The Sacking of America While the Politicians Preen

Right From the Start

Right From the Start

The Sacking of America While the Politicians Preen

Okay, we just watched the latest installment of political ineptness play out in the fight over the budget and the debt ceiling.  I say political ineptness not because the federal government experienced a partial (non-essential) shut down or because the mainstream media wrung its collective hands about defaulting on the national debt albeit there was never any chance that it was going to happen given the massive revenue stream that flows to the nation’s coffers each month.

It is because it was a fight had before with the same results.  Not just once, or twice, but time after time after time.  Nothing new has been learned since the first time, nothing new has been offered since the first time and nothing new will be learned or offered as we gear up for yet another round in January.

Everything necessary for a resolution is already available if the politicians were actually seeking a solution instead of playing games to stake out political positions.  It is made all the worse because the fight is cannon fodder for the media in that it provides them infinite opportunities to speculate, to exaggerate the impending doom, and to point fingers of blame at the party opposite their own political suasion.  It is great theatre but quite frankly it is like watching Gone With the Wind for the umpteenth time – it’s still epic but now boring and predictable.

And what is accomplished?  Nothing.  Well the public employees got a three week paid vacation with a bonus on top in the form of unemployment payments, but beyond that nothing.  More importantly it was yet another diversion from what is really important – the lack luster economy and the growing percentage of the permanently unemployed.

There is an easy solution to this sideshow.  I have stated before that the actual dollar amount of the national debt, while interesting, is not critical.  The critical number is the ratio of the national debt to the Gross Domestic Product (GDP).  So long as the GDP is growing at a rate faster than the national debt, the economy will be fine.  As a result, instead of fixing an absolute dollar amount on the national debt, Congress should fix a cap based on the ratio between it and the GDP.  Exceeding that ratio would require a super majority of both houses of Congress.  (For those of us who believe in a smaller, more efficient government, that ratio could be indexed to drop to a predetermined level over a defined period of time – but that would be icing on the cake.)  Adoption of such a methodology should be accompanied by a provision that requires the Treasury Department to pay the interest on the national debt before any other payments.  (Oregon has a provision that requires state and local government agencies to make contributions to the Public Employees Retirement System as a first priority – surely the national debt is at least as important as public employee pensions.)  In doing so, Congress would take this distraction off the table and allow them to focus on the critical issue facing us today  – jobs.

Similarly, the battle over the budget is pointless.  The Democrats have artfully avoided presenting or passing a budget bill in the Senate for years and yet government keeps running through a series of continuing resolutions allowing spending to continue at current levels.  That has wound up being the solution every time the Democrats and Republicans have engaged in this sham budget debate.  It would be far better to simply permanently adopt a continuing budget resolution holding spending at current levels unless superceded by an actual budget adopted by the Congress.  The result would be no more preening for the cameras as politicians stage a resolute demeanor over tax increases or budget cuts, no more government shut downs and no more circus for the media to exaggerate and distort.  It would also mean that the size of government would remain static unless an actual budget was produced.  To sharpen the point on the prod, however, I would suggest that such a continuing budget resolution be accompanied by provisions that barred congressional members and their staffs from receiving pay (and recovering pay retroactively) for the period following the expiration of one fiscal year and the adoption of a budget for the ensuing fiscal year.  Also during the default period of the continuing budget resolution, there would be no salary increases (regardless of collective bargaining contracts), no “step increase” and no changes in job titles or functions resulting in salary increases.  Hirings and promotions would only be permitted to backfill existing filled positions (as contrasted with budgeted but unfilled positions – a favorite budget trick of bureaucrats).

Then, having removed the distraction of this recurring but largely choreographed budget fight, the President and the Congress could actually focus on the anemic economic recovery.

Let’s be honest.  The titans of Wall Street are making out like bandits.  Not only have they benefited from the full recovery of the stock market (count me in those numbers also) but they are compounding their riches through leveraging other people’s money – no wonder they are increasingly enamored with politicians such as President Barack Obama and provide huge financial support for those who wink at such excesses.  But for the average Joe, the working men and women, the mainstreet businessman and the new entrants to the job market, this recovery stinks.  And worse yet, despite crowing from the politicians about all that they have done, it stinks more each day.

Look, it is irrelevant what the unemployment percentages are anymore.  They represent the number of people receiving welfare in the form of unemployment benefits.  The numbers today are more effected by the number of people whose benefits expire or who just give up looking than they are by actual layoffs and hirings.  The only possible reason that the focus remains on these numbers is that it gives the politicians – namely President Barack Obama – the opportunity to falsely claim progress on the economic front.  The jobs report are instructive but barely relevant.  While the number of jobs being created is interesting they lack real relevancy because they are compared to historic numbers as opposed to current numbers.  For instance, the total number of jobs created since the beginning of the Bush/Obama recession still have not reached the total number of jobs lost since the beginning of that recession – that’s interesting but still misleading.  The number of jobs created in a given month have been, for the most part, tepid although there are surges which almost uniformly are adjusted downward in the ensuing reporting period.  Regardless, the jobs numbers do not reflect the fact that the population, including the working age population is increasing and, since the inception of the Bush/Obama recession, has been increasing at a rate faster than the job creation rate.

For those of you forced to endure a teachers union dominated education in the Portland Public Schools, that means that while the total number of people with jobs is increasing, the total number of people without jobs is increasing at a faster rate.  That number is reported monthly by the United States Department of Labor’s Bureau of Labor Statistics (BLS) and is routinely ignored by the mainstream press because it highlights a dismal performance on the economy by Mr. Obama who they greatly favor.  The number is called the labor penetration rate and it has been dropping steadily since Mr. Obama took office in 2009.  At that point the penetration level was at 65.7 percent – that means 65.7 percent of the people of working age (16 and older) were employed.  As of October, that number had decreased to 62.8 percent – proof positive that the number of people available to work is increasing faster than the current level of job creation.  Folks, we are going backwards.  Not only is there a smaller percentage of the workforce able to find employment, the average annual income for those finding work continues to decline.  Average household income has dropped from $55,484 in 2008 (the end of the Bush presidency) to $51,371 in 2013, the beginning of Mr. Obama’s second term.

The impact of government on the economy is almost always negative.  The economy does best when the government gets out of the way.  The history of the Obama presidency has been increasing government intrusion on private business coupled with absolute ignorance on what it takes to create and maintain job growth.  It is compounded by the uncertainty of the true cost of Obamacare to employers and the constant demand for higher taxes by Mr. Obama and his Democrat allies in Congress.  Uncertainty is the bane of economic progress.  Mr. Obama is aided by a Congress who neither cares nor understands itself what is necessary for economic growth.  And nothing is going to change because none of the parties are interested in solving the problems – they are only interested in posturing for the next election, and the next election and the next election.  The young people of America who brought Mr. Obama to office through overwhelming electoral support are going to bear the brunt of all of this.   (They are only beginning to understand today that the only way Obamacare works is if they grossly overpay for health coverage that they don’t need so they can subsidize older Americans who have a higher incident of healthcare needs.)

One is tempted to say they got what they deserved but nobody deserves this.

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Posted by at 05:00 | Posted in Economy, Employment, Federal Budget, Federal Government, Jobs, Obamacare, President Obama, Public Employees Retirement System | 565 Comments |Email This Post Email This Post |Print This Post Print This Post
  • Bob Clark

    I really like the Government-expenditure-total-to-GDP ratio concept as amended into all constitutions and local government charters. The Oregon property tax structure has such limits, excepting for public construction bonding, with $10 for general local governance and $5 for public education; all of this per $1k in assessed real market value of property. Ideal tax reform would be to set the Government-to-GDP ratio to something in the 30 to 35% range, which I sense is about the current ratio. The ratio should be built on like a ten year rolling average, so that when the economy is growing above average the ratio runs below the targeted 30 to 35%; but when recession hits, the ratio can run higher so as to assist higher “safety net” demands.

    To perfect this concept, a measure of the economic costs/transfers of new regulation would be also embedded to ensure against socialism begat through regulation, such as the Affordable Care Act’s embedded redistribution efforts.

    The beauty of these economic limits is it would really reduce the number of political battles staged to protect the individual against the latent confiscation efforts the government class is continually attempting to impose.

    Side note: some of the decline in labor force participation rate is do to aging baby boomers going into retirement. However, retirement, disability and just plain dropping out and living on the dole has clearly been sped by Obama’s and state of Oregon’s various welfare offerings. A University of Chicago economics professor wrote in a Wall Street Journal article, based on his own study, the Affordable Care Act effectively increases the marginal rate of taxation and benefit loss for the average American from about 40% to just over 50%. Meaning with the ACA, the average worker loses over half his income and benefits for each extra dollar he/she earns in the workplace or on private savings (up from the previous 40% rate).

    Obama and Kitzhaber (and his minions) are trashing the work ethic. Margaret Thatcher I think said it best: “The problem with socialism is you eventually run out of other people’s money.” [might not be quite verbatim.]

  • thevillageidiot

    Bob you are pretty close. But where is your head? prior to the depression Gov Spending as portion of GDP was 10% to 12%. during the Great Depression jumped to 20% where it stayed until about 1950. after then it was spending courtesy of the Korean war, Vietnam war, the great society and huge increase in social spending, the continuous wars and increases in medicare and medicaid to where it is now greater than 35% of GDP. The most recent spike was over 40% with the current issues of war. the next climb to over 40% will be a result of the ACA which even now both parties are trying to fix. Russ even you are wrong. The Gov Spending has got to be cut back but it won’t for a while. Taxes will increase (are increasing) the big three will continue to suck up the taxpayer money (now big four SS, Medicare/medicaid, War, ACA). If there is anybody out there that is under the age of 50 you better start voting for any politicial the promises to shutdown all four. or you will be spending all your money on supporting the old, infirm, and lazy. with just enough to subsist on. The penetration level Russ is talking about has a real bummer aspect, only 50% are actually employed out side of a government pay check and that includes the military industrial complex as part of the Gov paychecks. So a third of the adult work force is paying for everybody else.
    Who is John Galt?

    • DavidAppell

      All-government spending peaked at 38.7% in 1Q10, at a time when the economy was reeling and government action was needed.

      So what? It’s now down to 34.5%, an austerity that many economists think is prolonging the Great Recession.

  • Jack Lord God

    In the debt ceiling idiocy, Republicans offered to compromise with a one year postponement of Obamacare. Democrats rejected that. Now Democrats are likely going to demand it. That’s how stupid things are now.

    In case you havent figured it out – America is a country about to enter rehab.

    It won’t be pretty.

    • DavidAppell

      Cutting debt now would be idiotic. Naturally you’re in favor of it.

  • DavidAppell

    Didn’t Larry Huss just recently retired?
    Who, then, pays for his health insurance? Medicare?

    • .

      Whatever bloats your float, Appell, is biased in sociopath y that twill never pencil out you nil wit.

      • DavidAppell

        Maybe. But at least I have balls enough to post under my real name. Coward.

        • .

          You might call me menstrual you to helen gong degenerate.

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