Early Childhood Education- Arne’s Special Interest Army

Regarding special interests groups, economic rent seekers, and political constituency building exercises through the use of taxpayer money, lets examine early childhood education.

Empirical evidence of early education dating back to the Westinghouse Study of 1969, the 1987 studies by the University of Delaware and by Copple, Cline,& Smith, to the 1990 study by the U.S. Department of Health and Human Resources [Sharon McGroder study] ---which took studies from all over the nation and analyzed the studies as a group --- the result of the studies and especially the McGroder study is that early education either has no benefit or a small benefit that fades out by the third grade. (1) (2) (3)

U.S. Department of Health and Human Resources initiated yet another study: The Head Start Impact Study. The Head Start Impact Study final executive report, dated January 2010 concluded $150 billion of taxpayer dollars have been “invested” in Head Start since 1965 yielding no lasting benefits for participating children. (4)

In the field of economics, early education has long been considered a cost/benefit loser. The question that begs to be asked is why continue to spend taxpayer money on a program with massive costs and little benefit. The answer is that the program continues not based upon economics, the program is a political creation. Politicos through the mechanism of government build a constituency of Head Start workers, Head Start suppliers, and associated Head Start special interest groups through the use of taxpayer dollars ($150 billion to be exact).

Notes:

(1) http://aspe.hhs.gov/daltcp/reports/headstar.htm

(2) http://www.heritage.org/research/reports/2010/10/expanding-head-start-is-empirical-evidence-informing-policymaking

(3) http://www.lrainc.com/swtaboo/taboos/headst01.html

(4) http://www.acf.hhs.gov/programs/opre/hs/impact_study/reports/impact_study/executive_summary_final.pdf

Jason and the Argonauts and the Quest for the Solar Fleece -or- Solyndra, SolarReserve, Ron Pelosi, Nancy Pelosi and Argonaut Private Equity

“Yesterday, the Department of Energy announced that it had approved new loan guarantees worth more than $1 billion for two solar energy companies:

DOE announced a $737 million loan guarantee to help finance construction of the Crescent Dunes Solar Energy Project, a 110-megawatt solar-power-generating facility in Nye County, Nev. The project is sponsored by Tonopah Solar, a subsidiary of California-based SolarReserve.

The Energy Department said the project will result in 600 construction jobs and 45 permanent jobs…

The Energy Department also announced that it had finalized a separate $337 million loan guarantee to Sempra Energy for a 150-megawatt photovoltaic solar-generation project in Arizona.

The project will result in 300 construction jobs, DOE said.

Let’s see. Simple math, as the president would say, gives us a grand total of $1.074 billion spent to create, according to the DOE, just 45 permanent jobs. That’s about $24 million spent for every permanent job created. As far as the DOE’s “green” loans program is concerned, that’s par for the course. By any reasonable standard, it’s a horribly inefficient way to spend the taxpayers’ money.

　

With respect to Solyndra, the DOE shelled out $535 million to a company that happened to list a major Democratic fundraiser (George Kaiser) as a primary investor. Could there be a similar connection to any of these other companies? Of course there could.

As American Glob reports, Solar Reserve, the California-based enterprise at the heart of the $737 million loan guarantee mentioned above, is an “investment partner” with the Pacific Corporate Group. The executive director of PCG is Ron Pelosi, brother-in-law of House Minority Leader Nancy Pelosi (D., Calif.).

But that’s not all. Solar Reserve is also investment partners with Argonaut Private Equity, an arm of the (George) Kaiser Family Foundation that was a major investor in Solyndra and was involved in negotiations with the DOE to restructure the failed company’s loan agreement. That agreement would ultimately give Argonaut and other private investors priority status over the American taxpayer with respect to the first $75 million recovered in the event of Solyndra’s collapse. As Republicans argued at a recent House committee hearing, this arrangement was almost certainly a violation of federal statute.

Argonaut’s managing director, Steven Mitchell, served on Solyndra’s board when the restructuring took place, and reportedly still serves on the company’s board. He is also listed as a “board participant” at Solar Reserve.” - The Solyndra Mess Gets Messier, by Andrew Stiles, National Review On Line, 09/29/2011

Link to the entire article appears below:

http://www.nationalreview.com/corner/278732/solyndra-mess-gets-messier-andrew-stiles

　

　

　

　

Health-Care Costs: the “price” you pay for being convinced you do not need to know the price.

One quite obvious problem in health-care in the U.S. is the total absence of price transparency at the point of sale. One must further consider the total absence of price transparency among providers. Stated alternatively, at the point of sale price is absent which further negates price comparisons among alternative points of sale.

Maybe an example better illustrates the absence of price phenomena. Would any consumer enter a retail establishment and purchase goods where no price was marked nor forth coming? If you entered Target, Wal-Mart, Home Depot, or your corner grocer and price was not readily discernable, would you shop or leave the establishment? How could one compare prices among differing retail establishments in the above example if prices are not marked or forth coming?

When purchasing gasoline do you note the marquee sign displaying price and formulate part of your purchase decision regarding price? Imagine gas stations with no price. You can’t imagine gas stations with no price? Welcome to the wonderful world of health-care purchases.

Think for a moment and list all the places that do not display price. Its likely a short list and the list is populated with health-care related services. Why do they not list price? Without prices listed how can you compare price?

Price is a signal. Price is the rationing agent or mechanism regarding the allocation of scarce resources with alternate uses. How can one rationally allocate scarce resources with alternate uses without a rationing agent?

One must then ask himself/herself why price is not readily discernable in health-care? Why isn’t there a price tag, estimate, menu or some sort of price signal? Why are prices available at your local lumber yard but not your local clinic? Why? Its because you are not the payer of the health-care goods and services.

Health-care providers have absolutely no incentive to provide price to those not paying for services. Huh? Think about for a moment: who pays the bill? Where does the health-care provider, in most/many instances tender the invoice? The bill goes to a government sponsored quasi-insurer or a private insurer. The price is provided to the payer which is government or a private insurer.

Wait a darn minute! You pay insurance premiums, and/or you take a lower wage for employer sponsored benefits, and/or you pay into Medicare, and/or you pay taxes for government sponsored Medicaid services hence you are the payer! Sorry, wrong. From the stand point of the health-care provider, the government or a private insurer is the payer.

Rather paradoxical?!? If you are the ultimate payer of health-care services through insurance premiums, reduced wages, and/or taxes how in the world can you not be the payer? You are not the payer because you have been convinced by politicos through the mechanism of government that a third party payment system is to your benefit. That price is no object hence price need not be a component of decision making. Hence price becomes something merely passed onto you, the ultimate payer. Unfortunately, the price passed onto you, you being ultimate payer, is the “price” you pay for being convinced you do not need to know the price.

　

　

Tinkering Through Spending by Some People

Consider this observation by Milton Friedman regarding Keynes and the advent of Keynesianism:

“Keynes was exceedingly effective in persuading a broad group—economists, policymakers, government officials, and interested citizens—of the two concepts implicit in his letter to Hayek: first, the public interest concept of government; second, the benevolent dictatorship concept that all will be well if only good men are in power. Clearly, Keynes’s agreement with “virtually the whole” of the Road to Serfdom did not extend to the chapter titled “Why the Worst Get on Top.”

Keynes believed that economists (and others) could best contribute to the improvement of society by investigating how to manipulate the levers actually or potentially under control of the political authorities so as to achieve desirable ends, and then persuading benevolent civil servants and elected officials to follow their advice. The role of voters is to elect persons with the right moral values to office and then let them run the country“. (1)

　

Special attention needs paid to this passage: “…improvement of society by investigating how to manipulate the levers actually or potentially under control of the political authorities so as to achieve desirable ends…”. Keynes basically created a free pass for politicos through the mechanism of government to “tinker”. Keynesianism has institutionalized “tinkering”.

Going one more step and combining two Milton Friedman observations, take the above observation and the above highlighted passage and consider the following:

"The fundamental principle of socialism is that its is appropriate to use force to organize society, to take from some and give to others. The government has nothing to give. The government is simply a mechanism which has the power to take from some to give to others. It is a way in which some people can spend other peoples' money for the benefit of a third party - and not so incidentally themselves". (2)

Considering the two observations together, it strikes one that the only item of consequence of The General Theory for the politico is deficit spending or “spending”. Keynes and Keynesianism political-economy appears to boil down to an attempt to legitimize tinkering by “some people” i.e. politicos.

Tinkering through spending by some people is not an empirical proposition. Stated alternatively, tinkering through spending by some people is merely a notional proposition, a vision, or quite frankly no more than an opinion. It would logically follow that if we have a notional proposition, vision, and opinion…. then tinkering through spending by some people would be/will be supported and perpetuated by arguments that are notional propositions, vision oriented, and opinion based.

Step back for a moment, keeping in mind tinkering through spending by some people is supported and perpetuated by arguments that are notional propositions, vision oriented, and opinion based; exactly what kind-type arguments have been put forward in the last eighty years regarding government intervention into the economy? The track record of these notionally based intentions vs. the actual results? Tinkering through spending by some people, the summation there of, has produced exactly what? What grand cumulative positive result can one point to?

Hence we have no positive result. We have the constant and relentless continuation of notional propositions, vision oriented, and opinion based arguments regardless of the non-positive result. Which basically accumulates into the concept of “judge us by our intentions and not our results“. Which would lead one to surmise that tinkering through spending by some people is not a public policy concept but rather a political power concept. That Keynesianism is merely an institutionalized support argument for political power or the power of the state. Which circles one back to this statement by Friedman:

“The government has nothing to give. The government is simply a mechanism which has the power to take from some to give to others. It is a way in which some people can spend other peoples' money for the benefit of a third party - and not so incidentally themselves.”

　

　
Notes:
　

　

　

(1) Milton Friedman, Richmond Federal Reserve Economic Quarterly, volume 83/2 Spring 1997.
http://www.richmondfed.org/publications/research/economic_quarterly/1997/spring/pdf/friedman.pdf

(2) The Invisible Hand in Economics and Politics, Milton Friedman, Institute of Southeast Asian Studies, 1981, p11.

　

　

Upon Further Review: Buffett Tax Math

"As anyone with at least a passing familiarity with tax-policy analysis would know, Buffett was leaving out a critical piece of information. The very reason that dividends and capital gains bear a lower tax rate than wage income is that, unlike wages, they are not deductible from corporate income taxes.

That is, if you receive income from owning or selling corporate stock, that income has already been taxed at the corporate level. The same is not true for wages. So unless you make dividends and capital gains deductible to some entity – either the corporation or the shareholder – investment income is double-taxed.

Under the current system, which levies a lower personal tax rate on investment income but not a zero rate as tax neutrality would require, most of Buffett’s income is taxed at a higher effective tax rate than his secretary’s wages. He may not be writing a personal check for all those taxes, but he bears their cost in the form of lower returns". (1)

HT: B. Kavanaugh

(1) Carolina Journal, 09/21/2011  http://www.carolinajournal.com/jhdailyjournal/index.html

Obama: Rich must pay fair share. What is fair?

"All I'm saying is that those who have done well, including me, should pay their fair share in taxes," Obama said in a speech that effectively staked out the ground on which the 2012 presidential election will likely be fought. (1)

Anytime you hear the term fair coming from a politico your antennae need to go up to full extension. Fair is one of those political terms that mean what the particular politico wants it to mean in a particular context. Maybe a better way to frame the term fair is that it has no meaning at all other than that meaning given by the user at a particular moment. How so?

Webster defines fair as: free from bias, dishonesty, or injustice: a fair decision; a fair judge. That is a very noble definition. However, when fair is actually used, put into action as it where, is fair used free from bias?

Maybe a better definition of “fair” is: what you are doing and what the other guy is not doing -or- fair is where you go to get your pig judged.

Notes:

(1) Obama: Rich must pay fair share of deficit cuts, Agence France-Presse, 09/19/2011, http://www.rawstory.com/rs/2011/09/19/obama-rich-must-pay-fair-share-of-deficit-cuts/

“Buffett Effect” leading to the “Buffett Tax”.

 

Assume for a moment we have a butcher, a baker, and a candlestick maker. We will confine our discussion to financial success [vs. other types of “success”]. The three, one way or another, become owners of businesses. These businesses grow. Hence the three go through all phase of being broke, to being risk takers, to becoming successful.

Let us further assume that over time the butcher and baker are successful to the tune of $750,000 per year in income whereas the candlestick maker earns $10,000,000 per year in income. Along the way the three amass wealth but the candlestick maker has ten times the wealth of each the butcher and baker. All are financially successful merely to differing degrees.

Now let us focus on the “Buffett Effect” leading to the “Buffett Tax”. For one reason or another some people that reach the candlestick maker’s level of financial success (in the above example) feel the need to “give back”. Milton Friedman stated :


“So the question is, do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible? And my answer to that is, no they do not”. (1)

"...there is one and only one social responsibility of business--to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud." (2)

Friedman was eluding to executives and owners of firms create social value by providing current and future employment and creating current and future wealth. That the social value of employment is generally over looked. That the social value of employment is what executives and owners of firms are best at doing and what they should concentrate upon.

However, rather than concentrating on their first and best recourse, the need to "give back" appears. The need to “give back” is focused upon on an exogenous area other than what Friedman eluded to above. Hence "give back" comes in the form of charitable giving which creates libraries, museums, foundations, etc.

Moreover, at some unknown but certain point, surrounding the concept of the “give back” mind set, a disconnect occurs where the giver thinks all should be like him/her. That his/her “give back” should be the norm for all. That is, the give back mind set morphs into Thomas Sowell’s explanation of notional propositions [visions of the anointed], based on the way things ought to be, argued through verbal virtuosity, merely ending in the person painting the world in her/her own self image. One might refer to the above phenomena as the "Buffet Effect". (3) (4) (5)

If one steps back for a moment and returns to Friedman, if the want-to-be “give backer” had taken his/her “social responsibility” as concentrating on what they do best, creating more and better jobs, would society be better off? If Jane and James Goodfellow have more and better jobs would that in and of itself solve more societal needs than merely “giving back” charitably?

At some point the “Buffett Effect” spills over from charitable giving to “state giving“. Some wider omni-giving mind set. That somehow philanthropy morphs into social welfare. Hence the "Buffett Tax".

Note: one would have to assume a social welfare state already exists in the background as how could the once charitable “give backer” morph into “state giving” without the social welfare outlet existing in the first place. Which then leads back to executives and owners of firms creating social value by providing current and future employment. That is, does a portion of the existing social welfare state exist do to the failure to create jobs with wealth rather than giving away wealth?

Therefore the “Buffett Effect” and the “Buffett Tax” may well be circular when a social welfare state exists. The would be job creator decides "giving back" is more valuable than his/her first and best skill as job creator. Charity is produced but less than optimal jobs are produced. The less than optimal job creation enhances the need, perpetuation, and existence of the social welfare state. The "Buffett Effect" morphs into "state giving" as an omni-giving exercise with wealth bestowed upon the welfare state. The social welfare state bloats, the charitable giving continues, optimal job creation is not produced, leading to more "state giving", and so goes the circle.

Notes:

(1) Interview "Milton Friedman Responds" in Chemtech (February 1974) p. 72.

(2) Rethinking the Social Responsibility of Business, http://reason.com/archives/2005/10/01/rethinking-the-social-responsi

(3) Thomas Sowell, Visions of the Annionted

(4) Thomas Sowell, Intellectuals and Society

(5) Thomas Sowell, A Conflict of Visions

Buffett Tax: “This is not class warfare, it’s math.”

'This is not class warfare, it's math,' challenges the president. (1)  

Obama loves class warfare. He has played the class warfare card over and over again to the point of a broken record. Obama frames the class warfare argument with the answer to the argument being tax increases.

Keep the above in mind for a moment.

FDR loved class warfare. He played the class warfare card over and over again to the point of a broken record. FDR framed the class warfare argument and answered the argument with multiple tax increases.

In Jim Powell’s book FDR’s Folly he points out the following:

(a) during and after the 1937 “recession within a depression” FDR continued to bang the drum of class warfare rhetoric,

(b) after the 1937 the real live, real time people living in the depression began to reject FDR’s class warfare rhetoric as FDR had been banging the drum for years [the depression was the doing of “rich” people] yet the depression lingered on and got worse [1937 recession].

(c) after 1937 congress began passing tax decreases and that congress became more and more Republican (voters electing those representing the opposite argument to FDR’s class warfare/tax argument). (2)

 


Notes:

(1) Obama proposes $1.5 trillion in new taxes        http://www.msnbc.msn.com/id/44578820/ns/politics-white_house/

(2) FDR's Folly, How Roosevelt and His New Deal Prolonged the Great Depression, Three Rivers Press, NY, NY 2003

Buffett Tax Translation

'Obama added, "I’m proposing real cuts to spending. These would be among the biggest cuts in our history ... This plan eliminates tax loopholes that primarily go to the largest corporations."

"We can’t afford these special lower rates for the wealthy — rates, by the way, that were meant to be temporary." ' (1)

Observation: the tax code is a political creation or an economic creation? The loop holes and tax rates are a political creation or an economic creation? 

In Action: does economic man, faced with politico man's tax code, act rationally to reduce tax to the maximum extent? 


Translation: the ultimate "creator" [politicos] want to merely recreate in their own [new, newest] self image. Its not about economics, its all about politics.

Notes:

(1)
http://themoderatevoice.com/122763/obama-on-proposed-1-5-trillion-in-new-taxes-this-is-not-class-warfare-its-math/

Solyndra: The Final Government Failure Frontier, Where No Failure Has Gone Before

"Ex-employees of the failed solar panel company Solyndra have applied for aid under the federal government’s Trade Adjustment Assistance program, the Labor Department has confirmed.

If approved, the employees of what was once touted as a leading exemplar of the White House’s green jobs program will be eligible for more federal funds to enable them to be retrained for other jobs.

It would be an ironic coda to the saga of Solyndra, which manufactured solar panels and received $527 million in loan guarantees from the Energy Department and praise from President Obama during visits to the firm’s California headquarters. Now those green workers will be seeking the government’s help to find work again and not necessarily in the conservation jobs sector". (1)

"So to recap: massive government subsidies created 1,100 "green jobs" that never would've existed but for those massive government subsidies. And when those fake jobs disappeared because the subsidized employer company couldn't compete in the market, the workers blamed China (instead of what's easily one of the worst business plans ever drafted) in order to receive... wait for it... more government subsidies." (2)

Update 09/28/2011:

The Daily Show
Get More: Daily Show Full Episodes,Political Humor & Satire Blog,The Daily Show on Facebook

Notes:

(1) Ex-Solyndra Employees Now Applying For Trade Adjustment Assistance, Sean Higgins , Capital Hill, IBD's Politics and Markets Blog    http://blogs.investors.com/capitalhill/index.php/home/35-politicsinvesting/2763-ex-solyndra-employees-now-applying-for-trade-adjustment-assistance

(2) Behold, The Circle of Government Life, Dr. Mark Perry, Carpe Diem blog http://mjperry.blogspot.com/2011/09/chart-of-day-detroit-home-prices-vs-new.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+blogspot%2FmmMP+%28CARPE+DIEM%29

Non-existent Green Jobs, MACT, CSAPR and "Under my plan of a cap and trade system, electricity rates would necessarily skyrocket." - Barack Obama 01/2008

br />

“Obama’s dreams of green jobs have run into some snags lately. The bankruptcy of solar panel company
Solyndra, which received half a billion dollars in loan guarantees, is not good for the goal of greenifying our lives. Objectively speaking, there is one simple reason that companies like Solyndra just couldn’t make ends meet: the prices that they need to charge for their products are simply too high to create true market demand“.

For instance, the EPA’s Utility Maximum Achievable Control Technology rule (MACT) requires all coal-fired plants to reduce emissions of specific toxic air pollutants like mercury emissions. The problem with this is that it would “require coal-fired power plants to install equipment that in some cases is too expensive to afford and in other cases does not currently exist commercially.”

So essentially, borrowing a phrase from President Obama, “If someone wants to build a coal-fired power plant, they can, it’s just that it will bankrupt them.” This is not some reading between the lines to figure this out, as noted above, this is the actual words spoken by candidate Obama and the MACT rule is the perfect example of it in action. The requirements aren’t just onerous, they’re in some cases impossible to meet which of course results in massive fees levied against the company.

So what is the result of this?

Well this one rule could force enough coal-fired power plant shutdowns to equal about 30-70 gigawatts of electricity across the country. That means that businesses and families will need to move towards more expensive alternatives for energy to keep the lights on. This explains why the administration was so intent on investing in solar energy to the point of ignoring due diligence in favor of “hurrying up.” This standard will lead to double-digit increases in rates in keeping with another famous quote from President Obama where he acknowledged that under his plan “power bills would necessarily skyrocket.” For families that will mean tightening their belts in an economy which they can ill afford to do so. For businesses, it will also mean tightening belts which means cutting corners and yes, cutting jobs.

But MACT isn’t the only rule with alarming implications. The EPA’s Cross-State Air Pollution Rule (CSAPR) will also target coal-fired power plants. This time it’s to prevent polluted air from crossing state lines. As is the case with MACT, it doesn’t accomplish this in a sensible way that allows the companies managing the plants to stay in business and continue providing power while implementing the changes. Again, it’s overly stringent with unrealistic timelines that are designed to be virtually impossible to comply with.

Brian Shaw of the Washington Examiner notes:

This rule will impose onerous new costs on coal-fired power plants, causing many to shut down, and threaten electrical generation reserve capacity all over the country. These reserve margins are needed to avoid power disruption during times of peak demand. Even temporary loss of reserve capacity risks dangerous blackouts.

In terms of job losses, CSAPR is ahead of the game causing job losses even prior to its actual implementation. Luminant, a Texas energy company, announced a wave of shutdowns and layoffs as the rule’s compliance deadline moves closer”. - President Obama and the EPA’s War on Jobs - by Ben Howe, redstate.com, 09/15/2011

The link to the entire story,President Obama and the EPA’s War on Jobs by Ben Howe, appears below:

http://www.redstate.com/aglanon/2011/09/15/president-obama-and-the-epas-war-on-jobs/

　

Obama “Jobs Bill”: ACORN Eligible?

"Section 261 of the bill provides $15 billion for “Project Rebuild.” Grants would be given to “qualified nonprofit organizations, businesses or consortia of eligible entities for the redevelopment of abandoned and foreclosed-upon properties and for the stabilization of affected neighborhoods.” Radical groups like ACORN won’t get the whole $15 billion, though, because they will have to compete with state and local governments for the money". - Matthew Vadum pajamasmedia.com

Link to entire article appears below:

http://pajamasmedia.com/blog/obama%E2%80%99s-jobs-bill-makes-acorn-eligible-for-15-billion-in-taxpayer-money/

A Congressional Bill that is Comprised of One Sentence?

The Protecting Jobs From Government Interference Act, H.R. 2587, is a one sentence bill. Yes, you read that correctly, it’s a congressional bill that is comprised of one sentence. The bill is was introduced by Rep. Tim Scott (R-SC).

“H.R. 2587 would prohibit the National Labor Relations Board from ordering any employer to close, relocate, or transfer employment under any circumstance“. (1)

That’s the entire bill! You can actually read and comprehend this particular bill. The bill passed the U.S House of Representatives on 09/15/2011.

Notes:

(1) http://www.gop.gov/bill/112/1/hr2587

No Bail Out for This U.S. Assembled Vehicle Purchase!

Obamanomics No-Fly Zone?

“House Speaker John Boehner rolled out the congressional Republican counteroffer to President Obama's American Jobs Act on Thursday. It wasn't a plan for fundamentally changing economic policy in Washington -- the GOP candidates for president will need to do that -- but it does set out the right pre-conditions for jobs and growth. And it establishes a no-fly zone to deter more Obama regulations and taxes that inhibit hiring.

Mr. Boehner emphasized what he called the "triple threat" from government now facing employers: federal regulations, out of control spending and a business-unfriendly tax code.

"Employers will hire if they have the right incentives," Mr. Boehner said, "but the incentives have to outweigh the costs. Businesses are not going to hire someone for a $4,000 tax credit if government mandates impose long-term costs on them that significantly exceed the temporary credit." That's a not-too-subtle shot at the White House, whose plan dangles tax breaks in front of employers in 2012, then snatches them away in January 2013.

The Boehner speech did warn the Democrats that tax increases are not a viable option. The speaker endorsed a regulatory freeze as well. "I would also urge the president," he advised, to "tell every member of his cabinet: 'Until further notice, I don't want anything that gets in the way of private-sector job creation.'" He said he wants to see passage of the REINS Act, which requires congressional review of costly regulations. There was a vague endorsement of tax reform and lower rates on individuals and corporations. And Mr. Boehner expressed high hopes that the congressional "super committee" will come up with the mandated $1.5 trillion in budget savings. One theme of the speech was that deficit reduction is a "jobs program."

This GOP response to the president's jobs proposal was appropriately tough and critical, but the GOP still is missing a concrete and salable economic revival plan. Those who want the Republicans to go big and go radical will be disappointed. Economically anxious independent voters who want to see a fresh jobs agenda from Republicans will have to keep looking. This was a game plan for playing defense, not offense.” - Stephen Moore writing in The Wall Street Journal Political Diary 09/16/2011

　

The 2013 Tax Cliff

What is meant by the 2013 “tax cliff” being formed by the Obama Administration? (1) (2) In 2013 you would have the following recipe for a tax cliff:

(1) Bush era reduced tax rates expire,

(2) temporary tax holiday regarding payroll tax expire,

(3) proposed increase in marginal tax rates proposed in the so called “Obama Jobs Plan” come into effect,

(4) the laundry list of tax increases associated with ObamaCare come into effect.

Notes:

(1) http://www.naturalnews.com/news_000615_Heading_towards_2013_tax_cliff.html

(2) http://online.wsjWSJ_hp_mostpop_read

Paul Ryan on Pro-Growth Tax Reform

Keynesian Twilight Zone

Did the European Union [EU] Have a Counterpart to the Federalist Papers?

The Federalist Papers, the collection of the eighty-five articles written from 1787-1788, where/are important in many ways. One very important point about the federalist papers and the discussion of a constitution based on a central government is that the discussion was widely published in newspapers and periodicals. Therefore, wide accessibility was accomplished and consequently widely discussed by the general public.



Did the European Union [EU] Have a Counterpart to the Federalist Papers? Yes and no.

In a most excellent essay entitled Does the Treaty of Lisbon Need A European Version of the Federalist Papers? , Dr. Timothy S. Boylan, 04/2008  discusses this very subject. (1)

Several excellent points exist in the essay. Two excellent points are:

(1) the lack of a Federalist Papers, 85 articles published in widely accessible public media, leading to a wider public discussion/understanding: "..little guidance in term of simply, clearly, and effectively communicating these realities to the public". (2) That is, the under pinning's, theory, concept, etc. of the "treaty" aka "constitution" of the EU was not and still is not widely communicated to James and Jane Goodfellow,

(2) a discussion similar to the 85 articles making up the Federalist Papers does exist, but it exists in such obscure places that the public would have no ready access. (3)

One could surely look at the above two points in many different ways. One way to look at the Federalist Papers is: even today the Federalist Papers are studied, many generations after the fact. That is, the Federalist Papers were not only an open public discussion when originally written, the Federalist Papers remain an open public discussion two hundred years later. Hence wide public access by the original generation , many subsequent generations, right up the current generation, has created a "public" reference point.

For example, although the average U.S. school student hasn't read the Federalist Papers, the concepts of the Federalist Papers are taught in history and civics classes two hundred years later. Hence the "concepts" are discussed, debated, understood or rejected, etc. Two hundred years from today will EU children subsequently growing into adults have the same knowledge, discussion, debate, etc.?

The "general public" disconnect regarding the formation and constitution of the EU is likely another piece of the puzzle regarding the current difficulties in the EU.

　

Notes:

(1) Does the Treaty of Lisbon Need A European Version of the Federalist Papers? , Dr. Timothy S. Boylan, 04/2008. http://verfassungswandel.files.wordpress.com/2008/10/21-boylan-paper.pdf

(2) Ibid

(3) Ibid

Al's Earth is No More

‘Nature Journal of Science, ranked as the world’s most cited scientific periodical, has just published the definitive study on Global Warming that proves the dominant controller of temperatures in the Earth’s atmosphere is due to galactic cosmic rays and the sun, rather than by man. One of the report’s authors, Professor Jyrki Kauppinen, summed up his conclusions regarding the potential for man-made Global Warming: “I think it is such a blatant falsification.” ‘ - Chriss W. Street, big government.com, 09/06/2011

For complete story entitled Nature Journal of Science Discredits Man-made Global Warming please see link below:

http://biggovernment.com/cstreet/2011/09/06/nature-journal-of-science-discredits-man-made-global-warming/

Obama jobs plan: social overhead capital [infrastructure] spending and the "pensions for potholes" argument.

In regards to the Obama jobs plan, specifically the proposed spending on social overhead capital [infrastructure], take a moment and consider the argument "pensions for potholes". Pensions for potholes is the argument that tax monies have been diverted from maintenance of social overhead capital to fund the benefits/retirement plans of public sector employees. Extending the argument into the future, more and more monies will have to be diverted from infrastructure [new and maintenance of existing] to fund benefits/retirements.

Keeping the above points in mind, one could surely make the argument that the proposed infrastructure spending is an indirect funding of public sector pensions/benefits. That is, rather than reforming the benefits/pensions of public sector employees and allowing tax monies to flow to social overhead capital, the benefits/pensions are not addressed and exogenous money is appropriated to address the problem caused by the diverted monies going to benefits/pensions rather than monies flowing to infrastructure.

Argument with no Arguments: the quintessential textbook case.

"We got to keep an eye on the battle that we face: The war on workers. And you see it everywhere, it is the tea party. And you know, there is only one way to beat and win that war. The one thing about working people is we like a good fight. And you know what? They've got a war, they got a war with us and there's only going to be one winner. It's going to be the workers of Michigan, and America. We're going to win that war. . . . President Obama, this is your army. We are ready to march. Let's take these son of bitches out and give America back to an America where we belong" -- Teamsters President Jimmy Hoffa speaking at a rally for President Obama in Detroit on Sept. 5. (1)

In the above quote exactly what entails the “war on workers”? Exactly how does the tea party [a non existent political party] articulate a “war on workers”? The non-defined and example-less “war on workers” is going to be refuted by means of marching? Marching will “…take these son of bitches out…“? Hence we have an argument with no underlying the arguments.

It’s the quintessential textbook case of the argument with no arguments.

(1) Wall Street Journal Political Diary, 09/06/2011

Jobs report: public sector jobs

You have likely heard media reports, pundits, and politicos recently pointing toward public sector layoffs as being a major driver of the unemployment rate remaining persistently high (9.1% u3, 16.2 u6). That is pure notion and its wrong on so many levels it would take a 50,000 word essay to address all the fallacies. (1)

However, we know for a fact that public sector jobs are shed twelve months after the onset of a recession because the public sector budgets one year in advance and tax receipts fall during recession. Hence after the twelve month advanced budget expires and the tax receipts are down the public sector layoffs begin. The spruce goose of all stimulus plans ever concocted [social engineering heaven] was specifically designed to delay the above mentioned public sector layoff phenomena. The stimulus is now gone and now the inevitable occurs as tax receipts are down and lay offs begin. Therefore the argument has no merit as it’s a normal economic phenomena that has merely been delayed.

Another fallacy (of the tons that could be addressed) is the implicit assumption of necessary, needed and required. Media reports, pundits, and politicos pointing toward public sector layoffs make the implicit assumption that the public sector jobs that have been shed are somehow necessary, needed and required. That restoring such jobs is implicitly assumed to be necessary, needed and required. Riddle me this: James and Jane Goodfellow do not even notice and see no difference in service. Are the now absent public sector positions necessary, needed and required to James and Jane Goodfellow? How can something be necessary, needed, and required if one can tell no difference in service? Maybe a better point is that the now absent public sector positions are only considered necessary, needed and required to the wards of the state class, politicos [power purveyors of state], and those that generally believe in “state”.

A final point is “what goes up always goes up”. From 2002-2007 tax receipts by state and local government expanded rapidly. There is no doubt that the politicos in power had the exact same mind set as homeowners, that being, what goes up always goes up. Hence they spent money hand over fist, issued new debt, and hired an extraordinary number of new workers. What was produced was a false margin. The marginal hires were hired under false revenue numbers [a revenue bubble as it where] accompanied by new issuance of debt and workers added is association with the debt. That is to say, the total number employed in the public sector as of 2007 was a false number. You can no compare current or future employment levels to 2007 levels as 2007 levels were false. Therefore any valid comparison would need to at the very least go back to the 2001-2002 levels.

Notes:

(1) Unemployment Rate - U6, Portal Seven, http://portalseven.com/employment/unemployment_rate_u6.jsp?fromYear=2007&toYear=2011

U.S. Government to Sue 17 Financial Firms Over Home Loans

"The top federal housing regulator filed lawsuits on Friday against 17 of the world's biggest financial institutions, saying they sold $196 billion of risky home loans over four years to Fannie Mae and Freddie Mac without adequately disclosing the risks.

The suits, filed by the Federal Housing Finance Agency, represent the most sweeping action to date from a federal regulator stemming from the mortgage meltdown, which brought the financial system to its knees in the fall of 2008 and helped push the economy into a deep recession." (1)

"Among those targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., and Goldman Sachs Group Inc. Large European banks including The Royal Bank of Scotland, Barclays Bank and Credit Suisse were also sued.

The lawsuits were filed by the Federal Housing Finance Agency. It oversees Fannie and Freddie, the two agencies that buy mortgages loans and mortgage securities issued by the lenders.

The total price tag for the mortgage-backed securities sold to Fannie and Freddie by the firms named in the lawsuits: $196 billion." (2)

Milton Friedman stated many times that legal recourse is one of those checks and balances within free enterprise/free markets to weed out the unscrupulous.

In this particular case exactly where is the root problem? Does legal action need taken to root out the source of the problem or the problem's results?

In John B. Taylor's book Getting Off Track he makes a very convincing argument that the government itself set the stage for financial shenanigans. (3) The community reinvestment act, the Clinton Administration's aim to raise the percentage of home ownership, the lowering of standards for a loan application approval (which was government directed), etc., along with the cheap money bubble created in 2003-2004 by the Fed [government] set the stage for the financial shenanigans that followed. Stated alternatively, no government intervention in the housing market and no government induced cheap money bubble then no stage is set for financial shenanigans. If one sets the stage for financial shenanigans then one should be surprised to find financial shenanigans?!?

Secondly, the residential housing sector is in a depression. Partly due to the above phenomena and also due to the government directing way too many resources into a single sector (residential housing) via the aid of the tax code. Hence suing lenders is going to help the housing market -or- is suing lenders merely blaming some entities for the housing market depression?

Most importantly, how does this action solve the current economic malaise?

Notes:

(1) U.S. Sues Big Banks Over Home Mortgages, Wall Street Journal, 09/02/2011
http://online.wsj.com/article/SB10001424053111903895904576546904174271250.html

(2) Feds sue big banks over sales of risky investments, Yahoo Finance, 09/02/2011
http://finance.yahoo.com/news/Feds-sue-biggest-US-banks-apf-3066897747.html

(3) Getting Off Track: How Government Actions and Interventions Caused, Prolonged, and Worsened the Financial Crisis. John B. Taylor, Hoover Institution Press, February, 2009.