aid, the average net price paid at both private and public universities is significantly less than those costs.
Students at public colleges pay on average about 75 percent of the advertised tuition costs. Their counterparts at private universities only shell out an average of 66 percent of the sticker price for a higher education, according to the College Board. As these figures illustrate, financial aid helps insulate students from price increases.
To keep pace with escalating costs, financial assistance to college students has ascended at a blistering 438 percent over the past three decades, the College Board estimates. This spike in funds is the result of dramatic increases in federal grant and loan programs.
For example, last fiscal year the government doled out a record $12.2 billion in Pell Grants to needy students. Government student loans totaled $130 billion. Throw in another $250 billion in private loans and you have $392.2 billion in financial aid funneled to college students in a single year.
Those billions are only the tip of the iceberg. The federal government estimates there are more than 88,500 loan and aid programs administered by Washington, the states, private foundations and scholarship organizations in the United States.
But often government financial aid comes with a catch. Students must repay the money, except in the case of Pell Grants. The College Board estimates that the average student graduates with $24,000 in debt. A full 10 percent of students have loans of $40,000 and more. Two-thirds of students who graduate owe money for college loans.
All those billions in loans are adding up to a potential giant headache for the economy. This year total outstanding student loan debt passed $1 trillion, which exceeds consumer credit card debt in America. By easing rules on loan repayments, the president risks triggering a wave of student defaults and adding to the growing problem of unpaid balances. If that happens, the government will be faced with the prospect of another costly bailout.
Public and private universities have dodged any blame for escalating costs. They point to price increases for everything from scholarly journals to pay for professors. However, studies have shown that the lion's share of the tuition increases at many institutions have gone to add buildings, facilities, gyms, technology and to upgrade dorms.
Academic leaders also justify tuition increases by pointing to cuts in state funding. They act as if the only solution is higher prices to offset reduced subsidies. Unlike any other business, they reject the idea of paring budgets to reflect new economic realities.
Meanwhile, there is no credible evidence that the added spending has improved the quality of higher education. Parents and students are paying more money for the same education, albeit in fancier buildings fitted with high tech gadgets.
That's why the president's pandering to young voters and the elitist university establishment is such a pathetic gesture. Too bad the president's own college degree did not better prepare him to address the issue of runaway higher education costs affecting students and their parents.
Saturday, October 29, 2011
Phony Budget Baloney
Phony budget deals orchestrated months ago in the holy name of compromise have failed to derail the big spenders in Washington. In the fiscal year that ended last month, the federal government spent more than $3.6 trillion, breaking U.S. records for budget busting excess.
The spending binge topped the previous mark of $3.52 trillion in 2009 that was posted by the Democrat-controlled Congress and the party's leader President Obama. Last year's spending ogre was 4.2 percent higher than the 2010 budget.
This must be news to most Americans who thought the country had ushered in a new era of fiscal austerity. The truth is taxpayers have been duped by both Republicans and Democrats, who were aided and abetted by the mainstream media's coverage.
In the last fiscal year, the Belt Way Bunch added another $1.3 trillion to the federal deficit. This marks two years of record deficit spending that was touted as necessary to promote economic recovery. Does anyone believe Washington has purchased economic prosperity?
To pay for its reckless spending, the government borrowed billions of dollars, raising the nation's interest payments on its debt by 16.7 percent. This growth in servicing the debt accounted for the largest percentage increase in last year's federal budget.
Meanwhile, Obama and Team Democrat have continued to demand increases in tax revenues to solve the deficit problem. However, this ignores the fact that federal tax receipts grew by 6.5 percent in fiscal 2011. Taxpayers are sending more money to Washington, but the government is spending it faster than the Internal Revenue Service can empty our wallets.
As Washington has continued to borrow to finance spending, the nation's debt has spiraled to a historic level of $14.8 trillion. That works out to $132,435 per taxpayer. In just a single day, the government piled on another $238 billion in debt, the largest one day increase in the nation's long history. That occurred on August 3 moments after the ink dried on the agreement to lift the debt ceiling.
For their part, President Obama and his Washington regime have continued to falsley blame George Bush for the mountain of debt. During Bush's last two years as president, Washington added $618 billion in debt, according to the Office of Management and Budget. Obama doubled that amount in just the last fiscal year.
Despite their claims to the contrary, Obama and Democrat Party lawmakers have no intention of curtailing government spending. The so-called super committee formed after the budget deal is nothing more than another Washington charade. Committees are an excuse to defer tough budget decisions.
Meanwhile, the Congressional Budget Office has forecast that the country will run up another $1.1 trillion in deficit spending for fiscal 2012. That would mark three consecutive years of deficits of more than $1 trillion. Before Obama became president, single year deficits had never approached $1 trillion.
The country's mood has turned sour over the excessive spending. A recent poll by The Hill newspaper found that 69 percent of Americans believe the country is in decline. More than 8 in 10 Americans are worried about the country.
As the polls indicate, Americans are fed up with the deceit and duplicity in Washington. They are demanding real budget reform, not more counterfeit compromises that only offer the illusion of fiscal responsibility.
.
The spending binge topped the previous mark of $3.52 trillion in 2009 that was posted by the Democrat-controlled Congress and the party's leader President Obama. Last year's spending ogre was 4.2 percent higher than the 2010 budget.
This must be news to most Americans who thought the country had ushered in a new era of fiscal austerity. The truth is taxpayers have been duped by both Republicans and Democrats, who were aided and abetted by the mainstream media's coverage.
In the last fiscal year, the Belt Way Bunch added another $1.3 trillion to the federal deficit. This marks two years of record deficit spending that was touted as necessary to promote economic recovery. Does anyone believe Washington has purchased economic prosperity?
To pay for its reckless spending, the government borrowed billions of dollars, raising the nation's interest payments on its debt by 16.7 percent. This growth in servicing the debt accounted for the largest percentage increase in last year's federal budget.
Meanwhile, Obama and Team Democrat have continued to demand increases in tax revenues to solve the deficit problem. However, this ignores the fact that federal tax receipts grew by 6.5 percent in fiscal 2011. Taxpayers are sending more money to Washington, but the government is spending it faster than the Internal Revenue Service can empty our wallets.
As Washington has continued to borrow to finance spending, the nation's debt has spiraled to a historic level of $14.8 trillion. That works out to $132,435 per taxpayer. In just a single day, the government piled on another $238 billion in debt, the largest one day increase in the nation's long history. That occurred on August 3 moments after the ink dried on the agreement to lift the debt ceiling.
For their part, President Obama and his Washington regime have continued to falsley blame George Bush for the mountain of debt. During Bush's last two years as president, Washington added $618 billion in debt, according to the Office of Management and Budget. Obama doubled that amount in just the last fiscal year.
Despite their claims to the contrary, Obama and Democrat Party lawmakers have no intention of curtailing government spending. The so-called super committee formed after the budget deal is nothing more than another Washington charade. Committees are an excuse to defer tough budget decisions.
Meanwhile, the Congressional Budget Office has forecast that the country will run up another $1.1 trillion in deficit spending for fiscal 2012. That would mark three consecutive years of deficits of more than $1 trillion. Before Obama became president, single year deficits had never approached $1 trillion.
The country's mood has turned sour over the excessive spending. A recent poll by The Hill newspaper found that 69 percent of Americans believe the country is in decline. More than 8 in 10 Americans are worried about the country.
As the polls indicate, Americans are fed up with the deceit and duplicity in Washington. They are demanding real budget reform, not more counterfeit compromises that only offer the illusion of fiscal responsibility.
.
Saturday, October 22, 2011
The Ugly Politics of Envy And Scapegoating
Barrack Obama and Democrats are counting on anger over wealth inequality in the country to save the embattled president and his party. That's why both are openly courting the Occupy Wall Street protesters in an attempt to parlay the energy from the demonstrations into support for Obama's reelection.
The president tipped his hand at a recent press conference, showering praise on the leaderless demonstrations. "People are frustrated," Obama told reporters. "Protesters are giving voice to a more broad-based frustration of how our financial system works."
In the days that followed, the president climbed on his sleek, multi-million-dollar, armored campaign bus and traveled to visit friendly crowds recruited by his party. At each stop, he used the occasion to declare war on wealth, reciting his angry anthem about how the rich are sticking it to the middle class and poor.
His words echoed the single cogent theme emerging from the unruly Wall Street demonstrations. Based on interviews with protesters and a reading of the placards they are waving, the nascent movement views the wealthiest one percent as scapegoats for all the country's ills from bailouts to budget cuts.
Sensing an opportunity to fuel the protests, the mainstream media has teed up stories about the yawning gulf in the United States between the richest one percent and the 99 percent of the rest of Americans. Reporters from MSNBC and Rolling Stone magazine have been outed for exchanging emails with protesters, advising them on how to improve news coverage and focus their message.
In the fawning rush to support the demonstrators, sycophant journalists have trampled all over the facts. As just one example, they are dead wrong on their claims that the rich control a larger share of the wealth today than ever before.
In 1998, the top five percent owned 59 percent of all wealth, according to U.S. Census data. Today that same group claims slightly more than one-half. The top 20 percent today owns 80 percent of all the wealth, compared to 83 percent in 1998. While one can argue the figures still show a concentration of net worth, the data does not support the assertion that the rich are grabbing a larger share of wealth.
From a global perspective, a majority of those 99 percent of "deprived" Americans can legitimately be called rich. According to MarketWatch, total assets of just $2,200 would place most Americans in the top half of the world's wealthiest people. Households with a modest $61,000 in net worth would qualify for exclusive membership in the world's wealthiest 10 percent club.
That hasn't deterred the Occupy Wall Street mob from scorning fat cat CEO's, making millions of dollars. Adopting some of the shabby rhetoric used by the president, the protesters have whined about excessive executive pay as they paraded outside the New York residences of captains of industry. Interestingly, the demonstrators as well as the president are silent on the enormous wealth of professional athletes and those in the entertainment industry.
Consider that Oprah Winfrey earned $290 million last year, according to Forbes Magazine's annual Celebrity 100 list. Actor Tyler Perry raked in $130 million, while producer Jerry Bruckheimer enjoyed a $113 million pay day. Singer Lady Gaga and talk show host Howard Stern pulled down $90 million and $76 million, respectively.
Top professional athletes cashed in last year, too. Golfer Tiger Woods led the pack with $110 million, according to Forbes. Basketball's Kobe Bryant tallied $45 million as did Michael Jordan and race car driver Kimi Raikkonen. Soccer star David Beckham pocketed $42 million
By comparison, compensation for the top 10 chief executive officers averaged $43 million last year, according to a survey by The Wall Street Journal. Their pay looks down right skimpy when you consider that the average income of the nation's top 10 celebrities was a stunning $100 million while star athletes rang up an average of $46 million in salary and endorsements.
Apparently, the Occupy Wall Street sheep and their spiritual shepherd Barrack Obama believe demonizing business executives plays better in America than denigrating celebrities and athletes. Their logic appears to be that not all wealth is created equal. Yet they complain about the inequality of wealth.
This war on wealth is nothing more than the politics of envy and scapegoating. It is divisive, tawdry and reprehensible. And, apparently it isn't working as well as Obama and his marching minions had hoped.
A recent USA Today/Gallup Poll found that most Americans blame the political cesspool in Washington for the current fiscal stench. Fully 64 percent finger the federal government as the culprit, while only 30 percent pin the blame on financial institutions, according to the poll.
Those results suggest Americans aren't easily swayed by noisy demonstrations and a reckless president. More importantly, most Americans recognize envy and scapegoating as the staple of despots and totalitarian tyrants. That kind of despicable rhetoric has no place in a democracy.
The president tipped his hand at a recent press conference, showering praise on the leaderless demonstrations. "People are frustrated," Obama told reporters. "Protesters are giving voice to a more broad-based frustration of how our financial system works."
In the days that followed, the president climbed on his sleek, multi-million-dollar, armored campaign bus and traveled to visit friendly crowds recruited by his party. At each stop, he used the occasion to declare war on wealth, reciting his angry anthem about how the rich are sticking it to the middle class and poor.
His words echoed the single cogent theme emerging from the unruly Wall Street demonstrations. Based on interviews with protesters and a reading of the placards they are waving, the nascent movement views the wealthiest one percent as scapegoats for all the country's ills from bailouts to budget cuts.
Sensing an opportunity to fuel the protests, the mainstream media has teed up stories about the yawning gulf in the United States between the richest one percent and the 99 percent of the rest of Americans. Reporters from MSNBC and Rolling Stone magazine have been outed for exchanging emails with protesters, advising them on how to improve news coverage and focus their message.
In the fawning rush to support the demonstrators, sycophant journalists have trampled all over the facts. As just one example, they are dead wrong on their claims that the rich control a larger share of the wealth today than ever before.
In 1998, the top five percent owned 59 percent of all wealth, according to U.S. Census data. Today that same group claims slightly more than one-half. The top 20 percent today owns 80 percent of all the wealth, compared to 83 percent in 1998. While one can argue the figures still show a concentration of net worth, the data does not support the assertion that the rich are grabbing a larger share of wealth.
From a global perspective, a majority of those 99 percent of "deprived" Americans can legitimately be called rich. According to MarketWatch, total assets of just $2,200 would place most Americans in the top half of the world's wealthiest people. Households with a modest $61,000 in net worth would qualify for exclusive membership in the world's wealthiest 10 percent club.
That hasn't deterred the Occupy Wall Street mob from scorning fat cat CEO's, making millions of dollars. Adopting some of the shabby rhetoric used by the president, the protesters have whined about excessive executive pay as they paraded outside the New York residences of captains of industry. Interestingly, the demonstrators as well as the president are silent on the enormous wealth of professional athletes and those in the entertainment industry.
Consider that Oprah Winfrey earned $290 million last year, according to Forbes Magazine's annual Celebrity 100 list. Actor Tyler Perry raked in $130 million, while producer Jerry Bruckheimer enjoyed a $113 million pay day. Singer Lady Gaga and talk show host Howard Stern pulled down $90 million and $76 million, respectively.
Top professional athletes cashed in last year, too. Golfer Tiger Woods led the pack with $110 million, according to Forbes. Basketball's Kobe Bryant tallied $45 million as did Michael Jordan and race car driver Kimi Raikkonen. Soccer star David Beckham pocketed $42 million
By comparison, compensation for the top 10 chief executive officers averaged $43 million last year, according to a survey by The Wall Street Journal. Their pay looks down right skimpy when you consider that the average income of the nation's top 10 celebrities was a stunning $100 million while star athletes rang up an average of $46 million in salary and endorsements.
Apparently, the Occupy Wall Street sheep and their spiritual shepherd Barrack Obama believe demonizing business executives plays better in America than denigrating celebrities and athletes. Their logic appears to be that not all wealth is created equal. Yet they complain about the inequality of wealth.
This war on wealth is nothing more than the politics of envy and scapegoating. It is divisive, tawdry and reprehensible. And, apparently it isn't working as well as Obama and his marching minions had hoped.
A recent USA Today/Gallup Poll found that most Americans blame the political cesspool in Washington for the current fiscal stench. Fully 64 percent finger the federal government as the culprit, while only 30 percent pin the blame on financial institutions, according to the poll.
Those results suggest Americans aren't easily swayed by noisy demonstrations and a reckless president. More importantly, most Americans recognize envy and scapegoating as the staple of despots and totalitarian tyrants. That kind of despicable rhetoric has no place in a democracy.
Sunday, October 16, 2011
Wall Street's Dumb Obsession With Artificial Intelligence
One of the oldest investment cliches is fast becoming obsolete. For as long as stock trading has been around, brokers and financial advisers have preached long-term investing, urging clients to adopt a 10-year horizon to smooth out the inevitable market volatility that effects returns.
As proof of their theory, investment counselors haul out charts showing that over a decade, despite economic ups and downs, stocks average annual returns of around seven to nine percent. The premise is soothing to investors seeking predictability in the performance of their investments.
However, in the last ten years the stock market has failed to deliver anything approaching those returns. The Standard & Poor's 500 posted a skimpy annual return of 0.4 percent between August 1, 2000, and August 31 of this year. During this ten-year period, the hallmark of the market has been its unpredictability.
The financial industry can dredge up a laundry list of explanations for the market volatility, most notably the near collapse of the country's biggest banks and financial institutions. Without overlooking those problems, they don't fully explain the market chaos. Although its hardly ever mentioned, one of the chief contributors to market turbulence is the introduction of artificial intelligence on Wall Street.
Beginning more than a decade ago, big investment houses, financial institutions and brokerage firms began using computers and algorithmic programs to buy and sell large blocks of stock that traditionally were shopped by traders on the floor of Wall Street exchanges. It was done in the name of speed and cost savings as securities firms were able to slash the number of traders they employed.
Based on this success, every financial company began recruiting mathematicians, engineers and computer science professionals, while dumping millions of dollars into computing, networking and software. As a result, lightning-fast super computers began assuming a larger role in discovering stock opportunities, identifying subtle market trends, figuring when to execute trades and cracking the trading strategies of their competitors.
These moves turned the financial industry on its head. Major financial firms began relying more heavily on artificial intelligence than human intelligence for every conceivable task. The trend has become even more pronounced in the last two years with computer-aided trading now accounting for about 70 percent of the total volume on the stock exchanges.
But this reliance has come at a steep cost. Stocks have lost $4 trillion in value since the peak in 2007 as huge market swings have dealt crippling blows. The largest was logged May 6 of last year when the Dow Jones Industrial Average plummeted 573 points in a mere five minutes. Most market watchers now believe the so-called "flash crash" was created by powerful, swift computers that spiraled out of control in a series of cascading trades based on algorithmic formulas. In essence, the machines took over the market.
In the aftermath of the crash, dizzying drops in the stock market have become routine and impossible to predict. For instance, this year the S&P 500 has lost more than two percent of its value on 15 days, 14 of those occurring just since July. Stock volatility indices have reached levels last experienced at the trough of the bear market in 2009.
Explaining the dramatic dips is getting harder for financial pros, leading investors to conclude that the stock market is incomprehensible. That has fueled an investor stampede for the exists. In 2010, investors yanked $37 billion out of the market. This year has witnessed further erosion in market confidence as investors have fled stocks for the safety of gold, bonds and other financial instruments.
For a good laugh, listen each day as financial pundits stumble to dissect the market's performance. They offer up reasons like natural disasters, world debt woes, labor unrest, or insurrections in some obscure country to explain market oscillations. No doubt these forces and others have impacted the stocks of some companies, but the truth is that computerized investing and trading has fueled much of the dysfunction on the exchanges.
That is because every process from finding the right stock to the timing of selling and buying is done without human involvement. It is true that humans wrote the software codes and developed the algorithms for the computers, but machines are increasingly driving the stock market unfettered by human intervention.
This is not a comforting thought for the millions of Americans invested in stocks through 401K plans, pensions or mutual funds. Some are calling for the government to get more involved beyond its traditional watchdog role. But the solution lies not in Washington.
It is the responsibility of the financial industry to restore investor confidence by addressing the volatility issue as it relates to computerized trading. The answer is not to shelve the computers because prudent use of technology allows the market to function efficiently.
However, the industry needs to curb its obsession with technology and ensure that human intelligence has the ability to override computerized trading decisions. If they fail to do so, then individual investors have every right to Occupy Wall Street. Unlike the current crop of demonstrators, investors would actually have a legitimate reason for their protest.
As proof of their theory, investment counselors haul out charts showing that over a decade, despite economic ups and downs, stocks average annual returns of around seven to nine percent. The premise is soothing to investors seeking predictability in the performance of their investments.
However, in the last ten years the stock market has failed to deliver anything approaching those returns. The Standard & Poor's 500 posted a skimpy annual return of 0.4 percent between August 1, 2000, and August 31 of this year. During this ten-year period, the hallmark of the market has been its unpredictability.
The financial industry can dredge up a laundry list of explanations for the market volatility, most notably the near collapse of the country's biggest banks and financial institutions. Without overlooking those problems, they don't fully explain the market chaos. Although its hardly ever mentioned, one of the chief contributors to market turbulence is the introduction of artificial intelligence on Wall Street.
Beginning more than a decade ago, big investment houses, financial institutions and brokerage firms began using computers and algorithmic programs to buy and sell large blocks of stock that traditionally were shopped by traders on the floor of Wall Street exchanges. It was done in the name of speed and cost savings as securities firms were able to slash the number of traders they employed.
Based on this success, every financial company began recruiting mathematicians, engineers and computer science professionals, while dumping millions of dollars into computing, networking and software. As a result, lightning-fast super computers began assuming a larger role in discovering stock opportunities, identifying subtle market trends, figuring when to execute trades and cracking the trading strategies of their competitors.
These moves turned the financial industry on its head. Major financial firms began relying more heavily on artificial intelligence than human intelligence for every conceivable task. The trend has become even more pronounced in the last two years with computer-aided trading now accounting for about 70 percent of the total volume on the stock exchanges.
But this reliance has come at a steep cost. Stocks have lost $4 trillion in value since the peak in 2007 as huge market swings have dealt crippling blows. The largest was logged May 6 of last year when the Dow Jones Industrial Average plummeted 573 points in a mere five minutes. Most market watchers now believe the so-called "flash crash" was created by powerful, swift computers that spiraled out of control in a series of cascading trades based on algorithmic formulas. In essence, the machines took over the market.
In the aftermath of the crash, dizzying drops in the stock market have become routine and impossible to predict. For instance, this year the S&P 500 has lost more than two percent of its value on 15 days, 14 of those occurring just since July. Stock volatility indices have reached levels last experienced at the trough of the bear market in 2009.
Explaining the dramatic dips is getting harder for financial pros, leading investors to conclude that the stock market is incomprehensible. That has fueled an investor stampede for the exists. In 2010, investors yanked $37 billion out of the market. This year has witnessed further erosion in market confidence as investors have fled stocks for the safety of gold, bonds and other financial instruments.
For a good laugh, listen each day as financial pundits stumble to dissect the market's performance. They offer up reasons like natural disasters, world debt woes, labor unrest, or insurrections in some obscure country to explain market oscillations. No doubt these forces and others have impacted the stocks of some companies, but the truth is that computerized investing and trading has fueled much of the dysfunction on the exchanges.
That is because every process from finding the right stock to the timing of selling and buying is done without human involvement. It is true that humans wrote the software codes and developed the algorithms for the computers, but machines are increasingly driving the stock market unfettered by human intervention.
This is not a comforting thought for the millions of Americans invested in stocks through 401K plans, pensions or mutual funds. Some are calling for the government to get more involved beyond its traditional watchdog role. But the solution lies not in Washington.
It is the responsibility of the financial industry to restore investor confidence by addressing the volatility issue as it relates to computerized trading. The answer is not to shelve the computers because prudent use of technology allows the market to function efficiently.
However, the industry needs to curb its obsession with technology and ensure that human intelligence has the ability to override computerized trading decisions. If they fail to do so, then individual investors have every right to Occupy Wall Street. Unlike the current crop of demonstrators, investors would actually have a legitimate reason for their protest.
Monday, October 10, 2011
President's Jobs Kill Bill
If the President's lofty promises about his new jobs bill sound familiar, it's because he has recycled the same tired, old rationale he used to cajole Congress to approve his $787 billion stimulus boondoggle shortly after he took office.
To refresh your memory, the Obama administration's economic team predicted that the president's stimulus package would create three to four millions jobs by the end of 2010. They boldly forecast that the unemployment rate would peak at just under 8 percent in 2009.
Many Democrats now deny these claims were ever made. However, the numbers are contained in a report entitled, "Job Impact of American Recovery & Reinvestment Plan," published January 9, 2009. The authors were Christina Roma, then chairwoman of the President's Council of Economic Advisers and Jared Bernstein, the vice president's top economic counselor.
Their predictions, used to justify the massive spending, were grossly inflated. Unemployment peaked at more than 10 percent in early 2010. It remains today at 9.1 percent. As far as those promised jobs, even Vice President Joe Biden has given up trying to use creative math to prove the stimulus delivered on the administration's prophecy.
Now the president is on the road again clamoring for Congress to buy into new promises of economic nirvana. In speeches, he continues to claim his job proposal will grow the economy two percent and create two million new jobs. Obama will need more than snake oil to convince wary Republicans and Democrats that his forecasts are any better than they were the last time he trotted out an economic recovery plan.
In fact, there is evidence that the new jobs bill will harm rather than help the economy. The chief reason is the president's plan would finance the $447 billion scheme mainly by limiting the percentage of income the top wage earners can write off their taxes. For example, the same write-offs that average taxpayers use would be reduced for high income households and individuals from 35 percent of their earned income to 28 percent. That would include donations to charitable organizations.
It means a charitable gift of $100,000 would save a donor $28,000 in taxes, which is $7,000 less than the write off allowed under today's formula. The lower deductions would apply to households earning at least $250,000 and $200,000 for individuals. Studies have shown that individual giving is influenced to varying degrees by the tax write-off.
Not only would the change have a chilling effect on donations, it also could impact jobs at one of the nation's top employers. "Nonprofits employ almost 10 percent of the workforce nationwide and in many states nonprofits are the largest employers. In our view, cutting the deduction is like cutting off your nose to spite your face," protested William Daroff, vice president of Public Policy at the Jewish Federation of North America.
If donations decline as a result of individuals cutting back on their giving, charitable groups will be forced to cut expenses, making employee layoffs likely. Even more worrisome, the poor, sick and elderly who benefit from the charitable organizations' outreach programs will lose a safety net.
Yet the charitable deduction issue is not even the most egregious example of flawed logic contained in the bill. The president's plan also includes extending unemployment benefits for another year for recipients at a taxpayer cost of $62 billion Most credible economists argue that extending benefits will discourage the unemployed from seeking work. At the very least, it further delays their job search until benefits run out. Either outcome will negatively impact job growth.
None of this will deter Obama. He appears obsessed as ever with the idea that bigger government and more spending will solve the country's economic problems. After being hoodwinked on the stimulus plan, Congress must not allow itself to succumb to Obama's empty promises a second time.
To refresh your memory, the Obama administration's economic team predicted that the president's stimulus package would create three to four millions jobs by the end of 2010. They boldly forecast that the unemployment rate would peak at just under 8 percent in 2009.
Many Democrats now deny these claims were ever made. However, the numbers are contained in a report entitled, "Job Impact of American Recovery & Reinvestment Plan," published January 9, 2009. The authors were Christina Roma, then chairwoman of the President's Council of Economic Advisers and Jared Bernstein, the vice president's top economic counselor.
Their predictions, used to justify the massive spending, were grossly inflated. Unemployment peaked at more than 10 percent in early 2010. It remains today at 9.1 percent. As far as those promised jobs, even Vice President Joe Biden has given up trying to use creative math to prove the stimulus delivered on the administration's prophecy.
Now the president is on the road again clamoring for Congress to buy into new promises of economic nirvana. In speeches, he continues to claim his job proposal will grow the economy two percent and create two million new jobs. Obama will need more than snake oil to convince wary Republicans and Democrats that his forecasts are any better than they were the last time he trotted out an economic recovery plan.
In fact, there is evidence that the new jobs bill will harm rather than help the economy. The chief reason is the president's plan would finance the $447 billion scheme mainly by limiting the percentage of income the top wage earners can write off their taxes. For example, the same write-offs that average taxpayers use would be reduced for high income households and individuals from 35 percent of their earned income to 28 percent. That would include donations to charitable organizations.
It means a charitable gift of $100,000 would save a donor $28,000 in taxes, which is $7,000 less than the write off allowed under today's formula. The lower deductions would apply to households earning at least $250,000 and $200,000 for individuals. Studies have shown that individual giving is influenced to varying degrees by the tax write-off.
Not only would the change have a chilling effect on donations, it also could impact jobs at one of the nation's top employers. "Nonprofits employ almost 10 percent of the workforce nationwide and in many states nonprofits are the largest employers. In our view, cutting the deduction is like cutting off your nose to spite your face," protested William Daroff, vice president of Public Policy at the Jewish Federation of North America.
If donations decline as a result of individuals cutting back on their giving, charitable groups will be forced to cut expenses, making employee layoffs likely. Even more worrisome, the poor, sick and elderly who benefit from the charitable organizations' outreach programs will lose a safety net.
Yet the charitable deduction issue is not even the most egregious example of flawed logic contained in the bill. The president's plan also includes extending unemployment benefits for another year for recipients at a taxpayer cost of $62 billion Most credible economists argue that extending benefits will discourage the unemployed from seeking work. At the very least, it further delays their job search until benefits run out. Either outcome will negatively impact job growth.
None of this will deter Obama. He appears obsessed as ever with the idea that bigger government and more spending will solve the country's economic problems. After being hoodwinked on the stimulus plan, Congress must not allow itself to succumb to Obama's empty promises a second time.
Wednesday, October 5, 2011
Snapping Up Food Stamps
Even as Washington grapples with snipping the federal budget, spending on government entitlement programs continues to spiral out of control. One of the worst offenders is food assistance, a program with an insatiable appetite for taxpayer funds.
Already, the program's growth has outstripped nearly every other government assistance scheme. More than 43 million Americans now receive food stamps, renamed Supplemental Nutritional Assistance Program (SNAP) in 2008 to shed its image as a plan riddled with waste and fraud. One out of every eight Americans or 15 percent of the population receives SNAP assistance, a staggering increase of 74 percent since 2007.
A major reason for the runaway growth is the change in emphasis. Approved by Congress in 1964, the food stamp program was designed to feed poor households by providing ducats to redeem for groceries. A key feature of the early program was to allow clients to purchase surplus food produced by American farmers at a steep discount.
Most of those receiving food assistance had no job and existed on welfare. But as recently as 1999, wage earners outnumbered welfare families getting food benefits. With regular adjustments in income eligibility requirements, most single parent wage earners now qualify for food assistance. The benefit has become a de facto subsidy for low-wage jobs.
As the program has lowered its requirements, the cost to taxpayers has soared. In 1964, the annual funding for the food stamp program was $75 million. In the 2012 federal fiscal year, which began in October, funding is scheduled to reach $85.2 billion. That's more than double the 2010 spending level. This is what happens when entitlement programs are left unchecked.
But the growth is unsustainable with federal budget deficits stretching as far as the eye can see. Yet there is little Congress can do from a budgeting standpoint. As an entitlement program, Congress does not decide each year to increase or decrease SNAP funding. Instead, the budget appropriation is determined by estimations of how many people will apply and be eligible for food assistance. The only way to influence the budget is a Congressional vote to alter eligibility for the food assistance program.
That is almost impossible to do. Food stamps have normally been insulated from politics because any attempt to decrease benefits raises the spectre of poor people eating cat food to survive. That image is prepetuated by Democrats and the media to scare away advocates of food assistance reform.
Meanwhile, food program waste and fraud continues unabated. In fiscal year 2009, so-called improper payments cost taxpayers nearly $2.2 billion, according to the U.S. Department of Agriculture. Since most fraud goes undetected, the financial impact is likely much higher than reported.
Republicans have poked around the issue this session. As recently as June, a House Agriculture Subcommittee began looking for ways to trim the SNAP budget while using funds more efficiently to tackle legitimate needs. But Democrats have so far sidetracked reform by characterizing the effort as a Republican scheme to deny food to hungry infants and old people.
In the past, these emotionally-charged arguments have trumped common sense in the debate over food assistance. However, Congress can no longer ignore the facts as it faces pressure to reduce the burgeoning federal deficit. An overhaul of SNAP is long overdue. But like most entitlement programs, the prospects for meaningful reform are as dim as the arguments from fear mongers.
Already, the program's growth has outstripped nearly every other government assistance scheme. More than 43 million Americans now receive food stamps, renamed Supplemental Nutritional Assistance Program (SNAP) in 2008 to shed its image as a plan riddled with waste and fraud. One out of every eight Americans or 15 percent of the population receives SNAP assistance, a staggering increase of 74 percent since 2007.
A major reason for the runaway growth is the change in emphasis. Approved by Congress in 1964, the food stamp program was designed to feed poor households by providing ducats to redeem for groceries. A key feature of the early program was to allow clients to purchase surplus food produced by American farmers at a steep discount.
Most of those receiving food assistance had no job and existed on welfare. But as recently as 1999, wage earners outnumbered welfare families getting food benefits. With regular adjustments in income eligibility requirements, most single parent wage earners now qualify for food assistance. The benefit has become a de facto subsidy for low-wage jobs.
As the program has lowered its requirements, the cost to taxpayers has soared. In 1964, the annual funding for the food stamp program was $75 million. In the 2012 federal fiscal year, which began in October, funding is scheduled to reach $85.2 billion. That's more than double the 2010 spending level. This is what happens when entitlement programs are left unchecked.
But the growth is unsustainable with federal budget deficits stretching as far as the eye can see. Yet there is little Congress can do from a budgeting standpoint. As an entitlement program, Congress does not decide each year to increase or decrease SNAP funding. Instead, the budget appropriation is determined by estimations of how many people will apply and be eligible for food assistance. The only way to influence the budget is a Congressional vote to alter eligibility for the food assistance program.
That is almost impossible to do. Food stamps have normally been insulated from politics because any attempt to decrease benefits raises the spectre of poor people eating cat food to survive. That image is prepetuated by Democrats and the media to scare away advocates of food assistance reform.
Meanwhile, food program waste and fraud continues unabated. In fiscal year 2009, so-called improper payments cost taxpayers nearly $2.2 billion, according to the U.S. Department of Agriculture. Since most fraud goes undetected, the financial impact is likely much higher than reported.
Republicans have poked around the issue this session. As recently as June, a House Agriculture Subcommittee began looking for ways to trim the SNAP budget while using funds more efficiently to tackle legitimate needs. But Democrats have so far sidetracked reform by characterizing the effort as a Republican scheme to deny food to hungry infants and old people.
In the past, these emotionally-charged arguments have trumped common sense in the debate over food assistance. However, Congress can no longer ignore the facts as it faces pressure to reduce the burgeoning federal deficit. An overhaul of SNAP is long overdue. But like most entitlement programs, the prospects for meaningful reform are as dim as the arguments from fear mongers.
Thursday, September 29, 2011
Raising Hackles Over Rising Taxes
Even for a president known for his dunderhead economic ideas, it was stunning to watch Barack Obama stump for raising taxes to the tune of $1.5 trillion to reduce the deficit. In a futile attempt to defend his soak the rich plan, the president dredged up feckless justifications.
Obama bellowed that it wasn't fair that secretaries coughed up more money for taxes than millionaires and billionaires, borrowing a line from gazillionaire Warren Buffett. There was only one problem with the Buffett-Obama assertion. It is factually incorrect.
Households earning more than $1 million pay an average of 29.1 percent of their income in federal taxes, while those with incomes of $50,000 pay an average of 12.5 percent. The numbers clearly underscore the fallacy of the president's argument about tax fairness.
According to the Congressional Budget Office, 10 percent of the households with the highest incomes pay more than 70 percent of federal income taxes. Meanwhile 51 percent of Americans pay no federal income tax. Where is the fairness in that?
Those aren't the only flaws with the president's wrong-headed plan. Obama claimed that his tax increases were aimed at millionaires and billionaires. However, his proposal actually would lift federal taxes for individuals with $200,000 and above in income.
There is ample evidence to suggest that raising taxes on any group while the economy sputters is a prescription for economic disaster. Instead of raising government revenue, a tax hike likely would have the opposite effect because it would cripple job creation thus worsening the economy and suppressing wage growth. Total tax revenue will decline under that scenario.
A robust economy is the most reliable way to fuel more jobs. However, the nation's economic growth in the most recent quarter was an anemic one percent. That followed growth of a puny 0.4 percent in the first quarter. Increasing taxes will strangle the tiny economic development the country has experienced.
Increasing taxes will stifle small business job growth. One-half of individual and household incomes above $250,000 annually are attributable to small businesses revenue. These firms create more than 60 percent of all new jobs in the economy. Raising taxes on these individuals will leave less money for them to invest in their firms.
Under the president's plan, higher taxes also would apply to investment partnerships. The tax will be acutely felt by real estate and oil and gas developers. That will quell capital deployment among small business partnerships in these industries, further suffocating job growth.
In addition, the president's plan targets tax-exempt income from municipal bonds issued by states and cities. By reducing the tax benefits for individuals, these bonds will become a less attractive investment. As a result, infrastructure projects, often cited by the president as job creators, will lack proper funding.
Despite the adverse economic impacts, the Obama-controlled media has swept these obvious deficiencies under the rug and donned a cheerleader outfit to extoll the benefits of forcing the wealthy to pay an even higher portion of their earnings to the government.
Unfortunately, there are too many Americans who think confiscating more money from the rich will solve the country's debt problems. Even if everyone earning $200,000 and above were taxed at 100 percent of their income, it would hardly make a dent in nation's $14 trillion debt.
America does not have an income problem. The country has a spending problem. Even the economically illiterate should be able to understand that. Too bad that logic still eludes the president.
Obama bellowed that it wasn't fair that secretaries coughed up more money for taxes than millionaires and billionaires, borrowing a line from gazillionaire Warren Buffett. There was only one problem with the Buffett-Obama assertion. It is factually incorrect.
Households earning more than $1 million pay an average of 29.1 percent of their income in federal taxes, while those with incomes of $50,000 pay an average of 12.5 percent. The numbers clearly underscore the fallacy of the president's argument about tax fairness.
According to the Congressional Budget Office, 10 percent of the households with the highest incomes pay more than 70 percent of federal income taxes. Meanwhile 51 percent of Americans pay no federal income tax. Where is the fairness in that?
Those aren't the only flaws with the president's wrong-headed plan. Obama claimed that his tax increases were aimed at millionaires and billionaires. However, his proposal actually would lift federal taxes for individuals with $200,000 and above in income.
There is ample evidence to suggest that raising taxes on any group while the economy sputters is a prescription for economic disaster. Instead of raising government revenue, a tax hike likely would have the opposite effect because it would cripple job creation thus worsening the economy and suppressing wage growth. Total tax revenue will decline under that scenario.
A robust economy is the most reliable way to fuel more jobs. However, the nation's economic growth in the most recent quarter was an anemic one percent. That followed growth of a puny 0.4 percent in the first quarter. Increasing taxes will strangle the tiny economic development the country has experienced.
Increasing taxes will stifle small business job growth. One-half of individual and household incomes above $250,000 annually are attributable to small businesses revenue. These firms create more than 60 percent of all new jobs in the economy. Raising taxes on these individuals will leave less money for them to invest in their firms.
Under the president's plan, higher taxes also would apply to investment partnerships. The tax will be acutely felt by real estate and oil and gas developers. That will quell capital deployment among small business partnerships in these industries, further suffocating job growth.
In addition, the president's plan targets tax-exempt income from municipal bonds issued by states and cities. By reducing the tax benefits for individuals, these bonds will become a less attractive investment. As a result, infrastructure projects, often cited by the president as job creators, will lack proper funding.
Despite the adverse economic impacts, the Obama-controlled media has swept these obvious deficiencies under the rug and donned a cheerleader outfit to extoll the benefits of forcing the wealthy to pay an even higher portion of their earnings to the government.
Unfortunately, there are too many Americans who think confiscating more money from the rich will solve the country's debt problems. Even if everyone earning $200,000 and above were taxed at 100 percent of their income, it would hardly make a dent in nation's $14 trillion debt.
America does not have an income problem. The country has a spending problem. Even the economically illiterate should be able to understand that. Too bad that logic still eludes the president.
Sunday, September 18, 2011
American Amnesia Over 9/11 Attacks
In recent weeks, the mainstream media hyperventilated over the tenth anniversary of September 11, 2001, regurgitating remembrances of the horrific attacks. A plethora of newscasts, newspaper reports and magazine perspectives focused on healing, forgiveness and profound personal stories about the deliberate assault on America.
However, the untold story of 9/11 in the intervening years is how many Americans have forgotten the lessons of that fateful day that changed the country forever. Too many citizens believe luck, religious outreach and coddling our enemies will keep us safe from another attack.
In fact, a recent Pew Research Center poll found that 43 percent of Americans think U.S. "wrongdoing" motivated the attacks. The research should come as no surprise because the media and many politicians have spent the last ten years blaming their country instead of the terrorists for the attacks.
Overall, most Americans believe that we are no safer today than we were a decade ago. Pew found that 62 percent of those polled think terrorists have either the same or a greater ability to launch another major attack.
It is understandable why people feel that way. The public is deeply divided over the anti-terrorism policies and tactics undertaken by its government. Many are convinced their leaders have gone too far in trying to stave off another attack.
Likewise, a majority of Americans believe the wars in Iraq and Afghanistan have either increased the risk of attacks or made no difference. This is a somber reminder to the U.S. military and their families of the fickle nation they serve. No soldier should ever be put in harm's way if its citizens do no support the mission.
The Pew research stands in stark contrast to a united nation that faced events on the day after September 11th. Americans demanded punishment for the perpetrators. They insisted the government beef up its intelligence apparatus. They wanted to travel without fear. They called for tighter borders.
Soon after the American military unleashed its might, politicians and the media began expressing a different sentiment. They wanted to engage our enemies in dialogue. They preached religious tolerance. They chafed at security measures. Amnesia set in as Americans bought into the idea that our safety could be purchased with rhetoric and an extended hand of friendship.
In Pew's poll, less than half of Americans say the main reason the country has remained safe is because their government is doing a good job of protecting its citizens. A full 35 percent think America has been just plain lucky.
Clear majorities of Americans now oppose data gathering to prevent a terrorist threat, according to Pew's research. Most reject the idea of government monitoring of telephone calls and emails of suspected terrorists, which majorities had previously supported.
Politics have clearly shaped American opinions. Pew reports that from 2001 through 2008, Democrats offered "decidedly more critical views of the government performance on terrorism." After Barrack Obama became president, Democrat voters' views have turned more positive, Pew reports.
Political pandering as well as the Pew research offer a sad commentary on American resolve to fight terrorism. While the nation contemplates the events of 9/11, many of its citizens and political leaders have forgotten the painful lessons the attacks taught us.
The country must be vigilant, prepared, united in purpose and militarily strong to protect itself from terrorism. Ten years ago Americans would not have needed to be reminded.
However, the untold story of 9/11 in the intervening years is how many Americans have forgotten the lessons of that fateful day that changed the country forever. Too many citizens believe luck, religious outreach and coddling our enemies will keep us safe from another attack.
In fact, a recent Pew Research Center poll found that 43 percent of Americans think U.S. "wrongdoing" motivated the attacks. The research should come as no surprise because the media and many politicians have spent the last ten years blaming their country instead of the terrorists for the attacks.
Overall, most Americans believe that we are no safer today than we were a decade ago. Pew found that 62 percent of those polled think terrorists have either the same or a greater ability to launch another major attack.
It is understandable why people feel that way. The public is deeply divided over the anti-terrorism policies and tactics undertaken by its government. Many are convinced their leaders have gone too far in trying to stave off another attack.
Likewise, a majority of Americans believe the wars in Iraq and Afghanistan have either increased the risk of attacks or made no difference. This is a somber reminder to the U.S. military and their families of the fickle nation they serve. No soldier should ever be put in harm's way if its citizens do no support the mission.
The Pew research stands in stark contrast to a united nation that faced events on the day after September 11th. Americans demanded punishment for the perpetrators. They insisted the government beef up its intelligence apparatus. They wanted to travel without fear. They called for tighter borders.
Soon after the American military unleashed its might, politicians and the media began expressing a different sentiment. They wanted to engage our enemies in dialogue. They preached religious tolerance. They chafed at security measures. Amnesia set in as Americans bought into the idea that our safety could be purchased with rhetoric and an extended hand of friendship.
In Pew's poll, less than half of Americans say the main reason the country has remained safe is because their government is doing a good job of protecting its citizens. A full 35 percent think America has been just plain lucky.
Clear majorities of Americans now oppose data gathering to prevent a terrorist threat, according to Pew's research. Most reject the idea of government monitoring of telephone calls and emails of suspected terrorists, which majorities had previously supported.
Politics have clearly shaped American opinions. Pew reports that from 2001 through 2008, Democrats offered "decidedly more critical views of the government performance on terrorism." After Barrack Obama became president, Democrat voters' views have turned more positive, Pew reports.
Political pandering as well as the Pew research offer a sad commentary on American resolve to fight terrorism. While the nation contemplates the events of 9/11, many of its citizens and political leaders have forgotten the painful lessons the attacks taught us.
The country must be vigilant, prepared, united in purpose and militarily strong to protect itself from terrorism. Ten years ago Americans would not have needed to be reminded.
Monday, September 12, 2011
Why Bozo The Clown Could Beat Obama
Hand wringing over the electability of the current crop of Republican presidential candidates has replaced baseball as the national pastime. To listen to the political pundits, there is not a single GOP standard bearer with the mettle or the gravitas to oust Barrack Obama from the White House.
If the assertion wasn't so patently prosperous, it would be laughable. But the mainstream media has fueled the notion that the Republican candidates are so flawed, so intellectual bereft, so inexperienced as to have no chance of unseating the incumbent president.
Even Republicans have fallen prey to the crescendo of media blathering that has no basis in fact. GOP bosses and so-called political experts have openly pined for a white knight to ride to the rescue, suggesting New Jersey Governor Chris Christie or Florida Senator Marco Rubio or Wisconsin Representative Paul Ryan enter the presidential fray.
Republicans need to quit looking at the 2012 presidential race through the media prism. To conclude that no Republican is electable, you have to suspend political reality. Polling data, history and an analysis of the last election suggest Barrack Obama is the most vulnerable president in modern history.
Just look at the president's poll numbers. They are as dismal as the economy. In the latest Rasmussen Poll, only 21 percent of likely voters strongly approve of Obama. Meanwhile, 43 percent strongly disapprove. By zeroing in on those with strongly held opinions, the data taps into the level of voter angst.
These results represent a stunning turnabout from January of 2008 when hope and change entered the American political lexicon. Back then, 44 percent of likely voters strongly approved of the newly elected president, while only 16 percent strongly disapproved.
According to Rasmussen, the negative ratings for Obama have plumbed nearly unprecedented depths. You have to go back to President Jimmy Carter to find this kind of dissatisfaction. No one should have to be reminded that Carter was trounced by Ronald Reagan, a candidate that the media deemed "unelectable" because he was too far right.
Rasmussen, a Democrat pollster who has been tracking presidential ratings for years, recently scored Obama's approval index at -23. That is unfamiliar territory but for a handful of presidents, all of whom were rejected by voters for a second term.
Many in the media like to point to President Reagan's low approval ratings in his first term to suggest Obama will recover. However, the media always conceals one important fact: Reagan's numbers improved only when the jobless rate began to decline.
That's why history cannot be ignored. No sitting president, except Franklin Roosevelt, has been given a second term when the unemployment rate was above 8 percent. In fact, in the last 12 president elections, no incumbent has escaped defeat when the jobless number was 7.5 percent or higher.
It is sheer folly for the media to gaze upon the August employment figures without concluding Obama's chances for reelection correlate with job growth: zero.
An even-handed analysis of the last presidential election scrubs the sheen from Obama's historic victory. While the president snared a lopsided win in the electoral college, he managed to collect only 52 percent of the popular vote.
In key swing states, Obama's margin of victory was paper thin. For example, in Ohio the president won by 217,000 votes out of more than 6 million cast. It was the same story in Florida, where Obama eked out a 144,000 vote margin in a state where 8.5 million people trooped to the polls. Virginia swung to Obama by 230,000 votes out of 3.7 million ballots.
As these numbers suggest, Obama' win hardly approached landslide proportions. Despite having every advantage, including the weakest Republican candidate in history and a looming recession, it was a surprisingly close election. In addition, he was aided by the highest voter turnout in 40 years.
The president will have none of these advantages in the 2012 election. His own base suffers from Obama fatigue. While McCain was reviled by conservatives, the current GOP front runners have no such albatross. The unemployment numbers are unlikely to improve substantially before next November. Voter anger at the administration has reached record levels, approaching those recorded by George W. Bush.
As one measure of voter discontent, consider these poll numbers: Just 34 percent of Americans think the country's best days are in the future. More than 60 percent are gloomy about the outlook. That level of pessimism usually energizes voters to toss out the incumbent.
Barrack Obama has only one thing going for him. The mainstream media is solidly in his camp. The same journalists who failed to vet Obama when he ran for president will spend all their energy investigating, debunking and demonizing Republican candidates.
But voters are savvy. They can sift through the media spin. In the last election, the Pew Research Center polled registered voters and found that 70 percent believed that journalists wanted Obama to win.
The media won't abandon Obama this election. However, no amount of media campaigning can conceal the fact that the country is worse off under President Obama. Voters have seen the real Barack Obama and they are clearly in no mood to make the same mistake twice.
For that reason, those who dwell on electability of Republicans are obviously delusional about the political reality facing Barrack Obama.
If the assertion wasn't so patently prosperous, it would be laughable. But the mainstream media has fueled the notion that the Republican candidates are so flawed, so intellectual bereft, so inexperienced as to have no chance of unseating the incumbent president.
Even Republicans have fallen prey to the crescendo of media blathering that has no basis in fact. GOP bosses and so-called political experts have openly pined for a white knight to ride to the rescue, suggesting New Jersey Governor Chris Christie or Florida Senator Marco Rubio or Wisconsin Representative Paul Ryan enter the presidential fray.
Republicans need to quit looking at the 2012 presidential race through the media prism. To conclude that no Republican is electable, you have to suspend political reality. Polling data, history and an analysis of the last election suggest Barrack Obama is the most vulnerable president in modern history.
Just look at the president's poll numbers. They are as dismal as the economy. In the latest Rasmussen Poll, only 21 percent of likely voters strongly approve of Obama. Meanwhile, 43 percent strongly disapprove. By zeroing in on those with strongly held opinions, the data taps into the level of voter angst.
These results represent a stunning turnabout from January of 2008 when hope and change entered the American political lexicon. Back then, 44 percent of likely voters strongly approved of the newly elected president, while only 16 percent strongly disapproved.
According to Rasmussen, the negative ratings for Obama have plumbed nearly unprecedented depths. You have to go back to President Jimmy Carter to find this kind of dissatisfaction. No one should have to be reminded that Carter was trounced by Ronald Reagan, a candidate that the media deemed "unelectable" because he was too far right.
Rasmussen, a Democrat pollster who has been tracking presidential ratings for years, recently scored Obama's approval index at -23. That is unfamiliar territory but for a handful of presidents, all of whom were rejected by voters for a second term.
Many in the media like to point to President Reagan's low approval ratings in his first term to suggest Obama will recover. However, the media always conceals one important fact: Reagan's numbers improved only when the jobless rate began to decline.
That's why history cannot be ignored. No sitting president, except Franklin Roosevelt, has been given a second term when the unemployment rate was above 8 percent. In fact, in the last 12 president elections, no incumbent has escaped defeat when the jobless number was 7.5 percent or higher.
It is sheer folly for the media to gaze upon the August employment figures without concluding Obama's chances for reelection correlate with job growth: zero.
An even-handed analysis of the last presidential election scrubs the sheen from Obama's historic victory. While the president snared a lopsided win in the electoral college, he managed to collect only 52 percent of the popular vote.
In key swing states, Obama's margin of victory was paper thin. For example, in Ohio the president won by 217,000 votes out of more than 6 million cast. It was the same story in Florida, where Obama eked out a 144,000 vote margin in a state where 8.5 million people trooped to the polls. Virginia swung to Obama by 230,000 votes out of 3.7 million ballots.
As these numbers suggest, Obama' win hardly approached landslide proportions. Despite having every advantage, including the weakest Republican candidate in history and a looming recession, it was a surprisingly close election. In addition, he was aided by the highest voter turnout in 40 years.
The president will have none of these advantages in the 2012 election. His own base suffers from Obama fatigue. While McCain was reviled by conservatives, the current GOP front runners have no such albatross. The unemployment numbers are unlikely to improve substantially before next November. Voter anger at the administration has reached record levels, approaching those recorded by George W. Bush.
As one measure of voter discontent, consider these poll numbers: Just 34 percent of Americans think the country's best days are in the future. More than 60 percent are gloomy about the outlook. That level of pessimism usually energizes voters to toss out the incumbent.
Barrack Obama has only one thing going for him. The mainstream media is solidly in his camp. The same journalists who failed to vet Obama when he ran for president will spend all their energy investigating, debunking and demonizing Republican candidates.
But voters are savvy. They can sift through the media spin. In the last election, the Pew Research Center polled registered voters and found that 70 percent believed that journalists wanted Obama to win.
The media won't abandon Obama this election. However, no amount of media campaigning can conceal the fact that the country is worse off under President Obama. Voters have seen the real Barack Obama and they are clearly in no mood to make the same mistake twice.
For that reason, those who dwell on electability of Republicans are obviously delusional about the political reality facing Barrack Obama.
Sunday, September 4, 2011
Obama's Regulatory Expansion Saps Business Growth
While the economy shrinks faster than the president's approval ratings, at least Barrack Obama can boast of growth in one area: regulatory agencies. Under his leadership, the federal regulatory regime has intruded into nearly every aspect of the lives of individuals and of American business.
Since 2008, the annual budgets of federal agencies have skyrocketed 15 percent, while the economy stumbles along with Gross Domestic Product (GDP) growth of less than two percent this year. The annual taxpayer bill for this regulatory excess tops $54 billion.
Payrolls at federal regulatory agencies have increased 13 percent since Obama moved into 1600 Pennsylvania Avenue. That's a net addition of 281,000 government jobs. Meanwhile, private-sector job growth has dwindled since 2008, even with microscopic gains this year.
The Progressive Policy Institute studied the issue and found that in a one-year period federal regulatory jobs rose faster than either private or government payrolls. This shameless expansion has gone unnoticed by most Americans because the mainstream media has covered up the issue to protect the president.
With so many new employees on the federal dole, they are discovering more ways to punish business. In one single month this year, regulators unfurled 379 new rules that will cost businesses more than $9.5 billion, according to the Heritage Foundation.
In the Obama Administration's first 26 months, the foundation counted 75 new major rules that saddled businesses with $40 billion in additional expenses. Of course, those costs are ultimately passed on to unwary consumers, who always blame businesses for price hikes instead of the real culprit, federal excess.
A study last year by the Small Business Administration estimated that the annual price tag of complying with federal rules and regulations was a staggering $1.75 trillion. Small firms have suffered most. Research revealed that these companies spend 38 percent more per employee than large firms on federal regulatory compliance.
Unfortunately, Washington agencies are just getting warmed up. The Federal Register estimates that there are more than 4,200 new regulations in the government pipeline. And there is no end in sight because legislation passed by the Democrat controlled Congress the last two years created more superfluous agencies.
For example, the new Consumer Financial Protection Bureau is hiring at a frenzied pace. The agency, spawned by the Dodd-Frank Act of 2010, plans to add 1,200 people based in Washington with satellite offices in New York, Chicago and San Francisco.
The bureau has opened its doors for business, despite not having a director. The president has nominated former Ohio Attorney General Richard Cordray to the post. However, his appointment must be confirmed by the Senate.
Republicans and businesses plan to oppose the nomination as a way of neutering the agency. In signalling its opposition, the U.S. Chamber of Commerce warned that the new agency is a "potent threat to the price and availability of credit" for businesses and consumers.
That warning will go unheeded by a White House unconcerned about the harm federal regulations are causing the economy. Obama and his team of Big Government advocates keep dreaming up new ways to burden businesses and cripple economic expansion.
This from a president who claims he is preoccupied with creating jobs. Based on the evidence, Barrack Obama's idea of job growth involves enlarging the federal bureaucracy at the expense of the private sector, while sticking taxpayers with the bill.
Since 2008, the annual budgets of federal agencies have skyrocketed 15 percent, while the economy stumbles along with Gross Domestic Product (GDP) growth of less than two percent this year. The annual taxpayer bill for this regulatory excess tops $54 billion.
Payrolls at federal regulatory agencies have increased 13 percent since Obama moved into 1600 Pennsylvania Avenue. That's a net addition of 281,000 government jobs. Meanwhile, private-sector job growth has dwindled since 2008, even with microscopic gains this year.
The Progressive Policy Institute studied the issue and found that in a one-year period federal regulatory jobs rose faster than either private or government payrolls. This shameless expansion has gone unnoticed by most Americans because the mainstream media has covered up the issue to protect the president.
With so many new employees on the federal dole, they are discovering more ways to punish business. In one single month this year, regulators unfurled 379 new rules that will cost businesses more than $9.5 billion, according to the Heritage Foundation.
In the Obama Administration's first 26 months, the foundation counted 75 new major rules that saddled businesses with $40 billion in additional expenses. Of course, those costs are ultimately passed on to unwary consumers, who always blame businesses for price hikes instead of the real culprit, federal excess.
A study last year by the Small Business Administration estimated that the annual price tag of complying with federal rules and regulations was a staggering $1.75 trillion. Small firms have suffered most. Research revealed that these companies spend 38 percent more per employee than large firms on federal regulatory compliance.
Unfortunately, Washington agencies are just getting warmed up. The Federal Register estimates that there are more than 4,200 new regulations in the government pipeline. And there is no end in sight because legislation passed by the Democrat controlled Congress the last two years created more superfluous agencies.
For example, the new Consumer Financial Protection Bureau is hiring at a frenzied pace. The agency, spawned by the Dodd-Frank Act of 2010, plans to add 1,200 people based in Washington with satellite offices in New York, Chicago and San Francisco.
The bureau has opened its doors for business, despite not having a director. The president has nominated former Ohio Attorney General Richard Cordray to the post. However, his appointment must be confirmed by the Senate.
Republicans and businesses plan to oppose the nomination as a way of neutering the agency. In signalling its opposition, the U.S. Chamber of Commerce warned that the new agency is a "potent threat to the price and availability of credit" for businesses and consumers.
That warning will go unheeded by a White House unconcerned about the harm federal regulations are causing the economy. Obama and his team of Big Government advocates keep dreaming up new ways to burden businesses and cripple economic expansion.
This from a president who claims he is preoccupied with creating jobs. Based on the evidence, Barrack Obama's idea of job growth involves enlarging the federal bureaucracy at the expense of the private sector, while sticking taxpayers with the bill.
Sunday, August 28, 2011
Check In The Mail To Bailout Post Office?
If there ever was a poster child for bureaucratic inefficiency and incompetence, it is the U.S. Postal System. The ungainly appratatus stands as an example of what happens when a pseudo-government agency attempts to operate as a public enterprise using unsound business practices while ignoring market trends.
By its own admission, the Post Office is awash in red ink. Postmaster General Patrick Donahoe estimates the service will lose a record $8 billion in the current fiscal year that ends in September. Over the next decade, the losses could approach a budget-crippling $238 billion.
The Postal Service generates income by selling stamps and services to cover its costs. The agency currently receives no federal subsidies. However, with fewer people using the mail, revenues are sinking. In most recent fiscal quarter, the agency posted a $3.1 billion loss.
That doesn't even begin to describe the system's financial headaches. Next month the Postal Service is expected to default on a $5.5 billion health benefit prepayment required by federal law. The agency is unable to meet the obligation by borrowing money because it has reached its $15 billion limit, making default likely unless Congress or the government rescues the service.
In its review of the system, the Government Accountability Office (GAO) revealed that the current business model used by the Post Office is "not viable". The audit, released in June, called for deeper cuts in jobs and wages in light of the 25 percent decline in first class mail over the past decade.
In summarizing its findings, the GAO cautioned that without drastic revisions, the Post Office's staggering losses will increase. The calls for reform have gone largely ignored, although Donahue deserves credit for at least trying to whittle away at the bloated payroll.
His efforts have been opposed at every turn by the powerful National Association of Letter Carriers (NALC). A union official recently wailed that his organization will "vehemently oppose any attempt to destroy the collective bargaining rights of postal workers."
The union wants to protect every one of the current 563,400 postal jobs. Donahoe has raised the union's ire by calling for a reduction of 220,000 union employees as part of his plan for shuttering 3,650 post offices, many in rural locations. The postal chief also wants to end Saturday mail delivery, which would save $3 billion annually.
Republicans in Congress are growing impatient with the impasse. Led by California Rep. Darrell Issa, the GOP is considering legislation to rein in health benefits, reduce payroll and force changes to the pension fund covering 480,000 retired postal employees. That has set off a firestorm of protests among union officials, who complained that "crushing postal workers and slashing service" will not solve the system's financial crisis.
Democrats have been quick to come to the aid of the beleaguered union. Democrat Tom Carper who chairs the Senate subcommittee overseeing the post office, has voiced concern over whether the proposals "would be fair to employees." Carper is only protecting his party's interests. Postal unions have overwhelmingly supported Democrat candidates, including Obama in the 2008 presidential election.
That fact undoubtedly explains why the president's proposed 2012 budget included a whopping $11 billion bailout gift-wrapped for the Postal Service. The union was appropriately moved. "We're pleased that the Obama Administration seems to recognize the seriousness of the Postal Service's financial condition..." a union official chirped. News coverage of the proposed financial relief has been nonexistent.
Taxpayer funds won't fix this financial mess. If the Postal System were a "real" business, it would have long ago filed for bankruptcy. Washington needs to compell the system to exit the postal business, leaving the market to private companies to serve.
By its own admission, the Post Office is awash in red ink. Postmaster General Patrick Donahoe estimates the service will lose a record $8 billion in the current fiscal year that ends in September. Over the next decade, the losses could approach a budget-crippling $238 billion.
The Postal Service generates income by selling stamps and services to cover its costs. The agency currently receives no federal subsidies. However, with fewer people using the mail, revenues are sinking. In most recent fiscal quarter, the agency posted a $3.1 billion loss.
That doesn't even begin to describe the system's financial headaches. Next month the Postal Service is expected to default on a $5.5 billion health benefit prepayment required by federal law. The agency is unable to meet the obligation by borrowing money because it has reached its $15 billion limit, making default likely unless Congress or the government rescues the service.
In its review of the system, the Government Accountability Office (GAO) revealed that the current business model used by the Post Office is "not viable". The audit, released in June, called for deeper cuts in jobs and wages in light of the 25 percent decline in first class mail over the past decade.
In summarizing its findings, the GAO cautioned that without drastic revisions, the Post Office's staggering losses will increase. The calls for reform have gone largely ignored, although Donahue deserves credit for at least trying to whittle away at the bloated payroll.
His efforts have been opposed at every turn by the powerful National Association of Letter Carriers (NALC). A union official recently wailed that his organization will "vehemently oppose any attempt to destroy the collective bargaining rights of postal workers."
The union wants to protect every one of the current 563,400 postal jobs. Donahoe has raised the union's ire by calling for a reduction of 220,000 union employees as part of his plan for shuttering 3,650 post offices, many in rural locations. The postal chief also wants to end Saturday mail delivery, which would save $3 billion annually.
Republicans in Congress are growing impatient with the impasse. Led by California Rep. Darrell Issa, the GOP is considering legislation to rein in health benefits, reduce payroll and force changes to the pension fund covering 480,000 retired postal employees. That has set off a firestorm of protests among union officials, who complained that "crushing postal workers and slashing service" will not solve the system's financial crisis.
Democrats have been quick to come to the aid of the beleaguered union. Democrat Tom Carper who chairs the Senate subcommittee overseeing the post office, has voiced concern over whether the proposals "would be fair to employees." Carper is only protecting his party's interests. Postal unions have overwhelmingly supported Democrat candidates, including Obama in the 2008 presidential election.
That fact undoubtedly explains why the president's proposed 2012 budget included a whopping $11 billion bailout gift-wrapped for the Postal Service. The union was appropriately moved. "We're pleased that the Obama Administration seems to recognize the seriousness of the Postal Service's financial condition..." a union official chirped. News coverage of the proposed financial relief has been nonexistent.
Taxpayer funds won't fix this financial mess. If the Postal System were a "real" business, it would have long ago filed for bankruptcy. Washington needs to compell the system to exit the postal business, leaving the market to private companies to serve.
Sunday, August 21, 2011
Warning: Obamacare Contains Unhealthy Surprises
After another stinging legal defeat, President Obama's massive health care law has been placed on life support. The latest blow came when the 11th Circuit Court of Appeals ruled that the provision mandating government insurance coverage is unconstitutional.
Despite this and two other legal setbacks, the Obama Administration continues to snub the courts, instead quietly amassing the bureaucracy needed to oversee the gargantuan government program. Payrolls are being fattened at both the Internal Revenue Service and the Health and Human Services Department in anticipation of implementation.
Because of the government's stealth approach, most Americans are unaware of the pervasive bureaucracy that will be required to administer federal health care. If the U.S. Post Office employs more than one-half million people, how many government workers will be needed to oversee a trillion dollar health care program?
No answer has been forthcoming from the Obama Administration. Whatever the number, the bureaucracy will require round-the-clock feeding from the government trough. Not to worry because the feds have grand plans to raid your wallet beginning less than two years from now in 2013.
The implementation date was selected by the Democrat controlled House and Senate in 2010 to save Obama from having to defend unpopular taxes during the presidential campaign next year. Shortly after the election, the government will usher in the New Year with a hodgepodge of new taxes aimed at raising more than $503 billion over six years.
An increase in payroll taxes for businesses and individuals will be one of the first to be unleashed beginning in 2013. The current payroll tax of 1.45 percent will almost double to 2.35 percent for individuals making more than $200,000 annually. This tax has been part of the Social Security and Medicare deductions on most individuals' checks.
While this tax targets upper income earners, it is likely to include more middle income families. If history is any indication, entitlement expenses always grow faster than Treasury's revenues, making it unlikely any taxpayers will be spared from paying for the imposing government scheme.
In addition, the health care revision mandates payroll tax rates will apply to investment income, including capital gains, stock dividends, rents and royalties in 2013. This marks the first time in U.S. history that investment income will be subject to a payroll taxes.
In 2016, individuals will be required to purchase government health care insurance. Employers with more than 50 workers will be forced to provide health insurance or incur stiff fines.
Things go from bad to worse in 2018. All individuals will be forced to pay a new 40 percent excise tax on private health insurance plans, including those offered by business employers, that are deemed too generous by the government.
By the end of 2019, The Heritage Foundation estimates that the total tax burden of Obamacare on the economy will skyrocket to $102 billion annually.
But that doesn't tell the whole story. Besides the taxes already mentioned, there are 14 other changes to tax law that eliminate deductions, hike taxes and increase fees. Although aimed mostly at companies, consumers always end up picking up the tab for increased business costs in the form of higher prices.
Taxes won't be the only burden for individuals. Americans are likely to find the cost of private insurance prohibitive. The Centers for Medicare and Medicaid Services estimate that private insurance costs are expected to rise a stunning 88 percent.
No wonder the price tag for Obamacare has been hard to pin down. The Congressional Budget Office (CBO) released an updated analysis in March, raising the cost into the $1.1 trillion stratosphere. But that forecast will likely prove too low because the medical coverage standards have not been spelled out by the Institute of Medicine, the independent agency charged with the task of defining benefits.
Meanwhile, the states are facing a January 1, 2013, deadline to submit detailed plans based on the new standards. Insurance companies find themselves in the same predicament, prompting a Blue Cross and Blue Shield official to recently complain about the difficulty in planning for the new law without standards.
Businesses are facing equal uncertainty, particularly those offering health care coverage to employees. Future benefit costs are clouded, which has caused businesses to delay hiring. As a result, some firms and unions have already obtained waivers from the Obama Administration. Recent estimates put the number at "almost a thousand" exemptions from Obamacare.
One of the first in line to be granted a waiver was the powerful Service Employees International Union (SEIU), which represents many state and local government workers. That is no coincidence because the 2.1 million-member union was one of the president's chief supporters, filling his campaign coffers with millions of dollars, while supporting his health care reform.
Once Obamacare coverage begins it will be too late to prevent the government from seizing control of health care, which accounts for 17 percent of the economy. Washington has never once in its history repealed an entitlement program. That's why Congress must unplug Obamacare immediately and terminate the life of this federal boondoggle.
Despite this and two other legal setbacks, the Obama Administration continues to snub the courts, instead quietly amassing the bureaucracy needed to oversee the gargantuan government program. Payrolls are being fattened at both the Internal Revenue Service and the Health and Human Services Department in anticipation of implementation.
Because of the government's stealth approach, most Americans are unaware of the pervasive bureaucracy that will be required to administer federal health care. If the U.S. Post Office employs more than one-half million people, how many government workers will be needed to oversee a trillion dollar health care program?
No answer has been forthcoming from the Obama Administration. Whatever the number, the bureaucracy will require round-the-clock feeding from the government trough. Not to worry because the feds have grand plans to raid your wallet beginning less than two years from now in 2013.
The implementation date was selected by the Democrat controlled House and Senate in 2010 to save Obama from having to defend unpopular taxes during the presidential campaign next year. Shortly after the election, the government will usher in the New Year with a hodgepodge of new taxes aimed at raising more than $503 billion over six years.
An increase in payroll taxes for businesses and individuals will be one of the first to be unleashed beginning in 2013. The current payroll tax of 1.45 percent will almost double to 2.35 percent for individuals making more than $200,000 annually. This tax has been part of the Social Security and Medicare deductions on most individuals' checks.
While this tax targets upper income earners, it is likely to include more middle income families. If history is any indication, entitlement expenses always grow faster than Treasury's revenues, making it unlikely any taxpayers will be spared from paying for the imposing government scheme.
In addition, the health care revision mandates payroll tax rates will apply to investment income, including capital gains, stock dividends, rents and royalties in 2013. This marks the first time in U.S. history that investment income will be subject to a payroll taxes.
In 2016, individuals will be required to purchase government health care insurance. Employers with more than 50 workers will be forced to provide health insurance or incur stiff fines.
Things go from bad to worse in 2018. All individuals will be forced to pay a new 40 percent excise tax on private health insurance plans, including those offered by business employers, that are deemed too generous by the government.
By the end of 2019, The Heritage Foundation estimates that the total tax burden of Obamacare on the economy will skyrocket to $102 billion annually.
But that doesn't tell the whole story. Besides the taxes already mentioned, there are 14 other changes to tax law that eliminate deductions, hike taxes and increase fees. Although aimed mostly at companies, consumers always end up picking up the tab for increased business costs in the form of higher prices.
Taxes won't be the only burden for individuals. Americans are likely to find the cost of private insurance prohibitive. The Centers for Medicare and Medicaid Services estimate that private insurance costs are expected to rise a stunning 88 percent.
No wonder the price tag for Obamacare has been hard to pin down. The Congressional Budget Office (CBO) released an updated analysis in March, raising the cost into the $1.1 trillion stratosphere. But that forecast will likely prove too low because the medical coverage standards have not been spelled out by the Institute of Medicine, the independent agency charged with the task of defining benefits.
Meanwhile, the states are facing a January 1, 2013, deadline to submit detailed plans based on the new standards. Insurance companies find themselves in the same predicament, prompting a Blue Cross and Blue Shield official to recently complain about the difficulty in planning for the new law without standards.
Businesses are facing equal uncertainty, particularly those offering health care coverage to employees. Future benefit costs are clouded, which has caused businesses to delay hiring. As a result, some firms and unions have already obtained waivers from the Obama Administration. Recent estimates put the number at "almost a thousand" exemptions from Obamacare.
One of the first in line to be granted a waiver was the powerful Service Employees International Union (SEIU), which represents many state and local government workers. That is no coincidence because the 2.1 million-member union was one of the president's chief supporters, filling his campaign coffers with millions of dollars, while supporting his health care reform.
Once Obamacare coverage begins it will be too late to prevent the government from seizing control of health care, which accounts for 17 percent of the economy. Washington has never once in its history repealed an entitlement program. That's why Congress must unplug Obamacare immediately and terminate the life of this federal boondoggle.
Sunday, August 14, 2011
Wake Up and Smell the Tea
Barack Obama, who campaigned on the promise of uniting America, can now claim the mantle as the most divisive president in U.S. history. He has become the Demonizer-In-Chief, assaulting big business, health insurers, corporate jet owners, the wealthy, credit rating agencies and everyone else who dares to stand against his bankrupt agenda.
In recent days, the president has reserved some of his harshest verbal venom for the Tea Party, blaming the nascent movement for the Washington wrangling that ended with a debt deal no one liked. Of course, the Obama Amen Chorus in the media and within the Democrat Party bared their fangs in support the president.
Massachusetts's Sen. John Kerry sunk his dental implants in the Tea Party, laying the blame for the Standard & Poor's credit downgrade at the feet of the 87 freshmen GOP Congressmen who adhered toTea Party principles in the debt debate.
Obama's political hatchet man David Axelrod seconded Kerry's assessment, calling the credit agency's action a "Tea Party downgrade." Democrats were just getting warmed up when the mainstream media stepped into the fray with incendiary language.
David Gregory on television's "Meet the Press" program accused the Tea Party of "holding the process hostage" in referring to the debt negotiations. New York Times columnist Thomas Freidman characterized the Tea Party as the "Hezbollah faction" of the GOP.
Figuring his colleagues hadn't gone far enough in exposing their bias, fellow columnist Joe Nocera wrote in The Times that the Tea Party had "waged Jihad on America." Howard Dean, the Democrat Party's left wing loon, infamously branded the movement "racist."
Democrats and their allies in the media have made the Tea Party Public Enemy No. 1 for one reason: they are scared to death that what started as a loosely knit revolution against Obama's perilous penchant for spending will mushroom into an landslide rejection of the president next November.
Democratic pollster Rasmussen's research underscores the issue for Obama and his party. It released results this month that showed "42% of all likely U.S. voters believe the average Tea Party member has a better understanding of problems America faces, while 34% think the average member of Congress is more clued in."
In fact, the Tea Party isn't a a traditional political party, but a fractious federation of like-minded individuals. A poll conducted by CNN/Opinion Research painted a more favorable picture of Tea Party members than the one framed by the media and Democrats.
The research found that three-fourths of those who identified themselves as Tea Party members had attended college, compared to 54 percent of the public at large. Six in ten were male. More than half live in rural America. Most don't actively support the party, but often endorse the Tea Party views.
That hardly is the profile of a "terrorist."
In recent days, Democrats have ratcheted up the anti-Tea Party rhetoric in hopes of shielding the president from the blame he deserves for the debt debacle that ended with the U.S. losing its AAA credit rating for the first time in 70 years, despite Obama's repeated lie that raising the debt ceiling was the only way to avoid a downgrade.
No wonder the president's credibility is deteriorating faster than a crippled Japanese nuclear plant.
Obama got his wish, a debt deal that lifted the moratorium on borrowing. He cannot legitimately finger the Tea Party or its Congressional supporters for the stock market crash and credit downgrade that happened AFTER the bipartisan agreement was signed into law by the president.
For months, the media and Obama clamored for a debt compromise. They misread the American public, thinking that voters preferred compromise over substance. What the electorate wanted was a solution to reclaiming the nation's fiscal footing, not some squishy deal that leaves the debt issue unsettled for 10 more years.
Voters send people to Washington to represent their views. Many inside the Beltway believe that the notion of a representative government is a quaint idea not worth preserving. They salivate after compromise, but only as long as negotiations end up with a lopsided agreement they favor.
Which brings us back to the Tea Party. The reason the movement fired the imagination of the voters was its principled stand against taxes, big government and wanton spending. The electorate was tired of voting for the same old political crowd that promised reform and then promptly changed their stripes the minute they set foot in the Capitol.
Yet when Tea Party backed Congressmen and women balked at talk of raising taxes to reduce the deficit, the media and the Democrat Party acted outraged. In their skewed view, principles should be sacrificed in the name of compromise. That kind of thinking is what led to the current fiscal dysfunction in Washington.
Despite its grassroots origin, the Tea Party movement has proven effective at raising the level of dissatisfaction with Obama's policies. That's what bothers the president and the Democrats most. They want to control the political message by silencing voices of dissent through intimidation, dehumanization and disinformation.
The Big Bad Tea Party has a huge target on its back because it won't bend to Obama's political will. Instead of reaching out to his critics, the president prefers to divide the nation with labels. Name calling is no hallmark of leadership. It is the stock-and-trade of political cowards.
In recent days, the president has reserved some of his harshest verbal venom for the Tea Party, blaming the nascent movement for the Washington wrangling that ended with a debt deal no one liked. Of course, the Obama Amen Chorus in the media and within the Democrat Party bared their fangs in support the president.
Massachusetts's Sen. John Kerry sunk his dental implants in the Tea Party, laying the blame for the Standard & Poor's credit downgrade at the feet of the 87 freshmen GOP Congressmen who adhered toTea Party principles in the debt debate.
Obama's political hatchet man David Axelrod seconded Kerry's assessment, calling the credit agency's action a "Tea Party downgrade." Democrats were just getting warmed up when the mainstream media stepped into the fray with incendiary language.
David Gregory on television's "Meet the Press" program accused the Tea Party of "holding the process hostage" in referring to the debt negotiations. New York Times columnist Thomas Freidman characterized the Tea Party as the "Hezbollah faction" of the GOP.
Figuring his colleagues hadn't gone far enough in exposing their bias, fellow columnist Joe Nocera wrote in The Times that the Tea Party had "waged Jihad on America." Howard Dean, the Democrat Party's left wing loon, infamously branded the movement "racist."
Democrats and their allies in the media have made the Tea Party Public Enemy No. 1 for one reason: they are scared to death that what started as a loosely knit revolution against Obama's perilous penchant for spending will mushroom into an landslide rejection of the president next November.
Democratic pollster Rasmussen's research underscores the issue for Obama and his party. It released results this month that showed "42% of all likely U.S. voters believe the average Tea Party member has a better understanding of problems America faces, while 34% think the average member of Congress is more clued in."
In fact, the Tea Party isn't a a traditional political party, but a fractious federation of like-minded individuals. A poll conducted by CNN/Opinion Research painted a more favorable picture of Tea Party members than the one framed by the media and Democrats.
The research found that three-fourths of those who identified themselves as Tea Party members had attended college, compared to 54 percent of the public at large. Six in ten were male. More than half live in rural America. Most don't actively support the party, but often endorse the Tea Party views.
That hardly is the profile of a "terrorist."
In recent days, Democrats have ratcheted up the anti-Tea Party rhetoric in hopes of shielding the president from the blame he deserves for the debt debacle that ended with the U.S. losing its AAA credit rating for the first time in 70 years, despite Obama's repeated lie that raising the debt ceiling was the only way to avoid a downgrade.
No wonder the president's credibility is deteriorating faster than a crippled Japanese nuclear plant.
Obama got his wish, a debt deal that lifted the moratorium on borrowing. He cannot legitimately finger the Tea Party or its Congressional supporters for the stock market crash and credit downgrade that happened AFTER the bipartisan agreement was signed into law by the president.
For months, the media and Obama clamored for a debt compromise. They misread the American public, thinking that voters preferred compromise over substance. What the electorate wanted was a solution to reclaiming the nation's fiscal footing, not some squishy deal that leaves the debt issue unsettled for 10 more years.
Voters send people to Washington to represent their views. Many inside the Beltway believe that the notion of a representative government is a quaint idea not worth preserving. They salivate after compromise, but only as long as negotiations end up with a lopsided agreement they favor.
Which brings us back to the Tea Party. The reason the movement fired the imagination of the voters was its principled stand against taxes, big government and wanton spending. The electorate was tired of voting for the same old political crowd that promised reform and then promptly changed their stripes the minute they set foot in the Capitol.
Yet when Tea Party backed Congressmen and women balked at talk of raising taxes to reduce the deficit, the media and the Democrat Party acted outraged. In their skewed view, principles should be sacrificed in the name of compromise. That kind of thinking is what led to the current fiscal dysfunction in Washington.
Despite its grassroots origin, the Tea Party movement has proven effective at raising the level of dissatisfaction with Obama's policies. That's what bothers the president and the Democrats most. They want to control the political message by silencing voices of dissent through intimidation, dehumanization and disinformation.
The Big Bad Tea Party has a huge target on its back because it won't bend to Obama's political will. Instead of reaching out to his critics, the president prefers to divide the nation with labels. Name calling is no hallmark of leadership. It is the stock-and-trade of political cowards.
Sunday, August 7, 2011
Nightmare On Wall Street Dooms Obama
History will record that Barack Obama signed away a second term in office when he approved legislation on August 2 to raise the nation's debt ceiling to an once unfathomable level of more than $16 trillion. With a stroke of the presidential pen, Obama unleashed a torrent of economic backlash.
The stock market greeted the president's debt deal with a resounding rejection, sending the Dow Jones average tumbling 512.76 points on August 4. The steep decline ranked as the ninth-worst in the market's history. Staggering losses of trillions of dollars wiped out stock gains for the year.
That was significant because the market's performance was the lone economic gauge that had improved under Obama in 2011. Jobs have wilted with the summer heat. Unemployment bounces from bad to worst. Home sales and prices are in the toilet. The only silver lining was a robust stock market. No more.
Make no mistake about it, this is Obama's debt deal. He stiff armed Speaker John Boehner's attempts to forge a bipartisan deal. Then the president panicked as the clock ticked down on the nation's first credit default. He dispatched senate majority leader Harry Reid to strike a deal, any deal.
As a result, Obama was forced to sign legislation that trimmed the fiscal deficit by $2.1 trillion over 10 years in exchange for raising the debt ceiling by another $2.1 trillion from its current record level of $14.294 trillion. The deficit reduction is to be achieved solely by slicing away at the bloated federal budget.
For months, the president and his Democrat cronies had brayed like jackasses that tax increases had to be part of any deal. Republicans called his hand. Obama caved for selfish political reasons. He wanted to postpone having to revisit the debt ceiling issue until after the November presidential elections next year.
When Republicans balked at a debt ceiling extension of more than a year, the president and his mouthpiece Jay Carney resorted to lies. They wagged their fingers at the GOP, claiming that past Congresses had reached longer agreements. The facts say otherwise.
Since 1979, the average debt limit extension given to Treasury has been 251 days, about eight months. The shortest increase in 1981 lasted all of one day. The longest extension in 1997 allowed enough leeway for borrowing to continue for five years.
Now the president is trying to placate his far left political base by suggesting that tax increases on the wealthy will be part of a bipartisan congressional committee's efforts to find $1.5 trillion beyond the $917 billion in cuts already identified. Like a two-year old, Obama is stamping his feet to rally the Democrat Kook Klan.
Meanwhile, the grownups who actually work for a living aren't impressed. In a recent USA Today/Gallup poll 46 percent of Americans registered their disgust with Obama's debt deal. More than 40 percent think the agreement will do more to harm than help the economy. Not good news for a president who believes he can double-talk his way out of any failure.
The folks at Standard & Poors also were nonplussed. The rating agency lowered the U.S. credit rating by one notch to AA-plus, an unprecedented blow to the nation's stature as the gold standard for fiscal responsibility. The U.S. had held the top-tier AAA credit rating since 1941, a period of 70 years.
In revising its rating, S&P argued that the deficit cuts did not go far enough. Using government figures, the credit rating agency projected that the nation's debt level would hit $20.1 trillion by 2021, despite the reductions contained in the debt deal. In other words, the debt keeps rising for the foreseeable future.
The loss of the triple-A rating was once unthinkable. However, Obama's reckless spending the last two years when his party held both houses of Congress has left a financial mess that has fattened budget deficits and burdened Americans with unconscionable debt.
As a result, U.S. Treasury bonds, once hailed as the safest security in the world, are now rated lower than bonds issued by countries such as Britain, Germany, France and Canada, according to Reuters. The Chinese, who hold $1 trillion in U.S. debt, issued a strong condemnation of the debt deal and related credit downgrade.
"China will be forced to consider other investments for its reserves," said Li Jie with the Central University of Finance and Economics. "U.S. Treasuries aren't as safe anymore."
Who thought that China, once an economic weakling, would be lecturing the world's economic powerhouse on fiscal responsibility? It happened on Barack Obama's watch. George Bush was nowhere on the scene, yet Obama still found reasons to blame the former president, as he has done ad naseum for the past three years.
No matter how hard he tries Obama cannot escape culpability for the nation's economic decline. His budgets, his spending and his deficits have shoved the country to the brink of bankruptcy. Barack Obama owns the American economy with all its financial warts.
Don't expect the president to suddenly unveil any solutions to revive the economy. He is too busy planning his retirement as it becomes patently obvious that voters will reject his failed presidency next November.
The stock market greeted the president's debt deal with a resounding rejection, sending the Dow Jones average tumbling 512.76 points on August 4. The steep decline ranked as the ninth-worst in the market's history. Staggering losses of trillions of dollars wiped out stock gains for the year.
That was significant because the market's performance was the lone economic gauge that had improved under Obama in 2011. Jobs have wilted with the summer heat. Unemployment bounces from bad to worst. Home sales and prices are in the toilet. The only silver lining was a robust stock market. No more.
Make no mistake about it, this is Obama's debt deal. He stiff armed Speaker John Boehner's attempts to forge a bipartisan deal. Then the president panicked as the clock ticked down on the nation's first credit default. He dispatched senate majority leader Harry Reid to strike a deal, any deal.
As a result, Obama was forced to sign legislation that trimmed the fiscal deficit by $2.1 trillion over 10 years in exchange for raising the debt ceiling by another $2.1 trillion from its current record level of $14.294 trillion. The deficit reduction is to be achieved solely by slicing away at the bloated federal budget.
For months, the president and his Democrat cronies had brayed like jackasses that tax increases had to be part of any deal. Republicans called his hand. Obama caved for selfish political reasons. He wanted to postpone having to revisit the debt ceiling issue until after the November presidential elections next year.
When Republicans balked at a debt ceiling extension of more than a year, the president and his mouthpiece Jay Carney resorted to lies. They wagged their fingers at the GOP, claiming that past Congresses had reached longer agreements. The facts say otherwise.
Since 1979, the average debt limit extension given to Treasury has been 251 days, about eight months. The shortest increase in 1981 lasted all of one day. The longest extension in 1997 allowed enough leeway for borrowing to continue for five years.
Now the president is trying to placate his far left political base by suggesting that tax increases on the wealthy will be part of a bipartisan congressional committee's efforts to find $1.5 trillion beyond the $917 billion in cuts already identified. Like a two-year old, Obama is stamping his feet to rally the Democrat Kook Klan.
Meanwhile, the grownups who actually work for a living aren't impressed. In a recent USA Today/Gallup poll 46 percent of Americans registered their disgust with Obama's debt deal. More than 40 percent think the agreement will do more to harm than help the economy. Not good news for a president who believes he can double-talk his way out of any failure.
The folks at Standard & Poors also were nonplussed. The rating agency lowered the U.S. credit rating by one notch to AA-plus, an unprecedented blow to the nation's stature as the gold standard for fiscal responsibility. The U.S. had held the top-tier AAA credit rating since 1941, a period of 70 years.
In revising its rating, S&P argued that the deficit cuts did not go far enough. Using government figures, the credit rating agency projected that the nation's debt level would hit $20.1 trillion by 2021, despite the reductions contained in the debt deal. In other words, the debt keeps rising for the foreseeable future.
The loss of the triple-A rating was once unthinkable. However, Obama's reckless spending the last two years when his party held both houses of Congress has left a financial mess that has fattened budget deficits and burdened Americans with unconscionable debt.
As a result, U.S. Treasury bonds, once hailed as the safest security in the world, are now rated lower than bonds issued by countries such as Britain, Germany, France and Canada, according to Reuters. The Chinese, who hold $1 trillion in U.S. debt, issued a strong condemnation of the debt deal and related credit downgrade.
"China will be forced to consider other investments for its reserves," said Li Jie with the Central University of Finance and Economics. "U.S. Treasuries aren't as safe anymore."
Who thought that China, once an economic weakling, would be lecturing the world's economic powerhouse on fiscal responsibility? It happened on Barack Obama's watch. George Bush was nowhere on the scene, yet Obama still found reasons to blame the former president, as he has done ad naseum for the past three years.
No matter how hard he tries Obama cannot escape culpability for the nation's economic decline. His budgets, his spending and his deficits have shoved the country to the brink of bankruptcy. Barack Obama owns the American economy with all its financial warts.
Don't expect the president to suddenly unveil any solutions to revive the economy. He is too busy planning his retirement as it becomes patently obvious that voters will reject his failed presidency next November.
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