Beyond The Cliff...The Abyss?

Mort Zuckerman, writing for the U.S. News has this to say about the huge financial problem of unfunded debt facing America. Zuckerman says  that this problem dwarfs the fiscal cliff as an economic disaster.

A key quote from the piece:

"The greatest fiscal challenge to the U.S. government is not just its annual deficit but its total liabilities. Our federal balance sheet does not include the unfunded social insurance obligations of Medicare, Social Security, and the future retirement benefits of federal employees. Only in the small print of the financial statements do you get some idea of the enormous size of the unfunded commitments. Today the estimated unfunded total is more than $87 trillion, or 550 percent of our GDP. And the debt per household is more than 10 times the median family income."

As Glenn Reynolds (the Instapundit) likes to say:

"Something that can’t go on forever, won’t. Debts that can’t be repaid, won’t be. Promises that can’t be kept, won’t be. Make your plans accordingly."

I am.

We've Seen This Movie Before

And we know how it ends.

I'm talking about the little dance routine going on between GOP and Democratic leaders over the "fiscal cliff" negotiations. As I listen to Speaker Boehner and Senator McConnell go through their usual rhetorical machinations, I ask myself how guys so easy to roll got to be in top leadership spots. I feel like it is inevitable that the GOP will cave on "revenues" in exchange for some vague and distant spending cuts. And, they'll still get the blame for whatever fiscal tragedy occurs.

It particularly bothers me since the answer is simple. The President's campaign had only one consistent, specific theme. He asked that those making over $250,000/yr. pay "a little bit more" as part of "a balanced approach" to reducing the deficit. The election results came in and it would seem that the people agreed with the President.

As such, the Speaker should announce that "the people have spoken" and the House should immediately pass a bill extending the Bush tax cuts to all taxpayers except those making over $250,000. He should then ask the President to outline the spending cuts which were to be his part of the "balanced" deficit reduction. This would compel the President to put something on the table or be exposed as (to use his term)  a "bulls.....r".

The Republicans could stay faithful to their "no tax increase" pledge. Their vote, after all, would be to extend most of a tax cut, not to raise any tax. The President would be left to explain how his campaign rhetoric regarding taxing the rich brings in only $80 or $90 billion and leaves us over $1 trillion short of balancing the budget. That should be interesting.

Unfortunately, I don't think our GOP "leaders" have a clue. If, instead of winning, they cave again, the GOP may be finished, because the Tea Party members and other fiscally conservative Republicans are almost certain to say good-bye.

UPDATE: Here's an interesting article proposing that the GOP adopt the Simpson-Bowles deficit plan as an alternative to the almost certain disaster awiting them as a result of the current "negotiations".

Where The Economy Goes From Here

As a conservative, I have grave concerns about President Obama's re-election and its likely effects on the US economy. I have been quite afraid that we are likely to head further down the road towards a state-directed economy, much like European social democracies.

In this blog, University of Chicago economist, John Cochrane, makes a few predictions. They really aren't pretty. The most obvious; that four more years of Obama means four trillion more dollars added to our national debt.

The part of his post that troubles me the most, however, is his description of the incredible breadth of regulations which are already on tap and slated to be implemented as a result of current legislation and executive fiat. Here are his examples just dealing with the EPA:

• Greenhouse gases. Detailed industry controls focusing on greenhouse gas emissions. They're even going to regulate cow farts. Sorry, Farm Methane Emissions. It's funny unless you're a dairy farmer. Hundreds of billions
• Between greenhouse gases, much tighter mercury limits, and designating coal ash a "hazardous substance" like nuclear waste (I'm exaggerating, but that's the idea), the end of coal.
• Tight fracking regulations.
• Much tigher ozone standards. Many cities are now way over the limit.
• Cut sulfur in gas from 30 ppm to 10 ppm. EPA: $90 billion a year
• Temperature standards to protect fish in power plant cooling ponds
• Tighter standards for farm dust. Farms have to submit mediation plans.
• Water quality control for every body of water in the country.
• Strict regulation of industrial boilers ($10-20 billion)
• Formaldehyde emissions from plywood. I didn't know Home Depot was a dangerous place to hang out.  

There are a lot more examples, coming as a result of the ACA (Obamacare), the Dodd-Frank law, and other Federal laws and executive orders.

Read the whole post, but make sure you have the stomach for it. If this guy is half right, our economic future is not a happy one.

Be Careful What You Wish For

President Obama regularly claims that the American people should give him more time to fix our economy because he was handed such a gigantic economic mess. He likes to claim that he inherited the worst economy since the Great Depression.

Well, in addition to his claims making him sound like a whiner, they may be demonstrably wrong, as well.
This blog post offers an opposing view.

Moreover as Lloyd Tackitt (via Instapundit) notes, Obama asked for the job: “Obama didn’t inherit a bad economy, he applied for the job of fixing it. He literally begged to get his hands on it so he could fix it. He ran a competitive campaign to get the job of fixing it and shouted about how bad of a condition it was in. Now he twists it so that it sounds like it was something dumped on him he didn’t really want. He has gone from bragging that only he could fix it, to whining that it was worse than he expected. Why is it that no one calls him out on this? I haven’t heard even the most conservative of pundits call him on this.”

I agree. Obama asked for the chance. We gave it to him. He failed.

Next contestant!

Don't Mess With Texas

As many people know, Texas is one of a handful of states where the economy is booming, while California is one of too many which seem to be limping towards bankruptcy. Dallas Federal Reserve President Richard Fisher explains the difference with this story:

"The governor of California is jogging with his dog along a nature trail. A coyote jumps out and attacks the governor's dog, then bites the governor. The governor starts to intervene, but reflects upon the movie Bambi and then realizes he should stop because the coyote is only doing what is natural.

He calls animal control. Animal control captures the coyote and bills the state $200 for testing it for diseases and $500 for relocating it. He calls a veterinarian. The vet collects the dead dog and bills the state $200 for testing it for diseases. The governor goes to the hospital and spends $3,500 getting checked for diseases from the coyote and getting his bite wound bandaged.

The running trail gets shut down for six months while the California Fish and Game Department conducts a $100,000 survey to make sure the area is now free of dangerous animals. The governor spends $50,000 in state funds implementing a 'coyote awareness program' for residents of the area. The Legislature spends $2 million to study how to better treat rabies and how to permanently eradicate the disease throughout the world.

The governor's security agent is fired for not stopping the attack. The state spends $150,000 to hire and train a new agent with additional special training, re: the nature of coyotes. People for the Ethical Treatment of Animals (PETA) protests the coyote's relocation and files a $5 million suit against the state.

The governor of Texas is jogging with his dog along a nature trail. A coyote jumps out and tries to attack him and his dog. The governor shoots the coyote with his state-issued pistol and keeps jogging.

The governor spent 50 cents on a .380-caliber, hollow-point cartridge. Buzzards ate the dead coyote.

And that, my friends, is why California is broke and Texas is not."

In fact, this story pretty much encapsulates the choice facing Americans on Election Day. We must choose between the Statists who believe in Government solutions to all problems or Free Market advocates who believe individual and market choices should guide us.

I'm going for Texas.

Note To Romney, GOP...Don't Get Cocky

While its just about unanimous across the political spectrum that Romney cleaned the President's clock in tonight's debate, I sure hope that nobody in Romney's camp thinks the election was won tonight.

It was a great start. I'm sure that this was the first time many millions of Americans got an unfiltered look at Romney. They had to be impressed with his knowledge and demeanor. Moreover, if all they ever knew about Romney had come from the MSM or the Obama campaign, they must be perplexed that he is nothing like the heartless aristocrat they had heard about.

Still, Obama's palace guard in the media will start spinning the story in some way. Also, you may recall that in 2004, Kerry beat up George W. Bush pretty badly in their first debate. Bush did much better later. Of course, he was helped by the whipping Dick Cheney gave to John Edwards in the VP debate. Obama probably should not count on Joe Biden taking out Paul Ryan.

Romney needs to know that Obama will be out for blood next time. Surely, Obama will be far better prepared.  He will challenge Romney on a number of points and Romney should expect to take shots about his "inappropriate" criticism of the embassy attacks and his 47% comments. Romney needs to repeat this steady, assertive performance a couple more times. If he can, he may well become President. If he tries to coast, he'll be an also ran.

Romney 1---Obama 0

Debate number one went to Mitt Romney by a knockout.

I'm a partisan, but anyone who watched this had to have the same opinion. In fact, a number of liberal commentators were stunned by the President's poor showing. Chris Matthews was almost apoplectic in his view that Obama was weak tonight.

For me, the thing I noted was the vast difference in knowledge about economic matters. Romney was in command of facts and economic principles. The President had only his talking points. He clearly does not have a real grasp on economics. If the average guy watched this, there was a clear contrast in competence.

But He's Trying!

The Saturday edition of the Democrat and Chronicle included a guest essay from RIT Professor Ronald Amberger. The essay was titled Obama doesn't set oil prices and tried to "explain the real reasons that oil prices are rising ("speculators, people who refuse to conserve oil and the refusal to look to alternative energy sources").

The essay is brief, but Professor Amberger's agenda comes through quite clearly. He is clearly in the Obama/Chu camp of persons who think that Americans need to get used to higher prices for fuel so that "good" (read: green) alternative energy sources are economical (he underscores the fact that natural gas or nuclear energy need not apply).

He makes an incredible argument that if we produced more oil in the US it would only mean "that less oil is produced elsewhere and the price is unaffected". Really? I would love to challenge the economic theory behind that statement, but suffice it to say, if we produced more oil in the US, we would, at least not be lining the pockets of our enemies by purchasing foreign oil. Amberger, like Obama and Chu, wants us to fall for green energy even though the cost is 4 to 5 times the cost of carbon fuels and despite the fact that no green energy source has proved feasible on any significant scale.

The thing that really bugs me about the essay is the hypocrisy. The President, the Energy Secretary and Professor Amberger all actually believe that rising prices for gasoline are a good thing. They just don't want to be blamed by the" unreasonable" and "ignorant" public who don't want or like the high prices. If they are all so damn sure they are right, they should make the case for alternative energy without resort to smoke and mirrors.

The problem is that they can't.

Gates' Boom Continues

Despite the economic doldrums across the State and the region, the Town of Gates continues to be a hub of economic development.

Today's Democrat and Chronicle reported on the expansion of Closing, USA, a real estate and title company which is moving into the Rochester Tech Park and adding about 100 new jobs. This comes on the heels of expansion of the Sutherland Group (400 jobs), the Quaker Steak opening (100 jobs) and the expansion of Precise Tool on Cherry Road.

The Tech Park is now over half full (and remember, we are talking about a huge facility; it was built to hold 26,000 employees). There have also been a number of upgrades of many properties in the town, such as the Wegman's office building on Chili Avenue and storefronts in the Gates Plaza and Tops Plaza.

Future developments include the opening of Jeremiah's restaurant and the possible construction of a Fast Track gas station/convenience store. There have been preliminary discussions regarding hotels and residential developments, too. Finally, an unconfirmed rumor has it that the Seneca Nation has the Tech Park on its short list for possible casino sites.

Gates has always been the geographic center of Monroe County. Now it is becoming the economic center, as well.

UPDATE 2/10/12:

I spoke with Supervisor Assini this morning and he informed me that Gates' businesses have added a net of 1600 jobs in the past 14 months. And unlike the jobs allegedly created by the Obama Administration, you can actually find these 1600 workers in the Town of Gates.

No "Obama Moment" For Kodak

The Kodak bankruptcy has understandably been big news in Rochester, but given Kodak's iconic status, it has also made news across the country.

This is a sardonic take by Henry Payne in the National Review Online about the way the Obama administration operates, using the Kodak B/K as its basis. To be fair, Kodak would not have been a business which really justified a bail-out, but Payne is correct on the point that since Kodak is a non-union shop, the idea would never have come up in the current administration.

Hanson: Fat Lady Hasn't Sung Yet For USA

Victor Davis Hanson has always been one of my favorite columnists. I think its partly because he is an historian and he is able to view current issues in light of historical perspectives.

In this essay from the National Review Online, Hanson reminds us that things have looked bad for America before but we have always pulled ourselves up by the bootstraps and held our place in the forefront of nations. He notes that we have serious problems today and that many commentators see China as our inevitable successor. But he also points out, that at other times of economic trouble, those same pundits thought that Germany or the Soviets or Japan or the EU would supplant the US. He also calls out our many strengths as a nation.

Here are two paragraphs:

"We forget sometimes that there are a host of small, vulnerable nations that apparently still assume that the United States, alone, can and will come to their aid. Without America, it is hard to see how Israel can survive, or that Kurdistan would ever have become autonomous, or that bankrupt and vulnerable Greece will have independence of action in a tough neighborhood, or that Taiwan will continue as we have known it. No one is talking about the defense of Europe as it implodes — apparently on the supposition that NATO is de facto American and will continue to protect the continent from outside threats and discourage historical tensions from within. The truth is that in the decades ahead, weak and vulnerable states will look to the U.S. military as never before.

A billion adolescents worldwide are growing up with Apple iPhones, iPods, and iPads; with Facebook accounts, Amazon online ordering, Google searches, and Walmart discount purchasing. These are not Russian, French, Chinese, or Japanese companies, but American inventions that uniquely appeal to the human desire for economy, ease of use, wide choice, informality, and transparency. No other country could have invented them — or the next generation to come. The idea of a Chinese-invented Google is a paradox, a Russian Facebook a joke, a Japanese-inspired Walmart impossible."

This is VDH at his best. He's telling that its too soon to throw in the towel. Its worth taking the time to read it all. Trust me, you'll feel a little better about our prospects.

Please, Sir, I Want Some More.

No, I'm not referring to Oliver Twist, instead my heading refers to John Halstead, the President of SUNY Brockport. He wrote this essay in todays Democrat & Chronicle suggesting that SUNY tuition should be allowed to increase.

His essay outlined his arguments justifying a tuition increase. He also described the potential negative ramifications of a failure to do so.

I don't have a big quarrel with his argument about possible service cuts, but I think there is an underlying question that his essay left begging. I would like an explanation from an educator like Mr. Halstead regarding the reasons that college education costs have outpaced inflation by a factor of four. Are there some unique factors which have necessitated such cost growth? Everything costs more than it did 20 years ago, but the costs of higher education have skyrocketed. Details, please.

Mr. Halstead's arguments are reasonable if the current cost structure is reasonable. I'd like a discussion in that vein before we simply agree to more of the same.

Big Three Bail-Out. First Step On Road To Government Managed Economy?

I am deeply troubled by the "bail-out fever" that has overcome Washington and, apparently, the nation. I don't have any facts or brilliant rationale behind this view, I just think it is a very serious mistake to give the government so much control over our lives.

Make no mistake, these bail-outs come at a price which is larger than the dollar amount involved. The government getting a stake in major industries means control over them. For example, if we bail-out the "Big Three", consumers will no longer decide what cars are made based upon which cars we want to buy, the "car czar" will decide what types of vehicles are made available to us based upon things like fuel economy and other things that are "good for us".

Frankly, I'm appalled at the spectacle of the Big Three CEO's begging for money. The pitiful scene was made worse by the fact that half the reason for their need for help is the regulations imposed on them by the Congress they were begging from.

As Holman Jenkins notes in this article from The Wall Street Journal, there is a big problem with the proposed rescue plan; to wit: "[t]o become "viable," as Congress chooses crazily to understand the term, the Big Three are setting out to squander billions on products that will have to be dumped on consumers at a loss". His article goes on to point out how CAFE standards set by Congress, along with the lawmaker's allegiance to (and fear of) the UAW, have been the catalyst for a great deal of the automakers' problems.

The more general problem is the fact that we are quite possibly seeing the first steps in the "nationalization" of the US economy. The free market, which has ruled in America since its inception, and which, I believe, is responsible for our prosperity, may be giving way to a state managed economy. Worse, business leaders, first in the banking industry, and now the auto industry are asking the government to take over. They should be fighting this, kicking and screaming; instead, they are begging for government "help".

Worst of all, President Bush is apparently going along with this plan. Why? Isn't it obvious to him that the Democrats just want him to sign off on the "first steps" down the road to this new economic reality? Thus, next year, when they make the really dramatic changes, they can say "hey, George Bush was behind it". He's giving them cover. Why?

The whole bail-out mentality really troubles me. Lenders, borrowers, businessmen, none of them want to be responsible for their plight. They all want someone else to rescue them from mistakes they made. Why should we do it? And how long can we afford to do it? I'm not an economist, but I truly believe that if we continue on this path, our economy will be ruined and our future will not be anywhere near as prosperous as our past.


UPDATE 12/13:

Check out this PowerLine article. It contains sentiments similar to mine regarding the way in which the Bush Administration has chosen to deal with the auto industry bail-out. The following lines from that article reflect my views completely:

"To me, the most disheartening aspect of the current bailout spree is the spectacle of executives from the banking, investment banking, insurance and auto industries begging the government for cash like teenagers who have blown their allowances and are abjectly asking their Daddy for more money. The government as Daddy--wasn't that supposed to be a liberal concept?"