Prospects are dim for an economic rebound unless the Obama Administration takes off its blinders long enough to see that its policies are undermining small businesses. Without vibrant small business growth, the economy will never be able to generate the jobs needed to significantly lower unemployment.
The jobs data for June was a further indictment of the president's handling of the economy. Unemployment ticked up to 9.2 percent, rising for the second straight month. The economy grew a puny 18,000 jobs in the month. Job growth at small businesses was virtually nonexistent.
To understand the scope of the problem, consider this analysis from Heritage Foundation. Using data from the Bureau of Labor, the think-thank estimated that employers must create an average of 260,000 net jobs every month until August, 2014, to lower unemployment to the normal rate. Job growth hasn't approached those numbers since the tech bubble in the late 1990s, so the odds are not good it will happen.
Changing the current direction on job growth depends on small businesses with under 500 employees. These firms represent 99.9 percent of the total of 27.5 million business operating in the United States. Large companies, including the Goliaths in Fortune's 500, account for far fewer enterprises, about 18,311 firms, according to the Small Business Administration (SBA).
Department of Labor data also shows that small businesses employ more people than their big company cousins. Fifty-two percent of the nation's workforce is employed by small businesses. In rural areas of the country, small firms' share of employment is even higher.
Nothing underscores the importance of small businesses to the economy better than job creation statistics from the SBA and Labor Department. These small firms have generated 65 percent of the net new jobs in the economy during the past 17 years.
To put that into perspective, small businesses accounted for 9.8 million of the net new jobs created between 1993 and 2009. By comparison, the corporate behemoths generated 5.2 million jobs during the same period. Clearly, small businesses hold the key to job growth.
Small businesses create their share of high tech jobs, too. Government data shows that smaller firms hire 43 percent of the scientists, engineers, computer programmers and other professionals with high-tech skills. The little guys are also more innovative, producing 13 times more patents per employee than the big boys.
Despite the obvious importance of small businesses to the economy, the Obama Administration has mostly ignored them. Billions of dollars in bailouts went to the Wall Street crowd, including big banks, financial institutions and even some of the world's largest automobile manufacturers.
While emptying the U.S. Treasury for big businesses, the president's answer for the little guys was the "Small Business Jobs Act of 2010." By any measure, the legislation has done nothing to address small businesses' problems. The National Federation of Independent Businesses, the largest association representing small firms, has pronounced the law an abject failure, falling short of dealing with "the most significant problems" facing its members.
Instead of a helping hand, the federal government has piled on more regulations for small businesses. The SBA found that the smallest firms, those with fewer than 20 employees, spend 36 percent more per worker on average to comply with federal regulations. By some estimates, the price tag for government regulations is $1.75 trillion annually.
In the latest example, the Environmental Protection Agency (EPA) has unleashed 30 new costly regulations that will further cripple small business job growth. The rules were handed down without a vote in the Congress and with no study on its impact on small businesses.
That moved the chief executive of the Small Business And Entrepreneurship Council to scold Washington for its heavy handedness. "More government spending, increased regulation and higher taxes are not economic tonics. But that is what small business owners are getting from Washington. The White House needs to wake up."
Unfortunately for small businesses, regulatory burdens aren't the only thing tamping down growth. Banks have been slow to open their vaults to small businesses desperate for capital. Business loans for under $100,000 have declined 18.1 percent during the recession, reports the Federal Reserve. The overwhelming majority of those loans are made to businesses with under 500 employees.
Small business firms rely heavily upon bank credit for injections of cash needed for everything from office space to inventory. Without financing, small businesses have to make tough choices. In 2009, the SBA reports that 660,900 small firms shuttered their doors. Another 60,837 declared bankruptcy. That same year only 552,600 small business starts up were counted by the SBA, putting growth in negative territory.
New financial regulations, many contained in the 2,300-page Dodd-Frank Wall Street Reform and Consumer Protection Act, have further crimped lending. Yet the billions of dollars in taxpayer bailouts handed to banks were supposed to allow these institutions to continue to loan money to forestall an economic catastrophe. As far as small businesses are concerned, banks are not showing them the money.
Another round of wasteful stimulus spending by the Obama Administration won't cure what ails the economy. Small businesses don't want a handout. All that is needed is for the government to lift burdensome regulations and make it easier for banks to resume lending at normal levels.
Don't expect an about face from the administration. It has shown a callous disregard for all things small. Big businesses have feasted at the government money trough, sucking up most of the financial aid. In an election year, it's not surprising the Obama Administration has chosen to lavish more attention on large firms because it gives them access to fat cat political donors.
By abandoning small businesses, the president has not only jeopardized the nation's chances at regaining its economic footing, but he has exposed his ignorance about job creation in the United States.
Sunday, July 17, 2011
Sunday, July 10, 2011
Debt Ceiling Charade Masks Worse Problem
With each ticking second, the United States marches inexorably closer to reaching the end of its legal ability to borrow more money. The cash spigot will shut off when the federal debt hits $14.294 trillion, officially on August 2 according to the Treasury Department.
However, that deadline is just another part of the charade created by the media and the president. Here's what the politicians don't want you to know: the country actually bumped up against the legal debt ceiling on May 16. For the most part, the media has ignored that fact to shield the president.
In spite of the legislative mandated ceiling, the government (with the full knowledge of Congress) has continued to incur more debt because Treasury Secretary Tim Geithner has been clearing headroom by suspending investments in the retirement fund for federal employees. Those "investments" were being made with borrowed money.
In the ultimate shell game, Treasury technically can claim it has not exceeded the limit by sticking government IOU's in the federal retirement fund. It doesn't change the fact that the government has rung up more debt, but the money won't be "borrowed" until the ceiling gets raised.
As a result of this sham, the country's outstanding debt now rests at a staggering $14,343,033,186,678.55. That figure rises every hour, every minute, every second of every day. In the time it has taken you to read to this point, another $2.8 million has been added to the federal debt.
While Obama attempts to broker a deal to increase borrowing and save his failing presidency, the nation watches in mostly stunned disbelief as he continues to sell the idea that the collapse of the United States is imminent if the debt ceiling remains in place. If only the country can borrow a few more trillion dollars, the United States will be spared from financial ruin, the president contends.
To parody the president's favorite phrase, let's be clear about this: the United States has a debt problem. Borrowing even more money does nothing to address the issue. In fact, borrowing deepens the financial hole by raising interest payments on debt which worsens the federal deficit.
No politician dares mention the relentless raid on the nation's treasury to finance the current mountain of debt. In June alone, your government wrote a check for $110.5 billion just to pay the interest on the trillions of dollars it owes to investors. The country still owes every penny of the principal amount of $13,343,033,186,678.55. A sizable portion of that debt--$4.3 trillion--is held by foreign governments.
Last year the federal government paid $413.9 billion in interest alone to satisfy its financial obligations. In the first nine months of the current government fiscal year (October, 2010-June, 2011), the United States shelled out $385.8 billion just to meet the interest due to lenders. At this rate, the government will easily surpass the record of $451 billion paid in interest in fiscal year 2008.
Interest on debt is now the federal budget's fifth largest item. Debt costs rank only behind entitlements and defense and domestic security in the budget. No doubt interest payments will consume a larger share of the budget each fiscal year as the current historically low borrowing costs inevitably begin to escalate. The Federal Reserve can only suppress interest rates for so long. Even a quarter-percent increase in borrowing costs will have a grave impact on interest payments.
The debate over the debt ceiling has muted the alarms bells created by the ballooning interest on borrowed money. With government debt climbing at an annual rate of 8.5 percent since 2009, the nation has arrived at a critical tipping point, where interest payments are a threat to cratering the economy.
No Democrat or Republican has yet stepped up to the issue. Everyone in Washington, from the President on down, wants you to believe that borrowing more money ends the financial crisis and provides the country breathing room to address runaway budget deficits.
However, the interest payments on debt have helped create the very deficits that has everyone concerned. Unless the nation quits its borrowing habit, default on the national debt will be no less an issue than if the ceiling remains in place.
As the president often says, it is time for the Congress to act like adults. The only way out of this sticky financial mess is for the adults in the House and Senate to just say "HELL NO" to increasing the debt.
However, that deadline is just another part of the charade created by the media and the president. Here's what the politicians don't want you to know: the country actually bumped up against the legal debt ceiling on May 16. For the most part, the media has ignored that fact to shield the president.
In spite of the legislative mandated ceiling, the government (with the full knowledge of Congress) has continued to incur more debt because Treasury Secretary Tim Geithner has been clearing headroom by suspending investments in the retirement fund for federal employees. Those "investments" were being made with borrowed money.
In the ultimate shell game, Treasury technically can claim it has not exceeded the limit by sticking government IOU's in the federal retirement fund. It doesn't change the fact that the government has rung up more debt, but the money won't be "borrowed" until the ceiling gets raised.
As a result of this sham, the country's outstanding debt now rests at a staggering $14,343,033,186,678.55. That figure rises every hour, every minute, every second of every day. In the time it has taken you to read to this point, another $2.8 million has been added to the federal debt.
While Obama attempts to broker a deal to increase borrowing and save his failing presidency, the nation watches in mostly stunned disbelief as he continues to sell the idea that the collapse of the United States is imminent if the debt ceiling remains in place. If only the country can borrow a few more trillion dollars, the United States will be spared from financial ruin, the president contends.
To parody the president's favorite phrase, let's be clear about this: the United States has a debt problem. Borrowing even more money does nothing to address the issue. In fact, borrowing deepens the financial hole by raising interest payments on debt which worsens the federal deficit.
No politician dares mention the relentless raid on the nation's treasury to finance the current mountain of debt. In June alone, your government wrote a check for $110.5 billion just to pay the interest on the trillions of dollars it owes to investors. The country still owes every penny of the principal amount of $13,343,033,186,678.55. A sizable portion of that debt--$4.3 trillion--is held by foreign governments.
Last year the federal government paid $413.9 billion in interest alone to satisfy its financial obligations. In the first nine months of the current government fiscal year (October, 2010-June, 2011), the United States shelled out $385.8 billion just to meet the interest due to lenders. At this rate, the government will easily surpass the record of $451 billion paid in interest in fiscal year 2008.
Interest on debt is now the federal budget's fifth largest item. Debt costs rank only behind entitlements and defense and domestic security in the budget. No doubt interest payments will consume a larger share of the budget each fiscal year as the current historically low borrowing costs inevitably begin to escalate. The Federal Reserve can only suppress interest rates for so long. Even a quarter-percent increase in borrowing costs will have a grave impact on interest payments.
The debate over the debt ceiling has muted the alarms bells created by the ballooning interest on borrowed money. With government debt climbing at an annual rate of 8.5 percent since 2009, the nation has arrived at a critical tipping point, where interest payments are a threat to cratering the economy.
No Democrat or Republican has yet stepped up to the issue. Everyone in Washington, from the President on down, wants you to believe that borrowing more money ends the financial crisis and provides the country breathing room to address runaway budget deficits.
However, the interest payments on debt have helped create the very deficits that has everyone concerned. Unless the nation quits its borrowing habit, default on the national debt will be no less an issue than if the ceiling remains in place.
As the president often says, it is time for the Congress to act like adults. The only way out of this sticky financial mess is for the adults in the House and Senate to just say "HELL NO" to increasing the debt.
Monday, July 4, 2011
Texas & California: A Cautionary Tale of Two States
Texas and California are two states rocked by economic earthquakes that are pulling each in opposite directions. California, once a growth powerhouse, is languishing in the throes of economic upheaval, while Texas is shaking up its economy with unparalleled business development.
This state of economic affairs was well documented in a recent USA Today article which marveled at Texas' business gains, calling the growth "one of the biggest economic shifts in the past half-century." Based on federal data, Texas has leapfrogged New York and is now the country's second-largest economy behind only California. And the gap is narrowing.
The newspaper relied on recently released data from the Bureau of Economic Analysis for its analysis. The verdict underscores how tax, labor and regulatory laws created by state legislatures directly impact economic growth in ways both harmful and helpful.
Despite the obvious factors shaping each state's business environment, USA Today viewed the differences as little more than luck. In its article, the newspaper quoted an economic forecaster from academia who accounted for Texas growth as equal parts "good planning and good fortune."
In a classic case of numbing stupidity or journalistic bias, the national newspaper concluded that the "economic winners of the last decade are states that focus on raw materials, government and senior citizens." Really? Apparently, the folks at USA Today are clueless about what drives business expansion.
States like Texas, where Republicans hold big legislative majorities, have outperformed the rest of the pack by making it easier for businesses to relocate, operate and prosper in the state. The losers, like Democrat Party controlled California, are heaping onerous regulation, taxes and labor laws upon the backs of business, stifling economic growth.
USA Today ignored these facts because an honest analysis would have exposed the Democratic Party's propensity for tax, labor and regulatory policies that are crippling economic development, both regionally and on the national level. With a little digging, here's what the newspaper would have found:
Texas is one of 22 states with right-to-work laws, which prevent employees from being forced to join a union as a condition of employment. This not only safeguards employees' rights, but attracts businesses suffering under the iron fist of union rules. On the other hand, California is one of 28 states that have bowed to union pressure to outlaw right-to-work rules. As a result, the Bureau of Labor reports that 17.2 percent of California workers belong to unions, even higher than the national average of 12 percent. Only 5.1 percent of the Texas workforce is represented by a union. Studies have shown that right-to-work states enjoy higher job growth. That research helps explain why unemployment in Texas was 8.0 percent at the end of May according to the Labor Bureau, while the jobless rate was 11.7 percent in California, significantly above the 9.1 percent national average.
Texas is one of seven states with no personal income tax, leaving consumers with more discretionary income to spend on goods and services. A family of three with a household income of $50,000 in Los Angeles pays the government 10.6 percent of their income. Tack on sales taxes and the burden becomes even worse. California's state sales tax is 9.25 percent with some cities and counties piling on local sales taxes on top of that, making it the highest in the nation. Texas is among the lowest at 6.25 percent. High taxes raise the cost of living for families, leaving households with less money to spend with local businesses.
Texas has no corporate profits tax, although it collects franchise fees. In 2006, the Texas legislature overhauled the tax structure providing for $3 billion in tax relief for business, reducing their tax burden by 33 percent. In contrast, the California legislature has saddled businesses with a 8.84 percent tax on profits. Banks and financial institutions pay an even higher rate of 10.84 percent. In weighing corporate tax burdens, the nonpartisan Tax Foundation ranked Texas 13th for its business friendly system, while California was nearly dead last at 48. It is no wonder that California's share of the national economy shrank faster than all but three states from 2000 to 2010, according to Bureau of Economic Analysis figures. Meanwhile, Texas' historic growth spurt during that same period has hiked the state's share of the U.S. economy to 8.3 percent.
Regulations on Texas businesses pale in comparison to California's bloated system of legal handcuffs. The governor's office in California released a study in 2009 that calculated the total cost of business regulation in the state at an astounding $492.994 billion. In addition, the analysis estimated that over regulation of business had robbed California of nearly 4 million jobs. Another California state-sponsored study this year, dubbed the "Commission on the 21st Century Economy," determined that the cost of doing business in California was almost 23 percent higher (on average) than other states.
Clearly, by any objective measurement California is overtaxed, overregulated, over unionized and overrated as a place to do business. The state will continue to shed jobs and spiral deeper into economic decline as a result of Democrats' tax and spend policies that have driven California to the brink of bankruptcy.
Don't expect any sympathy from Texas, which has targeted California businesses as part of its economic development program. With an economic output valued at more than $1 trillion annually and expanding, Texas has set its sights on wrestling away the No. 1 ranking from California.
When that happens, as it surely will, perhaps Californians will finally tire of the Democratic Party's anti-business policies in the once Golden State.
This state of economic affairs was well documented in a recent USA Today article which marveled at Texas' business gains, calling the growth "one of the biggest economic shifts in the past half-century." Based on federal data, Texas has leapfrogged New York and is now the country's second-largest economy behind only California. And the gap is narrowing.
The newspaper relied on recently released data from the Bureau of Economic Analysis for its analysis. The verdict underscores how tax, labor and regulatory laws created by state legislatures directly impact economic growth in ways both harmful and helpful.
Despite the obvious factors shaping each state's business environment, USA Today viewed the differences as little more than luck. In its article, the newspaper quoted an economic forecaster from academia who accounted for Texas growth as equal parts "good planning and good fortune."
In a classic case of numbing stupidity or journalistic bias, the national newspaper concluded that the "economic winners of the last decade are states that focus on raw materials, government and senior citizens." Really? Apparently, the folks at USA Today are clueless about what drives business expansion.
States like Texas, where Republicans hold big legislative majorities, have outperformed the rest of the pack by making it easier for businesses to relocate, operate and prosper in the state. The losers, like Democrat Party controlled California, are heaping onerous regulation, taxes and labor laws upon the backs of business, stifling economic growth.
USA Today ignored these facts because an honest analysis would have exposed the Democratic Party's propensity for tax, labor and regulatory policies that are crippling economic development, both regionally and on the national level. With a little digging, here's what the newspaper would have found:
Texas is one of 22 states with right-to-work laws, which prevent employees from being forced to join a union as a condition of employment. This not only safeguards employees' rights, but attracts businesses suffering under the iron fist of union rules. On the other hand, California is one of 28 states that have bowed to union pressure to outlaw right-to-work rules. As a result, the Bureau of Labor reports that 17.2 percent of California workers belong to unions, even higher than the national average of 12 percent. Only 5.1 percent of the Texas workforce is represented by a union. Studies have shown that right-to-work states enjoy higher job growth. That research helps explain why unemployment in Texas was 8.0 percent at the end of May according to the Labor Bureau, while the jobless rate was 11.7 percent in California, significantly above the 9.1 percent national average.
Texas is one of seven states with no personal income tax, leaving consumers with more discretionary income to spend on goods and services. A family of three with a household income of $50,000 in Los Angeles pays the government 10.6 percent of their income. Tack on sales taxes and the burden becomes even worse. California's state sales tax is 9.25 percent with some cities and counties piling on local sales taxes on top of that, making it the highest in the nation. Texas is among the lowest at 6.25 percent. High taxes raise the cost of living for families, leaving households with less money to spend with local businesses.
Texas has no corporate profits tax, although it collects franchise fees. In 2006, the Texas legislature overhauled the tax structure providing for $3 billion in tax relief for business, reducing their tax burden by 33 percent. In contrast, the California legislature has saddled businesses with a 8.84 percent tax on profits. Banks and financial institutions pay an even higher rate of 10.84 percent. In weighing corporate tax burdens, the nonpartisan Tax Foundation ranked Texas 13th for its business friendly system, while California was nearly dead last at 48. It is no wonder that California's share of the national economy shrank faster than all but three states from 2000 to 2010, according to Bureau of Economic Analysis figures. Meanwhile, Texas' historic growth spurt during that same period has hiked the state's share of the U.S. economy to 8.3 percent.
Regulations on Texas businesses pale in comparison to California's bloated system of legal handcuffs. The governor's office in California released a study in 2009 that calculated the total cost of business regulation in the state at an astounding $492.994 billion. In addition, the analysis estimated that over regulation of business had robbed California of nearly 4 million jobs. Another California state-sponsored study this year, dubbed the "Commission on the 21st Century Economy," determined that the cost of doing business in California was almost 23 percent higher (on average) than other states.
Clearly, by any objective measurement California is overtaxed, overregulated, over unionized and overrated as a place to do business. The state will continue to shed jobs and spiral deeper into economic decline as a result of Democrats' tax and spend policies that have driven California to the brink of bankruptcy.
Don't expect any sympathy from Texas, which has targeted California businesses as part of its economic development program. With an economic output valued at more than $1 trillion annually and expanding, Texas has set its sights on wrestling away the No. 1 ranking from California.
When that happens, as it surely will, perhaps Californians will finally tire of the Democratic Party's anti-business policies in the once Golden State.
Monday, June 27, 2011
Politics Are Par For The Course
In a journalistic coup that bested Wikileaks, the Diatribe has obtained a secret recording of the conversations that took place during a highly publicized golf match involving the president and the speaker of the house. Joining the two were Vice President Joe Biden and Ohio GOP Governor John Kasich.
To set the scene, the political foursome squared off recently at a secluded golf course tucked in the woods of Maryland, just outside Washington. Speaker John Boehner and the vice president donned spiffy Bermuda shorts. President Obama, looking dapper in a polo shirt and tan baseball hat, hid his knobby knees under long britches.
As the group gathered at the first tee, they were unaware that a micro-dot sized gadget had been surgically implanted among the vice president's hair plugs by a former CIA agent employed by the Diatribe. What follows is an unredacted transcript of the conversations captured by the recording device.
OBAMA: I assume we are playing for a few dollars, right John?
BOEHNER: There you go, Mr. President, bringing up your deficit reduction plan! Let's stick to golf.
BIDEN: That's unfair, John. The president can golf and politic at the same time. He's that good!
KASICH: Watch it Mr. President. I think the vice president just planted his lips on the seat of your golf pants.
OBAMA: Since I'm the leader of the free world, I get to decide the wager. We'll play a $2 Nassau.
BIDEN: Nassau? I'd better tell someone to fire up Air Force One for a trip to the Bahamas.
(Obama rolls eyes.)
KASICH: By the way, I'm playing a Titlelist ball. Has everyone marked his balls?
(Biden tugs at the zipper on his shorts.)
OBAMA: Someone tell Joe we are talking about golf balls.
BOEHNER: You're up on the tee first, Mr. President.
(Obama addresses the ball.)
BOEHNER: Just as I suspected, sir! You are a lefty!
BIDEN: At least my boss doesn't swing both ways like some of your fellow House Republicans, John.
KASICH: Watch it, Joe. Remember Ohio is a swing state.
(Obama hits a wild shot that curves to the left.)
BOEHNER: I heard you were trying to stick more to the middle with the election looming next year.
KASICH: Old habits die hard, right Mr. President?
(Biden laughs but doesn't know why.)
OBAMA: You're up Mr. Speaker. Since we're partners, I guess I'll have to pretend I'm pulling for you.
BOEHNER: I know you can fake it. Think of me as just another birth certificate from Hawaii.
(Boehner hits a solid if unspectacular drive.)
KASICH: That's the John I know. Straight and boring.
(Biden tees his golf ball and prepares to hit.)
OBAMA: Excuse me Joe, but I think your aim is way off.
KASICH: That ain't the only thing off about that guy.
(Biden backs off and readdresses the golf ball. He takes a mighty swing and misses.)
BIDEN: Nancy Freaking Pelosi!
BOEHNER: What does she have to do with anything?
BIDEN: When I looked down at my golf ball and saw all those artificial dimples, all I could think of was Nancy's face. It spooked me.
OBAMA: Try again Joe, but hurry because I promised the First Lady that I would be home in time to help her get into her "fat" jeans before her speech on childhood obesity.
(Biden swings and dribbles the golf ball about 10 yards.)
KASICH: Back in Ohio, we call that shot the Muammar Gaddafi. Short and stinky.
BIDEN: OK, Mr. Governor of the Flat Broke State of Ohio. You're up.
(Kasick smacks a long drive and struts off the tee.)
BOEHNER: Nice shot, John. Looks like you'll have to carry the vice president.
BIDEN: There's not a Republican alive who could do as well as I have as vice president.
KASICH: Actually, sir, I know a few dead ones who could even do better.
OBAMA: Gentlemen, we need to show a little more civility. Perhaps, we should have a beer summit.
BIDEN: I'm not climbing some mountain just to drink a beer, even if you are the president.
(Biden stalks off into the woods. A few minutes pass.)
KASICH: Anyone seen my playing partner, the vice president?
BOEHNER: I think he may be relieving himself behind that tree over there.
OBAMA: That's just like Joe. Always thinking of the environment.
KASICH: Sir, I think he's doing more than just hugging that tree.
And, so it continued for the next four hours in a match aimed at creating a friendlier political climate. On the course, Obama and Boehner teamed up to beat Biden and Kasich. The victors each took home $2. Perhaps, in a spirit of political harmony, they will agree to donate their winnings to help pay down the nation's debt of $14.2 trillion.
To set the scene, the political foursome squared off recently at a secluded golf course tucked in the woods of Maryland, just outside Washington. Speaker John Boehner and the vice president donned spiffy Bermuda shorts. President Obama, looking dapper in a polo shirt and tan baseball hat, hid his knobby knees under long britches.
As the group gathered at the first tee, they were unaware that a micro-dot sized gadget had been surgically implanted among the vice president's hair plugs by a former CIA agent employed by the Diatribe. What follows is an unredacted transcript of the conversations captured by the recording device.
OBAMA: I assume we are playing for a few dollars, right John?
BOEHNER: There you go, Mr. President, bringing up your deficit reduction plan! Let's stick to golf.
BIDEN: That's unfair, John. The president can golf and politic at the same time. He's that good!
KASICH: Watch it Mr. President. I think the vice president just planted his lips on the seat of your golf pants.
OBAMA: Since I'm the leader of the free world, I get to decide the wager. We'll play a $2 Nassau.
BIDEN: Nassau? I'd better tell someone to fire up Air Force One for a trip to the Bahamas.
(Obama rolls eyes.)
KASICH: By the way, I'm playing a Titlelist ball. Has everyone marked his balls?
(Biden tugs at the zipper on his shorts.)
OBAMA: Someone tell Joe we are talking about golf balls.
BOEHNER: You're up on the tee first, Mr. President.
(Obama addresses the ball.)
BOEHNER: Just as I suspected, sir! You are a lefty!
BIDEN: At least my boss doesn't swing both ways like some of your fellow House Republicans, John.
KASICH: Watch it, Joe. Remember Ohio is a swing state.
(Obama hits a wild shot that curves to the left.)
BOEHNER: I heard you were trying to stick more to the middle with the election looming next year.
KASICH: Old habits die hard, right Mr. President?
(Biden laughs but doesn't know why.)
OBAMA: You're up Mr. Speaker. Since we're partners, I guess I'll have to pretend I'm pulling for you.
BOEHNER: I know you can fake it. Think of me as just another birth certificate from Hawaii.
(Boehner hits a solid if unspectacular drive.)
KASICH: That's the John I know. Straight and boring.
(Biden tees his golf ball and prepares to hit.)
OBAMA: Excuse me Joe, but I think your aim is way off.
KASICH: That ain't the only thing off about that guy.
(Biden backs off and readdresses the golf ball. He takes a mighty swing and misses.)
BIDEN: Nancy Freaking Pelosi!
BOEHNER: What does she have to do with anything?
BIDEN: When I looked down at my golf ball and saw all those artificial dimples, all I could think of was Nancy's face. It spooked me.
OBAMA: Try again Joe, but hurry because I promised the First Lady that I would be home in time to help her get into her "fat" jeans before her speech on childhood obesity.
(Biden swings and dribbles the golf ball about 10 yards.)
KASICH: Back in Ohio, we call that shot the Muammar Gaddafi. Short and stinky.
BIDEN: OK, Mr. Governor of the Flat Broke State of Ohio. You're up.
(Kasick smacks a long drive and struts off the tee.)
BOEHNER: Nice shot, John. Looks like you'll have to carry the vice president.
BIDEN: There's not a Republican alive who could do as well as I have as vice president.
KASICH: Actually, sir, I know a few dead ones who could even do better.
OBAMA: Gentlemen, we need to show a little more civility. Perhaps, we should have a beer summit.
BIDEN: I'm not climbing some mountain just to drink a beer, even if you are the president.
(Biden stalks off into the woods. A few minutes pass.)
KASICH: Anyone seen my playing partner, the vice president?
BOEHNER: I think he may be relieving himself behind that tree over there.
OBAMA: That's just like Joe. Always thinking of the environment.
KASICH: Sir, I think he's doing more than just hugging that tree.
And, so it continued for the next four hours in a match aimed at creating a friendlier political climate. On the course, Obama and Boehner teamed up to beat Biden and Kasich. The victors each took home $2. Perhaps, in a spirit of political harmony, they will agree to donate their winnings to help pay down the nation's debt of $14.2 trillion.
Monday, June 20, 2011
Obama's Inheritance
Since he assumed the nation's highest political office, President Obama has spent an inordinate amount of time repeating one word over and over in a futile attempt to explain his own ineptness. His trademark language is that he "inherited" such a mess from his predecessor that he cannot be blamed for today's dreary economic condition.
Obama's recurrent theme is that his policies have put the country on the right track to recovery after inheriting (that word again!) an economy perched on the brink of disaster when he was sworn in January, 2009. There is only one problem with the president's assertion. The facts don't support his claims.
In truth, by any measurement the country is worst off with Obama at the helm than it was before his ascension to 1600 Pennsylvania Avenue.
For example, when the president came into office unemployment stood at 7.7 percent, according to the Bureau of Labor. The agency's most recent data puts current unemployment at 9.1 percent. Most economists agree even that figure underestimates the job situation because the bureau has stopped counting long term unemployed in the data. More than one economist has pegged the "real" unemployment rate at a staggering 22.1 percent, based on the bureau's report for May.
Home foreclosures are another leading indicator of economic recovery. At the end of 2008, 1.84 percent of all U.S. housing units were either in foreclosure or had been notified of impending foreclosure. The latest figures indicate that 4.14 percent of home mortgages are in the foreclosure process. Mortgage firms report that number will soon start growing again because many foreclosure proceedings have been put on hold while the industry sorts out litigation over requirements for notification. The Home Buying Institute estimates there is a backlog of 2.2 million homes in some stage of foreclosure. Therefore, foreclosures are expected to spike for the remainder of the year.
Likewise, home prices have tanked since the President relocated to the White House. The Federal Housing Finance Agency reported in June that the home price index fell faster than at any time since 2008. That follows a 5.5 percent decline in the past year. As prices have declined, more consumers are sitting with homes that are valued at less than what they owe on their mortgage, heightening the prospect of more foreclosures. Since 2006, the Home Buying Institute reports that home prices in the United States have dropped 33 percent, the largest decline in the country's history.
When Obama was inaugurated, the nation's debt stood at $10.626 trillion. In two years, the president used the Democratic majority in Congress to add $5.9 trillion in new debt, the largest increase in the nation's history. With the debt level now within an eyelash of the country's official ceiling of $14.2 trillion, the U.S. owes more money than it ever has.
The U.S. dollar has dipped dramatically since Obama assumed the presidency. In his first year in office, the dollar lost 22 percent of its value against the European currency. This year the dollar's value has suffered another setback, dropping 11 percent against the Euro, despite a mounting financial crisis in Greece, an European Union member. The declining value of the dollar has impacted consumers in many ways, most notably the price of a gallon of gasoline. The U.S. purchases oil from OPEC countries based on the dollar's exchange rate. As the dollar declines, it means more money is needed to buy the same amount of oil. By one estimate, the weakened dollar has added 56.5 cents to the cost of every gallon of gasoline sold in the U.S.
The president can complain all he likes about what a lousy hand he was dealt when he took office. It won't matter to voters when they trek to the polls next year. Obama was elected precisely because the electorate felt he was best equipped to turn around a faltering economy that quickly nosedived into a full blown recession.
Obama should be judged on the country's current economic condition, not on what he inherited. He promised hope and change. The country has yet to experience either under his leadership; instead he has spent future generations' inheritance on failed economic programs.
Obama's recurrent theme is that his policies have put the country on the right track to recovery after inheriting (that word again!) an economy perched on the brink of disaster when he was sworn in January, 2009. There is only one problem with the president's assertion. The facts don't support his claims.
In truth, by any measurement the country is worst off with Obama at the helm than it was before his ascension to 1600 Pennsylvania Avenue.
For example, when the president came into office unemployment stood at 7.7 percent, according to the Bureau of Labor. The agency's most recent data puts current unemployment at 9.1 percent. Most economists agree even that figure underestimates the job situation because the bureau has stopped counting long term unemployed in the data. More than one economist has pegged the "real" unemployment rate at a staggering 22.1 percent, based on the bureau's report for May.
Home foreclosures are another leading indicator of economic recovery. At the end of 2008, 1.84 percent of all U.S. housing units were either in foreclosure or had been notified of impending foreclosure. The latest figures indicate that 4.14 percent of home mortgages are in the foreclosure process. Mortgage firms report that number will soon start growing again because many foreclosure proceedings have been put on hold while the industry sorts out litigation over requirements for notification. The Home Buying Institute estimates there is a backlog of 2.2 million homes in some stage of foreclosure. Therefore, foreclosures are expected to spike for the remainder of the year.
Likewise, home prices have tanked since the President relocated to the White House. The Federal Housing Finance Agency reported in June that the home price index fell faster than at any time since 2008. That follows a 5.5 percent decline in the past year. As prices have declined, more consumers are sitting with homes that are valued at less than what they owe on their mortgage, heightening the prospect of more foreclosures. Since 2006, the Home Buying Institute reports that home prices in the United States have dropped 33 percent, the largest decline in the country's history.
When Obama was inaugurated, the nation's debt stood at $10.626 trillion. In two years, the president used the Democratic majority in Congress to add $5.9 trillion in new debt, the largest increase in the nation's history. With the debt level now within an eyelash of the country's official ceiling of $14.2 trillion, the U.S. owes more money than it ever has.
The U.S. dollar has dipped dramatically since Obama assumed the presidency. In his first year in office, the dollar lost 22 percent of its value against the European currency. This year the dollar's value has suffered another setback, dropping 11 percent against the Euro, despite a mounting financial crisis in Greece, an European Union member. The declining value of the dollar has impacted consumers in many ways, most notably the price of a gallon of gasoline. The U.S. purchases oil from OPEC countries based on the dollar's exchange rate. As the dollar declines, it means more money is needed to buy the same amount of oil. By one estimate, the weakened dollar has added 56.5 cents to the cost of every gallon of gasoline sold in the U.S.
The president can complain all he likes about what a lousy hand he was dealt when he took office. It won't matter to voters when they trek to the polls next year. Obama was elected precisely because the electorate felt he was best equipped to turn around a faltering economy that quickly nosedived into a full blown recession.
Obama should be judged on the country's current economic condition, not on what he inherited. He promised hope and change. The country has yet to experience either under his leadership; instead he has spent future generations' inheritance on failed economic programs.
Monday, June 13, 2011
Democrats Spooking Seniors With Mediscare Propaganda
Democrats and their leader President Obama are trotting out their favorite scare tactic in a likely preview of what their campaign platform will be in 2012. In interviews, political ads and speeches, the party is trying to spook seniors by claiming Republicans are intent on taking away their Medicare.
The mainstream news media has trumpeted the party's contentious accusation without challenging its veracity. This is a troublesome development because unfortunately surveys have shown that most seniors rely on network television news for their information on issues.
That's why it is crucial for Republicans to set the record straight. The truth is that Medicare's fund will be bankrupt by 2024, according to the government program's own trustees. That means seniors will have no government health care unless lawmakers act to fix the plan.
Even that gloomy outlook may be wildly optimistic. The trustees arrived at their estimate by using billions of dollars in projected savings under Obama Care to maintain fund solvency. Medicare's own chief actuary Richard Foster questioned those conclusions. Most health care experts believe the trustees' savings estimates are grossly overstated.
Without those as yet unrealized savings, the trustees admit that the Medicare fund will run out of money in 2016, a scant five years from now. Absent reform of the program, the nation faces soaring deficits to continue funding at levels that will keep pace with rising health care costs.
Instead of tackling the issue head on, President Obama and his party have maintained that their monstrous health care bill will improve Medicare's finances. However, the only reason for their position is the 165 changes embedded in Obama Care aimed at deep cuts in health care spending for seniors and the disabled.
That fact has not been widely reported in the media. The dirty little secret is that the average amount of benefits for seniors and the disabled will be decreased under the President's health care bill. The law creates a plethora of mechanisms for trimming Medicare payments to hospitals and doctors.
In anticipation of those provisions, many doctors are no longer accepting Medicare, including as many as 30,000 in Texas alone. That means there will be fewer doctors to treat seniors. The quality of care is bound to suffer as seniors are forced to find less desirable care alternatives.
Democrats know that Medicare is on life support. As of this year, Medicare's long-term unfunded liability is a whopping $24.8 trillion, according to an recent analysis by USA Today. Medicare assumed another $1.8 trillion in new liabilities in just the past year. Those deficits are forecast to grow every year for the foreseeable future.
Unfunded liability is one of those mumbo jumbo government terms few understand. What it means is there is not enough money in the Medicare trust fund to pay for future benefits. The fund gets its money from Medicare taxes on workers and premiums paid by recipients. Taxpayers are on the hook for the gap that exists between dollars in the Medicare trust fund and the expenses for benefits.
Republicans have an opportunity to turn around the whole debate on Medicare by exposing Obama Care's government-run plan for rationed care for seniors and the disabled. The evidence is contained in the so-called Affordable Health Care Act, which puts at risk medical care standards seniors value.
Republicans need to make the case that seniors will be far worse off with Obama Care than under any scheme proposed by the GOP. Forcing Democrats to defend the indefensible might even tempt the party's leaders to join hands with Republicans in forging a budget deal that addresses the issue.
Once seniors understand the deep cuts envisioned under Obama Care, they will be more willing to embrace the Republican plan for reducing deficits and reigning in health care spending without government meddling in decisions best left to patients and their families.
With millions of Baby Boomers beginning to qualify for Medicare, neither political party can afford to turn a blind eye toward dealing with a looming crisis that threatens our nation's solvency and jeopardizes health care for seniors and the disabled.
The mainstream news media has trumpeted the party's contentious accusation without challenging its veracity. This is a troublesome development because unfortunately surveys have shown that most seniors rely on network television news for their information on issues.
That's why it is crucial for Republicans to set the record straight. The truth is that Medicare's fund will be bankrupt by 2024, according to the government program's own trustees. That means seniors will have no government health care unless lawmakers act to fix the plan.
Even that gloomy outlook may be wildly optimistic. The trustees arrived at their estimate by using billions of dollars in projected savings under Obama Care to maintain fund solvency. Medicare's own chief actuary Richard Foster questioned those conclusions. Most health care experts believe the trustees' savings estimates are grossly overstated.
Without those as yet unrealized savings, the trustees admit that the Medicare fund will run out of money in 2016, a scant five years from now. Absent reform of the program, the nation faces soaring deficits to continue funding at levels that will keep pace with rising health care costs.
Instead of tackling the issue head on, President Obama and his party have maintained that their monstrous health care bill will improve Medicare's finances. However, the only reason for their position is the 165 changes embedded in Obama Care aimed at deep cuts in health care spending for seniors and the disabled.
That fact has not been widely reported in the media. The dirty little secret is that the average amount of benefits for seniors and the disabled will be decreased under the President's health care bill. The law creates a plethora of mechanisms for trimming Medicare payments to hospitals and doctors.
In anticipation of those provisions, many doctors are no longer accepting Medicare, including as many as 30,000 in Texas alone. That means there will be fewer doctors to treat seniors. The quality of care is bound to suffer as seniors are forced to find less desirable care alternatives.
Democrats know that Medicare is on life support. As of this year, Medicare's long-term unfunded liability is a whopping $24.8 trillion, according to an recent analysis by USA Today. Medicare assumed another $1.8 trillion in new liabilities in just the past year. Those deficits are forecast to grow every year for the foreseeable future.
Unfunded liability is one of those mumbo jumbo government terms few understand. What it means is there is not enough money in the Medicare trust fund to pay for future benefits. The fund gets its money from Medicare taxes on workers and premiums paid by recipients. Taxpayers are on the hook for the gap that exists between dollars in the Medicare trust fund and the expenses for benefits.
Republicans have an opportunity to turn around the whole debate on Medicare by exposing Obama Care's government-run plan for rationed care for seniors and the disabled. The evidence is contained in the so-called Affordable Health Care Act, which puts at risk medical care standards seniors value.
Republicans need to make the case that seniors will be far worse off with Obama Care than under any scheme proposed by the GOP. Forcing Democrats to defend the indefensible might even tempt the party's leaders to join hands with Republicans in forging a budget deal that addresses the issue.
Once seniors understand the deep cuts envisioned under Obama Care, they will be more willing to embrace the Republican plan for reducing deficits and reigning in health care spending without government meddling in decisions best left to patients and their families.
With millions of Baby Boomers beginning to qualify for Medicare, neither political party can afford to turn a blind eye toward dealing with a looming crisis that threatens our nation's solvency and jeopardizes health care for seniors and the disabled.
Sunday, June 5, 2011
Debunking Education Myths
Declining tax revenues and increasing education costs have fueled a fierce debate over funding for public schools that has reached a fever pitch this summer. Many state legislatures have reacted to the crisis by forcing cuts that have created stormy protests from powerful teacher unions and the education establishment.
As the issue has simmered, the well-heeled education lobby and the news media have combined efforts to spew bogus bromides about the funding and performance of public schools. At the same time, both groups have branded opponents as Neanderthals unwilling to invest in our children's future.
What began as a civil discourse has boiled over into nasty confrontations between teachers unions and legislators. For example in Wisconsin, teachers and their labor union supporters trashed the state capitol to protest the governor's attempts to reduce benefits and weaken bargaining rights to reel in spiraling education costs.
Lost in all the ugliness has been a meaningful dialogue about the future of education. Instead all sides have reverted to pitched battles over money with seemingly little discourse on such key issues as classroom instruction, student performance and skills needed in the workplace.
Proponents of throwing more money at education have relied on boilerplate arguments to make their case. However, upon further scrutiny, most are myths that have been perpetuated by the media. Here are just a few examples:
1. The United States spends less than most countries on education. This is a favorite of teacher unions, but it is patently false. By any measurement, the U.S. spends more per pupil on kindergarten through twelfth grade than any of the other 34 wealthiest countries, according to a study by the Mercatus Center at George Mason University. By the time an American student graduates, the average tab per student is $110,000 for public schooling. Yet the center's study found that American students consistently scored at or below the average in reading math and science compared to these same countries. The U.S. government estimates that federal, state and local entities will expend $880.2 billion on education in the current fiscal year. As a percentage of Gross Domestic Product (GDP), the country spends more than France, United Kingdom, Italy, Japan and most of the rest of the world's wealthiest countries.
2. Public Schools cannot cut funds without shortchanging students. Most Americans have no idea where all those billions of dollars go once the cash trickles down to local school districts. Therefore, it probably comes as a surprise that only 45 cents of every dollar spent in public education qualifies as classroom instruction expenses, according to the U.S. government's definition. Costs for administration, sports, buildings, maintenance, transportation and supplies make up the remaining 55 cents. Yet the majority of school districts resist any suggestion to shift spending priorities, instead falling back on more dollars as the only solution. The education bureaucracy has done a poor job of prioritizing spending to maximize the investment taxpayers are making in public schools.
3. More funding will improve academic achievement. This lie deserves its own special wing in the Education Hall of Shame. Although spending in public schools is at an all-time high water mark, performance has not kept up with the pace of increased funding. According to a joint study by Princeton University and Brooking Institute, from 1970 to 2008 public education funding increased 150 percent while reading, math and science scores remained essentially flat. Federal government data shows that Utah, which has the lowest per-student spending in the country, outperforms New York state, which has the highest per-student expenditures. Only 21 percent of Utah students failed to meet federal measurements for performance, while 38 percent of New York's children fell short. Yet New York spends three times the dollars per pupil that Utah does. The truth is that academic outcomes depend on how the money is spent, not on how much money is spent.
4. Getting rid of teachers is the only way to reduce costs in the face of budget cuts. Whenever school districts are faced with tight funding, administrators' first reaction is to jettison teachers. This allows school executives to create gloomy headlines about the future of education to spur a public outcry that will pressure legislators to resist funding cuts. However, a nationwide survey by the National Center for Education Statistics (NCEA) found that schools average one adult for every nine students. Adults include teachers, non teaching staff, support services, guidance counselors, librarians, instructional aides and administrative support. About 52 percent of the school staffs are classified as teachers on average, according to the NCEA. The other 48 percent always seems to escape the budget axe. School decision makers should be forced to slice non-teaching jobs before they even consider teacher reductions.
Until teacher unions and school executives stop the lies about public funding, the nation has little chance to make progress toward solutions for improving education. Historic trends and credible research have consistently shown that increased funding does not lead to corresponding gains in academic success.
Instead of crying foul, teachers unions and education policymakers need to lead the effort to implement reforms that improve resource allocation for public schools. They should embrace reducing the school bureaucracy, sacking under performing teachers and focusing more effort on student achievement.
But don't hold your breath waiting for that to happen. If past history is any gauge, the teacher unions and education leaders will continue to resist change, imperiling progress at a time when the nation's need for better educated students was never more acute.
As the issue has simmered, the well-heeled education lobby and the news media have combined efforts to spew bogus bromides about the funding and performance of public schools. At the same time, both groups have branded opponents as Neanderthals unwilling to invest in our children's future.
What began as a civil discourse has boiled over into nasty confrontations between teachers unions and legislators. For example in Wisconsin, teachers and their labor union supporters trashed the state capitol to protest the governor's attempts to reduce benefits and weaken bargaining rights to reel in spiraling education costs.
Lost in all the ugliness has been a meaningful dialogue about the future of education. Instead all sides have reverted to pitched battles over money with seemingly little discourse on such key issues as classroom instruction, student performance and skills needed in the workplace.
Proponents of throwing more money at education have relied on boilerplate arguments to make their case. However, upon further scrutiny, most are myths that have been perpetuated by the media. Here are just a few examples:
1. The United States spends less than most countries on education. This is a favorite of teacher unions, but it is patently false. By any measurement, the U.S. spends more per pupil on kindergarten through twelfth grade than any of the other 34 wealthiest countries, according to a study by the Mercatus Center at George Mason University. By the time an American student graduates, the average tab per student is $110,000 for public schooling. Yet the center's study found that American students consistently scored at or below the average in reading math and science compared to these same countries. The U.S. government estimates that federal, state and local entities will expend $880.2 billion on education in the current fiscal year. As a percentage of Gross Domestic Product (GDP), the country spends more than France, United Kingdom, Italy, Japan and most of the rest of the world's wealthiest countries.
2. Public Schools cannot cut funds without shortchanging students. Most Americans have no idea where all those billions of dollars go once the cash trickles down to local school districts. Therefore, it probably comes as a surprise that only 45 cents of every dollar spent in public education qualifies as classroom instruction expenses, according to the U.S. government's definition. Costs for administration, sports, buildings, maintenance, transportation and supplies make up the remaining 55 cents. Yet the majority of school districts resist any suggestion to shift spending priorities, instead falling back on more dollars as the only solution. The education bureaucracy has done a poor job of prioritizing spending to maximize the investment taxpayers are making in public schools.
3. More funding will improve academic achievement. This lie deserves its own special wing in the Education Hall of Shame. Although spending in public schools is at an all-time high water mark, performance has not kept up with the pace of increased funding. According to a joint study by Princeton University and Brooking Institute, from 1970 to 2008 public education funding increased 150 percent while reading, math and science scores remained essentially flat. Federal government data shows that Utah, which has the lowest per-student spending in the country, outperforms New York state, which has the highest per-student expenditures. Only 21 percent of Utah students failed to meet federal measurements for performance, while 38 percent of New York's children fell short. Yet New York spends three times the dollars per pupil that Utah does. The truth is that academic outcomes depend on how the money is spent, not on how much money is spent.
4. Getting rid of teachers is the only way to reduce costs in the face of budget cuts. Whenever school districts are faced with tight funding, administrators' first reaction is to jettison teachers. This allows school executives to create gloomy headlines about the future of education to spur a public outcry that will pressure legislators to resist funding cuts. However, a nationwide survey by the National Center for Education Statistics (NCEA) found that schools average one adult for every nine students. Adults include teachers, non teaching staff, support services, guidance counselors, librarians, instructional aides and administrative support. About 52 percent of the school staffs are classified as teachers on average, according to the NCEA. The other 48 percent always seems to escape the budget axe. School decision makers should be forced to slice non-teaching jobs before they even consider teacher reductions.
Until teacher unions and school executives stop the lies about public funding, the nation has little chance to make progress toward solutions for improving education. Historic trends and credible research have consistently shown that increased funding does not lead to corresponding gains in academic success.
Instead of crying foul, teachers unions and education policymakers need to lead the effort to implement reforms that improve resource allocation for public schools. They should embrace reducing the school bureaucracy, sacking under performing teachers and focusing more effort on student achievement.
But don't hold your breath waiting for that to happen. If past history is any gauge, the teacher unions and education leaders will continue to resist change, imperiling progress at a time when the nation's need for better educated students was never more acute.
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