“Ron Paul has now walked the budget-cutting walk he’s been talking about.” The words of Investor’s Business Daily’s Andrew Malcolm sum up most commentators’ initial reactions to the Texas Congressman’s “Plan to Restore America,” and who could disagree? For decades Paul has been arguing that federal spending must be slashed, and on Monday, October 17, he laid out just how he intends to do that if elected President in 2012: Eliminate agencies, end foreign aid, repeal reams of regulations, cut military spending, reduce the federal workforce, and freeze mandatory spending. His expected results: $1 trillion in immediate cuts, followed by a balanced budget in three years. “Bold” — the word most commonly used to describe Paul’s proposal — is, perhaps, an understatement.
Both supporters and detractors praised Paul for being specific in what he would cut.
Cincinnati’s Fox19 station, for instance, said Paul’s plan “is the only full budget plan proposed thus far that proposes balancing the budget with actual cuts. Not, using fuzzy math with ‘cuts’ in defense spending that wasn’t going to be spent.”
“The contrast between the so-called super committee’s goal and Paul’s plan shows how pathetic official Washington’s gestures of fiscal responsibility are,” observed Jacob Sullum. “Paul’s detailed numbers refute the myth that the budget cannot be balanced without raising taxes while challenging his opponents to put up or shut up.”
With the announcement from Gallup that the unemployment rate had dropped precipitously in early October to 8.3 percent came the disclaimer that they could be wrong. Chief Economist Dennis Jacobe wrote that “the sharp drop in Gallup’s unemployment and underemployment rates may partly result from seasonal factors. Halloween has become the third-largest sales season for many retailers, who are likely increasing their staffing accordingly. In addition, some stores may have been minimally staffed and are beginning early to add employees for the holidays.” But it also “means it could be something of an aberration that will dissipate during the weeks ahead ... but for now, this job market improvement appears real.”
As the Occupy Wall Street protests have gained momentum over the last few weeks, many have pointed out that the protesters' anger is directed at the wrong people. Critics of the movement, while understanding the frustration of the demonstrators, contend that their focus should be on a number of other sources: the Federal Reserve, for instance, and also the elected officials who continue to support government intervention in the free market and to pick and choose winners via regulations and the “too big to fail” philosophy.
Meanwhile, Wall Street is already gearing up to buy off another round of elected officials, solidifying the very collusion between Wall Street and the federal government that has both Occupy Wall Street protesters and their critics concerned.
The Center for Responsive Politics recently posted data regarding the financial contributions of Wall Street firms to each presidential contender’s campaign for the 2012 elections.
According to the data, Mitt Romney has received the most donations from Goldman Sachs — nearly $400,000 to date. The next closest is President Obama with $49,000, followed by Tim Pawlenty, Jon Huntsman, Rick Perry, and Ron Paul, the latter of whom received just $2,500 from the company.
With five weeks to go to create an agreement that will cut at least $1.2 trillion from the federal budget over the next ten years, there are few indications that the Supercommittee will propose anything substantial.
Despite demands from the co-chairs of the committee, Senators Patty Murray and Jeb Hensarling, that members not speak publicly about their work, Robert Pear, writing for the New York Times, was able to glean some insight into any progress the committee is making. According to a person working for the committee, members are “still hovering at 30,000 feet,” with no landing field in sight. Members are still asking, “What is the baseline? Are we doing tax reform?” In other words, even basic agreements of how to measure progress have yet to be hammered out.
Rep. Chris Van Hollen, a member of the committee, admitted that “the jury is still out” on whether it could agree on where to find the $1.2 trillion in savings. Members of the committee have expressed exasperation about Sen. John Kerry’s rantings during the closed-door sessions: “Kerry just talks a lot,” according to a House Republican aide. “It’s what I would call Senate talk. It’s like a waterfall of words. It never gets you anyplace.” Another who has attended some of the committee’s sessions agreed: “Kerry is very aspirational.. People hope he will come down to earth.” One of Kerry’s aides defended his ramblings, explaining that Kerry “thinks out loud, running through the options in his mind. He vocalizes options that may cause distress.” In sum, the more Kerry talks and the more time he takes in the committee meetings, the less people are likely to pay attention or get anything substantial accomplished.
The social and economic upheavals caused by environmental subsidies, as seen in the demise of Solyndra and other energy companies, are devastating but not unpredictable after-effects. Over decades, and even centuries, the U.S. government has indulged in a myriad of legislative actions to funnel taxpayer money into projects of its choosing — and generally speaking, no good has come from them. In fact, history shows that government interference has only hampered the natural flow of markets and depressed the innovative practices of countless American entrepreneurs.
Throughout history, government subsidies have aimed to offer a number of "solutions" to the marketplace: to create jobs, keep consumer prices at "favorable" market levels, and endow business entities with capital to survive in markets that are "not sustainable by the private sector." Today, a common justification for such subsidies — which are prevalent in the environmental sector — is to achieve energy independence and curb pollution by funding research and development for emerging technologies.
Such government patronage comes in various forms, including direct financial transfers, preferential tax treatments, price controls, research grants, and trade restrictions. But corporate recipients soon become addicted to such political massaging, as they relentlessly lobby Congress and the White House to negotiate corrupt inside deals that lead to endless, wasteful streams of government largesse.
According to Katy Grimes of the Sacramento-based investigative reporting website Cal Watchdog for October 19, "For unions, Governor Jerry Brown is the governor who keeps on giving." Over the weekend, the California Governor signed into law Senate Bill 922, which will prevent cities from banning union-supported “project labor agreements” that force contractors to hire union workers if they want to bid on public projects. The measure, written only one week before it was passed, provides that if even a non-union contractor wins a public project, his workers are required to join a union.
Grimes added that the Governor "even included a signing message in which he proclaimed the bill to be 'fair' and 'democratic.'" However, she pointed out, the legislation "will actually do the opposite of what Brown's signing message said":
It suppresses the competition rights of small businesses and infringes on local governments' ability to use free-market, non-union construction labor. And it's already mandated by the state that all employees must receive union wages, even if they are not union members, when working on public projects.
President Barack Obama and the Democratic Party have led increasingly successful efforts to pit Americans against one another through the politics of hate and envy. Attacking CEO salaries, the president — last year during his Midwest tour — said, "I do think at a certain point you've made enough money."
Let's look at CEO salaries, but before doing so, let's look at other salary disparities between those at the bottom and those at the top. According to Forbes' Celebrity 100 list for 2010, Oprah Winfrey earned $290 million. Even if her makeup person or cameraman earned $100,000, she earned thousands of times more than that. Is that fair? Among other celebrities earning hundreds or thousands of times more than the people who work with them are Tyler Perry ($130 million), Jerry Bruckheimer ($113 million), Lady Gaga ($90 million) and Howard Stern ($76 million). According to Forbes, the top 10 celebrities, excluding athletes, earned an average salary of a little more than $100 million in 2010.
According to the Wall Street Journal Survey of CEO Compensation (November 2010), Gregory Maffei, CEO of Liberty Media, earned $87 million, Oracle's Lawrence Ellison ($68 million) and rounding out the top 10 CEOs was McKesson's John Hammergren, earning $24 million. It turns out that the top 10 CEOs have an average salary of $43 million, which pales in comparison with America's top 10 celebrities, who earn an average salary of $100 million.
Moody’s summary of its annual report on France’s finances appeared on Monday sufficiently couched in calm and reasoned tones that the markets took little notice: “The country’s Aaa rating with a stable outlook reflects the French economy’s strength, the robustness of its institutions and very high financial strength.”
Further on in the report, however, ominous phrases began appearing, such as “the government’s financial strength has weakened,” there is now “a deterioration in French government metrics, which are now among the weakest of France’s Aaa peers,” and “France may face a number of challenges in the coming months – for example, the possible need to provide additional support to other European sovereigns or to its own banking system.” All of this, says Moody’s, is “exerting pressure on the stable outlook of the government’s Aaa debt rating,” especially now that the government “has less room to maneuver in terms of stretching its balance sheet than it had in 2008.” But there’s nothing to worry about, as “Moody’s will monitor and assess the stable outlook” over the next three months.
Anyone trying to figure out why Americans don’t trust their elected officials need look no further than an October 17 New York Times article. Entitled “Farmers Facing Loss of Subsidy May Get New One,” the William Neuman-penned piece reports that “in the name of deficit reduction,” Congress, backed by “major farm groups,” is considering eliminating a $5 billion farm subsidy — only to turn around and enact another farm subsidy costing almost as much. “In essence,” observes Neuman, “lawmakers would replace one subsidy with a new one.”
The existing subsidy, called the direct payment program, “was created in 1996 as a way to wean farmers off all such supports — and instead was made permanent a few years later,” Neuman writes. Now Congress is going to try to wean farmers off direct payments, which they receive regardless of market conditions, and onto a “shallow-loss” program, whereby the government would “guarantee 10 to 15 percent of a farmer’s revenue,” says Neuman, describing it as “a free insurance policy to cover commodity farmers against small drops in revenue.”
This, by the way, would come on top of $6 billion in federal subsidies to pay over half the cost of farmers’ crop insurance premiums. Crop insurance policies “typically guarantee 75 to 85 percent of a farmer’s revenue” in the event of crop damage or a market drop, Neuman explains. Should a shallow-loss program be enacted, farmers would be guaranteed up to 100 percent of their current revenue for a very small personal investment.
The press release from the Boston Consulting Group signaled the beginning of the American renaissance in manufacturing as cost advantages of China are fading rapidly and companies are beginning to repatriate their jobs back home. There are seven industrial sectors that could create two to three million jobs over the next five years as American manufacturers do the new math. As explained by Harold Sirkin, one of the three authors of Made in American, Again:
A surprising amount of work that rushed to China over the past decade could soon start to come back — and the economic impact could be significant. We’re on record predicting a U.S. manufacturing renaissance starting by around 2015.
The seven industry groups which could enjoy the most significant benefits are transportation goods, electrical equipment and appliances, furniture, plastics, rubber products, machinery, and computers. The resultant sea-change by repatriating jobs in these industries would be massive, potentially adding $100 billion to America’s GDP, while reducing oil consumption due to lower transportation costs.
China is facing severe head winds in its fight to stay competitive. Wages have been rising there by 15 to 20 percent a year, while the value of the dollar continues to decline against the yuan — which effectively has increased costs of doing business in China by 23 percent over the past five years. The advantages of bringing jobs back to America are already showing up in the import numbers.