stimulus

Progressing Right Along

The following was submitted by Nick Nottleman, a reader and concerned American, on the debt ceiling debate and subsequent downgrade in our credit rating by S&P.

Newt Gingrich recently said that his biggest regret while Speaker of the House was not addressing baseline budgeting.  This is the mechanism that says Federal Government Spending is automatically increased each year based on a given percentage.  For Example, our 2011 Federal Budget is approximately 3.9 TRILLION dollars.  Using the baseline of 8 percent, our spending should automatically increase 312 BILLION in 2012.

It is also the mechanism that projects these increases in spending and thus a projected budget for the next 10 years.   And the really neat part is that if you decide to spend a little bit less than what these projections indicate, you get to call it a “cut”.

Now here’s the kicker…  Anything you add to the annual spending, call it something crazy like “Stimulus”, “Omnibus”, or heck, even “Socialized Medicine”, well, that stuff sneaks right in there and receives it’s nasty little automatic increase.

Holding the Line for Fiscal Sanity

Perhaps nothing more acutely demonstrates the divide between the political class and the rest of America that the ongoing debate over raising the debt ceiling. With less than two weeks to go before the August 2nd deadline designated by Treasury Secretary and tax cheat Tim “Turbo Tax” Geithner as the date when America runs out of money, there is still no deal for raising the debt limit. House Republicans, swept into power in November 2010 on the TEA Party/anti-spending tidal wave, have held the line admirably. Even Speaker of the House John Boehner has been more resolute than I would have expected in insisting that there be no new taxes as part of the deal (although this could be less from principle than the realization that to cave in on the tax issue would guarantee a challenge to his Speakership).

At the center of the controversy are the terms of raising the debt ceiling, which currently stands at $14.3 trillion, with President Obama asking for trillions more. Republicans demand a deal which allows the debt limit to be increased in exchange for cuts in spending. Democrats just want the debt ceiling to be raised period, and loathe spending cuts because it would reduce the size and scope of the imperial federal government, and in doing so take away from their ability to dole out taxpayer dollars to favored constituencies in exchange for votes.

It has been an established understanding for decades now that the Democrats can’t be trusted with national defense. It should be clear now to every sane American that Democrats can no longer be trusted with economic matters either.

Obama’s New Economic Advisor: Magic 8 Ball

On Friday, President Barack Obama gave a speech to address the latest monthly jobs report. If the consequences of his policies were not so disastrous, the speech would have been comedy gold. The history of Obama’s promises on the economy is a case study in cognitive dissonance, with promise after promise, then failure, then excuses and accusations. The only thing consistent when it comes to Obama and the economy is that when his predictions prove elusive, it comes as an “unexpected” shock to him and his diehard supporters in the media.

At issue is the jobs report issued by the Department of Labor for June, which reveals that a cadaverous 18,000 jobs were created for the month, 83 percent less than the 105,000 jobs predicted. The “unexpectedly” low jobs growth contributed to the rise in the unemployment rate, which rose to 9.2%. To put this in perspective, economists say that we need to create 125,000-150,000 jobs per month just to keep up with population growth, and we need to be creating roughly 300,000 jobs per month to begin seeing strong economic growth. The news was made even worse by the revelation that far fewer jobs had been created in May than originally reported, which was also “unexpected”.

Shortly after taking office Obama used the fiscal crisis to ram through the “stimulus” package, which we were told would keep unemployment below 8% if passed, and warned that unemployment would go as high as 9% if it did not pass. We passed it, and in the nearly two and a half years since, unemployment rose from 7.8% in January 2009 when Obama took office, to 10.1% in October 2009 (a full eight months after the bill was signed into law), hovered just below 10% for a while before dipping to 8.8% in April 2011. Unemployment has ticked up every month since, and Obama’s own Treasury Secretary warns that it could be more than five years before we see a drop to Bush-era unemployment levels.

Budget deal still out of reach

There were rumors over the weekend that House Speaker John Boehner was going to cave on tax hikes in a budget and debt ceiling agreement with the White House with a promise for tax reform down the road. No doubt such a move wouldn’t sit well with conservatives and tea partyers. Boehner faced opposition from inside the Republican caucus and backed down.

While the White House insists that a deal can still be made, talks between Republicans and President Barack Obama didn’t seem to get anywhere yesterday; though they’ll take another crack at it today. It does seem, however, that the administration is rejecting an end-run around the Constitution by raising the debt ceiling without the approval of Congress.

Some have been pointing to past budget deals that included tax hikes and spending cuts as a blueprint for the deal that the White House wants. However, if history is any guide, those deals never seem to be implemented as they are agreed to, a Philip Klein notes:

Stimulus cost $185,000 per job

Pushing back against a claim by Speaker John Boehner, who recently cited numbers from the Weekly Standard noting that the so-called stimulus cost $278,000 per job, economic advisors from the Obama Administration want to set the record straight:

The Council of Economic Advisers report, issued last Friday, states that in the first quarter of 2011, the stimulus bill “has raised employment relative to what it otherwise would have been by between 2.4 and 3.6 million.”

The White House has long disputed the math of dividing the cost of the stimulus by the number of jobs created – we asked a similar question back in October 2009, when that computation resulted in the comparable bargain of $72,408 per stimulus job, as you can read at this blog post.

Obama once again resorts to class warfare to pressure GOP

During a press conference yesterday, President Barack Obama stressed the importance of raising the debt ceiling - the statutory limit on the national debt - by the August 2nd deadline and repeating the same tired class warfare rhetoric that we’ve become familiar with since he arrived on the national scene:

In his first full-scale news conference since March, the president insisted that Democrats had compromised in private talks by agreeing to billions of dollars in budget cuts that would hurt their voters. But, he said, Republicans were refusing to bend by not agreeing to eliminate tax breaks to owners of corporate jets and profit-rich oil companies. If Republicans get their way, Obama said, the end result would be unbalanced deal that lifts the debt limit but forces the government to make deeper-than-necessary cuts.

“If we do not have revenues, that means there are a bunch of kids out there who do not have college scholarships,” Obama said. ”[It] might compromise the National Weather Services. It means we might not be funding critical medical research. It means food inspection might be compromised. I’ve said to Republican leaders, ‘You go talk to your constituents and ask them, “Are you willing to compromise your kids’ safety so some corporate-jet owner can get a tax break?”

Just in case any viewer missed his class-clashing message, Obama referred to corporate-jet owners at least three more times before he took his second question.

The Amazingly Accurate Predictions of Ron Paul

See Video

Jon Huntsman enters the race for the GOP nomination

Jon Huntsman, former Governor of Utah and Ambassador to China, formally announced yesterday that he will seek the Republican nomination for president:

Former Ambassador to China Jon Huntsman (R) launched his presidential campaign Tuesday with the message that he is a post-partisan political leader.

Speaking with the Statue of Liberty and Manhattan skyline as his backdrop in an effort to evoke Ronald Reagan, who held a campaign event from the same spot a generation ago, Huntsman said he would bring to the presidency a focus on substance and not on politics.

“We will conduct this campaign on the high road,” Huntsman said during his speech, calling modern political debate mostly “corrosive.”

The mounting debt and other problems facing the United States are “un-American,” he said. But he wouldn’t extend that line of attack against his former boss, President Obama.

Huntsman said his campaign against the president for whom he’d served as ambassador would boil down to policy, not attacks on patriotism.

“He and I have a difference of opinion on how to help the country we both love,” Huntsman said. “But the question each of us wants the voters to answer is who will be the better president, not who’s the better American.”

Stimulate me!

Stimulus works, right?  At least, that’s what the rhetoric from DC has said since the housing meltdown began.  We needed to take money from hardworking Americans and give it to someone to create jobs.  President Obama has often touted “jobs created or saved”, despite sharing how he knows those jobs were actually “saved”.

Reason magazine’s blog Hit & Run has some awesome examples of the stimulus’ awesomeness:

Green lightbulb company saves or creates or funds 3 jobs at $1.7 million in stimulus money per job.

More than 2.7 million mortgage deadbeats are still living in homes they have not made a payment on in more than a year. Average time from first missed payment to foreclosure is now 565 days.

Number of Americans renouncing citizenship is growing.

Actual good news: More homeowners are moving into 15-year fixed mortgages to build up equity. Bill McBride digs up great mortgage-burning ad for Miller High Life.

Lost half-decade: Start date of economic slump earlier than previously thought.

First indication that UK made right call in eschewing further stimulus: Unemployment across the pond is dropping at fastest rate in 10 years.

VIDEO: “Recovery Summer”

From the folks at American Crossroads:

Do Americans have shovels at the ready to bury big government?


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