Category Archives: economy

Americans Want Spending Cut Not Increased to Pay Down National Debt (corrected)

Posted on July 14, 2011 by | 1 comment

By Daniel Downs

The current debate in Washington over increasing the debt ceiling is one of perspective. The federal government, like the rest of us, spends nearly twice as much as its income. The difference between the bureaucrats and us is many American don’t keep increasing their debt to pay for it. Washington bureaucrats apparently disagrees. Yet, it seems they also believe serious spending cuts are in order.

The confusion may lie in the political rhetoric. Washington bureaucrats want us to believe they believe spending cuts are necessary while they silently increase spending to compensation for the so-called spending cuts. In other words, politicians must raise the debt ceiling again to pay for the increases in spending in order to cut spending that will balance the national accounts. The end result thus will be tax and spend as per plan.

According to a recent Gallup Poll, most Americans would not like the above plan. “Republicans … tilt heavily in favor of reducing the deficit primarily if not exclusively with spending cuts (67%) as opposed to tax increases (3%). Fifty-one percent of independents share that preference. Democrats are most inclined to want equal amounts of spending cuts and tax increases (42%), though more favor a tilt toward spending cuts (33%) than tax increases (20%).”

The problem with the Gallup Poll is the deficit. The deficit is the difference between spending and income. Yet, the underlying problem is not the deficit. It is the continued borrowing to pay on the ever-increasing debt.

And, if Washington Bureaucrats would stop trying to tell us how to spend our money for such things as health care, televisions and light bulbs, the federal government could cut spending by hundreds of millions if not billions. One small example is light bulb regulations. The Congressional Budget Office (CBO) estimates a $30 million reduction in federal spending the regulation requiring only the manufacture and consumption of the new squiggle-looking, mercury containing, energy efficient light bulbs were eliminated.

Besides all that, Michelle Bachmann claims the government already has enough revenue to pay on its debt. Her logic is reasonable. The rest of us don’t seek more debt to pay for more debt. We are supposed pay down the debt before get new loans–Treasury I.O.U.s, Fannie Mae backed mortgages, and the like. As the position of those she represents, politicians and their professional cronies must quit trying to spend America’s money it does not have. Such behavior seems to approach something similar to taxation without representation about which the Feds are expert practitioners.

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The Price of Being the Enemy

Posted on July 11, 2011 by | 1 comment

by Gary Palmer

The evidence is undeniable – global warming is now a major problem for practically every person in America, including the people of Alabama. If you don’t believe it, check your monthly utility bill or the price of gasoline to see that global warming is a big problem in terms of what it costs you.

Technically, the problem is not global warming. It began with cooked up statistics that leftist politicians and environmentalists used to push an agenda that will devastate our economy and do nearly nothing to impact the global temperature. A formidable array of politicians and scientists have bought into the proposition that human activity is bad for the planet.

This belief is not new. In their book The First Global Revolution published by the Club of Rome in 1998, authors Alexander King and Bertrand Schneider make the case for using predictions about worldwide environmental catastrophe to force nations to change economic and governing policies.

King and Schneider wrote, “In searching for a common enemy against whom we can unite, we came up with the idea that pollution, the threat of global warming, water shortages, famine and the like, would fit the bill. In their totality and their interactions these phenomena do constitute a common threat which must be confronted by everyone together.” They concluded, “All these dangers are caused by human intervention in natural processes, and it is only through changed attitudes and behavior that they can be overcome. The real enemy is humanity itself.”

Hmmm. Based on that statement it would be logical to conclude that, if people are the enemy, policies that punish people are not necessarily bad as long as the policies can be billed as helping save the environment.

Needless to say, that would not go over well with most Americans who are opposed to such schemes as Cap and Trade. Even though the Cap and Trade bill died in the U.S. Senate last year (after passing in the House), the Environmental Protection Agency (EPA), with the full support of the Obama Administration, is in the process of implementing it anyway. If the EPA succeeds in this effort, the impact on the American economy will be devastating.

A Heritage Foundation analysis of the Cap and Trade bill that passed the U.S. House of Representatives projected that the GDP for the United States would decline by a cumulative $9.4 trillion between 2012 and 2035. Heritage also projected that net job losses would approach 1.9 million by 2012 and could approach 2.5 million by 2035. The irony of the job losses is that they will hit manufacturing and mining particularly hard, eliminating thousands of union jobs.

Additionally, the Tax Foundation projected that the total burden of the Cap and Trade bill passed by the U.S. House of Representatives in 2009 would cost the average family of four over $1,200 per year. Moreover, this burden is regressive across income levels, consuming a significantly higher percentage of low income households’ income. According to the Tax Foundation, the Cap and Trade bill will cost households in the bottom 20th percentile of household income $617 per year or about 6.2 percent of their income.

Even though the U.S. Senate rejected the Cap and Trade bill, the Obama Administration is using the EPA to implement it anyway and at significant cost to low- to middle-income families. Perhaps as a way to justify new, more costly regulations, the EPA released a report earlier this year claiming that the Clean Air Act of 1990 will avert 230,000 premature deaths and add $2 trillion to our economy by 2020. The estimated economic benefits in the EPA report range from $250 million to $5.7 trillion, making it appear that the estimators could not come up with anything close to what the economic benefit might be, so they split the difference at $2.7 trillion.

Claiming that 230,000 lives were spared a premature death as a result of the EPA’s actions is in the same genre as justifying the billions of dollars wasted with the Stimulus Bill by claiming it saved an unspecified number of jobs. No one can prove that environmental regulations have saved lives any more than it can be proved that implementing cap and trade regulations will save the planet, but we can see the proof of the impact that these regulations are having on our household income.

High utility bills and the price of gasoline are just part of the price you pay for being the enemy.

Gary Palmer is president of the Alabama Policy Institute, a non-partisan, non-profit research and education organization dedicated to the preservation of free markets, limited government and strong families, which are indispensable to a prosperous society.

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Poll: Americans Want National Debt Paid Down, Not Increased Through More Spending

Posted on July 7, 2011 by | Leave a comment

According to this McClatchy-Marist Poll, nearly six in ten American adults — 59% — want the federal government to make the reduction of the debt its priority even if the economy is slow to recover.

Capitol Hill politicians should get the hint that Americans are against raising the debt ceiling. They want a balanced budget. They need to find a way to reduce the debt by half in order leave with their means.

Every empire, the Roman Empire included, defaulted on its debt. Why should America be any different? Imperialists always spend more than a working public can afford, which is the reason why so many Americans went backruptcy or default on their loans during the great recession. The American government reflects its people. Well, the current politicians reflect about a third.

About one-third — 33% — want the government to stimulate the weak economy even if it costs more money.

“For the public, it’s all about the debt,” says Dr. Lee M. Miringoff, Director of The Marist College Institute for Public Opinion. ”For Washington, the devil is in the details.”

Looking at party, 79% of Republicans want the debt to be paid down while 15% think stimulating the economy should be the priority. There is less of a consensus among Democrats. Half — 50% — believe the government should focus on stimulating the economy while 45% say the national debt should top the government’s “to do” list. More than six in ten independents — 61% — think the priority should be the reduction of the debt even if the economy rebounds slowly. This compares with 32% who say the stimulation of the economy should be the main issue even if it costs more money.

The McClatchy-Marist Poll reported Americans are still pessimistic about the economy and for good reason: Three in four believe the U.S. is still in recession.

A majority of Americans — 53% — say that, when thinking about the U.S. economy, the worst is yet to come. However, 42% believe the worst is behind us. Six percent are unsure. When McClatchy-Marist last reported this question in April, 57% thought there was more bad economic news to come, 39% said better economic days were ahead, and 4% were unsure.

And, 75% of residents nationally still think the country is in a recession. This compares with one in five — 20% — who say the nation has come out of the recession. Five percent are unsure. In April, similar proportions held these views. At that time, 71% reported the recession was not over, 25% said it was, and 4% were unsure.

To read more, go to the Marist Poll.

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Poll: More than Six in Ten Unhappy with Obama on Deficit

Posted on June 30, 2011 by | Leave a comment

President Barack Obama met with Senate leaders yesterday to jumpstart stalled budget talks, but do voters nationwide agree with how the president is handling the federal budget deficit?

According to this McClatchy-Marist poll, 61% of voters disapprove of how the president is handling the deficit. Fewer than one-third — 31% — approve, and 8% are unsure.

“President Obama is increasingly focusing on and is the focus of budget negotiations,” says Dr. Lee M. Miringoff, Director of The Marist College Institute for Public Opinion. “Once again, it seems the buck stops in the oval office.”

While a majority of Democrats — 56% — approve of the president’s performance on the issue of the deficit, nearly four in ten — 37% — disapprove, and 8% are unsure. True to party lines, most Republicans — 89% — disapprove of the president’s fiscal management while only 7% approve. Four percent of Republicans are unsure. Among independent voters nationally, 65% disapprove of how the president is dealing with the budget deficit, and 26% approve. Nine percent of independents are unsure.

Voters are also voicing their dissatisfaction over the president’s handling of the economy. In fact, President Obama’s rating on the economy has hit an all-time low. Just 37% of registered voters nationally approve of the way the president is handling the economy while nearly six in ten — 58% — disapprove. Five percent are unsure.

When McClatchy-Marist last reported this question in April, 40% gave the president high marks on how he was dealing with the economy while 57% rated his performance as sub-par. Three percent, at the time, were unsure.

However, many voters still don’t blame President Obama for the nation’s current economic conditions. 61% report the president inherited them while 31% think they are the result of his own policies. Nine percent are unsure. Little has changed on this question since McClatchy-Marist’s previous survey. In April, 63% thought the president faced these trying economic conditions when he entered office while 30% said his policies created them. Seven percent, at the time, were unsure.

The McClatchy-Marist report can be read in its entirety by going here.

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Creating Jobs

Posted on June 29, 2011 by | Leave a comment

By Congressman Steve Austria

Currently, the national unemployment stands at more than 9 percent, we have experienced 28 months of unemployment above 8 percent, and Ohio’s unemployment is more than 8 percent. In our own communities we have seen these statistics play out on a daily basis. Most of us know of a family member or friend struggling to find work or may know of a local business that has just shut its doors. Many people have lost their homes and a lot of students coming out of college and graduate programs are unable to find the level of gainful employment they are seeking. To put a difficult issue simply, we are facing tough economic times.

June marks the one-year anniversary of this President declaring a “Summer of Recovery.” In my opinion, last summer seemed like anything but a recovery, and this summer is not looking much different. The truth of the matter is that the last Congress failed to deliver on the promises they made to put Americans back to work. We are now faced with a crippling national debt that threatens the ability to help our country stay competitive in the global marketplace.

To jump start our economy and get Americans back to work, we must go in a different direction than where the previous Congress led us. It is time to get America back to what it does best – which is creating, innovating and leading the world. I am committed to taking every possible step to help get our country back on track and Americans back to work, but I will not do it by putting the tab on our children and grandchildren.

Since January, my Republican colleagues and I have worked furiously to cut spending. These funding debates have not been easy, and tough decisions have been made and are still being made. Our philosophy is based on the tried-and-true economic principle that we must stop borrowing and cut spending which will provide more certainty in the private sector and thus grow the economy.

In order to regain the confidence small business owners and entrepreneurs need to hire new workers and expand, we must remove the Washington red tape and the unnecessary, burdensome regulations. We must streamline the tax code and lower the tax rate for businesses and individuals to spur investment back into the economy and encourage growth. Furthermore, it is important that we promote lower energy costs through increased production, have less reliance on foreign oil, and encourage all forms of domestic energy production.

To learn more about our plan to put the economy back on track, please visit www.jobs.gop.gov.

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CSI Ohio Reforming State Regulatory Environment One Rule at a Time

Posted on June 29, 2011 by | 3 comments

By Lt. Governor Mary Taylor

When Avon Mayor Jim Smith read an article about the launch of CSI Ohio: The Common Sense Initiative in January, he sat down and drafted a letter to me. Smith’s letter detailed a problem that was keeping a local small business from being competitive, growing and possibly adding more jobs in Lorain County.

Custom Culinary, a local food manufacturer, was being bogged down by a senseless government regulation that prohibited it from purchasing bulk quantities of alcohol for the production of soups, sauces and purees. For one recipe, some of the company’s 39 employees had to pour 140,000 pounds of wine into a vat of sauce one bottle at a time. The process was time consuming, costly and kept the business at a competitive disadvantage. It took just three days for CSI Ohio to identify a common sense legislative solution to Custom Culinary’s problem, something Mayor Smith had pleaded with others for years to fix.

Gov. John R. Kasich and I developed CSI Ohio to do exactly what it did for Custom Culinary: solve problems. Since it was launched on January 10th, CSI Ohio has been busy developing a process to hold state government accountable for implementing business regulations that incorporate the principles of transparency, consistency, predictability, flexibility and balance. As agencies develop new regulations and review existing ones, CSI Ohio will require them to analyze the regulation’s impact to business. The questions we are asking include the following: What are you trying to accomplish through the regulation? How will you know if it’s been successful? What types of businesses are impacted and how much will it cost Ohio’s job creators?

The state’s new rule review program is off to a productive start. Agencies are pulling back regulations that don’t meet the common sense test. They are identifying alternative regulations that are just as effective but have less impact on business and job creation. And perhaps most important, they are bringing stakeholders and interested parties into the process of developing regulations, not just commenting after the fact.

For example, in March, the Public Utilities Commission of Ohio rescinded administrative rules that would have applied the same standards meant for cross-country semi-truck drivers to small business owners (such as landscapers, builders and event supply companies) with vehicles between 10,001 and 26,000 pounds. In April, the Ohio Optometry Board withdrew a rule that would have changed the terms of contracts between licensed optometrists and retail stores for providing eye care services. And more recently, CSI Ohio worked with the Ohio Environmental Protection Agency to complete the delivery of a long-awaited package of general permits that had lingered at the agency for the past ten years.

We most certainly have our work cut out for us as we move forward and begin to see tangible results, but we need your help as well. Feel free to contact us via email at CSIOhio@governor.ohio.gov or visit us online at www.governor.ohio.gov/csi to get routine updates and to let us know about senseless government rules or regulations standing in the way of job creation.

Mary Taylor is Ohio’s 65th Lieutenant Governor. She was sworn into office on January 10, 2011, the same day Governor John R. Kasich named her to lead CSI Ohio: The Common Sense Initiative to reform Ohio’s regulatory policies, and serve as the director of the Ohio Department of Insurance.

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Threat of Another Recession, Look to Europe

Posted on June 28, 2011 by | Leave a comment

The potential for another recession is high, according to financial adviser John Mauldin. The primary reason is not too much overspending by the federal government, quantum easings, or too many bad loans to people who couldn’t possibly repay. No, it is Greece and lesser debt-ridden European nations with their insolvent banks this time.

Mauldin’s concern is based on two weeks spent in Europe speaking with investors, bankers, economists, and other people. Many Europeans see continued decline in the value of both the Euro and the dollar. The same believe more quantum levels of money printing are inevitable in order to save their economies from default. One of Europe’s more astute financiers even see the Euro ceasing to exist in the near future.

Even Bernanke warned the possible negative impact on America’s economy if Greece defaults and European banks fail.

In Greece, the economy is so bad that drug companies are refusing to send hospitals needed medicine because hospitals cannot pay their bills.

Pharmaceutical companies are starting to refuse to deliver to Greek hospitals, as they are up to two years behind on their payments. It turns out that Greece owes some €6 billion to private businesses like hospitals and simply cannot pay. Those costs are rising, and much of it is to hospitals for medical care supported by the government. They are issuing bonds (shades of California) for the debt in some cases, which sell for a discount of 50%, if they can be sold. And we thought finding €12 billion was a hard thing.

That is one reason Americans should not allow socialist Democrats to socialize health care.

To read John Mauldin article, titled “The Contagion Risk of Europe,” go to his website http://www.johnmauldin.com/frontlinethoughts/the-contagion-risk-of-europe

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The State of Ohio’s Economy

Posted on June 27, 2011 by | 1 comment

By Daniel Downs

The Ohio Monthly Financial Report came out earlier this month. In it, the Office of Budget and Management summarizes the economic condition of the state relative to both the Midwest region and the nation. Economic criteria covered by the Report include growth of the economy, employment, consumer income and spending, manufacturing, construction, as well as government revenues and expenditures.

Economic growth as measured by GDP continues at a slow pace. Leading economic indicators decreased in April. Contributing to the slight decline of the economy is supply chains disruptions to automakers caused by the Japan earthquake and the negative impacts of flooding, tornadoes and fires here in the United States. Even so, the Ohio Coincident Economic Index continues to report increased growth. In fact, the 12 month rate of change increased to 6.3percent–the fastest since the 1990s.

Ohio gained 8,600 new jobs in April while unemployment decreased from over 9 percent to 8.6 percent, which 0.4 percent less than the national average. Employment increased in all sectors except local government. Unfortunately, Ohio has 357,000 fewer employed citizens than before the recession.

After decreases in unemployment claims during the first three months of 2011, Dayton area unemployment increased from 2,878 to 3,461 or 20 percent, according to the Ohio Bureau of Labor Market Information. This was reflected by a small decline (0.1%) of employment in April. In spite of occasional increases and decreases, Dayton area employment growth has remained flat for over a year unlike the rest of Ohio.

While Ohio jobs increased, manufacturing production decreased in April. Because of the impact of the Japan disaster, this trend is expected to continue to the end of the year.

Nationally, commercial construction increased, but remained flat throughout the Midwest. Private residential construction showed the same trend. The Dayton area was no exception. Private residential building permits increase 26 percent. Housing prices however continue to fall in Ohio and throughout the nation.

Some question the accuracy of the Case/Shiller Home Price Index. Yet, the Federal Housing Finance Agency (FHFA) also shows similar declines in home prices. For Ohio, the FHFA reports a 2.9% decline in home values for the first quarter of 2011, which is 6.7% less than in 2010.

Ohio personal income exceeds that of the national average. Personal income increased 3% during the fourth quarter of 2010, which is 3.8% above the previous year. Personal spending has kept pace with increased income. At least part of the increase has gone not for more products but for the same products at higher prices like gas and food. In other words, real disposable income is unchanged.

In places like Xenia, real income is even less because of collectively self-imposed higher taxes.

The Report also addressed where personal income was being spent. Retail sales were up in April because of Easter. Curiously, sales at drug stores, apparel stores, and auto dealerships were all down, but sales at luxury retailers significantly increased.

Who would have guessed that the federal stimulus (QE1 and QE2) would create inflation instead of inspiring the wealthy to create many more good new jobs? Maybe they did at luxury retailers.

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Gov. Kaisch and Senator Brown’s Battle for Ohio Taxpayer Money

Posted on June 9, 2011 by | Leave a comment

Govenor Kaisch has decided to drop out of the National Governor’s Association (NGA), according to the Columbus Dispatch. Kaisch wants to save Ohio the $176,000 annual dues. Moreover, he claims the costs are greater than the benefits. Of course, the NGA’s recent report that spot lighted some of Kaisch’s budget balancing cuts as among the biggest in the nation might influenced his decision just a little bit.

While Gov. Kaisch is trying to save the state money, Senator Sherrod Brown want to increase the cost of government in Ohio. Brown is seeking donation to campaign agianst Ohio newly revised public employee collective bargaining law known as Sentate Bill 5. It’s understandable why Senator Brown is stumping against SB5. If he stuck to just making federal laws, his collective baragaing union voters would likely vote for someone else the next election.

Readers might have guessed that this blogger favors SB5. Saving taxpayers money is a good thing. Reformation that benefits non-union workers and taxpayers is a good thing too. Even better is local and state representatives enabled to represent the best interest of their community taxpayers rather than being hamstrung by rigid collective bargaining law that favor the public unions. And inspite of the growing number of public employees, the majority of Ohio workers are not members of any union.

If memory serves, Governor Kaisch signed SB5 into law.

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Inflation Eating Away at Personal Income

Posted on June 7, 2011 by | Leave a comment

The top line on the latest personal income numbers might have looked pretty good initially when released by the Bureau of Economic Analysis on the morning of May 27. But once inflation was taken into account, the story changed dramatically for the worse.

In nominal terms, personal income was up by 0.4 percent in April, which followed on growth of 0.4 percent in March, 0.4 percent in February, and 1.1 percent in January. As for disposable income (i.e., personal income less personal current taxes), again in nominal terms, it grew by 0.3 percent in April, which followed on growth of 0.4 percent in March, 0.3 percent in February, and 0.4 percent in January.

But once inflation is factored in, the gains disappear.

Growth in real personal income (excluding current transfer receipts) was nonexistent in April (0.0 percent), which followed -0.1 percent in March, 0.0 percent in February, and 1.1 percent in January.

Meanwhile, growth in real disposable income came in at 0.0 percent in April, 0.0 percent in March, -0.1 percent in February, and 0.1 percent in January.

In the end, real disposable income is what matters, as that captures the dollars available for consumption, saving and investment. And for the first four months of 2011, real disposable income growth has been nonexistent. Specifically, the inflation tax, if you will, has wiped out gains in disposable income.

This is another glaring example of how inflation affects the economy, and why the Federal Reserve needs to get focused on fighting inflation, rather than trying to manipulate economic growth – which, as we see here and in most other economic data since the late summer 2008 – only makes matters worse.

By Raymond J. Keating, Chief Economist at Small Busines & Entreprenurship Council (SBEC)

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