President Obama sent a letter to House Speaker John Boehner (R-Ohio) Tuesday detailing seven new regulations that would each cost the U.S. economy more than $1 billion annually. With regulatory costs for American businesses of at least $38 billion per year and compliance costs of $100 billion per year, the seven proposed regulations would target transportation and the environment.
Boehner wrote the President last Friday, "The economy cannot withstand the barrage of major new federal regulations planned by the administration." He noted that the Obama Administration’s regulatory agenda counters Obama’s proclaimed motive to reduce burdens on American businesses. Boehner further noted that during the President’s tenure 219 rules have been proposed, each projected to cost at least $100 million.
Obama’s regulatory proposal includes four rules from the Environmental Protection Agency (EPA) and three from the Department of Transportation (DOT). An air-quality standards rule alone could cost between $19 billion and $90 billion per year for the U.S. economy.
According to Laura Chanthalath, manager at High’s Chimney Service, business is booming. Located in Gaithersburg, Maryland, her company might rebuild one chimney a day during the summer when business is slow. But now, thanks to Irene, “We’re completely booked. This has been a big boost to our business because the summer is extremely slow, especially in the chimney business. So it’s been good for us.”
Not counting lost man-hours and production, Irene is estimated to have cost at least $20 billion but, as the Washington Times wrote, “Economists say much of the rebuilding of roads, bridges and buildings, along with retail purchases … will recoup virtually all of the losses in the coming years.”
In banking, few values count more than consistency and integrity. The sovereign debt crisis in Europe, however, appears to have watered down those values in the case of some banks. The International Accounting Standards Board has stated that some European banks used the value provided by the Greek government in determining how much value Greek bonds should be counted in the assets of the bank. That would mean the bonds would be worth about 21% less than than the original valuation.
Those bonds on the open market, IASP Chairman Hans Hoogervost wrote in a letter to the European Securities Markets Authority — the organization responsible for regulating securities valuation — have much lower values than that. “This is a matter of great concern to us” the August 4th letter, which was made public on August 29th, warned. “It is hard to imagine that there are buyers willing to buy those bonds at the prices indicated by the valuation models being used.”
President Obama has nominated Princeton University’s Alan Krueger for Chairman of the White House Council of Economic Advisers (CEA), and if approved by the Senate, Krueger, a labor economist and the Treasury Department’s former chief economist, will replace Austan Goolsbee. "I am very pleased to appoint Alan and I look forward to working with him," Obama stated, shifting his eyes between two flat-screen teleprompters during a statement on Monday. "I have nothing but confidence in Alan as he takes on this important role as one of the leaders of my economic team."
Not surprisingly, reports that the Federal Emergency Management Agency (FEMA) is running out of money have surfaced. The fund’s capacity has been maximized by the most recent natural disaster, Hurricane Irene, which is estimated to cost billions of dollars.
With less than $800 million in its disaster aid coffers, the Federal Emergency Management Agency has been forced to freeze rebuilding projects from disasters dating to Hurricane Katrina to conserve money for emergency needs in the wake of Irene. Lawmakers from states ravaged by tornadoes this spring, like Missouri and Alabama, are especially furious.
In its annual Index of Economic Freedom, the joint effort by the Heritage Foundation and the Wall Street Journal, Canada ranks 6th among the 179 countries of the world, ahead of the United States (9th), the United Kingdom (16th), Japan (20th) and Germany (23rd). Considering ten components of economic freedom (among them: Business Freedom, Fiscal Freedom and Government Spending), the report ranks countries on the degree to which “individuals are free to work, produce, consume and invest in any way they please, with that freedom both protected by the state and unconstrained by the state.”
The latest report from the Canadian Labour Force Survey illustrates the degree to which Canadians have benefited from the rebound from the global recession by exercising their freedom to work, with employment increasing by 215,000 from July, 2010 and 675,000 since the bottom of the recession in July, 2009. In a workforce of 17 million, this represents an improvement of 4 percent at a time when employment in the United States has remained flat over that same period. Unemployment in Canada is 7.2%, a full two percentage points lower than in the United States.
Many in the media are saying how unusual it is for our economy to be so sluggish for so long, after we have officially emerged from a recession. In a sense, they are right. But, in another sense, they are profoundly wrong.
The American economy usually rebounds a lot faster than it is doing today. After a recession passes, consumers usually increase their spending. And when businesses see demand picking up, they usually start hiring workers to produce the additional output required to meet that demand.
Some very sharp downturns in the American economy, such as in the early 1920s, were followed quickly by bouncing back to normal levels or beyond. The government did nothing — and it worked.
Overall U.S. unemployment is 9.1 percent. For white adults, it's 8 percent, and for white teens, 23 percent. Black adult unemployment stands at 17 percent, and for black teens, it's 40 percent, more than 50 percent in some cities, for example, Washington.
Chapter 3 of Race and Economics, my most recent book, starts out, "Some might find it puzzling that during times of gross racial discrimination, black unemployment was lower and blacks were more active in the labor force than they are today." Up until the late 1950s, the labor force participation rate of black teens and adults was equal to or greater than their white counterparts. In fact, in 1910, 71 percent of black males older than 9 were employed, compared with 51 percent for whites. As early as 1890, the duration of unemployment among blacks was shorter than it was among whites, whereas today unemployment is both higher and longer-lasting among blacks than among whites.
How might one explain yesteryear's lower black unemployment and greater labor force participation?
President Obama’s constant refrain about the government’s unprecedented levels of red ink points to “millionaires and billionaires” as the problem, not the massive amounts of waste, fraud, and inefficiency in government operations. Remember when a million per mile seemed like a crazy price for a new road? Now it’s a billion per mile for a transportation project and the politicians are just fine with it, even if the project is totally unnecessary, even if we’re already broke.
To make it allegedly easier for people in San Francisco to get in and out of Chinatown in a hurry, a new 1.7 mile subway line is in the works.
The original projected cost was $647 million. Now it’s $1.6 billion, and growing.
Though Hurricane Irene — later downgraded to a tropical storm — did not cause anywhere the level of devastation initially predicted, it still made a major impact on the East Coast. At least 24 are known dead, thousands are without power, and some areas along the east coast are still under water. Estimates of the damages are in the billions of dollars.
The state of Vermont has been declared a federal disaster area, with many small towns experiencing historic flooding. According to Fox News, “Hundreds of Vermonters were told to leave their homes after Irene dumped several inches of rain on the landlocked state.” Governor Peter Shumlin called it the worst flooding the state has ever seen. As well, he added, there is “extraordinary infrastructure damage” across the state. One video shows a small bridge over Williams River — which had stood since 1870 — swept away by rushing floodwaters.
Every road in the state of Vermont, with the exception of two major highways, was closed at some point over the weekend as a result of the storms.