Tag Archives: Government Spending

News

Obama’s deficit for the last two months exceeds Bush’s entire 2006 deficit

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Story from Gateway Pundit. (H/T ECM)

Excerpt:

The Obama Administration is already $292 billion in the red this year.
This is more than the national deficit for the entire year of 2006 ($248 billion).
Not good.

President George W. Bush never did this.

Obama tripled the national deficit his first year in office and he’s off to a record-setting start in fiscal year 2010.

During the Bush years, despite the 2000 Recession, the attacks on 9-11, the stock market scandals, Hurricane Katrina, and wars in Iraq and Afghanistan, the Bush Administration was able to reduce the budget deficit from 412 billion dollars in 2004 to 162 billion dollars in 2007, a sixty percent drop. In 2004 the federal budget deficit was 412 billion dollars. In 2005 it dropped to 318 billion dollars. In 2006 the deficit dipped to 248 billion dollars. And, in 2007 it fell below 200 billion to 162 billion dollars. During the Bush years the average unemployment rate was 5.2 percent, the economy saw the strongest productivity growth in four decades and there was robust GDP growth.

Please read my previous post that features two Harvard economics explaining why massive government spending drives unemployment up. You can’t fix an economy with spending. You fix it with tax cuts, especially for businesses who hire people. For example, we could cut the employer portion of payroll taxes completely. (That idea is from a different Harvard economist)

There are people I know who voted for Obama because McCain and Palin would spend more. I asked them to look at voting records and ratings from groups advocating fiscal conservatism, like Citizens Against Government Waste, the American Conservative Union, and the Club For Growth. But they kept talking about Sarah Palin’s wardrobe, because that’s all they saw on MSNBC.

Commentary

What helps kids to learn? Parents, teacher unions or education bureaucrats?

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Christine Kim
Christine Kim

What’s the best way to help children do well in school?

On the one hand, social conservatives on the right favor the traditional family structure, complete with a father who lives in the home and is an involved parent. Parents have an incentive to help children do well in school because they are biologically linked to the children and they are paying all the bills at home. They are making sacrifices and they want to see some results.

On the other other hand, social liberals on the left favor raising taxes on working families, and funneling the proceeds to unionized public school teachers. Do teachers get paid more for improving the quality of education for students? Or do they get paid more for contributing to Democrats who will increase their salaries? Do they have an incentive to make children learn?

Parents vs teacher unions: Who does the best job?

Consider this research paper from Christine C. Kim of the Heritage Foundation, my favorite think tank.

Excerpt:

American taxpayers invest heavily in education. Last year, spending on public K–12 education totaled $553 billion, about 4 percent of gross domestic prod­uct (GDP) in 2006. For each child enrolled in a pub­lic elementary or secondary school, expenditures averaged $9,266 that year—an increase of 128 per­cent, adjusted for inflation, since 1970.

Despite this increase in public spending, student achievement and educational attainment over the last four decades has remained relatively flat. In 2007, a significant portion of students, disproportionately from disadvantaged backgrounds, scored “below basic” in reading and math on the National Assess­ment of Educational Progress (NAEP). Sadly, in many of the nation’s largest cities, fewer than half of high school students graduate.

While academic research has consistently shown that increased spending does not correlate with edu­cational gains, the research does show a strong rela­tionship between parental influences and children’s educational outcomes, from school readiness to college completion. Two compelling parental factors emerge:

  1. family structure, i.e., the number of parents living in the student’s home and their relationships to the child, and
  2. parents’ involvement in their children’s schoolwork.

Consequently, the solution to improving educa­tional outcomes begins at home, by strengthening marriage and promoting stable family formation and parental involvement.

The PDF is here. In the rest of the paper, Christine supports her conclusions using evidence.

News

How Democrat policies cause corporations to outsource jobs overseas

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David Farr is the CEO of Emerson Electric, a $1.7-billion-dollar company heavily involved in manufacturing. What does he think about the job that the Democrats are doing in Washington?

In this Bloomberg article, he explains:

Emerson Electric Co. Chief Executive Officer David Farr said the U.S. government is hurting manufacturers with regulation and taxes and his company will continue to focus on growth overseas.

“Washington is doing everything in their manpower, capability, to destroy U.S. manufacturing,” Farr said today in Chicago at a Baird Industrial Outlook conference. “Cap and trade, medical reform, labor rules.”

Emerson, the maker of electrical equipment and InSinkErator garbage disposals with $20.9 billion in sales for the year ended September, will keep expanding in emerging markets, which represented 32 percent of revenue in 2009. About 36 percent of manufacturing is now in “best-cost countries” up from 21 percent in 2003, according to slides accompanying his speech.

Companies will create jobs in India and China, “places where people want the products and where the governments welcome you to actually do something,” Farr said.

The unemployment rate in the U.S. jumped to 10.2 percent in October, the highest level since 1983. Emerson, which Farr said employs about 125,000 people worldwide, has eliminated more than 20,000 jobs since the end of 2008 to lower expenses.

“What do you think I am going to do?” Farr asked. “I’m not going to hire anybody in the United States. I’m moving. They are doing everything possible to destroy jobs.”

[…]Mature markets such as the U.S., Western Europe and Japan continue to decline in importance and the company will keep investing in emerging markets, Farr said during the presentation.

“We as a company today are putting our best people, our best technology and our best investment in these marketplaces to grow,” he said. “My job is to grow that top line, grow my earnings, grow my cash flow and grow my returns to the shareholders. My job is not to shrink and roll over for the U.S. government.”

[…]In renewable and alternative-energy markets, Emerson had 2009 sales of $50 million and plans to increase that to more than $800 million in five years.

“But you are not going to see Emerson going out there with fancy commercials or sitting at the right hand of some president, talking about this,” Farr said. “We do it.”

When it comes to manufacturing jobs, the only person whose opinion counts is the CEO of the manufacturing company, because he makes the hiring decisions.

Why Obamanomics will not improve the economy

I noticed the Bloomberg article because it was linked to this American Thinker article, which was linked at Marshall Art’s blog.

The American Thinker article analyzes why Obamanomics will not improve the economy.

Excerpt:

The reason that Obamanomics will not and cannot work is because an economy cannot be managed from the top. Economics is a bottom-up process that depends upon individual incentives. Critical incentives have been diminished or destroyed by recent economic policies. Fear, uncertainty, threats, tax increases, penalties, and violations of the rule of law are but some of the conditions anathema to entrepreneurs, small business, and large business. Businesses will not hire, invest, or expand in a climate of disincentives. No commands from on high can force economic activity. That was a lesson that should have been learned from Eastern Europe and the former USSR.

If these disincentives are left in place, our economy will continue to shrink and our standard of living will continue to diminish. Capital has no nationality, and it will start to flee our shores. Talent will follow. We will not recover from this economic downturn until businesses and individuals have a more favorable incentive structure.

You can’t argue with the 10.2% unemployment rate, and it’s only going to get worse. Everything that Obama has done has been bad for business, and has contributed to raising unemployment. Democrats, (and the people who voted Democrat), know less about economics than my keyboard.