Obamanomics and The Stimulus Plan - Part 1

Let's talk a little bit more today about what impact the President's stimulus plan has had on the economy. As you may recall from yesterday, the AP and the White House were in a little bit of a spitting match about what numbers were valid to use with the White House promising to produce newer, more accurate results by yesterday, which they did.

The new numbers claim that Obama's stimulus plan has created or saved almost 650,000 jobs according to a new AP article by Matt Apuzzo and Brett Blackledge. The White House obviously thinks this is great news but, as always. let's do a little math. If the stimulus plan did indeed create/save 650,0o0 jobs and we divide that estimate into the estimated amount of the stimulus plan that has already been spent, $180 billion or so (see yesterday's post for the details), then each job Obama claims to have created or saved was done at a cost of about $277,000 per job! There is no way we can get out of the recession with these kinds of programs if it needs over a quarter of a million dollars to create one job. And remember, the 650,000 estimate is Obama's number, not some sandbagged Republican number.

What is even worse, according to the AP article, the White House still has not gotten all the kinks out of the estimation process:

• Despite earlier identification of a double counting, the jobs saved claim from the Palm Beach County, Florida water department is still was doubled from an actual of 57 jobs to a reported 114 jobs.
• Some programs that got money from the stimulus package continued to use the money for pay raises and not job saving, incorrectly listing those who got only a raise as a job saved.
• According to the article, there are still dozens of instances where contractors posted the same number of jobs created or saved on different projects, which resulted in multiple counting of the same employees who were just working different projects.

Even worse, the greatest number of jobs created or saved were in state governments. These state government employees, while they most probably work very hard, do not contribute to the growth of the economy since their wages are paid for by taxing people in the private sector. So saving their jobs is just a distribution of existing wealth via taxation, not from the market or the economy getting larger.

Now, given that the economy has already shed 3 million jobs this year, the Obama supporters could claim that unemployment would be even worse if the stimulus plan had not been passed. Two problems with this line of reasoning. First, this approach was never going to work it if cost over $270,000 to create one job under Obama's plan. Second, and this the real fundamental problem that no one is addressing, government does not create jobs, the private market does. Free people earning and spending their wealth as they see fit is the most efficient, cost effective way to grow an economy. Politicians either do not recall, do not know, or choose to ignore the fact that government does not pay for anything. It merely takes wealth via taxation from some members of society, individuals and businesses, and redistributes it to other members of society including a cut for itself.

Thus, to say this plan using government money "created" a job is a bogus argument since the money used to create this job will not be used to create another job that was the result of the free market, it was just redirected by the political class. The more Obama uses government money to create these phantom jobs, the less jobs will be created in other sectors of the market where people would have spent the money they earned if it had not been forcibly taken under taxation.

Remember, it was the political class, including both Republicans and Democrats, that got us into this mess in the first place with lax oversight performance of the banking, financial, and housing markets. No member of the political class accurately predicted, along with their respective economists, the largest economic downturn since the Great Depression until it was way too late to do anything. What makes anyone think they can fix the very disaster they caused?

"Love My Country, Loathe My Government" addresses many of these issues, the most important of which calls for a major downsizing of government and the associated taxation so that free individuals can take more control of their financial and economic choices and in the process, create the new jobs and industries that government cannot do by redistributing wealth.

While the above is a common sense description of how the stimulus plan is doomed to failure, tomorrow we will discuss Obamanomics and The Stimulus Plan - Part 2. We will review a Reason Magazine article that asked credible, non-administration economists their opinions of the stimulus plan and hopefully, provide some more detailed explanations of why this and other types of stimulus programs never work, always waste money, inflate the national deficit, and delay the recovery.

Tell Me When You Feel This (Stimulus That Is)

As we come up on the one year anniversary of the government's $787 billion stimulus program, I thought it might be fun to see what good, if any, it has done. The data below comes from two sources. The first is the claim by the Obama administration that the stimulus program has already created 30,000 jobs as outlined in an October 29, 2009 AP article by posted on Earthlink. The second set of data comes from several sources and tries to estimate how much of the stimulus money has already been spent. According to www.propubica.com, a source quoted in numerous other websites and blogs, the government has spent about $183 billion already with $120 billion in spending programs and $63 billion in tax cuts. A June 15, 2009 article on the Reasons magazine website by Jacob Sullom estimates that about one fourth of the entire package will be spent by the end of the year which comes out to about $197 billion dollars. Since the two sources are relatively close if you consider timing, year-to-date (propubica.com) vs. year end (Reason), lets use the $183 billion for our calculation.

Given these sources, let's do some very, very simple math: $183 billion has been spent to generate 30,000 jobs or $6.1 million has been spend to generate each job! If we assume that the tax cuts did not generate any jobs and use the $120 billion spending component, then we get a deal at about $4 million per job created. This is an atrocious waste of taxpayer money no matter how you do the math. Even if you are off a factor of ten in the job creation estimate, you are still looking at hundreds of thousands of dollars spent per job created. This is not job creation, this is just an unadulterated waste of valuable taxpayer resources.

The even sadder part of the whole deal is that the 30,000 estimate might be TOO HIGH. The whole purpose of the October 29 article referenced above is to review the job count data the Obama administration claimed was a legitimate estimate. In its review of government records, the AP found:

• Some groups that received stimulus money used it to pay raises for existing employees but reported saving jobs anyway.
• A Georgia day care center claimed that they saved 129 jobs with the stimulus money. Must be a very, very large day care center.
• A Texas contractor who kept 22 people on the payroll counted each employee four times inflating their jobs created number to 88.
• The water department in Palm Beach County, Florida hired 57 people but reported 114.
• A Colorado business claimed the stimulus created more than 4,200 jobs but the actual count was under 1,000.

Thus, just using just this small sample of reports that the AP reviewed shows that even the 30,000 is overinflated by more than ten percent before looking at any other sources. Pathetic returns no matter how you cut the data.

Two questions need to be asked:

1) If the entire $787 billion and the equally ineffective $700 billion TARP dollars had been given to each US household, each household would have received about $11,400. I contend this would have been a much better economic stimulator of the economy rather than banks that did nothing constructive with their TARP funds (see yesterday's post) and million dollars wasted per each job created. It certainly would have been fairer since these households will have to pay for these billions in future taxes.

2) Although there is no indication that the Obama administration artificially inflated the jobs creation number (if they were going to lie about the numbers, I assume they would have done a much bigger lie), what if they did? It reminds of the Nixon administration attempts to manipulate economic data back in the 60s and 70s to make his administration look better than it actually was. In either case, incompetence in reporting the numbers or lying about the actual numbers, how can we believe anything this administration tells us?

If the TARP money was laid end-to-end...

A Washington Post article written by Lois Romano was run in the October 18th edition of the Seattle Times and addressed a very fundamental question: how well did the political class track and manage the hundreds of billions of dollars that the government paid out to financial institutions under the Troubled Assets Relief Program or TARP. Congress passed the TARP funding bill in an attempt to get the bad, or so called toxic, assets off of the banks' books so that they would have healthy enough balance sheets to begin loaning money again. This would theoretically get the credit markets unfrozen and get the economy moving again.

Ms. Romano's article was mostly an interview of Elizabeth Warren who is the chairperson of the Congressional Oversight Panel which is supposed to evaluate how well the $700 billion in taxpayer money is being used. Highlights from the article include:

• Warren told Michael Moore in his latest film, "Capitalism: A Love Story", that she does not know where the TARP money went since the government attached no strings to it's use.
• There was no paper trail of the money once it left the Treasury Department and the legislation and the Treasury guidelines did not require any accountability of the funds.
• Almost none of the TARP money appears to have been used for its original purpose, to rid the banking system of toxic assets. Those toxic assets are still around and in some respects are getting worse. Thus, hundreds of billions of dollars later the original problem has not been solved but the money is gone.
• According to Ms. Warren, the original discussion around TARP is that some of the banks had become too intertwined with each other and were too big to fail without economic disaster. It is her opinion, "A year later, the big are bigger than they were. They are more intertwined..."
• In summary, Ms. Warren called the TARP program "a moment of panic." As we all should know, decisions done in a panic mode are usually never the optimal decisions and the interview with more Warren proves that the TARP program is no exception.

Besides not fixing anything and possibly making the financial system worse off, how do you quantify a $700 billion disaster? Two ways come to mind:

1. There about 130 million households in the country, so if each household had to fund an equal portion of the TARP money, the per household cost would be about $5,400. This is $5,400 that could have been spent on consumer goods, housing, mortgages, household debt reduction, education, and myriad of other, positive economic ways if the political class had not flushed it down the TARP toilet and got nothing return. Giving every household $5,400 would have gone a long way to fixing the economy.
2. For those of you that like space travel, if you laid 700 billion dollar bills end-to-end, the trail would reach to the moon and back about 139 round trip times. That is how big a screw up the political class made of the TARP program.

Maybe Elizabeth Warren should be running the country because she could not do a much worse job. At least she seems to have some sense of accountability and respect for taxpayer dollars, unlike the political class. Just like yesterday, and as proposed in"Love My Country, Loathe My Government", those who sat on Congressional committees that were responsible for TARP should be removed from those committees for incompetence and should be laid end-to-end until they reach some level of accountability.

So You Want To Be My Latex Salesman?

Seinfeld fans will certainly recognize the title for today's post. It is a sarcastic comment by Jerry regarding George's inability to get anything right. This is the inspiration for today's observations. The following information was all on the front page of USA Today on October 19, 2009:

"Watchdog slams $700 billion bailout" - Neil Barofsky, the TARP special inspector general, stated in this blurb that it is extremely unlikely that taxpayers will ever get back all of the cash the political class gave to banks and other financial institutions in 2008 and that those banks that received the bailout money are still involved in risky financial behavior.

"Bioterror failures criticized in report" - reporter Mimi Hall wrote that a bipartisan commission reported that the Obama administration is failing to address the urgent and immediate threat of bioterrorism. The commission's report says that the White House has left the country vulnerable to bioterrorism and that anthrax spores released by a crop duster could "kill more Americans than died in World War II." Unlike the Clinton and Bush administrations, Obama has no senior staff with a biodefense background.

"Flu vaccine runs a month behind" - Reporter Elizabeth Weise wrote that vaccines for the swine flu will not be available until November which is a month later than first thought with some states not expecting dosages until December. Only two weeks ago it was thought lots of vaccines would be available by the end of October (guess they missed that short term forecast).

All of this bad news about government ineptness was on just one page of the newspaper, imagine if we had gone through the other pages. The sad part of these articles is that no politician seems to be in trouble for these failures. As mentioned before, one of the fifty steps in "Love My Country, Loathe My Government" would be to institute a process that would result in politicians being removed from Congressional committee posts for subpar performance. Waste taxpayer dollars on bailouts? Off the committee. Endanger the public with inadequate bioterrorism planning? Off the committee. Short change promised vaccine volumes and endanger the public? Off the committee. Until there is accountability political class performance will not improve.

Given the impotency of the political class in these smaller endeavors, one would have to steal a line from Seinfeld and ask: So you want to manage our health care plans?

Ghost Of Nixon Past - Part 1

Having been away on vacation for a week has caused me to fall behind in responding to more shenanigans from the Washington political class. They are a never ending source of amusement, disgust, and wastes of money. However, tonight's post is very serious. A disturbing trend is becoming evident with the Obama administration. It appears that rather than debate, discuss and compromise on the issues, the Obama administration would rather try to intimidate those that have the audacity to disagree with them. Three examples are listed below and come from a letter I sent to my Democratic Senator this morning:

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Senator Nelson:

I have never voted for a Republican for national office in my life so this is not coming from a disgruntled Republican voter. I would like to know your view on the following topics that I view as a tremendous threat to freedom in this country:

• It is no secret that Obama and the White House are out to do a hatchet job on Fox News. It is obvious that Fox has not been a supporter of the administration on any number of fronts. However, isn't the right to disagree in this country sacred? This administration is beginning to feel like Nixon's with the start of an "enemies list" headed by Fox News. I never watch Fox News but shouldn't they have a right to pursue their views without government coercion. What is your view?
• Recently it looks like this enemies list concept has extended to Henry Waxman who is investigating salaries at insurance companies who are opposed to the current health care reform bills. Do you agree with Waxman that the government should coerce those who disagree with the government's policies by attacking private market companies? Would it not be better to discuss and debate rather than attack like Obama and Waxman are doing?
• In the summer, Speaker Nancy Pelosi called those who disagree with the President as Un-American. Do you agree with Pelosi that those who show peaceful dissent are not true Americans? Do you agree with her that mature debate of differing opinions is against the country?

These are very troubling government actions regardless of who is in power and who these attacks are directed at. Kind of starting to feel like Iran where the government suppresses dissent and oppresses those who disagree. I would like a specific reply on how you support or actively oppose these freedom threatening actions by Obama, Waxman and Pelosi. Remember the words of Martin Luther King: "An injustice anywhere threatens justice everywhere."

***********************************************************************

I also remember some of the words and antics of the Nixon administration. Nixon also had an enemies list like this adminstration and also had Spiro Agnew to try to bully and intimidate the press people who dared to disagree with Nixon's policies, much like the attack dogs that Obama has put after Fox News. The duration of the Nixon administration was not pleasant if you remember. The more he attacked the press and their right to publish the news as they saw fit, the more the country became divided, culminating in Watergate, impeachment, and a country whose ills were not addressed for a long time.

I have not yet heard back from the Senator which is no surprise. I seldom get any response from him, not even form letters or emails. Typical of the political class, "Hey. I am in office and am too important to deal with you until the next election." I will keep you posted on any response I receive, should make for some funny and convoluted spin. I will also keep you posted on any response I get from the White House since I copied the letter to them. I have NEVER received any kind of response from them despite Obama's pledge to have the most open administration ever. Just like his pledge to get us out of Iraq, close Guantanomo, fight for gay rights, etc., etc., etc., he is coming up short on this pledge also.

I labeled this post as Part One, I think there will be very many more Nixon-like actions from this administration, none of which contribute to freedom in this country.

What's A Few Billion Dollars Among Friends?

As always, it is always so easy to come up with examples of the political class wasting a billion or two of taxpayer dollars. In an AP article today, as posted on earthlink.net, the Inspector General in charge of auditing the $700 billion financial industry bailout, Neil Barofsky, issued a report critical of Treasury Secretary Tim Geithner. Mr. Geithner was the head of the New York Fed prior to his current assignment. In that job, his office was responsible for overseeing the bailout of insurance giant AIG. (note: as a side note, you might remember Mr. Geithner's name from previous posts that outlined how he failed to pay about $30,000 in back taxes until he was nominated to be Treasury secretary. For some reason, despite the tax shortfall, he still got the job.)

You may remember that last fall AIG received $180 billion in taxpayer bailout money for 1) being totally incompetent in managing its business and 2) convincing the political class that the world would end along with the world's financial system if it was not bailed out. Despite being incompetent, AIG took $1,75 billion of that taxpayer money and paid out bonuses to its employees. Besides being an outrageous flushing of taxpayer dollars, Geithner looks especially bad in the Barofsky report since he has always claimed he was unaware of the payouts until March, 2009. However, the report proves his staff at the NY Fed knew of the payments back in November, 2009. Thus, Geithner is either incompetent since he was managing taxpayer giveaways without knowing where the money was going until March, even though his staff knew in November, or he his trying to cover his mistakes by saying he did not find out until March but did indeed know in November, along with the rest of his staff, but allowed it to happen anyway.

As if that screw up it not bad enough, consider the following quote from the article:

"In a report released Tuesday, Barofsky wrote that Treasury did not understand AIG's pay structures when it gave the firm billions in aid last fall. He said Wednesday that officials at the New York Fed "still did not have their arms wrapped around" AIG's compensation structure when he finished his audit last month."

Thus, according to the inspector general, almost one year after the multi billion dollar bailout, the Fed STILL does not know what they are doing. Unbelievable that the political class could throw together a massive bailout using taxpayer money, allow large bonuses to go to people in AIG, many of whom were responsible for a lot of the financial meltdown, and eleven months later still not even know the whole picture.

This is just another instance that the book, "Love My Country, Loathe My Government", addresses in some of the proposed steps to fix the country. Step 34, a step that remove politicians from committee and subcommittee posts for lax oversight, would be a perfect remedy here. Those politicians that were sitting on committees overseeing the bailout funds should be removed for this gross incompetence in the AIG matter. Step 1, the downsizing of government, is another step that would address this problem since with fewer things to do in a downsized government, the chance for multi billion dollar screw ups would also go down.

How To Fix The Country Without Politicians

Let's consider how little the American political class has achieved over the past four decades. During this time period, the Republicans and Democrats both took turns at being President and controlling Congress:

• In the 1960s, Nixon declared war on drugs but today the drug problem is worse than ever with narco states developing to our south and inside some of our major urban areas.
• In the 1970s, Carter muddled through the energy crisis but today we are no closer to having a strategic and effective national energy plan in place.
• In the 1980s, Reagan commissioned a panel which identified the deficiencies in public education in this country with its landmark report, "A Nation At Risk" but today we still have a failing public education system that is worse than the majority of countries around the world.
• In the 1990s, Clinton had ample warning to put together an anti-terrorism strategy and infrastructure, given the numerous attacks on America during his terms (USS Cole, first World Trade Center bombing, African embassy bombings, etc.), but today we are still trying to cope with widespread and growing terrorism threats.
• For decades we have had leaky borders which has resulted in millions and millions of illegal aliens in the country.
• For decades we have known that Social Security and Medicare funding levels were not sustainable but no one stood up to adjust the programs for long term viability.
• For decades health care spending in this country has been escalating quickly with no viable solution in sight.

There is no need to go on, I think you get the point. We have sent trillions of taxpayer dollars to the political class in Washington and have really gotten no solutions in return. Four decades of high taxation but drugs are still a problem, our energy supplies are vulnerable, public education doesn't educate, we are constantly on guard for terrorists, illegal aliens are everywhere, and major lifeline social programs are heading for bankruptcy. I also think that we cannot expect solutions from the political class, after four decades they probably would have solved some problem by now. Whether they cannot solve them because they are not smart enough, they are too lazy, or they do not want to solve them, the bottom line is they have not fixed anything and, in many cases, we are worse off than before.

Now, let's look at some other historical events that were a government success:

• The Manhattan Project helped develop a new technology in record time that led to the atomic age.
• The Apollo Moon program successfully put US astronauts on the surface of the moon and returned them safely.
• The Grace Commission analysis and recommendations in the 1970s produced significant cost savings in government operations.
• The Reagan panel on public education mentioned above did produce an excellent report and set of recommendations on how to improve education in this country (even if the political class never implemented the plans.)
• The 9-11 Commission did a thorough analysis of the breakdowns in security relative to terrorist attacks and its recommendations were implemented to improve security.

What is the difference between this second list of accomplishments and the first list of failures? In the second list, the political class funded the project, staffed the effort with smart/non-politican Americans, and then got out of the way. FDR did not develop the physics of nuclear energy, Einstein did. Kennedy did not calculate launch trajectories for Apollo, NASA scientists did. In the first list, politicians tried unsuccessfully to solve the problems.

Thus, vital steps in "Love My Country, Loathe My Government" is the establishment of independent expert panels to address the drug, education, illegal alien, health care costs, and energy problems in this country. Congress would fund the panels and then GET... OUT... OF... THE... WAY as the panels of smart Americans figure out the solutions similar to the second list of successes above. Each panel would develop a handful of viable alternative plans that voters would then decide which ones to implement, Congress and the rest of the political class would be not part of the solution. For those of us who have followed the current health care reform exercise, it is pretty obvious that the political class is incapable of even being civil to each other, never mind being able to analyze complex problems and come up with solutions. I am tired of waiting, four decades is enough for me.

Health Care Reform - The Never Ending Story

It is no secret that I have total disdain for the entire health care reform fiasco and debate that has been playing out in Washington the past several months. Nowhere has anyone showed me a quantified analysis of the root cause(s) of the problem of rising health care rates. Once more, who really knows what and by how much each of the following factors influence health care costs:

• Doctors make too much money.
• Lawyers who sue doctors make too much money.
• Insurance companies make too much money.
• Drug companies make too much money.
• Fraud and criminal behavior is rampant in the industry.
• Government interference in the market introduces excessive costs and inefficiencies.

Rather than an analysis of the problem, we have untold number of lobbyists jockeying for the best possible result for their respective clients, politicians who know nothing about the medical profession or health care market making uninformed decisions without any analysis, and members of the political class calling citizens un-American for having a differing viewpoint, a Congressman calling the President a liar, and another Congressman calling all members of the opposing party knuckle dragging Neanderthals. Some days you just want the pain of the whole issue to go away.

Unfortunately, an article I came across today in Reason magazine gives me little hope that the insanity will end any time soon. In the October, 2009 issue, Brian Doherty has a short article called "Just Say No.". The main point of the article is that the state of Arizona voted to place a bill called the Arizona Freedom Act on the ballot. The main thrust of the bill is to pass an amendment to the state constitution that "will protect Arizonians' rights to spend their own money on any legal health care service and opt out of any health care system imposed upon them." In other words, we do not have to do what Washington is telling us to do if we do not want to in the area of health care reform and programs.

The article goes on to quote a representative of the American Legislative Exchange Council who says that at least five other states are considering similar initiatives. If enough states pass similar type opt out programs, Mr. Doherty says that they may be able to overcome the Federal imposition of national health care much like the states turned back the Federal mandated Real ID Act several years ago. And what would all this mean: probably years and years of court battles, years and years of more kindergarten like behavior of the political class, and no resolution to the problem of rising health care costs.

Bottom line: Obama blew it by not doing a root cause analysis like the one that this blog has been proposing for months and which was initially laid out in Step 28 of "Love My Country, Loathe My Government": Convene an expert panel to undertake an in-depth national economic study to determine the real root causes of spiraling health care costs and recommend appropriate actions to eliminate them. Voters, not Congress, would approve these recommendations. An old boss I used to work for had a favorite saying: "Nothing is more devastating to an opinion than a number." If Obama had done his number and root cause analyses ahead of time, he could have quashed a lot of the emotion that has been injected into the discussion. But he didn't and we are stuck with the bitter and divisive disaster we have today. Will it never end?

Tomorrow's discussion: Why history dictates that Step 24 is the only viable option for fixing the health care crisis.

Detroit vs. Helsinki vs. 150 Other Countries

I start today's post with two seemingly unrelated topics from previous posts. In August we reviewed how the United States has deployed over 500,000 troops across the world in over 150 countries (I read today on the Net that we currently have over 700 physical military outposts/locations around the world). About a week ago we reviewed how the Federal government had loaned an Al Gore backed company over a half BILLION taxpayer dollars to develop a hybrid sports car that would be manufactured in Finland.

Today I came across an article in the latest issue of The Week Magazine (www.theweek.com) that discussed the sorry status of Detroit. According to the article:

• Detroit was once the fourth largest city in the country and had 1.85 residents in 1950. but its current population is only 770,000.
• On average, 1,000 residents migrate out every day.
• One third of the population lives below the poverty line.
• One fourth of the adult population did not graduate from high school.
• The median household income is less than half of the United States average.
• Unemployment is almost 30%, comparable to the levels seen during the Depression.
• The last mayor, Kwame Kilpatrick, just finished a four month prison sentence.
• Once know as the nation's murder capital, a mayoral candidate last year, Stanley Christmas, said" I don't mean to be sarcastic but there just isn't anyone left to kill" after last year's murder rate went down 14%.
• Almost 30% of the city has been abandoned, leaving behind many empty, overgrown lots and burned out homes.
• The median home price is $7,000.

I do not know if Detroit is salvageable but does it make sense to spend billions and billions of dollars sending troops all over the world or giving a political crony's company a half a billion dollars? I do not believe that the Federal government can save Detroit but bringing taxpayer wealth back into the economy, whether it is from bringing troops home (Step 30 in "Love My Country, Loathe My Government"), eliminating corporate welfare (Step 1 in the book among others) like the Al Gore waste of money, developing a national energy policy that keeps energy wealth in the country (Step 23), or eliminating pork (Step 44) would reduce citizens' tax burden and allow the market to fix Detroit. Keep our tax dollars home and maybe, just maybe we can spend it on ourselves and other Americans. Obviously, given the current outflow of money to overseas sources, the political class is not capable of executing these steps and places like Detroit result.

Maybe It's Just Me...

Maybe it's just me ......shouldn't the President be a little more involved with the issues facing this country? In a previous post I voiced my opinion that the President should not have gone to Copenhagen to lobby for the Olympics to come to his hometown of Chicago for the probable financial windfall to his Chicago buddies. I kind of thought that Iraq, Afghanistan, health care reform, the latest terrorism plot, skyrocketing deficits, 10% unemployment, the reviewing and updating to the Patriot Act, failing public schools, drug addiction epidemic, energy problems, failing Social Security, really failing Medicare, the housing market in the dumps, and a few other issues should have his complete attention.

Maybe it's just me but...... has the President done anything to merit the Nobel Peace prize? Was it just a weak year for peace and he slipped in as a dark horse candidate? Jon Gruden, former head coach of the Tampa Bay Buccaneers, had a favorite saying" You are as good or as bad as your record." Given Obama's record, I really do not see where he actually accomplished anything in the realm of peace besides giving good speeches. He has not gotten us out of the war in Iraq like he campaigned to do, the Afghanistan war is a mess, he is no closer to achieving any movement towards peace in the Mideast than Bush was with his road map, Iran is progressing towards a nuclear bomb quicker than we expected, North Korea still has its nuclear program going, he has not closed Guantanamo like he promised, he postponed a meeting with one of the the world's most peaceful leaders, the Dali Lama, in order to not tick off China, and while he and the current Russian premier promised to cut down on their respective nuclear weapons stockpiles, that is is all it is right now, a promise. His record is at best inconclusive so it must have been a poor field of candidates for peace this year. At least he did not fly off to Oslo to lobby for the award and he is donating the money award to charity, a very nice gesture.

And finally, maybe isn't just me but..... I do not think that shilling for a comedian's new late night cable talk show is either worthy of a United States President and a winner of the Nobel peace prize. As you may have heard or seen, the President filmed a commercial for the new George Lopez talk show on TBS. Have we become so shallow as a country that the leader of the free world is selling something on cable? I would have hoped that the time spent arranging and filming this ad spot would have been better spent on the items and issues listed in the first paragraph above. I cannot imagine George Washington selling cherry tree axes, Abe Lincoln selling log cabins, or FDR selling dog food because Fala likes it. It is really sad that the political class has become enamored with hearing itself either insult each other (Congressman Wilson - "You lie" and Congressman Grayson - "Republicans are knuckle scraping Neanderthals."), insult American citizens (Nancy Pelosi - citizens are unAmerican if they oppose Obama's policies and Henry Reid - American physically smell when they visit Washington), or go television to hype a cable talk show or discuss their March Madness brackets (Obama). Maybe it's just me.

Good News, Bad News (For Freedom)

Even when the political class gets something right they still manage to get it wrong. According to an October 6, 2009 AP online article written by Jessica Gresko and available online on Earthlink, the District Of Columbia city council is about to make same sex marriage legal in the District. The council apparently has enough votes to pass the legislation and it is likely that Congress will approve the idea. Congress gets to review all DC legislation and even the Congressional Republicans quoted in the article, who are opposed to same sex marriage, felt that it would not be stopped by Congress.

This is good news for freedom in this country. We are all Americans and should be treated as such regardless of our sexual orientation. Denying marriage rights to a subsection of the population is discrimination no matter how you cut it and no matter what your position is on the gay life style. Everyone should have the exact same rights regardless of religion, sexual orientation, ethnicity, heritage, height, weight, eye color, etc. Just because you do not want to participate in a life choice should give no one the right to deny that choice to others (see the "George Orwell 's 1984" section on page xxiv in "Love My Country, Loathe My Government" for a discussion on how the political class turns groups of Americans into competing "tribes" in order to deny freedom to Americans).

You would think that this is a victory for freedom and the political class finally got one right...until you read what one of the provisions is in the bill: according to the article the legislation "specifically says that religious leaders and institutions are not required to perform the marriages or rent their space for same sex ceremonies unless they let the public use or rent the space." As I read this, if a church whose religious tenets include being against homosexuality and they rent out their space to Boy Scouts or Girls Scouts organizations, rent out their space to gain some incremental revenue for their church, loan out their space to local charities or service organizations, etc., they would have to allow gay marriage ceremonies in their facilities. Thus, granting freedom to marry to one group of citizens would also restrict/impinge on the freedom of religion rights of other citizens. The only choice of these churches would be to cut off revenue streams and restrict the use of their facilities to worthy community groups or be forced to do something their religion prohibits.

Freedom gained, freedom lost in the same stroke. This is a very dangerous path to go down, starting the tear down of the separation of church and state with the state starting to dictate religious policy. Very, very dangerous. Thus, even when the political class does something good, they also foul it up in the same breath by doing something stupid, dangerous and downright repugnant from a freedom of religion perspective.

Where Best To Spend Taxpayer Money - Detroit or Helsinki?

Just when you think it cannot get any more stupid and insane, you get surprised by the American political class. The October 9, 2009 issue of the The Week magazine (http://www.theweek.com/) quotes an article from the New York Times that reports on a $529 million US government loan that has been made to a California startup company, Fisker Automotive. According to the Times article, the loan is for Fisker to build a hybrid sports car with a retail price of $89,000. The truly insulting part of the whole loan deal is that the car will be manufactured in Finland! Think about how many ways this is such a lame decision:

• With Detroit facing an unemployment rate of almost 30% and the US car industry under incredible strain due to foreign imports, whose bright idea in the government was it to loan someone more than a half a billion dollars to manufacture cars in Finland?
• If hybrids are so important to our country's future energy conservation needs and the potential need to reduce our carbon footprint, shouldn't these funds have been invested domestically to develop the manufacturing skill base we need in this country and not in Finland?
• Who in this country, with unemployment levels about to go over 10%, would have the money to buy an $89,00 vehicle? Not many.
• Couldn't these funds have been better used to provide retraining programs for unemployed U.S. automotive workers in order to get them back on their feet?
• Let's do some math: according to the online version of the Wall Street Journal, U.S. auto and light truck sales through the end of September were about 10 million units. If we assume the last three months of the year will have the same rate of sales, annual 2009 sales will be about 13.3 million units. According to the Fisker website, they expect to eventually sell 15,000 units on an annual basis. If ALL of them come to the United States, 15,000 units on a base of 13.3 million units comes out to about .1% of the market. At this rate these volumes will have virtually no impact on global warming, carbon footprint, etc.

So let's summarize: U.S taxpayer dollars are going overseas as the deficit soars, new skills are being developed overseas and not in our own factories and with our own workforce, an end product will result that will benefit only the rich due to the high price although all taxpayers, rich and poor, will contribute to its development, and a global warming impact of next to zero. What a stupid, wasteful idea.

Oh, did I mention that Al Gore is one of the investors in Fisker? Want to bet Al makes out like a bandit with half a billion taxpayer dollars in his Fisker pocket? The audacity of such wasteful spending unbelievable. Another example of the political class taking care of its own at the expense of the U.S. taxpayer.

Pornagraphy, Advertising, Leadership, and Pelosi

Supreme Court Justice Potter Stewart had a famous quote regarding pornography in a case he was reviewing: "I know it when I see it." While the quote does not provide any concrete criteria for assessing difficult concepts, it does capture a feeling we each have about certain topics such as advertising, leadership and the aforementioned pornography. These are three very subjective characteristics. Why does one advertising campaign affect some people to purchase while having no impact on others? Why is a movie viewed as cutting edge by some but pornographic by others? Why is one person viewed as a leader by some but arrogant by others? Very subjective.

I tried to get a good definition of leadership but the dictionary definitions fail to capture that special something that leaders bring to life, kind of like the "I know it when I see" feeling. However, rather than a definition, I did find a good description of leadership that does better than the dictionary:

• A simple definition of leadership is that leadership is the art of motivating a group of people to act towards achieving a common goal. Put even more simply, the leader is the inspiration and director of the action. He or she is the person in the group that possesses the combination of personality and skills that makes others want to follow his or her direction.

I think this is a good definition of what a leader is. Words like "motivating a group of people", "inspiration","achieving a common goal", "makes others want to follow", etc. help to define that special, gut feeling we get when understanding leadership or effective advertising.

Given this special definition of leadership, how does House Speaker Nancy Pelosi stack up? As Speaker, she is one of the most visible, vocal and important politicians in the country but is she a leader? Me thinks not:

• When Congressman Joe Wilson yelled out "liar" during Obama's address to Congress on health care reform, there was well deserved outrage. However, Wilson apologized almost immediately for the outburst and his apology was graciously accepted by the President. However, despite the apology acceptance, Pelosi insisted on scheduled Congressional time to censure Wilson in what typically turned into a bitter, childlike partisan bickering event. Hardly an act the will establish an atmosphere of "achieving a common goal."
• When one of Obama's czars, Van Jones, publicly and on videotape called all Republicans a#%holes, Pelosi did not to express her outrage that fellow House members were slandered by an administration official. This type of inaction is not going to "make others want to follow her".
• When common Americans expressed outrage and their opinions over the wasteful, deficit spending of the political class, Pelosi called them "un-American." Not a good way of "motivating a group of people" when you question their patriotism for exercising their basic rights.
• And the most recent abysmal non-display of leadership, Pelosi refused to censure Democratic Alan Grayson who earlier this week called all Republicans "foot dragging, knuckle dragging Neanderthals." When pressured by Republicans to censure Grayson like the House had censured Wilson, Pelosi refused. While she may be the Speaker of the House she is in no way any kind "inspiration." A true leader would never allow fellow citizens or team members insult other members of the team, it inhibits the movement towards a common goal, namely addressing and solving the country's ills.

Thus, I am pretty sure I know leadership when I see it and Nancy Pelosi is not leader, failing on every aspect of the leadership description above. She is one of the few people in Washington with the clout and visibility to unite the politicans of both parties for the good of the country but obviously has neither the skill or the desire to do so. Unfortunately, she would rather just muck around in the mud with the other kindergarten level politicians that currently sit in Congress.

I would suggest that Pelosi take to heart the advice from this old saying: "Never mud wrestle with a pig. You both get dirty and the pig enjoys it." Get out of the mud, Nancy, and show a little leadership. We will let you know when we see it.

Cash For Clunkers - One Last Time

We've panned the Cash For Clunkers program in previous posts, insisting that it is an idiotic program that accomplishes very little, if anything, in the areas it supposedly helped. Now that the preliminary sales results are coming in for September, the month after the program ended, it is becoming very clear that this was another government disaster of an idea.

According to the Motor Trend magazine website, on a year over year basis, General Motor sales were down over 40% (September, 2009 vs. September, 2008), Chrysler sales were down over 40%, and Ford sales were down about 6%. Most other brand sales were down on a year over year basis although not as badly as the GM and Chrysler declines. The Motor Trend article points out that the economy was imploding in September, 2008, highlighted by the meltdown of Lehman Brothers and other financial institutions, so that last September sales were on the low side to begin with, making these 40% declines more drastic.

Why did this happen? According to the stltoday.com website, they quoted a Washington University (St. Louis) economist, Gerry MacDonald, at the onset of the program in August who predicted, "The total number of cars sold isn't going to go up an inch. You're just moving it around in time. You are going to sell more cars now and fewer cars later." Now that the low September sales levels are materializing, it seems Mr. MacDonald was pretty close in his prediction. The bigger question is why didn't the high powered DC economists and politicians see this coming? Or did they and the political class not want to see it coming? With the incentives being as rich ($4,500) as they were, it is a no brainer that sales volumes would not increase, just slide.

Given that the majority of the sales were probably not incremental, were there other benefits to offset the disappointing follow up car sales? Although I do not have firm numbers on many of the following points, logic and common sense would say that there were probably far reaching, and mostly negative impacts, throughout the economy as a result of this program:

• Since the incremental sales were probably very small, there was no economic stimulus from the program. In fact, you can make the case that other product categories theoretically suffered since tax dollars used for the program were not available to be used for other products and services.
• Some experts have said that the less wealthy citizens suffered on a number of fronts. First of all, most lower income people could not afford a new car, even with the rebate, since credit was tight (reducing attractive car loan options) which required many of them to have cash up front that they did not have. Even if they had the cash, would they have been able to afford the higher car insurance they would have had to pay for years? In essence, lower income citizen's tax dollars were used to support a rebate sale for middle and upper income people who did have cash and who could afford higher insurance rates.
• Second, since all of the cars traded in were destroyed, there is probably some price increase pressure on the used car market since demand for used cars did not change, just the supply. Classic economic theory says that if demand stays the same and your supply is reduced then prices will go up. And who is the biggest target market of typical used cars? Lower income groups.
• Although it was against the rules, I would bet that a good number of these sales were junkers that were hauled out of the junkyard and passed off as the family car. The money was just too good to pass up: buy a junker out of the junk yard for $50, do a wink wink with the car dealership and you bypass the rules (rules said you had to have been using the car for at least a year prior to the program). Do you really think that in a very depressed car market that every dealer went by the book and lost sales because of the rules? Do you really think the government had any kind of audit process in place to support the rules? If this happened, which it probably did, than some clunkers were not taken off of the road, they already had been off the road.
• I came across and interesting environmental argument against the program earlier today. The writer's view was that this program actually did more harm to the environment than good. Their logic involved the sale of new cars when old cars are traded in. Used cars are typically purchased by lower income people since they cannot afford a new car, cannot get credit for a new car, and/or can not afford the increase in insurance payments for a new car. The writer saw two damaging environmental scenarios. First, the lower income car driver would just hold on to their really old clunker longer since they could not afford to step up to a better, more fuel efficient used car since the government had destroyed a lot of them. Thus, they are burning more gas than if they had gotten a newer vintage used car. Second, what if some lower class people actually bit the bullet and somehow bought a new car vs. a more recent used car? Think of the incremental energy in manufacturing and transportation involved in delivering that new car to the lower income purchaser vs. having them purchase a used car already made and on the lot? The writer provided no hard facts or analysis but their logic seemed sound if unquantified.

Bottom line: this program was a disaster on many fronts. It diverted taxpayer dollars from one group of people to another, diverted taxpayer dollars from other product categories, did not incrementally increase car sales, made used cars more difficult to find and afford for lower income groups, and had negligible, if any, positive environmental impacts. Great program.

As we have said previously, this was a simple rebate program that the political class obviously did not think through. Do we really think they can efficiently and effectively remake the whole health care system in the country and understand all of the interrelated tentacles that are involved? I doubt it.

Follow up note - in yesterday's post we discussed President Obama's trip to Copenhagen to lobby for Chicago getting the 2016 Summer Olympics and how we thought he should be working on much bigger issues (wars, economy, unemployment, etc.) rather than helping his Chicago buddies get the Olympics and probably get rich in the process. Before his presentation to the Olympic Committee, it was widely believed that Chicago was neck and neck with Rio for getting the bid out of the four finalist cities. Unfortunately, or fortunately depending on your view of a Chicago Olympics, Chicago was the first city ousted in the voting. Thus, not only did the President ignore vital national issues for a few days, he did not even sway the Committee to give the bid to Chicago. We all lost.

Obama's To Do List (Or Not To Do)

As I look across the country, I am assuming that President's Obama's to do list includes the following (in no particular order):

1. Gracefully get out of Iraq
2. Re-strategize the Afghanistan war
3. Get the sky rocketing deficit under control
4. Reduce sky rocketing unemployment rate
5. Implement an effective and doable immigration policy
6. Find the accomplices and bomb making materials that Najibullah Zazi was working with
7. Fix failing public schools
8. Finally win the war on drugs
9. Fix the totally ineffective fence on the Mexican/U.S. border (see yesterday's post)
10. Come up with a coherent national energy strategy
11. Pass effective and efficient health care reform
12. Close the Guantanomo Bay prison facility
13. Neutralize the Iranian nuclear bomb threat
14. Make nice with the Czechs and Polish who you royally dissed last week with a non-diplomatic handling of the missile defense decision
15. Reduce the oppressive tax burden on Americans
16. Fix the Palestinian/Israeli conflict
17. Fix a Social Security System heading for bankruptcy
18. Find a way to get the "bickering" (his words) under control between the citizens of this country
19. Fix a Medicare system heading for bankruptcy

At least I thought this would be his to do list, Instead, he has decided to jet over to Copenhagen and personally lobby the International Olympic Committee to hold the 2016 summer Olympic games in his home town of Chicago. I would have thought that this trip would be unnecessary/a secondary priority given the other things in the list above but silly me, what do I know. A few observations about the trip:

• Why did his wife and her contingent go over separately? Was that totally necessary from a taxpayer expense perspective? Couldn't they have managed their schedules to go together?
• If Akron, Ohio was in the running for the Games, would he have gone to Copenhagen to support Akron? I sincerely doubt it, which means he is showing extreme favoritism to his home town even though he should be representing all of America.
• Is this personal support a quid pro quo for his Illinois supporters of his 2008 Presidential campaign? Did he get financial and other support in exchange for helping to bring the games to Chicago?
• How will his local Chicago supporters benefit financially from this support if Chicago gets the Games? There are already reports circulating that his local buddies will make a killing from a real estate perspective.
• Will the presence of the Games in Chicago result in a large displacement of Chicago citizens like it did in China? Again, there are already reports that where the proposed Games will be staged will require a large imminent domain displacement of lower and lower/middle class homes.
• Although past American city hosts of Olympic games were on the hook for Olympic costs and expenses, will Obama smooth the way somehow that all American taxpayers get stuck with the bill rather than just the Chicago area residents?
• A recent Sports Illustrated article cited a reputable opinion poll that showed in February two out of three Chicago resident's supported the bid while a recent update to that poll showed that the city was split 50/50 on whether they supported the bid, i.e. interest among the residents is waning. Shouldn't they have a major say in whether they want their jobs, lives, and homes disrupted and not the local political class in cahoots with the national political class?

Between stints on Letterman and Leno, publicly picking his March Madness basketball brackets, going to Denmark for the Olympic bidding, etc., I am now officially tired and disgusted with the President's priorities. It appears to me that he puts far more importance on being the President than acting presidential.