Friday, July 6, 2012

Quick Hits - July 6, 2012

The U.S. economy, entering its third 'recovery summer' added a net of 80,000 new jobs during the month of June, well below the revised expectations of 100,000 to 120,000 jobs.  The number is also below the number of new jobs that need to be created each month to cover the growth of the United States population.

The Bureau of Labor Statistics, continuing to 'cook the books' regarding jobs numbers reports that the 'official' unemployment rate remained steady at 8.2%.  This is done via the labor participation rate.  This rate is dropping, and remains at the lowest level in the past thirty years - and significantly lower than when President Barack Obama took office in January 2009.

James Pethokoukis, writing at the American Enterprise Institute, takes these latest numbers and puts them into perspective...

This continues to be the longest streak — 41 months — of unemployment of 8% or higher since the Great Depression. And recall that back in 2009, Team Obama predicted that if Congress passed its $800 billion stimulus plan, the unemployment rate would be around 5.6% today.

Just 75,000 jobs were created, on average, per month in the second quarter vs. 226,000 in the first quarter. And for the year, monthly job creation has averaged just 150,000 vs. 153,000 last year. Both numbers are extremely weak.

But those top-line numbers actually overstate the health of the labor market.

– If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today—the U-3 unemployment rate would be 10.9%. Even if you take into account that the LFP should be declining as America ages, the unemployment rate would be 10.5%.

– The broader U-6 unemployment rate, which includes “all persons marginally attached to the labor force, plus total employed part time for economic reasons,” is 14.9%, up a bit from May.

– The average duration of unemployment ticked up to 39.9 weeks.

– It will take 219,000 net new jobs a month for unemployment rate to be below 8% on Election Day if current participation rate holds steady.

– Job growth during the three-year Obama recovery has averaged just 75,000 a month for a total of 2.7 million. During the first three years of the Reagan Recovery, job growth averaged 273,000 a month for a total of 9.8 million. If you adjust for the larger U.S. population today, the Reagan Recovery averaged 360,000 jobs a month for a three-year total of 13 million jobs.
Unfortunately, there is more grim news in this latest jobs report, and job growth at it's lowest levels in the past quarter since 2010.

Almost one third of the new jobs created in June within the private sector were at temporary employment firms...
BLS reported that Business and Professional Services created 47k jobs in June, almost 6-in-10 of the total jobs created. Over half of these, though, 25k, were at temporary employment firms. This means that almost one-third of the jobs created were are temp agencies, a clear sign that employers remain hesitant about expanding their payrolls.

Here's even worse news.

More new people were added to the government's disability program in June, 85,000, than net jobs were created. Record numbers of people are currently in the federal government disability program. Since the technical end of the recession in June 2009, 3.1 million were added to the disability program. According to the BLS statistics, since this same time frame, 7.3 million Americans dropped out of the labor force - and we're seeing many of these attempt to qualify as disabled in order to get government funds.

Under President Barack Obama, the unemployment level has been above 8% for 41 consecutive months.  To put this into perspective, in the previous 60 years, the unemployment rate topped 8% only for a TOTAL of 39 months.

Markets are not responding to these continued poor job creation numbers as the Dow Jones Industrial is currently down 170 points.

In the spring of 2009, when making the case for the passage of the nearly $850 billion dollar stimulus program, the WH promised that unemployment would not exceed 8% unemployment levels if the stimulus was passed.  They further promised, by this point in time, we would have an unemployment rate of 5.5%.  If we ignore the efforts of the Administration around cooking the books, we're at 8.2% and 10.9% if the labor participation rate today was at the same level as in early 2009.

Yet, we're told by the WH and President Obama that the promised recovery will take more time, perhaps up to a decade more.  All the American people need to do is reward Barack Obama with a second term in office.

Drew M, writing at Ace of Spades, reminds us that in 2004, then state Senator Barack Obama was attacking President George W. Bush's job creation record...
That's 8 years ago to the month compared to today's job numbers. Let's see how Bush and Obama stack up at the same point in their terms, shall we?

How many jobs did the economy created in June of 2004? 112,000 (pdf). This was actually down from previous months. It's actually impressive considering the unemployment rate was...5.6% and had been for much of that year (it's harder to get big job growth when unemployment is relatively low).

Obama actually said that today's awful job numbers are "a step in the right direction".

So to recap...112,000 jobs and 5.6% unemployment was killing the middle class but 80,000 jobs (when there's clearly a job shortage) and 8.2% unemployment is "a step in the right direction".
Heritage Foundation's Morning Bell reminds us that with this faltering economic 'recovery', now at a post war record in terms of being the slowest recovery, will collapse even further as we look forward to January 1, 2013 and the effects of 'taxmageddon' - when a combination of expiring tax cuts and tax increases, including those from Obamacare, hit to the tune of nearly $500 billion in 2013 alone.  Or, to put this in a way where middle class and low income American families can better understand - the average American family will pay $4,138 more in taxes in 2013 than they are paying in 2012 if nothing is done.

Are you actually expecting something to be done?  It's June.  'Taxmageddon' is 6 months away - and no, one, in particular President Barack Obama is doing anything.  The Democrat controlled Senate hasn't passed a budget in what is closing in on 3 1/2 years.  Harry Reid isn't pushing for action.  Neither is Barack Obama despite his presidential campaign.  Nor is he likely since his 2013 budget, which was unanimously defeated in both the House and Senate, called for $2 trillion in additional tax increases on top of 'Taxmageddon'!

Instead, the President continues on his 2 day bus campaign tour through Ohio and Pennsylvania - two states that he won in 2008, but are in play as battleground states this November.  Riding his Canadian built bus, he continues to hammer Mitt Romney on the false meme that during his tenure at Bain Capital, Romney was a major oursourcer of US jobs overseas.  (Even the WaPoo's Glenn Kessler gave this claim 4 pinochio's as been reported in QH before.)

While on the tour, President Obama took a cheap swipe at Fox News.  Entering a bar in Amherst, Ohio, and being told that the bar was airing Fox News on it's televisions for patrons, Obama suggested a customer demand that the channel be changed - because 'the customer is always right'...

Senior Obama aide, Valerie Jarrett, also took a swipe at the number 1 cable news network, blaming Fox News for creating the impression that the Obama Administration is waging class warfare against the wealthy in the U.S....

ISAACSON: Sounds like a great vision. But so many businessmen and others have said that the message has become one of class warfare, attacking the rich, attacking people who make a profit, people who make jobs. Why is that that tone has been set, that people believe that this is a class war?

JARRETT: Well, they may be watching one particular network.


When not taking shots at the number 1 ranked cable news network, the 'Narcissist in Chief' was busy spiking the football on the SCOTUS ruling on Obamacare....

Boasting that 'The law I passed is here to stay!' This is as his own staff (in particular WH Press Flack Jay Carney) continues to try to rewrite Supreme Court Chief Justice John Robert's rewriting of the Obamacare legislation to rule the Individual mandate a tax, and therefore constitutional under the taxing authority given to Congress by the U.S. Constitution.  
From the moment the Supreme Court rewrote Obamacare's individual insurance mandate as a "tax," the Obama White House began pushing back, even though the "tax" label is all that saved the law from destruction. But on Thursday, the White House took its denial to a degree of "verbal wizardry" and "sophistry" not seen since Chief Justice John Roberts' baffling decision. 
In defending the law, White House press secretary Jay Carney has moved from merely misrepresenting the law's effect to mischaracterizing the very Supreme Court decision that upheld it. "[I]t is simply a fallacy to say that this is a broad-based tax. That's not what the opinion stated that was authored by the chief justice. The [Patient Protection and Affordable Care Act] is constitutional under Congress's taxing authority, but this is clearly a penalty that affects less than 1 percent of the American population." 
In fact, Roberts repeatedly called the mandate a tax in his decision to uphold it. "[T]he shared responsibility mandate may for constitutional purposes be considered a tax, not a penalty," Roberts wrote, before concluding, "It is reasonable to construe what Congress has done as increasing taxes on those who have a certain amount of income, but choose to go without health insurance." 
…The reason President Obama cannot embrace the court's opinion, as favorable as it was to Obamacare, is that he promised not to raise "any" tax on the lower or middle classes during his 2008 campaign. He then quite explicitly insisted during the health care debate of 2009 and 2010 that the mandate was not a tax. As he told ABC's George Stephanopoulos, "I absolutely reject that notion."

As noted previously, there are over 21 new taxes included within Obamacare, and many of which will hit particularly hard those American families earning $120,000 or less. The GOP continues, not withstanding the statement of knucklhead Eric Fehrnstrom, to push for the repeal of Obamacare as 'Day One, Job One' - calling the bill a bloated massive tax and spending bill that continues to fail to gain the support of the majority of Americans.

Senate Minority Leader Mitch McConnell, who has detractors concerned about his commitment towards repeal, is reminding the American voters that not one Republican in the Senate or House voted for Obamacare - and all are committed to the repeal of the bill and the passage of smaller, measured, and targeted legislation to address not only healthcare reform, but the immediate need to reform Medicare and Medicaid to restore them to fiscal solvency.

Jay Cost, in his column today on the Weekly Standard blog, highlights that Obamacare, as a bill, is a house of cards - built on progressive assumptions that could quite easily [and likely] fail to be realistic and match reality.  If that is the case, then this bill becomes an even bigger albatross around the national economic neck. Among the assumptions that Cost indicates are most at risk...
  • What if the Individual mandate results in more than 1% of the population not getting the coverage until they need it - preferring to pay the tax as opposed to health insurance premiums?  What will then happen when they obtain their insurance only when they are sick and needing treatment?
  • What is the impact of employers dropping insurance coverages en masse knowing that the employees can get coverage via the Obamacare exchanges - and the employers saving significant amounts of money?  The bill assumes that this will not happen, but signs are out there that over one third of the nation's employers may do just this.
  • Can Medicare be cut by the $500 billion that Obamacare does without undermining the quality of care?  The Democrats say yes - but the reports from the Centers for Medicare and Medicaid is doubtful.  This is even before the fiscal effects are considered on the double counting of the $500 billion on the fiscal impact of the bill or states rejecting the expansion of Medicare costs to their coffers.
  • Can Medicare handle 15 million new recipients - and 15 million new patients?  What about the quality of their care?  Doctors are already hesitant to accept Medicare patients because the program pays so poorly - and payments are scheduled to drop further.
  • How can one drastically increase the number of people demanding medical services without a corresponding increase in the supply of services without a huge spike in prices.  Democrats say that, yes, this can happen - but Economics 101 says, No it will not happen.

Looking at this rundown of 'features', and it is appearing more and more that the primary purpose of Obamacare was to a) have the federal government take the first major steps to seize control of 1/6th of the national economy, and b) create the conditions (via planned failure) for a single payor government run healthcare system in the model of Britain's National Health Insurance.

Both the Wall Street Journal's Kimberly Strassel and Washington Post columnist Charles Krauthammer are looking at the President's record and noting the same common thread - the Imperial Presidency of Barack Obama...
Krauthammer's column focuses on the condition that the President can apparently not distinguish the difference between policy and the law.  He focuses at the Administration's response to Arizona's SB1070 illegal immigration legislation...
Consider this breathtaking cascade: An administration violates its constitutional duty to execute the law by deliberately refusing to enforce it. It then characterizes its non-enforcement as simply establishing priorities. It then tries to strike down a state law on immigration on the grounds that it contradicts federal law — by actually trying to enforce it!
Strassel, on the other hand, looks at this as being standard operating procedure for Barack Obama...
For example, Congress refused to pass Mr. Obama's Dream Act, which would provide a path to citizenship for some not here legally. So Mr. Obama passed it himself with an executive order that directs officers to no longer deport certain illegal immigrants. This may be good or humane policy, yet there is no reading of "prosecutorial discretion" that allows for blanket immunity for entire classes of offenders.
Mr. Obama disagrees with federal law, which criminalizes the use of medical marijuana. Congress has not repealed the law. No matter. The president instructs his Justice Department not to prosecute transgressors. He disapproves of the federal Defense of Marriage Act, yet rather than get Congress to repeal it, he stops defending it in court. He dislikes provisions of the federal No Child Left Behind Act, so he asked Congress for fixes. That effort failed, so now his Education Department issues waivers that are patently inconsistent with the statute.
Similarly, when Mr. Obama wants a new program and Congress won't give it to him, he creates it regardless. Congress, including Democrats, wouldn't pass his cap-and-trade legislation. His Environmental Protection Agency is now instituting it via a broad reading of the Clean Air Act. Congress, again including members of his own party, wouldn't pass his "card-check" legislation eliminating secret ballots in union elections. So he stacked the National Labor Relations Board (NLRB) with appointees who pushed through a "quickie" election law to accomplish much the same. Congress wouldn't pass "net neutrality" Internet regulations, so Mr. Obama's Federal Communications Commission did it unilaterally. 
In January, when the Senate refused to confirm Mr. Obama's new picks for the NLRB, he proclaimed the Senate to be in "recess" and appointed the members anyway, making a mockery of that chamber's advice-and-consent role. In June, he expanded the definition of "executive privilege" to deny House Republicans documents for their probe into the botched Fast and Furious drug-war operation, making a mockery of Congress's oversight responsibilities. 
This president's imperial pretensions extend into the brute force the executive branch has exercised over the private sector. The auto bailouts turned contract law on its head, as the White House subordinated bondholders' rights to those of its union allies. After the 2010 Deepwater Horizon oil spill, the Justice Department leaked that it had opened a criminal probe at exactly the time the Obama White House was demanding BP suspend its dividend and cough up billions for an extralegal claims fund. BP paid. Who wouldn't? 
And it has been much the same in his dealings with the states. Don't like Arizona's plans to check immigration status? Sue. Don't like state efforts to clean up their voter rolls? Invoke the Voting Rights Act. Don't like state authority over fracking? Elbow in with new and imagined federal authority, via federal water or land laws.

Krauthammer's summary, however, is the real takeaway - and reminder for voters come November...
The Republican presidential campaign centers on the ineffectiveness of this administration: failure at home, passivity abroad. A fine electoral strategy. But as citizens, we should be grateful. Given the administration’s extravagant ambitions, incompetence is its saving grace.

Did you know that the US Navy is going green?
The U.S. Navy has started going green under the direction of Obama’s Secretary of the Navy Roy Mabus. They started using a special “green fuel” for their “Great Green Fleet,” which will be tested this month while completing its Rim of the Pacific exercise. Unfortunately, this green project already reflects the worst aspects of the Obama Administration’s green agenda. The fuel being used by the “Great Green Fleet” is colossal waste of taxpayer money. 
The standard aviation fuel used by the Navy $3.60 a gallon. The “green fuel,” made from things like algae, chicken fat, and seeds, costs $26 a gallon. Rob Port of Say Anything Blog further highlights the absurdity of the Navy’s “green fuel” project:
The article reports that Obama’s Secretary of the Navy Ray Mabus calls the “green fuel” “vital for the military’s energy security.” 
Apparently Mr. Mabus hasn’t heard that there is an energy boom happening in this country right now, with entire oceans of reserves of oil and natural gas being opened up by new production techniques and favorable market conditions. 
“Peak oil,” or the idea that we’re going to run out of oil, is a notion that has been thrown on the scrap heap by the innovators in the fossil fuel energy industry. Yet, the “peak oil” nonsense is still the driving force behind this expensive boondoggle.  
Your tax dollars, hard at work.

Such a deal - rather than paying $3.60 a gallon, let's pay $26 a gallon. Would you do that for your own car? Nice to know green fuel works, but how about letting the private sector work on figuring out how to produce it so that it costs no more than, say, $4 a gallon before we start requiring its use.

Reflecting the same inane governmental logic, we have California. This is a state with between $16 billion and $25 billion annual budget deficit.  (With the accounting gimmicks used, it's tough to tell which is the 'real' number.)   This deficit is getting worse, not better as California's economy continues to be one of the worst of the 50 U.S. states.  

Faced with this deficit, Governor Jerry 'Moonbeam' Brown is demanding that state voters in November pass an additional $7 billion in new taxes - threatening additional cuts to essential state services if it is not passed.  (But never a thought towards eliminating duplication, waste, or enriching the public sector unions.)

It is in this environment that the State Assembly, on a purely party line vote, passed a plan to borrow $7.9 billion for the construction of the biggest of the state's boondoggle's - the $68 billion to $98 billion High Speed Rail Network.  It's immaterial to the Democrats supporting this folly that the program is based on a unrealistic and unviable business plan.

It's immaterial to these same Democrats that the state cannot afford the program, and there remains not one single private investor willing to step forward and begin to contribute the nearly one third of the costs private investors are supposed to provide.  They don't even know if more federal funds are forthcoming given the national fiscal troubles Barack Obama has placed the country in.  None of that matters. Governor Moonbeam wants a high speed rail network that no one will ride.  The unions that fund Governor Moonbeam wants a high speed rail network as they will pocket many of those billions being spent.

California is now equal to Greece + Spain.

Reversing course, Greece has decided to honor the terms of the bailout agreement, dropping their demands to renegotiate the deal...

Spanish bond yields soared back above the critical threshold of 7% on Friday - reflecting that the nation is still in great fiscal trouble...

About 160 academics published a petition Thursday calling on German citizens to put pressure on Chancellor Angela Merkel to block any further moves toward European integration that would make German taxpayers foot the bill for the debts of other euro-zone countries.

The petition specifically hits out at Ms. Merkel's concessions to other euro-zone governments at a summit of European leaders last week. In all-night negotiations, Ms. Merkel, under pressure from Italy and other southern European countries, agreed to create a European banking union, and make it easier for countries to tap the euro-zone bailout funds to prop up weak banks and buy government debt. In exchange, Ms. Merkel won an agreement to put major European banks under the supervision of the European Central Bank.

"The chancellor found herself forced to make decisions at the European Summit that are wrong," the authors wrote in the letter, which has been seen by The Wall Street Journal. "Banks should be allowed to go bust. In the event that debtors can't pay anymore, there is only one group that should be responsible for it—the creditor."

Is Barack Obama pathological?

“The thing that I want everybody here to understand – each of you personally — is that back in 2008, everybody said we couldn’t do it because we were outspent,” he said during a 4.12 p.m. speech in Sandusky, Ohio.

Today in History

1944 – A fire breaks out under the big top of the Ringling Bros. and Barnum & Bailey circus, killing 167 people and injuring 682. Two thirds of those who perished were children. IN 1950, an arsonist, Robert Segee confessed to starting the fire and was convicted of arson. He was sentenced to 2 consecutive terms of 22 years in prison for the crime, the maximum penalty at the time in Ohio.

1971 – Louis Armstrong dies at the age of 69

1988 - An explosion devastates Occidental Oil’s Piper Alpha offshore oil-rig in the North Sea, killing 167 oil workers.

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