Friday, June 15, 2012
Random ruminations from your resident curmudgeon...
By now, we are all aware of the "private sector is doing fine" gaffe from President Obama. While this comment shows that the President and those that surround him are painfully out of touch with what is happening in this country, it is reflective of their world and the world of government. For so many at all levels of government, the perception is that government creates jobs and grows the economy. Nothing could be further from the truth, as government does not add anything to our nation's GDP or productivity. For most of us in the private sector, government is extra weight that must be lugged around in order to be productive. Yet the mantra out of Washington is that more spending on government will boost jobs and productivity. Ya think? Consider this: since the recession began in in 2008, the private sector has lost 4.6 million jobs while federal government payrolls have fallen by 240,000 jobs. Looking at our economy today, are we financially healthier and better off now than we were in 2008? The obvious answer is no, yet those in Washington insist on piling on more regulation and government intervention- and more government workers- while the private sector struggles to add jobs. Here is the fact that should predominate our thinking on this matter: it is the private sector that creates jobs, not government. It is the private sector that takes the risk and makes the investments necessary to add new employees, not government. And if our economy is ever going to grow and add new jobs, it will come from the private sector and not government.
Thinking about getting married? Try assembling some IKEA furniture first to see if you're really compatible.
As we draw closer to the November election date, the rhetoric is going to heat up, and I encourage any of you to get your BS meters out to test what comes out of a candidates mouth. The latest comment that caused the BS meter to go off the scale was President Obama's claim that "since I have been President, federal spending has risen at the lowest pace in nearly 60 years." The mendacity of that statement is breathtaking, but since the main stream media, an unabashed arm of the Democratic Party, will not fact check the claim, I am here to do so. To see how breathtaking that lie is, we need some historical context. Using the federal government's National Income and Products accounts as a basis for measurement ( a more accurate measure of appropriations and outlays in comparison to GDP, or national income), we find that when Bill Clinton became President in 1992, government spending was 23.5% of GDP, and working with a Republican Congress, was 19.5% of GDP when he left office 8 years later. Now the numbers get interesting. During the first 6 years that George Bush was in the White House, federal spending rose to 21.4% of GDP. However, during the last two years of his second term, federal spending rose 27.3% of GDP, the largest peacetime expansion of federal spending in history. Since President Obama has come into office, we have had $1.8 trillion in two different stimulus programs (see the item above to see how effective these were in creating jobs): over $3 trillion in new debt (and more, much more coming); and the $1.7 trillion socialized medicine program known as Obamacare. Oh yes, don't forget the impending $607 billion dollar tax increase awaiting us on January 1 if Congress and the President do nothing to extend the lower tax rates. Currently, federal spending as a percentage of GDP sits at 26%, with the drop attributable to repayment of TARP funds from banks which was counted against spending. Oh, yeah, that 26% of GDP does NOT include the onerous burden of Obamacare, which begins to kick in next year. The most important take away from all this is simply that government spending cannot continue unchecked. Both parties in Washington are guilty of spending wildly, and we as citizens are going to have to get involved in the numbers and begin to hold our leaders accountable for their profligacy.
I tried one of those "make money at home" endeavors, but counterfeiting is harder than it looks.
Watching what is going on in the Eurozone with the PIIGS (Portugal, Italy, Ireland, Greece, and Spain) and their economic struggles is both fascinating and a portent of what could happen in our country and other economies if not careful. How? One of the measures to restore economic health in these troubled countries has been to raise taxes. Now there is no doubt that there has to be tax revenue flowing into any government for it to function, to provide for a national defense, the general welfare, and those (supposedly) limited government functions. The dilemma for most politicians and bureaucrats is the age old question of how much tax should be collected. For most politicians, taxes are never high enough. Well, according to a recent European Commission report, up to 40% of the debt reduction in these troubled countries has come from tax hikes and not spending cuts. And we are seeing how that is playing out with social upheaval and the potential of the break up of the European Union. Here is the bottom line: raising taxes in the middle of an economic downturn, as Obama and the Democrats are proposing, is an economic disaster. Raising taxes without curtailing the bloated level of government spending is untenable. We as nation are on the same same path as the PIIGS, as "old" Europe, and we will reap the same destructive economic and societal results if we do not change course. For lasting economic reform, we must demand that the government reign in its spending and not just raise taxes. This is what the November election is about.
Some days, my wife tells me she feels like the weight of the world is on her shoulders. Other days, she doesn't carry a purse.
And that, my friends, is my view.