Monday, July 16, 2012

Quick Hits - July 16, 2012

We were all greeted this morning with more dismal economic news with the release of the June retail sales numbers.  According to the Commerce Department, retail sales dropped 0.5% in June, following a 0.2% drop in May - making this the first time since December 2008 that this key statistic has dropped in three consecutive months.  The decline was far worse than even the most pessimistic forecast for the retail numbers - with the consensus predicting a 0.2% increase.

Goldman-Sachs responded to this by noting that since retail sales declined far more than was anticipated, it was revising their estimate for the 2nd Quarter 2012 GDP growth downwards from 1.3% to 1.1%.

Interviewed yesterday on CBS News 'Face the Nation', the chair of the House Budget Committee, Paul Ryan, noted that the November election is 'really going to be a big choice about two futures....'

"Look at the record that Barack Obama has to run on. It's the worst economic recovery on record, the highest deficits and biggest government since World War II, the worst jobs quarter in two years, and the highest poverty rates in a generation. That's not a record you can run on, and Mitt Romney has been very clear and very specific with how he'll do things differently to get our economy turned around – to save us from a debt crisis – and so he will continue to emphasize those things, and at the end of the day it's really going to be a big choice about two futures."

Ryan added: "Do you want the path the President has put us on – a path of debt, doubt, and decline – a welfare state with a debt crisis – or the Mitt Romney path, which has been very clear about prosperity, the American idea, turning the economy around and getting us back to growth again?"

Within this environment, we have this front page headline from this morning's Washington Post - "Democrats threaten GOP with 'Fiscal Cliff' " noting the latest effort of brinkmanship being practiced by Congressional Democrats in a time where the Democrat managed economy is on the precipice of a double-dip recession.
Democrats are making increasingly explicit threats about their willingness to let nearly $600 billion worth of tax hikes and spending cuts take effect in January unless Republicans drop their opposition to higher taxes for the nation’s wealthiest households.

Emboldened by signs that GOP resistance to new taxes may be weakening, senior Democrats say they are prepared to weather a fiscal event that could plunge the nation back into recession if the new year arrives without an acceptable compromise.

How serious is the threat being leveled by the irresponsible Congressional Democrats? 'Taxmaggeddon' is real - and will have a major and immediate negative impact on the national economy....
The United States faces an economic collapse thanks to massive tax increases on Jan. 1, and continued deficit spending for years on end.

Keynesians worry about spending cuts and to some extent the expiration of the temporary 2% payroll tax cut. But the looming expiration of the Bush tax rate cuts along with new levies enacted as part of ObamaCare pose the greatest threat.

The breadth of what will hit the country is extraordinary. The top federal rate on personal income will increase to 39.6% from 35%, with an additional 0.9% increase in the payroll tax for Medicare. The highest federal rate on dividends will increase to 43.4% from 15%, and the tax rate on capital gains will increase to 23.8% from 15%.

The rates on capital income are rising because of the expiration of the Bush tax cuts, and a 3.8% tax on investment income for the highest earners enacted as part of ObamaCare. As happens almost every year, there is a large scheduled expansion of the Alternative Minimum Tax (AMT) to ever-lower levels of income. The highest estate tax rate is scheduled to rise to 55% from 35%, with the lifetime individual exemption dropping to $1 million from $5 million. Meanwhile, tax rates will rise in many states.

In all, federal tax increases total almost $500 billion (over 3% of GDP) per year on a static-revenue basis. And that's not counting the $1 trillion, 10-year increase in excess spending over tax receipts in the ObamaCare legislation. Given that many of the new taxes are rate increases at the margin, they will affect incentives to earn additional income. Thus it is a certainty that we face a lower level of output in 2013.

The blunt reality is that we cannot have a prosperous economy when government is overspending, raising tax rates, printing too much money, overregulating and restricting the free flow of goods and services across national boundaries.

Yet, when it comes to the economic policies of leading Democrats, from Barack Obama to Harry Reid, wealth apparently isn't created by the private sector or individuals, it's done by the government. Overspending, increasing tax rates, over regulation, and restricting trade are responsible actions to ensure 'fairness'.

Harry Reid, the Senate Majority Leader has announced that his Senate will continue to shirk it's responsibilities regarding the nation's finances for yet another year...
After failing to pass a budget for three years, he announced last week that he won’t be passing most appropriations bills by the end of the fiscal year, Sept. 30.

That means that most federal departments won’t be funded, except under stopgap “continuing resolutions,” until Congress returns for a post-election lame-duck session — when, inevitably, a cumbersome, hugely expensive “omnibus” bill will be rammed through.

It’s not the first time Congress has done this, but it’s still a major black eye for Reid, who seems a “leader” in name only.

Did you realize that yesterday, July 15, 2012, was 'Happy Cost of Government Day'?

Everything you earned from January 1 through July 15 went to cover the sum of your share of the cost of government for 2012.  This year, it took 197 days for each of us to pay off the burden of federal, state, and local taxes - 88 days for federal spending, 69 days for the regulatory burdens, and 40 days for state and local government spending.

But we should be happy, it's down a few days since the peak of 2009-2010 - which, coincidentally, was prior to the GOP landslide of November 2010 and taking back control of the House of Representatives.

Unfortunately, this is not a joke.

When asked to define his 'proudest achievement' during his first term in office, the President did not name the passage of Obamacare or the Dodd / Frank banking reform legislation. No, his 'proudest achievement' is the economy.

Imagine you are one of the leaders of the Barack Obama reelection campaign... You look at the $100 million your campaign has spent since late April, all in key battleground states, and all hammering the GOP Presidential candidate Mitt Romney. You've outspent him by a 4 to 1 margin in those states over that timeframe - attacking the GOP candidate on his tenure at Bain Capital, his wealth, his lifestyle, and his refusal to release more than just one year of tax returns.

You can ignore the actions of some reliably supportive news organizations like the Washington Post, CNN, and about half a dozen others who have called out this barrage of attacks on Mitt Romney as 'demonstrably false'. You could focus on the domination of these attacks on the front pages of newspapers and saturating television news. But there is something that you can't ignore - the polls.

When one looks at the polls after this massive effort, virtually every one showing that on a national basis and within the battleground states, the race remains effectively a tie - within the margin of error in almost every case from every pollster. As bad as this might seem after the massive $100 million campaign - there comes two more facts that are hard to ignore or downplay.

One is that the financial / fundraising advantage the President's campaign once had is rapidly disappearing. Despite having had nearly 180 fundraisers since the campaign kicked off, your campaign was outraised by the Romney campaign by $16 million in May and $35 million in June. Grassroot fundraising efforts are far behind that of the 2008 campaign. The campaign will be very unlikely to maintain the current burn rate of spending - and that rate of burn delivered no real gain.

The Rasmussen Reports daily Presidential Tracking Poll for Monday shows Mitt Romney attracting 46% of the vote, while President Obama earns 44%. Five percent (5%) prefer some other candidate, and five percent (5%) more are undecided.

But there still remains another very disturbing element about many of these polls - they are skewed - and skewed in favor of your candidate. Even with the skew, as large as +12 Democrat, your candidate does not have a commanding lead. The National Review's Campaign Spot blog, by Jim Geraghty, notes this about the Democrat skewed polls...
On another polling annoyance, I turn to your favorite punching bag PPP-D. Here is the trend with PPP-D. They do a terrific job polling our primaries (this is not sarcasm). Their closing polls are usually okay. But their tracks, should be involving a Republican versus Democrat race be viewed with healthy skepticism. The latest poll release in NC showing Obama +1 indicated a Democrat advantage of +12. I don’t know what they are smoking over there but I want some (just kidding) . . .

As I tracking every public poll, I have found it amazing on how many pollsters are oversampling Democrats. On average, every poll is indicating a partisan ID similar to 2008. Based on my analysis, the average gap is +6.4% Democrat which compares to the +7% which was in 2008. Alas, for the RCP poll average to be correct you have to assume the self-identified party preference turnout will be similar to 2008, if the turnout is similar to 2004 or 2000 or 2010, Obama’s polling leads may as well be part of his “story telling.” For the pollsters that look at preference, Rasmussen has indicated that the self-identified party ID (for Adults – not likely voters) is about +1.4% Republican.

Based on my track if the election were held today Romney wins by 5 percentage points.

If the thought that November 2012 couldn't be a replay of November 1980 isn't running through the minds of Obama's campaign brain trust - then they are clearly overrated and incompetent.

And speaking of the President's campaign fundraising efforts, is it any surprise that this approach has turned out to be a complete failure?

Obama’s tasteless fundraising ploy of asking brides to request donations to his campaign in lieu of gifts is a total flop - President Obama’s bizarre marriage-theme fund-raising scheme — where he asks couples to request campaign donations from their guests in lieu of wedding gifts — has been a total flop.

The desperate initiative, dubbed “the Event Registry,” is being mocked by event planners and couples — and shows how desperate the Obama campaign is to keep up with GOP contender Mitt Romney’s fund-raising.

Campaign officials launched the initiative in late June, the same month Obama raised just $71 million compared to Romney’s $100 million.

The Chair of the Democrat National Committee, Debbie Wasserman-Schultz could not find a reason for Jews in America to support President Obama's reelection other than the President's position on abortion - which includes partial-birth abortion.
In an interview with Jewish Life Television (JLTV), Democratic National Committee chair Debbie Wasserman Schultz failed to provide a single reason for Jewish voters to support President Barack Obama other than abortion, which she cast as somehow intrinsic to the values of the Jewish community.

The Department of Homeland Security, very quietly late last week, finally 'agreed' to let Florida use a law enforcement database to challenge people's right to vote if they are suspected of not being U.S. citizens.
The agreement, made in a letter to Florida Gov. Rick Scott’s administration that was obtained by the Associated Press, grants the state access to a list of resident noncitizens maintained by the Homeland Security Department. The Obama administration denied Florida’s request for months but relented after a judge ruled in the state’s favor in a related voter-purge matter.

MSNBC.COM is no more.

The internet partnership between Microsoft and NBC is officially over as NBC is paying $300 million to Microsoft for it's stake in the website and regaining full control. NBC has announced that the site will be immediately rebranded as

Reports are that the ending of the partnership after 16 years was initiated by Microsoft after concerns that the site, like the MSNBC cable network, was becoming too left wing and tainting the Microsoft brand.
Microsoft, in particular, had grown frustrated by contract terms requiring it to exclusively feature content on its own websites. That exasperation was exacerbated by the MSNBC cable channel's strategy to counter Fox News Channel's appeal to conservative viewers by tailoring its programming for an audience with a liberal viewpoint.

The strategy fed a perception that material from MSNBC's website was politically slanted, too.

"Being limited to content was problematic to us because we couldn't have the multiple news sources and the multiple perspectives that our users were telling us that they wanted," said Bob Visse, general manager of

NBC News wasted little time to announce the new head for - or addressing concerns of a political slant....
Proving that no misdeed goes unrewarded on the left, reports have it that once Microsoft and NBC News break up housekeeping and put an end to in its current form, the resulting new Internet outlet will be getting a new chief. And that new chief will be none other than Vivian Schiller, the disgraced former head of National Public Radio (NPR).

You may remember Vivian Schiller for her bungled firing of the NPR commentator Juan Williams back in 2010.

The Juan Williams mess wasn't the only thing that Schiller mishandled while chief of NPR. She was also involved in the tap dancing the publicly funded radio outlet performed when independent journalist James O'Keefe plied an undercover camera that caught NPR execs agreeing to take millions in donations from what they understood to be the Muslim Brotherhood, as well known terror outfit from the Middle East.

There were a number of stories last week in the press contrasting the economic results of states that were led by Republicans versus the economic results of states that were dominated by progressive Democrats. Among these were reports that every one of the states with GOP Governors, like Wisconsin under Scott Walker, Texas under Rick Perry, or Florida under Rick Scott, had major drops in their unemployment levels in response to the statewide policies these conservatives implemented. highlights a stunning example of media bias by the Associated Press (shocking, I know) in a report where they actually claim that these GOP Governor's have an 'awkward task' of explaining their success, while not addressing the failures of Democrat controlled states.
The Democratic governors' concerted effort to impugn Republicans' motives suggests Democrats may seek to assign blame to Republicans for a weak economy, rather than working to convince voters that the economy is improving under Obama and just needs more time. But that argument is a double-edged sword for Democrats, because it forces them to fully confront economic realities - including an unemployment rate that is hovering at 8.2 percent nationally. No president has been re-elected with the unemployment rate above 7.2 percent.

On the other hand, Republican governors face the awkward task of touting growth in their own local economies while arguing that progress has come despite - not because of - Obama's leadership.

Just what is the economic record of Illinois? New York? Connecticut? North Carolina? Or California....which is the model for what will happen to America without conservative Republicans...
But what would America look like if the Republican "fever" did break?
We already know. It would look a lot like the state of California, where no non-cyborg Republican has been governor since 1996. Democrats have also enjoyed complete control of the state legislature since 1997. And they have governed exactly the way you'd expect Democrats to govern.

Spending has more than doubled, from $45.4 billion in 1996 to more than $92.5 billion today. Income, sales and car taxes have all been hiked. As a result, California has the most progressive income tax system in the nation, with seven income tax brackets, and the second-highest top marginal rate.

At 10.8 percent, California has the third-highest unemployment rate in the country. There are fewer private-sector jobs in the state today, 11.9 million, then there were in 2000, 12.2 million.

And thanks to liberal welfare requirements, a third of all the nation's welfare recipients live in California despite the state only containing one-eighth of the national population.

Contrast those numbers with Republican-controlled Texas, where private-sector jobs have grown from 7.8 million in 2000 to 9 million today.

…The California dream is dead. Democrats killed it. Middle-class families can't escape the state fast enough.

Besides, if the success in the GOP led states were because of President Obama's economic policies, why wouldn't we be seeing substantial improvements across all states, and not just in the GOP states?

Today in History

1918 - In Yekaterinburg, Russia, Czar Nicholas II, his family, and four servants are executed by their Communist captors.

1945 - At 5:29:45 AM local time, the Manhattan Project comes to its end as the first atomic bomb is successfully tested at Alamogordo, New Mexico. The explosion was equal to the destructive power of 15,000 to 20,000 tons of TNT and sent a mushroom cloud 40,000 feet into the morning sky.

1969 - Apollo 11 is launched from Cape Canaveral, Florida on the first U.S. lunar landing mission. The craft would enter lunar orbit on July 19th after traveling 240,000 miles in 76 hours.

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