For what its worth....Obamanomics

[sirs]

Stimulus Killed 1,000,000 jobs

An extensive new study conducted by Timothy Conley from the University of Western Ontario, Canada Economics Department and Bill Dupor of Ohio State University Economics Department, shows the trillion dollar boondoggle known as the stimulus bill, which President Obama has credited over and over again for "saving and/or creating" thousands of jobs, actually killed 1 million private sector jobs. 

This paper uses variation across states to estimate the number of jobs created/saved as a result of the spending component of the American Recovery and Reinvestment Act (ARRA). The key sources of identification are ARRA highway funding and the intensity of state sales tax usage.

We estimate the Act created/saved 450 thousand government-sector jobs and destroyed/forestalled one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases (Fig. A) rather than boost private sector employment (e.g. Fig. B). The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services. Searching across alternative model specifications, the best-case scenario for an effectual ARRA has the Act creating/saving a net 659 thousand jobs, mainly in government.

The study also shows that despite the entire idea of the stimulus creating "shovel ready," or construction/infrastructure jobs, infrastructure employment has drastically decreased despite stimulus spending.   



Our benchmark results suggest that the ARRA created/saved approximately 450 thousand state and local government jobs and destroyed/forestalled roughly one million private sector jobs. State and local government jobs were saved because ARRA funds were largely used to offset state revenue shortfalls and Medicaid increases rather than boost private sector employment. The majority of destroyed/forestalled jobs were in growth industries including health, education, professional and business services. This suggests the possibility that, in absence of the ARRA, many government workers (on average relatively well-educated) would have found private-sector employment had their jobs not been saved. Searching across alternative model specifications, the best-case scenario for an effectual ARRA has the Act creating/saving a net 659 thousand jobs, mainly in government.

The findings in this study are disturbing. The private sector fuels the public sector and the stimulus is a perfect example of how the government fails to create sustainable jobs and destroys the private sector in its overreach. And what did the American taxpayers get out of the deal?
- A stalled economy,
- no long term job growth,
- stunting of growth in the overall economy
- and another trillion dollars in debt.

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John Hinderaker at Powerline reports on a study by two economists offering a statistic that every American should know before voting in the 2012 presidential election:

The trillion-dollar Obama "stimulus" plan created or saved 450,000 jobs in state and local GOVERNMENT, but destroyed or forestalled 1,000,000 jobs in the PRIVATE SECTOR.

That's right -- American taxpayers ponied up (and put our children in hock) to the tune of a trillion dollars in order to save tax-taking government jobs and to destroy tax-providing private sector jobs, for a net loss of over one-half million jobs.


That's Obamanomics, America.

[sirs]

The latest weekly new jobless claims was lower than expected, but still about 150,000 higher than economists say is necessary to indicate we're on the road to a recovery.  The unemployment rate increased to 9.0 percent last month.  More than 14 million people are still out of work; another 6 million have given up even trying to find a job and have left the workforce. 

Transfer payments from various social welfare programs now account for a record high 35 percent of total salary and wage income in America.  Food stamps are used by 1-in-7 people nationally. 

The only thing that is working well in America seems to be Obama's plan to "spread the wealth," but he's borrowing 40 cents of every dollar to do it. 

While the numbers are staggering, Washington seems paralyzed to do much to help.  In fact, evidence mounts that many of the woes facing Americans trace to failed public policy put in place by misguided politicians.   The latest wreck on the growing list is the government mandated minimum wage.

In 2006, Democrats campaigned on an increase in the minimum wage, and early in 2007 the new Democrat majority delivered, unfortunately with significant Republican congressional support.  And, George W. Bush signed it into law as part of a bigger appropriations package. 

At that time, the minimum wage was $5.15 per hour and the unemployment rate was less than half (4.4%) of what it is today.  Congress hiked the minimum wage more than 40% to $7.25 on a three step schedule with the last hike taking effect in July, 2009. 

In March, 2010 A Line of Sight contributing editor, Chris Jaarda, examined the history of the minimum wage and found that unemployment spiked following four of the last five increases in the federal minimum wage.  Jaarda also discovered that 79% of economists agree with the following: ?a minimum wage increases unemployment among young and unskilled workers.? 

Somebody should have told Congress. 

A newly released study by two labor economists, William Even (Miami University) and David Macpherson (Trinity University) confirmed, yet again, what Jaarda and many others already knew; increasing the minimum wage punishes most the young, unskilled workers, and worse, has a significant racial component. 

Even and Macpherson's study, "Unequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases" analyzed the employment status of 16-24 year-old male high school dropouts, by definition the most unskilled, inexperienced group in the labor pool. 

Among the white males, the authors determined that "each 10% increase in a state or federal minimum wage has decreased employment by 2.5%; for Hispanic males, the figure is 1.2%."

"But among black males in this group, each 10% increase in the minimum wage decreased employment by 6.5%."

Just a reminder, that 2007 increase was 40%.  Guess what happened?

During the peak of what has been dubbed the Great Recession, the unemployment rate for young adults (16 to 24 years of age) as a whole rose to above 27%, according to syndicated columnist, Walter Williams.  However, the unemployment rate for black young adults was almost 50%, but for young black males, it was 55%.

Many factors including the financial crisis contributed more to the recession than the minimum wage increase.  In trying to parcel out the right numbers, Even and Macpherson compared the job loss caused by higher minimum wages with that caused by the recession and found between 2007 and 2010, employment for 16-to-24-year-old black males fell by approximately 34,300 as a result of the recession; over the same time period, approximately 26,400 lost their jobs as a result of increases in the minimum wage across the 50 states and at the federal level.

Even and Macpherson explain that young black men are more likely to be employed in low-skilled jobs in bars and restaurants, exactly the kind of businesses with narrow profit margins that are more adversely affected by increases in minimum wage.   Indeed, the National Restaurant Association lobbied against the 2007 legislation, pointing out that the last increase led to 146,000 lost jobs. 

Walter Williams ? himself a black male ? unloaded blistering satire at the political establishment; "The best way to sabotage chances for upward mobility of a youngster from a single-parent household, who resides in a violent slum and has attended poor-quality schools is to make it unprofitable for any employer to hire him."

When the 2007 minimum wage increase was passed, the New York Times hailed it as a "major victory for low income workers."  That's the standard liberal ? oops, progressive ? line.  But, I doubt the 50% of black young adults that are out of work feel all that victorious.

Commentary

[sirs]

Blackmailing Taxpayers

One of Dictionary.com's definitions of blackmail is "to extort money from (a person) by use of threats." Substitute "taxpayers" for "person" and you have what the White House and congressional Democrats are doing with the debt ceiling.

In case you weren't paying attention (and too few are) the United States officially reached the debt ceiling on Monday. Treasury Secretary Tim ("I forgot to pay my taxes") Geithner informed Congress of difficult decisions he was forced to make to keep the country solvent, which is a joke. How can a country be considered solvent when just the interest on the debt amounts to more than the entire gross national product of many countries?
Among Geithner's sleights of hand to keep America from "defaulting" on its loans is his suspension of payments to federal retirement funding investments until Aug. 2. Whoa, there's a brave move! Geithner doesn't suggest spending cutbacks. That's because with Democrats, especially, federal spending is considered more sacred than money dropped in a church offering plate. Once it's in, it would be a sacrilege to take it out.

The public -- or at least the half of us who pay our tax bills so that the other half can take it and so politicians can keep themselves in office -- ought to be awake to this scam. It makes convicted Ponzi scheme practitioner Bernie Madoff look like a piker.

A good place to start with the spending axe would be the Department of Housing and Urban Development (HUD). The Washington Post last Sunday published the results of a lengthy investigation into the spending ways of this unnecessary federal agency. The expose found that "nearly 700 projects awarded $400 million appear to be stalled or abandoned. An additional 600 projects have not drawn any of the money allocated, tying up $250 million."

That is, or ought to be considered, disgusting. But for much of the bloated federal government, it is increasingly the norm. Two senators have promised an "investigation." Don't look for anything serious to be done. It never is. Politicians and bureaucrats protect their turf. Wrists might be slapped. Someone near -- but not at -- the top might even be replaced. There could be promises of "reform," but in the end, HUD will remain to misspend another day, along with so many other agencies and programs that waste our money.

What is needed is a top-to-bottom review of government, beginning with a serious discussion about its purpose and the responsibility of individuals to do more for themselves.

For people not addicted to TV reality shows and the baser things in life, the Founders of our country warned of what would happen if we got into too much debt. They have something to say to us across the years if we will pay attention.

Possibly the most profound remonstrance concerning debt came from Thomas Jefferson, who said, "I place economy among the first and most important virtues, and public debt as the greatest of dangers to be feared. To preserve our independence, we must not let our rulers load us with perpetual debt. If we run into such debts, we must be taxed in our meat and drink, in our necessities and in our comforts, in our labor and in our amusements. If we can prevent the government from wasting the labor of the people, under the pretense of caring for them, they will be happy."

Has this no meaning in 2011? Of course it does. Wisdom is not bound by centuries, but people must act on wisdom before it can work its magic.

Manipulating federal retirement investments is not a serious response to having reached the debt ceiling. Calling a "contractor" to lower the ceiling by reducing debt would be serious. Are there enough serious people to do the necessary budget-cutting work in Washington?

Commenting on the debt ceiling having been reached, Senator Marco Rubio (R-FL) said it "further highlights the failed leadership and reckless spending that has our country heading toward a Greece-like day of reckoning. We are better than that."

Are we?