Wednesday, February 29, 2012
Remember these people are not elected but appointed. And it's not just any ordinary organization that is in control of the EPA, it's an organization that wants to "Fundamentally" change our lives. It's the progressive liberal socialist Democrats that want to change the country to look more like European failed socialism.
The question now is what do we do to change this nightmare before it will be to late? Easy, vote out everyone that is responsible for this catastrophe.
The Rule of More
Source: "The Rule of More," The Economist, February 18, 2012.
Over the course of President Obama's years in office, the creation of new federal regulations has accelerated unabashedly, consistently leveling new costs on consumers and businesses alike in the name of aggregate benefit. However, further investigation finds that justifications for new regulations are increasingly concentrated into two areas that are untrustworthy, says The Economist.
Co-benefits via reduced fine particles -- regulations controlling emissions of certain compounds also claim the side-benefit of reducing overall particles, thereby claiming substantial health benefits.
Private benefits of energy efficiency -- net gains of private actors, including regular consumers, from a given regulation insofar as it augments the efficiency or ease of their regular activities.
This first type of benefit can be seen in the justification for the new U.S. Environmental Protection Agency-mandated standards for mercury emissions. The policy claims benefits worth $90 billion, yet less than .01 percent of these benefits actually stem from reducing mercury -- the rest is supposedly attained by reducing fine particles. This demonstrates several dangers of these co-benefit claims:
Regulations can be proposed that ostensibly target a given contaminant while they have little intention of achieving that end in reality, misleading the public.
This inherent lack of transparency is compounded by the lack of supporting data quantifying the net health effects of these policies.
Two-thirds of the benefits of economically significant final rules in 2010 were thanks to reductions in fine particles brought about by regulations that were actually aimed at something else, according to Susan Dudley of George Washington University.
That is double the share of co-benefits reported in President Bush's last year in office in 2008.
Private benefits from energy efficiency also stand on dubious grounds, relying on overly generous benefit assumptions while downplaying economic costs.
Ted Gayer of the Brookings Institution notes that private benefits such as reduced fuel consumption account for 90 percent of the $388 billion in lifetime benefits claimed for last year's new fuel-economy standards for cars and light trucks.
They also account for 92 percent and 70 percent of the benefits of new energy-efficiency standards for washing machines and refrigerators, respectively.
The problem is that, provided the information, these benefits would have been chosen by consumers with no government prodding -- the fact that regulation is necessary suggests that consumers do not want to participate, undermining the justification.
When tyrants and despots try and rule out side the law, the people say to them we will decide what will happen and when. Socialists, progressive Democrats and other demagogues are not welcome.
TransCanada to Go Ahead with Part of Controversial Pipeline
Source: Wendy Koch, "TransCanada to Go Ahead with Part of Controversial Pipeline," USA Today, February 28, 2012.
To capitalize on the boom in U.S. oil production, a Canadian company announced Monday that it will split a controversial pipeline rejected by President Obama and start building the Oklahoma-to-Texas portion, says USA Today.
Calgary-based TransCanada said the southern half of the $7 billion Keystone XL project will ensure that the glut of oil produced in the upper Midwest gets to Gulf Coast refineries.
It said this portion, which won't need a presidential permit because it does not cross a U.S. border, will cost about $2.3 billion and be completed next year.
The initial 1,700-mile pipeline, intended to carry a heavy crude known as tar sands from Alberta across seven U.S. states, has become a political issue. Citing rising gas prices and the need to create U.S. jobs, Republicans have criticized Obama for denying a permit last month and siding with environmentalists who say the crude's development would exacerbate climate change.
Obama said he denied a permit because a GOP-imposed 60-day deadline did not give him enough time to decide on the project given the uncertainty over its route through Nebraska. He suggested a route running south from Cushing, Okla., and welcomed TransCanada's news.
Martin Tallett of the EnSys Energy consulting firm, says the southern pipeline could slightly lower gasoline prices by allowing more crude oil onto the international market.
TransCanada spokesman Shawn Howard says the southern pipeline will carry a light crude produced in North Dakota, Montana, Kansas, Oklahoma and Texas.
Howard says it still needs permits from local and state officials, as well as the U.S. Army Corps of Engineers.
Tuesday, February 28, 2012
The real bottom line here is the taxpayer loses again as is always the case when government bureaucrats are involved, especially ones that work for Obama and the other uber far left progressive socialist Democrats that infest the White House and congress.
In the GM case, Obama stole the bond holders blind and gave their money to the unions to keep that voting block intact for future elections. Little wonder then now that GM can't pay the money back no one is surprised. Paying back the money was never the intention of Mr. Obama.
GM's Profits Don't Mean Taxpayers Will Be Off the Hook
Source: Shikha Dalmia, "GM's Profits Don't Mean Taxpayers Will Be Off the Hook," Bloomberg, February 22, 2012.
Three years after being rescued by a taxpayer bailout, General Motors (GM) recently announced some rather ambitious profit targets for 2012. But even if it meets these targets -- a big if -- taxpayers should not wait on one foot to recover their remaining "investment" in the company, says Shikha Dalmia, a senior analyst at Reason Foundation.
How did investors react to all this hope and cheer? With a giant yawn: GM's stock price, which has been hovering around $25 for months, barely budged -- that's $8 below GM's IPO price.
If investors aren't buying GM's rosy scenarios, it's for some good reasons, says Dalmia.
Peter De Lorenzo, editor of Auto Extremist, notes that GM is facing the most competitive market in history and investors are dubious that it can deliver.
GM's $8 billion in profits last year resulted partly from the tsunami in Japan that disrupted Toyota and Honda's global supply chain. Both are back this year and more formidable than ever.
Tougher competition in North America is not GM's only worry. Its sales in China are slowing. Also, Europe will probably remain a trouble spot.
GM suffered $2 billion in losses in Europe last year, thanks to Opel. But GM has been unable to obtain permission from the German government to restructure its labor costs, even as European sales plummet in an economic meltdown.
What's more, GM's global pension obligations are underfunded to the tune of $22 billion -- about $10 billion in the United States alone.
If GM manages to address all these issues, notes Sean McAlinden of the Center for Automotive Research, its share price might go up $40 to $45, leaving taxpayers still $5 billion to $8 billion in the red. But that's under the best scenario. If stock prices remain at the current $25 level, the losses could mount up to $15 billion. That's not counting the $15 billion in tax write-offs that GM got as part of the bankruptcy deal.
All in all, taxpayers are facing somewhere from $20 billion to $30 billion in losses.
These green energy projects are a bust, but it doesn't matter, votes are needed. So no matter what corruption that occurs, Obama will do what ever it takes to get reelected including stealing our future. He believes if he doesn't care, why should we.
Cost of $10 Billion Stimulus Easier to Tally than New Jobs
Source: Ianthe Jeanne Dugan and Justin Scheck, "Cost of $10 Billion Stimulus Easier to Tally than New Jobs," Wall Street Journal, February 24, 2012.
Companies have received more than $10 billion to create jobs and renewable energy by building wind farms, solar projects and other alternatives to oil and natural gas under section 1603 of the American Recovery and Reinvestment Act of 2009. The program expired in December, and President Barack Obama proposed last week that Congress revive it in the 2013 budget, says the Wall Street Journal.
On federal applications, companies said they created more than 100,000 direct jobs at 1603-funded projects. But a Wall Street Journal investigation found evidence of far fewer -- some plants laid off workers, others closed. The 1603 program was an important part of the government's push to encourage investment in alternative energy.
It gave $10.7 billion to 5,098 businesses for 31,540 projects, according to the Treasury Department.
Recipients were generally reimbursed 30 percent of their costs after projects were finished.
Those businesses claimed on federal applications that they created 102,883 jobs directly.
But the Journal found evidence of far fewer.
For example: About 40 percent of the funding, $4.3 billion went to 36 wind farms.
During the peak of construction, they employed an average of 200 workers apiece -- a total of roughly 7,200 jobs. Now, those projects employ about 300 people, according to the companies and economic development officials.
The American Wind Energy Association lobbied successfully in late 2010 to extend the 1603 program through 2011, predicting it would create thousands of jobs. Wind companies wound up with more than $7 billion of the 1603 money, yet industry payrolls declined to 75,000 last year from a peak of 85,000 in 2009, according to the association.
Monday, February 27, 2012
The question now is, is anyone listening to him in Washington? Do the people understand what's in store for us and the next several generations?
We're Already Europe
Source: Michael Tanner, "We're Already Europe," National Review, February 22, 2012.
With seemingly every day bringing more bad news from Europe, many are beginning to ask how much longer the United States has before our welfare state follows the European model into bankruptcy. The bad news: It may already have, says Michael Tanner, a senior fellow at the Cato Institute.
This year, the fourth straight year that the United States borrowed more than $1 trillion to support the federal government, our budget deficit will top $1.3 trillion, 8.7 percent of gross domestic product (GDP). Only two European countries, Greece and Ireland, have larger budget deficits as a percentage of GDP.
Things are only slightly better when you look at the size of our national debt, which now exceeds $15.3 trillion, or 102 percent of GDP.
Just four European countries have larger national debts than we do -- Greece and Ireland again, plus Portugal and Italy. And as bad as things are right now, we are on an even worse course for the future.
If one adds the unfunded liabilities of Social Security and Medicare to our official national debt, we really owe $72 trillion, by the Obama administration's projections, and as much as $137 trillion if you use more realistic projections.
Under the best-case scenario, then, this amounts to more than 480 percent of GDP; under more realistic projections, we owe an astounding 911 percent of GDP.
Meanwhile, counting both official debt and unfunded pension and health care liabilities, the most indebted nation in Europe is Greece, which owes 875 percent of GDP.
France, the second most insolvent nation in Europe, owes just 549 percent of GDP.
Perhaps we can take some solace in the fact that our welfare state is not yet as big as Europe's. But the key word here is "yet," says Tanner.
At that point does the United States cease being the United States as we have known it? At the very least, can our economy survive such a crushing burden of government spending, and its attendant level of taxes and debt?
There is a renewed interest in Vouchers and the Virtual class room learning system now that the focus is off the union and back on the students. Wisconsin, this year alone, saved $848 million to local school boards and taxpayers. This money will, and has already, kept taxes down this year and opens the opportunity for hiring and other educational advancements.
The Walker budget is the beginning of a new day for Wisconsin educational systems but a dark night for the union money laundering machine.
What Research Says About School Choice
Frederick M. Hess et al., "What Research Says About School Choice," Education Week, February 21, 2012.
Last year there was an unprecedented wave of new school choice programs launched across the country. Following 20 years of heated debate, new programs reflect a growing sophistication regarding the design and implementation of school choice policies. In a report for Education Week, scholars and analysts who support school choice examine the track record so far of these programs. They find it is promising and provides support for continuing expansion of school choice policies.
Among voucher programs, random-assignment studies generally find modest improvements in reading or math scores, or both.
Achievement gains are typically small in each year, but cumulative over time.
Graduation rates have been studied less often, but the available evidence indicates a substantial positive impact.
Some high-quality studies show that charters have positive effects on academic outcomes; in other contexts, the findings are more mixed.
In general, charters seem most likely to have positive effects on student achievement at the elementary level, in math, if the school is part of a well-established charter network, if the student has been enrolled for a while, if the student is disadvantaged, and if the school is in an urban area. In addition to effects on participating students, another major topic of research has been the impact of school choice on academic outcomes in the public school system.
Among voucher programs, studies consistently find that vouchers are associated with improved test scores in the affected public schools.
The size of the effect in these studies varies from modest to large.
No study has found a negative impact.
Fewer studies have examined the competitive effects of charter schools on achievement in traditional public schools, and the studies that do exist vary greatly in quality.
A third area of study has been the fiscal impact of school choice. Even under conservative assumptions about such questions as state and local budget sensitivity to enrollment changes, the net impact of school choice on public finances is usually positive and has never been found to be negative.
Sunday, February 26, 2012
The America student, for the most part, grows up in an environment that tells them life has no down side. No situation that comes their way, no matter how serious, can be handled by someone else. That is, a Super Hero will save the day. So many kids see this every day on the tube or playing games where magic happens all the time. Don't worry about the bad situation that's coming, that can be fixed by hitting the red button. Wow - awesome.
Parents of many of these kids now have grown up with this same mentality of 'it takes the entire village to raise the child'. Independent thought has been put aside and replaced by promises of others, big government, taking the responsibility for everything, good or bad.
Whether it's education or earning a living wage to meet ones needs and wants, it's believed there will always be a safety net to catch the falling star. But when the star crashes into the ground and realizes the net is gone, a net that was never really there to begin with, but now they are confused. They did everything right. They did what everything they were told to do. All they had to do was lay on the couch and play the game. They pushed all the right buttons.
The frustration and pain when cold reality finally pushes the fuzzy warm feelings fantasy aside can be debilitating. Now it's time to take control of one's life and go forward. The problem is the student of 'game boy' has no idea of what to do. hmmm Time for big government to step in and gain another recruit to dependency.
Restructuring Public Education for the 21st Century
Source: Linus Wright, "Restructuring Education for the 21st Century," National Center for Policy Analysis, February 23, 2012.
American public education needs a complete restructuring in order to support the development of critical thinkers ready to assume their positions as productive citizens of a free society. Neglecting to change the system will only contribute to America losing its position as the leader of the free world, says Linus Wright, an undersecretary of education during the Reagan administration and senior fellow with the National Center for Policy Analysis.
Students in dozens of other countries, including China, South Korea, Germany and Finland, outperformed American students in reading, math and science, according to the Program for International Student Assessment results released in December 2010.
The United States ranked 23rd in science, 17th in reading and -- worst of all -- 31st in math.
These results suggest that the United States is in need of a public education makeover. Indeed, students are inadequately prepared in elementary and middle school for academic success in high school.
Consider, 75 percent to 80 percent of urban children begin kindergarten with inadequate to non-existent vocabulary for learning.
Over time, many become discouraged and drop out, leaving the United States in the unenviable position of having one of the highest dropout rates in the world -- the United States' secondary education graduation rate was 76 percent in 2009, according to the Organization for Economic Cooperation and Development (OECD); six percentage points behind the OECD average of 82 percent.
America must move away from its antiquated agrarian system of education -- a six-hour school day and a 180 day school year will not and cannot compete with other industrialized nations whose students meet higher academic standards, have better prepared teachers, spend 30 percent to 50 percent more time in class, and are supported by a parental culture that expects and requires more from their children, says Wright. In addition, the United States needs to seriously consider how to improve academic achievement for low-income and non-English speaking students.
Important reforms include:
Early childhood education.
Eliminating the 12th grade.
Moving vocational education to community colleges.
But to take advantage of this market we need more domestic production. XL pipeline?
What this means is we can become a net exporter of oil. Not only can we stop the billions of dollars flowing overseas to buy what we need, but we can start bringing in billions through exporting the oil that is right here plus bring the price of gas down in this country, and according to this article, we have untold amounts of it. Just think what this new found income could do to bring us back to prosperity.
There is a problem here though that will stand in the way of any real increase in production and that is the Democrats and their eco-nut job environmentalist buddies. If you really want to see America back on the way to solvency, vote out as many progressive socialist Democrats as possible. This will be the best way and the quickest to stop our slide into oblivion.
U.S. Oil Gusher Blows out Projections
Source: Simone Sebastian, "U.S. Oil Gusher Blows out Projections," Houston Chronicle, February 19, 2012.
As oil prices have risen around the world, domestic production of crude in the United States has increased rapidly. More companies are shifting their focus to deep-water deposits in the Gulf of Mexico as new technologies and higher prices have made extraction more feasible. Additionally, breakthrough processes have made land extraction from shale sources more viable, says the Houston Chronicle.
The level of domestic oil production decreased over time to a level not seen since the 1940s, before making a complete about-face and increasing rapidly since 2009. The number of rigs in U.S. oil fields has more than quadrupled in the past three years to 1,272, according to the Baker Hughes rig count. Including those used to extract natural gas, the United States now has more rigs than the rest of the world combined.
Whereas the Energy Information Agency had previously projected that U.S. production would peak at 6 million barrels in 2022, it adjusted this estimate upwards last month to 6.4 million barrels per day by 2025.
Increased production throughout the United States is a function of two important factors: new methods and technology that have lowered costs, and increasing demand worldwide that has driven up prices. The combination of these two forces has made many production options more profitable.
Demand continues to increase in the short-term due to conflicts in some oil-producing countries, but also in the long-run because of increasing demand for oil in rapidly developing nations.
This has kept oil prices high, with the domestic benchmark West Texas Intermediate price reaching $103.24 per barrel last week. Additionally, land production has increased, due in large part to breakthroughs in the extraction of crude from shale.
Two new techniques, horizontal drilling and hydraulic fracturing, have allowed three shale sites (two in Texas, one in North Dakota) to constitute 40 percent of the nation's land-based production.
Though consensus has not been reached as projections are difficult to verify, some believe that this increased production will allow the United States to challenge Saudi Arabia for the top producer of all forms of petroleum.
Saturday, February 25, 2012
The new budget works as the deficit of 3.6 billion, brought on the the Democrats for the past eight years, will be gone next year and he did this without raising taxes. And what the unions hate the most is that it actually does work.
By the attacks on Walker and his family it's clear unions hate success. Plans that help the state to prosper must be stopped. Plans that limit the power of the union to take taxpayer money is unacceptable.
So Democrats and the public sector unions believe the only way to stop this success is to recall the governor.
Labor's Under-the-Radar Power Grab
Source: Michael M. Rosen, "Labor's Under-the-Radar Power Grab," The American, February 21, 2012.
If polls are to be believed, unionism in general is becoming increasingly unpopular with the American public. This might explain why overt attempts to gain legal concessions, such as the Employee Free Choice Act, have not been met by the federal government with overwhelming approval. Nevertheless, unions continue to gain concessions on the local level that perpetuate their damaging effects, says Michael M. Rosen of The American.
Specifically, unions across the country are increasingly taking advantage of the Project Labor Agreement (PLA) -- a contract with municipal and state governments that grants enormous allowances to unions in the construction of public buildings.
Non-union workers must pay union dues.
Non-union contractors have to contribute to union health and pension plans (even if they already offer their own).
Non-union workers must be approved by a union before being dispatched to a job.
Only union apprentices can work on PLA projects.
These strictures significantly limit bidding competition for the rights to public projects, thereby increasing costs to the taxpayers.
A 2009 report by the Beacon Hill Institute found that, had President Obama's pro-PLA executive order been in effect in 2008 with all federal construction projects in that year being performed under PLAs, the cost to taxpayers would have increased by $1.6 billion to a total of $2.6 billion.
A 2001 Ernst & Young analysis of construction projects in an upstate New York county supported the contention that PLAs reduce bidding competition, thus undercutting cost-effective construction.
Eric Christen, executive director of the Coalition for Fair Employment in Construction, cited a peer-reviewed study that found that the use of PLAs typically increased the price tag of a given project by 13 to 15 percent.
The idea here is to dictate outcomes for everyone. The founding fathers knew all about this kind of thing as this is what they came to America to get away from 235 years ago. And more importantly, the reason they conceived our Constitution.
Just think how foreword thinking the founding fathers where when the wrote the Constitution, they knew that one day an 'Obama' type socialist would come to destroy everything that so many people had died to gain and preserve.
Now it's up to us, our generation, to make sure we don't drop the ball when it's in our court. The future of the country is at stake in this November election. Take a few minutes out of your busy day and think about the consequences of your vote. Understand, if the country fails it won't be because of the politicians, it will be because of how you voted. Elections have consequences.
Fiscal Health of the States
Source: Jeffrey Miron and Robert Sarvis, "The Fiscal Health of the States," Mercatus Center, February 2012.
The troubled state of the federal government's debt obligations has stolen attention away from the equally precarious situation of many of the 50 states. While many state lawmakers are able to report financial statistics that are technically healthy, these figures rely upon bad assumptions and understate the liabilities that state governments will be forced to cover in the near future, say Jeffrey Miron and Robert Sarvis of the Mercatus Center.
By current accounting standards, the officially reported net debt of state and local governments is merely 1.9 percent of gross domestic product (GDP). However, these standards allow state agencies to assume an 8 percent interest rate for funding liabilities (largely pensions for state workers), but this assumes risky investment choices for certain liabilities.
More fittingly, certain liabilities should be discounted using a risk-free investment portfolio -- a strategy that tracks with Treasury bills and is likely to yield only about 3 percent interest.
Using this more appropriate discounting metric, finance professors Robert Novy-Marx and Joshua Rauh found that measured liabilities exceed official liabilities by roughly $1.3 trillion.
This financial strain is driven by rapidly increasing state-level expenditures.
These outlays, which have been growing steadily for several decades, are driven primarily by rising health care costs. As states seek to fund their portion of the Medicaid entitlement, they have been forced to spend more, thereby accumulating the aforementioned levels of debt.
State and local expenditures have grown from roughly 8 percent of GDP in 1962 to more than 14 percent in 2008. This rate of growth is expected to continue (and could possible accelerate) upon full implementation of the Patient Protection and Affordable Care Act (PPACA), ObamaCare, which will force states to increase expenditures on Medicaid.
Because of this growth, most states will hit a 90 percent debt-to-GDP ratio within two to three decades -- a level that economics Professors Carmen Reinhart and Ken Rogoff conclude will impose substantial additional burden on the states in interest payments.
To help states mitigate this financial strain, the federal government should convert allocations for Medicaid into block grants with minimal stipulations, granting states freedom to implement cost-saving policies.
Friday, February 24, 2012
Defining the Federal Role in Education
Source: "Defining the Federal Role in Education," Hoover Institution, February 2012.
Most Americans are aware of the depreciating quality of public education in this country. However, as this trend continues downward in relation to American students' education quality compared with foreign competitors, solutions must be sought. The need for immediate reform is further supplemented by the upcoming debate over the reauthorization of the Elementary and Secondary Education Act (ESEA), says the Hoover Institution.
Generally speaking, lawmakers will be forced to choose between three broad courses of action:
Continue the trend of increased federal involvement in public education (No Child Left Behind, Race to the Top, etc.).
Decentralize control over public education back to the states and local governing boards, thereby
harnessing the benefits of federalism.
Opt for a fundamentally new approach to education, taking advantage of the benefits of federalism while engaging the market-oriented gains from choice.
This first option is not particularly attractive. Many years of increased federal involvement in education, reaching their peak during the Clinton, Bush and Obama administrations, have yielded minimal returns. Even those programs targeting specific populations such as low-income neighborhoods and underperforming schools have produced disappointing results.
The second option, which represents a return to pre-modern education policy in which the process was almost entirely guided by local governance, also has questionable benefits. This sort of devolvement often leaves education at the mercy of self-interested institutions on the local level that, without federal oversight, distort incentives and take advantage of the system.
The inefficacy of these programs underlines the need for foundational change to education policy that incorporates the benefits of federalism with the advantages of choice.
Twenty-five percent of parents report moving to a given neighborhood to gain access to a certain school, 11 percent pay for private school, 15 percent enroll their children in parent-selected schools, and 6 percent enroll them in charter schools/homeschooling.
This means that more than half of all parents participate in some form of school choice.
Long waitlists at parent-selected schools suggests that demand for school choice currently exceed supply.
This form of choice should be expanded so that parents can vote with their feet on good schools. Federalism should augment this process by ensuring that federal/state funding follows the student -- not the school.
Thursday, February 23, 2012
No matter what is said to make them believe the system is in trouble, they will refuse to accept the fact that at some point in time, the money they rely on to heat their homes and to put food on the table, will stop.
Progressives know this but go ahead anyway as they have decided that the elderly will fall in line even if they are living in a cardboard box. Seniors will believe the Democrats are the gravy train to their last breath.
How Not to Make Public Policy: The Payroll Tax Cut
Source: Charles Blahous, "How Not to Make Public Policy: The Payroll Tax Cut," Economic Policies for the 21st Century, February 15, 2012.
In order to further stimulate economy, the Obama administration advocated a reduction in the payroll tax for the entirety of 2011, which was subsequently extended for the first two months of 2012. However, the tax holiday is a public policy package that exhibits all of the worst possible traits of policymaking, says Charles Blahous, a research fellow with the Hoover Institution.
First and most importantly, the use of the payroll tax holiday as a means of recovery undermines the fiscal health of the federal government. The holiday irreparably damages the financial strength of the Social Security Trust Fund, famously separate from the general revenues fund; the tax cut reduced Social Security tax income by $105 billion in 2011 alone.
Furthermore, because funds were diverted from the general revenues to cover the losses to Social Security, the tax cut further exacerbated total deficits, which have maintained unsustainable levels for four consecutive fiscal years.
By allowing a comingling of these two funds, the policy blurs the lines between them and undermines the autonomy of the Social Security program, causing it to resemble a public safety net more than a public retirement savings program.
In these ways, the policy has done a great deal of damage to the fiscal health of the federal government on the whole and Social Security in particular. Additionally, the decision to lower the tax rate undermines several principles that have, until now, guided decision-making for the national government.
The volatile nature of the cut, which was intended only for 2011 only to be extended into 2012, confuses taxpayers and limits their ability to project their tax burden. By allowing the aforementioned transfer of funds from general revenues to the Social Security Trust Fund, the policy limits transparency and ignores the time-honored autonomy of the two funds.
The policy also undercuts the quality of the public policy debate, as its supporters rely on economic theory that supposes a long-term cut, while the reality is that it is a short-term, unpredictable tax change.
Wednesday, February 22, 2012
Did you ever get the feeling that Washington was completely out of control and that you can only stand by and watch your life go down the toilet? This November vote with facts on your side. Make informed decisions. This difference is us.
The Pain of Zero Interest Rates
Source: John H. Makin, "The Pain of Zero Interest Rates," American Enterprise Institute, February 15, 2012.
With such small returns to be had from the nearly riskless T-bills, cautious household investors find they must either settle for almost nonexistent returns or accept greater risk in their portfolio. The pain caused by the Fed's policy begs the question, then, of why rates are so low, says John H. Makin, a resident scholar at the American Enterprise Institute.
In an uncertain atmosphere for investors, more people are placing cash in the U.S. Treasury because of its assumed safety -- excess demand drives down rates Treasury has to offer.
The lack of viable alternatives further exacerbates this demand; the volatility of the U.S. stock market and its disappointing returns over the last decade largely eliminate it as an option.
Finally, concerns about a double-dip recession and the debt crisis in Europe discourage potential investors from moving into riskier assets.
These factors cause capital to flow to secure assets such as the Treasury and insured deposits. Unfortunately, the low returns offered by these investments is damaging to households that had planned for greater income from maturing nest eggs.
According to the Case-Shiller Home Price Index, home prices are down by more than a third since 2006. The loss of wealth from this drop in housing values totaled $8 trillion on U.S. owner-occupied real estate alone. This impairs cash-strapped families even further, as many are stuck with mortgages that outstrip the value of the house.
Additionally, the diminished value of the home often loses the family a potential source of credit, as borrowing against the home is no longer an option.
Many are calling for the Fed to raise rates so that they can gain a greater rate of return on near-riskless investments. However, the consequences of such an action would far outweigh the benefits. This would increase the cost of the government's interest payments on its debt to about $280 billion and stock prices would fall even further as investors find a reasonable rate of return with no risk.
Higher rates would cause the housing market to flounder again and the resulting stronger dollar would cripple exports.
I still find it hard to accept this finding that only a small portion of what we have in this country is not made in China. But it does make one think along different lines which is how we all find answers to questions.
Another miscomcept coming.
3 Economic Misconceptions That Need to Die
By The Motley Fool Posted 3:35PM 02/13/12 Economy
By Morgan Housel
At a conference in Philadelphia last October, a Wharton professor noted that one of the country's biggest economic problems is a tsunami of misinformation. You can't have a rational debate when facts are so easily supplanted by overreaching statements, broad generalizations, and misconceptions. And if you can't have a rational debate, how does anything important get done? As author William Feather once advised, "Beware of the person who can't be bothered by details." There seems to be no shortage of those people lately.
Here are three misconceptions that need to be put to rest.
Misconception No. 1: Most of what Americans spend their money on is made in China.
Fact: Just 2.7% of personal consumption expenditures go to Chinese-made goods and services. 88.5% of U.S. consumer spending is on American-made goods and services.
I used that statistic in a recent article, and the response from readers was overwhelming: Hogwash. People just didn't believe it.
The figure comes from a Federal Reserve report.
A common rebuttal I got was, "How can it only be 2.7% when almost everything in Walmart (WMT) is made in China?" Because Walmart's $260 billion in U.S. revenue isn't exactly reflective of America's $14.5 trillion economy. Walmart might sell a broad range of knickknacks, many of which are made in China, but the vast majority of what Americans spend their money on is not knickknacks.
The Bureau of Labor Statistics closely tracks how an average American spends their money in an annual report called the Consumer Expenditure Survey. In 2010, the average American spent 34% of their income on housing, 13% on food, 11% on insurance and pensions, 7% on health care, and 2% on education. Those categories alone make up nearly 70% of total spending, and are comprised almost entirely of American-made goods and services (only 7% of food is imported, according to the USDA).
Even when looking at physical goods alone, Chinese imports still account for just a small fraction of U.S. spending. Just 6.4% of nondurable goods -- things like food, clothing and toys -- purchased in the U.S. are made in China; 76.2% are made in America. For durable goods -- things like cars and furniture -- 12% are made in China; 66.6% are made in America.
Another way to grasp the value of Chinese-made goods is to look at imports. The U.S. imported $399 billion worth of goods from China last year, which is 2.7% of our $14.5 trillion economy. Is that a lot? Yes. Is it most of what we spend our money on? Not by a long shot.
Part of the misconception is likely driven by the notion that America's manufacturing base has been in steep decline. The truth, surprising to many, is that real manufacturing output today is near an all-time high. What's dropped precipitously in recent decades is manufacturing employment. Technology and automation has allowed American manufacturers to build more stuff with far fewer workers than in the past. One good example: In 1950, a U.S. Steel (X) plant in Gary, Ind., produced 6 million tons of steel with 30,000 workers. Today, it produces 7.5 million tons with 5,000 workers. Output has gone up; employment has dropped like a rock.
Tuesday, February 21, 2012
Where and how does the taxpayer benefit from all this redistribution? dah! Redistribution is not about benefiting the taxpayer, it's about what's best for the elites and how it will benefit their reelection and extend their control over everyone and everything.
I'm sure everyone has heard of the 'shell game' where a pea is placed under one of the shells and then moved around for several seconds to hide the actual location of the pea, right? This is exactly what the progressive are doing with our tax dollars. Worse, a huge portion of the voting public doesn't even care about where the pea actually is!!
Federal Funds Flow to Clean Energy Firms with Obama Administration Ties
Source: Carol D. Leonnig and Joe Stephens, "Federal Funds Flow to Clean-Energy Firms with Obama Administration Ties," Washington Post, February 14, 2012.
When the Obama administration helped get a $787-billion stimulus package through Congress, it set aside $80 billion for investment in "clean technology." Left to the Department of Energy (DoE) to distribute, much of this funding went to companies whose fortunes directly benefitted Obama fundraisers and advisers, says the Washington Post.
A Washington Post analysis found that $3.9 billion in federal grants and financing flowed to 21 companies backed by firms with connections to five Obama administration staffers and advisers.
Sanjay Wagle, a venture capitalist and Barack Obama fundraiser in 2008, went to work at the DoE in 2009, and guided some $2.4 billion to companies in which Wagle's former firm, Vantage Point Venture, had invested.
David Danielson, formerly of General Catalyst, joined a DoE mission to fund breakthrough technologies -- he managed to direct $105 million to three General Catalyst portfolio firms.
Administration officials have been keen to point out that in any case where a conflict of interest existed, the staffer in question was not allowed to have an influence on the proceedings that led to the funding decision. However, several insiders familiar with the process are quick to respond that unofficial pressure is present everywhere.
The case of Solyndra serves as an excellent example. Recent federal investigations into the reasons for funding the risky company have turned up several possibilities of insider influence from industry actors.
Steven J. Spinner, a former department loan adviser, disclosed that his wife worked for Wilson Sonsini, a Silicon Valley law firm that handled funding applications for several clean-tech companies including Solyndra. Wilson Sonsini's clean-tech clients reaped $2.75 billion in DoE grants and financing, according to analysis by the Washington Post.
Once hired, Spinner agreed not to discuss loan matters involving Wilson Sonsini clients, yet e-mails show he urged officials to resolve delays in the Solyndra loan, and also defended the financial prospects of Solyndra to a White House deputy before its federal loan was approved.
The case of Solyndra and numerous other companies demonstrates the opportunities for insiders to funnel money to corporate interests.
Monday, February 20, 2012
Of course this isn't how the market place works. When the corporation has to pay more and more taxes they just make up the difference by cutting other expenses like wages and laying off less productive workers. The result is higher unemployment and a smaller tax base and therefore less taxes to the government.
Interesting how this works. But then more unemployment is just what Mr. Obama wants in that it forces the people to become more dependent on government subsistence and there by forcing them to vote to make sure the hand outs continue.
With the number of individuals accepting food stamps and other subsistence payments approaching 50%, Mr. Obama is well on his way to having a majority of the population voting for more of the same.
How Taxing the Rich Harms the Middle Class
Source: Aparna Mathurm, "How Taxing the Rich Harms the Middle Class," The American, February 15, 2012.
President Obama has continued a campaign for economic fairness throughout his last several major speaking engagements, including the State of the Union and his budget speech. To this end, the Obama administration seems content to force American corporations to continue to abide by one of the most abusive corporate tax rates in the world, as this is a tax on the "rich," says Aparna Mathurm, a resident scholar at the American Enterprise Institute.
Yet, the corporate income tax has just the opposite effect. Its burdensome effects are passed in full onto American workers, who pay the true price for the tax. With its 35 percent corporate tax rate, the United States is second only to Japan in the tax burden it places on domestic companies (and Japan plans to reduce its rate later this year). When combined with various corporation taxes at the state level, this tax rate rises to 39 percent.
The Obama administration has responded that it is the effective rate, not the statutory, that matters in assessing the burden on American businesses, but it bears mention that even the effective rate is one of the highest in the Organization for Economic Cooperation and Development.
With such a relatively high corporate tax rate, domestic businesses struggle to attract investment and are implicitly encouraged to move activities offshore. Specifically, studies show that in a world of globally mobile capital, investment will quickly flow to areas that have lower rates of taxation.
Therefore, the high corporate tax rate reduces American business' ability to compete with international market participants, as they fail to attract adequate capital investment. This reduces the productivity of their workers, and thereby inherently lowers their wages -- a conclusion validated by researchers from Harvard Business School, the Tax Foundation, and the Federal Reserve Bank of Kansas City, among others.
Sunday, February 19, 2012
The first thing to do to fix the public school system is to get rid of the dept of education. Stop the interference from Washington and turn the responsibility for school achievement over to the states. When ever the citizens have control of their own destiny they succeed.
Turning Around Low-Performing Schools
Source: Marisa de la Torre et al., "Turning Around Low-Performing Schools in Chicago," University of Chicago Consortium on Chicago School Research, February 2012.
Scrutiny and criticism of the education system has increasingly targeted low-performing schools, primarily in urban areas, that detractors charge are failing to serve students and handicapping their future opportunities. In response, various administrations in the Department of Education have introduced initiatives and grant-backed programs to reform these schools and improve education outcomes, say researchers with the University of Chicago Consortium on Chicago School Research.
The city of Chicago has been one of the most active participants in these programs, seeking to turn around its subpar schools at all levels. It has been involved in three different reform models affecting 36 schools between 1997 and 2009.
The "transformational model" changes school leadership (notably, the principal) and helps them to specialize in reversing the direction of a school's momentum. The "turnaround model" changes school leadership, alters the governance structure, and replaces at least 50 percent of the school's staff.
The "closure and restart model" shuts down a school for a year or two, transferring the students to other schools, and is subsequently reopened as an application-only charter school.
Each of the 36 schools examined participated in a program that was classified into one of each of the three models -- a decision that was made based on the characteristics of the school and its perceived needs.
A comparison of the schools before the implementation of reform and their vital statistics several years down the road allows for analysis of the efficacy of the programs. On average, Chicago elementary and middle schools that underwent reform made significant improvements in reading, closing the gap between those schools and the system average by almost half.
Those same schools also closed the gap in math achievement by two-thirds.
Achievement among high schools was not as significant -- there were not significant improvements in attendance rates or in the percentage of ninth-graders that were "on-track" to graduate.
Researchers emphasize that, especially among the high schools, earlier attempts at reform in the mid-1990s were found to be ineffective and were subsequently paired with additional reform. But this trial-and-error process depressed the schools' perceived level of achievement. Later attempts at reform appear much more promising in terms of turning these schools around.
One has to wonder just who will win this battle for supremacy or will we all lose in the end? Just what is Obama's role here? By his inability to see clearly the alternative to weakness is actually war, what will he do when he can retreat no longer?
How Iran sees America and what America does not want to see
By Michael Rubin
Published February 17, 2012 FoxNews.com
President Obama entered the White House determined to renew diplomacy with Iran. During his campaign, he said he would meet the leaders of Iran "without preconditions.”
In his inaugural address he said, "To those who cling to power through corruption and deceit and the silencing of dissent, know that you are on the wrong side of history, but that we will extend a hand if you are willing to unclench your fist." Obama was sincere, but his outreach was doomed before it began. The problem was never American goodwill but rather how Iran’s leaders understand diplomacy.
American diplomacy is based on the assumption that international counterparts operate by common rules. The Western notion of diplomacy, however, is a relatively recent concept, one that evolved during the Enlightenment and coalesced into a common understanding only in the nineteenth century.
To assume that twenty-first century adversaries, be they in Tehran, Pyongyang, or Beijing, accept a value system rooted in Western culture is naive.
The match-up between Iranian Supreme Leader Ali Khamenei and Obama is not a battle between equals, but rather a historical grudge match between Nizam al-Mulk, the eleventh century Persian Machiavelli, and Neville Chamberlain or Jimmy Carter.
In that game, the White House will always lose, especially when if it refuses to recognize the rules by which Iran plays. The cultural chasm between American and Iranian diplomats predates the 1979 hostage crisis.
Less than three months before radical students seized the U.S. embassy, Bruce Laingen, the American chargé d’affaires in Tehran, described the Iranian approach to negotiations to the State Department. “Perhaps the single dominant aspect of the Persian psyche is an overriding egoism,” he wrote in a cable, adding, “The practical effect of it is an almost total Persian preoccupation with self and leaves little room for understanding points of view other than one’s own.” “One should never assume that his side of the issue will be recognized,” he concluded.
That, after 32 years, no Iranian official has apologized for seizing the U.S. embassy underscores Laingen’s insight and shows the Iranian regime’s complete rejection of the rules of diplomacy. Iranians have grievances too—the 1953 coup against Iran’s Soviet-leaning premier, for example—but for this successive administrations have apologized.
The Islamic Republic’s embrace of terrorism also underscores the cultural gap. Tehran refuses the terrorist label, only because it believes wanton murder of civilians acceptable. Export of revolution is enshrined in the Islamic Republic’s constitution and the Iranian government has been so bold as to include a line-item for “resistance” in its budget.
During the last administration, critics chastised the President Bush for eschewing realism, the idea that immediate national interest should trump morality in decision making. Obama may believe he embraced realism, but he fails to recognize it in his adversaries: Iranian authorities make no secret that their primary national interest lays in becoming a nuclear power.
Here, again, American strategy is naïve: Obama may, like Bill Clinton before him, believe that he can exploit Iranian factional disputes to his advantage but he ignores that reformists and hardliners both seek a nuclear Iran. Indeed, the biggest dispute between the two poles on the Iranian political spectrum is not whether or not to go nuclear, but rather who should get credit for the achievement. When Ahmadinejad announces nuclear breakthroughs, as he did on Wednesday, he seeks glory for himself, but reformists say they deserve credit.
In June 2008, for example, Abdollah Ramezanzadeh, the spokesman for former president Mohammad Khatami, suggested Khatami’s much-lauded “Dialogue of Civilizations” was merely a tactic to distract the West from Iran’s nuclear progress. Former nuclear negotiator Hassan Rowhani seconded the notion in October 2011, crediting his own insincere diplomacy for enabling Iran to create a nuclear fait accompli.
While many American officials still cling to the 2007 National Intelligence Estimate’s controversial assertion that Iran ceased working on a nuclear weapon in 2003, they ignore the fact that it was during the reformist era that Iran laid the backbone of its program.
Absent sincerity, diplomacy is less a system for problem solving than it is an asymmetric warfare strategy.
Only twice has the Islamic Republic reversed course on its revolutionary goals: First, Ayatollah Khomeini released American hostages, not because of Carter’s diplomacy but rather because Iraq’s 1980 invasion made the price of Iran’s isolation too great to bear.
Then, only after a half million Iranians died, did Khomeini agreed to abandon the Iran-Iraq war short of his goal of ousting Saddam Hussein, likening the decision to drinking a chalice of poison.
Iranians often quip that they play chess while the Americans play checkers. They are wrong. By ignoring the Iranian game, Obama might as well be playing solitaire.
Tehran will feign pragmatism only when the cost of its goals—nuclear acquisition and revolutionary expansion—grow too costly. Only by raising exponentially the cost to Iran of its nuclear defiance can Obama hope to rein in Iranian ambitions.
Michael Rubin, a resident scholar at the American Enterprise Institute, teaches Iranian history and political culture for the U.S. military and holds a Ph.D. in Iranian history from Yale University.
Read more: http://www.foxnews.com/opinion/2012/02/17/how-iran-sees-america-and-what-america-does-not-want-to-see/print#ixzz1ml28ZUW6
Saturday, February 18, 2012
Understanding the True Cost of State and Local Pensions
Source: Andrew G. Biggs, "Understanding the True Cost of State and Local Pensions," American Enterprise Institute, February 13, 2012.
In a time where national attention is on budget shortfalls in all levels of government, it is crucial to recognize the impending troubles to be faced by public-sector retirement funds. Routinely underfunded and plagued by overly optimistic economic assumptions, the funds are managed in such a way that will almost certainly require a government bailout down the road, says Andrew G. Biggs, a resident scholar at the American Enterprise Institute.
According to standard actuarial accounting, the average public pension was 76 percent funded in 2009, down from 95 percent in 2001.
Likewise, annual required contributions, which track relative costs per year for funds, were over $74 billion in 2009, up from around $29 billion in 2001.
Overall, public pensions reported underfunding of $660 billion as of mid-2009, the most recent date for which complete information is available.
This information suggests that pension funds could be in a great deal of trouble in future years, when retiring workers demand compensation from near-bankrupt governments. However, the truly troubling feature of the current system is that these figures understate the liabilities of the funds and allow for minimal protection against future outlays.
In accounting their funds and assessing their financial health, government analysts discount future payouts (a commonly accepted procedure), but they do so using the rate of return they expect to gain from their invested assets. Thus, the financial strength of the fund can be augmented simply by adopting a more risky investment portfolio, as this will increase returns and projected future revenue streams.
This accounting feature is dangerous and misleading, and would not be used in the private sector by managers of a similar fund. Instead of discounting assets, they would discount liabilities and incorporate the risk factor of assets.
Joshua Rauh of Northwestern University estimates that, when correctly discounted, total unfunded liabilities for public-sector pensions as of October 2011 are roughly $4.4 trillion, sharply higher than the aforementioned figure of $660 billion as of mid-2009.
This amount exceeds total outstanding state and local government debt and is equal to nearly 30 percent of annual gross domestic product.
Please say it's not just that we, as a nation, just don't care enough to say awake long enough to find out all that has gone before us is gone.
National Center for Policy Analysis
President’s budget proposal. As required by law, the president submitted his annual budget proposal to Congress this week. If adopted, the President’s budget would spend $3.8 trillion in fiscal year 2013, which is almost a quarter of the gross domestic product. It projects $2.9 trillion in tax revenue and a $901 billion deficit in fiscal year 2013.
The President’s budget proposes $1.5 trillion in tax increases. His budget would end the 2001 and 2003 tax cuts (often called the “Bush tax cuts”) for people who earn more than $250,000 per year. The President’s budget would also impose a new 30% income tax on millionaires (called the “Buffett Rule”), which would apply to capital gains and carried interest.
The President’s budget proposes cuts to Medicare spending by requiring seniors to pay more for Medicare and cutting payments to Medicare providers. Other than that, the President’s budget ignores the unsustainable growth of entitlement programs and proposes nothing to solve the entitlement crisis.
The President proposes almost $500 billion in new transportation spending to stimulate the economy. The implications of this new spending on the President’s reelection campaign are worth some scrutiny.
Meanwhile, Senate Majority Leader Harry Reid (D-NV) said he did not intend to vote on the President’s budget or vote on any budget at all this year. This will be the third year in a row, more than 1,000 days, since the Senate passed a budget. While Senate Democrats are absent on this issue, Republican Leader Mitch McConnell (R-KY) said he will try to offer the President’s budget on the Senate floor so at least the Senators will have a chance to vote on something.
FINALLY...THE BLONDE JOKE TO END ALL BLONDE JOKES! medicen
A blonde woman was speeding down the road in her little red sports car and was pulled over by a woman police officer, who was also a blonde.
The blonde cop asked to see the blonde driver's license.
She dug through her purse and was getting progressively more agitated. 'What does it look like?' she finally asked. The policewoman replied, 'It's square and it has your picture on it.'
The driver finally found a square mirror in her purse, looked at it and handed it to the police woman. 'Here it is,' she said.
The blonde officer looked at the mirror, then handed it back saying, "OK, you can go. I didn't realize you were a cop."
Friday, February 17, 2012
Lessons from Europe's Experience with Renewable Mandates and Subsidies
Source: Josiah Neeley, "Learning from Others' Mistakes: What Europe's Experience with Renewable Mandates and Subsidies Can Teach Texas," Texas Public Policy Foundation, February 2012.
The state of Texas, one of the largest producers of wind energy in the world, can learn a great deal from European countries' experiences. While environmental advocates argue that targeted subsidies will reduce emissions and create "green" jobs, the experiences of Spain, Italy and the United Kingdom suggest that this may not be the case, says Josiah Neeley, an energy and environment policy analyst with the Texas Public Policy Foundation.
In 2007 the Spanish government vowed to increase its share of energy consumption from renewable sources from 8.5 percent in 2005 to 20 percent by 2020 via generous subsidies.
A 2009 study by researchers at the Universidad Rey Juan Carlos found that Spain spent €571,138 (about $748,555) to create each "green job."
The subsidies required 3.45 percent of all of Spain's household income tax revenues.
The resulting higher electricity costs from renewable sources led to the loss of nearly 110,500 jobs elsewhere in the economy.
Last month, the new government of Mariano Rajoy ended all subsidies.
Italy's remarkably similar experience suggests that the costs of these policies are not unique to Spain.
Italy's subsidy system effectively instituted a price floor for wind energy at three-times the level dictated by market forces.
A study performed at Italy's Instituto Bruno Leoni found that the capital necessary to create one green job could have created 6.9 jobs if invested in industry.
The same study concluded that, though the subsidies for renewable energy would lead to a green sector employing between 50,000 and 112,000 people by 2020, at least 60 percent of these jobs would be temporary.
Recent budget cuts have caused the government to cut back on its subsidies.
The United Kingdom also had a negative experience with renewable energy goals.
The U.K. government set the goal of creating 10 percent of all energy from renewable sources by 2010, 15 percent by 2015 and 20 percent by 2020.
A study by Verso Economics calculated the opportunity cost of the United Kingdom's subsidy system to be 10,000 direct jobs between 2009 and 2010 alone.
One estimate puts a £4,000-price tag (about $6,315) on each household to achieve only 15 percent by 2020.
The Obama Budget
Source: "The Amazing Obama Budget," Wall Street Journal, February 15, 2012.
President Obama recently proposed his budget for fiscal year 2013, including outlook and projections for many years to follow. While analysts continue to look at specifics, the general diagnosis is that Americans can look forward to more and higher taxes, less international competitiveness, deflated growth and out-of-control deficits that will drive the federal government even further into debt, says the Wall Street Journal.
Ignoring the need for greater austerity in order to control deficits, the Obama administration predicts that the current fiscal year will see spending rise by $193 billion to $3.8 trillion -- the equivalent to 24.3 percent of gross domestic product (GDP).
This will make four straight years of spending over 24 percent of GDP -- the highest four-year span since 1946.
Simultaneously, the White House budget office estimates that for the fourth year in a row, government revenues will not reach 16 percent of GDP, which has not happened since 1950.
The combination of skyrocketing spending and deflated revenues leads to unprecedented deficits -- another deficit of $1.327 trillion for 2012 will be the fourth year with deficits of at least $1.29 trillion each year.
In total, President Obama will have added $5 trillion to the publicly held debt within his first term.
Despite these trends, the proposed budget only promises fiscal responsibility in the far future while accomplishing nothing in the short-term. Most importantly for the short term, however, is a slew of tax hikes.
The president's plan would cancel the investment tax rate reductions that have been in place since 2003, impose a new investment income tax hike of 3.8 percent, and introduce the new "Buffett rule" on the rich.
Capital gains and dividend tax rates will be increased from 15 percent to 30 percent.
The estate tax will climb to 45 percent from 35 percent.
The Obama administration hides the pernicious effects that these taxes will have on long-term economic growth and estimates outrageous rates of growth in the near future.
All in all, the proposed budget and its deceptive estimates are nothing but a shell game for American voters.
Thursday, February 16, 2012
Taxi Regulation and the Failures of Progressivism
Source: Samuel R. Staley, "Taxi Regulation and the Failures of Progressivism," Foundation for Economic Education, January/February 2012.
The Progressivism that first appeared in the 1880s and 1890s had at its heart admirable goals. The movement sought to root out the nepotism and corruption that characterized politics and to create professional oversight over public services. However, these policies have led to a public sector that is dominated by political interests and rife with inefficiencies, says Samuel R. Staley, associate director of the DeVoe Moore Center at Florida State University.
This is extremely evident in the various systems of regulations that govern taxicabs in many American cities. Admittedly an unusual example, taxis operate under a cumbersome political system that distorts incentives, depresses driver wages, imposes nonsensical requirements and protects large market participants.
As a recent survey shows, regulations vary drastically between cities -- no single rule was present in a majority of cities surveyed. Fewer than half the cities surveyed required fares to be set by distance-based meters.
Forty percent regulated logos and taxi colors, or mandated radio dispatching.
One-third capped the number of vehicles, required public hearings for licenses, or mandated service hours or physician certificates.
One of the most onerous means of control that cities exercise over the industry is limiting the number of taxicabs that it licenses for use within the city.
An "optimal number" of cabs is often set by a city commission, staffed by bureaucrats and regular citizens with little knowledge of the industry.
The presence of a cap on the number of taxis creates a barrier to market industry that depresses supply and increases returns for companies that are already in the market.
Medallion coins, which are given upon licensing of a taxicab, are often sold in the black market for large sums (two New York coins sold for $1 million each in October 2011), yet such a market would not exist if this "optimal number" truly had been reached.
It bears mention that the commissions that establish these rules are often advised or even partially filled by representatives of already-existing taxi companies. This allows those businesses to hijack government institutions in order to create barriers to entry and reduce competition.
The problem with this study is the thinking and motivation of the two groups
The lower income families are the way they are because they don't focus on being more productive, as a rule, and the children are products of that thinking from the minute they become aware of their surroundings. Other factors. including a family history of not acknowledging a need for higher education or the need to reach new levels of productivity for increased income or position in the community.
Much of this lack of motivation can be laid right at the feet of the unions as they tell the workers they don't have to do any more then necessary because they can get their desires met by just doing what they are told by the union bosses.
Another problem with this study is they don't identify just who is included in what income group and how much money separates the groups. Also they don't lets us know how many people are in each group. This would be helpful to determine the severity of the problem and since the study mostly precludes blacks, numbers take on more importance.
This not to say all low income families are not productive orientated, but the result of the mind set, motivation, and education levels of the lower income people is to focus on getting by or just make ends meet produces results found in this study, lower income family children have lower test scores than children from higher income families.
Education Gap Grows Between Rich and Poor, Studies Say
Source: Sabrina Tavernise, "Education Gap Grows Between Rich and Poor, Studies Say," New York Times, February 9, 2012.
While researchers have focused for years on the race gap in educational achievement, recent studies show that the gap has decreased substantially in recent years. However, the achievement gap between children of high-income families and low-income families has grown significantly over the same period of time, says the New York Times.
Sean F. Reardon, a Stanford University sociologist, found that the gap in standardized test scores between affluent and low-income students has grown by about 40 percent since the 1960s.
In another study, the imbalance between rich and poor children in college completion -- the single most important predictor of success in the work force -- has grown by about 50 percent since the late 1980s.
During these same decades, the gap between whites and blacks shrunk by a large margin.
A number of factors explain why children of high-income households outperform their low-income classmates. Much of the difference stems from the fact that, because a family has fewer resources in general, it has fewer resources to dedicate to a child's education.
Meredith Phillips, an associate professor at the University of California, Los Angeles, used survey data to show that affluent children spend 1,300 more hours than low-income children before age 6 in places other than their homes, their day care centers or schools.
She also found that, by the time high-income children start school, they have spent about 400 hours more than poor children in literacy activities.
Additionally, wealthy parents invest more time and money than ever before in their children, including extracurricular activities that aid cognitive development and direct assistance with schooling.
A 2007 study found that wealthy parents spent nine times as much per child as low-income parents did. Education, long recognized as the great equalizer, no longer appears to be aiding that end.
Wednesday, February 15, 2012
Does Gender Matter for Political Leadership?
Source: Fernando Ferreira and Joseph Gyourko, "Does Gender Matter for Political Leadership? The Case of U.S. Mayors," National Bureau of Economic Research, December 2011.
What are the consequences of electing a female leader for policy and political outcomes? In a new paper for the National Bureau of Economic Research, authors Fernando Ferreira and Joseph Gyourko answer this question in the context of U.S. cities, where women's participation in mayoral elections increased from negligible numbers in 1970 to about one-third of the elections in the 2000s.
Ferreira and Gyourko use a novel data set of U.S. mayoral elections from 1950 to 2005, and apply a regression discontinuity design to deal with the endogeneity of female candidacy to city characteristics.
In contrast to most research on the influence of female leadership, they find no effect of gender of the mayor on policy outcomes related to the size of local government, the composition of municipal spending and employment, or crime rates.
While female mayors do not implement different policies, they do appear to have higher unobserved political skills, as they have a 6 to 7 percentage point higher incumbent effect than a comparable male.
But Ferreira and Gyourko find no evidence of political spillovers: exogenously electing a female mayor does not change the long run political success of other female mayoral candidates in the same city or of female candidates in local congressional elections.
Even though we have the second largest resources of fossil fuels means nothing to the nutjobs, it's about gaining control of the population by restricting where we live and how we live.
Believe it. It's here and now.
Oil and Gas Boom Lifts U.S. Economy
Source: Russell Gold, "Oil and Gas Boom Lifts U.S. Economy," Wall Street Journal, February 8, 2012.
An energy boom is revving up the U.S. economy, says the Wall Street Journal.
The use of new drilling techniques to tap oil and gas in shale rocks far underground helped add about 158,500 new oil and gas jobs over the past five years, and economists think it has created even more jobs in companies supplying the energy industry and in the broader service industry.
U.S. oil production is rising for the first time in decades, and natural gas has become so plentiful that prices recently plunged to a 10-year low.
Private-equity firms completed $24.8 billion of energy deals of all types last year, up from $8.5 billion in 2010, according to data tracker Preqin.
The economic benefits of rising energy production are spreading far beyond the traditional oil patch, to Ohio and Pennsylvania, Nebraska and New York, North Carolina and Idaho.
Though the energy boom looks like a road to prosperity, it may be a bumpy one. Drilling is disrupting communities in ways that are still unfolding, creating concerns about the costs to local governments for things like road damage. It is also raising fears about potential water contamination, air pollution and even earthquakes from the effects of drilling thousands of new deep wells.
Skeptics warn that individual shale communities could experience an employment boom, followed by a painful bust.
Rosy economic models "tell us nothing about what will happen when drilling ends," warns a May 2011 paper published by Cornell University's City and Regional Planning Department and funded in part by a foundation opposed to shale drilling.
Indeed, lower prices already have slowed new drilling for natural gas, causing jobs and investment to shrink in some communities. But energy companies have shifted their spending to shale wells that will provide oil, leading to rapid growth elsewhere. Even if gas prices stay low, overall employment is expected to continue rising, says John Larson, an economist with IHS Consulting.
Tuesday, February 14, 2012
To Obama, and the news media, it's all about managing the information and hoping that more and more people will believe what they read or hear from our local and national news out lets, which by the way are controlled by the Obama administration, that is, the Democrat National Committee.
The Bad News Behind the January Jobs Report
Source: John Lott, "The Bad News Behind the January Jobs Report," Fox News, February 3, 2012.
The official unemployment rate remains high at 8.3 percent -- still a half a percentage point higher than when President Obama took office. But that still might be looking at the bright side. If we include those who have given up looking for work and those who could only find part time work, the unemployment rate stands at almost an entire percentage point higher than when Obama entered office, says economist John Lott.
In January 2009, 11.6 million Americans were out of work and 23 percent of them had been unemployed for more than six months. Today there are 12.8 million unemployed and 43 percent have been out of a job for more than six months. The average length of unemployment has increased dramatically since even the recovery started.
Back in June 2009, "only" 29 percent of the unemployed had been unemployed longer than six months.
The number of unemployed Americans last month fell by 339,000, the fifth largest drop since January 2009. But there was an even much more shockingly large number -- almost 1.2 million additional Americans were classified in January as not being in the labor force.
This last number not only means that the official unemployment number is misleading, but it will also likely determine where the unemployment rate ultimately goes. Indeed, the Congressional Budget Office (CBO) recently predicted that the unemployment rate will be at 8.9 percent during the last quarter of 2012 and rise to 9.2 percent for the last quarter of 2013.
The CBO was so concerned about these people leaving the labor force that they warned that the current unemployment rate that reporters so breathlessly await at the beginning of each month is quite misleading.
At the end of last year, the CBO cautioned that the official unemployment rate was about 1.25 percentage points lower than the real rate. In January, that gap was about 1.6 percentage points.
It's only recently that the politicians have decided that if we are more compassionate toward those that are struggling will we be more prosperous. 'A rising tide lifts all ships' has been lost some place in the transition to 'leveling the playing field'.
Global Evidence on Taxes and Economic Growth: Payroll Taxes Have No Effect
Source: William McBride, "Global Evidence on Taxes and Economic Growth: Payroll Taxes Have No Effect," Tax Foundation, February 8, 2012.
Congress is currently debating whether to extend throughout the year the payroll tax holiday, which is currently set to expire at the end of February. Proponents of the holiday argue that the economic recovery is fragile, that continued short-term stimulus is in order as a result, and that the payroll tax holiday is particularly effective in this regard because it puts cash in the pockets of those most likely to spend it.
While there is a certain appeal to this argument, many economists have a different view of the short-run dynamics of stimulus measures in general and this payroll tax holiday in particular, says William McBride, an economist at the Tax Foundation.
The long-term growth effects of a payroll tax holiday extension are worth considering as well, as the United States appears mired in a long run of slow growth.
Here the evidence is quite conclusive: Based on Organization for Economic Cooperation and Development (OECD) data on 34 member countries between 2000 and 2010, there is no significant relationship between payroll taxes and long-term economic growth. In contrast, corporate income taxes have a highly significant and negative effect on long-term growth.
The estimates suggest that cutting the corporate rate by 10 percentage points is associated with an increase in total real gross domestic product (GDP) growth of 11.1 percentage points over the period. This would move the United States from below average to above average in terms of economic growth among OECD countries.
Personal income taxes on high incomes also have a significant negative effect on growth, such that cutting the rate by 10 percentage points is associated with an increase in total real GDP growth of 7.5 percentage points over the period. This would bring the United States to roughly an average level of growth relative to OECD peers.
If lawmakers want to have the biggest impact on boosting long-term economic growth in the United States, they should turn their attention to cutting tax rates on corporate and individual income.
Monday, February 13, 2012
Medicare ruling. The D.C. Circuit Court of Appeals ruled this week that seniors who want to give up their entitlement to Medicare are not allowed to leave the program. The suit was brought by former Rep. Dick Armey (R-TX) and several others who claimed they could get better insurance coverage elsewhere if they hadn’t qualified for Medicare. But the Court ruled that senior citizens “remain legally entitled to the benefits regardless of whether they accept them.” In other words, you can check out but you can never leave.
Are we doomed? You decide this November!
Lessons from Solyndra
Source: Robert P. Murphy, "Lessons from Solyndra," Library of Economics and Liberty, February 6, 2012.
In September 2011, solar energy giant Solyndra filed for bankruptcy and laid off 1,100 employees. The collapse was a major embarrassment for the Obama administration; however, fallout from the bankruptcy has revealed a number of additional factors that speak to the broader implications, says Robert P. Murphy, a senior fellow in business and economic studies at the Pacific Research Institute.
Evidence of corruption and conflicts of interest has surfaced as investigators look more deeply into the company's relationships in Washington. While any company can be expected to have tentative associations with various politicians, the pervasiveness of Solyndra's presence in the decision-making process that led to its loan guarantees is scandalous.
From 2008 to 2011, Solyndra spent almost $1.9 million on lobbyists.
A major fundraiser for the Obama campaign, George Kaiser, owns the firm Argonaut Ventures, which participated in the infusion of new money into Solyndra (and now stands ahead of taxpayers in the liquidation process).
Kaiser visited the White House repeatedly in 2009 and 2010 and (according to released e-mails) discussed Solyndra, despite earlier White House denials that the topic had ever come up.
A Department of Energy (DOE) stimulus adviser, Steve Spinner, whose wife's law firm represented Solyndra on the application, repeatedly pushed for the original loan guarantee to be approved.
These inside pressures likely had an influence on Solyndra's ability to win the DOE's support, and bring to light one of the many problems with Washington picking winners and losers: they are unlikely to do so without bias. The results from the bankruptcy of Solyndra also emphasize many of the more fundamental problems with the government intervening in markets.
The demand for stimulus, as was acknowledged by the secretary of energy, comes from the fact that these companies are unable to gain funding from the private sector -- a fact that in and of itself should be a warning sign. Additionally, by providing loans to these risky companies, the government inherently decreases the supply of loans available to other, market-approved businesses.
Finally, while government officials may agree that intervention is necessary for "green" products to achieve efficiency, this does not speak to the government's capacity to select them intelligently.
Sunday, February 12, 2012
This all is by design - the more people that find they can not survive without help in a bad economy, the more the progressive liberal Democrats can demand their vote to keep them in office and at the taxpayer trough, stealing every one's future.
The progressive liberal Democrats believe if they can continue to slow the growth of the economy by stopping any agenda that will solve out financial problems now and for the foreseeable future, by demanding higher taxes, bailouts, green energy and more subsides they can assure their own future by controlling a submissive and dependent population.
The question that remains is, how many of us will allow this to continue? Is it already to late to stop the slide into a subsistence culture? Think about this before you head to the voting booth this November.
Remember, we get the government we deserve.
Dependence on Government at All-Time High
Source: Patrick Tyrrell, "Dependence on Government at All-Time High," Heritage Foundation, February 8, 2012. William Beach and Patrick Tyrrell, "The 2012 Index of Dependence on Government," Heritage Foundation, February 8, 2012.
Published by the Heritage Foundation for the past 10 years, the Index of Dependence on Government tracks the growth in government dependence dating back to the early 1960s. This year's edition shows an alarming trend, says Patrick Tyrrell, a research coordinator with the Heritage Foundation and coauthor of the Index.
One in five Americans relies on the federal government for everything from housing, health care and food stamps to college tuition and retirement assistance --that's more than 67.3 million Americans who receive subsidies from Washington.
Government dependency jumped 8.1 percent in the past year, with the most assistance going toward housing, health and welfare, and retirement.
The average individual who relies on Washington could receive benefits valued at $32,748, more than the nation's average disposable personal income ($32,446). At the same time, nearly half of the U.S. population (49.5 percent) does not pay any federal income taxes.
As of now, 70 percent of the federal government's budget goes to individual assistance programs, up dramatically in just the past few years. However, research shows that private, community and charitable aid helps individuals rise from their difficulties with better success than federal government handouts. Plus, local and private aid is often more effectively distributed.
This much dependence on government has not been seen before in our nation, and it spells grave danger for the republic, says Tyrrell.