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.
Sunday, August 14, 2011
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.
Saturday, July 30, 2011
Soon Every American Will Be Poor
Government manipulation of the definition of poverty will soon insure that every American will end up being counted as poor. If you think that's an exaggeration, then you haven't been paying attention to changes in the way the Census Bureau measures poverty.
A directive to the bureau from the Office of Management and Budget in 1978 altered the metrics for determining who is poor. It mandated a more complex formula for defining poverty, including the use of income thresholds, family size, geographic location, benefits and scores of other economic benchmarks.
The result has been that the numbers of poor people in the United States increase annually, irregardless of the economy. Under the current census formula, the bureau recently reported there were 47.8 million people living in poverty in the world's wealthiest country at the end of 2009.
When Americans think of the poor, they imagine homeless, starving people, without adequate clothing whose very existence is threatened. The reason for this perception is that the media, federal government, charitable organizations and churches have churned out propaganda portraying a distorted stereotype of the poor.
The only problem is that an average poor person in America today does not fit that stereotype. In reporting the poverty figures, the mainstream media consciously ignored census and research data that would have shed more light on what it means to live in poverty today.
For example, there is data that shows 43 percent of all poor households own their own homes. That average home is a three-bedroom with one-and-a-half baths, a garage and a patio. More than half of all poor households report having a car, air conditioning, color television, VCR, cable TV, a cell phone, refrigerator and stove. Forty percent own computers. More than 35 percent have answering machines.
This data comes from two sources: the Census Bureau and the Residential Energy Consumption Survey, conducted regularly by the Department of Energy. The later research provides a broad measurement of household amenities and home ownership.
Under the Census Bureau's definition, a household can still be counted as "poor" with an income of more than $47,000. Since the national median household income is $50,221, that means nearly one half of all Americans could conceivably be deemed in poverty in the not too distant future.
If that seems far fetched, consider the Census Bureau revised its poverty formula again for 2009. That adjustment alone added four million more Americans to the rolls of the poor. After originally reporting there were 43.6 million poor people, the bureau changed its methodology and this month raised the 2009 official count to 47.8 million.
By world standards, the American poor seem almost middle class. The average home in Europe is far smaller than the three-bedroom household owned by the American poor. The per capita income for most countries falls well below the U.S. poverty line. And that doesn't include nations on the African continent.
Here's a sample of average personal incomes from developed countries, compiled by the World Bank: Spain, $31,650; New Zealand, $29,050; Greece, $27,240; Portugal, $21,860; Korea, $19,890; Czech Republic, $17,870; Croatia, $13,760; and Chile, $9,940. The incomes are stated in dollars to make a fair comparison with the United States.
It's no secret why the federal government would want to change its criteria to raise the number of people considered poor. The more poor people the government finds; the bigger the Washington bureaucracy required to solve the issue; the more taxes needed to fund federal poverty programs.
Americans by nature are a compassionate lot. They want to assist those in need. However, government disinformation and statistical fraud unfairly distort the situation. Without reliable data, it is impossible to determine the extent of poverty and to address it adequately.
That's why ending the current census charade should be a top priority for all who really care about helping the poor.
A directive to the bureau from the Office of Management and Budget in 1978 altered the metrics for determining who is poor. It mandated a more complex formula for defining poverty, including the use of income thresholds, family size, geographic location, benefits and scores of other economic benchmarks.
The result has been that the numbers of poor people in the United States increase annually, irregardless of the economy. Under the current census formula, the bureau recently reported there were 47.8 million people living in poverty in the world's wealthiest country at the end of 2009.
When Americans think of the poor, they imagine homeless, starving people, without adequate clothing whose very existence is threatened. The reason for this perception is that the media, federal government, charitable organizations and churches have churned out propaganda portraying a distorted stereotype of the poor.
The only problem is that an average poor person in America today does not fit that stereotype. In reporting the poverty figures, the mainstream media consciously ignored census and research data that would have shed more light on what it means to live in poverty today.
For example, there is data that shows 43 percent of all poor households own their own homes. That average home is a three-bedroom with one-and-a-half baths, a garage and a patio. More than half of all poor households report having a car, air conditioning, color television, VCR, cable TV, a cell phone, refrigerator and stove. Forty percent own computers. More than 35 percent have answering machines.
This data comes from two sources: the Census Bureau and the Residential Energy Consumption Survey, conducted regularly by the Department of Energy. The later research provides a broad measurement of household amenities and home ownership.
Under the Census Bureau's definition, a household can still be counted as "poor" with an income of more than $47,000. Since the national median household income is $50,221, that means nearly one half of all Americans could conceivably be deemed in poverty in the not too distant future.
If that seems far fetched, consider the Census Bureau revised its poverty formula again for 2009. That adjustment alone added four million more Americans to the rolls of the poor. After originally reporting there were 43.6 million poor people, the bureau changed its methodology and this month raised the 2009 official count to 47.8 million.
By world standards, the American poor seem almost middle class. The average home in Europe is far smaller than the three-bedroom household owned by the American poor. The per capita income for most countries falls well below the U.S. poverty line. And that doesn't include nations on the African continent.
Here's a sample of average personal incomes from developed countries, compiled by the World Bank: Spain, $31,650; New Zealand, $29,050; Greece, $27,240; Portugal, $21,860; Korea, $19,890; Czech Republic, $17,870; Croatia, $13,760; and Chile, $9,940. The incomes are stated in dollars to make a fair comparison with the United States.
It's no secret why the federal government would want to change its criteria to raise the number of people considered poor. The more poor people the government finds; the bigger the Washington bureaucracy required to solve the issue; the more taxes needed to fund federal poverty programs.
Americans by nature are a compassionate lot. They want to assist those in need. However, government disinformation and statistical fraud unfairly distort the situation. Without reliable data, it is impossible to determine the extent of poverty and to address it adequately.
That's why ending the current census charade should be a top priority for all who really care about helping the poor.
Monday, July 25, 2011
Obama Grounds Corporate Jet Industry
President Obama's penchant for carpet bombing successful businesses with class-warfare rhetoric reached new lows during the recent debt reduction negotiations. Using the bully pulpit afforded him by a pliant media, the president harangued tax breaks for corporate jets and their "fat cat" owners.
In what is becoming an all too familiar refrain, Obama admonished Republicans for supporting tax incentives for the rich. The president called for ending these "egregious loopholes," which allow aircraft owners faster depreciation for tax purposes.
By scrapping the tax advantage, Obama would raise $3 billion over the next 10 years, a minuscule fraction of the $4 trillion in deficit reduction that most economists agree is needed. Obviously, this wasn't about the money, but scoring political points with gullible, uniformed voters.
While the media remained silent, Obama hid the fact that his administration provided the tax incentive as part of his stimulus package in 2009. Now Obama wants to take it away while trying to portray himself as an opponent of tax breaks for corporate jet owners. It is the height of hypocrisy.
In demonizing business aviation, the president has bludgeoned one of the few successful American manufacturing sectors that has withstood the lure of moving jobs to a low wage country.
Business aviation is a $150 billion business which employs 1.2 million U.S. workers. However, the industry has suffered along with the rest of the economy. Last year the industry cranked out nearly one-third fewer planes than it manufactured in 2008. Removing tax benefits will further depress sales.
Contrary to the president's characterizations, about 85 percent of business aircraft operators are small to mid-size companies with a single plane. Only three percent of the approximately 15,000 business aircraft operating in the U.S. are registered to Fortune 500 companies. The facts don't support the president's claims of fat cat jet owners.
From a jobs perspective, the vast majority of general aviation aircraft used for business purposes are manufactured, operated, serviced and maintained in the U.S. There are thousands of jobs created by the industry at small, local firms across the country.
The president's attacks on business aviation are at odds with his public support of U.S. manufacturing. It isn't the first time that Obama has railed against corporate jets, famously scolding automobile executives for traveling to Washington on private aircraft for testimony before Congress a few years back.
Ed Bolen, president and chief executive officer for the National Business Aviation Association, was less than pleased with Obama's recent finger wagging. "The president is promoting a caricature of the industry that is very much at odds with reality of who the industry is," he said.
An official with the industry's largest union, the International Association of Machinists and Aerospace Workers, made his group's position clear, calling the president's attacks "insulting." "...I don't think he realizes how many people that this industry employs and how much revenue is brought in here from those types of aircraft," union leader Steve Rooney said.
Obama has often boasted of his goal of doubling U.S. exports in five years. Yet general aviation is one of the few manufacturers that can claim 62 percent of its business is tied to exports, according to trade and labor groups. Those exports support American jobs.
General aviation needs an improved economy to jump start sales. Instead of offering his support, the president's damaging words are adding to the woes of one of the country's manufacturing stalwarts.
Defaming whole industries is far easier than finding ways to facilitate business growth. It proves once again that President Obama cares more about agitating class envy than he does about the country's economic recovery.
In what is becoming an all too familiar refrain, Obama admonished Republicans for supporting tax incentives for the rich. The president called for ending these "egregious loopholes," which allow aircraft owners faster depreciation for tax purposes.
By scrapping the tax advantage, Obama would raise $3 billion over the next 10 years, a minuscule fraction of the $4 trillion in deficit reduction that most economists agree is needed. Obviously, this wasn't about the money, but scoring political points with gullible, uniformed voters.
While the media remained silent, Obama hid the fact that his administration provided the tax incentive as part of his stimulus package in 2009. Now Obama wants to take it away while trying to portray himself as an opponent of tax breaks for corporate jet owners. It is the height of hypocrisy.
In demonizing business aviation, the president has bludgeoned one of the few successful American manufacturing sectors that has withstood the lure of moving jobs to a low wage country.
Business aviation is a $150 billion business which employs 1.2 million U.S. workers. However, the industry has suffered along with the rest of the economy. Last year the industry cranked out nearly one-third fewer planes than it manufactured in 2008. Removing tax benefits will further depress sales.
Contrary to the president's characterizations, about 85 percent of business aircraft operators are small to mid-size companies with a single plane. Only three percent of the approximately 15,000 business aircraft operating in the U.S. are registered to Fortune 500 companies. The facts don't support the president's claims of fat cat jet owners.
From a jobs perspective, the vast majority of general aviation aircraft used for business purposes are manufactured, operated, serviced and maintained in the U.S. There are thousands of jobs created by the industry at small, local firms across the country.
The president's attacks on business aviation are at odds with his public support of U.S. manufacturing. It isn't the first time that Obama has railed against corporate jets, famously scolding automobile executives for traveling to Washington on private aircraft for testimony before Congress a few years back.
Ed Bolen, president and chief executive officer for the National Business Aviation Association, was less than pleased with Obama's recent finger wagging. "The president is promoting a caricature of the industry that is very much at odds with reality of who the industry is," he said.
An official with the industry's largest union, the International Association of Machinists and Aerospace Workers, made his group's position clear, calling the president's attacks "insulting." "...I don't think he realizes how many people that this industry employs and how much revenue is brought in here from those types of aircraft," union leader Steve Rooney said.
Obama has often boasted of his goal of doubling U.S. exports in five years. Yet general aviation is one of the few manufacturers that can claim 62 percent of its business is tied to exports, according to trade and labor groups. Those exports support American jobs.
General aviation needs an improved economy to jump start sales. Instead of offering his support, the president's damaging words are adding to the woes of one of the country's manufacturing stalwarts.
Defaming whole industries is far easier than finding ways to facilitate business growth. It proves once again that President Obama cares more about agitating class envy than he does about the country's economic recovery.
Sunday, July 17, 2011
Why the Economy Won't Soon Improve
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.
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 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.
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