Earlier this week, President Obama repeated his claim that, while the current economy isn’t perfect, at least “we yanked an economy out of what could have been a second Great Depression.”  To date, no one has contested the validity of this claim.  They should, because that’s not what the Obama Administration said when they took office.

In January 2009 the new Obama Administration issued its now-infamous report titled “The Job Impact of the American Recovery and Reinvestment Plan,” more commonly known as the “Romer/Bernstein Report” after the President and Vice President’s economists who authored it.  This report included estimates of what would  happen if the Administration’s stimulus plan was enacted, and what would happen if it wasn’t – presumably casting the U.S. into “another Great Depression.”  This chart displays the unemployment rates the Administration forecast in that January 2009 report if their stimulus plan passed (the “with stimulus” line), if their stimulus plan didn’t pass (the “without stimulus” line), and what actually happened:

Notice something important?  The unemployment rate the Administration in January 2009 predicted the U.S. would have now without their “yank(ing) the economy out of another Great Depression” (about 8 percent in the “without stimulus” line) is less than the current official U.S. unemployment rate (9.1 percent in May 2011).  Clearly, this data doesn’t support the President’s claim that the Administration “yanked the economy out of another Great Depression.”

(more…)

The Economic Policy Institute (EPI), a union-funded organization, has estimated that the cuts contained in the CR would result in a loss of 994,000 jobs. This analysis is based on a highly simplified economic analysis that has repeatedly been demonstrated to be wildly inaccurate.

EPI’s Jobs Analysis – Even the White House Thinks It Is Wrong

• EPI’s track record on forecasting the impact of policies on job creation is even rejected by the White House.
  • For example, EPI estimates that the U.S.-Korea Trade Promotion Agreement would result in a loss of 159,000 jobs.
  • In contrast, the President has said repeatedly that this trade agreement will create 70,000 jobs.

Romer/Bernstein Analytical Methods – Wrong Before, Wrong Now

(more…)

THEN (April 4, 2010):
Administration officials say growing labor force is “a great sign”

Behind the high unemployment rate, “there’s just been a tremendous increase in the labor force,” Christina Romer, chairman of the president’s Council of Economic Advisers, said on NBC’s ‘Meet the Press.’  “Over the last three months, we’ve added more than a million people to the labor force. And that’s actually, that’s a great sign,” Romer added. “That’s a sign that people that might have been discouraged dropped out because of the terrible recession, have started to have some hope again and are looking for work again.”

NOW (February 4, 2011):
What will the Administration say now that the labor force is shrinking?

Facts reveal sharp declines in the labor force since the March 2010 data Romer described above, with especially steep drops in the last two months.  According to the Bureau of Labor Statistics, the labor force has shrunk by 709,000 since March 2010.  Given this reality, will the Administration now say this trend is a “not great sign” indicating people have “lost hope again”?

(more…)

For the last two years, Washington has ignored the plight of the American people and job creators. Instead, a Democratic-led Congress saddled them with policies that fostered uncertainty and eliminated jobs. Democrats’ continued pursuit of misguided economic policies and reckless spending have driven our debt to $14 trillion – a level that has cost the U.S. economy as many as 1 million jobs and that continues to undermine our nation’s economic recovery.

In January of 2009, Christina Romer and Jared Bernstein, then President Obama’s chief economic advisors, put together an analysis predicting that the Democrats’ stimulus package would “save or create” at least 3 million jobs by the end of 2010. Similarly, Romer and Bernstein claimed that passage of the stimulus package would keep the unemployment rate under 8 percent, falling to 7 percent by the end of 2010. But since that time, the unemployment rate has remained above 9 percent for 20 consecutive months, and there are 6.8 million fewer jobs than Romer and Bernstein predicted in their now-infamous report.

The arrival of 2011 has ended the era of the failed economic policies embraced by the Democratic Administration and advanced by unchecked Democratic Congressional Leaders. Instead, in the 112th Congress, the new Republican House Majority will pursue a contrasting agenda that creates the climate of certainty necessary to usher in a new era of private sector job creation. Congress sent a strong signal of that commitment in December by extending the current tax rates and preventing a massive tax hike on Americans and small businesses. If there is any hope of getting Americans back to work, Washington must get out of the way and let employers do what they do best and what America needs most – create jobs.

(more…)

The experts charged with determining when recessions begin and end tell us that the latest of these unpleasant events ended a while ago. Technically, they are no doubt right. But that does not mean that the economic crisis we have been facing is over. I suspect that we have thus far only seen its first act. The drama to come may be far, far worse. To see why, one must recognize that economic downturns come in two different forms.

The economists who study recessions tend to think about them in turns of the business cycle – and rightly so, for in most cases it is the business cycle that produces the downturn. In the course of such a cycle, boom builds upon boom and bust upon bust. It is a bit like a game of crack the whip. Downturns occasioned by the business cycle are caused by overproduction. When businesses have more stock than they can sell, they stop producing and lay off workers. The workers laid off and no longer getting paychecks cut back on their consumption, and this in turn reduces the demand for goods and services and causes other businesses, which find their products and services no longer as much in demand, to curtail their efforts and lay off another set of workers. And so the recession grows, building on itself, until some businesses find that they have underproduced or underprovided for the services in demand. Then, the same process takes place in reverse with stepped-up production and a stepped-up provision of services requiring stepped-up employment, which occasions more consumption requiring another round of stepped-up production and provision of services and a further increase in employment and so forth – until production and provision once more overshoot demand. In the absence of perfect knowledge, human beings living in commercial societies are fated to suffer from an oscillation of this sort – between boom and bust.

When Barack Obama became President, his economic advisors appear to have been on automatic pilot and to have taken it for granted that this was the sort of recession that they were up against. And so they opted for a remedy that – if applied in the proper fashion, at the proper time, and  in the proper amount – might serve to hasten an economy’s recovery from a recession occasioned by the business cycle. That is, they sought to prime the pump – to increase consumption by artificial means, to borrow money from the future, put it in the pockets of certain citizens, and hope that they would spend it right away and thereby put others back to work.

Such was, at least, their pretense. In practice, of course, the so-called “stimulus bill” was a targeted measure – a massive pay-off designed to reward the public-sector employees and unionized workers involved in infrastructure construction who make up core constituencies within the Democratic Party and to do so at the expense of those whose taxes the Democrats intended in the future to raise. Obama’s advisors did not worry much about the manner in which the “stimulus” was to be applied, its timing, and amount, however. For they took it for granted that the expenditures would do no immediate damage to anyone and that the economy would bounce back quickly in any case, as it always does when the downturn is caused solely (or at least primarily) by the business cycle.

(more…)

In this week’s edition of Coffee and Markets, featuring The New Ledger’s Francis Cianfrocca, we’re talking about the latest unemployment numbers, the call for a millionaire’s tax, and Christina Romer’s goodbye remarks. We’re brought to you as always by BigGovernment.com and Stephen Clouse and Associates.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Download Podcast | iTunes | Podcast Feed

You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

TNL: Barack Obama is Losing Time
Romer: My Plan Failed
The Hill: White House Rules Out Stimulus Sequel
TNL: The Troubles Rich People Have
TNL: Critiquing Newt Gingrich’s Economic Policy

Ten months back, at the very end of September, I posted online a brief piece entitled Obama’s Wrecking Crew, in which I drew attention to a column in The New York Post in which Charles Gasparino reported two items of interest. First, that the titans of Wall Street – men such as Morgan Stanley’s John Mack, BlackRock’s Larry Fink, Greg Fleming (once at Merrill Lynch), JP Morgan’s Jamie Dimon, and Goldman Sachs’ Lloyd Blankfein – were beginning, in private, to express grave misgivings concerning the Obama administration’s stewardship of the economy. And, second, that these insiders were also telling him that Treasury Secretary Tim Geithner and chief economic adviser Lawrence Summers were complaining to them that they had almost no say in policy decisions. “Obama,” these two were said to have lamented, “is acting as if he has a blank check to do what he wants, while ignoring the longterm costs of his policies.”

In that post, I predicted that Geithner, a young man whose time had come, would suffer, at least for a while, in silence, and I suggested that self-respect would cause Summers to bolt. “Within the world of economics,” I wrote, “his is a name to be conjured with; and, unlike Paul Krugman, he has not in public prostituted himself for partisan advantage. It must be excruciating to watch while Obama’s wrecking crew destroys the foundations for American prosperity.”

As I predicted, Geithner is still there and is still willing to parrot the administration line regarding matters such as marginal tax rates. But Summers has not yet bolted – perhaps because he has nowhere to go. He rose to become Treasury Secretary under Bill Clinton, and he failed ignominiously as President of Harvard. Where, he has no doubt asked himself, do I go from here?

However this may be, my general point was correct – as has become evident in the last few weeks. Not to put a fine point on it, the rats have begun leaving Obama’s ship. The first to announce his departure was our current President’s Director of the Office of Management and Budget Peter Orszag, who had been a budget hawk when – as head of the Congressional Budget Office in 2007 and 2008 – he scored the various budget proposals submitted by President George W. Bush. Last Thursday, Christina Romer , Chairman of the Council of Economic Advisers, announced that she would soon follow Orszag’s example.

Neither Orszag nor Romer is a fool. They were party to a con, and they surely knew it.

(more…)

Earlier this season, Team Obama launched a PR offensive designed to convince Americans that a real economic recovery was underway. They called it ”Recovery Summer!” Note the exclamation point. They wanted you to really, really get that they believed we were in “recovery.” It wasn’t just a ”recovery.” It was “Recovery Summer!”

We should have known it was all illusory quackery when they wheeled out Joe Biden to talk it up.

Today we learn that the “recovering” economy shed 131,000 jobs last month, the second straight month of falling employment. More and more temporary census jobs ended, and the private sector added a paltry 71,000 jobs, far fewer than most expected. In more bad news, the government revised payrolls for May and June to show 97,000 FEWER jobs than originally reported.

All of the arrows are down.

For the $1 trillion-plus that the Democrats have spent trying to “create jobs” and “stimulate the economy,” this is where we are: job losses, not job creation; a formal 9.5% unemployment rate with the real unemployment rate at 18%; stagnant growth; and an exploding deficit and national debt.

Heckuva job, Obama, Pelosi, and Reid.

(more…)

Despite Vice-President Biden’s claim, the reality shows that, despite costing more than the administration expected, the stimulus still hasn’t created the jobs they promised.

CLAIM:  Democrats assert stimulus failed because Republicans kept it small.

Democrats repeatedly promised their massive 2009 stimulus plan would create over 3 million new jobs.  It hasn’t.  Instead, unemployment climbed to 10 percent as over 2 million more jobs were eliminated.  This weekend Vice President Biden took the extraordinary step of suggesting stimulus failed because Republicans made it “too small”:

TAPPER: Was the stimulus, in retrospect, too small?

BIDEN: Look, there’s a lot of people at the time argued it was too small. Actually, we…

TAPPER: A lot of people in your administration.

BIDEN: — yes. A lot of people in our administration, a lot of — I mean, you know, even some Republican economists and some Nobel laureates like Paul Krugman, who continues to argue it was too small. But, you know, there was a reality. In order to get what we got passed, we had to find Republican votes. And we found three — three. And we finally got it passed. So there is the reality of whether or not the Republicans are willing to play, whether or not the Republicans are just about repeal and repeat the old policies or they’re really wanting to do something. And I — I’m not — I’m not — you know…

TAPPER: So if you didn’t have Republicans that you had — if you didn’t have the legislative reality…

BIDEN: I think what…

TAPPER: — it would have been bigger?

BIDEN: I think it would have been bigger. I think it would have been bigger. In fact, what we offered was slightly bigger than that…

FACTS:  Democrats’ stimulus bill failed on its own merits, not because – at $862 billion or nearly $3,000 for every man, woman and child in the U.S. – it was “too small.”

(more…)

Over at Reason, the great Matt Welch looks under the hood of America’s fiscal engine and finds, well, trouble:

The housing bubble, with its tax-generating wealth, was already bursting in 2007. Yet as recently as 2009, Montgomery County, Maryland, decided to make “phantom” cost-of-living increases to the pensions of government workers, linking contributions to salary increases that did not occur. This sweetheart deal, which added more than $7 million to the county’s annual budget (according to The Washington Post), tasted rather bitter at a time when the county’s revenue was falling short of projections by more than $24 million. Yet after one Montgomery County Council member proposed eliminating this sop to the public-sector unions, four of his colleagues joined a rally on the rooftop of the council’s parking garage, leading a crowd of 400 government employees in chants of “We’ve had enough!” and “No justice, no peace.”

In Los Angeles, former labor organizer and once-rising political star Antonio Villaraigosa, now a second-term mayor who has fallen so far that the local glossy city magazine made him a cover boy last year under the headline “Failure,” announced in April his intention to shut down “inessential” city services two days a week, after the city controller had declared that the municipality would “run out of money” by June 30. Villaraigosa’s deputy chief of staff, Matt Szabo, told The Wall Street Journalthe city’s public-sector unions “have priced themselves out of a job.”

Yet those unions received significant raises from the tough-sounding mayor as recently as 2007. The city’s labor force grew by more than 9 percent from 2000 to 2009, and annual pension contributions tripled, according to the Los Angeles Times. In a March interview with National Public Radio, Villaraigosa lamented that “California cities are constrained by various propositions which limit your ability to raise revenues” (though he managed to raise the city’s sales tax from 8.25 percent to 9.75 percent) and portrayed renegotiating union contracts as an unlikely last resort. “There aren’t a lot of options here,” he said. “We have contracts with our employees that we have to abide by. So unless they agree to sharing in the sacrifice in these tough times, I won’t have a lot of options.”

Even bankruptcy isn’t necessarily a harsh enough reality check.

(more…)

Controlling obesity is all the rage now in America as, indeed, it should be. Feeding the American appetite with too many of the wrong kinds of calories is exacting a terrible toll on the health of Americans of all ages. Obesity, like cigarettes, kills. In recent years, Congress, along with a compliant President Bush and now with an enthusiastic President Obama, has been appeasing another kind of appetite with reckless abandon. The toll this fiscal obesity will exact from America and our people is incalculable and Jenny Craig will be of no help.

Clearly, most Americans do not want to be force fed programs they haven’t asked for and that they know neither they, their children nor their grandchildren can possibly afford. People throughout the country are beginning to dig in their heels and a growing number of congressmen and senators know it. Seventy years ago, Japanese Admiral Isoroku Yamamoto is quoted, following his successful and deadly attack on Pearl Harbor, “I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve.” It appears that the American electorate, long apathetic and used to acquiescing by default to reckless government spending may be awakening from its long slumber. Let’s hope so, for it is the last best hope we have to rein in the destructive behavior of so many of our elected representatives of both parties in Washington and the White House strategists who lead them on.

As we noted in this column two weeks ago, Moody’s has fired the first warning shot over the bow of our ship of state. The international credit-rating agency warned that America’s AAA credit rating would be in jeopardy (given our spiraling debt) if economic growth does not keep pace with the projections made by the Obama Administration. China and Japan, our largest sovereign creditors, fired two more warning shots at last week’s treasury auction when they decreased their purchases of U.S. debt. But is anyone in Washington listening?

(more…)

Wednesday will mark the first anniversary of the presidential inauguration of Barack Obama — who began his Presidency, as nearly all new first-term Presidents do, high in the polls. At that time, Obama’s approval ratings were, in fact, in the stratosphere. In the last twelve months, however, they have fallen further and faster than those of any President since polling began; and, and, as developments in Massachusetts suggest, his party is now in danger of suffering in November an historic defeat — which is likely to rival its fate in 1938, 1966, and 1994 if the Democrats do not, as I believe they may, do even worse. In a poll released on Thursday, the National Journal reports that half of the adults sampled responded that, if new Presidential elections were held right now, they would vote against Barack Obama, and less than a quarter of those questioned indicated that they would vote to re-elect the President. It is an appropriate time in which to pose this question: Why have Obama and his supporters fallen so far and so fast?

We must, I think, begin before the beginning. The Obama campaign was predicated on a fraud. With a skill that was breathtaking, Barack Obama managed during that campaign to signal to the left within the Democratic Party with a wink and a nod that he was their man and that he meant business — that he really intended to “transform” America. To those in the middle and on the right who are ashamed of the nation’s historic sins in matters of race, he offered absolution, and he promised that the penance that they would have to perform after leaving the confessional would not be harsh. He was not, he said, a tax-and-spend liberal.

I was not taken in. Late in 2008, after reviewing the page proofs of Soft Despotism, Democracy’s Drift, I persuaded my editor to allow me to add the following to the book:

Once again, as in the 1920s, rational administration has failed us. As on that other occasion, the Federal Reserve Board and the Department of the Treasury pursued over an extended period under more than one administration an easy-money policy bound in the end to give rise to “irrational exuberance” in the markets and to a bubble followed by a catastrophic decline in prices and a collapse of the credit markets. And, to make matters worse, we responded to this set of circumstances precisely as we did on that earlier occasion — by electing a president and choosing a Congress intent on dramatically increasing the scale and scope of the administrative state.

(more…)

So the President holds a jobs summit, but doesn’t invite the biggest actual producers of jobs — instead stacking the deck with people who believe there just hasn’t been enough government reallocation of taxpayer money. We’ll talk about the summit and the latest details of upheaval at General Motors in today’s edition of Coffee and Markets, a daily podcast from The New Ledger on politics, policy and the marketplace with Francis Cianfrocca, brought to you by BigGovernment.com.

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

Download Podcast | iTunes | Podcast Feed

You can subscribe to the podcast by following the links above, and if you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

Related Links:

ABC News: Real Progress or PR Stunt?
Romer on the Jobs Summit
Cianfrocca: Near an Inflection Point on the Economy?
Samuelson on Job Growth’s Challenges

On Friday, in the name of holy transparency, the White House released the list of jobs created or saved with the stimulus funds. Now, let’s assume that the government can create jobs even though it can’t. Let’s assume that “job saved” is not the lamest excuse for government spending I have heard in my life time as a budget analyst. And let’s look at what this data means.

The White House claims that 640,329 were created or saved. That, by the way, is way less than what Christina Romer claimed would be created. Last week, she mentioned 1.4 million during a Joint Committee hearing. Remember.

First, $159 billion has been spent so far. That’s $248,273 per job.

However, when you look at some specific contracts that were awarded you find that some jobs were created or saved at an insane cost to taxpayers. For instance, $1,359,633,501 were awarded to CH2M WG IDAHO LLC, in WA to create 2,183 jobs. That’s $622,827 per job. That’s not as bad though as the  $258,646,800 awarded to the Brookhaven Science Associates, LLC in NY, to create 25 jobs. That’s over $10.3 million per job.

I would be happy with one of these jobs.

(more…)

I believe that President Obama’s address to Congress, and our Nation, did not go far enough to put the numerous concerns Americans have to rest with the healthcare reform proposals before the House and the Senate.  There are still too many unanswered questions surrounding these discussions and too much at stake to simply pass any bill without intensive scrutiny and review.  After reading the over 1,000 page House Democrat proposal and fielding over 8,000 constituent correspondences into my office, it is clear that there is much work to be done.  

 During the August district work period, I attended numerous meetings across my congressional district and met with hundreds of constituents who made it clear that they are unhappy with the way Congress is conducting the current health care debate.  Democrat Congressional leadership continues to rush health care legislation through both chambers, without any real explanation.  Constituents in Ohio’s Fifth District, in addition to millions of other Americans, have asked Congress to slow this process down and thoroughly examine probably one of the most important pieces of legislation Congress has debated since the New Deal.  No one will argue that our nation does not need health care reform, but it is clear that Congress must start over with real bipartisan negotiations where Republicans can be included and have input into the final legislation.

(more…)