President Obama uses Class Warfare to Increase Spending and Reward Political Cronies

Posted by PITHOCRATES - September 19th, 2011

They have Learned in the UK that Government can’t Pay for Everything

China may be subsidizing high-speed rail.  But in the UK, the government is moving the other way.  Because it is just too costly (see Arriva Trains: Fare rise in Wales 2% lower than England posted 9/19/2011 on the BBC News Wales).

The Welsh Government has told Arriva Trains Wales it can increase prices by 1% above the inflation rate.

Last month the UK government announced an average increase in England of 3% over inflation…

Tony Miles, from Modern Railways magazine, said the decision was good news for Welsh commuters but it would impact on the Welsh Government’s budget.

He said: “This is a policy decision by the Welsh Government, which is very much in line with their outlook that the burden of financing public transport should fall more on taxpayers centrally than on the individual passengers…

“The UK Government wants to shift the cost of the railways more away from taxpayers and towards users.

The UK went farther down the socialist road than the Americans.  They nationalized a lot of their industries.  Nationalized their health care.  And, of course, their transportation.  Now there are efforts to reverse this.  Continuing on the work of the great Margaret Thatcher.

There are some in the UK that have a novel idea.  To let people pay for a train ticket.  If they want a train ticket.  Imagine that.  Paying your own way.  How fair.  And rational.  But not all are keen on the idea.  For in Wales they want everyone to pitch in and pay for train tickets.  Even those who don’t ride on the train.

They have learned in the UK that government can’t pay for everything.  And some are now trying to undo years of government growth.  In transportation.  And elsewhere.  To unleash more free market capitalism.  That they were so kind to introduce to the Western World all those years ago.

Was the Great Depression the Worst Economy Ever before Obama Took Office?

In America, though, government continues to grow.  Even with election losses.  And economic malaise (see End of Recession Doesn’t Mean Good Times Return Right Away by David Johnson posted 9/19/2011 on Random Samplings).

Numbers just released by the Census Bureau, however, illustrate that while the recession may technically be over, household economic conditions did not improve…

During the 2010 calendar year, median household income was $49,445, 2.3 percent lower than in 2009 after adjusting for inflation.

The Obama administration’s Recovery Summer ended the Bush recession in 2010.  Or so they say.  The unemployment rate is still above 9%.  If you factor in the underemployed and those who’ve given up looking for a job it’s closer to 16%.  And real household income is down 2.3%.

But just imagine how bad things would have been if Obama didn’t end the Bush Recession with his Recovery Summer.  People would be saying that the Great Depression was the worst economy ever.  Until Obama took office.

To end the Bush recession Obama spent $800 billion in ‘stimulus’ spending.  Which failed.  Because he’s asking for another $450 billion stimulus package.  Despite the first one failing.  Well, it may have failed to stimulate the economy.  But it did stimulate government.

Only Union Jobs are Good Jobs in the Obama Admin because only Union Jobs Fill Democrat Coffers

So we know that their stimulus spending fails to stimulate the economy.  But why?  Is it because they don’t understand things economic?  Or is it because their stimulus has more political goals than economic?  Perhaps it’s both (see Illinois among worst states to do business: Survey by Ameet Sachdev posted 9/19/2011 on the Chicago Tribune).

Illinois ranked among the three worst states for business, according to a survey of U.S. corporate executives released Monday…

Taxes and high costs were among the factors that contributed to the state’s poor showing in the survey. California was deemed to have the worst business climate, followed by New York and Illinois.

So California, Illinois and New York have the worst business climates.  Because of taxes and high costs.  No surprise, really.  For these are big blue Democrat states.  With big blue Democrat cities.  And big public sector unions.  At both the state and municipal levels.  Which is why they have such high taxes and costs.  Those public sector pension and health care benefits are absolutely killing their economies with the high taxes required to fund them.

The Democrats can say what they want.  But they are not business-friendly.  They are only friendly to political allies.  Unions.  Teachers.  And public sector employees.  Which is why businesses want to leave these Democrat areas.  Not to exploit cheap labor.  But to stop their own exploitation by these Democrat strongholds.

Illinois recently increased its income tax rate, which has prompted several companies, including Chicago-based CME Group, to consider leaving the state.

Texas, North Carolina and South Carolina were viewed as having the best business climates, according to the survey.

Boeing built their new 787 Dreamliner plant in South Carolina.  But the Obama administration is trying to shut that plant down.  Why?  Because they don’t like South Carolina.  Or its people.

You see, all jobs are not good jobs.  As the Obama administration sees it.  And these new South Carolinian jobs are not good jobs.  Because they are nonunion jobs.  No union means no union dues.  And no money to flow into Democrat coffers.  So the Obama administration has nothing to gain politically.  And that’s why they are using the power of the National Labor Relations Board to shut that plant down.  And make Boeing expand production in Seattle.  Where the jobs will be union jobs.  And union money will flow into Democrat coffers.  Via union dues.

President Obama and the Democrats Prefer Crony Capitalism over Free Market Capitalism

We call this crony capitalism.  Some may even say extortion.

Crony capitalism is the opposite of free market capitalism.  Where merit wins the day.  In crony capitalism, though, it’s who you know.  And what kind of political power you have (see Obama administration ‘pressured Air Force general to change testimony’ by Toby Harnden posted 9/16/2011 on The Telegraph).

According to Republicans on Capitol Hill, General William Shelton, head of Air Force Space Command, told them in a closed session the White House urged him to alter his testimony about the Pentagon’s concerns about a new wireless project by a satellite broadband company…

LightSquared, based in Virginia, is funded by the multi-millionaire Philip Falcone, a frequent donor to Democrats. The satellite and broadband communications company plans to build a nationwide, 4G phone network that many generals believe would seriously hinder the effectiveness of high-precision GPS receiver systems used by the military…

The row over the allegedly improper intervention came as a Republican-controlled House of Representatives Committee investigated a federal loan guarantee to Solyndra, a solar firm also tied to a major Democratic contributor, which failed after receiving a half-billion US government loan guarantee.

A spokesman for Gen Shelton said that his testimony was “his own, supported by and focused purely on documented tested results”.

LightSquared insisted it had not sought to interfere with the properly regulatory process. The White House said reviewing congressional testimony was routine.

Interesting.  The White House says this is just routine.  Which it apparently is.  Whether you’re funneling tax dollars to a green energy company.  Connected to a rich Democrat donor.  Or trying to throw a contract to a communications company.  Also connected to a rich Democrat donor.  Even if it compromises national security.

It’s just business.  And our politicians are just business people.  In the business of rewarding political friends.  In return for generous campaign contributions.

So much for hope, change and transparency.

If You Confiscated all the Rich’s Income it would Wipe out Obama’s Deficit…for One Year

Crony capitalism.  A little extortion.  Mixed in with a generous helping of class warfare.  In other words, Obama politics (see Obama calls for broad tax increases by Stephen Dinan posted 9/18/2011 on The Washington Times).

President Obama on Monday proposed a deficit reduction plan that calls for about $3 in new tax increases for every dollar in additional spending cuts as he seeks to put his imprint on the ongoing talks with Congress over reducing the government’s staggering debt…

“This is not class warfare, it’s math,” Mr. Obama said in the White House’s Rose Garden as he laid out the outlines. “The money’s got to come from some place.”

Real incomes are down.  Unemployment is still above 9%.  If you count the underemployed and those who have given up looking for work the actual number is closer to 16%.  So how best to create more jobs to help people go back to work?  And boost those real incomes?  Well, if you’re a member of the Obama administration, you raise taxes.

But this won’t help the employment numbers.  So why do it?  Because it is class warfare.  Despite the president’s denial that it is.  For there is no other reason to do this.  It won’t help the economy.  And it won’t help reduce the debt.

If you took all income from those earning $200,000 or more you’ll be lucky to get $2 trillion.  At least this is all they had in 2008.

(Source:  SOI Tax Stats – Individual Income Tax Rates and Tax Shares)

See?  You can raise tax rates to 100% on the rich but it won’t help.  If you confiscated all their income you’d raise a lot of money, yes.  Enough to wipe out the Obama’s $1.6 trillion deficit.  For one year.  But it will be $1.6 trillion the following year.  Unless you cut spending.  Because you can take this money only once.  Unless these people agree to keep producing all this wealth as indentured servants.  Which I don’t see happening.

So Broke that We Must Raise Taxes but not too Broke that We can’t Throw $7 Billion to the USPS

So it is class warfare.  And cronyism.  Helping those who help them.  With taxpayer dollars.  Which is why they need to raise taxes.  Not to retire the debt.  But to help their political supporters (see President Obama deficit plans back ending Saturday mail by Ed O’Keefe posted 9/19/2011 on The Washington Post).

The White House is also calling on Congress to return $7 billion that USPS paid into a federal retirement fund to the delivery service to help pay for other retirement and health-care costs. Obama’s plans also would allow the Postal Service to raise stamp prices beyond the rate of inflation to better match the cost of delivery…

Though the Postal Service is a self-funding entity that doesn’t accept taxpayer dollars, it is a significant piece of the unified federal budget because its workers and retirees draw benefits from federal workers’ compensation, retirement and health-care accounts.

The country is so broke that it must raise taxes.  But it is not too broke that it can’t throw $7 billion to Obama’s friends in the USPS.

We are Regressing back to the Totalitarian Regimes of the Old World

All this talk about balance approach to deficit reduction?  And getting the rich to pay their fair share?  It’s all class warfare. To increase taxes.  To keep funding important political constituencies.  It has nothing to do with deficit reduction.  The numbers are just too large to be able to reduce the deficit with taxes alone.  You have to cut spending.

And this just isn’t going to happen with Democrats in power.  Because government spending is their lifeblood.  Their economic policies don’t work.  And they’re not designed to work.  They have but one purpose.  Politics.  Rewarding political favors.  With taxpayer dollars.

And they will sacrifice anything to keep spending.  The economy.  Our real incomes.  Our national security.  Even the American Dream.  Our liberty.  For we are regressing back to the totalitarian regimes of the Old World.  Where, if you’re not politically connected, you are fast becoming a second class citizen.

www.PITHOCRATES.com

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Obama Delivers his $447 Billion Political Stimulus Plan to Congress

Posted by PITHOCRATES - September 12th, 2011

Had the $800 Billion Stimulus worked we wouldn’t need the $447 Billion Stimulus

We have a plan. Rather, Congress does. President Obama delivered it today. And he reiterated that they must pass it now. That there was no time for political games. Like he was doing. Saying basically that if the Republicans don’t pass it they don’t want to help the economy. And, by extension, they hate the American people. For only those who hate the American people could deny them jobs (see Obama urges no “political games” on jobs plan by Laura MacInnis and Matt Spetalnick posted 9/12/2011 on Reuters).

President Barack Obama called on Republicans not to play “political games” with his jobs plan as he pressed for swift passage of a $447 billion package he hopes will revive the U.S. economy and boost his re-election prospects…

He took aim at Republicans who have resisted many of his economic initiatives in the past.

“We can’t afford these same political games, not now,” Obama said.

Economic initiatives in the past? Like that $800 billion stimulus? You know, if that had worked we would not need another stimulus. But we apparently need another stimulus. So the previous stimulus must have failed. And, if so, why would this stimulus be any different?

It would appear that the only one playing a game now is the president.

Stimulus Sleight of Hand: Taking from the Private Sector to Stimulate the Private Sector

So let’s take a look at what the president calls stimulus. First of all, where is that $447 billion going to come from (see Obama proposes tax hikes on wealthy to pay for $447B jobs bill by Sam Youngman posted 9/12/2011 on The Hill)?

The White House said Monday that President Obama wants to pay for his $447 billion jobs bill by raising taxes on the wealthy and business.

Oh. He’s going to pay for his jobs bill by raising taxes on the job creators. I mean, let’s face it, poor people don’t create jobs. Rich people do. And businesses. And why aren’t they creating them now? They have no idea what cost this administration is going to levy on them next. Like a tax hike to pay for another stimulus bill.

The stimulus will be temporary. But you can bet those tax hikes won’t be. They’ll be permanent. And a disincentive for rich people and business owners alike to risk their money to create jobs.

The administration would tax the income investment fund managers make, known as “carried interest,” as regular income instead of as capital gains, which has a low 15 percent tax rate. This is another long-standing administration goal that has been resisted by Wall Street as well as some Democrats.

The administration estimates the capital gains change would provide $18 billion in revenue.

In other words, he wants to chase what investment capital we have out of the country.

A lot of people lose money in the stock market. Because it’s risky. It’s like gambling. Where there is no such thing as a sure thing. So those who take big risks often lose big. Even Donald Trump has filed for bankruptcy protection a couple of times. That’s why when they do win they need to win big. To cover all of those times they don’t win. But when you raise the tax rate on those winnings from 15% to 33% (the current top marginal income tax rate), it’s going to make investors think twice. That’s an increase of 120%. They may not just whistle a happy tune and pay it. You see, the funny thing about capital, it’s mobile. You can move it. And park it.

European investors are parking their money in U.S. banks at a negative interest rate while they wait out the European sovereign debt crisis. American investors can just as easily move their money out of the country. And wait for a more favorable investment climate before returning. Which won’t create jobs. Or provide tax revenue.

Another $3 billion would come from changing the way corporate jets depreciate. With a few other revenue raises, Lew indicated the total measures proposed by the administration would bring in $467 billion, $20 billion more than the cost of Obama’s jobs bill.

What is it with him and corporate jets? He sure hates those corporate jets.

So he will pull a half trillion dollars out of the private sector. So he can inject it back into the private sector. Less a small handling fee. And the usual gifts to his political cronies. Resulting in more debt. And very little stimulus. If any.

This is less stimulus. And more political sleight of hand. Taking from the private sector to stimulate the private sector.

The White House dug in on its refusal to say how many jobs the package would create, pointing instead to an estimate from Moody’s that said the bill would create about 1.9 million jobs.

Lew noted that he was not a part of Obama’s economic team when NEC director Christina Roemer and Vice President Biden’s former chief economist Jared Bernstein said that the original stimulus package would reduce unemployment to below 8 percent.

After months of being reminded by Republicans that the recovery act did not cut unemployment, which is now at about 9 percent, Lew said he thinks it is “dangerous to ever predict unemployment rates.”

If Moody’s prediction is accurate, that’s $ 235,263.16 per job. It would be cheaper just to give $30,000 to 1.9 million people. That would only cost $57 billion. And it would probably stimulate more. Of course, they won’t do that. Because that wouldn’t reward any political cronies.

And there’s a good reason why they’re not making any predictions. Because they know this stuff doesn’t work. They only made the unemployment rate prediction because they thought the economy would have fixed itself in short time. It usually does. That’s why they were in such a rush to pass it. They had to pass it before the economy recovered. They had no idea how bad things were. Or how their policies would make things worse. Because they have no idea of how the economy works.

And isn’t the refusal to make unemployment predictions an admission that they have no faith in what they’re doing? Vis-à-vis the economy, that is. For they have full faith and confidence in the political effects. They can predict the campaign donations this will generate. And the likely votes. But they won’t make these predictions public. For it will be admitting the truth of this political stimulus.

Stimulus that Works: Cutting Costs for Business

But someone knows how to create jobs. Not by putting more money into workers’ pockets. But buy cutting a business’ costs (see Detroit Sets Its Future on a Foundation of Two-Tier Wages by Bill Vlasic posted 9/12/2011 on The New York Times).

The newest Chrysler workers earn about $14 an hour, compared with double that amount for longtime employees on the same shift. With the economy slumping and job creation once again a pressing issue in the White House and Congress, the advent of a two-tier wage system in Detroit is spiking employment for one of the country’s most important manufacturing industries…

What was once seen as a desperate move to prop up the struggling auto industry is now considered an integral part of its future. The demand for $14-an-hour manufacturing jobs is providing Detroit’s Big Three automakers with a ready pool of eager new employees. Last year, Chrysler was flooded with inquiries about the jobs here, and it froze the list after receiving 10,000 applications.

So someone understands. American cars weren’t selling because they couldn’t compete in the market place. They couldn’t sell the cars they had. And they certainly weren’t going to expand production. But cut labor costs and look what happens. They can compete in the market place again. And create jobs.

So far, about 12 percent of Chrysler’s 23,000 union workers earn the lower wage, and over all, 4,000 or so of the 112,000 U.A.W. members are second-tier hires. Those numbers are expected to grow — and in fact can increase significantly even under the current contract. The jobs are central to the contract talks now because they are viewed as a critical element of the industry’s continued recovery.

The benefits for the lower-tier workers are scaled back as well. They get a maximum of four weeks paid time off a year, versus five for the longtime workers. And instead of the guaranteed $3,100-a-month pension a full-paid worker receives after age 60, the new hires have to build their own “personal retirement plan” based on contributions from the company of less than $2,000 a year.

This is stimulus that works. Cut costs for business. And business creates jobs. Which is the goal of stimulus.

Raising taxes on business won’t cut costs for business. So it won’t stimulate. Raising taxes on business to pay for a stimulus bill will tap the brakes on the very economy they’re trying to stimulate. And what is government spending that doesn’t stimulate? Pork. Earmarks. Rewarding political cronies.

Keynesian Stimulus Spending stimulates Politics, not Economic Activity

Let the political games begin. And the lying. The latest stimulus is no different from the first stimulus. It will fail. Only it will be less of a failure. The only good thing we can say about it.

Detroit has shown the way. If you want to create jobs. If you want to stimulate the local economy. You cut costs. You don’t raise them. And you do it in a way where there is little uncertainty. The two-tier wage system is here to stay. The automotive companies can plan on this cost certainty.

You know another name for this? Supply-side economics. That’s right. They fixed the car companies on the supply side. Not the demand side. That’s why they won’t take this model and apply it to the rest of the economy. That would go against every Keynesian fiber in their body. But they did in Detroit. Because they had to save the UAW. And things were so bad in the U.S. automotive industry that they had to drop politics this one time. But they will be damned if they’ll concede defeat and stop their Keynesian ways everywhere else. I mean, if they did, how, pray tell, would they reward their political cronies?

Keynesian stimulus spending stimulates politics. Not economic activity. Whereas supply-side economics stimulates economic activity. Not politics. So you can see why those in government are Keynesians. Because spending our money before we can is more important than our economic wellbeing.

 

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