Category Archives: Economics

more evidence of a wasted stimulus

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To all my liberal friends… this one’s for you:

…[W]ritten by the White House’s Council of Economic Advisors, a group of three economists who were all handpicked by Obama, [the latest economic report] chronicles the alleged success of the “stimulus” in adding or saving jobs. The council reports that, using “mainstream estimates of economic multipliers for the effects of fiscal stimulus”… the “stimulus” has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job.

In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.

And this number could be much higher if you calculate in all federal spending on this economic downturn…

Let me repeat: we have a spending problem

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This from Phillip Klein at the Washington Examiner:

It turns out that even if we brought tax revenues back to the historically high levels that existed at the end of the Clinton era, we’d still wind up with unsustainable deficits using the White House’s own definition of “sustainable.”

In 2000, the last full-year of President Clinton’s administration, tax revenues were 20.6 percent of GDP, according to the CBO… But the CBO’s long-term fiscal outlook released yesterday predicts that by 2035, total spending will reach a stunning 33.9 percent of GDP if lawmakers pursue their predictable course. That means even if revenues returned to the coveted pre-Bush tax cut levels, there would be a 13 percent difference.

…So let’s be clear: when Democrats talk about revenues needing to be part of the solution, for them to really be part of the solution, taxes as a proportion of the economy would have to exceed record levels. And not just marginally, but by a substantial degree.

I’m kinda getting tired of arguing with liberals about this.  We don’t have a revenue problem… we have a spending problem.

$1,331,714.29 per job

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Here is an internet gem I just discovered:

Debbie Wasserman-Schultz claims that Democrats have created 2.1 million private-sector jobs in 2 1/2 years and I’m willing to take her at her word for the next paragraph or so. But let’s look at how much of our money she and her comrades have spend to get that job increase.

I understand, by the way, that I will likely leave out a few dozen billion dollars somewhere along that way. I’m not including the pre-Obama bailouts for Bear Stearns and Citigroup, the billions the Fed ponied up (since they are, at least on paper, not subject to the whims of either political party), or TARP I. I’ll just go with the big, basic programs I can remember since the Age of Obama began in January, 2009.

  • 2/09, The Stimulus Bill: $787 billion…whoops! I meant $862 billion. (though high-end numbers puts that total, including debt service at well over $3 trillion, I’ll go with the “official” number).
  • Summer/09, Cash for Clunkers: $3 billion.
  • 3/10, Jobs Bill: $17.6 billion.
  • 3/10, Obamacare Bill: $1 trillion, at least. I’m hedging the numbers here because I don’t think anyone knows exactly how much Obamacare will cost once it’s run its 10-year course. However, two things are true. First, the President touted the bill as a job-creator. Second, it’s already affected how private companies do business.
  • 8/10, State Payroll Bailout Bill: $26 billion.
  • 9/10, Small Business Bill: $30 billion.
  • 12/10, Tax Hike Prevention Act: $858 billion.

All those bills come to a grand total of 2,796,600,000,000, or almost 3 trillion dollars (and remember, I know I haven’t included everything)…

So how much did Debbie Wasserman-Schultz and her Merry Band of spend-happy Democrats pay for each one of those 2.1 million jobs she says they’ve created? A little division gives us the answer: $1,331,714.29 per job.

As I’ve said before… not only was this a terrible deal… most of the jobs that were ‘saved or created’ were state union employee jobs (the dues of which heavily fund Democratic campaign coffers).

Nobody wants to drive this car…

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This from the green autoblog:

Once again, General Motors is burying the monthly sales totals for the Chevy Volt. In a press release headlined “May U.S. Retail Sales Rise 9 Percent on Demand for Fuel-Efficient Vehicles,” the Volt’s sales numbers are not disclosed. Instead, the total – 481 – is in the detailed PDF of the Chevrolet brand sales totals and shows the car is suffering from another month-to-month drop; GM sold 493 in April. Last month, GM told us that drop in Volt sales compared to March’s 608 units was due, in part, to the company sending 300 Volts to dealers to use as demo vehicles. We await word on what the reason for the drop is this time.

How much do you suppose GM has already LOST on this car (marketing costs, R&D, Labor, raw materials)?  The Volt might be one of the worst-performing models in GM history.  Someone explain to me who’s brilliant idea THIS was.

On a related note:  President Obama was here in Toledo just a few days ago and spoke about the auto industry.  Here’s the Washington Post’s analysis:

We take no view on whether the administration’s efforts on behalf of the automobile industry were a good or bad thing; that’s a matter for the editorial pages and eventually the historians. But we are interested in the facts the president cited to make his case.

What we found is one of the most misleading collections of assertions we have seen in a short presidential speech.

Those are their exact words… no joke.

via Electric Boogaloo: Nissan Leaf tallies 1,141 May sales.

What I’m reading…

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This from the AP:

WASHINGTON – Thousands of companies that cashed in on President Barack Obama’s economic stimulus package owed the government millions in unpaid taxes, congressional investigators have found.

The Government Accountability Office, in a report being released Tuesday, said at least 3,700 government contractors and nonprofit organizations that received more than $24 billion from the stimulus effort owed $757 million in back taxes as of Sept. 30, 2009, the end of the budget year…

Among the examples was an engineering firm that received a $100,000 stimulus act contract but owed $6 million in taxes. The IRS called it “an extreme case of noncompliance.” A social services nonprofit that received more than $1 million in stimulus funds owed taxes of $2 million.

The stimulus package, enacted in February 2009, funneled some $821 billion into the recession-hit economy. Of that, about $275 billion was designated for contracts and grants, of which nearly $200 billion had been paid out as of March 25, 2011.

Here’s my favorite bit:

Sen. Max Baucus, D-Mont., chairman of the Finance Committee, said every unpaid tax dollar was “added to our deficit or taken from future generations, so I will certainly use the conclusions from this report to look for new ways to ensure everyone pays their fair share.”

So… how is it that when people don’t pay taxes… we are stealing from future generations… but when government borrows trillions… and Republicans say the same thing… we’re just being scare mongers…

And then there’s Larry Kudlow…:

First there was the massive Obama stimulus spending. Then QE1 (The Fed’s quantitative-easing program). And now QE2 is winding down. And what did we get for all this? Slower growth overall, paltry job creation, more energy and commodities inflation, continued housing deflation, and virtually no new business start-up entrepreneurship…

All that money-printing stimulus worked to depreciate the dollar and jack-up commodity prices, especially oil and gasoline, but also food. So both companies and consumers have been punished…

Some demand-side boneheads on Wall Street want the Fed to move to QE3, allegedly to fight a stalling economy. But if the central bank prints another $600 billion or so, all that will do is sink the greenback another 10 percent and drive oil and gasoline prices higher and higher. And that, in turn, will slow business and consumers even more.

And even the Huffington Post acknowledges that Obama’s economic policies haven’t been a smashing success… to say the least:

WASHINGTON — President Barack Obama cannot escape one giant vulnerability as he bids to keep his job: Millions of voters still don’t have one.

Suddenly, the snapshot of the American economy is depressing again.

Job creation is down. So is consumer confidence. And homes sales, auto sales, construction spending, manufacturing expansion.

The brutal month of May was a reminder of the economy’s fragility and the risks for an incumbent president.

A finally forming field of Republican presidential competitors is maneuvering into the space for the public’s attention with this message: Obama has failed.

“This economy took a big hit,” Obama said Friday in Ohio, a pivotal 2012 state. “You know, it’s just like if you had a bad illness, if you got hit by a truck, it’s going to take a while for you to mend. And that’s what’s happened to our economy. It’s taking a while to mend.”

“There are always going to be bumps on the road to recovery,” Obama said.

Right… well, so far we’ve had close to 3 straight years of bumps… you can’t blame the bumps forever, Obama.

Covering for OPEC

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Robert Zubrin offers a good overview of the economics of oil over at National Review:

Responding to public concern over sharply rising gasoline prices, President Obama announced last week that he was asking Attorney General Eric Holder to launch a criminal investigation of price gouging by oil companies, refiners, and gas stations.

Such posturing is so absurd as to exceed the capacity of satire. The reason gasoline prices are up is that the price of crude oil is up. There is not only a direct correlation between the two, but a causal relationship: The primary cost of producing gasoline is the cost of the oil from which it is refined. It is impossible to make cheap gasoline from expensive oil. To launch a witch hunt against gasoline providers for high price at the pump when oil is selling for $110 per barrel is a truly amazing political stunt.

Unfortunately, in going after US oil companies, Obama unwittingly (or wittingly, depending on your point of view) not only covering for OPEC… but transferring blame that belongs to them onto the backs of American companies.

What spending problem?!

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Here’s an interesting Reuters Article.  Turns out Illinois is on the verge of “financial disaster”.

(Reuters) – Illinois is “on the verge of a financial disaster” as payments on the state’s debt have skyrocketed, Treasurer Dan Rutherford said on Monday.

Illinois faces an estimated $45 billion in principal and interest payments on its outstanding debt over the next 25 years, up nearly four-fold from the $12 billion owed in 2002, according to a position paper from the Republican treasurer, who took office in January.

Adding to the state’s debt burden is $140 billion in unfunded pension and retiree health-care liabilities and $8 billion of currently unpaid bills, the paper said.

Um, did that last line stand out to anyone else?  $140 BILLION dollars in unfunded public union pension and health care liabilities? How can THAT be?  I keep hearing from all my liberal friends how its NOT the public unions that are bankrupting state governments?!  *thinks to myself… heaven forbid we have some limitations collective bargaining rights.*

Wait just a minute… I got ahead of myself there.  If I were a good liberal… I might say something like this:  ”140 billion dollars!  Thats nothing to be concerned about. In fact, I resent the accusation that this is even a spending problem.  Simpletons like you might look at this unfunded liability and get all scared, thinking its because we are spending too much… but to those of us in elite circles… this is clearly a revenue issue, not a spending issue. Obviously the state of Illinois is letting the public keep too much money… and we need to raise taxes in order to cover the shortfall.  What’s that you say? We already raised income tax rates 66% in January to avoid this disaster?  Oh, well, obviously there hasn’t been enough time for the revenue to pour in.   The important thing here is that the people of Illinois aren’t paying enough to support our vision of a social utopia.  What’s that you say?  Child poverty rates are 30% in Chicago?  We’ve got the highest poverty rate of African Americans in the country?  Well… obviously we just need to get more of those people in public unions so they can make more money and have better retirement benefits… raising them out of poverty through government jobs.  See! Don’t doubt me… we’ve got this social equality thing all worked out.

via Illinois on verge of financial disaster: treasurer | Reuters.

Obama’s budget ‘Framework’

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Looks like most of Obama’s budget ‘framework’ is alot of smoke and mirrors.  This from Andrew Stiles:

Predictably, the president’s “framework” completely ignores the CBO’s revised scoring of his budget, and continues to assume $2.2 trillion in deficit reduction over ten years, or $2.9 trillion when extrapolated to fit the president’s new (and bizarre) twelve-year window. This would appear to indicate that Obama is proposing $1.1 trillion in additional savings; he claims to reach $4 trillion over twelve years. So how does he plan to save that money?

The most obvious difference between the president’s February budget and his April “framework” is the inclusion of new savings under the FY2011 “budget deal” or continuing resolution, which reduced annual spending by about $80 billion compared with the president’s (never enacted) budget request for this year. Here’s what the “framework” states:

The first step in our approach is to keep annual domestic spending low by building on the savings that both parties agreed to last week. That step alone will save us about $750 billion over 12 years.

Therefore, almost three-quarters of the Obama’s “new” savings comes not from any new reductions, but from the spending cuts already included in a budget deal that he and his party vociferously opposed, initially calling it “draconian” and “unworkable.”

ZING!

via Obama’s ‘Framework’ Folly – By Andrew Stiles – The Corner – National Review Online.