Political Economics

[DougMacG]

Romney needs to answer the leftist income inequality obsession with the inspiration and reality of income mobility optimism.  The latest study from Pew actually shows all kinds of progress even though they continue to exclude the primary sources of income for lower incomes, "does not include the value of Medicare, Medicaid, the EITC, Section 8 housing vouchers nor SNAP (food stamps)" which exaggerates inequality.  Making dollar errors in the multi-trillions for the poorest and then publishing results as if you covered it all.  Buyer beware! 
-----------------

Movement across class lines has been reasonably robust. 60 percent of children born to the richest fifth of Americans in the late 1960s fell out of that category, with 8 percent landing in the bottom fifth. 57 percent of children born into the bottom fifth moved up, and more than half of them moved into the middle fifth or higher. Overall, 70 percent of children didn’t end up in their parents’ quintile.

The rise in incomes holds across the economic spectrum. Among the poorest fifth, inflation-adjusted income grew by 74 percent, from $11,064 to $19,202. It grew even more substantially in the highest quintile but the Pew study may well understate growth in the real income of the poor.

Even with the exclusions that cause incomes of the poor to be understated, these incomes have risen considerably, as have incomes across the economic board.

Pew: http://www.pewstates.org/uploadedFiles/PCS_Assets/2012/Pursuing_American_Dream.pdf

Powerline: http://www.powerlineblog.com/archives/2012/07/the-rising-tide-has-lifted-most-boats.php

Forbes: http://www.forbes.com/sites/timworstall/2012/07/11/sad-ignorance-in-the-pew-economic-mobility-project-their-data-is-worthless/

[DougMacG]

We are most equal when we are most poor.  New CBO data support what I have trying to argue on these pages.

"...the incomes of the top one percent fell 18 times more than the incomes for the middle class at the start of the recession."

The point of the policy arrow change in Nov 2006 / Jan 2007 was to shift from growth to fairness.  At first it succeeded.  The asset / investment selloff mostly hit the rich - at first.  And anyone who owned anything but disproportionately that hits the rich.  But labor requires capital to be fully employed and productive.  Now the rich have recovered and the employment is way down and stuck.

What most analyses miss is that the rich pay the most taxes in dollars when they are making money, when the economy is growing, not when tax rates are the highest or threatened to be raised and raised.  Government services are paid for in dollars, not in percentages.  Inequality is greatest in times of high growth - because the rich are the most invested in that growth, more so than a poor or middle income person by definition.  That is unfortunate but not reversible.

Please see CNBC from last Friday:
http://www.cnbc.com/id/48257611

The Falling Fortunes of the One Percent
Published: Friday, 20 Jul 2012 | 10:59 AM ET
By: Robert Frank
CNBC Reporter & Editor

The presidential election has given us two myths about the rich. First, that their incomes, and income inequality, are at all-time highs. Second, that the wealthy pay less in taxes than ever, and lower taxes than the rest of us.

A recent report from the Congressional Budget Office, however, suggests that both may be false.

Let’s consider income first. Between 2007 and 2009, after-tax earnings by Americans in the top one percent for income fell 37 percent. On a pre-tax basis they fell 36 percent in the same period.

That may sound like a minor haircut for One Percenters compared to people who lost their jobs. But when you take into account federal transfers, assistance and taxes paid, the incomes of the bottom 20 percent grew by 3 percent, while it fell a modest 2 percent for the middle 20 percent.

In other words, the incomes of the top one percent fell 18 times more than the incomes for the middle class at the start of the recession.

The result of this big drop at the top was that their share of the country's total income also fell. In 2007, the top one percent earned 16.7 percent of all after-tax income. In 2009, that portion fell to 11.5 percent.

Inequality, in other words, fell during those years.  We are now in an age of High-Beta Wealth, where the incomes of the One Percent have become far more manic and prone to wild drops than the rest of the country.

And taxes paid? Despite the oft-repeated fact that tax rates for the wealthy are at an all-time low (which is true), it’s also true that the actual amount paid in taxes by the wealthy is higher than before the recession.

The One Percent paid an average effective tax rate of 28.9 percent on their income — far more than any other group, and more than twice the average effective rate of the middle class, who paid 11 percent on average.

So the rich lost more income and paid more of their money in taxes than the rest of the population.

This is not an argument against taxing the wealthy. And the incomes and tax rates of the wealthy may have jumped back since 2009, with the rebound in financial markets.

But when politicians and pundits talk about the rich just getting richer and paying less taxes, they need to pay closer attention to the actual numbers.

[DougMacG]

Famous people reading the forum, this is George Will taking a stab at a point I have been trying to make.   I was saying we are below the 'baseline' for 'breakeven' growth.  It is really negative growth or a growth deficit.

George Will said today:  "We're in a growth recession.  That sounds like an oxymoron.  It isn't.  We're now in the 4th year of a recovery and we're growing but receding at the same time because we're not growing fast enough to create enough jobs to even take account of the natural growth of the workforce."

Go to about 12:20 of the This Week video: http://www.realclearpolitics.com/video/2012/07/29/this_week_roundtable_on_romney_100_days_to_go.html

[objectivist1]

Leaving aside the fact that George Will is a member of the Washington, D.C. elite and is NOT in my opinion a true conservative (his chief desire seems to be accepted within the cocktail party circuit inside the beltway), this comment vividly illustrates the complete IDIOCY and deliberate obfuscation of government-speak.  In short - THERE IS NO RECOVERY IF WE ARE NOT CREATING JOBS FAST ENOUGH EVEN TO KEEP UP WITH THE GROWTH OF THE WORKFORCE.  This is not rocket science - and it is not lost on the average American who can't find a job, or if they can, only a part-time job which doesn't utilize their education or skills.  These people who live their lives mainly inside the D.C. beltway (and I happen to personally know a few of them) really do not have any idea of what the great majority of this nation's citizens think, or how they view events.  They exist in an almost hermetically-sealed bubble or alternate universe where all they hear is each others' perspectives and only imagine what it's like in the heartland.  They never actually travel there and ASK anyone what they think.  It's a very serious problem, not just with bureaucrats, but many of our representatives, who get to D.C. and then completely lose touch with their constituents.  IMHO all Congress people ought to be REQUIRED to spend x number of days IN THEIR OWN DISTRICTS, interacting with those they represent.

[Crafty_Dog]

I did my second summer of law school in DC (working for the Antitrust Division of the FTC) and also my first year out of law school as well while I took and waited for the results of the bar.  I passed, and left 

DC is a company town and is as Obj. describes.

On the subject of the unemployment rate, I would love to see the collective brain trust here  some up with the following:

Unemployment  +  those who have given up trying (this takes us to 12% if I understand correctly) + the increase in disability (which has roughly doubled under Baraq) = the true unemployment rate

[DougMacG]

Obj, I also consider George Will an independent.  His views are his own; they come out mostly conservative but not aligned with anyone or any movement.  In the context of this thread, we have been reading a lot of analysis from Brian Wesbury for one, who is a great economist but works for an investment house and I think has been trying to put lipstick on a pig in terms of this economy.  He says we are plowing forward but we really are standing still while multiplying our debt burden which means we are really moving backwards at an alarming rate.

By great economist I still mean that he is a economist who writes with the same conventions as the other economists, using misleading measures for things like growth rate, poverty rate, unemployment rate, among others, because that is the language they speak.

I tried to make a different point recently by questioning why they don't use a baseline growth rate where anything below that breakeven line would be considered a cut.  With a more honest measurement IMO it might be easier to see or admit that we are in about the 5th year of man made recession.  If we are not recovering it isn't a slow recovery or any other kind of recovery.  I think GW is making that same point in his own way.

Crafty, I don't know if I understand your question correctly but I think I would try to answer in a more simple manner:

There are how many adults in the USA?  Of that number, how many work at least full time?  How many don't.

Not in the numbers below, but more descriptive economically might be to measure how many adults work full time in the private sector, pulling the wagon, and how many do not.  The answer I believe is that less than 30% work full time or more in the private sector pulling the load and more than 70% do not.
--------------------

Less than half of working age Americans work full time, here is a source:  http://articles.businessinsider.com/2011-01-24/markets/29974517_1_part-time-unemployment-labor-force

These numbers are about a year old:

Only 47% Of Working Age Americans Have Full Time Jobs

The total non institutional civilian labor force (Americans 16 years and older who are not in a institution -criminal, mental, or other types of facilities- or an active military duty) is reported as 238.889 million. Of these, we see:

    Employed: 139.206 million people (58.3% of labor force)

    Unemployed: 14.485 million people (6.1% of labor force)

Obviously, that can't be the total picture, we're only at 64.4%. This is why:

    Part time employed for economic reasons: 8.931 million people. This concerns people who want a full-time job but can't get one.

    Part time employed for non-economic reasons: 18.184 million people. Non-economic reasons include school or training, retirement or Social Security limits on earnings, but also childcare problems and family or personal obligations.

But the by far largest category "missing" from both the Employed and Unemployed statistics is the "Not In Labor Force": 85.2 Million people.

The BLS definition states: "Not in the labor force (NILF). A person who did not work last week, was not temporarily absent from a job, did not actively look for work in the previous 4 weeks, or looked but was unavailable for work during the reference week; in other words, a person who was neither employed nor unemployed." (Clearly, this does include lot of unemployed people).

To summarize: 108.616 million people in America are either unemployed, underemployed or "Not in the labor force". This represents 45.5% of working age Americans.

If you count the "Part time employed for non-economic reasons", you get 126.8 million Americans who are unemployed, underemployed, working part time or "Not in the labor force". That represents 53% of working age Americans.

So only 47% of working age Americans have full time jobs. While the official unemployment rate is 9.4%. Something's missing somewhere.

A few more factoids on the topic:

    Today, the long term unemployed make up 42% of total unemployed. That is to say, of course, those who are actually counted as unemployed instead of "Not in the labor force".

    43.2 million Americans receive foodstamps. That's 18.1% of all working age Americans. If they all have on average 1.5 dependents, which is probably a reasonable estimate, a full one third of the US population receives at least part of their food through this system.

[Crafty_Dog]

Doug:

You raise good conceptual questions and provide worthy data in your answer-- a rare combination!

That said, I'm looking for something a bit conceptually ambitious.

I'm looking for something for scoring political points 

Instead of saying unemployment is currently 8.2%, I want someone (Romney comes to mind  ) to add the number of Americans who have left the workforce to the number of those currently counted as unemployed to calculate the unemployment rate.  My understanding is that measured this way, the unemployment rate is 12+%.

Then I want to add to the number the surge in disability numbers (a doubling if I have it right) on the notion that this surge is not do to a sudden increase in people being disabled but to a lowering of eligibility standards and these people too are people who are unemployed (in addition to being leeches  )--  and again to recalculate the unemployment rate.

[DougMacG]

Bringing this GM post forward in the process of gathering info to answer Crafty's question.  "The real unemployment rate actually rose in January to 11.5%".  To this we might add the disability increase.  Posting disability numbers separately.  I will look deeper into it later.

http://dogbrothers.com/phpBB2/index.php?topic=1467.msg59617#msg59617

http://www.zerohedge.com/news/implied-unemployment-rate-rises-115-spread-propaganda-number-surges-30-year-high

Implied Unemployment Rate Rises To 11.5%, Spread To Propaganda Number Surges To 30 Year High
Submitted by Tyler Durden on 02/03/2012 09:35 -0500


Sick of the BLS propaganda? Then do the following calculation with us: using BLS data, the US civilian non-institutional population was 242,269 in January, an increase of 1.7 million month over month: apply the long-term average labor force participation rate of 65.8% to this number (because as chart 2 below shows, people are not retiring as the popular propaganda goes: in fact labor participation in those aged 55 and over has been soaring as more and more old people have to work overtime, forget retiring), and you get 159.4 million: that is what the real labor force should be. The BLS reported one? 154.4 million: a tiny 5 million difference. Then add these people who the BLS is purposefully ignoring yet who most certainly are in dire need of labor and/or a job to the 12.758 million reported unemployed by the BLS and you get 17.776 million in real unemployed workers. What does this mean? That using just the BLS denominator in calculating the unemployed rate of 154.4 million, the real unemployment rate actually rose in January to 11.5%. Compare that with the BLS reported decline from 8.5% to 8.3%. It also means that the spread between the reported and implied unemployment rate just soared to a fresh 30 year high of 3.2%.

[DougMacG]

Bringing this info forward also: 
http://dogbrothers.com/phpBB2/index.php?topic=1467.msg64202#msg64202

"since June 2009, fully 3.1 million workers signed up for disability benefits."

[Crafty_Dog]

Doug:

Thank you for the work you are doing to develop this point.

May I nominate you to be our man for this? 

Remember, lots of famous people lurk here in search of more good ideas to use  so you could do some real good 

[objectivist1]

I think it's vitally important to point out here that Obama is clearly a Marxist/Communist ideologically, and as such, HIS PLAN FOR AMERICA IS UNFOLDING BEFORE OUR EYES.  As Rush Limbaugh famously said (and was viciously attacked for saying) shortly after Obama's election, "I hope he fails."  Limbaugh knew as many of us who had paid attention to Obama's history and writings that he WANTED to fundamentally transform our economy into a socialist/Marxist model, which would mandate the destruction of the existing system.  Obama is not some hapless misguided fool who wants to lower unemployment and government dependence, but simply can't figure out how.  The destruction of this economy and ever-increasing government dependence is DELIBERATE and INTENTIONAL.  It amazes me that so many fail to realize this even now.

[DougMacG]

Obj, your points on Obama and his background and disdain for all that made America great are well-founded.  More important though is to capture a significan number of the hearts and minds of the 69,456,897 people who voted for Barack Obama in 2008.  These people I think are more victims of a sort were experiencing disincentive denial.  They believed for the moment you can attack the rich, stomp out wealth, handcuff employers and strangle businesses without hurting the economy overall or hurting working people.  It's just not so and the evidence is all around us.  Saying that the destruction of the republic and our economy was intentional is probably not the most attractive argument for bringing them back.  There is no need to prove it was intentional, even if it was at the top, we only have to show it didn't work.

[objectivist1]

DMG:  I'm not suggesting that we use this as our sole or even primary argument.  What I am saying is that without acknowledging the philosophical underpinnings of capitalism vs. statism, and being able to identify an individual's adherence to one or the other, in the long run we are doomed.  As Ayn Rand so aptly put it:  "The men who are not interested in philosophy need it most urgently: they are most helplessly in its power."  Nothing could be more true.  Citizens absorb the philosophy by which they live and accept/reject ideas from the culture around them.  To the extent that we fail to identify philosophical systems and call them by their right names, we allow the enemy to continue its slow but steady subterfuge and destruction of the Framers' vision.  Mark Levin's recent book "Ameritopia" does a superb job of explaining these competing philosophical systems.

[DougMacG]

Crafty, I'll do my best to answer that.

When you adjust the BLS (Bureau of Labor Statistics) reported unemployment to the unemployment rate if we were to hold the workforce participation rate constant, the 9 million that left the workforce during the Obama years already includes the 3.1 million workers that left for disability pay.  

Here is the combined chart showing 20% unemployment for U6 assuming a constant workforce participation rate for the Obama years.



--------------------------------------------------------
Definitions for U-1, U-3, U-6 and all other BLS unemployment measures can be found here:  http://bls.gov/news.release/empsit.t15.htm

The following chart shows around 9 million leaving the workforce during the Obama years:

Maybe more clear at this link:  http://2.bp.blogspot.com/-DHhQMR8EhYY/T6aJDnHXF4I/AAAAAAAARdU/C0Nok_UgsGk/s1600/zero1.jpg

It should be noted that the declining labor force participation rate is not unique to Obama.  The rate for males has been declining over a long period and the workforce participation rate for females peaked in 2000.  The important point is that we cannot continue straight line decline unless we also lighten the public sector spending load at the same rate, sharing that burden with fewer and fewer workers - which simply is not going to happen.  Instead it is logically and empirically the opposite; the higher the number of adults who don't work, the more that will receiver increasing benefits from our ever-expanding plethora of programs.

[DougMacG]

Link to explanation of calculations made in the previous post:
 http://danielamerman.com/articles/2012/WorkCalc.html

Includes this chart:
 

By this measure, 'real' unemployment has doubled in the 6 years since Pelosi-Reid-Obama took control of congress and then the executive branch.

Whatever it is we are doing, ostensibly trying to help the middle class by attacking investors and businesses, it isn't working!

[DougMacG]

You might recall, a claim similar to this was the centerpiece of Washington Post Dana Milbank's tirade that Mitt Romney was a liar http://journalstar.com/news/opinion/editorial/columnists/article_6c1810a0-71f7-5614-9cbb-8d0a63bd0a3f.html, repeated ad nauseum by MSNBC's Rachel Maddow and the like.  The number one 'lie' in his "The Facts vs. Mitt Romney" column was this: "He blamed President Barack Obama for the "weakest economic recovery since the Great Depression."..."That Romney resorts to such gratuitous falsehoods discredits his leadership more than his opponent's."

Turns out it was true??
------------------------
Forbes Magazine:  "Obama Wins The Gold For Worst Economic Recovery Ever"

http://www.forbes.com/sites/louiswoodhill/2012/08/01/obama-wins-the-gold-for-worst-economic-recovery-ever/

If mismanaging an economic recovery were an Olympic event, President Obama would be standing on the middle platform right now, accepting the gold medal.

Deep recessions are supposed to be followed by strong recoveries, but, under Obama, the worst recession since the 1930s has been followed by the slowest economic recovery in the history of the republic.  In a very real sense, there has been no recovery at all—things are still getting worse.

To win the gold for economic mismanagement, Obama had to beat out some very tough competitors, including the previous Olympic record holder, George W. Bush.  Let’s look at how Obama pulled it off.

For those not familiar with the sport, the Olympic “Worst First Three Years of Economic Recovery” event is a pentathlon—it’s composed of five individual trials.

The trials making up this pentathlon are as follows: 1) total employment growth; 2) unemployment rate reduction; 3) per capita GDP growth; 4) change in the Real Dow; and 5) change in real produced assets.

Because the goal is economic mismanagement, in the total employment growth event, the lowest number wins.

Obama was victorious in this trial by producing an increase in jobs during the first 36 months of his economic recovery of only 1.72%.  This handily beat out Bush 43, who turned in a jobs gain of 2.93% during his recovery, and the team of Bush 41 and Bill Clinton, who delivered 3.64% more jobs during theirs.  And, Obama absolutely creamed Ronald Reagan, who produced an increase in total jobs of 8.97% during the first three years of the economic recovery that he oversaw.

Obama struggled in the “reducing the unemployment rate” event.  It was easy for Obama to do worse than Reagan, who had reduced the “headline” (U-3) unemployment rate by a massive 3.8 percentage points during the first three years of his recovery.  However, in terms of turning in a bad unemployment performance, both the Bush 41 – Clinton team and Bush 43 had started with an unfair advantage.

Obama’s recovery came out of the blocks with an unemployment rate of 9.5%, which was far higher than where either the Bush 41 – Clinton team started (6.8%) or where Bush 43 began (5.5%).  Accordingly, it was much harder for Obama to do worse than those two, because he would have to produce a smaller reduction in the unemployment rate than they did.

When the scores were first totaled, Obama (at 1.3 percentage points of reduction in the unemployment rate) was far behind both the Bush 41 – Clinton team (at 0.3 percentage points), and Bush 43 (at 0.1 percentage points).

However, Obama appealed to the judges, pointing out that, when measured by the more comprehensive “SGS Alternate Unemployment Rate” published by Shadow Government Statistics, he had actually managed to increase unemployment by 2.0 percentage points during his economic recovery.  Meanwhile, the other three competitors had reduced their jobless rates, no matter how you measured them.  The judges agreed, and they awarded first place in this event to Obama.

The officials then studied the replay tapes, and gave Obama extra credit for managing to push the U.S. 2.5 million jobs farther away from full employment during his economic recovery.  The other three contestants could not match that.

Next up was the “real per capita GDP growth” event.  Obama won this one decisively.

The total increase in real GDP per capita during the first three years of Obama’s recovery was only 4.34%.  This was worse than Bush 43 (5.98%) and the Bush 41 – Clinton team (5.61%).  Once again, Ronald Reagan brought up the rear in this important area of economic mismanagement.  He produced a stunning 15.36% gain in real per capita GDP during the first three years of his economic recovery.

The last two trials in the Olympic “Worst First Three Years of Economic Recovery” pentathlon relate to building a prosperous future for the U.S. economy.

The Real Dow is the Dow Jones Industrial Average divided by the price of gold.  It is a proxy for the driving force to invest in economic growth, rather than to park capital in “safe” investments like gold and government bonds.

In the Real Dow event, Obama had to settle for second place.  Bush 43 beat him soundly by managing to depress the Real Dow by a massive 35.6% during the first three years of the economic recovery that he oversaw.  However, in terms of economic destruction, Obama turned in a creditable performance, pushing the Real Dow down by 11.6% during his first three years of economic recovery.

In this event, the Bush 41 – Clinton team did not seem to be clear on the concept.  The Real Dow rose by 13.5% during their watch.  And, once again, Ronald Reagan came in dead last, producing a massive 89.9% increase in the Real Dow during the first three years of his powerful economic recovery.

Obama finished strong by blowing away the competition in the “change in real produced assets” trial.  Produced assets comprise the physical infrastructure of our economy, and economic progress depends upon building up our stock of produced assets.

During the first full year of Obama’s economic recovery (2010), real produced assets actually fell by 1.41%.  This is the biggest drop during the 60 years for which data is available.  It is also the only decline ever observed during an economic recovery.

Ronald Reagan finished second in this trial with a 0.16% increase in fixed assets during 1983.  The Bush 41 – Clinton team and Bush 43 tied in this event.  They both produced a 3.42% gain in real produced assets, in 1992 and 2002, respectively.

We should all be proud that Barack Obama has won the Olympic gold medal in the “Worst First Three Years of Economic Recovery” event, and reward him accordingly in November.

[Crafty_Dog]

Following up on Doug's work:

MarketBeat
WSJ.com's inside look at the markets
 Search MarketBeat1 
 . August 3, 2012, 2:50 PM.Participation Rate Reveals Real State of the Jobs Market.Article Comments MarketBeat HOME PAGE ».smaller Larger .
smaller Larger facebooktwittergoogle pluslinked ininShare.0EmailPrintBy John Shipman

Associated Press
Not enough of this.This morning’s nonfarm payrolls report included one piece of data most people skip, the participate rate. This is the percentage of people who are able to work who actually are part of the labor force (working or not). The lower the number, the more people who have dropped out of the labor force.

With a 63.7% labor force participation, “conditions in the labor market are considerably worse than indicated” in July’s report, writes economist Joshua Shapiro at MFR.

“Indeed, if the participation rate were at 66%, which is around where it hovered for many years ahead of the recession, the headline unemployment rate would be a little more than 3pp higher than currently reported,” he writes.

Meanwhile, drop in the participation rate “has been centered in younger workers, who are increasingly giving up hope of finding a decent job,” and instead staying in school “and racking up enormous amounts of student debt, which has contributed to the recent surge in consumer credit outstanding.”

You can see the participation rate data on the Bureau of Labor Statistics site here.

The participation rate isn’t something that gets plugged into the algos on jobs day, but the number illustrates the true state of the work force even better than the headline numbers, the jobs added and the unemployment rate.

The bottom line, and it hasn’t changed, is that there aren’t enough people working in the U.S. to contribute to growth, to contribute to the tax rolls, to help the nation grow its way out of its problems. So the headline number of 163,000 this morning was nice, but it didn’t change the real dynamics of the work force or the economy.

– Paul Vigna contributed to this post.

[DougMacG]

"Following up on Doug's work:"   - I appreciate knowing they (the WSJ) read and follow up on our posts here, and occasionally give credit.

“Indeed, if the participation rate were at 66%, which is around where it hovered for many years ahead of the recession, the headline unemployment rate would be a little more than 3pp higher than currently reported,”

Missing in the projections is that if we put an aggressive pro-growth mandate put in place, a turnaround that includes abundant opportunity and potential for real prosperity and economic freedom that counts entrepreneurs in the mix, a workforce participation rate higher than the past is possible. 

There is some math to do, but if you put in place an array of positive incentives (Romney's 59 point plan comes to mind), a return of productive investment and enterprise could grow the workforce a couple of points above historic averages instead of a couple of points below historic averages.  By the time we return the unemployment rate to near a pre-Dem-rule rates of 4.6% and elevate business start rates to new record highs, amazing amounts of income and wealth are possible if we quit fighting against it.  This budget would be in balance in my estimation at that point and the world recession would be over.

Is that worth changing horses in mid-drowning.

[DougMacG]

Very significant piece today in the WSJ.  Please read, learn and vote.

Arthur Laffer: The Real 'Stimulus' Record
In country after country, increased government spending acted more like a depressant than a stimulant.

"The macro economy is the sum total of all of its micro parts... stimulus spending really doesn't make much sense. In essence, it's when government takes additional resources beyond what it would otherwise take from one group of people (usually the people who produced the resources) and then gives those resources to another group of people (often to non-workers and non-producers)."

"government taxing people more who work and then giving more money to people who don't work is a surefire recipe for less work, less output and more unemployment."

http://online.wsj.com/article/SB10000872396390444873204577537244225685010.html

By ARTHUR B. LAFFER

Policy makers in Washington and other capitals around the world are debating whether to implement another round of stimulus spending to combat high unemployment and sputtering growth rates. But before they leap, they should take a good hard look at how that worked the first time around.

It worked miserably, as indicated by the table nearby, which shows increases in government spending from 2007 to 2009 and subsequent changes in GDP growth rates. Of the 34 Organization for Economic Cooperation and Development nations, those with the largest spending spurts from 2007 to 2009 saw the least growth in GDP rates before and after the stimulus.

The four nations—Estonia, Ireland, the Slovak Republic and Finland—with the biggest stimulus programs had the steepest declines in growth. The United States was no different, with greater spending (up 7.3%) followed by far lower growth rates (down 8.4%).

Still, the debate rages between those who espouse stimulus spending as a remedy for our weak economy and those who argue it is the cause of our current malaise. The numbers at stake aren't small. Federal government spending as a share of GDP rose to a high of 27.3% in 2009 from 21.4% in late 2007. This increase is virtually all stimulus spending, including add-ons to the agricultural and housing bills in 2007, the $600 per capita tax rebate in 2008, the TARP and Fannie Mae and Freddie Mac bailouts, "cash for clunkers," additional mortgage relief subsidies and, of course, President Obama's $860 billion stimulus plan that promised to deliver unemployment rates below 6% by now. Stimulus spending over the past five years totaled more than $4 trillion.

If you believe, as I do, that the macro economy is the sum total of all of its micro parts, then stimulus spending really doesn't make much sense. In essence, it's when government takes additional resources beyond what it would otherwise take from one group of people (usually the people who produced the resources) and then gives those resources to another group of people (often to non-workers and non-producers).

Often as not, the qualification for receiving stimulus funds is the absence of work or income—such as banks and companies that fail, solar energy companies that can't make it on their own, unemployment benefits and the like. Quite simply, government taxing people more who work and then giving more money to people who don't work is a surefire recipe for less work, less output and more unemployment.

Yet the notion that additional spending is a "stimulus" and less spending is "austerity" is the norm just about everywhere. Without ever thinking where the money comes from, politicians and many economists believe additional government spending adds to aggregate demand. You'd think that single-entry accounting were the God's truth and that, for the government at least, every check written has no offsetting debit.

Well, the truth is that government spending does come with debits. For every additional government dollar spent there is an additional private dollar taken. All the stimulus to the spending recipients is matched on a dollar-for-dollar basis every minute of every day by a depressant placed on the people who pay for these transfers. Or as a student of the dismal science might say, the total income effects of additional government spending always sum to zero.

Meanwhile, what economists call the substitution or price effects of stimulus spending are negative for all parties. In other words, the transfer recipient has found a way to get paid without working, which makes not working more attractive, and the transfer payer gets paid less for working, again lowering incentives to work.

But all of this is just old-timey price theory, the stuff that used to be taught in graduate economics departments. Today, even stimulus spending advocates have their Ph.D. defenders. But there's no arguing with the data in the nearby table, and the fact that greater stimulus spending was followed by lower growth rates. Stimulus advocates have a lot of explaining to do. Their massive spending programs have hurt the economy and left us with huge bills to pay. Not a very nice combination.

Sorry, Keynesians. There was no discernible two or three dollar multiplier effect from every dollar the government spent and borrowed. In reality, every dollar of public-sector spending on stimulus simply wiped out a dollar of private investment and output, resulting in an overall decline in GDP. This is an even more astonishing result because government spending is counted in official GDP numbers. In other words, the spending was more like a valium for lethargic economies than a stimulant.

In many countries, an economic downturn, no matter how it's caused or the degree of change in the rate of growth, will trigger increases in public spending and therefore the appearance of a negative relationship between stimulus spending and economic growth. That is why the table focuses on changes in the rate of GDP growth, which helps isolate the effects of additional spending.

The evidence here is extremely damaging to the case made by Mr. Obama and others that there is economic value to spending more money on infrastructure, education, unemployment insurance, food stamps, windmills and bailouts. Mr. Obama keeps saying that if only Congress would pass his second stimulus plan, unemployment would finally start to fall. That's an expensive leap of faith with no evidence to confirm it.

Mr. Laffer, chairman of Laffer Associates and the Laffer Center for Supply-Side Economics, is co-author, with Stephen Moore, of "Return to Prosperity: How America Can Regain Its Economic Superpower Status" (Threshold, 2010).

[bigdog]

http://www.cato-at-liberty.org/a-comprehensive-list-of-hyperinflations-in-history/

Note that there is a link to the paper in the brief discussion.

[Crafty_Dog]

Article Video Comments (120) more in Opinion | Find New $LINKTEXTFIND$ ».
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'A stimulus program should be timely, targeted and temporary."

—Lawrence Summers, January 29, 2008

Well, well. So the folks who have run U.S. economic policy since 2008 are alarmed about the peril of the 2013 "fiscal cliff." Too bad they didn't worry about that when they were creating the very ledge they now lament.

The latest warning comes from the Congressional Budget Office, which estimated in its mid-year budget outlook Wednesday that the economy will return to recession in 2013 if taxes rise and spending falls on schedule in January. "Such fiscal tightening will lead to economic conditions in 2013 that will probably be considered a recession," say the CBO sachems, "with real GDP declining by 0.5 percent" from this year's fourth quarter to the final quarter of next year and unemployment rising to about 9% from 8.3%.

Yes, a year of falling output would "probably be considered" a recession, especially if you are one of the 9% jobless.

Related Video
 
Editorial board member Steve Moore on whether the fiscal cliff could cause the U.S. to fall into recession. Photos: Getty Images
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One point to keep in mind is that CBO's economists are as true-blue Keynesians as exist on the planet. Like the Obama White House and Treasury, they believe in the "multiplier" that $1 of federal spending somehow creates $1.50 in greater GDP. Thus they plug large spending cuts into their economic models, and, presto, they find a recession.

One remarkable (and highly dubious) note in the CBO report is that the budget gnomes predict a big surge in tax revenues in 2013—to 18.4% from 15.7% of GDP—despite the recession they also predict. CBO simply doesn't think taxes matter much to taxpayer behavior, so it applies the higher rates to its current predictions of income and pretends revenues will roll in like the tides. But this will be a fantasy if enough Americans find ways to hide their income or work less, or if they simply earn that much less thanks to the recession.

The larger policy point is that this is the fiscal cliff the Keynesians built. The 2008 quote above from Larry Summers, the Harvard economist who later became President Obama's chief economic adviser, sums up the mindset that has dominated policy for most of the last decade and especially since 2008.

Rather than provide predictable, consistent policy for the long term, the Summers-Obama-Geithner-Krugman theory goes that government should jolt the economy with spending and tax cuts that are targeted and temporary. The jolt will drive the economy out of recession, rapid growth will resume, and the wizards of Harvard Yard can then tell us the precise moment when the stimulus can be withdrawn and taxes should rise again.

Or, if the jolt doesn't work, then order up another jolt, which makes the tax cliff even steeper.

The last decade has provided as clear a market test of this proposition as one can get. First, the Bush Administration had to accept a temporary window for its 2001 and 2003 tax cuts to pass the Senate's crazy budget rules. Its tax rebate of 2001 was such an economic bust that without the more ambitious and better designed 2003 tax cut Mr. Bush might not have been re-elected. But even the 2003 cut had to be temporary to pass Congress.

Then came the Summers-George Bush-Nancy Pelosi $168 billion tax rebate and spending stimulus of February 2008. That goosed GDP for a quarter as temporary consumer and government spending showed up in the national accounts, but growth quickly sputtered even before the autumn 2008 financial panic.

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Associated Press
 
President Obama with Treasury Secretary Tim Geithner, left, NEC Director Larry Summers, right, and Budget Director Peter Orszag, far right.
.Then came the $830 billion stimulus of February 2009, followed by other "targeted and temporary" measures like cash for clunkers and the first-time homebuyer's tax credit. GDP rose modestly as the economy recovered, albeit at a historically slow pace considering the depth of the recession. The rate of growth has since sputtered in each of the last three years.

That didn't stop Mr. Obama, who tried still another temporary tax fix after Republicans captured Congress in 2010. He agreed to extend the Bush tax rates for another two years, but only in return for an additional temporary payroll tax cut for one year. When that didn't spur faster growth in 2011, the President demanded and won another one-year payroll-tax extension for 2012. First half GDP growth this year fell again to 1.7%.

***
So here we are now facing the expiration of all of these temporary measures at the same time. And that's not all. You have to add the higher tax rates that Mr. Obama has proposed in his budget, such as the 30% "Buffett rule" tax rate on capital gains. And don't forget the new 3.8% surcharge on investment income that is part of ObamaCare and also starts in January.

The nearby table compares current tax rates with those that arrive next year with the tax cliff, as well as Mr. Obama's budget proposals and Mitt Romney's tax reform plans. Mr. Romney is proposing an across-the-board rate cut, while Mr. Obama would keep rates the same only for those earning less than $250,000. Everyone else would see a huge tax increase, one of the largest in history.

Republicans are pointing to the CBO report as proof of Mr. Obama's policy failure, and it is. But rather than gawking at the potential for another recession, they ought to explain the folly of "temporary, targeted" tax and spending stimulus. The fleeting tax elixir does little to change incentives to work or invest because everyone knows its impact is temporary. It also creates tremendous uncertainty as expiration nears, which can also harm incentives and growth.

The problem is political, but more important it is intellectual. The Keynesians and their allies who have dominated tax policy for most of the last decade (the 2003 bill excepted) need to be exiled back to Harvard, Princeton and Wall Street. And the Romney-Ryan Republicans need to understand and not repeat the Bush mistakes of 2001 and 2008.

Instead of "timely, targeted and temporary," tax policy should include lower rates (and fewer loopholes) that are applied as broadly as possible and are permanent. These were the principles that guided the Reagan policy of the 1980s, and they need to be revived.

[Crafty_Dog]

By PHIL GRAMM
Only twice since World War II has the U.S. unemployment rate reached 10%: It was 10.8% in 1982 and 10% in 2009. The different responses of Presidents Ronald Reagan and Barack Obama—Reagan lowering taxes and lifting regulatory and other barriers to economic growth, Mr. Obama increasing the size and reach of the government—represent polar extremes in policy. And in results.

Fifty-five months after the recession started in July 1981, the Reagan recovery had created 7.8 million more jobs than when the recession started, and real per capita gross domestic product was up by $3,091. Fifty-five months after the recession that began in December 2007, there were four million fewer Americans working than when the recession started, and real per capita GDP was down $803.

The trajectory of household income is even more telling. According to Sentier Research analysis of monthly U.S. Census data, during the current recovery American households have lost more income than they lost during the recession. In December 2007, real median household income was $54,916. It had fallen to $53,508 when the recession ended 18 months later. But by June 2012, real median family income had fallen to $50,964.

During the Reagan recovery from 1981 to 1986, real median household income on an annualized basis rose by $3,380 or 7.7%.

There are other, deeply troubling differences between the Reagan and Obama recoveries.

In July, most Americans were shocked to discover that 246,000 new people had qualified for disability benefits during the previous three months, while only 225,000 people had found new jobs. A total of 471,000 Americans left the unemployment rolls—but the difference between qualifying for disability benefits and getting a job is profound for the economy and for the people involved. Fifty-five months after the 1981 recession began, the number of Americans drawing disability benefits had actually dropped by 655,000—or 14.3%.

The explosion of disability payments is only the tip of the iceberg. Fifty-five months after the 1981 recession began, the number of people on food stamps had fallen by three million, or 13.4%. The number of food-stamp recipients since the recession that began in December 2007 has grown to more than 46 million, from 26 million—a mind-boggling 71% increase.

While part of this growth is attributable to the failed recovery, a significant amount has been created by the administration's effort to expand the food-stamp rolls. In a pamphlet on its website, the U.S. Department of Agriculture recommends that its employees provide "games, food and entertainment. . . . [P]utting SNAP [food stamp] information in a game format like bingo, crossword puzzles, or even a 'true/false' quiz . . . helps get your message across." The department is now trying to turn food stamps into an economic development program, asserting on its website that $1.00 in new food stamps generates $1.92 in "new economic activity."

The number of beneficiaries of the Aid to Families With Dependent Children program had declined by 1%, or 42,000 people, 55 months after the Reagan recession began. During the Obama recovery, the number of beneficiaries in AFDC's successor program, the Temporary Assistance to Needy Families program, has increased by 467,000, or 12%. This number can be expected to grow dramatically as a result of the administration's recent decision to waive work requirements for these welfare recipients.

Fifty-five months into the Reagan recovery, the number of Americans drawing unemployment insurance had dropped by 357,000, or 11.9%. Today there are 500,000 more Americans drawing unemployment insurance than when the 2007 recession started, an increase of 19.2%. Historical data and Congressional Budget Office projections for 2012 also indicate that in the Reagan recovery, Medicaid enrollment grew by 535,000, or 2.4%. In the Obama recovery, Medicaid enrollment has grown by more than 11 million, or 19.7%.

In summary, the Obama administration not only has failed to bring back the American economy, it has ushered in a frightening growth in dependence. A review of the data from the 126 programs that today make up America's $1 trillion welfare system shows the same basic pattern over and over again. Expenditures on means-tested welfare programs have grown 2.5 times faster during the Obama administration than in any similar time period in American history. In those welfare programs that existed during the Reagan era, the recovery resulted in either a decline in beneficiaries or a slower rate of growth. These same programs have ballooned during this administration.

When Americans voted for Barack Obama in 2008, they knew or should have known that they were choosing a bigger federal government, higher taxes and an expansion in the role that government would play in their lives and businesses. They voted for it and they got it.

But Americans were not voting for economic stagnation, an explosion of entitlements and a doubling of the national debt. Unfortunately these things go hand-in-hand. As the European experience demonstrates, the cost of big government is not just higher taxes; it's lower growth, greater dependency and fiscal crisis.

Mr. Gramm, a former Republican senator from Texas, is senior partner of US Policy Metrics.

[Crafty_Dog]

Real Unemployment Rate Is 11.4%
By DICK MORRIS
Published on DickMorris.com on September 8, 2012
Printer-Friendly Version
Economist James Fitzgibbon of the Highlander Group says that "If we impute the data samplings of non-working citizens at the labor force rate of January 2009 (when this Obama term began) we would have a Household U-3 Unemployment rate currently of 11.4%."
       
Fitzgibbon notes that the unemployment rate is being held down by 368,000 new people who have dropped out of the labor force.  He says "Labor Force Participation rate, which has fallen sharply to 63.5%, a new 31 year low reading."

Summarizing the data, he writes that the higher unemployment rate "which is much closer to seeming accurate and indicates this economic malaise and decline is worse than the contraction of 1980 - 81."  Grimly, he adds "I remember 1981, it was awful!"
       
So now we see Obama's real program for coping with unemployment:  Discourage people from even looking for work.  Encourage them to leave the labor force and rely on government handouts instead.
       
With almost 90 million working age adults not participating in the labor force, we are close to become a nation that does not work (less than two-thirds of us do), gets entitlements (50% of us do - compared to 30% in 1980), and pays no taxes (50% of us don't pay federal income taxes).
       
A new America -- the America that will emerge if we re-elect Obama.

[Crafty_Dog]

Monday Morning Outlook
________________________________________
Better Policy, Better Recovery To view this article, Click Here
Brian S. Wesbury - Chief Economist
Bob Stein, CFA - Senior Economist
Date: 9/10/2012
Politicians always shift the blame. So, hearing them say that “no one” could have cleaned up the so-called mess and fixed the economy in just a few years is not surprising.
What else do you say when after three years of recovery the unemployment rate is still at 8.1% -- down only 1.9 points since the peak almost three years ago – and real economic growth has averaged a tepid 2.2% for three years of economic recovery?
Surely, the last recession was a brutal one, which included a nasty financial crisis and a huge decline in housing prices. But the economy has been in the same or worse shape in the past and still rebounded sharply.
The bank crisis of the early 1980s was arguably more severe than in 2008 – the entire S&L industry had negative capital, oil and farm loan losses were massive and default by Latin American countries impaired large bank capital more than during the subprime crisis. Luckily, we did not have strict mark-to-market accounting back then, so multitudes of banks that were technically insolvent did not have to fail all at once.
Unemployment peaked at 10.8%. The US had double-digit inflation and interest rates. Oil prices spiked and energy was a larger share of family budgets. “Real” household income was lower in 1983 than 1969. Adjusted for inflation, the S&P 500 fell back to where it was in the early 1950s. Pension funds were in deep trouble. In other words, it’s not true that everything about the current financial and economic troubles is the “worst ever.”
What is true is that policy-makers in the 1980s acted differently. In the 1980s, the US responded to a nasty recession by trimming non-military spending, cutting marginal tax rates, holding the line on the minimum wage, de-regulating energy markets, and creating no new entitlements. In the past few years, we have gone in the exact opposite direction. Federal spending has been increased, regulations have multiplied, and government has grown. So far, tax rates have not been hiked, but everyone knows that if entitlements aren’t trimmed, higher tax rates are eventually on the way.
The differences between the two policy responses are clear. And, so are the results. Three decades ago, the economy skyrocketed into recovery. Real GDP grew at a 6.6% annual rate in 1983-84 and the jobless rate fell 3.5 points in only 21 months. This time…well…family incomes are still falling and the recovery has been tepid.
Not long ago, we would have argued that the US had learned its lesson – that the problems of the 1970s were caused by too much government – and it wouldn’t happen again. But, today, voters stand at the same fork in the road all over again. They must decide what they think of the claim that “no one” could have fixed the economy in the past few years and whether it’s appropriate for politicians to diminish our expectations. Which path will they choose? It is hugely important for the economy and financial markets.
==================================================================================================================================================
The Foundation
"Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition." --Thomas Jefferson
For the Record
 
'When somebody does not do the job, we gotta let 'em go.'
"The nation has now endured 43 months of unemployment officially above 8 percent. The details paint an even bleaker picture. No doubt many of the media outlets determined to get this president re-elected will tout the fact that the unemployment rate dropped from 8.3 percent to 8.1 percent, even as they bury the reason why: 368,000 Americans simply gave up looking for work. That exodus dropped the labor force participation rate to 63.5 percent, a 31-year low. For perspective's sake, if the number of people in labor force had remained the same as last month, the unemployment rate would be 8.4 percent. If the labor force were as large as it was when Obama took office in 2009, the unemployment rate would be a staggering 11.2 percent. Yet it gets even worse. The previous two month's jobs totals were 'revised.' 41,000 jobs were lopped off the totals for June and July, as reality caught up with the Bureau of Labor Statistics' (BLS) overly optimistic 'guesstimates.' ... And when one gets past the 'official' unemployment rate and examines the BLS's U-6 number -- representing Americans who have been out of work for six months, along with those who are involuntarily part-time workers, due to cutbacks in their days or hours -- the under-employment rate has held steady for months at around 15 percent of the workforce. Add those who have given up looking for work and that number jumps to 19 percent." --columnist Arnold Ahlert
Government
"[Friday's jobs numbers] was not the employment report either American workers or the Obama campaign were hoping for. ... Nonfarm payrolls increased by only 96,000 in August, the Labor Department said, versus expectations of 125,000 jobs or more. The manufacturing sector, much touted by the president in his convention speech, lost 15,000 jobs. Since the start of the year, job growth has averaged 139,000 per month vs. an average monthly gain of 153,000 in 2011. ... While the unemployment rate dropped to 8.1% from 8.3% in July, it was due to a big drop in the labor force participation rate (the share of Americans with a job or looking for one). ... The employment-population ratio is perhaps the broadest measure of the health of the labor market. It just shows how many Americans -- not in the military or in prison -- as a share of the population actually have some sort of a job. That number fell last month to 58.3%, just off its Great Recession lows. ... Again, a terribly anemic report that shows a stagnant economy -- not one ready to boom." --American Enterprise Institute's James Pethokoukis
What do you think?
Re: The Left
"Now to that 46.7 million number. That's the number of Americans who are now depending on food stamps to feed their families. Bloomberg.com quotes Agriculture Secretary Tom Vilsack as saying: 'Too many middle-class families who have fallen on hard times are still struggling. Our goal is to get these families the temporary assistance they need so they are able to get through these tough times and back on their feet as soon as possible.' Whoa! Check Please! Too many middle-class families have fallen on hard times? The same middle class families Obama has been focused on for each and every one of the past 1,325 days since his Inaugural (not counting fund-raisers and golf outings)? No one -- with the possible exception of graduate students -- thinks that qualifying for Food Stamps is a good thing. ... The failure to help middle class families lies directly at the feet of Barack Obama. This astonishing 46.7 million number has nothing to do with Republicans wanting to change the tax code. The tax code has been exactly the same during Obama's entire term. Under Obama's guidance about 1.5 million additional middle class families' incomes have slipped to the point that they need Food Stamp assistance. And that's not since January 2009. That's just in the past year. ... Fewer Americans working. More Americans on food stamps. Is it why Obama thinks he deserves to be re-elected?" --columnist Rich Galen
Culture
"One in seven Americans is on food stamps. According to the left, this high rate of participation is part of what makes America exceptional. So boasts liberal political commentator Alan Colmes in [last] Monday's Wall Street Journal op-ed 'How Democrats Made America Exceptional.' Since the food stamps program began in the 1960s, the participation rate has soared from roughly one in 20 Americans to where it is today. Apparently, this is the liberal idea of progress. And so anxious are they to make even greater strides that the Department of Agriculture was busily working to recruit more participants. ... Removing work requirements from the few welfare programs that contain them seems to be the Obama Administration's method of operation. President Obama's 2009 stimulus suspended the food stamps work requirement through September 2010, and his next two budgets attempted to maintain the suspension. Then, on July 12 his Administration announced it would begin waiving the work requirements that were the heart of the successful 1996 welfare reform law. Personal responsibility and work are key American principles. Food stamps and other welfare programs should promote these principles by requiring all able-bodied recipients to work, prepare for work, or at least look for a job in order to receive assistance." --Heritage Foundation's Rachel Sheffield

[DougMacG]

"Three decades ago (under Reagan), the economy skyrocketed into recovery. Real GDP grew at a 6.6% annual rate in 1983-84 and the jobless rate fell 3.5 points in only 21 months.

If Wesbury was able to find optimism to write about over the last 4 years, he is going to LOVE 24 years of the Romney, Ryan and Rubio administrations.

[JDN]

The government's sale of about $18 billion shares of stock in rescued insurance giant American International Group locks in a minimum $12.4-billion profit for taxpayers on one of the most controversial bailouts of the financial crisis, the Treasury Department said late Monday.

http://www.latimes.com/business/money/la-fi-mo-aig-bailout-treasury-profit-20120910,0,6421410.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fmostviewed+%28L.A.+Times+-+Most+Viewed+Stories%29

[DougMacG]

The government's sale of about $18 billion shares of stock in rescued insurance giant American International Group locks in a minimum $12.4-billion profit for taxpayers on one of the most controversial bailouts of the financial crisis, the Treasury Department said late Monday.

President Obama was quick to point out (?) that the credit for this responsible use of artificially manufactured public funds most certainly goes to then Pres. George W Bush for stopping the financial meltdown and making his one-term proposition recovery possible.

[DougMacG]

Getting back to CCP on a great post over on Media Issues: http://dogbrothers.com/phpBB2/index.php?topic=1066.msg65512#msg65512

The questions posed partly apply to a number of threads, Pres 2012, but I thought I would take it up here.  

Excerpt from CCP:

"... Today Art Laffer was on FOX and was asked specifically and directly an important question that goes to the heart of today's neo civil war.

He was asked why is should people believe that "trickle down" economics is better for the majority of people?  Do not the rich keep getting richer and the rest of the people stagnate?  Why not increase tax rates on higher earners, Clinton did it and the economy boomed.  Laffer was a complete failure at articulating a logical rational simple response that most people would agree to.

I guarantee Doug McG would do a far better job at answering these questions ina way the average could understand and immediately agree to.

I do not understand why these core questions are not being answered by the MR team.  All they do is talk "jobs", the "debt", and other buzz words that DO NOT specify why history proves them/us right and the socialists wrong.

If they can learn to answer these types of questions then the game is won. ..."
-----------------

First off, it warms the heart to receive a nice compliment like that, but I am an armchair commenter compared to a legend like Prof. Laffer.

Explaining freedom is quite a challenge and quite a skill is required.  I struggle to write the posts here but the act of trying helps me to have thought these questions through when the issues come up in real conversations and debates.  Every once in a while someone lays out the freedom argument so plain and simple that it all makes sense.  Reagan had that gift.  Gilder in Wealth and Poverty.  Having government do less is not sexy and easy to sell.  I remember Jack Kemp saying what we need is not a war against the rich, we need more people to become rich.  

Speaking to the opposite, the crony government state case I think is much easier to make. I remember Pres. Bill Clinton's state of the unions always went like this for about 100 minutes: we can do more for police (not a federal function), we can do more for teachers (not a federal function), we can do more for infrastructure (largely not a federal function), we can do more for struggling parents (some targeted program you have no shot at ever seeing) and so on.  How about cure diseases, how can anyone oppose any of that?

Bill Clinton in Charlotte said that a potential Romney administration would be a "double down on trickle down".

Trickle down is a lie in itself and a straw argument.  Trickle down is a term only used by people who oppose growth economics and want wealth creation slowed and punished.

There is no tax proposal on the table now or ever to give something to rich people in the hopes that it will trickle down to working people.

The rich do not pay less, that is a fallacy.  The top 20% of earners make 50% of the income and pay 70% of the taxes.

Extending tax cuts or creating new ones "gives" nothing to anyone.  A tax rate only defines what portion you can keep out of what you earn.  "Gifts" are on the spending, entitlements and welfare side of the ledger with no legitimacy on the tax side.  The deception is intentional.

We live and operate in a interconnected and interdependent economy.  Labor depends on capital just as capital depends on labor.  These are not different people.  As it turned out in the gulf oil spill, the number one class of share holders of British Petroleum turned out to be  the pensioners of Britain.  A store or a service company relies on customers, and suppliers.  Anyone can start a company, buy a share of stock or apply for a job in a free economy.  We do not have classes of people, middle or otherwise.  In fact, 70% of children did not end up in their parent's quintile of income.

We just lived through one of the greatest attacks on capital possible and we learned that when you handcuff investors and threaten them with greater and greater penalties for accomplishment, labor is hurt the worst.  An investor who pulls back his money still has most of his money, but the people who would have worked there do not have those jobs or any other if the problems is all across the economy.  A downside to federal control of industry and economy.  Today the stock market is glowing in value, barriers to entry block out potential competition for the listed and entrenched companies, while the labor market is in the tank.  Unemployment is at roughly 20% if you count people working part time that can't find full time and count the increase of people leaving the workforce among the unemployed.

What is the Obama administration doing wrong?  50,000 new regulations in 42 months and threatening to raise all relevant tax rates.  Uncertainty in all regards is at third world levels.

Example:  The new federal definition of a full time employee is eighteen pages long.  http://washingtonexaminer.com/feds-need-18-pages-to-define-full-time-for-obamacare/article/2507528  Why is that important?  Number of full time employees is a key criteria in the plethora of federal strangulations.  Please search the article posted on 'why there are so many 49 employee companies in France' for a clue.

It is not "trickle down" to take an already progressive tax code and lower and simplify the rates for everyone across the board.  It is pro-growth or supply side economics.

Marco Rubio for one has been consistently clear on this.  Romney and Ryan, sometimes.  

You cannot balance the budget or solve the unemployment crisis without encouraging robust job creation in the private sector.  For every government idea or piece of legislation you need to ask one question: what does this do to grow jobs in the private sector?   A surcharge on millionaires, does that grow jobs?  No.  Does increasing progressivity in the tax code grow jobs?  No. An Obamacare excise tax on all medical device sales, does this grow jobs?  No.  Blocking the drilling in ANWR and blocking a pipeline from Canada, does this grow jobs?  No.  QE4 and another round of not exactly shovel ready crony expenditures, does this grow jobs across the board?  No.  50,000 new regulations, does this grow jobs?  No.  Taking over an entire industry to bureaucratic control, stifling innovation, does this grow jobs?  No.  Regulations for public leave, plant closing notices, mandatory health coverages, does this kind of well intentioned do-gooding grow jobs?  No.

Does a better policy toward allowing energy production help employment in that industries and nearly all other industries?  Yes.  Do lower, simpler and more predicable marginal rates on income help job creation?  Yes.  Would getting our corporate down from worst in the world help job creation in America?  Yes.  Would eliminating all unnecessary regulations at the federal level increase job creation?  Yes.

Is there anything in the past, present or future Obama agenda that across the board falls on the side of growing jobs?  No.

Is the entire original Romney 59 point economic plan all about increasing job creation?  Yes.

You can't stomp out capital formation and economic freedom and put the focus on government controlled equality of outcomes without hurting employment and job creation.  I don't know how to say that in a way that persuades anyone not inclined to believe it, but it is empirically true.


Going back to the original quotation:  "Why not increase tax rates on higher earners, Clinton did it and the economy boomed."

This is not true.  Clinton raised taxes in his first action and the economy only sputtered ahead, a very weak recovery.  When he switched to the Dick Morris triangulate tact, he lowered capital gains tax rates, ended welfare as we knew it and deregulated industries.  Also he passed hemisphere-wide free trade with majority R support and majority D opposition.  It is quite a clever buffoon in Clinton to now tell us that job growth then, in the tens of millions, was a victory of Democratic policies over Republican policies in the context of the 2012 election choices.

As it was said of the Clintons at the time, they lie with such ease.

[Crafty_Dog]

How Quantitative Easing Helps the Rich and Soaks the Rest of Us
And why the Occupy movement should be up in arms.
Anthony Randazzo | September 13, 2012
•   
The decision is in: Unlimited quantitative easing. That was the announcement from the Federal Open Market Committee this afternoon, launching a third round of purchases of securities in a bid to boost the economy and reduce unemployment. This time, Federal Reserve Chairman Ben Bernanke and crew are pledging to buy $40 billion per month until the economy improves. The Fed's policy committee also extended its zero-interest rate policy until“at least mid-2015.” If QE3 lasts that long, the Feds will be printing at least another $800 billion to buy mortgage-backed securities.
•   
It won’t be a surprise to read conservatives lambasting this as unconventional monetary policy meant to help re-elect President Obama. And inflation hawks have already started screeching. But the loudest cry of “for shame” should be coming from the Occupy Wall Street movement.
Quantitative easing—a fancy term for the Federal Reserve buying securities from predefined financial institutions, such as their investments in federal debt or mortgages—is fundamentally aregressive redistribution program that has been boosting wealth for those already engaged in the financial sector or those who already own homes, but passing little along to the rest of the economy. It is a primary driver of income inequality formed by crony capitalism. And it is hurting prospects for economic growth down the road by promoting malinvestments in the economy.

How is the Federal Reserve contributing to regressive redistribution, income inequality, and manipulated markets? Let’s flesh this out a bit.
Last month, Bernanke said that quantitative easing had contributed to the rebound in stock prices over the past few years, and suggested this was a positive outcome. “This effect is potentially important, because stock values affect both consumption and investment decisions,” he argued, apparently under the belief that the Fed has a third mandate to support rising stock prices.

This is ironically a trickle down monetary policy theory, where rising stock prices mean more wealth and more consumption that trickles down the economic ladder. One problem with this idea is that there is a gigantic mountain of household debt—about $12 trillion worth—that is diverting away any trickle down. An even worse assumption is that the stock market really reflects what is going on in the real economy.

Where the Occupy movement should really be teed off is when you consider that most equity shares in America are owned by the wealthiest 10 percent. That is not inherently a problem—wealthier individuals with more disposable income will have more ability take ownership stakes in companies than those in lower income brackets. And it is not a call for class warfare. However, it does mean that when the Fed engages in quantitative easing it is providing a benefit to a very narrow segment of society at the expense of others (either through future inflation or through the cost of raising taxes to pay for increased federal debts). That is the definition of crony capitalism.

At the same time, all Americans have seen the prices of basic goods increase over the past few years in large part due to rising commodities prices. The whole idea of QE is to drive investors out of lower risk investments like mortgage backed securities and government debt and get them to put that money in “more productive”use—lend it, build skyscrapers, invest in technology, etc. Since there is little confidence about the future of the economy, many investors have crowded into the stock market with their money, and still others have invested in commodities.

The problem is that investing in commodities can push up prices on things like gas, meat (because of feed corn prices), bread (because of wheat prices), and even orange juice. There certainly have been other contributors to commodities prices going up, but if the Fed has boosted stocks, they've boosted commodities too. So not only are the cronies gaining from quantitative easing, there is a negative wealth effect too.

The cronyism doesn’t end there. In a Dallas Fed paper released in August, OPEC chief economist William White points out that easy monetary policy favors “senior management of banks in particular.” And even Bernanke himself suggested (as if it was a good thing) that quantitative easing purchases “have been found to be associated with significant declines in the yields on both corporate bonds and MBS.” Translation: the Federal Reserve has made it artificially cheaper for corporations to borrow money and has pushed up the prices of houses (benefiting homeowners but hurting homebuyers).

Correct me if I’m wrong, but I thought cheap loans allowing businesses to leverage up and juiced housing prices were key parts of what got us into this mess?

All of this might be acceptable to some if quantitative easing was helping the American economy recover. The reality is that quantitative easing has made it cheaper for the government to borrow, has artificially propped up the housing market (making it take longer to recover), and has dramatically manipulated the distribution of capital in financial markets. And the economy has not been in recovery.

The plans announced today will exacerbate pre-existing malinvestment and income inequality. What is this continuous round of purchases going to do? It won’t get banks lending any more than they already are. And even if it did, households and small business still have a lot of debt that will keep them in a deleveraging state for a while. It won’t help the housing market bottom out, clear away toxic debt, and end the wave of foreclosures that need to process. It is not going to push up incomes, create new jobs, or change the technological revolution that is altering the face of employment in America.

To put it simply: More quantitative easing is not going to move the dial much on the growth meter.

Taken together, the crony capitalism and negative wealth effects of quantitative easing should clearly give pause. The fact that QE promotes activities that led to the housing bubble should have stopped its progression as an idea a long time ago, especially since these problems are greater than any gain that would come from this now perpetual pace of money creation.

If there is a time to head down to Zuccotti Park and raise some cardboard in opposition to the continuation of such a devastatingly failed policy, it is now.

[DougMacG]

It was Bush, then the headwinds from Europe, unfair trade practices in China, ATM machines, Republican obstructionism.  Now they say it was the drought.

It was not 50,000 new regulations in 42 months or two dozen new taxes coming online with Obamacare or any other attack on employers, investors or businesses.
----------------

U.S. 2Q GDP Growth Revised Down to 1.3%

http://www.foxbusiness.com/economy/2012/09/27/us-2q-gdp-growth-revised-down-to-13/#ixzz27jiHJsHe

"U.S. economic growth was much weaker than previously estimated in the second quarter as a drought cut into inventories, setting the platform for an even more sluggish performance in the current quarter against the backdrop of slowing factory activity.

Gross domestic product expanded at a 1.3 percent annual rate, the slowest pace since the third quarter of 2011 and down from last month's 1.7 percent estimate, the Commerce Department said in its final estimate on Thursday.

Output was also revised down to reflect weaker rates of consumer and business spending than previously estimated. Outlays on residential construction export growth were also not as robust as had been previously estimated."

Who knew?

For recovery comparison purposes, the 2nd qtr of 1984 growth under Reagan growing out of the Carter malaise was 9.3% (http://online.wsj.com/article/SB10001424052702303962304577510691430926320.html), more than 7 times greater.  They probably had more rain.  Reagan went on to win 49 states.  Obama and his puppet pollsters I think blew a ten point lead with the decline by design strategy.

[DougMacG]

Responding to NY Times Article: In Romney-Obama ‘Redistribution’ Debate, a Gray Area, Eduardo Porter
http://www.nytimes.com/2012/09/26/business/obama-and-romneys-redistribution-debate-has-a-gray-area.html?adxnnl=1&adxnnlx=1348981253-bNvIBz3pN86dxBuUuzvppw
--------------------------------------------

Redistribution or Growth, Choose One

Redistribution analysis provides answers to the wrong question in the income debate. The Gini index Eduardo Porter (NY Time) references tells us only how your income compares with others, not how well anyone is doing. The question should be - which of the alternatives on the table will result in more income to more families going forward, no matter where you sit today in the income spectrum.

The Obama economy has worked the fixed-pie economic model to death, proving its underlying assumptions false. Central to redistribution is that disincentives don't matter and growth will rebound no matter the policies. President Obama assumes that capital gains tax rates, already scheduled to go up at the end of this year by more than 50% on higher income investors, will have no detrimental effect on the job situations of middle income workers. It will actually help them, he argues. But we know that isn't true. He admits knowing the contradiction when he accuses his opponent of moving jobs overseas in response to the same employment disincentives.

Employment requires capital and capital requires after tax return on investment. When we were approaching the last fiscal cliff in 2008 with tax rate hikes imminent, the selloff became epidemic. Those rate increases never happened but the damage was done. Millions of jobs were lost and trillions in wealth was destroyed. Worse for investment decisions than high marginal tax rates is uncertainty about future, high marginal tax rates. That uncertainty has been a continuous feature of the Obama economy from the day that the Pelosi-Reid-Obama took majority in congress with unemployment at 4.6%.

The question is not how much do you make compared to your neighbor but simply how much will you make. Paying the full array of your household bills, gas in the car, college and saving for retirement has nothing to do with what your neighbor or what any rich guy across town is making.

Mr. Porter quite accurately points out the irony that inequality increased more under Clinton than it did under the first Pres. Bush, but that is because the economy, at least in the last 6 years of Clinton, was growing much faster. Pres. Clinton had 2 years of slow growth, then changed course after the midterm election and the change of congress. Pres. Clinton cut capital gains rates and backed away from national healthcare while Pres. Obama clings to his redistributive, anti-growth agenda. The pro-growth policies that Pres. Clinton adopted brought prosperity, growth and at least a temporarily balanced budget. But growth means inequality because it is tied to the freedoms and choices of working, saving, investing and participating in the economy to create that growth. Conversely, the George W Bush presidency featured 51 months of job growth but according to Porter's own chart, the time when inequality fell was when the economy was plunging disastrously.

The key measure is upward income mobility, not income inequality. How likely are you to grow your income, over the next 4 years or over your lifetime. In a class-based, redistributive economy, the answer to your growth potential is not much. It is expanding economic freedom that offers the best opportunity to improve your economic situation. Don't grow the burden of government. Ease its excessive burdens.

After 4 years on the current path we know that penalties on investment do not translate into rewards for workers. Investment will pull back, sit on the sidelines or move overseas. Not just taxes, but with 50,000 new regulations the climate for startup companies, the engine of future growth, has never been worse. This helps no one.

Under Pres. Obama we have had more months above 8% unemployment than in all presidential terms combined since Truman, when the Bureau of Labor Statistics started tracking monthly unemployment. The real unemployment rate counting underemployment and workers lost from the workforce is close to 20%. For college grads today, the percentage failing to get a job in their field is worse than that.

Robbing Peter to pay Paul has proven to be no way to grow the economy, to improve opportunities or to be in a stronger position to help the truly needy. Printing money and running deficits in the trillions only worsens the future burden.

The 25 freest economies in the world earn per capita income 7 times greater than the 25 least free economies. Freer economies provides more income for more people.  Inequality is a fact, but it is freedom that leads to national prosperity.  - Doug

[Crafty_Dog]

"Americans must be wondering how much more of this 'recovery' they can afford. New figures from the Census Bureau's Current Population Survey, compiled by Sentier Research, show that the typical American household's real (inflation-adjusted) income has actually dropped 5.7 percent during the Obama 'recovery.' Using constant 2012 dollars (to adjust for inflation), the median annual income of American households was $53,718 as of June 2009, the last month of the recession. Now, after 38 months of this 'recovery,' it has fallen to $50,678 -- a drop of $3,040 per household. Yet it gets worse. Amazingly, incomes have dropped even more during the 'recovery' than they did during the recession. In fact, they've dropped more than twice as much as they did during the recession. From the start to the end of the recession, the real median income of American households fell $1,413, or 2.6 percent. From the end of the recession to the present day, it has dropped $3,040, or 5.7 percent. This begs the question: What kind of 'recovery' compares unfavorably with the recession from which it's ostensibly recovering?" --The Weekly Standard's Jeffrey H. Anderson

[Crafty_Dog]

Around the Nation: Obama's America
Barack Obama's Labor Department came to his rescue after Wednesday's debate debacle, announcing this morning that 114,000 jobs were added in September, and revising upward by 86,000 the numbers for July and August. The headline unemployment rate fell from 8.1 percent in August to 7.8 percent, a 44-month low.

October surprise!

A little digging, however, tells a far different story. For example, in order for the rate to drop 0.3 percentage points 31 days before a presidential election, 456,000 people would have had to either find work -- or drop out of the labor force. So what happened to 342,000 people?

Also, buried in this Associated Press dispatch is a notable caveat: "Still, many of the jobs added last month were part time. The number of people with part-time jobs who wanted full-time work rose 7.5 percent to 8.6 million." Indeed, the U-6 unemployment rate -- a better measure because it includes the underemployed and those who have given up -- remained unchanged at 14.7 percent. Though on the "bright" side, government unemployment is down from 5.7 percent in July to just 4.3 percent in September.
As James Pethokoukis of the American Enterprise Institute put it, "If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%. If the participation rate had just stayed steady since the start of the year, the unemployment rate would be 8.4% vs. 8.3%. Where's the progress?"
While millions upon millions remain unemployed or underemployed, Obama and his campaign are trying to claim progress with a new number: five million jobs "created" by his administration. In Wednesday's debate, the president also made the claim, "Over the last 30 months, we've seen 5 million jobs in the private sector created."

That's interesting because in August, the campaign was bragging about creating 4.5 million jobs. We know math is hard, but September's job numbers weren't enough to raise it from 4.5 million to 5.1 million. Besides, the administration is cherry-picking data. As the AP notes, there are only 325,000 more jobs than when Obama took office. The White House doesn't begin counting until halfway through Obama's first year.

Against that backdrop, we remind voters of that "stimulus" spending binge, which the White House promised would keep headline unemployment, at worst, below 8 percent, and by September 2012 it would be just 5.6 percent. When Democrats took control of Congress in 2007, unemployment was just 4.6 percent.
What else do we have to show for all that spending? Well, the official numbers for FY2012 are in and the deficit reached $1,275,901,078,828, easily topping $1 trillion for the fourth straight year. While that's lower than the high-flying days of Democrat hegemony in Washington in 2009 and 2010, it's higher than 2011. Total U.S. debt at the end of September reached $16,066,241,407,385, or roughly $136,690 per household.

[Crafty_Dog]

http://www.aei-ideas.org/2012/10/the-sickly-stagnant-september-jobs-report/

[Crafty_Dog]

http://scottgrannis.blogspot.com/2012/10/the-drop-in-unemployment-rate.html

[G M]

The sudden drop in unemployment was caused by a YouTube video or something......

http://scottgrannis.blogspot.com/2012/10/t :wink:he-drop-in-unemployment-rate.html

[DougMacG]

Last 2 years, left to right:
0.88% Job Growth, 4.58% Not in Labor Force growth, 2.2% Population Growth
Data source BLS

Job growth less than population growth equals economic decline.  Right?

http://www.powerlineblog.com/admin/ed-assets/2012/10/PopulationandJobs014.png

[DougMacG]

Sept. 2012 civilian labor force                                     155.063 million
Sept. 2012 – people who want a job but not looking   6.727 million
Adjusted labor force                                                    161.79 million

Employed in Sept (household survey)                        142.974 million
Employed as % of adjusted labor force:                     (142.974 / 161.79) = 88.37%
Unemployed as % of adjusted labor force                  (100.00 – 89.27) = 11.63%   

http://www.foxbusiness.com/government/2012/10/05/real-unemployment-rate/

[G M]

Why isn't this  brought up by Romney?

Sept. 2012 civilian labor force                                     155.063 million
Sept. 2012 – people who want a job but not looking   6.727 million
Adjusted labor force                                                    161.79 million


Employed in Sept (household survey)                        142.974 millionp
Employed as % of adjusted labor force:                     (142.974 / 161.79) = 88.37%
Unemployed as % of adjusted labor force                  (100.00 – 89.27) = 11.63%   

http://www.foxbusiness.com/government/2012/10/05/real-unemployment-rate/

[Crafty_Dog]

BTW, I claim a minor call here:  I have said more than once that Romney should be using the "adjusted labor force" number all along for precisely what has happened here-- now that the official number has gone done below 8%, the fleshing out of the number runs the risk as being seen as carping by those who don't follow these things closely.

[G M]

If anyone else was president......

http://articles.chicagotribune.com/2012-10-07/news/ct-met-black-middle-class-austerity-20121007_1_black-middle-class-black-households-national-rate

In August, the National Urban League's State of Black America 2012 report found that nearly all the economic gains that the black middle class made during the last 30 years have been wiped out by the economic downturn.

[G M]

[Crafty_Dog]

Intriguing chart.  Would you please also post that in the Budget thread?

[Crafty_Dog]

By JACK WELCH
Imagine a country where challenging the ruling authorities—questioning, say, a piece of data released by central headquarters—would result in mobs of administration sympathizers claiming you should feel "embarrassed" and labeling you a fool, or worse.


Soviet Russia perhaps? Communist China? Nope, that would be the United States right now, when a person (like me, for instance) suggests that a certain government datum (like the September unemployment rate of 7.8%) doesn't make sense.

Unfortunately for those who would like me to pipe down, the 7.8% unemployment figure released by the Bureau of Labor Statistics (BLS) last week is downright implausible. And that's why I made a stink about it.

Before I explain why the number is questionable, though, a few words about where I'm coming from. Contrary to some of the sound-and-fury last week, I do not work for the Mitt Romney campaign. I am definitely not a surrogate. My wife, Suzy, is not associated with the campaign, either. She worked at Bain Consulting (not Bain Capital) right after business school, in 1988 and 1989, and had no contact with Mr. Romney.

The Obama campaign and its supporters, including bigwigs like David Axelrod and Robert Gibbs, along with several cable TV anchors, would like you to believe that BLS data are handled like the gold in Fort Knox, with gun-carrying guards watching their every move, and highly trained, white-gloved super-agents counting and recounting hourly.

Let's get real. The unemployment data reported each month are gathered over a one-week period by census workers, by phone in 70% of the cases, and the rest through home visits. In sum, they try to contact 60,000 households, asking a list of questions and recording the responses.

Some questions allow for unambiguous answers, but others less so. For instance, the range for part-time work falls between one hour and 34 hours a week. So, if an out-of-work accountant tells a census worker, "I got one baby-sitting job this week just to cover my kid's bus fare, but I haven't been able to find anything else," that could be recorded as being employed part-time.

The possibility of subjectivity creeping into the process is so pervasive that the BLS's own "Handbook of Methods" has a full page explaining the limitations of its data, including how non-sampling errors get made, from "misinterpretation of the questions" to "errors made in the estimations of missing data."

Bottom line: To suggest that the input to the BLS data-collection system is precise and bias-free is—well, let's just say, overstated.

Even if the BLS had a perfect process, the context surrounding the 7.8% figure still bears serious skepticism. Consider the following:

In August, the labor-force participation rate in the U.S. dropped to 63.5%, the lowest since September 1981. By definition, fewer people in the workforce leads to better unemployment numbers. That's why the unemployment rate dropped to 8.1% in August from 8.3% in July.

Meanwhile, we're told in the BLS report that in the months of August and September, federal, state and local governments added 602,000 workers to their payrolls, the largest two-month increase in more than 20 years. And the BLS tells us that, overall, 873,000 workers were added in September, the largest one-month increase since 1983, during the booming Reagan recovery.

These three statistics—the labor-force participation rate, the growth in government workers, and overall job growth, all multidecade records achieved over the past two months—have to raise some eyebrows. There were no economists, liberal or conservative, predicting that unemployment in September would drop below 8%.

I know I'm not the only person hearing these numbers and saying, "Really? If all that's true, why are so many people I know still having such a hard time finding work? Why do I keep hearing about local, state and federal cutbacks?"

Enlarge Image


Close
Corbis
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I sat through business reviews of a dozen companies last week as part of my work in the private sector, and not one reported better results in the third quarter compared with the second quarter. Several stayed about the same, the rest were down slightly.

The economy is not in a free-fall. Oil and gas are strong, automotive is doing well and we seem to be seeing the beginning of a housing comeback. But I doubt many of us know any businessperson who believes the economy is growing at breakneck speed, as it would have to be for unemployment to drop to 7.8% from 8.3% over the course of two months.

The reality is the economy is experiencing a weak recovery. Everything points to that, particularly the overall employment level, which is 143 million people today, compared with 146 million people in 2007.

Now, I realize my tweets about this matter have been somewhat incendiary. In my first tweet, sent the night before the unemployment figure was released, I wrote: "Tomorrow unemployment numbers for Sept. with all the assumptions Labor Department can make..wonder about participation assumption??" The response was a big yawn.

My next tweet, on Oct. 5, the one that got the attention of the Obama campaign and its supporters, read: "Unbelievable jobs numbers..these Chicago guys will do anything..can't debate so change numbers."

As I said that same evening in an interview on CNN, if I could write that tweet again, I would have added a few question marks at the end, as with my earlier tweet, to make it clear I was raising a question.

But I'm not sorry for the heated debate that ensued. I'm not the first person to question government numbers, and hopefully I won't be the last. Take, for example, one of my chief critics in this go-round, Austan Goolsbee, former chairman of the Obama administration's Council of Economic Advisers. Back in 2003, Mr. Goolsbee himself, commenting on a Bush-era unemployment figure, wrote in a New York Times op-ed: "the government has cooked the books."

The good news is that the current debate has resulted in people giving the whole issue of unemployment data more thought. Moreover, it led to some of the campaign's biggest supporters admitting that the number merited a closer look—and even expressing skepticism. The New York Times in a Sunday editorial, for instance, acknowledged the 7.8% figure is "partly due to a statistical fluke."

The coming election is too important to be decided on a number. Especially when that number seems so wrong.

Mr. Welch was the CEO of General Electric for 21 years and is the founder of the Jack Welch Management Institute at Strayer University.

[bigdog]

http://www.cbo.gov/publication/43663?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_content=855024&utm_campaign=0

[DougMacG]

"CBO's Latest Estimate of the Cost of the TARP: $24 Billion"

George Bush is vindicated. )

People get the terms confused as we go through the recovery from hell, with Tarp, Stimulus1, Stimulus 2... QE1, QE2, QE ongoing, etc.

TARP was the late 2008 program that stabilized banks and non-banks in the heat of the crisis, a joint policy of the Bush administration, the Fed, Bernamke, Geithner at the NY Fed, and signed on by a Dem House and Senate and both the McCain and Obama campaigns.

The complaint of the right wing was more the over-reach of government than the dollar amount.  Bachmann later asked Bernanke and geithner in Congressional suncommittee, where can you point to in the constitution does it give the authority to bail out non-banks like AIG?

[G M]

http://hotair.com/archives/2012/10/15/were-in-the-midst-of-a-huge-recovery-says-flotus-who-knew/

We’re “in the midst of a huge recovery,” says FLOTUS. Who knew?

posted at 2:41 pm on October 15, 2012 by Erika Johnsen

Is this the campaign meme that Team Obama is going to aggressively start pushing at us with three weeks to go? Of course they often iterate that things are going better than they are, that these things take time, and that there were always going to be “bumps in the road” on the way to recovery, but are they now offensively trying to get us all to deny the signs of reality staring us in the face and just lure us into the attractive self-deception that we’re actually in the middle of a glorious economic rebound? That seems to be the story that Michelle Obama was shooting for during a radio interview on Friday, but, call me crazy… somehow I’m just not seeing it. Via CNSNews:
Mrs. Obama said, “I mean, we are seeing right now that we are in the midst of a huge recovery. Right?  Because of what this president has done.” …
Obama: “Pulled this economy from the brink of collapse when we were losing 800,000 jobs a month. Now were gaining every — throughout most of his presidency, we’ve been adding jobs to this economy because of what he’s been doing. The stock market has doubled. Housing prices are rising. Foreclosure rates are lowering. But in the face of that, you still have people trying to convince us that things aren’t better.” …
Obama: “And that just doesn’t make sense. Now, Barack of all people knows that we still have a long way to go to completely rebuild the economy. But we’re headed in the right direction. And when you see all of that truth, it’s hard to understand why are people blocking this?
The Obama campaign struck much the same tone in a brand new ad out today in which various Main-Streeters attest to the ways in which their businesses have improved because of the president’s policies since the official recession:

Well, if we can all just force ourselves to forget the pesky facts of Barack Obama’s tenure, like the fact that median household incomes have shrunk; that our high unemployment rate has remained near-stagnant and only dropped slightly because of so many people dropping out of the labor force; that economists are predicting the unemployment rate isn’t likely to get better anytime soon; that our current economic growth, practically isn’t; and etcetera… then sure, I suppose we can all suddenly delude ourselves into embracing Team Obama’s newfound pride over the president’s economic record. My brain could use a rest anyways.

[G M]

http://www.powerlineblog.com/archives/2012/10/our-awful-economy-in-one-chart.php

Our Awful Economy, In One Chart

Michelle Obama says we are “in the midst of a huge recovery.” That claim is laughable to anyone who has lived through the last four years; this simple chart from the Senate Budget Committee highlights one of the central failings of Obamanomics: people are leaving the labor force faster than they are entering it. Since Obama became president ten times as many people have been added to the roster of those not in the labor force, than have been added to the labor force:




That record of futility can never have been approached in American history.

[G M]

Memo To Michelle: What A 'Huge Recovery' Looks Like


Read More At IBD: http://news.investors.com/ibd-editorials/101612-629544-michelle-obama-wrong-on-huge-recovery-.htm

[G M]

Dinesh D'Souza's movie looking even more accurate.

http://www.washingtonpost.com/business/economy/officials-obama-ready-to-veto-a-bill-blocking-fiscal-cliff-without-tax-hike-for-rich/2012/10/17/64400224-1870-11e2-9855-71f2b202721b_story.html