"Men are so simple and so much inclined to obey immediate needs that a deceiver will never lack victims for his deceptions." — Niccolo Machiavelli
Obama thinks we should pay for this reelection campaign bus tour because, in the now infamous words of Press Secretary Carney:
“He’s the President of the United States.”
You can see the “context” of Carney’s comment here.
The political nature of Obama’s trip so blatant that the biased media wing of the Democrats’ party is not even trying to hide it:
- The Voice of America calls the bus tour a “Three-State Counteroffensive.”
- Reuters refers to the bus tour as “campaign mode” and “unmistakable campaign style.”
- The Associated Press reports that Obama starts a “political counteroffensive this week.”
The Republican National Committee has dubbed Obama’s taxpayer-funded reelection campaign bus tour the “Debt-End Bus Tour,” or “DEBT.”
Yesterday in Iowa, Barack Obama proved once and for all that he does not understand how the economy works: Byron York writes in the Washington Examiner that Obama claims to have reversed the recession until he was stricken with a spate of “bad luck”:
“At a town hall meeting on his campaign-style tour of the Midwest, President Obama claimed that his economic program “reversed the recession” until recovery was frustrated by events overseas. And then, Obama said, with the economy in an increasingly precarious position, the recovery suffered another blow when Republicans pressed the White House for federal spending cuts in exchange for an increase in the national debt limit, resulting in a deal Obama called a “debacle.”
“We had reversed the recession, avoided a depression, gotten the economy moving again,” Obama told a crowd in Decorah, Iowa. “But over the last six months we’ve had a run of bad luck.” Obama listed three events overseas — the Arab Spring uprisings, the tsunami in Japan, and the European debt crises — which set the economy back.”
In the first place, perhaps I have been living in the wrong one of John Edwards’ Two Americas, but I don’t really remember how everything was just fine in the American economy before the the tsunami hit Japan. That really seems like the sort of thing I would have noticed but maybe I just had my head in the sand – I am sure the American people will remember it next November, though. Second, I am a little puzzled as to how the debt ceiling compromised – which was passed two weeks ago – caused the recession to persist for the better part of the last three years. It’s even more puzzling than Katrina vandenHeuvel’s (one of the most Marxist writers in the country) assertion that the August debt compromise caused a bad jobs report for July.
All of that aside, does Obama really think “bad luck” is the reason the economy is the way it is? If he really doesn’t have a better explanation then he ought to do the country a favor and step aside in favor of someone who actually understands that jobs are created by hard working, intelligent and/or creative people that he has spent the last 4 years demonizing and punishing at every opportunity. Their ability to create jobs is hampered by pointless regulation and their ability to obtain capital to continue functioning is hampered by the uncertainty that is created by leadership that is rudderless and/or openly hostile to wealth creation. When businesses don’t know if their plans will be hampered by arbitrary regulation or their profits confiscated, they don’t grow and jobs don’t get created.
That isn’t “bad luck,” it’s bad policy. And the country can’t take any more of it.
Now, according to a Fox News report, Obama says he has a plan for job creation, but he won’t tell us about it until he returns from his vacation next month — how kind of him..
“As he prepares to give a major speech with fresh ideas to jump-start the economy, President Obama told a Kansas City television station Tuesday that he wants to rein in the deficit in the long term in order to spend on jobs programs "here and now."
Two senior officials confirmed to Fox News that the president will deliver an address focused on jobs and deficit reduction next month. On the deficit front, he is expected to submit a plan to the newly formed bipartisan committee -- which is supposed to find $1.5 trillion in savings -- urging the panel to go beyond its mandate and seek more.
In an interview Tuesday, the president hinted that he wants to seek deeper savings down the road to pay for a bigger jobs program now.
"I think that we've got to take a longer term view -- how do we deal with our deficit and debt in a long-term way? If we get that under control, we can actually pay for some additional job programs in the here and now," Obama told FOX 4 in Kansas City. "It's that kind of combination that I want to be able to present to Congress when they come home."
The president repeatedly has pushed for an extension of the payroll tax cut, the approval of several international trade deals and an extension of jobless benefits. The jobs speech is expected to detail fresh ideas, including additional tax cut proposals.
But Republicans quickly voiced skepticism about the president's latest push. Senate Republican Leader Mitch McConnell's office, under the heading of "here we go again," sent around a list of eight other jobs speeches Obama has given.
Sen. Jerry Moran, R-Kan., urged the president to focus his new approach on encouraging the private sector to expand.
If the president's proposals will just be once again ... reflecting his belief that you simply spend more money to create more jobs, it won't work," he told Fox News. "It's how we got into the downgrade that we're in."
House Speaker John Boehner and House Republican Leader Eric Cantor, in a USA Today op-ed Wednesday, urged Washington to pursue "pro-growth policies" that ease the tax burden on small business and roll back "redundant regulations."
What this really means is that he has no plan Obama and his circle of academic advisors hasn’t the slightest idea of how this economy works. Jobs are not created by more unemployment benefits, more government stimulus spending or infrastructure banks. Jobs are created by people in the private sector taking the risk to invest their time and treasure in entrepreneurial ventures for the purpose of making a profit.
“Last year, right before Earth Day, Seattle Mayor Mike McGinn traveled to the White House to announce a wondrous $20 million federal grant to create “green jobs” in the weatherization industry. Insulating houses would create at least 2,000 jobs, and save the Earth by reducing Seattle’s carbon footprint, which is probably even bigger than Al Gore’s.
A year later, the Seattle Post-Intelligencer surveys the ruins of another in the long, long, long string of miserable Obama failures:
As of last week, only three homes had been retrofitted and just 14 new jobs have emerged from the program. Many of the jobs are administrative, and not the entry-level pathways once dreamed of for low-income workers. Some people wonder if the original goals are now achievable.
"The jobs haven't surfaced yet," said Michael Woo, director of Got Green, a Seattle community organizing group focused on the environment and social justice.
"It's been a very slow and tedious process. It's almost painful, the number of meetings people have gone to. Those are the people who got jobs. There's been no real investment for the broader public."
You read that right: fourteen jobs. At a cost to the U.S. taxpayer (well, the U.S. taxpayer’s unborn children) of twenty million dollars. That works out to $1,428,571.43 per job created.”
Today we have an official national unemployment rate of 9.2% with an unofficial rate of close to 18%. This unofficial rate is comprised of people working part-time, those who’s unemployment benefits have expired and people who have given up looking for work. This rate is even higher among the African American community in the urban centers where black youths are not even counted by the Bureau of Labor Statistics as they are wards of the state.
Obama, like all progressive lefties, believe jobs can be created by more government spending. When Franklin Roosevelt was elected president in 1932 the unemployment rate in the United States was 24%. After eight years of government spending on jobs programs such as the Public Works Administration (PWA), Works Project Administration (WPA) and the Civilian Conservation Corps (CCC) unemployment declined to 15% in 1940. It never dropped below 5% until 1942 when World War II broke out and millions of Americans were drafted into the military.
Many people were put to work building roads, bridges, dams, sewer lines and parks by these government agencies, things the nation needed. But, even with all of this government spending unemployment would not drop below 15%. Even then Secretary of the Treasury, Henry Morgenthau, said:
“We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and if I am wrong somebody else can have my job. I want to see this country prosperous. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this Administration we have just as much unemployment as when we started. And an enormous debt to boot."
While many of these public works projects were needed for the good of the country they would have been built regardless of the depression. Infrastructure projects such as dams, bridges, roads and sewer lines are not constructed to create jobs. They are built to fill a need by the community or nation. President Eisenhower’s Interstate Highway project was not constructed to create jobs, it was built to give the nation the greatest network of super highways in the world.
Infrastructure projects are built for need and financed as a one of project. They are paid for out of revenues from gas or property taxes, with voter approval, and usually financed through the sale municipal bonds. They are project specific and not built to provide employment, although they will generate short term work for engineers, contractors and skilled equipment operators. Once the project is completed the jobs vanish and those engineers, contractors and skilled equipment operators must look for another project where they can sell their expertise and experience. Secondarily these projects create very little ancillary or spin off jobs. The only spin off from these projects is the money the engineers, contractors and skilled workers get to spend for their personal needs and desires. I know this as having been part owner of a medium sized civil engineering and land surveying business for 35 years engaged in both public and private sector projects.
After World War II the unemployment rate dropped to less than 3.8% by 1948. This was astounding considering the millions of soldiers, sailors and Marines were being discharged from military service and reentering the civilian work force. What was the major impudence for his phenomena? It was the home building industry.
These returning servicemen had some cash from their military service and the government sponsored GI home loan program allowed the private home building industry to blossom. Massive home building and development programs such as Levittown, and Lakewood and Norwalk in Southern California provided not only affordable, livable housing and communities along with jobs for civil engineers, surveyors, carpenters, bricklayers, plumbers and electricians they also created millions of spin off jobs and businesses.
As I wrote in my blog post “What Separates The Rich from The Poor:
“Just consider the industries that have sprung up due to this fundamental concept in our body of laws. First we have farming. A private individual can own and cultivate his own farm and sell the produce on the open market. He is no longer a sharecropper dependent on the “master” to earn a meager living. The farmer can divide his land and sell off parcels, if he so desires, and when he dies the land and all of its value passes to his heirs.
Second is the home building industry. About 67% of Americans own their own homes. This has created hundreds of supporting businesses such as; title companies, building contractors, architects, civil engineers, land surveyors, mortgage companies, underwriters, home loan banks, appraisers, law firms, and insurance companies to name a few. It has created gainful employment for millions of Americans, who in turn have purchased their own homes. All of this because of a simple document backed by the force of law — a deed based on secure title.”
I only touched on a few of the jobs and business that are created by a healthy home and commercial building industry. If you were to make a list of businesses and jobs created by this industry you would need many sheets of legal-sized paper. There are not only the jobs that I mentioned but jobs in businesses such as the home improvement stores, landscapers, alarm companies, telephone and cable installers, waste management companies, pool cleaners, nurseries, furniture stores and manufacturers, appliance makers, and utility companies. I am sure you can add many more to my list.
The people who are employed in the home building industry are the people who purchase the homes they build. The also purchase vehicles, TV sets and clothing. They take vacations and go to the movies. They buy their own food and pay taxes. This is no doubt one of the greatest supply chains in he world.
When the housing bubble burst due to flawed government sponsored lending programs causing an oversupply in the market our economy took a giant nose dive. People were buying homes they could not afford and banks were making mortgages they knew could not be repaid and then passing them off to the federal government. The result was escalating prices and oversupply. The bubble had to burst. All of Obama’s spending ahs not brought the housing industry back to life.
At first blush, it might seem hard to imagine how one can contend that a press report describing an industry sector as operating "at depressed levels" and at volumes that are one-half of what "economists consider to be healthy" isn't telling the whole truth. But that's exactly how I would describe Tuesday's article by the Associated Press's Derek Kravitz after July's Census Bureau release on housing starts, building permits, homes under construction, and completions. Kravitz reported:
Builders broke ground on fewer single-family houses in July, leaving home construction at depressed levels.
The Commerce Department said Tuesday that builders began work on a seasonally adjusted 604,000 homes last month, a 1.5 percent decrease from June. That's half the 1.2 million homes per year that economists say must be built to sustain a healthy housing market.
Single-family homes, which represent 70 percent of home construction, fell 5 percent. Apartment building rose more than 6 percent.
Building permits, a gauge of future construction, declined 3.2 percent. Jill Brown, vice president of economics at Credit Suisse, said that decline suggests "very little forward momentum."
“U.S. homebuilders are just as pessimistic about the depressed housing market as they were two years ago.
The National Association of Home Builders said Monday that its survey of industry sentiment was unchanged at 15 this month. The index has been below 20 for all but one month during the past two years. The index is just seven points above the lowest reading on record, in January 2009.
Any reading below 50 indicates negative sentiment about the housing market. The index hasn't reached 50 since April 2006, the peak of the housing boom.”
The problem is that of the sixteen key metrics the Bureau reported, eleven of them were record lows, either for any July on record, or any individual month on record. The other five were either the second-worst or third worst Julys on record. This isn't a depressed market; it's a despondent one. Kravitz only disclosed one of those eleven records, and in a misleading manner.
Here is the chronicle of sixteen new lows or near-lows set in July:
(1) Total starts, not seasonally adjusted — second-lowest July on record (going back to 1959).
(2) Total starts, seasonally adjusted — third-lowest July on record. Until 2007, no other July was ever below 1,000,000.
(3, 4) Single-family starts, seasonally adjusted and not seasonally adjusted — lowest July on record.
(5, 6) Total permits, seasonally adjusted — Second-lowest July on record; not seasonally adjusted — Lowest July on record (going back to 1959).
(7, 8) Single-family permits, seasonally adjusted and not — lowest Julys on record.
(9, 10) Housing units under construction, total and single-family, not seasonally adjusted — Lowest Julys on record (going back to 1971), by far (even 8% and 13%, respectively, lower than last year).
(11, 12) Housing units under construction, total and single-family, seasonally adjusted — Lowest of any month on record.
(13, 14, 15, 16) Completions, seasonally adjusted and not seasonally adjusted — second-lowest July on record in total in both cases (going back to 1968), lowest July ever for single-family in both cases.
The July housing stats, and the three years of data which precede it, demonstrate how completely absurd the idea is that we ever truly emerged from the recession into something resembling anything decent. President Obama can crow all he wants about what he allegedly accomplished, but it doesn’t change the evidence, which emphatically says otherwise.
So what we have today is a catch 22 in the housing industry. With people unemployed and unable to purchase homes the developers and builders will not risk their capital to build homes. This means that the jobs in the home building industry will not come and the unemployment will continue to stagnate at above 9%.
How can we create a healthy home building industry? First of all developers and home builders must regain their confidence to risk their capital. To do this we must stabilize the tax rates and decrease government spending. We need to repeal ObamaCare and stop the class warfare. Wealthy developers build home, not poor people. I recall a conversation I had with a developer in 1980, during the Carter recession when mortgage interest rates were 21%, when he told me that he would just retire to his boat and hold on to his cash until the interest rates dropped and the market stabilized. This what entrepreneurs do — they wait until the risks become acceptable.
Obama, the most brilliant person to occupy the White House, has absolutely no knowledge of how markets work and businesses are created. As a committed socialist he believes government spending is the answer to every economic ill that plagues us today. Well, Mr. brilliant President it doesn’t work that way. History tells us this over and over again.
It will be a slow process to reverse this catch 22 in the housing industry. It could take three or four years to clear the market and restore the confidence of the risk takers. This process will not begin until the Obama is gone and government gets its ham-handed hands of the market with their onerous regulations and permitting processes that add to the costs of housing and get the federal budget in order by reducing this runaway spending and constant calls of tax the rich. This class warfare was not present when Bill Levitt began Levittown and our unemployment dropped to below 4%. Bill Levitt, like other builders knew if he could build affordable homes everyone would benefit, including him.
I don’t give a damn what Warren Buffett has to say. He is a bottom feeder that makes his money off the misery of others. It is the people like Bill Levitt who created jobs by the thousands — not Buffett or Obama.