Economy languishes in the face of failed big government solutions

Last Friday’s GDP report was a splash of cold water in the face of those who keep hoping against hope that, as the President and Vice President keep telling us, the nation really, really is seeing economic recovery. Really.

The report adjusted downward last month’s preliminary 2nd quarter GDP estimate of plus 2.4 percent. Even that rate, however, was not great news, because it fits into the prophecy of those economists who believe the country is moving toward a double-dip recession, and the adjusted rate, 1.6 percent, is dramatically lower than the original projection.

GDP numbers have been moving downward since December’s robust 5.0 percent, which was only the second positive number in quite a while. But the last two quarters (3.7 percent and 1.6 percent respectively) show the country is economically unstable.

From 4Q 2009 to 1Q 2010, the GDP rate dropped by 26 percent, and from there to 2Q 2010 it dropped 66 percent. The only good news from this is that we are still in positive territory. But if the next quarter’s loss in GDP is even half the size of this one, we’ll be in negative territory once again, and on the edge of another technical recession.

Even staunch Obama supporters and others who subscribe to Keynesian big government solutions ought to be ready to acknowledge that the humongous stimulus has not worked. The economic policies in place since Mr. Obama took office 19 months ago have been successful in only one area: creating tremendous uncertainty among the nation’s businesses, crushing essential job creation.

A dizzying array of new taxes and increases in old taxes now face the American people, from provisions in the health care reform bill to energy taxes in cap and trade legislation and other measures. However, increasing taxes right now – particularly on the energy industry – is foolish, because doing so will have a broad negative effect on economic activity.

Responding to questions about how proposed energy taxes will affect economic activity, Andrew Moylan, Director of Government Affairs at the nonprofit National Taxpayers Union, provided the following answers.

Q: To what degree will tax hikes on the energy industry effect gasoline/natural gas prices and the price of energy produced by oil and gas?

A: “It's difficult to determine exactly how much the impact will be in dollars and cents, but with potential tax hikes of $20-30 billion, it certainly will not be zero. At the end of the day it is consumers that bear the burden of tax hikes, so heaping tens of billions worth in higher taxes on American energy companies just means tens of billions worth in higher energy prices for American consumers. That's never a good mix, but it's particularly worrisome given our extremely fragile economy.”

Q: What are the likely secondary effects on prices of other goods?

A: “Oil and gas are crucial inputs in the broader American economy, which is why price shocks tend to have a cascading effect into other areas of the economy. As an example, let's say we were to raise taxes by $30 billion on American cheese manufacturers. That would be a terrible idea, as it would harm farmers, grocers, and cheese consumers alike. But if you don't much care for cheese, this tax hike isn't likely to affect you too terribly much (with the exception of some minor changes in the prices of other goods).

“That's because cheese is not the lifeblood of much of our economy the way oil and gas are. Walk into any Wal-Mart store in America and virtually everything on the shelves was made or transported with oil. The semi-trucks that fill our highways to deliver those goods are dependent on affordable transportation fuels.”

Q: How will the tax increases affect the way oil and natural gas companies operate?

A: “There's an axiom of economics that says, ‘If you tax something, you get less of it.’ Stated simply: if you raise taxes on American energy production, you'll get less American energy production. If companies do not find it profitable to continue to search for much-needed oil and gas in the United States, it will have a number of effects. These tax hikes will likely lead to oil and gas companies employing fewer Americans to harness our domestic resources. That will harm growth and recovery across a wide swath of the economy. It will also likely lead to more importation of oil from foreign sources, such as Canada, Mexico, or Saudi Arabia, to meet America's ever-growing energy needs.”

Today, one of every 10 Americans wanting to work can’t find a job, and millions more are under-employed, or have simply given up looking for a job. This is nearly 25 percent worse than Mr. Obama said it would be if Congress passed the stimulus bill.

What is needed is to provide stability for the private sector so that it can move the economy forward. But Congress and the administration have instead created havoc in the private sector through big government economic policies that punish business. They don’t have much time left to transform their failed policies into a sensible plan to stabilize the economy and allow a true recovery to develop.

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Technorati Tags: Economy, Politics, Government, Liberalism

Must-See video: a Brit's view of the NYC mosque

Everyone should watch this video, whether you support the Ground Zero mosque, or whether you join with a majority of Americans who oppose it.

Pat Condell's perspective is worth your time. "Is it possible to be astonished, but not surprised?"

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Technorati Tags: Islam, Politics, War on Terror, Political Correctness

We have turned our country into somethingits Founders would not recognize

Things are terribly off course in the United States, and have been moving in the wrong direction for so long that many Americans not only don’t really realize it, they have come to believe this condition is normal and proper.

Here are two examples demonstrating how absurd things have become, both involving Nancy Pelosi (D-CA), the Speaker of the United States House of Representatives, although she is by no means the only one who warrants being cited.

Back during the uproar over the proposed health care reform bill, when opponents were complaining that the 2,700-page bill was too large to be read and understood before it was voted on, and that it contained features whose results were poorly researched, Ms. Pelosi told us that we “have to pass the bill so that you can find out what’s in it,” and did so with a smile on her face, without so much as a hint that she appreciated the absurdity of that comment.

A majority of Americans have expressed their opposition to the proposed Islamic center in New York, close enough to the Twin Towers that the building on the site where the mosque will be built was damaged badly enough to render it unfit for occupancy by wreckage from the planes hitting the World Trade Center. That is, in fact, the only reason that property was available for the mosque project in the first place.

The most valid of that opposition, of course, comes from the families and friends of the innocent people who were murdered in the attack, or whom we saw on TV jumping to their death to avoid being incinerated, and the police and fire fighters who died trying to save them. But there are others whose legitimate opposition to construction of the Cordoba House within the zone of 9-11 damage focuses on the fact that it is a painful reminder of the attack perpetrated by people worshiping the same god of Islam as the project’s proponents. Speaker Pelosi suggested that there ought to be an investigation to discover what sinister force is behind the opposition, and how “this [is] being ginned up.”

The founders of this once-great nation must be spinning in their graves as a high elected federal government servant seriously contends that the American people can’t know what’s in important legislation until it has been passed into law, and that bills before the Congress are routinely hundreds or thousands of pages long and often haven’t been read before being voted on, and that normal Americans expressing their thoughts about important events and issues would be the subject of a federal investigation for their actions.

We seem to have traveled through a wormhole into an alternate universe, where black is white and common sense has been stood on its head, along with our country’s founding principles. It is the stuff of a Mel Brooks movie, just as absurd as High Anxiety or Blazing Saddles, though not at all funny.

Those brave men and women who mutually pledged to each other their lives, their fortunes, and their sacred honor to fight for and win freedom from the oppressive rule of the British Crown and establish a small and limited government focused on individual liberty would be bewildered by the gargantuan, intrusive, inefficient and wasteful bureaucracy that has evolved over the 230-plus years since their brave sacrifice.

Could they ever have intended a government that would tell farmers how much wheat they can grow; dictate that every American must purchase a particular sort of health insurance, whether they want it or not; regulate how much water pressure your shower can use and what kind of light bulbs you can buy; and require average Americans to work more than 25 percent of the year – 99 days – just to pay their taxes?

Would they condone the federal government abandoning one of its major responsibilities – preventing the illegal entry into the country by millions of people, and protecting its citizens from those illegals that have violent and criminal intentions? Would they agree with taking a state to court, when in the face of federal incompetence that state attempts to protect itself and its legal residents from this onslaught of illegal aliens?

How would they react to government officials and other Americans branding citizens who rise up in constitutionally protected opposition to an out-of-control federal bureaucracy and to events with which they strongly disagree as “Nazis,” and “homophobes,” and “racists?” Indeed, was it not this same sense of protest at government oppression that brought on the American Revolution?

Whatever happened to Jefferson’s dictum, “that government is best that governs least?”

Someone once said that the country is never in greater danger than when Congress is in session, and when the House, the Senate and the White House are under the control of the same political party, that danger is magnified immensely.

The elected servants in Washington are grossly out of touch with the people they were sent there to serve. They are not listening to us, they are dictating to us, and it’s time for a change.

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Technorati Tags: Government, Politics, Liberalism, Democrats

A mosque at Ground Zero: A healing idea, or a provocation?

The controversy over the proposed Muslim “Cordoba House” two blocks from Ground Zero in New York City has been heating up over the last few weeks. Cordoba House, described as a community center similar to a YMCA by its chief proponent, Imam Feisal Abdul Rauf, is viewed as an affront by the families of 9-11 victims and others sensitive to the horrors of the September 11, 2001 attacks by radical Muslims who hijacked airliners and flew two of them into the World Trade Center, killing nearly 2,800 people.

In an announcement that caused political observers to scratch their heads, President Barack Obama told the nation last week that the mosque is a matter of religious freedom, which is guaranteed by our Constitution. Once again, Mr. Obama has inexplicably involved himself in an issue that didn’t require him to take a position, unnecessarily creating problems for himself, and further fueling the fire of the opposition.

His comment drew immediate and strong reaction from opponents, forcing a clarification. “My intention was simply to let people know what I thought, which was that in this country, we treat everybody equally and in accordance with the law, regardless of race, regardless of religion,” he said later.

Fair enough, Mr. President, but you’ve got it all wrong: the opposition does not contend that the Muslim group is not within its rights to build a mosque – there are at least 100 already in the city’s five boroughs. The building now occupying the proposed site, however, is close enough to have been damaged by debris from the explosion when the planes hit the towers, and a majority of both New Yorkers and Americans say the site – only 600 feet away from Ground Zero – is the wrong place to build Cordoba House.

A Fox News/Opinion Dynamics poll shows that while 61 percent of Americans polled think the Muslim group has a right to build a mosque, 64 percent think the proposed site is the wrong place, and only 30 percent think this project is appropriate. A CNN/Opinion Research Poll shows 68 percent are opposed to it.

A Rasmussen Reports survey focused on New York state voters and found that only 20 percent favor building in the shadow of the WTC, while 58 percent were opposed. A Marist poll found that Manhattan residents oppose the mosque by a 53 to 31 percent margin.

And if there wasn’t enough controversy already, the Washington-based Council on American-Islamic Relations said that the effort to stop the project is the work of “Islamophobes,” and the leader of the Hamas terror organization, Mahmoud al-Zahar, told the New York Post, we “have to build the mosque.”

Some opponents who are uneasy about the project have focused on elements such as its name – Cordoba House – and the history of Muslim conquerors to celebrate conquests by building mosques on the ashes of their vanquished enemies.

Abigail R. Esman, writing for Forbes.com, comments that “Cordoba, after all, was conquered in 711 by the Muslim Berber Gen. Tarik ibn Zayad, and by 756 became the capital of the Cordoba Caliphate, which covered most of Spain. Christian and Jewish civilians in that time were regularly murdered and enslaved. Among the first things the conquerors did under the new Caliphate was replace the Christian Church of Saint Vincent with the Great Mosque of Cordoba.”

“What emerges, then,” she continues, “is a potential symbol of victory at the site of one of Islam's most horrific acts in history. ‘We destroyed the World Trade Centers,’ the radical Islam world will say, ‘and replaced it with a mosque – there, in the financial hub of New York City, the capitalist center of the world.’ First Cordoba, then Cordoba.”

There are also questions as to the sources of funding for the $100 million project.

Imam Rauf, however, paints a very different picture. “American Muslims want to be both good Americans and good Muslims,” he wrote in the New York Daily News. “They can be the best assets the United States has in combatting (sic) radicalism,” he stated. “We believe that people of good faith can use the common core of their religions to find solutions to problems that will let them live together.”

But if all that is true, why persist in championing a project to which a majority of Americans are opposed, and which would bring immense pain to those very New Yorkers the imam and his fellow Muslims want to be one with?

If Imam Rauf and his colleagues are as he said, “the anti-terrorists … the people who want to embolden the vast majority of Muslims who hate terrorism to stand up to the radical rhetoric,” can you not accomplish this noble goal a respectable distance from the scene of the worst radical Muslim murder in our nation’s history?

The best way to foster understanding between the different religions and to show the essential degree of sensitivity is to abandon the Islam-centric demand to build the mosque near Ground Zero, and build it somewhere farther away.

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Technorati Tags: Culture, Politics, War on Terror, Islam

New information about Deep Water Horizon disaster raises many questions

In the early days following the Deep Water Horizon disaster that killed 11 workers and unleashed a gusher of oil into the Gulf of Mexico, one early reaction was to assess blame, and the logical targets for that blame were BP and the companies associated with it on that project, Transocean and Halliburton.

There is no question that BP bears much of the responsibility, however, in the weeks since the disaster a great deal of information has come to light that makes it evident that some of the blame belongs to parties other than BP.

The initial reactions were highly emotional, which is understandable, given that this disaster cost the loss of eleven workers. But emotion often clouds issues, and so it is with the Deep Water Horizon catastrophe.

A lot of damage has been done along the Gulf Coast, but the breathless forecasts of environmental calamity appear at this point to have been highly exaggerated. It is estimated, for example, that 75 percent of the approximately 200 million gallons of oil are “missing,” substantially lessening the potential damage to the environment.

Where did the oil go?

In my May 18 column was this: “Casting some needed light on the nature of oil spills, Merv Fingas, of McGill University and Environment Canada, wrote a piece published on the Minerals Management Service Web site, explaining that a lot of the spilled oil isn’t going to be a problem. ‘Evaporation is the most important change that most oil spills undergo. In a few days, light crudes can evaporate as much as 75 percent of the starting oil mass and medium crudes up to 40 percent.’ Some of the rest of the oil is absorbed by seabed sediment and never reaches the surface or shorelines. ” And some of it was collected; some was burned off; some was devoured by oil-eating bacteria.

Even so, a lot of oil did not evaporate, and wasn’t burned off, or collected, or eaten, and a lot of it made it to shore and caused a lot of damage. But we have learned that the damage from the oil spill could have been reduced, perhaps completely prevented, except that a party other than BP messed up.

The Washington Times addressed this issue recently, noting that, “Letting skimmers in early would have cleaned up much of the oil in Gulf waters at a relatively low cost before it fouled sensitive coastal marshes,” and that “BP isn't accountable for additional cleanup costs and damages that resulted from government's failure to give a green light to this process.”

“Delays and obstructions caused by the federal government are numerous,” The Times continued. “Countries such as Sweden and the United Arab Emirates offered skimmers in April, well before oil slicks hit coastal areas. Months later, they [were] still waiting for Washington's approval. When Louisiana Gov. Bobby Jindal set up 16 barges to vacuum oil from his state's waterways … the Coast Guard ordered them to stop while bureaucrats checked to make sure the machinery was made in the USA. Mr. Jindal also had to wait for weeks while the federal bureaucracy took its time deciding whether barrier islands could be built off the coast to stop oil from drifting into marshes. Meanwhile, tar balls floated ashore.”

And this is possibly the most significant issue of all, except for what caused the explosion: The Center for Public Integrity asserts that the federal government may well bear responsibility for much more than the incompetent response to requests for help: “Coast Guard officials told the Center for Public Integrity that the service does not have the expertise to fight an oil rig fire and that its response to the April 20 explosion may have broken the service’s own rules by failing to ensure a firefighting expert supervised the half-dozen private boats that answered the Deepwater Horizon’s distress call to fight the blaze.”

“The question of what caused the platform to collapse into the Gulf two days later remains unanswered,” CPI said, a crucial point in accurately assessing responsibility, “because the riser pipe from which the majority of BP’s oil spewed did not start leaking until after the rig sank. Experts and some lawsuits have openly tied the sinking of the drilling vessel to the severity of the leak.”

When the rig tipped over and sank, did it strike and damage the riser pipe, unleashing the gusher of oil into the Gulf?

Could it be that in addition to failing to respond to requests to help Gulf Coast states prevent serious environmental and economic damage the federal government, because of the Coast Guard’s fire fighting error, is actually responsible for most of the oil spill, or all of it?

And what role did politics play in this crisis? Is it true that, as The Times suggested, the Swedish and UAR skimmers were kept out to protect American union workers? Was the incomprehensibly slow federal response a political move to improve the case against continued use of fossil fuels?

There are many questions to be answered, and possibly several villains in addition to BP, Transocean and Halliburton, and all must be held accountable.

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Technorati Tags: Economy, Politics, Government, Environment

Economic data and public opinion show Obama administration and Congress are abject failures

July job numbers contained only a speck of good news for the Obama administration. While the unemployment rate held steady at 9.5 percent, private payrolls rose by only 71,000, a disappointing number when compared to the approximately 200,000 that had been expected. While fewer jobs were created than expected, more jobs were lost – 131,000 – than expected, partly due to the end of the temporary employment of some 143,000 census workers. All told, the only good news was that the unemployment rate didn’t rise.

Other news, such as the President’s and Congress’ approval ratings, is worse.

The Real Clear Politics average of polls taken by seven different pollsters between July 13 and August 4 shows Mr. Obama's average approval rating at 44.9 percent and his average disapproval rating at 50 percent, a negative margin of 5.2 points.

The best rating for Mr. Obama was a tie of approval/disapproval at 48 percent, and the worst was a 41 percent approval rating and a 53 percent disapproval rating, for a negative margin of 12 points.

Congress fares no better. In five polls taken between June 9 and July 28, Congressional job approval is only 21.2 percent, while the disapproval rate is 72.2 percent, a margin of minus 51 points. In those polls, the best rating Congress produced was between July 9 and June 14 where the positive number was 24 percent, the negative number 73 percent, for a negative 49-point margin.

By a negative margin of 27.8 points, Americans believe the nation is headed in the wrong direction. Only 33.5 percent in the four-poll average believe the country is going in the right direction, while 61.3 percent believe it is headed the wrong way.

The growth of the economy has slowed steadily since posting a 5 percent growth rate in the fourth quarter last year. In the first three months of 2010 the rate was 3.7 percent, but in the April-June period the rate dropped to 2.4 percent.

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Technorati Tags: Economy, Politics, Liberalism, Unemployment

Poor economic policies killing the business environment

So many people in this country do not understand the workings of business, including the vast majority of our elected leaders in Washington. Their anti-business policies proliferate and have formed giant roadblocks to a healthy economy, have delayed the recovery and kept millions of Americans on the unemployment line for far too long.

If you want to end a recession, leave as much money in the hands of the people as possible; the more money people have, the more they can spend. Create a stable environment so that businesses feel comfortable in hiring; make it easy for existing businesses to expand and for new businesses to start up. That environment will create jobs and new taxpayers, and more jobs and more taxpayers will fuel a recovery.

What government is doing now, however, is implementing policies that create uncertainty and dampen the entrepreneurial spirit; increasing taxes that rob needed capital from small businesses and punish the wealthiest consumers, who are the ones with the most to spend; crafting regulations that raise business costs and make it difficult to add workers and expand.

It was a failure of the federal government and the Federal Reserve following the 1929 stock market crash that led to a 15-year depression, and that is what is happening now.

Testimony from someone who has as good a set of credentials as one could expect, Las Vegas casino resort and real-estate developer Steve Wynn, sees exactly this view. He is credited with much of the dramatic resurgence and expansion of Vegas, and he is splitting up his headquarters in Las Vegas and putting half of it in Macau, China. Why? In a May interview with CNBC, Mr. Wynn said: “The opportunities I see are far superior abroad than in America.”

Asked by the CNBC interviewer, “What about the regulation, the [communist] government oversight and working there, as opposed to here?” he replied, “Macau has been steady. The shocking, unexpected government is the one in Washington. That’s where we get surprises every day; that’s where taxes are changed every five minutes; that’s where you don’t know what to expect tomorrow. To compare political stability and … predictability in China to Washington is like comparing Mt. Everest to an ant hill. Macao, in China, is stable. Washington is not.”

From Steve Winn’s point of view, the actions of our elected representatives have created a situation in this country that not only discourages the very activities needed to turn the economy around, they have created a business environment that is less stable, and therefore is less appealing, than a communist economy. That is remarkable, and more than a little unsettling.

The Obama administration and the Democrats in Congress think that the way to turn the economy around is for the government to spend money it doesn’t have and to raise taxes on virtually everyone, and especially on “the rich.” This method is deeply flawed, as evidenced by what happened in the 30s, because it not only takes money from those at the bottom of the economic scale who need as much of their money as possible to survive, but it takes even more money from those at the top of the scale who are the ones in the best position to positively affect the economy by buying additional goods and services, and investing money in new and existing businesses.

Government cannot exist without the money it takes from the private sector. Why, then, since government cannot exist without a vibrant private sector, would anyone think that government can fix a downturn in the economy without supporting activity in the private sector?

President Obama wants to raise taxes on “the rich” by allowing the Bush tax cuts to expire, and that is a horrible idea.

George W. Bush took office in January 2001 and inherited a recession that was substantially complicated by the September 11 terrorist attacks. The 2001 Economic Growth and Recovery Tax Act and the Jobs and Growth Tax Relief Reconciliation Act of 2003 together ended the recession, and did so not with spending and tax increases, but with tax cuts for everyone. And, according to the (begin ital) Wall Street Journal,(end ital) contrary to the “tax cuts for the rich” demagoguery, the Bush tax cuts resulted in the richest five percent paying 60 percent of all income taxes in 2005.

This is the kind of stimulus that we need today, but is the opposite of the steps that President Obama and Congressional Democrats have taken.

And a CNN/Opinion Research poll taken last month shows that the country disapproves of the way the economy is being handled by 57 to 42 percent, and by 62 to 36 percent Americans say the federal budget deficit is a serious problem.

Deficits result when government spends more than it takes in. Mr. Obama and Congressional leaders want to keep spending at record levels and increase revenue by raising taxes, which will thwart private sector productivity by transferring money to the government that would be better spent by the people who earned it.

The way to cure a deficit caused by too much spending is to spend less.

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Technorati Tags: Economy, Politics, Recession, Democrats