President Obama often asks the voters to understand that he inherited a very bad economy, and he did. But in many ways it was not as bad as the economy Reagan inherited from Carter.
On Reagan’s Election Day in 1980, unemployment was at 7.5 percent and headed for 10.8 percent; inflation was at 12.5 percent, headed for 13.6 percent, and interest rates were at 15.5 percent, headed for 21.5 percent by Christmas, well before Reagan was sworn in.
Obama inherited an unemployment rate of 6.8 percent and no inflation problem. Inflation was only 1.1 percent in comparison to the crushing 21.5 percent left by Carter. By the time Reagan was sworn in in January business men, farmers and home buyers (if you could find one) were paying 23 to 24 percent interest rates on loans.
Reagan wasted no energy on blaming Jimmy Carter. He approached the problem by lowering marginal tax rates in gradual steps over three years. He eased the regulatory burden on businesses, making it simpler to open or expand a business. His infectious optimism reminded people “the best is yet to come.” America was still “the shining city on the hill,” and Reagan reversed the country’s mood from a Carter-induced “malaise” to a can-do spirit.
In stark contrast, Obama did just the opposite with predictable results. He increased the regulatory environment increasing the cost and difficulty of opening or expanding a business. He introduced new law burdening business with new costs that are significant and beyond measurability at the same time. He fought for a return to higher taxes before acquiescing. Obama made his belief clear that America never was a shining city on a hill; it was a country in need of complete transformation. For America’s leader to wear a flag pin on his lapel was to honor a nation that was undeserving of such respect, a country that was in no way exceptional.
Reagan’s policies worked. By the end of his first term, inflation was down, employment was up, the economy was in good shape again and the mood of the nation had gone from morose to bright and cheery. In the bid for a second term, Reagan won every state with the sole exception of Minnesota.
Today we are where we are because of the president we picked in 2008, not because of what he inherited.
This post was adapted on an article by Peter Hegseth.
Canada has the worlds third largest petroleum reserves. There is no cheaper way to import crude oil into the United States than by pipeline to Canada. There is no nation with whom we are on better terms than we are with Canada. If we maximized governmental support for exploration, production and transportation of U.S., Canadian and South American reserves, after a few years we would not need to buy one barrel of crude oil from mid-east suppliers. In fact they would become reliant upon us for their energy needs because we have the refineries.
One Canadian broadcaster minces no words as he tells the audience his views from across the border. You can hear his strong words here.
Thomas Friedman, a thoroughly honorable man of the left, champions China from the pages of the New York Times in the same way his predecessor Walter Duranty did of Stalinist Russia from the pages of the same newspaper. Duranty denied Stalin’s atrocities; Friedman ignores China’s lack of human rights. Friedman argues that we could solve our economic problems if only we would do as China does.
Here is a glimpse of how China does.
In China, Human Costs Are Built Into an iPad New York Times Jan 26, 2012
The explosion ripped through Building A5 on a Friday evening last May, an eruption of fire and noise that twisted metal pipes as if they were discarded straws….Two people were killed immediately, and over a dozen others hurt. As the injured were rushed into ambulances, one in particular stood out. His features had been smeared by the blast, scrubbed by heat and violence until a mat of red and black had replaced his mouth and nose.
[Workers must submit to] onerous work environments and serious — sometimes deadly — safety problems.
Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste…
More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to clean iPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu, killed four people and injured 77.
There is a Laffer curve for regulation. No one has ever drawn one but one surely does exist. Total regulation would stifle an economy and there would be no prosperity. No regulation would be destructive to humanity and there would be no prosperity. Somewhere in between, the curve peaks. We are on the right side of the slope (over-regulation) and trending down. If you want to know where China is, ask Tom Friedman. But be prepared; he may not know. He may not have thought about it.
What’s your doctor’s opinion of Obamacare? Most doctors are tight-lipped with patients who ask where the doctor stands on Obamacare. With political issues are as tense as they are today, any discussion has the potential of becoming a contentious one. Doctors are there to heal, not to open wounds. So we must look elsewhere for the answer to the question and we find your doctor’s opinion is decidedly negative.
The American Medical Association (AMA) was for more than 160 years the primary organization representing the interests of physicians in America. It is the medical association most often quoted by the media. The AMA supports Obamacare. Doctors are leaving the AMA in droves. Fully 47% cited their reason for discontinuing their membership was the association’s support for Obamacare. After the exodus, only 17% of doctors practicing in America continue as members. Now that’s a statement!
The Patient Protection and Affordable Care Act (aka Obamacare) does take a haircut out of reimbursements to physicians for services rendered to Medicare and Medicaid patients. But to say that this is the only reason for their opposition to the Obama/Pelosi plan would be to indict the whole fraternity of physicians as unable to keep their priorities straight. Such is simply not the case.
Sally Pipes, writing for Forbes:
More than three times as many doctors believe that the quality of American health care will “deteriorate” rather than “improve” under ObamaCare. Nine of ten physicians think ObamaCare will have a negative impact on their profession.
Another gripe is that nothing in ObamaCare addresses the problem of defensive medicine that physicians feel forced to do as protection against frivolous lawsuits. There is no tort reform in the new law. Physicians are there to heal, not to practice law. They do not like putting their patients through procedures for legal reasons, procedures they would not do for health reasons.
So now you know. Unless your doctor is one of a small minority, he has a very negative view of Obamacare. But he will be slow to tell you that.
When an economy needs a little boost, the lowering of interest rates spurs consumer big ticket buying and encourages businesses to expand by lowering the cost of anything that is financed. However, with short term interest rates already near zero, this tool is no longer in the Federal Reserve’s toolbox. So Bernanke’s move is to lower long term rates in the hope that that will encourage companies to expand and consumers to increase their purchases of automobiles and homes. That’s the Bernanke Twist.
Tell me, with short term rates near zero and long term rates at 1.94%, the lowest in more than a half century, how much more likely is it you will buy a car if long rates go from 1.9 percent to perhaps 1.7 percent? How much more likely is it the owner of the tire store in your neighborhood will open another outlet now that he can borrow for a few pennies less? None.
Corporations are not lacking money. Consumers are not holding back because of interest rates. The Fed is pushing on a string — again. It is not the cost of money or the lack of money in the system that is holding back a recovery. It’s executive government policy that’s crippling the economy. The tire shop owner may be ready and anxious to open another store, but first he must know how much it will cost to take on the new employees. He also needs to know what the latest regulations are and how much it will cost to comply with them. But none of this is knowable given the complexities of Obamacare and the vagueness written into many of the new laws. So we sit.
What this country needs is not a good 5 cent cigar or lower interest rates. What this country needs is a presidential election year. Let’s hope the voters don’t make the same mistake twice.
The reason manufacturing and jobs are going overseas is as plain as the chart in front of your face. As you can see from the chart, corporate tax rates have been trending down in OECD countries while U.S. corporate tax rates have remained among the highest in the developed world.
A business can absorb the cost of a little higher tax than its rivals and still remain competitive – – up to a point. But when the difference is as much as 50%, it starts to become a matter of survival, not just the ability to compete. At 39% the U.S. rate is exactly 50% higher than the average rate in the OECD countries.
The OECD is the Organization for Economic Co-operation and Development. It is a group of 34 nations, mostly but not all, located in Europe. These are not third world countries. Typical members and their current corporate income tax rates include Germany (15%), Switzerland (8%), and the United Kingdom (26%). Our rate (39%) is the absolute highest on the entire list of OECD countries. The only other nations that exceed the 30% level are Belgium and France.
It is no secret which political party is acting to keep it that way. It is the same party whose constituents complain the loudest about U.S. corporations sending jobs overseas. It is the same party whose shibboleth is tax the rich. It’s the party that penalizes achievement and supports indolence. It is the party with the least understanding of how wealth is created and the best skills for appropriating it to spend in the furtherance of central planning agendas. It is the Democratic Party.
Onerous domestic taxation is not the only reason companies choose to go overseas. Laws and regulations are another. It is not that regulations are more liberal in foreign lands, although that is often the case for certain industries. The relative attraction is that you can plan and deal with the devil you know better than you can with one you don’t. If there is one word that describes the business policies coming from the Obama administration, that word would be uncertainty. Given the President’s position on Card Check, health insurance price controls, drilling moratorium, corporate executive salary controls and eagerness to partially nationalize companies in the name of bailouts it would be foolish to assume the uncertainty would unfold to the favorable side.
While the ever socialistic Europe is moving slightly to the right, the bastion of free market society that is America, is rushing hell-bent for leather to the left. Eastern Europeans know where we are going. They have been there and it wasn’t good. We need to change course before we find out what they already know. If we continue on the present course, believe me; it won’t be good.
Electricity costs are projected to rise between 11 and 24 percent over the next 2 ½ years. The rate of increase will vary according to where you live. American Electric Power is one of the largest generators of electric power in the United States. Taking AEP as an example we find that five of their coal fired generating plants will be unable to meet new EPA standards and will need to be shut down. Six more generating plants are in jeopardy of the same fate, but might be saved with expenditures of 6 to 8 billion dollars. In some regions the cost of production will rise by 35% by the end of 2014, according to a statement by AEP.
What the present administration cannot accomplish by legislation it does through regulation. In 2008 Obama pledged to bankrupt the coal industry with Cap and Trade legislation but was not able to get Cap and Trade through Congress. That left the job to the Environmental Protection Agency, hence these new proposals.
Here is what the National Economic Research Associates had to say about the new regs.
Using government data for its assumptions, NERA found the rules would increase costs for the electricity sector by more than $184 billion total or about $17.8 billion per year. Average electricity prices would increase by 11.5% and in some areas of the country, the increase could be as high as 23% in states such as Tennessee and Kentucky, according to the study.
The rules would also impact employment, with an estimated loss of 1.4 million job-years by 2020. A job-year is one job for one year, according to [the American Coalition for Clean Coal Electricity].
“The analysis by NERA shows that these would be some of the most expensive EPA rules ever imposed on coal-fueled power plants – costing more than $180 billion, causing double-digit rate electricity rate increases in many states, and leading to substantial job losses nationwide,” ACCCE President and CEO Steve Miller said in a statement Wednesday.
Details about the NERA study are available here.
And that’s not all. Home heating costs would rise for those who use natural gas to heat their homes. The NERA estimates the necessary conversion of some generating plants from coal to gas would increase the demand for gas by 26% causing natural gas prices to rise about 17% by the year 2016.
That’s the bad news. The good news is that the bad news is a proposal. Proposals are not inevitable. Congress does have the power to intervene but has shown little inclination to do so. This is an important issue that needs more attention.