Sep 27 2009

President Obama And Congressional Liberals Get An ‘F-’ On Economy

The bad economic news keeps rolling in this weekend as we learn a generation of young people may have permanent scars as a result of the failed liberal stimulus bill and its moronic reliance on government jobs programs to lift this nation out of the Great Recession:

The unemployment rate for young Americans has exploded to 52.2 percent — a post-World War II high, according to the Labor Dept. — meaning millions of Americans are staring at the likelihood that their lifetime earning potential will be diminished and, combined with the predicted slow economic recovery, their transition into productive members of society could be put on hold for an extended period of time.

… Young workers have been among the hardest hit during the current recession — in which a total of 9.5 million jobs have been lost.

Now we can all see how President Obama and the Liberals in Congress have proven the foolishness behind the liberal fantasy where government can stimulate economies and create jobs. Since government is actually a leech on the back of any economy, when government reduces its strangle hold (whether it be taxes, regulation or constraints on expansion) economies usually grow. In all previous successful battles against recession and job loss, it has been the reduction of taxes which has lifted all boats, not the fact the government leach tried to spit back some of the blood it has been sucking.

Al Angrisani, the former assistant Labor Department secretary under President Reagan, doesn’t see a turnaround in the jobs picture for entry-level workers and places the blame squarely on the Obama administration and the construction of its stimulus bill.

“There is no assistance provided for the development of job growth through small businesses, which create 70 percent of the jobs in the country,” Angrisani said in an interview last week. “All those [unemployed young people] should be getting hired by small businesses.”

Absolutely correct. There are no incentives for any hiring now or on the horizon. The government take over of health care will require taxing businesses, sucking up more money that might go to new entry level jobs. The Crap & Tax energy bill supposedly needed to fight the now disappeared global warming will suck up more money that could go to new jobs. Same thing with the tax hikes coming next year. Same thing with mountains of deficits/debt the liberals in DC are raising as a monument to their incompetence. We have nothing in hand to stimulate new jobs.

The one thing that really is sick is how the stooge news media is failing to connect the dots here. They DC liberals PROMISED their stimulus bill was going to turn things around. President Obama promised, after the bill was signed, that people would be going back to work. Here are some of his lame statements at the time:

Earlier this week, I signed into law the American Recovery and Reinvestment Act – the most sweeping economic recovery plan in history. Because of this plan, three and a half million Americans will now go to work doing the work that America needs done.

Because of what we did together, there will now be shovels in the ground, cranes in the air, and workers rebuilding our crumbling roads and bridges, and repairing our faulty levees and dams.

Because of what we did, companies – large and small – that produce renewable energy can now apply for loan guarantees and tax credits and find ways to grow, instead of laying people off; and families can lower their energy bills by weatherizing their homes.

Because of what we did, our children can now graduate from 21st century schools and millions more can do what was unaffordable just last week – and get their college degree.

8 months later and all this pie-in-the-sky BS rhetoric is embarrassing to reread. The DC liberals have done NOTHING to fix this economy. And the feds have the data to prove this.

I have been monitoring 6 government entities and their $105 billion portion of the $787 billion dollar stimulus bill. As was noted here, only $300 billion went to programs to create jobs. The rest went to unemployment funds to provide some marginal safety net for the millions who would be out of work for long periods. In a $10-12 trillion dollar economy, $300 billion is not much of a stimulus – especially when it is spread over many, many years.

Which is exactly what was wrong with the liberal stimulus plan in the first place. It was not stimulating. Of the $105 billion dollars I have been monitoring since last spring, 96% of the budgeted funds have not yet been spent, and will not be spent for years to come. Check out my latest data from the government recovery site itself.

In the first graph there are 4 sets of columns showing (from left to right): (1) the amount budgeted for stimulus programs for each of the 6 organizations I have been tracking, (2) the amount allocated to date to specific job-creating programs in that organization, (3) the amount actually spent to date creating jobs and (4) the amount left unspent from the total budget. (click image to enlarge)

The second chart translates the dollar amounts for the last three sets of columns in the previous chart into percentages of the budgeted amounts for each organization, showing what is the percent allocated, percent spent and percent unspent. (again, click image to enlarge)

Summary:

  • $105 billion was budgeted for job creation efforts across the 6 organizations (1/3rd of all job creating stimulus programs in the stimulus bill). Note: To find the original budget numbers go back to the earliest weekly reports for a given organization – the numbers were removed sometime in the first 6 weeks of reporting. Right now the sites only report allocated and spent.
  • 43%, or $45 billion, has been allocated to programs (the only bright spot in this bleak picture, with DOT having 60% of its funds at least mapped to projects)
  • Just under 4% has been spent creating jobs, which totals $4 billion.
  • Over 96% of the money, or $101 billion, of the money budgeted for job creation has yet to make its way out of the federal bureaucracy and into the economy.

8 months since the faux stimulus bill was passed and this is what the liberal government jobs program has to show for itself. Even if the money was flowing it would only flow to companies who contract with the federal government – a tiny number of companies in the grand scheme of things.

During this time period the unemployment (U3) and under-employment (U6) has been rising and rising – as the latest data from the federal government clearly shows (click to enlarge):

I noted on this chart were the stimulus bill passed. Note how the unemployment and under-employment lines don’t even slow down. There was a small leveling off in July, which was wiped out in August.

There is a bottom to this recession, but it has nothing to do with the stimulus bill since 96% of its job creating money is still stuck in the bureaucracy. Any bottom we discover will come about from natural economic forces.

The trend lines on this chart should be a wake up call to the blundering democrats in DC – but they are so out of touch with reality they seem to not even remember their own promises, let alonecare less whether they kept them. Here is a chart (click to enlarge) of the Democrats’ promises (dark blue line) on the stimulus bill, with the reality added along the top (in red):

Failure, plain and simple. Another measurement of the liberals’ failure is the breadth of the pain of this recession. If we look at the 15 states who are already experiencing unemployment over 10% we see that this failure has hit far and wide (click to enlarge):

Again, I noted when the stimulus bill was passed to illustrate how inadequate it really was. Some interesting facts become clear on this chart:

  • When the faux stimulus bill passed there were only 7 states with unemployment above 10%, now there are 14. Clearly the stimulus bill failed this simple test.
  • Another interesting fact to note: None of these states were over 10% unemployment when Obama was elected President.
  • If we extrapolate the national under-employment rate (16.7%) across these states we would likely see all of these states with under-employment over 20%, with some reaching 30%. And we would likely see double the number of states with under employment over 15% (the nation is at 9.7% unemployment, and is over 15% under-employment). The Feds don’t report U6 by states, but they should. It would really tell the true story about jobs in America right now.
  • These severely hit states hail from every region of the country.  Two of these states are very important electoral states (CA and FL). Many are democrat bases, nearly all were won by Obama.

There have been plateaus reached by many of these states regarding their unemployment. Some are off their highs, others are breaking new highs (anyone can research the data here). I know the DC egomaniacs will want to take credit for any positive news, or the drop off in negative news. But the fact is they have been as impotent as they have been arrogant.

There is a chance we will begin to see a flattening of the unemployment in some hard hit areas (this recession can only go so deep). But my guess is the ripples have yet to run their course and other states may join the ranks of those suffering greater than 10% unemployment.

There is nothing stimulating in the mix or on the horizon. All of the expected actions in DC are job killers, not creators. The burden on small businesses, the engine of job creation, will be increased under Obamacare, will be increased under Crap & Tax and will be increased when the Bush tax cuts end next year. All these events on the horizon foretell a worsening economic picture, and even fewer good jobs.

Unless the DC liberals face their failures, we will see more of the same until we can clean house in 2010.

20 responses so far

20 Responses to “President Obama And Congressional Liberals Get An ‘F-’ On Economy”

  1. kathie says:

    Democrats believe that only government can take care of problems. They will never entertain the reduction of government as a way to grow the economy, ever. They are transferring wealth so fast (health care and Cap and trade) that 30% of taxpayers will be responsible for the well-being of 70% of the population. Nobody will be hiring because they are too busy paying taxes to take care of a huge population and that population are not the creators. I wonder how many of no job growth, stagnation in all areas of the economy will it take to change minds. Big bad things are coming down the pike, bankruptcy in Medicare, Social Security, to name a few. We are in big trouble.

  2. crosspatch says:

    We need to greatly reduce minimum wage requirements. Minimum wage was not meant to be a living wage. The more they raise minimum wage requirements, the more of these jobs will be cut.

    My first job was at minimum wage in the summer when I was 14. I swept the place, I moved beef from the slaughter house to the coolers, I was the “gopher” when someone needed something. In other words, I didn’t do anything that someone else couldn’t do but having me do it at low cost made the rest of the shop more efficient because they could concentrate more on their core function and I could take care of unskilled tasks.

    Increasing minimum wage makes the entire business less efficient by reducing the number of unskilled workers in a business and requiring skilled workers to perform those tasks.

    I doubt we are going to see much flattening of unemployment. Durable goods orders were down in August as were home sales and median home prices.

    We might see some reduction due to people’s benefits ending and their going off the official unemployment rolls but I am not seeing any signs of economic uptick here in the US.

    One stock I watch is an ETF called VEU. That is basically all the world’s stock markets EXCEPT the US. Since September 25 it is up 16%. SPY which tracks the US S&P500 is up 13%. By contrast, gold (GLD) is up only about 3/4 of 1% since then.

    But the recent clamor for a world currency is the expression of concern by world financial markets that the dollar is being set up to take a huge nosedive as money is printed wholesale to cover massive deficits.

    I am not seeing any good fundamental information at the moment. One other thing that is going to really hurt is that when inflation picks back up, the Fed is going to be hard pressed to pull back out all of that cash they have injected into the financial institutions, but maybe their are betting that most of that will have evaporation by then due to covering loan defaults.

    Mortgage defaults were also up in August.

  3. crosspatch says:

    “but maybe they are betting” is what I meant.

  4. BarbaraS says:

    It’s too bad about the young people but they did vote for Obama. It is a good lesson for them that there are repercussions to their actions. Hopefully, they will learn this lesson. Never vote for a rock star for president of the US.

    I find it amusing and pathetic also that the dems lowered the voting age to 18 because the argument was that 18 year old were in the military and fought for their country and they should be able to vote. Then when the crunch comes, the dems don’t want to count the military votes. Of course, they just wanted the inexperienced, dumb young people to vote for them.

    Crosspatch

    You mispelled the word “gopher”. This term is not as in a rat but as go for this and go for that thus the term “gofer”. I typed up instructions for our “gofer” at a place I worked and spelled it as you did and the gofer, a young girl, was in tears thinking I was calling her a rat. My boss explained to me the correct spelling.

    You are right about minimum wage. It is just another form of wealth distribution which backfires in loss of jobs. This is geared toward the non acheiving adults and there are a lot of them who drift through life never trying to get ahead. I have worked with many of them.

  5. daralharb says:

    From the standpoint of the Obama administration, is 52.2% youth unemployment a bug or a feature? It is from these unemployed youth that “community service” workers can be recruited, including that “civilian national security force that’s just as powerful, just as strong, just as well-funded” as the military itself.

  6. Redteam says:

    daralharb, I do believe you have stumbled upon something.

    Obama should immediately get congress to hire 100% of all unemployed people under 25 years of age. They should all be ‘required’ to accept the job. They should all be hired at the minimum wage, whatever it is. So here are the calculations. each person will be paid 40 hours a week at $7.50. they should be taxed at 20 %. They should pay 7.65% EDIC and $3900 a year ‘required’ insurance. Let’s see where we are now. $3900/2000 = 1.95hr. (7.50 -(.20×7.50) – (.0765×7.50) – 1.95)=$3.46.

    It is fairly obvious that using this strategy that 100% of the young people will have a job and the net income to the government will be (7.50-3.46) =$4.04-3.46= .58 hr.
    So everyone will have a job and the government will be ‘making’ money instead of losing.

    Now, I’ll freely admit that reality will set in at some point, but for right now, it works out much more favorable than most of the numbers I see coming out of Warshington.

    now I don’t know how many under 25 unemployed there is, but let’s guess 10 million. 10 mill x .58Hr x 2000 hr/yr =$11.6billion a year ‘income’ to the gov.

  7. crosspatch says:

    It isn’t only the youth. The liberal logic behind minimum wage increases are that there are many adults working minimum wage jobs who can not afford to support a family so the notion is to make the minimum wage a “living wage”. That all sounds good in theory. It assumes that everyone having a job before the wage hike will still have one after the wage hike.

    In practice, a business eliminates minimum wage jobs for tasks that can be done by other employees or they simply outsource the task to (often SEIU affiliated) outside contract workers on an as-needed basis. That might be the actual point of all this … forcing jobs from non-union minimum wage employees for such jobs as custodial support to union contractors who might only come in a few days a week.

    But the end result is loss of jobs overall but some gain in jobs for union contractors which results in more money for the union which, in turn, results in more cash to Democrats who made the law to begin with.

    The correct mechanism is to abolish the minimum wage altogether. The market will determine what the minimum is and that will vary from one region to another. If you only want to pay $1 per hour, you aren’t going to find anyone to work for you. You will need to raise the pay rate to attract the required employee(s). And still if the rate is too low, you will not be able to keep employees. But most importantly, it allows wages to fluctuate with economic conditions. When the economy turns down, a business might find that it can attract employees for less money and when the economy rebounds, they will need to increase the wages to keep the ones they hired at the lower rate. Overall the impact is greater employment and less hardship.

    The left wants to prevent workers from being “exploited” but nobody puts a gun to your head and makes you take a job and nobody forces you to stay in one, either.

    Also, the problem only addresses a symptom, it doesn’t address the problem. Minimum wage is for unskilled labor. Why don’t the workers have any skill? Instead of jacking up labor rates through minimum wage hikes, why not fund more vocational programs at the high school level? When I was in high school, after grade 9 you could spend half the day at the county vocational school. You could learn electronics, carpentry, automotive repair, office skills, dental assistant skills, all sorts of things. The country no longer has that program so kids are graduating with no vocational skills whatsoever.

    The real problem is the lack of vocational schooling at the high school level.

  8. crosspatch says:

    Oh, and the if you must have a minimum wage, you set the maximum possible unemployment benefit to be lower than that minimum wage so it always pays more to work than to sit.

  9. [...] The Strata-Sphere:  President Obama And Congressional Liberals Get An ‘F-’ On Economy [...]

  10. crosspatch says:

    I think an F is too kind. Maybe an FY would be closer to the reality.

  11. crosspatch says:

    Seems Obama has coattails that reach all the way to Germany. German voters voted in Angela Merkel’s center-right Christian Democratic Party with enough margin to allow them to ditch the power sharing arrangement they had with the liberal Social Democratic Party and form a new coalition with the Free Democrat Party.

    After the European Parliament elections saw a swing to the right, the Germans have now done the same. The UK is poised to make a massive turn to the right as the Labour Party is polling behind the Conservative Party in practically every constituency.

  12. lurker9876 says:

    Interesting trend…If the conservatives take back both houses next year, the world would be more united and really make the right changes. Good.

  13. crosspatch says:

    Lurker9876:

    This doesn’t bode well for Labor in the UK:

    LABOUR is heading for a “really bad defeat” unless the party dramatically improves its performance, Peter Hain, the cabinet minister, warned last night.

    “There is an emerging consensus in the Labour party that we should change the electoral system,” he said.

    The ballot, which would happen after a general election, will propose the “alternative vote” system where voters rate candidates in order of preference. “It would help repair the gaping chasm of credibility which exists between citizens and politicians,” said Hain.

    If a voting reform bill does become law, it would be a “poison pill” for an incoming Conservative government. David Cameron, the Tory leader, would be forced to decide whether to use political capital and parliamentary time to repeal the legislation.

    So they sense they are in deep trouble so what is their suggestion? Like Liberals everywhere … CHEAT! Change the election system! Novel idea.

    I suspect that if they actually tried that, they would be out of office for a century and the law would be changed right back.

    Labour lost practically every seat they held in the County Council elections. It may have been their worst drubbing in history. Seats they had held for decades were in some cases replaced with newcomer Conservatives who had zero name recognition.

    So we have Italy, France, Germany, and now the UK moving right. Even Sweden is cutting taxes to spur business growth.

    The US liberals will soon be a laughing stock in European capitals. It is really going to leave a mark on the ego of the Democrats who believe they are all so sophisticated and closer to European ideals.

    Their only friends in a few years will be the Chinese, the Russians, Cuba, Venezuela, and possibly Iran. I believe it is possible that the Democrats might not only lose both houses of Congress, they might be on their way to losing several state legislatures and governors as well.

  14. SallyVee says:

    Hello from jonnyvee’s new iPhone. Which I have appropriated. It allows me to practically surf in my sleep… Heh, as if Thats possible. I am seriously distressed and sinking, just like our economy. And in addition to all said by AJ and Crosspatch, left unsaid is the grave threat posed also to our national security. But does that even matter if we are heading for third world status? Soros blueprint. But to what end I am not quite sure. Guys, where is this going? My America is disappearing. Americans have turned into pods. But let’s say they wake up long enough to stage a ballot box coup next November. Can we reverse in time to prevent domestic and/or foreign disaster?

    AJ, why can’t you make a nice hopey-change graph for once.

  15. AJ,

    Now is the time for Democratic Red and Purple state Congressmen to panic.

    See what Nobel Prize-winning economist Paul Krugman said here:

    http://abcnews.go.com/Business/wireStory?id=8594380

    U.S. Unemployment Not to Peak Until 2011: Krugman
    By Marja Novak
    Reuters
    LJUBLJANA

    Unemployment in the United States will peak only in early 2011 because of a slow and painful recovery from the global economic crisis, Nobel Prize-winning economist Paul Krugman said on Wednesday.

    He said the global economy seems to be stabilizing at a level that is “unacceptably poor” and added it is possible that the recession will be a double-dip one.

    “(U.S.) unemployment will peak in early 2011 … certainly staying very high and possibly rising all next year,” Krugman told a business meeting in Slovenia, adding his forecast was based on data from previous U.S. economic crises.

    That is bad news for Democrats all the way around. The voters cut Reagan some slack — but not Congressional Republicans — in his first term because he convinced them he was trying hard on the economy.

    They won’t do so for Obama in 2012 because he has openly focused on matters other than the economy, and thereby convinced voters that it isn’t his priority.

    This will badly hurt Obama in 2012.

    However, down ballot Democrats across the country will get hit first, and harder.

    And I’m talking only public perception here.

    It’ll only get worse, employment wise, as the Bush tax rate cuts end in 2010 and higher tax rates in 2011 force companies to cut back employment even more.

    Just look at the timing of the significant tax increases from expiration of the Bush first term tax cuts.

    If the economy is still in recession in 2011 as Krugman predicts, those tax increases will keep it there. And they might turn it into a full-bore depression. Major tax increases during major recessions tend to do that.

    What Dick Morris says here about Obama Care is even worse news for Democrats:

    http://www.dickmorris.com/blog/2009/09/17/obamas-headwind-on-health-care/

    Before Obama addressed the nation and a joint session of Congress, his proposals drew only 45% approval (Rasmussen). But after he spoke, support for his health care proposals rose until it peaked at 52%. Then, a scant week after his speech ended, public support had quietly but quickly eroded back down to 42%.

    It is no surprise that a nationally televised presidential speech can move support for the chief executive’s program by 7 points. But it is shocking that – in the absence of any other major independent negative event – these new supporters would flee in the space of one week and that three percent more would move against him.

    IOW, the more people talk about health care reform that is popular with the Democratic Party primary voting base, the more _unpopular_ it becomes. Especially when it gets framed as Morris put it here:

    It is, (Obamacare) essentially, a program to force people who don’t need it to buy health insurance so as to lower costs for those who do and to subsidize part of the price tag by cutting medical care to the elderly.

    I can see few ways to effectively unite the young and the elderly against health care reform, and Democrats generally, but the Obama Democrats seem to have found it.

    The Red/Purple District Democrats seem on course for a perfect storm of their own making. They made a “stimulus bill” into a vehicle for $787 billion corrupt pork in exchange for a few hundred thousand dollars of campaign contributions in 2009.

    Now what good will that do them?

  16. AJStrata says:

    Sally Vee,

    Hopey change graphs will most likely be out prior to the 2010 elections, the way the dems are going.

  17. crosspatch says:

    “The voters cut Reagan some slack”

    Maybe because Ronald Reagan had a college degree in economics and might have known a little bit about what he was hearing from the economists.

  18. [...] jobs promised in February (over 95% of which is still stuck in the bloated government bureaucracy, as seen in the latest government data) is coming in months too late to stop the damage. Add in the 50% unemployment for young adults and [...]

  19. [...] Note when the faux stimulus bill was passed (green dotted line) and how it had no effect on job creation. That is because over 95% of the jobs program money in the ’stimulus bill’ has yet to get out of the federal bureaucracy (see here for data). [...]