September 05, 2010

The Summer of Recovery Ends: Epic Fail Fall Begins

By Clarice Feldman

Summer began on such a hopeful note. Vice President Biden was trotted out of seclusion to announce in January "you're going to see, come the spring, net increase in jobs every month." Certain he'd not mislead us, we waited full of optimism only to see our hopes dashed on the audacity of dopes.

Looking back on it that line will prove as memorable as the promise that once the voters saw ObamaCare and read it (unlike the solons who passed it) they'd really love it.

The President took one small stop between his sixth summer vacation of the year and a return to the Oval Office -- New Orleans, where his critics claimed he tried to revive his claim that he wasn't G.W. Actually, if you study the photos of his trip there, you'll see that he was just doing a little advance advertising for the September 7 Judith Jamieson tribute at the White House. She, as you may recall, is artistic director of the Alvin Ailey Dance Theater, and one of her most famous dances is "Wade in the Water", a lyric ballet she performs with an umbrella held high above the water.

That bit of heavy lifting over, the President returned to the Oval Office that had just been redone into what appears to be a suburban TV room to the tune of $800,000. Brown cotton covered comfy sofas and a new cocktail table, which appears to be something covered in contact paper, but which we are told is walnut and mica. I held my breath when I heard the rug had been redesigned as well. I feared our new seal would be a leftward facing capon clasping arugula, but it was tasteful even if the bumper sticker like quotes encircling it misattributed to Martin Luther King, something someone else had written.

Anyway, the big guy made it home just as the chairman of his council of economic advisers, Christina Romer, was leaving to return to academia where people apparently are far less demanding about actual results. She confessed she didn't now what had gone wrong, why things were so bad and why they are proving so hard to correct. Contrary to Vice President Biden's chirpy prediction, over 4 million American jobs were lost in a year and a half, 350,000 alone in June and July of recovery summer.

Dana Milbank says the farewell luncheon was thinly attended although those listening probably learned a great deal about the art and science of economics.

"To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would." Her defense was that "almost all analysts were surprised by the violent reaction."

That miscalculation, in turn, led to her miscalculation that the stimulus package would be enough to keep the unemployment rate from exceeding 8 percent. Without the policy, she had predicted, unemployment would soar to 9.5 percent. The plan passed, and unemployment went to 10 percent.

No wonder most Americans think the effort failed. But Romer argued, a bit too defensively, against the majority perception. "As the Council of Economic Advisers has documented in a series of reports to Congress, there is widespread agreement that the act is broadly on track," she declared. Further, she argued, "I will never regret trying to put analysis and quantitative estimates behind our policy recommendations."

But the problem is not that Romer did a quantitative analysis; the problem is that the quantitative analysis was wrong. Inevitably, this meant that, as she acknowledged, "the turnaround has been insufficient."

She offered some suggestions -- mostly more spending to stimulate things -- and flatly rejected the notion of extending the Bush tax credits.

My friend hit & run offered up a farewell chart to her (from NRO), demonstrating that we are indeed heading in the right direction:

In the meantime people not on the White House staff or the Council of Economic Advisers are, to put it mildly, rather concerned about the non-stop fiascos Obama has created and the ever burgeoning national debt. The efforts to paper over these demonstrable failures is getting no more rave reviews than did the expensive redo of the Oval Office.

Shikha Dalmia, for example, compares the General Motors IPO as a political bit of flummery which may be "this decade's biggest financial fiasco"

Indeed, in its application to the Securities and Exchange Commission--which, guess what, will come through just in time to make an IPO possible before the November elections!--GM admits that its "disclosure controls and procedures and internal control over financial reporting are currently not effective." And this "could materially affect our financial condition and ability to carry out our business plan." Companies include all kinds of outlandish mea-culpas in their IPO applications to cover their derrières in the event of investor lawsuits. However, this one goes to the heart of the information that investors need to determine whether GM is a good investment, especially since it is going public after only two good quarters as opposed to the usual four. If GM can't guarantee its own numbers, how exactly are investors supposed to evaluate its worth?[/quote]

I expect law firms around the country are lying in wait to see which, if any fiduciaries, put their clients' money in the GM IPO.

In any event the IPO hardly looks like good news for the taxpayers who paid the hefty bill to keep GM afloat (and the UAW happy).It's being done at a very inopportune time clearly in a vain effort to halt the Democrats' political slide.

Romer wasn't the only Administration spokesperson on the economy. The President chided the Republicans in Congress for not giving him more money -- the small business bill -- to toss away . Unfortunately, the event looked as amateurish as the message.

Jake Tapper gave us in the inside skinny

The event in some ways could be seen as a metaphor for the administration's flailing on the economy. Originally no remarks were scheduled, then on Sunday evening, the White House announced the president would make remarks in the Oval Office after his economic daily briefing.

Then on Monday that was upgraded to remarks by the president at 12:30 p.m. ET in the Rose Garden after his briefing, signifying a more formal event.

Then those remarks were pushed to 1 p.m.

Finally the president approached the lectern at 1:20 p.m.

Only five sentences into his remarks, the P.A. system fizzled.

"What we did know was that it took nearly a decade -- what we did -- how are we doing on sound, guys?" the president asked

"Is it still going to the press?" he asked, checking to make sure even if he couldn't be heard clearly in the Rose Garden, broadcast networks were getting clean sound, which they were.

"OK," the president said.

A plane flew nearby, drowning out his voice.

"What we did know was that it was going to take nearly a decade in order for -- can you guys still hear us?"

Reporters nodded.

"OK," he continued, "let me try this one more time."

He appeared no more presidential later in the now brown and gold oval office where he discussed what passes for his strategic vision in Iraq.

Jennifer Rubin said he "looked scrawny and ill-at-ease in the large empty desk." He didn't transcend his characteristic "lack of introspection and grace" she said,

Obama's not into open-ended commitment. This is the same counterproductive claptrap that has been roundly criticized and that reveals him to be fundamentally disinterested in foreign policy. It is also why both friends and enemies doubt our staying power.

But most of all, the bulk of the speech had nothing to do with either Iraq or Afghanistan - it was a pep talk for his domestic agenda. This cements the sense that he simply wants out of messy foreign commitments. He also repeated a number of domestic policy canards. This was among the worst, blaming our debt on wars rather than on domestic fiscal gluttony: "We have spent over a trillion dollars at war, often financed by borrowing from overseas. This, in turn, has short-changed investments in our own people, and contributed to record deficits. For too long, we have put off tough decisions on everything from our manufacturing base to our energy policy to education reform."

He is arguing for more spending.

If Romer and Obama and their unpersuasive calls for even more spending were not reassuring, the report by ADP on the economy was at least equally so, revealing another 10,000 private economy workers lost their jobs last month.

The reasons for weak job growth? The WSJ cites "market volatility, regulatory uncertainty and weak demand has curtailed economic growth" and "business concerns on regulations, taxes and future health-care costs, plus job mismatch," and lack of demand.

John Goodman spelled out the reasons for the lack of economic recovery clearly. Clearly enough so that even the dopes in Congress and the white House, virtually none of whom have one bit of experience running a business ,could understand if they read it instead of wasting their time with big idea economists like Romer who admit they haven't a clue:

Disastrous economic policy is almost certainly the reason. And number one on my list of disasters is the new health reform law.

Did you know that the Patient Protection and Affordable Care Act (PPACA) uses the term "the Secretary shall" 1,075 times? That means enormous discretionary power to make decisions about the fate of a sector that is more than one-sixth the size of the entire economy has been vested with one government department. And after Kathleen Sebelius makes all of those decisions, the election in 2012 could easily produce a different Secretary from a different political party which could have 1,075 opinions very different from those of Secretary Sebelius.

You've got to pick a pocket or two

Even before the passage of PPACA, personal health spending was close to one-fifth of family income. Under the new law, the cost of the mandatory health insurance coverage for a family will equal about 50% of the wage of a $30,000 a year worker. And after that, decisions by the Secretary of Health and Human Services could easily raise or lower labor costs by 5% to 10%. Will your health plan be "grandfathered"? How expansive will the mandated benefits be? Will the fine for not providing insurance stay at legislated levels? Or will it become much higher? No one knows the answers to these questions.

What matters most is not the size of the mandates, but the uncertainty surrounding them.

Of course, that's not the only major legislative change spooking the productive class. Ira Stoll has a thing to add to the mix about the Dodd-Frank financial regulation act, which apparently no one read before passage either:

The New York Times has an editorial this morning supporting a provision in the Dodd-Frank financial "reform" legislation that requires companies to report a ratio of their CEO's pay to that of a typical employee.

"Without company-specific data, however, it is impossible to measure and judge the effect of pay structures on companies and the broader economy," the Times editorial says. "How does the pay gap between the boss and the workers figure into performance? Are companies efficiently providing goods and services or are they being run for the enrichment of the few? Disclosure of the gap could help provide answers."

There's one company, of course, for which those responsible for the Times editorial already have "company-specific data" - that is the New York Times Company itself, where Arthur Sulzberger Jr.'s overall compensation as chairman of the New York Times Company more than doubled to $6 million in 2009, in a year when many Times reporters and editors, who make about $100,000 a year, were subjected to a 5% pay cut, and reporters at the Globe, who make less than those at the Times, took a 5.9% pay cut.

If the Times editorialists are really curious about how the pay gap figures into performance and about whether companies are "efficiently providing goods and services" or whether they are "being run for the enrichment of the few" - well, no need to wait for the implementation of Dodd-Frank to get that company-specific data. Just take a stroll around the office.

He's making a satiric point, but really what is the point of requiring these things except to stir up class envy? Is the suggestion that the Fannie Mae graft enabler Barney Frank or the "my dad and I aren't crooks" Chris Dodd should decide executive compensation for private companies? Maybe the clueless twenty something drafters of the outrageous Obamacare and TARP and financial regulation legislation would be assigned this task. Perfect. Then, we can sit around Berkeley in symposia with Romer and wonder why the economy's stalled.

The stalled economy, the arrogance and incompetence of the President, his staff and party are surely weighing him down.

And some note that the stirring up of made up charges of racism and homophobia (and I'd add class envy) by the Democrats to keep their base charged up is all that party has left, having so thoroughly discredited itself in the voters' minds. Professor Jacobson of Legal Insurrection writes:

The current political atmosphere reminds me of the scene in Doctor Zhivago when the crusty old Czarist General leads his young soldiers through a crowd of army deserters near the war front during the First World War.

The deserters beseech the soldiers to come over to their side, which does happen, as the soldiers pull the General off his horse and beat him to death.

Yes, I see the irony of using a movie scene about the Russian Revolution in the current context, but I think we are witnessing something similar in the upcoming elections, at least if recent polling is accurate.

Core Democratic groups either are switching sides or staying out of the battle, as attempts to portray the Tea Party movement as racist fall flat. The Democrats are at risk of being left with all Generals, and no troops.

Once the false charges of racism are cast aside, these core groups will realize that the modern Democratic Party has nothing to offer other than crushing deficits and national debt, high unemployment, and a ravenous desire to control individual lives.

We are not there yet, but I sense we are approaching that tipping point.

Well everyone says we shouldn't get cocky and warns of the certainty of at least one October surprise as the days "dwindle down to a precious few, September, October, November [!]"

Don't worry. That thought hasn't escaped me and with the help of my friends, bgates and MayBee, I've come up with a few October surprises of my own. Of course, like most such surprises they are not true, but in keeping with the M.O. of the opposition, use them anyway. Just wait until the last week in October, please.

I heard Obama's going to announce a "Restoration to Citizenship through Work" program, where he'll reduce unemployment among ex-cons by hiring them to enter medical information into the new federal databases.

Also, a "Preserve Communities through Service" initiative that's supposed to encourage beautification of low-income areas via a combination of tax credits and other incentives. Basically, if you make less than $25k a year, the government will pay you to cut your own lawn, and if you make more than $75k, they'll fine you unless you drive into a slum and cut somebody else's lawn for them.

The OATC (Organizing for America Training Corps) is going to show up on college campuses next month. Not just in the Ivies, either - A&M is supposedly going to have like 5,000 cadets, mostly "re-entry" students from Austin. Unfortunately, that means their existing ROTC program is going to be relocated to San Angelo, but I guess the administration figures anybody going into the Army right now doesn't mind being suddenly moved hundreds of miles into a desert.

OATC hopes to get college student voting numbers to 100% of enrollment - in their hometowns and at school, if there's still time to get absentee ballots. [/quote]

Posted by: bgates | September 02, 2010 at 01:25 PM

President Obama will introduce the Justice in Salaries Act (JIS Act), which will authorize the Department of Labor to give a ranking of social importance to all jobs. Also incorporated into the ranking will be a factor representing whether success on a particular career path requires real talent, just plain luck, or exploitation of those who are less successful through no fault of their own.

The ranking will then be used to determine the legal salary range for each segment.

Authors, Public Servants, and Political consultants are expected to be high on the JIS scale. ... ds_ep.html

many, many links on this post; go to the link above if you wish to view them