October Jobs Report: The Final Score Is In: Obama has Failed Millions of Americans
On January 9, 2009, Christina Romer, released a report showing how badly our economy needed Obama’s “stimulus.” This report claimed that with the “stimulus” plan, the unemployment rate would not reach 8 percent.
Forty months into the “recovery” and a trillion dollars later, the unemployment rate has just barely edged below 8 percent. The “stimulus” and Obama’s economic policies have failed to come close to what was promised.
Even then, the unemployment rate is only telling a small part of the economy’s story. The rate is measured against the actual labor force, which had changed dramatically since the start of the Obama presidency. According to BLS data, more than 4 million people have given up looking for work and have dropped out of the labor force, effectively shrinking the denominator used in the unemployment rate calculation. They are the forgotten Americans of Obama’s recession.
If you were to count these forgotten Americans, the employment rate would be 10.56 percent today. This is more than double the unemployment rate that Obama promised we would have at this point in his administration.
How does this compare to the recovery during Reagan’s presidency?
Since June this year, the economy has been adding, on average, 147,000 jobs per month. At the same time in Reagan’s presidency, the economy was adding an average of 305,000 jobs per month.
However, this is just a small sample. If we look at Obama’s entire presidency, the picture is much worse. According the BLS non-farm payroll data, we have barely recovered the jobs lost since the beginning of Obama’s presidency.
The verdict is in. Obama’s policies have failed. Higher taxes and massive spending have stalled the economy. The robust recovery under Reagan show what really works to jumpstart and economy: smaller government, lower taxes and less regulation can spur the growth we were promised government would provide four years ago.
Debt Ceiling Redux: Government Still Sits on Too Many Assets to Default
Today, the Treasury announced that it expects the federal government to reach the debt ceiling near the end of this year. Matthew Rutherford, the assistant secretary for financial markets at the treasury said that “treasury has the authority to take certain extraordinary measures to give Congress more time to act to ensure we are able to meet the legal obligations of the United States.” This announcement corresponds with a recent letter sent to Treasury on October 15th by Senators Hatch and Sessions asking what plan the government has to prevent defaulting on its obligations. While Treasury has stated it can take "extraordinary" measure to stave off full default, if policymakers want to buy time, the answer is much simpler. With current debt standing at $16.1 trillion of the $16.3 trillion limit, we have pointed to major assets that Treasury could sell to prevent America from hitting the debt ceiling:
By selling off the government’s ownership of General Motors, the government could net $12.5 billion in savings. It could also demand that GM pay back its outstanding 30 billion in TARP funds.
Days gained on federal debt: 13
The government currently owns of 85 million acres of untapped oil and gas reserves. Income from auctioning federally-owned leases could total $61 billion
Days gained on federal debt: 20
The federal government currently owns more than 650 million acres of land- almost 30 percent of all land in the United States. Based on land values estimated on past exchanges, selling federal lands (exempting National Parks) could be worth as much as $230 billion.
Days gained on the federal debt: 75
If the federal government were to get back all the money the Department of Energy plowed into Solyndra-type loan guarantees, it would net $34 billion.
Days gained on the federal debt: 11
The federal government is estimated to hold over 900,000 buildings and structures. According to the GAO, the government consistently underutilizes or abuses its real property. Selling nonperforming real estate assets and reform federal real estate management would save at least $4 billion.
Days gained on the federal debt: 1
Total number of days gained before the debt limit must be raised: 122
Treasury could give Congress nearly 18 additional weeks to debate and reach comprehensive spending reform. Congress should use this time to shift their focus from the debt problem and refocus on the government fundamental problem: overspending.
Reagan vs. Obama - Another Reminder of Obama's Failed Economic Policies
Today’s unemployment report resembled Obama’s debate performance: poor and misleading. Wednesday, the President tried to convince the American people that they are better off than they were 4 years ago, but Americans are not buying it. When the numbers are all against you, it is hard to disguise failure.
Today’s job report reflects that failure. The report showed the unemployment rate dropped to 7.8 percent, with the economy adding only 114,000 more jobs in the month of September. This is being hailed as good news by the President and the media. It speaks to how bad the economy is if this jobs report is praised as good news.
Take a look:
One of the reasons the employment number continues to drop is because people are leaving the workforce. If we were to calculate the unemployment rate with the same labor force participation we had in 2009, the real unemployment rate would be 10.75 percent; not a pretty picture at all. It is even worse when you consider that Obama promised that the unemployment rate would be less than 6 percent by today with his failed stimulus.
This supposed “good” news for Obama is being celebrated on the backs of the 8.7 million people who are not only unemployed, but have given up looking for jobs since Obama took office in January 2009.
For a reminder of what a real recovery looks like, one should consider how Reagan’s policies helped the economy.
At this point in the Reagan presidency the economy was constantly adding more than 120,000 jobs, totaling more than 9.8 million jobs since the end of the recession in the 80s.
Obama has only been able to manage to add 2.9 million jobs since the beginning of the Obama presidency.
Even worse, since the beginning of Obama’s presidency, the economy has lost now a total of 965,000 jobs, while Reagan’s presidency oversaw an increase of 2.9 million at this point in his presidency.
These numbers cannot hide the failure of the President’s big government policies: America is much worse off today than it was when Obama took office. His policies have contributed to making this recession one of the longest and worst in American history.
In order for a true recovery, the government needs to pursue policies that will allow the economy to grow and prosper. Reagan’s economic policies of cutting taxes and reducing regulation helped a broken economy recover. We need more than just empty rhetoric; we need real policies that will help American families. The policies of Reagan are just those policies.
Reagan vs. Obama - August Jobs Report Leaves Americans Still Waiting on Recovery
It was only fitting that the jobs report was released the day after the president took the stage at the DNC convention. With no hesitation, he proclaimed that only he could produce a plan that “will lead to new jobs, more opportunity, and rebuild this economy on a stronger foundation.” But the next morning we were reminded, once again, what a failure his policies have been.
Cilley's Tax Tricks in New Hampshire
In the New Hampshire gubernatorial race, every candidate except for Jackie Cilley has promised to oppose the passage of any broad-based tax on the citizens of the state. Cilley has decided not to make this important promise to New Hampshire tax payers has committed today’s all-to-popular fallacy of appealing to moderation:
“(Pledges) make decisions in advance of even being able to diagnose a problem fully,” she said. “They are not leadership, and they don’t allow for governing. I favor a government that has adequate resources to do the job right, not one dime more and not one dime less,” she said. “When you come from that premise, you say everything’s on the table. We’re going to look at what the most logical, pragmatic way is to bring our state into the 21st century to face the challenges of the 21st century marketplace and to attract the kinds of businesses that we want here.”
So like all those seeking some grand bargain at the federal level, Cilley is appealing to the false promise of compromise. It’s well documented that grand bargains have a record that is quite different from the lofty rhetoric used by proponents. She is trying to pull the wool over the eyes of the citizens of New Hampshire by promising that she will act as a responsible politician who is only trying to help. However, her policies would harm New Hampshire.
Voters in New Hampshire only need to be reminded of the history of compromise in Congress. Since the ‘80s pro-tax politicians, in order to gain the support for tax increases from conservatives, promise spending cuts as a compromise. However, history has shown, again and again, that the tax increases remain, but the spending cuts do not.
One could expect a similar result if tax hikes are on the table in New Hampshire. The compromise would be to increase taxes to “responsibly” fix the budget and nothing more. This won’t happen; tax increases will only encourage politicians to spend more. It is a pretty good rule of thumb that the more tax revenue you give a politician, the more they are going to want to spend.
Additionally, the whole concept of a pragmatic approach to government to solve problems, especially when it involves tax increases, is foolish. Yes, New Hampshire may be taking in less money than it is spending in the long run, but this in no way implies that taxes should be raised. Perhaps she should consider a policy platform that reduces spending in order to fix New Hampshire’s budget problems.
One of the main reasons that New Hampshire has had the blessing of high-economic growth, high median incomes, low unemployment and generally great standard of living is because the state has kept a 0% tax on income and retail sales. New Hampshire is competing for more economic activity with its neighbors and is winning.
Raising taxes would put New Hampshire on the same high-tax, high-spending, low-growth path that its neighboring states have been on for decades. Even if on Monday taxes were raised to stabilize the New Hampshire budget, there is no reasonable assurance that taxes and spending wouldn’t be raised even higher in the future. So as long as New Hampshire politicians keep their pledge to enact broad-based taxes, New Hampshire will remain a shining example of better tax policy.
To see that spending has done in New Hampshire, check out this spending calculator.
Failure of Tax Increases: Connecticut
This content is provided by The Americans for Tax Reform Foundation.
With today’s dismal jobs report, it is quite clear that the economy is continuing to suffer under failed economic policies. The so-called stimulus (better known as the give-away to Obama’s friends) and the looming tax increases in 2013 are dragging the economy down like an anchor. Today’s unemployment number of 8.2%, which is bad in and of itself, does not take into account the countless Americans that have been jobless for so long that they have given up on looking for a job. The high-tax, high-spending economic policies have been a failure during this recession.
These terrible economic numbers should be thought of every time a politician wants to raise taxes and further harm the economy. This will be especially important in the near future when they start talking about “fixing the deficit.”
Not only should we be wary of this for the sake of our economy, we should question whether raising taxes would even work to fix the deficit.
Just yesterday, Connecticut’s government announced that “Despite the largest tax increase in Connecticut’s history, the state is projected to finish the fiscal year with an operating deficit of $192 million”
Just in case that needs to be repeated: The state government attempting to take more money away from the private sector through higher taxes, but it still ended up with a massive budget deficit.
In the 2011-2013 biennial budget in Connecticut, there were a number of tax changes. Taxes on income above $100,000 were increased, the sales tax was increased to 6.35%, room occupancy tax increased to 15%, and the rental tax increased to 9.35%. They also did away with a number of tax exemptions and added a number of services that will qualify for sales and use tax.
Largest tax increase in Connecticut’s history, indeed. But no fix for their massive deficit.
So when you hear a politician claim that the only way to fix the deficit problem is to raise taxes on the American people, think of Connecticut: huge tax increases, but still a huge deficit.
Tax Competition in New England
This content is provided by the Americans for Tax Reform Foundation
With the Supreme Court’s decision affirming that Obamacare, in part, is constitutional, the political debate will turn to this massive piece of legislation. Tax reform may take a backseat until the future of Obamacare is decided. However, tax reform should be a vital component of the next president and Congress’ agenda. America is losing out on vital economic growth because of its loop-hole riddled and excessively burdensome tax system. Without reform, our economy will fall behind, far behind.
Throughout the world, nations are doing what America should be doing: they are reforming their tax system, which includes drastically simplifying and lowering their corporate income tax. They know that this will attract more economic activity to their country and make the lives of their citizens better.
The necessity for reforms are based on the idea of tax competition. Countries, to ensure healthy economic growth, will compete to attract economic activity to their borders by making their tax system less burdensome.
Tax competition isn’t some grand theory either; it can be observed among the states here in America. New England is a great example of this.
Observing the New England states’ tax policy, New Hampshire is an outlier. It is the only one with no personal income tax or sales tax. The other states have relatively high taxes and high tax burdens.
At the same time, New Hampshire is also an outlier in economic performance. It ranks the lowest in the percent of population that is considered to be low income, the highest private sector share of personal income and highest household median income. The other states, especially Maine and Vermont, have had dismal economic performance in the last 10 years compared to New Hampshire.
There is clearly a link between the two.
New Hampshire’s neighbors know this and have asked how they could model themselves after New Hampshire. It is a fair question because the other states are losing out on a lot of economic activity because of New Hampshire’s lower tax burden, especially on income and retail sales.
In one area that New England states are acting on is the income tax. In past decade, All New England states, except Connecticut, have either kept their income tax the same or lowered it, to get more in line with New Hampshire.
A similar trend (but not as strong) can be seen in Corporate Taxes:
New England states have seen that New Hampshire’s economic performance is not an accident. New Hampshire is winning because it does not penalize productive activity. Even Vermont, not a state you would expect to be business friendly, has lowered its corporate tax rate to be match New Hampshire. Now Maine, which has elected reform-minded legislators and a governor, is discussing lowering its income tax rate.
For tax reform, this example is good news for those who want to see government to get out of the way of business. The pressure placed on governments by neighboring ones will overcome even the most stubborn high-tax, big-government ideologies. If the economy is faltering because of terrible policies, politicians will need to lower the burden of government when people and businesses are suffering. The politicians at the federal level need to look around them. Like New Hampshire in New England, countries around the world are reducing their tax burdens and taking vital economic activity from America. The next president needs to make reform a priority or we will continue to slip behind.
Tying the Gas Tax to Inflation: Not a Good Idea
This content is provided by the Americans for Tax Reform Foundation.
Recently, oil industry insiders have stated that gas prices throughout the country are going to drop as low as $2.50 a gallon due to a drop in demand and high supply.
Surely this is good news for drivers in the short run, but if the federal government continues to block domestic production, we will see prices continue on an upward trend.
What makes these price increases worse is that a significant portion of what people pay for gas is taxes. The federal gasoline tax is 18.4 cents per gallon and the average state gas tax is 26 cents per gallon. What’s worse, politicians in most states vote to increase the tax every single year.
However, some states have a particularly bad policy that increases gasoline taxes without politicians having to take responsibility. In Maine, Nebraska, North Carolina and Wisconsin, the state gas tax increases with inflation. So when the CPI goes up, so does the tax on gas.
If you think about this for a second, this is particularly dangerous for a couple of reasons.
First, politicians no longer have to explain to their constituents why their gas taxes have increased. There is no vote, so there is no longer accountability. Politicians can now count on more of our money with less of our consent. Since there is no accountability, it is no surprise that all of these states have gas taxes that are above the national average.
Second, and probably worse, the price of gasoline is included in the calculation of the CPI! So as the price of gas goes up, this creates upward pressure on the CPI. In turn, this could increase the gas taxes in these states. So citizens in these states are hit even harder by gas price increases.
The counter to this argument says that states need to adopt this policy because this tax pays for roads and road repairs become increasingly expensive as time goes on.
Well if that were the case, we should see that those states with an indexed gas tax would have better roads. More money for roads means better roads, right?
Not necessarily. According to an annual Reason Foundation study on the quality of our states’ roads, only Nebraska ranks in the top ten and Maine ranks a dismal 32th in 2008. Even better, North Dakota, which has only raised its gas tax once in the past decade, has the best roads in the country.
So policymakers should be weary of claims that indexing the gas tax is the solution to their crumbling roads. Taxpayers are paying higher and higher prices for roads that are not necessarily any better. It is clearly the case that more money is not necessarily the solution. Perhaps these states that are flirting with enacting this policy should first look to state with good roads to see what they can learn. Families cannot afford to keep paying a higher and higher price for poor quality roads.