That great phrase was coined by the late Jack Kemp, who believed that growth and opportunity for all is the answer to poverty. In fact, Kemp believed it was the answer to all things economic. And he was right. The best anti-poverty program is the one that creates jobs. The answer to large budget deficits? Grow the economy, create jobs, watch incomes rise, and let the tax revenues come rolling in.

Partly from Jack Kemp’s work, and partly from his own experience, Ronald Reagan believed the same thing. He knew that growth is the single best solution for our economic ailments. And neither Reagan nor Kemp saw the world in terms of specific income classes or categories. They looked at the whole economy and realized that everyone is tied together. Dragging down the top earners will not help the middle class. And providing an ever larger safety net will not solve poverty. Reagan believed in the safety net, and maintained it. But he knew it was a stop-gap, not a solution.

Does Mitt Romney understand this?

The worry stems from Romney’s ill-advised statement this week. He said, “I’m not concerned about the very poor. We have a safety net there. If it needs repair, I’ll fix it.” That raises doubts as to whether he understands the Reagan-Kemp model. Perhaps he does. But he will have to tell us more.

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Commentators and pundits, some of whom ought to know better, continue to harp on the idea that the recession persists because consumers are not spending. Every Keynesian seems to believe that because consumers are in a dreadful funk, only government stimulus spending can rescue the moribund economy, given (to them, at least) that investors will not spend more because the Fed, having already driven interest rates to extraordinarily low levels, cannot use conventional policies to drive them any lower and thereby elicit more investment spending.

People, please look at the data. They are conveniently available to one and all at the website maintained by the Commerce Department’s Bureau of Economic Analysis, the outfit that generates the national income and product accounts for the United States.

According to these data, real personal consumption expenditure recovered from its recession decline by the fourth quarter of 2010. Continuing to grow, it now stands (as of the most recent data, for the second quarter of 2011) even farther above its pre-recession peak.

Real government expenditure for consumption and investment (this concept does not include the government’s transfer spending, such as unemployment insurance benefits and social security benefits) is also running higher than its pre-recession level. In the second quarter of 2011, it was running more than 2 percent higher (recall that this is “real,” or inflation-adjusted spending; nominal spending has grown substantially more).

The economy remains moribund not because consumption spending has failed to recover and not because government spending has failed to increase, but because the true driver of economic growth—private investment—remains deeply depressed. Gross private domestic fixed investment fell steeply after the second quarter of 2007, and in the second quarter of 2011 it remained 19 percent below its pre-recession peak. This figure fails to show how bad the investment situation really is, however, because the bulk of the investment spending now taking place is for what the accountants call the “capital consumption allowance,” the amount estimated as necessary to compensate for the wear and tear and obsolescence of the existing capital stock.

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Hall of Fame ceremonies are reserved for those people who stand out from the masses, whether it is football, country music or rock and roll.  However the latest inductions into a new kind of Hall of Fame are those who hand out unemployment insurance checks.

Yes, now no one can say President Obama hasn’t done anything about unemployment—he is allowing those bureaucrats who sign the checks to be recognized for their work.

In 2010, the unemployment insurance (UI) program celebrated its 75^th anniversary.  To commemorate, a new awards ceremony was introduced.  The Department of Labor (DOL) established the UI Innovation Awards and the UI Hall of Fame to recognize the outstanding work of individuals and state UI agencies.

The 2011 awards ceremony will be held Oct. 17-20 at the Biltmore Hotel in Providence, R.I.  The going rate for a junior suite with two king-sized beds during the convention is $119 a night, not too bad.   Of course since this is a federal government department, you can assume your tax dollars are paying for the convention as well as probably contributing to the UI Hall of Fame celebration.

A request of the budget for this convention from the organizer of the awards ceremonies at the Department of Labor went unanswered.  Americans for Limited Government (ALG) is currently working on a Freedom of Information Act (FOIA) request to find out the cost to taxpayers for this event.

To nominate a person for the UI Hall of Fame, whether dead or alive, one of more of the following achievements must have occurred (as reported from the DOL’s information on the award):

1. Promoting Legislation or Public Policy

Nominee has made important contributions to the achievement of significant Federal legislation or public policies that have improved and strengthened the Unemployment Insurance program.

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Secretary of Agriculture Tom Vilsack has officially joined a prestigious list of Democrat economic geniuses that believe entitlement programs stimulate the economy.

First there was Nancy Pelosi who said, “Now, let me say about unemployment insurance…this is one of the biggest stimuluses [sic] to our economy. Economists will tell you this money is spent quickly. It injects demand into the economy, and is job creating.”

Excuse me Nancy, isn’t cash obtained in a liquor store heist also spent quickly, and couldn’t theft be considered a job creator for cops, the courts, and prison personnel?

Even still, Mrs. Pelosi contends unemployment insurance “creates jobs faster than almost any other initiative you can name because, again, it is money that is needed for families to survive, and it is spent. So it has a double benefit. It helps those who have lost their jobs, but it also is a job creator.”

President Obama, the man who has also proven to be a fiscal whiz kid, concurs with Pelosi that the extension of unemployment benefits is “good for the entire economy.”  Obama said “It’s probably the biggest boost that we can give an economy because those folks are most likely to spend the money with businesses, and that gives them customers.”

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I’m about to perform a healing.   For those non-believers out there… like magic, it will terrify and then delight you.   Maybe it’ll scare the jesus into you.

I warn even the staunchest Christian; this will test your mettle.   It will clench your teeth and stiffen your spine.   But, Tea Party babies, I love you!   Have faith!  This idea will end unemployment, and the Fed will never be allowed to print money again.   In God We Trust.

And God wants us to provide every unemployed American citizen a Guaranteed Income of $10,400 per year.

Fifteen million Americans are unemployed.  Even if this program INCREASES the number of people calling themselves unemployed, I want to guarantee all of them, as long as they choose to stay in the program, a check from the Government for $200 per week.

But, there’s a catch.  God’s in the details…

Instead of 99 weeks, Unemployment Insurance will end at three months.  After it runs out, the unemployed will be allowed to enter our new Guaranteed Income system:

1. There’s no more minimum wage.
2. They have to take any job offered.
3. If  they slack off at work and they keep getting fired, they are out of the program.
4. Payments decrease to zero as they earn towards $9 per hour– but on a schedule that still incentivizes them to earn more.

Once someone is in the Guaranteed Income program, their resume goes into the GI website, and if you offer them $2 per hour to pick up dog sh*t in your yard, they pick up dog sh*t.  If a call center offers them $3 per hour for forty hours, they earn an extra $120 per week.

Poof!  There’s no more unemployment.  God said, “Let there be light.”

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President Obama’s announcement yesterday that he struck a tax compromise with Senate Republicans that will temporarily halt the automatic income tax hikes that were due to hit all Americans. Although the President announced the compromise with little excitement, saying he was “sympathetic” to the idea of fighting to raise taxes on high earners instead of striking a deal, the proposed plan is a small win for a sluggish economy that is saddled with 9.8% unemployment. But we need many more wins, and much larger ones, before the economy can recover and thrive.

In addition to preventing income taxes from rising on January 1, 2011, the plan includes a temporary two percentage point cut in employee payroll taxes, from 6.2% to 4.2%. That cut is also effective for employer contributions, reducing the overall Social Security tax from 12.4% to 10.4% for 2011. The White House says this tax cut will save families an average of $1,500 next year.

The compromise also locks the death tax rate in at 35% for two years, a provision strongly opposed by President Obama, who has called for raising the death tax significantly in previous budget plans.

The deal is an acknowledgment by the White House that in troubled economic times it is good for working people to keep more of their money to spur job creation. Mr. Obama recognized this connection when he announced the deal. “Make no mistake,” the President said yesterday, “allowing taxes to go up on all Americans would have raised taxes by $3,000 for a typical American family and that could cost our economy well over a million jobs.”

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President Obama has asked Congress for an additional $50 billion in “stimulus” money to finance infrastructure projects. The theory is that the additional spending will cause businesses to boost production to meet this demand. Producers will add jobs, triggering increases in consumer spending that will ripple through the economy and fuel a stronger overall recovery.

Unfortunately, however, such government pump-priming hasn’t worked in the past, and there’s no reason to believe it will work now.

Sure, consumer spending accounts for approximately 70 percent of America’s gross domestic product, and increases in consumer spending would provide the economy with an immediate boost. But a drop in consumer spending is not what ails the economy. In fact, as a percentage of GDP, consumer spending actually increased during the downturn, the Commerce Department’s Bureau of Economic Analysis reports—from approximately 69.2 percent of GDP in the fourth quarter (October-December) of 2007 to approximately 71 percent of GDP in the April-June quarter of 2009.

So the conventional wisdom—that a sharp decline in consumer spending caused the economy’s downturn—is wrong.

What did cause the downturn? The answer is: a sharp decline in private investment.

In fact, the ups and downs of the business cycle are always driven by investment spending, not by consumption spending.

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Private saving and investment are the heart and soul of the dynamic market process. Together they provide and allocate the resources used to augment the economy’s productive capacity, generate sustained long-run economic growth, and thereby make possible a rising level of living. Economic crises interrupt this process by discouraging investors and causing them to consume their resources or to employ them in relatively safe, low-yielding ways. Absent entrepreneurs willing to take the great risks that characterize investments in great technological and organizational innovations, the growth process fades into economic stagnation or even decline.

The present recession starkly displays this characteristic crisis-related abatement of the economy’s investment process. Indeed, the decline of private investment during recent years has been much greater than most observers realize. Consider the following data, taken or derived from the most recently revised National Economic Accounts prepared by the Commerce Department’s Bureau of Economic Analysis (Tables 1.1.5, 1.1.6, and 5.2.6).

In 2006, gross private domestic investment reached its most recent peak, at $2.33 trillion (in constant 2005 dollars), or 17.4 percent of GDP. After remaining almost at this level in 2007, this measure of investment fell substantially during each of the next two years, reaching $1.59 trillion, or 11.3 percent of GDP, in 2009. This decline is severe enough, but it does not give us all the information we need to gauge the extent of the investment bust.

The greater part of gross investment consists of what the statisticians call the capital consumption allowance, an estimate of the amount of money that must be spent simply to offset wear and tear and obsolescence of the existing capital stock. In a country such as the United States, with an enormous fixed capital stock built up over the centuries, a great amount of funds must be allocated simply to maintain that stock. In recent years, the private capital consumption allowance has ranged from $1.29 trillion in 2005 to $1.46 trillion (in constant 2005 dollars) in 2009. Thus, even in the boom year 2006, about 60 percent of gross private domestic investment was required merely to maintain the economy’s productive capacity, leaving just 40 percent, or $889 billion in net private domestic investment, to augment that capacity.

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In a recent post, I posited unemployment insurance should be reformed to offset the minimum wage for new small businesses hires.  Please continue in comments to help me brainstorm.

This is a “free stimulus,” because it uses current unemployment payments to actually create new jobs.  No tax cuts.  No deficit spending.   No new government program.  And only Main Street gets to use it.  When was the last time you heard something sane and immediate?

The Elevator Pitch

Example:  A company not currently making new $7.25 per hour hires, can bid $2 per hour and if no other employer in the area bids more, and have deeply discounted workers… with the government making up the difference to $7.25.

The discounted employment contract is for one month, so when a higher bid comes in, the current employer will have to meet the new pay.  If no higher bid comes in, the small business continues paying $2 per hour.  Highest bid wins.

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Arianna once again has her panties in a bunch, and I’m the libertarian brave enough to reach in and fix them.

Yes, it’ll drive Huffington into spastic frenzy.  But, this is not a reason to subsidize the minimum wage.  David Shuster will tunnel ever deeper into his rabbit hole of despair.  Sadly, neither is this a reason to subsidize the minimum wage.

Unemployment is somewhere between 6.3-17.3%, and that is why we need to allow small businesses to pay employees a couple bucks an hour and have unemployment make up the difference.

Don’t jump to conclusions here, please read my plan through.  This isn’t an off-the-wall proposal.  Republicans can reach across the aisle to Obama with an idea Paul Krugman himself supports.  Presenting this as a “no-cost jobs bill” and “free stimulus” is exactly the kind of reform judo conservatives need.

Overall, as Cato points out 6.3% – 17.3% of America is unemployed depending on your definition of unemployment.  In December 2009:

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On Wednesday, Boeing announced it would put a second 787 assembly line in Charleston, S.C., rather than Everett, WA.

Union leaders and politicians like Sen. Patty Murray, D-Wash., expressed shock, dismay and outrage at the company’s decision.

Either they are feigning surprise, or they’ve been comatose for the last decade. Your guess is as good as mine.

For years, politicians and labor leaders in Washington have ignored Boeing’s pleas to stay competitive. In 2002, Boeing CEO Alan Mulally told the State House Labor Committee that “the state of Washington is not competitive. . . . meaning it costs us more to operate [here].” He specifically pointed to Washington’s costly workers’ compensation system, which requires employers to purchase insurance coverage from the state or be on the hook to cover all claims costs themselves, rather than allowing them to choose from among competing private providers. As a result, Washington collects some of the highest premiums from employers and injured worker rates are well above the national average.

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