Chuck Schumer: "The Public Knows In Its Gut" Only Government Can Help Middle Class

There is one way that Democratic Senator Schumer is correct here.   If you accept that we have the highest tax rates in the world and a huge regulatory burden and that those are reducing investments and thus wages. then "yes" there is something that government can do: get out of the way, 

. . . As 2014 began, the parties were in stalemate. But, when government failed to deliver on a string of non-economic issues: the rollout of the Obamacare exchanges and the mishandling of the surge in border crossers, the ineptitude of the VA, the initial handling of the Ebola threat, people lost faith in government's ability to work, and then blamed the incumbent governing party, the Democrats, creating a Republican wave.  

Ultimately, the public knows in its gut that a strong and active government is the only way to reverse the middle class decline and help revive the American Dream. Democrats lost in 2014 because the government made mistakes that eroded the electorate's confidence in its ability to improve the lives of the middle class. . . . .

There seems to be a lot more controversy over Schumer's crass comments about whether the Democrats should have done Obamacare rather than focusing on the economy.  What Schumer missed with these comments is that Obamacare actually made a lot of people worse off.  It increased health insurance costs, but subsidies hid those increases from many.

US GDP growth falling farther and farther behind trend as the Obama recovery continues

Click on figure to make it larger.

With the final measure of GDP growth during the first quarter of 2013 just being released (2.6%), I thought that I would graph out how GDP growth has preformed during the Obama "recovery."  As economists know, during previous recoveries GDP growth grows much faster than the trend growth rate until GDP growth catches back up to trend.  This is the first recovery where that isn't the case.  As you can see from the above figure, GDP growth in the current recovery keeps growing more slowly than the trend rate.  

Real GDP increased by only a paltry 1.9 percent in 2013.  It was down from the already weak 2.8 percent in 2012.

Cash for clunkers didn't help economy or improve environment, just made us poorer

This study sees to ignore the fact that "Cash for Clunkers" made the country poorer by destroying perfectly good cars, but it at least makes two other useful points.  From Fox News:

In fact, the Car Allowance Rebate System (CARS) known as Cash for Clunkers, did little to help the environment and was “far more expensive per job created than alternative fiscal stimulus programs,” according to new research led by Ted Gayer and Emily Parker of Brookings. . . . 

“The existing evidence also suggests that these sales were pulled forward from sales that would have occurred otherwise in the future,” Gayer and Parker said. “Ten months after the end of the program, the cumulative purchases from July 2009 to June 2010 were nearly the same, showing little lasting effect.” 

Americans traded in 700,000 “clunkers” between July 1 and Aug. 24, 2009, according to Brookings. . . . 

The environmental gains made through the program weren’t all that impressive either, according to the study. . . . 

Total emissions reduction was not “substantial” because “only about half a percent of all vehicles in the United States were the new, more energy-efficient CARS vehicles.” . . .

On this last point, suppose that fuel economy increased by 25 percent for these new cars and that the program did have an impact on cumulative purchases, the impact would be about 0.1% on energy use.  Now recognize that it cost energy to produce those new cars and to destroy the old ones and the benefit is some tiny fraction of 0.1%.

Comments on "Booming oil production boosted GDP estimate, White House advisers say"

First let me say that 2.5% growth in GDP is too slow.  As the above figure indicates, trend real GDP growth from 1965 to 2007 was 3.103%.  Wow, big celebrations when for one quarter GDP growth rises to 80% of the normal trend growth rate!  Of course, everything is relative and the first quarter had growth of only 1/3rd the trend.  As the figure shows, for the first time in a recovery, we are falling further and further below the trend.  Yet, the Obama administration is crowing over what is responsible for this great news.  From The Hill newspaper:

Two of President Obama’s top economic advisers are crediting increasing petroleum production with the rosier estimate for second quarter economic performance announced this week. . . . 

The United States petroleum trade deficit hit a record low in June as booming domestic oil production displaced imports and exports of refined petroleum products increased. 

That played a significant role in revising U.S. gross domestic product growth in the second quarter to 2.5, up from 1.7 percent, said Furman and Sperling. . . .

Ironically the day before the GDP numbers were released The Hill newspaper had this story:

Four senators – two from each party – say President Obama should not allow a State Department inspector general (IG) probe of the Keystone XL pipeline review process to further delay a final permit decision. 

The IG recently said its review of the department's selection of a contractor analyzing the project would bleed into 2014, raising the prospect that a federal permit decision could await the outcome. 

Sens. John Hoeven (R-N.D.), Mary Landrieu (D-La.), John Thune (R-S.D.) and Max Baucus (D-Mont.), all pipeline backers, together issued statements Thursday criticizing the potential for more delays in the five-year federal review. 

“This tactic of delay and deferral must stop. It is depriving America of jobs, hurting the American economy and hurting the American people,” Hoeven said in one of the statements, which underscore efforts by pipeline backers to keep political pressure on the White House. . . . 

“We cannot sit by while excuse after excuse delays jobs in Montana and across the country,” Baucus said. “We've had years of studies and the President's own State Department has repeatedly concluded the environment won't be harmed. It's past time to put Americans to work building the Keystone pipeline.” . . . 

Is the Obama administration claiming credit for the growth from increased oil output just a little too ironic?

How bad were things even two years into the "recovery"? New info from the Census

From the US Census's America's Families and Living Arrangements: 2012:

States experiencing a larger-than-average increase in families with an unemployed parent between 2005 and 2011 included Nevada (148 percent), Hawaii (95 percent), Florida (93 percent), Connecticut (65 percent), New Jersey (63 percent), California (61 percent), Colorado (56 percent) and North Carolina (54 percent). Estimates for many of these states do not differ from one another. 

The recession affected families in other ways as well. For instance, 24 percent of married mothers with children under 15 were stay-at-home parents before the recession began in 2007. The rate dropped to 23 percent in 2009 and only returned to its prerecession level in 2012. On the other hand, the percentage of married fathers who were stay-at-home parents remained unchanged between 2006 and 2010, then rose slightly in 2011 and 2012 to a higher rate than prior to the beginning of the recession. The percentage remains below 1 percent, however. 

Furthermore, the number of householders with children under 18 who owned their home declined by 15 percent to 20.8 million between 2005 and 2011. In parts of the country, this decline was even sharper. 

Over the same period, the six states with among the steepest drops in homeownership among households with children were Michigan (23 percent), Arizona (22 percent), California (22 percent), Ohio (20 percent), New Hampshire (19 percent) and Florida (19 percent). Estimates for many of these states do not differ statistically from one another. . . . .

Biden thinks that the recovery is doing well enough that he can run for president in 2016 based on the recovery

From the WSJ.com:

Biden allies believe he could run on some of the accomplishments Mr. Obama notched over two terms. If the economic recovery continues, Mr. Biden could run on the basis that he was a partner in combating the recession. Unemployment hit 10% in the first year of Mr. Obama's term and as of July was down to 7.4%. 

"My guess is it would be a legacy campaign, continuing to build on the success they've had in the administration,'' Mr. Rasky said. . . . 

"Obama’s approval rating on economy drops to 35 percent"

From The Hill newspaper:

A new poll finds President Obama’s approval rating on the economy dropping to 35 percent, even as he travels across the country delivering policy speeches and pushing proposals to boost job growth and investment.
The survey from Gallup, released Thursday, finds a 7-point drop in support for Obama’s handling of economic issues, down from 42 percent in June.
His rating on taxes and the deficit also dropped 5 points from last month’s poll. Thirty-six percent approve of Obama’s handling of tax issues and 26 percent approve of his approach to the deficit.
Gallup noted that Obama’s ratings on the economy fell alongside a slide in Americans’ overall economic confidence over the same period.
The president’s overall approval dropped 3 points to 44 percent. . . .

Is California's $70 billion high-speed train obsolete before it is even built? A colossal waste of money?

With California and US taxpayers on the hook for $70 billion to build a train across the state starting this year, Elon Musk might have already made it a waste of money.  The government would have a slower, more costly way of moving people that few would want to use.  Musk isn't promising to make this system operate, but he is arguing that it could be done.  From Bloomberg Businessweek:

Almost a year after Elon Musk, chief executive of Tesla Motors (TSLA) and SpaceX, first floated the idea of a superfast mode of transportation, he has finally revealed the details: a solar-powered, city-to-city elevated transit system that could take passengers and cars from Los Angeles to San Francisco in 30 minutes. In typical Musk fashion, the Hyperloop, as he calls it, immediately poses a challenge to the status quo—in this case, California’s $70 billion high-speed train that has been knocked by Musk and others as too expensive, too slow, and too impractical. 

In Musk’s vision, the Hyperloop would transport people via aluminum pods enclosed inside of steel tubes. He describes the design as looking like a shotgun with the tubes running side by side for most of the journey and closing the loop at either end. These tubes would be mounted on columns 50 to 100 yards apart, and the pods inside would travel up to 800 miles per hour. Some of this Musk has hinted at before; he now adds that pods could ferry cars as well as people. “You just drive on, and the pod departs,” Musk toldBloomberg Businessweek in his first interview about the Hyperloop. . . .

How Obama's stimulus bill opened up the floodgates for food stamps making it extremely easy for people to qualify

Everyone should be outraged by this abuse of the food stamp program.  Obama's changes have made it so that this bum, Jason Greenslate, can "surf every day, it is wonderful man, just get away from everything and clear your head.  Get out with the boys and have a good time" on the taxpayer dime without having to be weighed down with a job (video is available here).  I would be interested in seeing anyone defend Obama's changes to the program after watching the video link.

Patrick Caddell describes how this video left him speechless.

Let me put it this way, my jaw hit the floor. Earlier this week I was able to screen a portion of this Friday’s Fox News documentary “The Great Food Stamp Binge,” hosted by Bret Baier. It airs Friday at 10 p.m. and Sunday at 9 p.m. ET on the Fox News Channel. This investigation focuses on a federal program called SNAP, or "Supplemental Nutrition Assistance Program." . . . 

All this change is a direct result of the Obama administration's surreptitious undermining of the law in the Stimulus Act in 2009 and the disingenuous gutting of President Clinton's overwhelmingly successful Welfare Reform law. This was achieved by administrative fiat in 2010. . . . 

Take this example, from "The Great Food Stamp Binge," of what is nothing short of social engineering or reeducation. In North Carolina social workers actually got an award for breaking down the “Mountain Pride” that makes some from that state reluctant or unwilling to take handouts.  They actively fought the tradition of tightening your belt and taking care of yourself when times get tough. . . .

Dramatic diagram: Pathetic GDP growth, first recovery to be falling further and further behind trend GDP

This has the latest update to the GDP numbers.  Click on figure to make larger.

The Real Unemployment Rates by State, and they are very high

Click on the above figure to make the figure larger.  This figure relies on what is called the U6 measure of unemployment, the rate that is most similar to how unemployment is measured in Europe.  Traditionally the unemployment rate in the US only says someone is unemployed as long as they are actively looking for work, but most of the recent drop in the unemployment rate is due to people giving up looking for work.  The U6 measure tries to take the number of discouraged workers into account, but even this measure isn't perfect as if the unemployed person is discouraged for more than a year even the U6 measure drops that person from the count.  Fourteen states have a real unemployment rate that is above 15 percent.  The data is from the Bureau of Labor Statistics.

Note the states that are doing the best are doing well no thanks to the current government policy.  North Dakota and to a lesser extent South Dakota are benefiting from the oil boom.

The real unemployment rates in Los Angeles and New York City are over 20 and 15 percent each.

Daily Caller piece: "Obama’s spending failure"

My piece starts this way:

According to President Obama, cutting government spending will “certainly slow our recovery.” Over and over again, he has described the sequester’s threatened $85 billion cut in spending out of a $3.8 trillion budget as “devastating.” But that represents a mere 2 percent cut in spending. Obama frightens people by pretending that the $1 trillion cut takes place right away rather than being spread out over 10 years. 

Sounds like more of the same. During the 2008 presidential campaign, Obama continually promised to “cut net spending” and make government smaller. The stimulus was promised not to “raise projected deficits beyond a short horizon of a year or at most two.” Yet, now during the fifth year of Obama’s presidency, we are told that we can’t cut spending, that we need even more government “investments.” . . .

Obama's state of the union heavy on Keynesianism

Well, given how well Keynesianism has been working out so far, it was understandable that Obama would keep pushing it further.  From The Hill newspaper:

The economy will remain Topic A, and Obama’s speech is expected to warn of the danger automatic spending cuts known as the sequester pose to a slowly improving economy. At the same time, Obama will give due weight to other priorities such as immigration and gun control. . . .

Keynesian claims about Sequestration

Will spending cuts really government spending cuts hurt the economy?  Yet, despite what Keynesians believe the evidence doesn't support that.  From The Hill newspaper:

A sharp decline in defense spending led the U.S. economy to contract at the end of 2012 by 0.1 percent, but it did little to change the fight over further cuts to the Pentagon set to begin in March. 

The White House used the report to lash out at Republicans, arguing the GOP should agree to a deficit-reduction package that includes spending cuts and tax hikes to replace the $85 billion in scheduled cuts known as sequestration. 

“Our economy is facing a major headwinds, and that's Republicans in Congress,” White House press secretary Jay Carney said. “It can't be 'we'll let sequester kick in because we insist tax loopholes remain in place for corporate jet-owners.' ” 

Republicans counter that they agreed to raise tax rates on households with annual income above $450,000 in a deal earlier this month and that they will not raise taxes again. Instead, they say President Obama must accept spending cuts. . . . .

"Voters pessimistic as Obama prepares for second inauguration"

Almost four years into a "recovery" and Americans are still uncertain about their economic future?

President Obama is entering his second term with many of the nation’s voters still pessimistic or unsure about their economic prospects, a new poll for The Hill has found. . . . 

Sixty percent say they do not expect to make major economic strides during Obama’s second term, compared to just 38 percent who expect to be better off in 2016.  

Despite the lingering pessimism about the trajectory of the nation’s economy, the poll does offer a silver lining for the president as he prepares to take the oath of office again — by a 2-to-1 margin, voters blame Congress, instead of him, for the nation’s woes. 

Fifty percent of those polled blamed Congress the most, compared to just 25 percent placing blame squarely at the feet of Obama. Another 10 percent apiece blamed voters and the media the most. . . .

Government subsidies keep being thrown away on green investments

Apparently, Delaware and the federal government have a lot of extra money to throw away.  From Fox News:

Delaware taxpayers appear to be getting soaked twice under a deal in which the Democratic governor loaned $21.5 million to a hybrid electric carmaker to set up shop in the state. The company has yet to produce a car in Delaware, and taxpayers are footing the electric bill for the idle plant.  

The deal was enthusiastically announced in 2009 by Gov. Jack Markell and Vice President Biden -- formerly Delaware's senior senator -- as a way to bring as many as 2,500 green jobs to the state. But California-based Fisker Automotive Inc. has since suffered a series of setbacks that have compounded its shaky financial situation.  

"It has not worked out the way he had envisioned," Markell spokeswoman Cathy Rossi acknowledged Monday in a statement to FoxNews.com. "We didn't know and couldn't have known about the underlying technical and financial problems."  

Delaware reportedly has paid at least $400,000 in utility bills since about April, when Fisker halted operations and laid off dozens of workers at the 142-acre, Wilmington-area facility. Markell staffers told The News Journal the payments are part of the grant deal and necessary to at least keep Fisker's small-scale operation on life support. . . . .  

However, in February the U.S. Energy Department stopped disbursements on Fisker's $529 million loan because the company purportedly failed to meet production and sales goals on its electric plug-in sedan, the Karma.  . . .

Can government ever divorce politics from its actions?: Requests to cut off aid to Michigan over Right-to-Work law

This is part of a series of similar comments that I should keep track of.  Here is what Michigan Senate Minority Leader Gretchen Whitmer has been suggesting:

“If this works out the way the Democrats would hope, here’s the scenario: Governor, if you sign the legislation, kiss that money goodbye. And if you nix it and veto it, well, guess what? We’ll open up the wallets and get you the money,” [WWJ Lansing Bureau Chief Tim Skubick] told CBS Detroit [when he described Whitmer's argument]. “Some people might call that blackmail. In politics we call it taking advantage of a situation.” 

Detroit-based WJR host Frank Beckmann condemned Whitmer’s remarks, calling her plan “outrageous.” 

“This should immediately disqualify her for any consideration to run for governor,” Beckmann said on the air. “Taking the interests of the entire state of Michigan, the entire region of Detroit, holding them hostage because you object to legislation that has passed in 23 other states and has caused great economic growth?” . . .

Obama interjects himself into the debate.

“I’ve just got to say this,” Obama said at the Daimler Detroit Diesel plant in Michigan before a small crowd of workers. “What we shouldn’t be doing is trying to take away your rights to bargain for better wages and working conditions. We shouldn’t be doing that. 

“You know, these so-called right-to-work laws, they don’t have to do with economics, they have everything to do with politics,” Obama added to applause and cheers from the crowd. “What they’re really talking about is giving you the right to work for less money.” . . . 

Leno: "Good News For The Economy, President Obama Is Out Of Town"

Updating the comparison between US and Canadian Unemployment Rates

Back in the middle of 2011 I provided this discussion available here.  As I noted, "the striking feature of this diagram is how the Canadian and US unemployment rates moved so incredibly similarly until after Obama's $830 billion "Stimulus" was passed."  Well, I have updated the numbers.

It looks like after the stimulus dollars ran out that the gap between the unemployment gap two countries got much smaller.

Bill Clinton: "It is true [the economy is] not fixed."

Bill Clinton at a campaign event in Ohio (October 18, 2012): "Governor Romney's argument is, we're not fixed, so fire him and put me in.  It is true we're not fixed. When President Obama looked into the eyes of that man who said in the debate, I had so much hope four years ago and I don't now, I thought he was going to cry. Because he knows that it's not fixed."