More Amateur Hour Economic Antics From Washington, Part 3: Debt Definition Deficit, Unemployment, Greece and More

Okay, I tried to limit the bad economic news and totally inept economic managements skills of the Washington political class to two posts. However, as I wrote the two posts, the bad antics and horrible economic news continued to flow in, requiring a third day of review on how bad the trends, statistics, and economic situation has become and the inability or non-desire of the political class to do anything about the deteriorating situation:

- Last week the Labor Department reported that while the economy did create 96,000 jobs last month, which dropped the official unemployment rate down to 8.1%, the main driver in the drop was the fact that four times as many workers, 368,000 Americans, lost hope of finding a job. They stopped looking for work entirely, resulting in more frustration for American workers.

- The job creation numbers for the past two months were revised downward 41,000 jobs, based on further Labor Department analyses, contributing to further despondency.

- If the same number of people were in the labor market since January, 2009, as opposed to stopping the search for work because of frustration, the true unemployment rate would be 11.2%. This estimate kind of debunks the administration's claim that unemployment would go as high as 8% if the disastrous $800 billion economic stimulus program was not implemented.

- August represented the 42nd consecutive month that unemployment was above 8%, a continuing all time record.

- According to a September 12, 2012 Associated Press report:

• The Census Bureau reported that the number of people falling below the Federal government's poverty line still stands at a record 15%.
• The Census estimates that 46.2 million people remained below the poverty line in 2011, unchanged from 2010.
• The figure is the highest in more than half a century, exceeding the level during the throes of the Great Recession.

- According to the Federal Bureau Of Labor Statistics, for 38 straight months, the percentage of Americans who have a job has been lower than the percentage of Americans who were employed during the recession. The lowest point for employment during the recession was 59.4 percent, while the high-water mark for employment during the "recovery" has been 59.3 percent. Think about that statement: when it comes to estimating the percentage of Americans who are employed, every month of the "recovery" has been worse than any month of the recession. As a reference point, during the Bush years, the percentage of Americans who were employed was never below 60%, every month for eight years.

This is another piece of very distressing news: the recovery is in many ways worse than the recession. This data shows that employment is worse during the recovery than the recession, those living below the poverty line is higher than the past 50 years, and recent data shows that household income dropped more during the so-called recovery than during the Great Recession. Very disturbing. 

- New data from the Congressional Budget Office (CBO), as analyzed by James Harrigan of Utah State University and Antony Davies of Duquesne University, forecast that by 2021 the U.S. Federal government national debt load might rise to Greece’s dangerous and unsustainable level:

• The analysis indicates U.S. debt may climb to almost 150 percent of gross domestic product nine years from now, about the same as Greece’s is today.
• The CBO puts our national debt level at $25 trillion by 2021, up from $16 trillion now. As a side note, this estimate is much higher than the overly optimistic projections from the Obama administration.
• However, according to Harrigan and Davies, over the past 15 years, CBO forecasts of national debt levels  five or more years into the future have under estimated by an average of 40%.
• A 40% under forecast would result an actual debt level of $35 trillion in 2021.
• The analysts found that the CBO has an accurate  track record predicting GDP which they say will be about $24 trillion for 2021.
• Dividing $35 trillion of national debt by a an economy sized to $24 trillion results in the Greece-like 146% a debt-to GDP ratio.

We we all know what is happening to Greece at this level of debt to economic activity.

- Interesting and simple analysis from the Real Clear Markets website on September 10, 2012. They calculated that, based on current views of Federal government spending and expenses in 2012, the Federal government will spend all of its expected tax and fee revenue by September 10 this year. This means that for the remaining 110 days of 2012, the Federal government will have to borrow $10 MILLION DOLLARS A DAY to continue to operate. This will result in a 2012 deficit of over $1 TRILLION.

In 2011, the Federal government had to use borrowed money to pay for 132 days of government operations.  In the last ten years, the Federal government had to borrow money to keep itself in operation for a grand total of 1,061 days or almost three full years of government operations, and waste.

Our children and grandchildren will have to pay for these three years of our over spending in addition to paying for whatever the government does in their future. It's a devastating burden to their economic freedom and their future welfare.

- A story in USA Today after the Democratic National Convention contained some very distressing news. Rather than have me try and explain the distress, allow me to reference some remarks from Gretchen Hamel, executive director of the Public Notice organization. She issued the following statement in response to reports that an essay signed by President Obama in the official program for the Democratic National Convention actually confuses the terms “debt” and “deficit”:

"Today’s report that the president doesn’t understand the difference between our national debt and our annual deficit is frightening. But for an administration that has overseen wasteful spending projects such as Solyndra and whose lack of responsible oversight allowed federal employees to party in the GSA, this lack of attention to detail isn’t surprising. Responsible budgeting isn’t glamorous or fun, but it is a necessary, core function of government. For reference, our national debt is at a historic high of $16 trillion and our annual deficit is about $1.2 trillion, exceeding the trillion dollar mark for the fourth straight year. Additionally, Congress has failed to pass a budget into law for the past three years. President Obama may be hoping the American people award him an “incomplete,” but on his understanding of budgetary issues he’s clearly failing."

Truly scary if those responsible for solving our skyrocketing debt problem, the same people that caused it to rise about 50% (over $5 TRILLION) in just the past four years or so, do not understand the simple differences between "deficit" and "debt" then we are truly screwed from an economic and financial security perspective. The antics of the political class, as documented today and the past two days, can lead to no other conclusion.

As we discussed last week in a recent blog post:

http://www.loathemygovernment.blogspot.com/2012/09/fun-with-math-part-3-turning-tide-to.html 

there is a way to solve our outrageous and dangerous debt problem. We laid out the plan that would take $9 TRILLION of debt out of our fiscal future with minimal impact on most Americans. That plan, combined with the following three steps could save us from Washington:

1. Step 39 from "Love My Country, Loathe My Government" would immediately implement term limits for every single Federal politician. Their antics have proven beyond a shadow of a doubt that the cannot solve the economic problems that they created.
2. A short term step relative to Step 39 is to vote all incumbents out of office on November 6. How much worst could it get if we replaced every incumbent politician in November? Declining household income, record high deficit spending, record high poverty levels, 42 consecutive months with unemployment over 8%, hundreds of billions of dollars wasted every year from incompetence, criminal fraud, and inefficiency. Again, how much worse could it get with a new set of people sitting in Congress and the White House.
3. Step 36 would require every Washington politician to take and pass a course on basic economic concepts, thoughts, and history. Without such training you can see what a problem they have created for all of us.

Antics are not solutions. Incumbents are not solutions either.

We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://www.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times.

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment

More Amateur Hour Economic Antics From Washington - Part 2: Gas Prices Rising, Household Incomes Plummeting, Retirement That Nevers Happens, and More

Last Friday, we reviewed the latest economic statistics, trends, and opinions of experts in the financial and economics area. The overall view is not good. Almost four hundred thousand Americans applying for first time unemployment benefits every week, Americans believing that their retirement years and the future of their kids will not be pretty, economic growth that is tepid beyond belief, etc.

Unfortunately, one post was not enough to cover all of the bad news from most corners of the economy and Washington:

- Some good news: the latest Thomson Reuters/University of Michigan's final reading index on overall consumer sentiment for August rose to 74.3, its highest index rating since May. Some bad news: the survey's gauge of consumer expectations fell to 65.1 from 65.6, the lowest level since December of 2001.

Additionally, about 50% of those surveyed stated that their own personal financial situation was worse than it was five years ago and the majority surveyed do not expect any wage gains during the year ahead.

- A separate survey from last week from the Conference Board showed consumer confidence hit its lowest level since November, partly due to higher gasoline prices.

- In a recent interview with USA Today, John Bogle, legendary founder of the Vanguard Group, was asked what worries him the most in the economy. His answer: "the coming train wreck in the financial system."

Bogle's view is that retirees hoping to live on the proceeds from their 401(k) savings or similar venues are due for a big surprise since, on average, these savings holdings are not enough to maintain a decent lifestyle. This makes many aging Americans ill prepared for retirement and will have them remaining in the workforce longer than previous generations.

- According to an August 23, 2012 Bloomberg article, an analysis by of the latest U.S.Census data by Sentier Research found some depressing findings:

• Unbelievably, Americans' incomes dropped more in the three-year economic expansion that started in June 2009, after the Great Recession ended, than during the longest recession since the Great Depression.
• Median household income fell 4.8% on an inflation-adjusted basis since the Great Recession ended in June 2009.
• That was almost twice the 2.6% drop in household income during the 18-month contraction.
• The Sentier analysis found that household income is 7.2% below the December 2007 level.
• Household income fell to $53,508 from $54,916 during the 18-month Great Recession. from December 2007 to June 2009 and kept falling during the 36-month period since then, dropping to $50,964 in June 2012.
• The report included the following summary quote: “Almost every group is worse off than it was three years ago, and some groups had very large declines in income.”

You know that we are not in a good economic place when household income continues to plummet even though the recession ended years previously.

Regarding the December 2007 level household income level, recall that Pelosi, Reid and the Democrats had already been in charge of both houses of Congress for nearly two years and one month later, in January, 2008, Democrat Barack Obama took over the White House. Just saying.

- On August 31, 2012, the Institute for Supply Management-Chicago Inc. announced that its monthly business barometer index dropped  from 53.7 to 53.0 in July. While an index reading over 50.0 indicates that the economy is expanding, U.S. manufacturing has been slowing down over the past months as sales have not matched manufacturers' expectations.

- Famous housing expert Robert Shiller, the developer and manager of the Case-Shiller Home Price Index recently reported that home prices are improving slightly and the sector is showing small signs of recovery, both good economic news items. The index rose .5 from June, 2011 to June, 2012, the first year-over-year increase since 2010.

However, he warned that storm clouds still lurk on the horizon since slowing Asian economies and the still dangerous European debt situation could slow down the U.S. economy. This slowdown would dampen the housing markets as consumers decide not to risk high priced purchases such as homes during times of economic stress: "We seem to have upward momentum … but there are a lot of clouds on the horizon too. We have the European crisis, which is looking very iffy right now, we have Asia weakening, we have the fiscal cliff — there’s a lot of things."

Thus, while the trend may have stopped going down in the housing market, there is likely a lot of good things that must happen before the industry can start growing again.

- The latest poll results from Gallup found that Americans' confidence in their economy has tied a low point not seen since January, 2011. The Gallup Economic Confidence Index was minus-27 in August, a reading that was slightly worse than July's reading of minus-26 and well below May's four-year high of minus-17.

Slipping confidence in the economy, a still burdened housing industry, retirement plans dashed, declining household income, and softening manufacturing numbers. Makes it hard to believe that 1) the Obama administration would proudly state that they did it their way (economically speaking) and it worked and 2) any American would actually believe that the current economic policies of Washington make any sense and are having any kind of positive impact on the economy.

Two steps from "Love My Country, Loathe My Government" are needed to be implemented immediately:

1. Step 39 would establish term limits for all Federal politicians, "one and done." The current batch of long time politicians in Washington are proving every day that they have no clue on how to fix the economy despite record high stimulus spending, record high federal reserve money printing, and record low interest rates. How much worse could it be to turn over the whole lot of them every few years?
2. In the shorter term, Step 26 would require every Federal poltician to sit through and pass a course on basic economic policy, theory and history. Again, how much worse could it be since it is pretty obvious, based on our current eocnomic disaster, that those making the policy decisions in the White House and congress how no solid knowledge or understanding of economics.

Oh, by the way, have you noticed how gas prices continue to escalate upwards, more than twice what they were back in January, 2007? High gas prices, caused mostly because we have not had, nor to we currently have, a long term energy strategy for the country? Paying more for gas every week depresses confidence and disposable income that could otherwise be used to expand the economy.

Note: the bad news is not over. Tomorrow we will go through the final batch of horrid economic news even though, according to the President, "the private sector is doing just fine." Huh?

We invite all readers of this blog to visit our new website, "The United States Of Purple," at:

http://.unitedstatesofpurple.com/

The United States of Purple is a new grass roots approach to filling the office of President of The United States by focusing on the restoration of freedom in the United States, focusing on problem solving skills and results vs. personal political enrichment, and imposing term limits on all future Federal politicians. No more red states, no more blue states, just one United States Of America under the banner of Purple.

The United States Of Purple's website also provides you the formal opportunity to sign a petition to begin the process of implementing a Constitutional amendment to impose fixed term limits on all Federally elected politicians. Only by turning out the existing political class can we have a chance of addressing and finally resolving the major issues of or times

Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.
Please visit the following sites for freedom:

http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment

Government Favors And Politicians For Sale! Election Year Specials! Act Now! - Basic Corruption

Many times we have covered the corruption and greed that, unfortunately, has become the trademark of our political class. A very small sample includes the following:

• A major fund raiser for President Obama was illegally moved ahead of the American taxpayer in the Solyndra bankruptcy proceedings, resulting in taxpayers receiving nothing for their doomed $529 million loan guarantee to Solyndra.
• Obama's Department of Energy approved a Federal government loan guarantee to a company that employs Nancy Pelosi's husband in an influential executive position.
• Nancy Pelosi received upwards of nine corporate IPO opportunities, including one for the VISA IPO. VISA was somehow able get revenue restriction legislation delayed in the House Of Representatives when Pelosi was the Speaker of the House until after the IPO happened, resulting in a $100,000 profit for Ms. Pelosi in just a few days.
• Congressman Spencer Bachus successfully shorted the financial sector of the stock market shortly after getting warnings of a financial meltdown from the Secretary Of Treasury and head of the Federal Reserve Board, days before the information became public.
• Congressman Barney Frank received substantial re-election campaign funding support from various banking institutions, the very institutions the Congressman was supposed to be overseeing as a past chairman and current member of the House banking committee.
• Congresswoman Ginny Waite-Brown invested in various banks based on non-public, secret information she received as a result of her membership on a House banking committee, the very committee that approved taxpayer bailout money for the very same banks the Congresswoman invested in.
• Congressional members hand out $16-$20 billion worth of earmarks each year, earmarks and funding favors which are no more than thinly disguised campaign financing efforts.
• The Fisker and Telsa auto companies received hundreds of millions of dollars worth of Federal government loan guarantees despite the fact that multiple people in each company are major fund raisers for Obama and the Democratic party.
• Senator Harry Reid sold his oil company investments shortly before the oil industry took a major hit on price decreases and bought health care company stocks just before the health care reform legislation debate began in the Senate, making a tidy profit in the process. 
• Ex-Senator Obama, ex-Senator Dodd, and Congressman Frank successfully derailed the auditing and reformation of Fannie Mae and Freddie Mac. This derailing that has already cost the American taxpayers over one hundred billion dollars in bailout funds, possibly because Obama, Dodd, and Frank were the top recipients of political campaign donations from Fannie and Freddie.

The historic list goes on and on. And current day government/politician favors and corruption continue. In the November 18, 2011 issue of The Week magazine, a synopsis of a Washington Post article reported that the top Wall Street financial institutions earned $77 billion during the eight years of the Bush administration. 

However, in less than three years of the Obama administration, years that included the worse economic downturn and banking crisis since the Great Depression, these same financial and banking  institutions earned $83 billion in profits. A coincidence or political class favors/corruption? Based on the historical data, I doubt it was a coincidence.

Need more proof that the government favors and political class members are for sale in this upcoming election year? Consider a set of examples that have already and recently taken place with our politicians, as reported in a recent Business Week magazine article within their Spring, 2011 Government Insider Special report:

• New Jersey Senator Robert Menendez recently "championed" a plan to provide a temporary tax cut for small companies, a tax cut that would allow them to offset investments these companies might make in research on therapies to prevent and treat chronic diseases. Oh, by the way, the pharmaceutical industry in New Jersey just happened to contribute $434,043 to his 2010 reelection campaign and PAC.
• Michigan Senator Debbie Stabenow sponsored a bill to give a tax rebate for consumers who purchase a gas/electric car or truck. The recently available Chevy Volt from General Motors certainly falls within this category. Oh, by the way, General Motors employees contributed $84,635 to Stabenow's reelection campaigns between 1995 and 2010.
• New York Senator Charles Schumer has been accused by other Congressional members of making a proposed tax on carried interest of private equity managers so difficult that the measure never was passed into law. Oh, by the way, Schumer has received $8.8 million from the security and investment industry since 1989, an industry that certainly includes private equity managers.
• Montana Senator Max Baucus obtained a provision in a recent farm bill "for tax exempt forestry conservation bonds to help purchase a 500 square mile patchwork of land owned by Plum Creek Timber." Oh, by the way, Plum Creek Timber has spent $3.7 million in lobbyists fees from 2006 to 2010 and its employees have contributed $19,100 to various Bachus reelection campaigns.
• Iowa Senator Charles Grassley has backed tax credits for domestic production of corn based ethanol and tariffs on imports of ethanol. It just so happens that his home state has 40 ethanol plants that generate 3.5 billion gallons of ethanol each year. Oh, by the way, Grassley received $290,250 in reelection campaign donations from agriculturally based PACs in his 2010 election run.
• Arizona Senator John Kyl is a major proponent of cutting taxes on inherited wealth, having been instrumental in the one year hiatus of the inheritance tax in 2010 and cutting a deal with Obama to keep the reinstatement of the tax at 35%. Oh, by the way, eliminating the estate tax is a major priority of the Club For Growth, which just has happened to donate $155,753 to the Senator's election campaigns since 1989.
• Texas Senator John Cornyn has opposed Obama's attempts to repeal oil and gas industry tax breaks besides opposing the President's ban on Gulf oil drilling. Oh, by the way, oil and gas industry components have given the Senator $1.7 million since 2001.

Corruption or coincidence? You decide, but here seems to be a lot of confidences going on if it is not corruption. Just these seven Senators with just these seven instances of political favors for campaign funding donations comes out to over $11 million.

Think about how much money is involved when you include the other 43 U.S. Senators and all 435 members of the House of Representatives. If these other 478 politicians trade at the same rate as the seven Senatorial examples listed above, we are looking at almost $800 million that our politicians have traded government favors for their campaign funding needs.

This volume of trading has to be sub-optimal for the rest of the country's citizens that do not partake in this corruption. Rather than doing what is best for the whole nation's interests, this type of basic corruption does what is best for the politicians' careers and the special interests that fund their careers.

Since most of these political favors occur between incumbent politicians and special interests, Step 39 from "Love My Country, Loathe My Government" would go a long way to eliminating this type of corruption. Step 39 would impose term limits on all Federal politicians, "one and done." You get one term in office, either as a Senator, Congressman, or President, and then your Federal political career is over.

Maybe in such an environment, where a politician knows that they do not need to fund their perpetual reelection campaign since they only get one term, they would then make decisions that are right for the country, not what are optimal for their special interest campaign funding sources. Heaven knows that they are not doing that now, making the right choices for the country,  so how much worse could it get if they were "one and done?"

A political process that relies on special interests, cronyism, and trading government favors for campaign funding and other perks is not a democracy. It is a central American banana republic, it is Iraq under Hussein or Libya under Ghaddafi, or it is the mob under Don Corrleone. In any of those examples, freedom and liberty are subservient to corruption.

Ashleigh Brilliant once said: "I either want less corruption or more of a chance to participate in it." Under our current political set-up, neither situation is likely to occur for the vast majority of hard working, honest Americans who play by the rules and have some sense of integrity. Thus, let's try term limits and try to lessen the corruption and increase the chances of freedom and liberty.

Please note: we will not stop just with these basic types of political corruption listed above. Tomorrow we will cover institutional corruption, the rules that the political class exempt themselves from to make their lives easier, and on Friday we will look at the somewhat curious and incestuous relationship between the Federal government and Goldman Sachs.




Our book, "Love My Country, Loathe My Government - Fifty First Steps To Restoring Our Freedom And Destroying The American Political Class" is now available at www.loathemygovernment.com. It is also available online at Amazon and Barnes and Noble. Please pass our message of freedom onward. Let your friends and family know about our websites and blogs, ask your library to carry the book, and respect freedom for both yourselves and others everyday.


Please visit the following sites for freedom:
http://www.cato.org/
http://www.robertringer.com/
http://realpolichick.blogspot.com/
http://www.flipcongress2010.com/
http://www.reason.com/
http://www.repealamendment/