So you would hope that given the serious deficit and 9+% unemployment, Obama would embrace this practical idea. Alas, you would be wrong. As pointed out editorially in yesterday’s WSJ, the White House is all about, Procuring the Union Agenda. Seems that Joe Biden’s “Middle Class Task Force” is drafting an Executive Order for Obama that would “oblige government procurement agencies to give contracts to “responsible contractors” who pay workers well and offer higher health, pension, sick leave and other benefits. These new mandated labor standards would have to be enforced across a company, not just at the unit bidding for a contract.” It is this new twist that puts the Davis-Bacon Act on steroids!

Unlike the disjunctive, “EITHER inflate taxpayer costs OR decrease employment” of Davis-Bacon, this executive order by expanding Davis-Bacon beyond the bidding unit will “BOTH inflate costs AND decrease employment.” The greatest adverse impact here is on small businesses, formerly the job creation engines of this economy!

So instead of competitive bidding to get the best quality at the best price, we have the Obama administration doing the unions’ bidding. Obama is owned by the unions; at least they own the biggest part of him!

Tom Motherway

The professor uses that tale to drive home the truth about the “stimulus” and the “jobs bill.” The idea behind stimulus, for example, is to get investors to invest, lenders to lend, and employers to employ. Prime the pump, put a little bit of water in to get the well flowing. That little bit of water, the government money, was never meant to restore the economy by itself, but to get the private business sector going. What has happened?

• After the Bush-started stimulus in 2008–business spending fell by 28%.
• Durable goods spending fell by 22%.
• Four months after the TARP billions–large TARP banks made 23% fewer loans.
• The velocity of money fell faster than at any time in the last half century.
• The WSJ reports the “sharpest decline in lending since 1942.”

Why would banks lend when, “from the White House to Capitol Hill, politicians are coming up with all sorts of bright ideas for borrowers not to have to pay back what they borrowed…”  Why would investors invest when a substantial number of the consumers are unemployed? Why would employers employ when faced with higher taxes and more Obamacare mandates? In short, the outlook is uncertain and certainly more big government than private sector oriented.

Sowell points out that none of this is new: during the Great Depression of the 1930s, money velocity, lending, investing and employment were all lower than they were in the 1920s. The anti-buisness rhetoric and anti-business policies did not inspire any more confidence then than they do now. “In an atmosphere where nobody knows what the federal government is going to come up with next, people tend to hang on to their money until they have some idea of what the rules of the game are going to be.”

Economists have estimated that Roosevelt’s New Deal prolonged the depression by several years, how long will Barack Hussein Obama, Reid and Pelosi prolong our current difficulties?

Tom Motherway

So what do we need? We need wealth, capital willing to take risks and create jobs in the process. We need entrepreneurs to translate that risk capital into successful businesses and create jobs in the process. Thus the article’s title character: Sergey Brin the Soviet-born American who founded Google!

Litan treats the “Startup Visa Act” jointly introduced by Senators Kerry and Lugar which would create a new, two-year visa for immigrant entrepreneurs who attract at least $250,000 venture financing in America. The visa would become permanent if the firm adds at least five non-family employees, attracts $1M in financing, or earns $1M in revenue. Fully 25% of the technology companies in the U.S. were founded by immigrants.

The idea is a good one but as the article points out could use some improvement. Why set such a high capital raising bar? A lot of tech companies were started with family money and credit card debt! And why limit the capital to U.S. sources? Don’t we want foreign investment that creates U.S. jobs? Finally isn’t immigration that brings mere wealth to the country beneficial to job creation? So why not issue visas based on permanent residence and at least $5M of new capital invested in U.S. businesses?

The H-1B visas–applicable to high skilled immigrants–are strictly limited, 65,000 in 2010 down from 195,000 in 2003. Tech firms have long complained about this limitation. As the article points out these visas are a likely source of the entrepreneurs that will start the next Google.

Intelligent immigration policy can create jobs, improved technology, capital, and favorable demographic patterns to boot. Hopefully Obama’s union bosses won’t object!

Tom Motherway

“The current poverty measure counts absolute purchasing power— how much steak and potatoes you can buy. The new measure will count comparative purchasing power — how much steak and potatoes you can buy relative to other people. As the nation becomes wealthier, the poverty standards will increase in proportion. In other words, Obama will employ a statistical trick to ensure that “the poor will always be with you,” no matter how much better off they get in absolute terms.”

“The weird new poverty measure will produce very odd results. For example, if the real income of every single American were to magically triple over night, the new poverty measure would show there had been no drop in “poverty,” because the poverty income threshold would also triple. Under the Obama system, poverty can be reduced only if the incomes of the “poor” are rising faster than the incomes of everyone else.”

“The government’s own data show that the typical American defined as poor (according to the traditional, pre-Obama poverty measure) has two color televisions, cable or satellite service, a VCR or DVD player, and a stereo. He also has a car, air conditioning, a refrig erator, a stove, a clothes washer and dryer, and a microwave. He is able to obtain medical care. His home is in good repair and is not overcrowded. By his own report, his family is not hungry, and he had suf ficient funds in the past year to meet his family’s essential needs. While this individual’s life is not opulent, it is far from the stark images conveyed by the mainstream media and liberal politicians.”

So the “poor” will always be with us no matter how rich they become. Why do this you may ask? Obama’s stated objective is to exercise what he would call a primary function of government: redistribution of wealth. Doing this creates dependency on government and dependency creates voters for the re-distributor.

Of course, there’s a downside. Redistribution by definition removes capital from reinvestment opportunities. As a direct consequence the wealth of society is lowered. The standard of living goes down proportionately. Ultimately, there will be no more wealth to re-distribute. What’s left is a permanent underclass, dependent only upon other dependents!

I fear Obama is the ultimate Communist. Tzars. Government control of major industries. Promotion of public employee unionism. Create major new welfare programs when existing programs are near bankruptcy. And now, a redefinition of “poverty” from absolute terms to relative terms.

I’m reminded of Orwell’s Animal Farm, “while all of us are equal, some are more equal than others!”

Tom Motherway

• In the past five years federal spending has increased 42% to nearly 25% of the economy, the highest level since World War II.
• The deficit has exploded from $318 Billion in 2005 to $1.4 Trillion, a 400+% increase, equal to the entire accumulation of debt from George Washington to Bill Clinton.

As James Antle points out in his American Spectator article, Amending the Spending, “this will be remembered as a golden era of fiscal responsibility compared to what is to come.” Again I emphasize, this is even without Obamacare, added stimulus, bailouts, etc. With demographic certitude, as baby boomers retire, social security, medicare, and medicaid as we know them will be bankrupt. THE PUBLIC DEBT WILL EXCEED 110% OF THE ECONOMY IN 2026 AND CLIMB PAST 200% BY 2040! Again, this is without Obamacare, added stimulus, bailouts, etc.!

Three congressmen, Mike Pence (R-Ind.), Jeb Hensarling (R-Texas) and John Campbell (R-Calif.) have proposed a constitutional amendment to cap federal spending at 20% of the U.S. economy. The limit would be waived only when an official declaration of war is in effect or by two-thirds majorities of both houses of Congress. 20% is the historic average share of the economy consumed by the federal government.

The backers admit that Republicans are just as spendthrift as Democrats. They are not naive about getting it passed, 5000 amendments have been offered and only 27 enacted! But the mood of the country seems to be shifting to a serious concern for the current fiscal insanity.

If they’re correct, and the amendment has some legs, the country can get off the current unsustainable course and onto a path that’s fiscally sustainable.

Tom Motherway

As Steve Martin used to say, EXCUSE ME!!!

When this “bedrock principle” was raised by Senator Jim Bunning of Kentucky that Congress could only spend a dollar if it saves a dollar elsewhere, to ask where the $10 Billion in extended unemployment and Cobra benefits was being paid for, the Democrats were outraged and foot-in-mouth Vice President Joe Biden lambasted the Republicans as inhumane!

As Jay Ambrose of the OC Register points out, you would think that the Democratic Congress could find a measly $10 Billion in all the pork they’ve barbecued in recent legislation.

“The special sadness in all of this is the hypocrisy of a president who just recently sold paygo as a mighty step toward fiscal responsibility. Not only was Biden then turned loose on an honest man trying to make paygo work, but the whole paygo law is by and large a con game to begin with. It can be waived with flimsy excuse and seems to exempt virtually every other budgetary sentence that begins with a capital and ends with a period. Even if it were religiously heeded, the budget could be swamped by the costs of the exceptions.”

I cannot say it any better: “It’s time to start worrying, fellow Americans. Really worrying.”

Tom Motherway

“We have no time left,” said the governor, “We have no room left to borrow. We have no room left to tax. So we merely have time left to do this. We are all reaching the edge of a cliff. And it reminds me a bit of that part of ‘Butch Cassidy and the Sundance Kid’ where he had the seminal decision to make. So what did they do? They held hands and jumped off the cliff. We have to hold hands at every level of government, state, county, municipal, school board. We have to hold hands and jump off the bridge.”

“Governor Christie has wasted no time in implementing budget freezes through executive action. No doubt there will be a political firestorm in New Jersey as the pinch is felt by politically powerful entities such as the teachers, police and firefighters unions. Whether he can survive tackling the growing fiscal crisis with actual solutions is the question. He told the mayors to get ready for cuts in state aid in his upcoming budget, which will be presented March 16, but he promised he would give them a hand by implementing pension, benefit and arbitration process reform, something that will be bitterly opposed by the aforementioned unions.”

Ya gotta like this guy. We need a lot more like him–telling it like it it is. Hopefully voters will be smart enough to listen!

Tom Motherway

• We face $1.4 Trillion annual deficits for the next decade.
• Our current national debt is $12.3 Trillion and will grow by $1 Trillion a year.
• Estimated unfunded liabilities from social security and medicare are $107 Trillion.
• States with aggregate deficits of $350 Billion, debt of $1.9 Trillion, and unfunded liabilities of $1.4 Trillion are asking for federal handouts.
• Unemployment is 9+% with private sector growth stalled.

Why then would he promote a radical takeover of healthcare with 10 year costs of $2.3 Trillion that adds $1.86 Trillion to the deficit over the next 20 years, that creates employment taxes and mandates, each discouraging private sector employment, and that fails to solve the demographically certain failure of medicare, social security and medicaid? We’ve proven our inability to handle two, no three if you include medicaid, major entitlements, why add another? And why would he risk his party’s control of Congress and his own ability to govern to attain this goal that a majority of Americans don’t want?

Obama is smart enough to know that Obamacare will exacerbate the financial straights of the United States. It’s uncertainty will decrease private sector employment. It’s taxes will decrease private capital for investment. It will cede financial and technological leadership to other countries. In short, we will be worse off tomorrow than we are today.  Why would he risk that…want that?

It is clear that he knowingly intends to drive us further to the brink. It is also clear that given his apparent intelligence he has an end-game in mind. Take our admitted crisis, you know the “never-let-a-crisis-go-to-waste” kind, explode it into a gigantic, off-the-clff catastrophe, then come up with a one-of-a-kind, popular solution that involves “shared pain” and if we are all lucky, someday “shared gain.”  Call it a Cloward-Piven Strategy on steroids. (See: Cloward-Piven Strategy: Is It Obama’s? and references cited therein.)

As Larry Kudlow said in NRO, One Giant Government Leap Backwards,” One of the most galling features of this plan is a taxpayer-subsidized government-insurance entitlement for people earning up to 400 percent above the poverty line, or nearly $100,000 for a family of four. In other words, a middle-class health-care entitlement that will add millions of people to the federal dole. It’s all too reminiscent of the political dictum of the old New Dealer Harry Hopkins: tax and tax, spend and spend, elect and elect.”

So will Obama’s “Fiscal Responsibility and Reform Commission” turn out to be the VAT Commission with a European 12% sales tax on top of the income tax, excise tax, etc. And those on top of the various state sales, income and property taxes? All this to finance BIG GOVERNMENT? If so, we will then all have the advantage of being “in the same boat,” “equal,” and “happy” in an ever declining country and economy.

So for the literarily inclined, Obama wants us on Hayek’s Road to Serfdom where we will encounter Orwell’s Animal Farm with 1984’s Big Brother in control. As Obama recently said in response to a push-back, “we won the election.”  And win the next election and the next, he aims to do with the creation of more and more dependency on him and less and less individual responsibility.

I won’t be around to witness the outcome but I hope the next generation will become informed and engaged, lest our grandchildren and great-grandchildren suffer horrible consequences.

Tom Motherway

Big utility operators as well as some states like South Carolina and Washington are blasting the Obama administrations announcement that it will drop plans for a federal nuclear-waste vault beneath Yucca Mountain.

“The Energy Department’s move to formally drop its application for the Yucca Mountain waste site could hobble efforts to build more nuclear power plants—a strategy the Obama administration has promoted as a way to reduce U.S. greenhouse-gas emissions. Without a permanent solution to the waste-storage problem, several states, including California, won’t let new nuclear plants be built.”

“Michael Morris, chief executive of American Electric Power Co., said on Thursday that “there has to be a reaction,” because Yucca is the only site that’s been vetted and deemed capable of storing waste from the nation’s 104 operating power reactors. Speaking at a Wall Street Journal conference, he blasted the “idiocy of Yucca Mountain” being terminated as a repository, and said the government will have wasted $10 billion on the project if it doesn’t proceed.”

“Under federal law, Yucca is the designated site for the nation’s spent nuclear fuel and high-level radioactive waste. But the repository is more than a decade behind schedule. As a result, the waste generally remains at the nuclear reactors and DOE sites where it was generated.”

But what’s a few billion dollars wasted, a significant number of jobs lost, and the pronouncement of conflicting federal policies to this consummate totalitarian? 2012 can’t come any too soon!

Tom Motherway