(See 1 below.)
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David Axelrod has begun his scorched earth policy because Obama is slipping and the prospects of a meaningful economic recovery continues to appear distant. (See 2 and 2a below.)
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Is Obama facing an economic ice cream event, ie a double dip? (See 3 below)
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Former president Clinton offers unsolicited advice to Obama which is probably unwelcomed.
Is Clinton using this opportunity to remind historians of his own his accomplishments? If not, why did 'Slick' Bill not seek a private meeting with Obama rather than go public in Newsweek?
As Obama's Sec. of State what must Hillary be thinking? (See 4 below.)
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The swing state picture continues to get murkier for Obama. (See 5 below)
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Obama is manipulating The NLRB so he can continue to kiss the rear of unions and thereby, gain their votes and money for 2012.
As for the nation and corporate America, Obama's message is bend over and be patriotic. My needs come before yours and the nation. That's how we play the game in Chicago and I 'ain't 'bout to change.' (See 6 below.)
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FBI concerned al Qaeda is becoming desperate to make a big score as their leadership is in disarray and it is impacting recruiting. (See 7 below.)
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I take no comfort from the fact that apparently Ms. Obama was dissed in South Africa ' by Jacob Zuma but it does show the world the level to which this nation has sunk in terms of the respect we command and the fear of snubbing us engenders. (See 7below.)
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The New York Times' Executive Editor, Bill Keller, spills the beans: he and the press have a negative bias when it comes to Sarah Palin. (See 8 below.)
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When all is said and done it really comes down to one simple thing - lemonade and cookies.
Only a few months ago a young kid in our complex was told he could not sell lemonade by some government bureaucrat because his stand did not pass sanitary codes. After a few protests and some news coverage the bureaucrat relented but would not accept a free lemonade. (See 9 below.)
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Dick
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1)How Did 2011 Go So Wrong? America's Two-Speed Recovery
By Derek Thompson
It's not just high gas prices. America has a growth problem and a jobs problem that might be beyond Washington's control.
When Jim O'Neill, Goldman Sachs's celebrated Asset Management director, dubbed 2011"the year of the USA" two days before Christmas last year, his brand of optimism wasn't rogue. He was merely the loudest member of a growing crowd of market cheerleaders.
The poison and crud from the recession had finally worked its way through the economy, they said. Corporations were flush with cash and ready to hire. Financial institutions were swimming in profits and ready to lend. Housing prices had taken a beating, but that was a good thing in way. Homes were affordable again, and families who had spent two years shedding debt were itching to buy something big.
So how did 2011 turn out so poorly? Six months later, unemployment is still above
9%. Small business sentiment, which fell for the third consecutive month in May, is lower than a year ago. Real wage gains still look like a pancake, and the American Consumer -- the world's greatest engine of growth -- is showing up like LeBron James in the fourth quarter of a Finals game.
At the bottom, small businesses aren't growing. At the top, financials and multinationals are growing but not hiring. High gas prices hurt consumers and businesses. Europe's never-ending debt trauma hurt exports and the stock market. But you can't blame it all on the rest of the world. You can't even blame it all on Washington.
Economists at the IMF like to talk about a global "two-speed recovery." That means China is battling inflation with 9% yearly growth, while Europe and the U.S. are fighting double-dips with sub-2% growth. But there's a two-speed recovery at home, as well. Financial companies and multinationals are enjoying record profits, and the stock market has recovered better than most analysts expected.
But the wealth isn't trickling down. Small businesses -- which account for 99 percent of all companies and two-thirds of all hires -- are selling into a weak consumer market. Banks know it, so they're withholding loans. It's a cappuccino economy: The top is as frothy as the bottom is static.
At the top of the economy, financials and multinationals are growing, but they're making do with fewer workers. At the bottom of the economy, small businesses aren't growing, and they're not hiring workers. Two speeds, one reality: It's hard out there for a worker.
Something is broken, but what? Northwestern economist Robert Gordon says the most successful large companies have learned to make the worker "disposable." In the last 40 years, a perfect storm has eroded labor's power, including:
1. The shift of executive compensation towards stock options to maximize shareholder value
2. Lower real minimum wages
3. More competition for goods (imports) and workers (low-skill immigrants, outsourcing, automation)
4. Mainstreaming of contract/part-time/freelance work
Between 1930 and 1970, workers thrived in an economy that looked after labor. Union laws protected hours and wages, and manufacturing, where workers could make high salaries for little to no post-high school education, accounted for one out of four jobs in the economy. But the era of labor is over. The era of productivity is here, and there's no use trying to put the genie back in the bottle.
The last factor in America's two-speed recovery is the housing bust. There are two huge contributors to the net worth of American households. One is investments, although the investor class is concentrated in the top 10 to 25% of income distribution. The other is the house. The value of the typical home has fallen by nearly half in the last five years:
Image: Beverly & Pack/Flickr
"We're seen more than a 40% drop," said Gary Burtless of the Brookings Institution. "Prices fall, which hurts net wealth. The borrowing capacity of people who would move into new homes is questionable, so homes go unoccupied. With lots of unoccupied housing, nobody builds anything new."
This isn't a problem that can be "solved" with another $1,000 per family in payroll tax cuts (although it might help). It's certainly not a problem that can be solved by cutting government and praying somebody else picks up the slack. The hardest thing for Washington to understand is that not every economic question can be solved in Washington. Taxing and spending policy is important. But America's two-speed crisis is deeper.
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2)"How Do You Get Cool Back Into This?"
By Mona Charen
It isn't quite panic yet, but the sounds emanating from Obamaland are certainly nervous. If you are David Axelrod, chief strategist for President Obama's re-election campaign, you are well aware of your idol's fall and doubtless less than thrilled to get this question from CNN's Candy Crowley:
"Something that the president said this week struck me ... he said it's not as cool to be an Obama supporter as it was in 2008... I think he's right. I think it's not as cool to be an Obama supporter now. How do you get cool back into this?"
Gee, how do you compare a campaign that was based entirely on vapid promises and vaporous sentiment with a referendum on actual job performance? Axelrod denied (unconvincingly) that the 2008 campaign had been a "cult of personality" and assured Crowley that once the campaign gets "fully engaged and the choices become clear, you are going to see a great deal of activity out there on his behalf." In a signal of just how feeble the case for Obama's re-election is, Axelrod fell back on the bogeyman:
"I think one of the things that's going to inform that campaign is whether that Republican candidate is going to yield to some of the forces within his own party or her own party that is driving their -- their party further to the right."
For the record, there has never been a time in the past 50 years that the Democrats have not claimed to detect a frightening rightward tilt in the GOP -- even as the party has nominated such wild-eyed radicals as George H.W. Bush, John McCain and George W. ("compassionate conservative") Bush.
Crowley pointed out that support for the president among independents has declined from 52 percent in the 2008 election to 42 percent today, and that even among staunch liberals, 89 percent of whom voted for Obama in 2008, support has dipped to 64 percent. How does the Obama team re-create a victory in light of these numbers?
She might have added so much more to that question. She might have asked how an incumbent achieves a vote of confidence when commodity prices on food and fuel are rising and, relatedly, the value of the dollar is plunging; when the housing market has yet to recover from the crash despite (or, more likely, because of) the president's Home Affordable Modification Program, which has prevented markets from clearing; when a record one in seven Americans now receives Food Stamps; when one out of six Americans is on Medicaid; and when a whopping 62.5 percent of respondents say the nation is on the wrong track.
When the economy is strong, elections can turn on a variety of issues. But when the economy is poor, elections are seldom about anything else. The 1980 race was illustrative.
Though the Carter/Reagan race is remembered now as a landslide for Ronald Reagan, the contours of the victory were not apparent during the campaign. As late as October 29, Gallup had the race as a dead heat, with Reagan at 44 percent and President Carter at 43 (it was a three-man race). Other polling showed larger margins for Reagan but nothing like the 10-point margin of victory he achieved. At the time, the contest was perceived as close.
It was after the first and only debate, a week before Election Day, that voters definitively moved into Reagan's column. At the time, inflation was running at 13.5 percent, unemployment was 7 percent and interest rates were 21 percent. American hostages remained in Tehran. Carter's approval ratings hovered in the 30s during the final year of his tenure.
Why wasn't Carter perceived as hopelessly weak? Perhaps because as bad as things were, voters needed to be confident about the challenger's fitness. Carter had succeeded to some degree in frightening voters about Reagan's (you guessed it) right-wing extremism. Reagan's reassuring debate performance allayed those fears. And Reagan's summation drilled to the heart of voters' concerns. Ask yourself, Reagan advised, "Are you better off than you were four years ago?"
The economy today is in some respects worse than it was in 1980. Barring a catastrophe, little else will matter in 2012. Any credible Republican can defeat Obama -- which is why Axelrod is already smearing as "extremist" a person whose name he does not know.
2a)Congressional Budget Office warns of debt explosion
The national debt will exceed the size of the entire U.S. economy by 2021 — and balloon to nearly 200 percent of GDP within 25 years — without dramatic cuts to federal health and retirement programs or steep tax increases, congressional budget analysts said Wednesday.
The dire outlook from the nonpartisan Congressional Budget Office comes as the White House and congressional leaders are locked in negotiations aimed at cutting spending and stabilizing future borrowing. The CBO report highlights the enormity of that task and the immense difficulty of paying off the debt, given an aging population and soaring health-care costs.
Over the long term, the CBO said, a projected explosion in government spending outside interest on the debt is “attributable entirely” to the ballooning cost of “Social Security, Medicare, Medicaid, and (to a lesser extent) insurance subsidies” intended to help finance coverage for the uninsured under President Obama’s new health-care law.
“The health care programs are the main drivers of that growth,” the CBO said, responsible for 80 percent of the projected rise in spending on those programs over the next 25 years.
Tax collections could keep pace with those costs if Congress permitted the George W. Bush tax cuts to expire on schedule in 2012 and allowed the alternative minimum tax to hit millions of additional households, the CBO said. But under current tax policies, the CBO said, tax collections would barely cover the cost of the health and retirement programs alone by 2035.
“If policymakers are to put the nation on a sustainable budgetary path, they will need to let revenues increase substantially as a percentage of GDP, decrease spending significantly from projected levels, or adopt some combination of those two approaches,” the CBO report said.
The report cautions that taking either action now “would probably slow the economic expansion. However, the sooner that medium— and longterm changes to spending and revenues are agreed on— and the sooner they are implemented after the period of economic weakness — the smaller will be the damage to the economy from rising federal debt.”
And the economic damage of inaction could be huge, the CBO said. If current policies are unchanged and the national debt continues to grow, the U.S. economic output could be as much as 6 percent smaller than current projections by 2025 and as much as 18 percent smaller by 2035.
Despite the growing danger, both major political parties have declared their resistance to the types of policy changes that would be necessary to rebalance the federal budget, at least as part of the debt-reduction talks currently under way between Vice President Biden and six lawmakers from both parties.
Democrats have ruled out major changes to health and retirement programs, while Republicans have ruled out any increase in tax revenue, a position Senate Minority Leader Mitch McConnell (R-Ky.) emphasized Wednesday.
“I think I can safely say, this Congress is not going to raise taxes, so why are we still talking about it?” McConnell told reporters at a breakfast hosted by the Christian Science Monitor. “So, look, taxes aren’t gonna be raised.”
As a result, negotiations have focused primarily on a middle ground that includes agency spending and other kinds of direct payments to beneficiaries, such as farm subsidies, with a goal of producing just over $2 trillion in savings over the next decade.
Although savings of that magnitude would help, such a package would come nowhere near solving the nation’s budget problems. According to the CBO report, policymakers would have to come up with immediate and permanent savings of more than $700 billion a year — more than $7 trillion over the next decade — just to keep the debt at its current level of roughly 69 percent of GDP through 2035. Reducing the debt as a share of the economy would require even more dramatic changes.
On Tuesday, the chairman of the Senate Budget Committee complained that the emerging package would not “fundamentally change” the alarming rate of growth in the national debt and that it falls far short of the savings needed to avert a debt crisis.
“A $2 trillion package sounds big, but I think most serious observers would tell you that it takes a package of at least $4 trillion to fundamentally change the trajectory we’re on,” Sen. Kent Conrad (D-N.D.) told reporters. “In the context of our debt, which is nearly $15 trillion and is headed for $25 trillion, $2 trillion over 10 years does not do the job.”
Bipartisan negotiators led by Biden are rushing to draft a debt-reduction package to persuade reluctant lawmakers to raise the legal limit on government borrowing, now set at $14.3 trillion. Without additional borrowing authority, the government could default on its obligations starting Aug. 2. The White House and congressional leaders hope to raise the limit by just over $2 trillion to pay the bills through the end of next year.
Conrad said he would agree to raise the debt limit for no longer than six months without a more serious effort to reduce future borrowing. And he told reporters that he is recruiting like-minded senators to “send a very clear message that some of us are not going to vote for a long-term extension of the debt limit unless there is a credible plan” to reduce borrowing.
Conrad has long been a leader on budget issues and a determined champion of debt reduction. Last year, he organized a protest of more than a dozen senators that held up the last major increase in the debt limit until President Obama agreed to appoint a fiscal commission to develop a plan to stabilize the debt.
That commission produced a plan that would limit borrowing to a little over $5 trillion over the next decade. The framework under consideration in the Biden talks is likely to require more than $7 trillion in additional borrowing.
Conrad and five other senators, from both parties, had been trying to advance the fiscal commission’s plan, but that effort stalled after Sen. Tom Coburn (R-Okla.) left the group, saying its members were unable to agree on sharp cuts to benefits for retirees.
The remaining members are trying to decide whether to press their case despite opposition from leaders in both parties. So far, few have been willing to support Conrad’s stance. Even some like-minded lawmakers say negotiating $4 trillion in savings is virtually impossible before the Aug. 2 deadline.
“I think it’s too big of a lift,” said House Minority Whip Steny H. Hoyer (D-Md.). “I believe we need a comprehensive approach to this. But in the present time frame, that’s not possible.”
Hoyer said that “the majority of members of Congress understand that the debt-limit package will not end the necessity to act to confront the nation’s fiscal crisis.”
But Conrad argued that all incentive will be lost once the debt ceiling is raised.
“If they reach an agreement and that passes and the debt limit then does not have to be dealt with until after next year’s election, there will be very little appetite here to come back and do what really has to be done to get our financial house in order,” he said.
Conrad suggested raising the debt limit for a shorter period to give policymakers more time to tackle far-reaching overhauls of the tax code, as well as Social Security and Medicare, the biggest drivers of future debt. But Senate Majority Leader Harry M. Reid (D-Nev.) and House Majority Leader Eric Cantor (R-Va.) both rejected that idea Tuesday.
House Republican leaders say it would be extraordinarily difficult to persuade their skeptical troops to vote more than once for a debt-limit increase. And, Cantor said, the job of reducing the debt wouldn’t get any easier after a delay.
“I don’t see how multiple votes on a debt-ceiling increase can help get us to where we want to go,” Cantor told reporters. “We want big reforms. We want big spending cuts and big changes to how this town works. ... If we can’t make the tough decisions now, why would we be making those tough decisions later?”
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3)To Avoid Double-Dip Recession, Remember Lessons of 1980s: Echoes
By Amity Shlaes More
Is our economy headed back into a recession? A look at a past double-dip, the recessions of 1980 and of 1981-1982, suggests we are due. That double-dip also suggests the Federal Reserve should raise interest rates earlier and faster than you might think.
In fact, the 1980s experience points to something horrible: We need a recession to get a true recovery.
The trouble that time actually started in the 1960s. Back then, policy makers feared inflation less than a recession. Scholars alleged they knew how to manage "creeping inflation" before it morphed into "galloping inflation," the unstoppable animal. A famous economic textbook at the time, written by Paul Samuelson, claimed that inflation was all right as long as it stayed below 2 percent. John Kenneth Galbraith deemed inflation "a normal prospect." The view was that oil shocks, loose monetary policy, taxes, deficits and labor strikes were also mere obstacles to grow past.
In the mid-1970s, the inflation rate -- measured using the Consumer-Price-Index value for urban consumers -- crept above 5 percent, and it seemed to want to stay there.
Federal Reserve Chairmen Arthur F. Burns and G. William Miller tightened interest rates repeatedly over the decade's course, so that the prime rate, the interest rate charged by banks to creditworthy customers, climbed from 8.5 percent in February 1970, when Burns began in the job, to an astounding 11.75 percent in early August 1979, when Miller left office.
Nonetheless, Burns and Miller both made clear they would always be mindful of a recession when setting interest rates. "They didn’t want to make credit so easy as to fuel further inflation, but they didn’t want to make it so tight as to choke the economy into another recession," as Alan Greenspan later put it.
The inflation rate moved above 10 percent regardless of the Fed's rate increases. This was partly because of energy prices, but only partly. The deeper problem was a shift in attitude.
Prices don't merely reflect what people think things ought to cost today; they also reflect what people expect items to cost tomorrow. Markets suspected that the future contained less growth and more inflation than advertised. They also suspected that the Fed would always hesitate to raise rates out of fear of hurting growth.
That suspicion was reinforced in 1978, when President Jimmy Carter signed the Humphrey-Hawkins Act, which mandated that the Federal Reserve strive for both full employment and stable prices.
Then, in the summer of 1979, with the inflation rate exceeding 10 percent, Carter appointed the inflation hawk Paul Volcker as Fed chairman. Whether Carter knew what he was doing is debated to this day.
For weeks, Volcker worked hard to build consensus within the Fed for raising rates. He also summoned the Wall Street Journal's opinion editors, Robert Bartley and George Melloan, to lunch in the dining room of the New York Federal Reserve Bank to try to win their support. Then he held an unusual Saturday meeting of the Fed’s board of governors on Oct. 6. Afterward, the Fed announced it would raise the discount rate, which it charges banks that borrow at its window, to 12 percent.
When this news was announced that night, not everyone understood its importance. Pope John Paul II was visiting the U.S. at the time, and CBS asked the Fed spokesman, Joe Coyne, if their announcement mattered. “You'll remember this long after the pope has left town,” Coyne told the network.
Coyne was right. For what Volcker was really saying was: "We are not afraid to force recession, whatever the statute says. Our only job is to stop inflation."
The Journal spelled it out the following Monday in an editorial bluntly titled "Support Mr. Volcker":
"The new Federal Reserve anti-inflation package is the most hopeful economic policy in decades," wrote the Journal's editors. "Since 1965, inflation has ratcheted ever higher … It is past time for a decisive step to break that spiral, and Mr. Volcker's package is the best hope we have."
Volcker used his monetarist cover to tighten violently. Between summer 1979 and December 1980, the prime rate rose to 21.5 percent from 12 percent.
Why so high? To wring extra money out of the economy, certainly, but also to prove the Fed meant what it said. Volcker incurred the wrath of many. Homebuilders sent the Fed two-by-fours to symbolize the houses they were not building; car dealers sent in keys to unsold vehicles. "We were negotiating for a house when Mr. Volcker came along and knocked the struts from under us," a husband told the New York Times in 1980.
In the second dip, which officially began in summer 1981 and ended late in 1982, unemployment rose past 10 percent. "That recession resulted from the absolute necessity to kill inflation," George Melloan told me.
The Fed didn't move the discount rate below 5 percent until the 1990s.
Eventually, people became convinced that the U.S. was serious about inflation. And the lower interest rates that followed enabled millions of Americans to build, invest and buy homes. Volcker's work made the work of future presidents, Republican and Democrat, easier.
Inflation hasn't dominated our headlines yet. But this moment resembles the old days because the Fed has made clear it's willing to tolerate inflation out of concern over a recession. No one today can imagine Fed Chairman Ben Bernanke raising rates to even the levels of the Burns era.
The first takeaway message from the early 1980s is that creeping inflation gallops before experts catch it. The second takeaway is that postponing the commitment to tighten hard ensures yet higher interest rates later.
A monetary recession lurks ahead. How high will the rates be? Higher than you think.
(Amity Shlaes, a senior fellow in economic history at the Council on Foreign Relations and a Bloomberg View columnist, oversees the Echoes blog. The opinions expressed are her own.)
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4)It’s Still the Economy, Stupid
Fourteen million Americans remain out of work, a waste of our greatest resource. The 42nd president has more than a dozen ideas on how to attack the jobs crisis.
By Andrew Hetherington for Newsweek
Bill Clinton:
14 WAYS TO PUT AMERICA BACK TO WORK
Next week in Chicago, the Clinton Global Initiative will focus on America for the first time, inviting business and political leaders to make specific commitments in support of the former president’s jobs blueprint, which he details below.
1. SPEED THE APPROVALS
Harry Hopkins had nowhere near the rules and regulations we have now. (In 1933, Hopkins’s Civil Works Administration put 4 million to work in a month.) I don’t blame the people in the White House for problems in getting shovel-ready projects off the ground; sometimes it takes three years or more for the approval process. We should try to change this: keep the full review process when there are real environmental concerns, but when there aren’t, the federal government should be able to give a waiver to the states to speed up start times on construction projects. We gave states waivers to do welfare reform, so by the time I signed the bill, 43 of the 50 states had already implemented their own approaches. We need to look at that.
2. CASH FOR STARTUPS
If you start a business tomorrow, I can give you all the tax credits in the world, but since you haven’t made a nickel yet, they’re of no use to you. President Obama came in with a really good energy policy, including an idea to provide both a tax credit for new green jobs and for startup companies, to allow the conversion of the tax credit into its cash equivalent for every employee hired. Then last December, in the tax-cut compromise, the Republicans in Congress wouldn’t agree to extend this benefit because they said, “This is a spending program, not a tax cut. We’re only for tax cuts.” It was a mistake. The cash incentive worked. On the day President Obama took office, the U.S. had less than 2 percent of the world market in manufacturing the high-powered batteries for hybrid or all-electric cars. On the day of the congressional elections in 2010, thanks in large part to the cash—incentive policy, we had 20 percent of global capacity, with 30 new battery plants built or under construction, 16 of them in Michigan, which had America’s second—highest unemployment rate. We have to convince the Republican Congress that this is a good thing. If this incentive structure can be maintained, it’s estimated that by 2015 we’ll have 40 percent of the world’s capacity for these batteries. We could get lots of manufacturing jobs in the same way. I could write about this until the cows come home.
3. JOBS GALORE IN ENERGY
When I was president, the economy benefited because information technology penetrated every aspect of American life. More than one quarter of our job growth and one third of our income growth came from that. Now the obvious candidate for that role today is changing the way we produce and use energy. The U.S. didn’t ratify the Kyoto accords, of course, because Al Gore and I left office, and the next government wasn’t for it. They were all wrong. Before the financial meltdown, the four countries that will meet their Kyoto greenhouse-gas emission targets were outperforming America with lower unemployment, more new business formation, and less income inequality.
4. COPY THE EMPIRE STATE BUILDING
Just look at the Empire State Building—I can see it from my office window. Our climate-change people worked on their retrofit project. They cleared off a whole floor for a small factory to change the heating and air conditioning, put in new lighting and insulation, and cut energy-efficient glass for the windows. Johnson Controls, the energy-service company overseeing the project, guaranteed the building owners their electricity usage would go down 38 percent—a massive saving, which will enable the costs of the retrofits to be recovered through lower utility bills in less than five years. Meanwhile, the project created hundreds of jobs and cut greenhouse-gas emissions substantially. We could put a million people to work retrofitting buildings all over America.
5. GET THE UTILITIES IN ON THE ACTION
Let’s suppose you and I go to a blue-collar neighborhood in Rockland County, N.Y., about an hour north of midtown Manhattan. On each house we could do a simple job—in and out in a day—that would almost certainly save 20 percent in energy costs. You wouldn’t even need banks if states required the electric companies to let consumers finance this work through utility savings. At least 11 states allow the electric companies to collect the money saved and use it to pay the contractors. So why shouldn’t the utilities finance this? To give another example, our climate-change initiative worked with the state of Arkansas, with the support of the governor, to develop a program called HEAL (Home Energy Assistance Loan), in which a company first creates jobs by making its own building more energy-efficient. Then, with the savings from the utility bill, they establish a fund to offer interest-free loans to their employees to finance the same work on their homes. This could be done with a little government support by companies all over the country. You get 7,000 jobs for every billion dollars in retrofitting. Let’s start with the schools and colleges and hospitals, and state, county, and local government buildings. That would keep the construction industry busy for a couple of years, creating a million jobs that would ripple through the whole economy, spurring even more growth.
6. STATE-BY-STATE SOLUTIONS
There may be some things that the states can do to loosen this up. One of the reasons Harry Reid won in Nevada is that, right before the election, two big Chinese companies announced they were moving factories there to make LED lightbulbs and turbines for the big wind farms down in Texas. Nevada is a little state, and it gained more than 4,000 jobs.
The thing I really liked about it was that the Chinese guys played it straight. They said the decision was pure economics. They didn’t say, “We’re coming here because Harry Reid is the leader of the Senate.” They said, “We’re coming here because Nevada has the best state incentives to go with the federal incentives.” They were very clinical. They said labor costs in China are still cheaper, but these turbines are big and heavy, and higher transportation costs to the U.S. market would offset the labor gains—and there was a tax credit from the federal government for green-energy manufacturing, and extra credits in Nevada.
7. GUARANTEE LOANS
Before the last presidential election, I tried for a year to get both Congress and the administration to deal with the fact that the banks weren’t lending because they were still jittery about the economy, and worried about the regulators coming down on them for bad loans still on the books. It’s not much better now. Banks still have more than $2 trillion in cash uncommitted to loans.
So I suggested that the federal government set aside—not spend—$15 billion of the TARP money and create a loan-guarantee program that would work exactly the way the Small Business Administration does. Basically, the bank lends money to a business after the federal government guarantees 75 percent of it. Let’s say that the SBA fund has about a 20-to-1 loan-to-capital ratio, and it’s never come anywhere near bankruptcy. If we capitalized this more conservatively at 10-to-1, we could guarantee $150 billion in loans and create more than a million jobs. We should start with buildings we know will stay in use: most state and local government buildings, schools, university structures, hospitals, theaters, and concert halls. We could include private commercial buildings with no debt. Even if many are strapped for cash, allowing the costs of the retrofits to be paid only from utility savings means the building owners won’t be out any cash. It’s a “just say yes” system.
8. PAINT ’EM WHITE
Look at the tar roofs covering millions of American buildings. They absorb huge amounts of heat when it’s hot. And they require more air conditioning to cool the rooms. Mayor Bloomberg started a program to hire and train young people to paint New York’s roofs white. A big percentage of the kids have been able to parlay this simple work into higher-skilled training programs or energy-related retrofit jobs. (And, believe it or not, painting the roof white can lower the electricity use by 20 percent on a hot day!)
Every black roof in New York should be white; every roof in Chicago should be white; every roof in Little Rock should be white. Every flat tar-surface roof anywhere! In most of these places you could recover the cost of the paint and the labor in a week. It’s the quickest, cheapest thing you can do. In the current environment it’s been difficult for the mayors to get what is otherwise a piddling amount of money to do it everywhere. Yet lowering the utility bill in every apartment house 10 to 20 percent frees cash that can be spent to increase economic growth.
9. DEALS TO MAKE THINGS
Every analysis shows that TARP and the stimulus saved us from a second Great Depression. After the GM and Chrysler bailouts, we have something like 75,000 more jobs in the industry. Closure of the factories and the suppliers with them would have cost a million jobs. The stimulus should have been more vigorously defended in the last election. It did work, but it didn’t “fix the economy” because it was an $800 billion stimulus trying to fix a $3 trillion hole. Nobody can fill a $3 trillion hole with $800 billion, so it didn’t make ordinary people feel a lot better, but without it, the unemployment rate would have been 1.5 to 2 percent higher than it is.
I’m sympathetic with the objectives of the Bowles-Simpson commission; we do need to do something about long-term debt. It’s a question of timing, really. If we cut a lot of government spending while our economy still has so little private investment, we risk weakening the economy even more and increasing the deficit because tax revenues can fall more than spending is cut. That’s why the Bowles-Simpson report recommends we delay big spending cuts until next year. So what should we do? More infrastructure initiatives now would put a lot of people back to work. But President Obama doesn’t have the votes in the Congress to get another stimulus package. When asked why he robbed banks, Willie Sutton said, “Because that’s where the money is.” We have to unlock that money and take steps to get U.S. corporations to invest some of the $2 trillion they have accumulated.
Without regard to their party or their philosophy, Americans have always been great at the art of the deal. The real thing that has killed us in the last 10 years is that too much of our dealmaking creativity has been devoted to expanding the financial sector in ways that don’t create new businesses and more jobs and to persuading people to take on excessive debt loads to make up for the fact that their incomes are stagnant. That’s one reason why we’ve been suffering from anemic employment for years. In the seven years and eight months that preceded the meltdown, our economy produced a meager 4 million new jobs, far too few to cope with millions coming into the workforce, and virtually all those jobs were created in housing, finance, and consumer spending.
10. TRAIN ON THE JOB
Andrew Liveris’s book on how we can bring manufacturing back to America cites a company that interviewed 3,600 people for 100 jobs and hired 47; the others didn’t have the necessary skills. One answer to the skills roadblock comes from the former labor commissioner in Georgia, Michael Thurmond. After job vacancies go unfilled for a certain period of time, the state offers businesses the money to train potential employees themselves. During the training period, the companies don’t become employers, so they don’t have to start paying Social Security taxes or employer benefits. They train people their way, then hire those who succeed as regular employees, reducing the time lag between when a job is advertised and when it is filled. With unemployment at 9 percent and the real rate of those without full-time work higher, there are 3 million posted job vacancies. Filling them faster could make a big difference.
11. TEACH SKILLS WE NEED
I’m trying to figure out why job seekers don’t have the skills companies need; why the community colleges and vocational programs, which have done such a great job for America, are not providing more people with the skills to fill these vacancies. Do people just not enroll in the right programs or do they drop out because of the economy? I hope we can find out.
12. CUT CORPORATE TAXES
It’s true that our corporate rates are the second-highest in the world. But it’s also true that what our corporations actually pay is nowhere near the second-highest percentage of their real income in the world. So I’d be perfectly fine with lowering the corporate tax rates, simplifying the tax code, and saving some money on accountants, but broadening the tax base so that all of them pay a reasonable amount of tax on their profits. That’s what the Bowles-Simpson commission recommended, and it’s the right policy. Lower the rates to be competitive, but reduce the loopholes that cause unfair disparities. We all need to contribute something to help meet our shared challenges and responsibilities, including solving the debt problem.
13. ENFORCE TRADE LAWS
We lost manufacturing jobs in every one of the eight years after I left office. One of the reasons is that enforcement of our trade laws dropped sharply. Contrary to popular belief, the World Trade Organization and our trade agreements do not require unilateral disarmament. They’re designed to increase the volume of two-way trade on terms that are mutually beneficial. My administration negotiated 300 trade agreements, but we enforced them, too. Enforcement dropped so much in the last decade because we borrowed more and more money from the countries that had big trade surpluses with us, especially China and Japan, to pay for government spending. Since they are now our bankers, it’s hard to be tough on their unfair trading practices. This happened because we abandoned the path of balanced budgets 10 years ago, choosing instead large tax cuts especially for higher-income people like me, along with two wars and the senior citizens’ drug benefit. In the history of our republic, it’s the first time we ever cut taxes while going to war.
14. ANALYZE THE OPPORTUNITIES
I’m hosting this month’s CGI America meeting on the assumption that there will be no federal stimulus and no further tax incentives targeted directly toward creating new jobs. Going on these assumptions, we want to analyze America’s economy: What are our assets? What are our liabilities? What are our options? There must be opportunities to be tapped, given all the cash in banks and corporate treasuries. If we have some success, we might be able to influence the debate in Washington in a nonpartisan way because we’ll have economic evidence to show them. I don’t have any problem at all if Congress wants to give tax credits to companies that actually hire people. But I think we have to pay for them, so I’d be happy to go back to the tax rates people at my income level paid when I was president in order to pay for the tax incentives to put more people to work.
The whole purpose of CGI America is to highlight good ideas because not everyone is aware of what’s out there. I’m going to try to get enough commitments that are representative enough of the circumstances facing diverse industries and different cities and states to persuade people across America to try their own version of them in a discussion of our economic stagnation. There’s been a remarkable lack of attention to “microeconomics,” the untapped growth potential of American corporations, entrepreneurs, and workers.
Let’s be realistic here. This is a massive economy. No matter how many impressive commitments we get, we won’t move the numbers. They’ll move the numbers only if enough people say, “Wow, I wish I’d thought of that.”
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5)Swing state economic woes confront Obama
By CHUCK RAASCH
Pockets of the most intense and persistent economic pain overlap with a cluster of presidential battleground states, and unless there is a turnaround that defies most economic forecasts, President Barack Obama will be fighting for re-election next year on as unfavorable ground as any president since at least George H. W. Bush in 1992.
The fact that potential swing states like Florida, Ohio, Wisconsin, Pennsylvania and Michigan are governed by unpopular Republican governors on budget-cutting crusades will play heavily into next year's political calculus. And Obama still has the bully pulpit to make his "we prevented a depression" case in the swing states, as recent trips to Florida and North Carolina showed.
But as his North Carolina trip also showed, questions about whether Obama has been aloof from the struggles of the unemployed and underemployed could present a huge problem for the president in economically depressed swing states key to his re-election. Although economists were saying the economy was recovering by the 1992 election, the senior Bush — whose approval ratings approached 90 percent after the first Gulf War — was successfully portrayed by Democrats as clueless to Americans' economic struggles, and he lost to Bill Clinton.
An irked-looking Obama told NBC Monday that "the notion, somehow, that I'm calm about (peoples' economic struggles) is nonsense. But what is true is that, as president, my job is to make sure that I am finding every good idea that we can to move the country forward."
Nationally, the housing market is lousy and job growth remains anemic. Unemployment in May was 9.1 percent, and it has not been below 8 percent since Obama took office.
As Democratic pollster Stan Greenberg and others have noted, no president since Franklin Delano Roosevelt in the midst of the Great Depression has been re-elected with unemployment above 8 percent. The pace of job growth has been so slow, and the underlying problems in housing and consumer confidence so persistent, that some economists have become convinced that the recovery from the recession of 2007-2009 will take years.
"We are still in the fourth or fifth inning," said Sam Khater, senior economist for CoreLogic, a business, finance and consumer reporting and analysis firm, which reported this month that 22.7 percent of all American homeowners owed more on their homes than they were worth.
That "underwater" mortgage effect remains a huge weight on the economy, and it is worse in many swing states — the closest and most heavily contested states in presidential elections. It not only threatens the immediate financial solvency of many homeowners, but it depresses home prices, which are a key source of wealth and confidence in the future.
"A great deal of the pain of this downturn lies in front of us, still," Douglas Elmendorf, director of the non-partisan Congressional Budget Office, told reporters Tuesday.
Several states key to Obama's re-election — Florida and Nevada, especially — have been among the worst hit by the housing slump. Both have unemployment rates well above the national average. North Carolina, which went for Obama narrowly in 2008 after being solidly Republican in presidential elections since Ronald Reagan's election in 1980, had 9.7 percent unemployment in April.
"Obama's position now is a lot weaker than in 2008, so since he barely won (North Carolina), then I think he would lose there now and would in 2012 unless the economy improves significantly," said David Rohde, a political scientist at Duke University. "It is definitely the economy that is the biggest problem, and the same is true of the other swing states. I do not think people feel the corner has been turned yet."
In Nevada, the hardest hit of all, citizens are distributing the blame, and there may not be much Obama can do, said University of Nevada-Reno political scientist Eric Herzik.
"Our construction industry has collapsed, and home values have collapsed," he said. "Banks get a lot of blame for that. We don't have traditional industrial sector jobs so Obama can't come and campaign about saving the auto industry here. We need people to come and gamble and drink and smoke, and they are not doing it."
Michigan, solidly Democratic in recent presidential elections, continues to struggle with double-digit unemployment, despite federal bailouts that have helped right the auto industry. Ohio, the quintessential swing state, has unemployment slightly below the national average, but its housing problems mirror the nation's.Virginia, where Obama became the first Democrat to win the state since 1964, has had relatively low unemployment, but nearly a quarter of all mortgage holders are in negative equity positions.
In Pennsylvania, whose economy weathered the economic downturn better than it has in the past, there are rising doubts about the Obama administration's leadership on record federal debt and deficits, said Terry Madonna, a pollster and analyst at Franklin & Marshall College.
"You look at suburban voters, middle-class to upper-middle-class, fairly well-educated voters, to them it is debts and deficits now combined with the recession," Madonna said. "(Obama) gets sort of a double whammy there. ... It is the incumbent's fault, whether or not it is his problem to begin with."
Georgia and Arizona — two traditional Republican states that Obama's allies think he could pick up because of dramatic increases in Hispanic populations — both had unemployment above the national average in April. Nearly a third of the mortgage holders in Georgia and almost half in Arizona are "underwater."
But as American Enterprise Institute scholar Norman J. Ornstein points out, many swing states are run by unpopular Republicans, and their policies could be on the ballot next year along with Obama.
"Obama is going to be able to go to Ohio ... and say to the voters, 'If you like what (Gov.) John Kasich has done, you will love what (the Republican nominee) will do," Ornstein said.
In Nevada, Herzik predicted a similar scenario.
"Half the state thinks, 'I am not happy with where the nation is going, but the Republican alternative scares me,' " Herzik said. "And the Republicans will say, 'Obama scares me more.'"
Chuck Raasch writes for Gannett, 7950 Jones Branch Road, McLean, VA 22107. Send email to craasch@gannett.com.
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6)Major Changes to NLRB Rules Announced Today
By Peter Kirsanow
Today the NLRB announced proposed changes to union-election procedures, the effects of which will dwarf the importance of the Boeing case and substantially increase the number of unionized workplaces.
In a nutshell, the NLRB’s proposed rules would implement “quickie elections,” a process that would allow unions to organize a workplace as easily as they could have had the Employee Free Choice Act (also known as “card check”) passed.
This is a very big deal. Union representation of the private-sector workforce has fallen from 35 percent 50 years ago to just 6.9 percent today. Implementation of the NLRB’s proposed rule changes would significantly increase the latter percentage. Here’s why:
The proposed rules would substantially shorten the time period between the filing of a petition for a union-representation election and the actual conduct of the election. Right now, initial elections normally are conducted within 38–40 days of the filing of a petition by the union. Since the typical employer is completely oblivious to the fact that a union has been organizing his workforce for the last 6–8 months, the filing of the representation petition is usually the first time the employer becomes aware of the unionization campaign. The employer then uses the 38–40 days between the filing of the petition and the election to make his case to his employees.
That’s not much time for the employer to get his message out. Indeed, in 2009 and 2010 unions won approximately 68 percent of elections (this does not include the number of petitions withdrawn by unions). Yet the “quickie election” rules proposed by the NLRB will shorten the time frame to a mere 10 –20 days. Make absolutely no mistake: That’s not enough time for even the largest and most sophisticated employers to counter what the union has been telling employees while organizing them for the last 6–8 months. The union win rate will far exceed 68 percent. In fact, it’s likely that many employers will choose to not even go through the expense of an election that he’s sure to lose, but will simply voluntarily recognize the union upon a showing of authorization cards.
Keep in mind also that the NLRB is poised to decide Specialty Healthcare, the practical outcome of which could allow unions to cherry-pick for participation in union elections only those employees the union is certain will vote in favor of representation. Combined with the proposed new election rules, the decision would ease unionization of workplaces in every industry in every state throughout the country.
The proposed rule has several other facets that affect an employer’s ability to make his case to his employees. I will discuss them over the next several weeks before the rules become effective. I will also discuss a number of other major developments in labor law, including but not limited to the Department of Labor’s new disclosure requirements for employers (and their counsel) as well as a case before the NLRB that may render certain employee arbitration agreements invalid.
EFCA died in the senate. But the NLRB, through decision and rulemaking, is in the process of effectuating EFCA’s essential goals without the need for congressional action.
— Peter Kirsanow is a former member of the National Labor Relations Board.
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7)Al-Qaida Becoming More Desperate
By Ronald Kessler
Successful strikes against al-Qaida have made the terrorist organization more desperate and more likely to take risks to kill Americans, FBI officials tell Newsmax.
“The decapitation of al-Qaida leadership and the killing of a senior al-Qaida commander in Pakistan earlier this month are making them more desperate,” one FBI official says. “When they are desperate, they may be willing to change tactics. They might try something more risky.”
As a result, “We believe they are going to start being more active, willing to take more risks with communications or plotting, with shorter timelines on their actions, as opposed to long extended conspiracies,” the official adds.
“Now that they feel more pressure on them, it’s harder to plan long-term conspiracies. You could see more, but smaller-scale, attacks. They will shotgun their opportunities, hoping one or two of them are successful.”
In addition, “They know there is talk of drawdowns in Afghanistan and Iraq,” the official says. “They may be watching until that happens. That will allow them to operate a little more freely.”
At the same time, the official says, “Al-Qaida in the Arabian Peninsula has become more active. They actively recruit westerners who have western passports.”
The FBI’s greatest concern is lone wolf, self-radicalized individuals who hear the radical message through the media or internet.
“They get enough information to do something and initiate on their own,” an FBI official says. “That’s what we fear because they’re so hard to detect. They have to make a critical mistake. They talk to people and try to get some support. That’s why we put trip wires in place and try to develop informants and have relationships with state and local police who pick up tips from citizens.”
As described in my new book “The Secrets of the FBI,” the FBI has devised trip wires that might tip off the bureau to terrorist activity. For example, chemical supply companies are urged by the FBI to develop profiles that pinpoint large or suspicious purchases of chemicals that can be used to make explosives.
“We set these trip wires, and when people come across them, we have abilities to report that . . . someone is buying dual-use technology or the precursors to make nerve gas or industrial-strength peroxide,” says Arthur M. “Art” Cummings, who headed FBI counterterrorism and counterintelligence investigations until last year. “Someone does that, boom! We have an alert, either a HUMINT [intelligence from a human] alert from an individual or a technical alert.”
Besides lone wolves, the FBI is focusing more on insurgents from Iraq who come to this country to support efforts to kill U.S. troops there. Last month, the FBI announced the arrests of two such Iraqi citizens in Bowling Green, Ky.
According to indictments unsealed on May 31, Waad Ramadan Alwan, 30, and Mohanad Shareef Hammadi, 23, allegedly participated in the construction and placement of improvised explosive devices in Iraq and more recently attempted to ship money and weapons from the U.S. to insurgents in Iraq.
“Although there is screening of individuals who come to this country to live, no system is foolproof,” an FBI official says. “If you don’t have any derogatory information on them, they’ll slip through the cracks.”
In the case of the Iraqis who were charged, the FBI learned about their plans and introduced a source to record conversations in which they discussed their activities.
Ronald Kessler is chief Washington correspondent of Newsmax.com. He is a New York Times best-selling author of books on the Secret Service, CIA, and FBI. His latest, "The Secrets of the FBI," is to be released in August.
© Newsmax. All rights reserved.
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8) Jacob Zuma snubs Michelle Obama during First Lady's South Africa visit
South Africa President Jacob Zuma has snubbed the visiting Michelle Obama by sending his prisons minister to meet the first lady at the airport and failing to see her during her three-day stay.
Mr Zuma was out of the country for the first day of Mrs Obama's second solo trip abroad on Tuesday and although he returned on Monday night, aides said he was "not available" to meet her.
Instead, he arranged for Corrective Services Minister Nosiviwe Mapisa-Nqakula to greet her on her arrival in Pretoria on Monday night, and one of his three wives, Nompumelelo Ntuli-Zuma, to meet her briefly on Tuesday.
Mrs Obama, her daughters Sasha and Malia and her mother Marian Robinson, were also granted a rare audience with 92-year-old former president Nelson Mandela at his Johannesburg home.
It was Mrs Obama's first encounter with the global icon, although her husband Barack Obama met him when still a senator on a 2006 Africa tour. Mrs Obama's aides revealed that a mobile phone photograph taken of that meeting now hangs in Mr Mandela's office.
When Mrs Obama made her first solo trip, to Mexico, she was guest of honour at a state dinner hosted by President Calderón and his wife.
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8)All the biased news they see fit to print
By Michael Goodwin
Palin Derangement Syndrome strikes again. The victim this time is dangerously contagious.
In a bombshell announcement, New York Times Executive Editor Bill Keller publicly confessed his sickness. OK, he didn't put it exactly that way, but you don't have to be a doctor to recognize the symptoms. Here's how he started a column in the Times Magazine:
"If the 2012 election were held in the newsrooms of America and pitted Sarah Palin against Barack Obama, I doubt Palin would get 10 percent of the vote. However tempting the newsworthy havoc of a Palin presidency, I'm pretty sure most journalists would recoil in horror from the idea."
It's a paragraph worth parsing. First comes the backhanded admission that the "newsrooms of America" are overwhelmingly liberal. The 90 percent Obama vote Keller cites is consistent with surveys showing the vast majority of journalists tilt left, a fact that explains the warped coverage of government, culture, business and even sports in most major news organizations.
His second sentence condescendingly reveals Keller's agreement with the journalistic "horror" of the "havoc of a Palin presidency."
That's a huge mistake. As the supposed objective editor of the Times' news pages, he is giving license to his staff to go after Palin and, by inference, go easy on Obama. His not-so-subtle marching order is certain to find favor with ambitious reporters and editors hoping to please the boss.
Yes, yes, everybody knows the Times is hopelessly biased. Besides, Keller has resigned, to be replaced by deputy Jill Abramson in September, so he is a short-timer.
True, but Keller's piece on Palin, disguised as a thumb-sucker about her relationship with the media, is important for two reasons. It is a violation of the public image of fairness expected of Times editors, and explains the nasty treatment Palin got during his tenure. He sent reporters to Alaska to dig for dirt on the birth of her last baby in 2008 and recently invited readers to play journalist with her e-mails during her time as governor.
Having grown up at the Times under the great Abe Rosenthal, I find it appalling that Keller has so little regard for the standards that were the true mark of professionalism.
Taking over eight years ago after the tumultuous tenure of Howell Raines, Keller is a reluctant leader. He was effectively voted into the job by the staff, and exercised a light touch.
With reporters and other editors free to default to their own beliefs instead of the facts, the opinions in the news stories often made the editorial and op-ed pages redundant. No wonder the Times is often called the propaganda arm of the Democratic Party.
But the Keller Times didn't just promote liberalism. It became overtly partisan and routinely attacked conservatives and Republicans in its national news coverage, often stretching to score a point for its team. Thus, a television critic could describe a gigolo in a pornographic show as having "bleached blond hair and a Boehner-orange tan."
Other smears were on the front page, such as the innuendo-laden attack on John McCain's relationship with a lobbyist during the 2008 campaign. That article connects with a straight partisan line to the recent hit piece on Supreme Court Justice Clarence Thomas and now Keller's piece on Palin.
On the other side, the fawning coverage of Obama is cringe-inducing, given his record and the nation's problems. An article this week on gay marriage, under a dulcet headline about Obama's "evolving" stance, soft-pedaled his contradictory statements over the years and the fact that he sought advice from gay Congressman Barney Frank about maximizing the political benefit of switching positions.
It was probably inevitable that the paper would lose readers during the recession and the technological revolution. But that doesn't fully explain why the Times also lost its place in the American pantheon. I believe it lost its place because it first lost its way. That was Bill Keller's choice.
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9)
Obama Era Economic Stagnation Explained by Lemonade and Cookies
By C. Edmund Wright
We don't need to ask the wizards of the Ivy League why Obamanomics is not working. Everything we need to know can be explained with lemonade and cookies. Or more specifically, a couple of news items from the last few days involving lemonade and cookies pretty well demonstrates why the economy is doing well in a few select places while being in the tank overall. Two little anecdotes define conservative versus liberal economic thinking, not to mention the inevitable failure of the Obama regime.
First, in Bethesda, Maryland parents were fined 500 dollars when their kids had the temerity to run an "un-authorized" lemonade (and other cold drinks) stand. In fact, the venture was in part a fundraising effort to boot. Talk about making lemons out of lemonade. Now if you're scoring at home, this stunning tale makes it Bureaucrats 1 Entrepreneurs 0 in blue-state Maryland.
Meanwhile, in Texas, Governor Rick Perry signed into law SB 81, making it legal for kids and grandmas to bake cookies and cupcakes for sale at home. Before this law was signed, it was not technically against an ordinance. Now it's Entrepreneurs 1 Bureaucrats 0 in red-state Texas.
Gee, with these divergent thought processes, I wonder which state might have performed better over the past few years with respect to private sector job creation. The answer of course is Texas.
And it's not because of a couple of drink stand jobs here or home baking jobs there will result from the ordinances and laws. It's about the entire notion of the role of government intervention in our economy. In Texas, and all over red-state America, the idea is that government's role in the economy is merely to foster an environment where businesses can prosper. This is a good thing of course, allowing businesses to create jobs and economic opportunities for the owners and employees and investors through the production of attractive goods and services for consumers. This win-win-win equation explains the engine that has fueled the economy of our nation for decades. This is Milton Friedman's compassion theory in practice. He would no doubt like SB 81.
In blue-state America, the notion is that government must manage every aspect of business to make sure rules are followed and that no one is taken advantage of by anyone at any time. It's the idea that highly educated central planners can create a better economy by empowering armies of unelected and unaccountable bureaucrats who will interpret and enforce all of these wonderful ivory tower edicts from the smartest among us. As Friedman would ask sarcastically, just who "would be these angels" that could deem fairness from on high?
The answer of course would be those same some unnamed and unelected and unaccountable bureaucrats in faraway government buildings.
The bureaucratic mindset regarding lemonade in blue-state Maryland stands as a microcosm of the Obama administration. The Bethesda authorities' penalizing of the kids' drink stand is simply a micro-version of the National Labor Relations Board (NLRB)'s attempt to prevent Boeing from opening up their massive Dream Liner plant in North Charleston, SC. It's also much like the EPA running Shell Oil out of Alaskan waters after Shell had invested four billion dollars in exploration in those waters. These are the same battles as the Maryland lemonade stand, just on a scale of billions of dollars. It's the idea that central planners and government statists know what's best for our economy and our population. It's the thinking that the cumulative decisions made by free peoples and free enterprises acting in their own best interests cannot be trusted without bureaucratic supervision.
This is chilling the business climate everywhere. Entrepreneurs are on strike, Ã la Atlas Shrugged, and for the same reasons.
People in business are very sensitive to the government-knows-best mindset too. They can practically smell it. Many started their own businesses for the express purpose of being independent and having control of their own destinies. In short, liberty is often the entrepreneur's main motivation. Accumulating money is of course part of that, because property is a necessary ingredient in the liberty equation. People motivated by independence are obviously going to avoid situations that invite government interference. Under the Obama administration, running a business now invites just that.
Which is the whole issue with Boeing and the NLRB. Boeing has experienced difficult labor regulations in Washington State, costing it billions of dollars and no telling how much customer goodwill in past years. (One of the angriest customers ironically was ultra-lib Richard Branson of Virgin Air, ticked off that Boeing missed delivery deadlines due to union strikes.) Boeing was doing what any sensible business must do, which is to channel future investments into areas where those problems would not arise again. To do otherwise would be to commit economic suicide.
Not interested in suicide, Boeing went to Charleston. Keep in mind that this decision was made before Obama, Reid, and Pelosi came to power and was not only sensible but perfectly legal. There was no thought given to the idea that in America there would soon be the central planning mindset of the new regime. It was beyond thinking that this move would be challenged retroactively as illegal. Welcome to "hope and change."
Is it any wonder businesses have their money "on the sidelines" now? Of course not. To take a chance now would be business malpractice. You don't have to understand complex labor law in Washington or the science of environmental law in Alaska to get this. It's simple common sense. The best economic lessons always are, since economics is nothing more than human nature in action.
Part of Milton Friedman's fame comes from the famous "pencil" example, where he describes a five-cent pencil is literally the result of cooperation and products from multiple continents by people who can't stand each other -- or understand each other. And yet, the marketplace weaves them together through a series of self-interested decisions to produce a pencil for a nickel. It demonstrates that this miracle could only happen in the marketplace. A government-mandated system requiring products from multiple continents would no doubt produce pencils costing thousands of dollars. The market thus not only forges products and prices that central planning cannot, but the collateral benefit is cooperation from people who otherwise would not cooperate.
To understand why our economy is not in recovery and cannot possibly get there under this administration, it's even simpler than Friedman's pencil. Just compare the government view of lemonade stands in Maryland versus the government view of homemade cookie kitchens in Texas. Have some cookies and lemonade. It's all you have to know. It's so simple, even an Ivy Leaguer can do it.
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