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George Will: The Manufactured Crisis of Sequester

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Photo Credit: Washington PostEven during this desultory economic recovery, one industry thrives — the manufacture of synthetic hysteria. It is, however, inaccurate to accuse the Hysteric in Chief of crying “Wolf!” about spending cuts under the sequester. He is actually crying “Hamster!”

As in: Batten down the hatches — the sequester will cut $85 billion from this year’s $3.6 trillion budget! Or: Head for the storm cellar — spending will be cut 2.3 percent! Or: Washington chain-saw massacre — we must scrape by on 97.7 percent of current spending! Or: Chaos is coming because the sequester will cut a sum $25 billion larger than was just shoveled out the door (supposedly, but not actually) for victims of Hurricane Sandy! Or: Heaven forfend, the sequester will cut 47 percent as much as was spent on the AIG bailout! Or: Famine, pestilence and locusts will come when the sequester causes federal spending over 10 years to plummet from $46 trillion all the way down to $44.8 trillion! Or: Grass will grow in the streets of America’s cities if the domestic agencies whose budgets have increased 17 percent under President Obama must endure a 5 percent cut!

The sequester has forced liberals to clarify their conviction that whatever the government’s size is at any moment, it is the bare minimum necessary to forestall intolerable suffering. At his unintentionally hilarious hysteria session Tuesday, Obama said: The sequester’s “meat-cleaver approach” of “severe,” “arbitrary” and “brutal” cuts will “eviscerate” education, energy and medical research spending. “And already, the threat of these cuts has forced the Navy to delay an aircraft carrier that was supposed to deploy to the Persian Gulf.”

“Forced”? The Navy did indeed cite the sequester when delaying deployment of the USS Truman. In the high-stakes pressure campaign against Iran’s nuclear weapons program, U.S. policy has been to have two carriers in nearby waters. Yet the Navy is saying it cannot find cuts to programs or deployments less essential than the Truman deployment. The Navy’s participation in the political campaign to pressure Congress into unraveling the sequester is crude, obvious and shameful, and it should earn the Navy’s budget especially skeptical scrutiny by Congress.

The Defense Department’s civilian employment has grown 17 percent since 2002. In 2012, defense spending on civilian personnel was 21 percent higher than in 2002. And the Truman must stay in Norfolk? This is, strictly speaking, unbelievable.

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G20 Summit To Focus On ‘Currency War’ Threat To Economy

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Photo Credit: naitokzJapan’s aggressive attempts to spur on its struggling economy were set to escape censure from the G20 nations today as bickering in Moscow kept alive fears of a “currency war”.

Finance ministers at the G20 gathering are understood to have pulled back from explicit criticism of Japan, whose prime minister Shinzo Abe has embarked on a huge programme of monetary and fiscal stimulus to jump start the world’s third largest economy out of its third recession in five years.

The currency market was thrown into turmoil this week after the G7 – the United States, Japan, Germany, Britain, France, Canada and Italy – issued a joint statement warning against using domestic policy to target currencies.

But the show of unity was immediately shattered by off-the-record briefings against Japan, which needs a weaker yen to help fuel its export-driven economy.

European Central Bank president Mario Draghi yesterday labelled the behind-the-scenes briefing as “inappropriate, fruitless and self-defeating”.IMF chief Christine Lagarde and Russia’s deputy finance minister Sergei Storchak also denied the ex- istence of currency wars, labelling recent swings in the yen as “market reaction to exclusively internal decision making”.

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The Broke, Retreating State of Our Union

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Photo Credit: National Review It is terribly appropriate that President Obama gave his halting and graceless State of the Union address on Mardi Gras: He spent the evening shouting “Laissez les bons temps rouler!” at every liberal constituency in sight, promising new spending for public-sector unions (“Fix-It-First”), demanding (yet again) that banks renegotiate mortgages on politically driven terms, offering handouts to Al Gore–style enviropreneurs (reviving cap-and-trade, offering yet more subsidies to politically connected energy firms), and promising a $9-an-hour minimum wage.

In the real world, Fat Tuesday is followed by Ash Wednesday and a season of fasting and penance. For the free-spending Barack Obama, Fat Tuesday is followed by Fat Wednesday, Fat Thursday, Fat Friday, fat federal spending the whole way through. (Don’t tell the first lady.) Austerity is reserved for the taxpayer, the so-called rich on whom the president just secured tax increases before demanding, two minutes later, yet more tax increases. That includes new taxes on Medicare recipients (“ask more from the wealthiest seniors”).

Exhibiting the new liberal vogue for jingoism, the president blamed our economic straits on China three times in the first part of the speech, turned up his nose at imported cars, and abominated the always-popular scourge of “foreign oil.” (Blast you, Canada!) But a $9-an-hour minimum wage is a boon to a Chinese manufacturing sector still dependent upon cheap labor, and expensive emission controls make overseas industries relatively competitive, while one of the biggest threats to U.S.-made cars and U.S.-produced oil is the raft of new environmental regulations the president says he wishes to see enacted.

The high-income may sigh at the tax proposals, but the president’s proposals weigh particularly heavily upon the low-income young. They will have to pay his debt. They will also be the ones most affected by the proposal to raise the minimum wage: The result of artificial wages increases, as economists have documented over and over, is fewer jobs. The president proposes to cut the bottom rung off the economic ladder, which is of much more concern to those born at the bottom.

The president has a strange sense of language. The word “economy” used to be a synonym for “thrift.” Barack Obama has managed to turn that on its head. His speech gave every indication that he remains a hostage to the superstition that we can spend our way to national prosperity — or that we can pass laws that will force employers, pharmaceutical manufacturers, and other businesses to spend our way to prosperity for us. That has failed for four years because it is bad economics and wishful thinking.

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Food Stamp Rolls In America Now Surpass The Population of Spain

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Photo Credit: APSince taking office in 2009, food stamp rolls under President Barack Obama have risen to more than 47 million people in America, exceeding the population of Spain.

“Now is the time to act boldly and wisely – to not only revive this economy, but to build a new foundation for lasting prosperity,” said Obama during his first joint session address to Congress on Feb. 24, 2009.

Since then, the number of participants enrolled in food stamps, known as the Supplemental Assistance Nutrition Program (SNAP), has risen substantially.

When Obama entered office in January 2009 there were 31,939,110 Americans receiving food stamps. As of November 2012—the most recent data available—there were 47,692,896 Americans enrolled, an increase of 49.3 percent.

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Putin Turns Black Gold Into Bullion As Russia Out-Buys World

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Photo Credit: Alexsey DruginynWhen Vladimir Putin says the U.S. is endangering the global economy by abusing its dollar monopoly, he’s not just talking. He’s betting on it.

Not only has Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer. His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg. The added gold is also almost triple the weight of the Statue of Liberty.

“The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency,” Evgeny Fedorov, a lawmaker for Putin’s United Russia party in the lower house of parliament, said in a telephone interview in Moscow.

Gold, coveted by Russian rulers including Tsar Nicholas II and the Bolshevik leader whose forces assassinated him, Vladimir Lenin, has soared almost 400 percent in the period of Putin’s purchases. Central banks around the world have printed money to escape the global financial crisis, sapping investor appetite for dollars and euros and setting off a scramble for safety.

In 1998, the year Russia defaulted on $40 billion of domestic debt, it took as many as 28 barrels of crude to buy an ounce of gold, Bloomberg data show. That ratio tumbled to 11.5 by the time Putin first came to power a year later and in 2005, after it touched 6.5 — less than half what it is now — the president told the central bank to buy.

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Fox News Poll: Voters Back Spending Cuts To Boost Economy By Huge Margins

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Photo Credit: J Pat CarterBy massive margins, voters say they would rather see the government cut spending than increase it as a way to boost the nation’s economy, according to a Fox News poll that showed, in hindsight, voters largely saying the 2009 stimulus did not work.

The poll showed that, by a 60-34 percent margin, voters say President Obama’s $800 billion strategy for pulling the American economy out of its one-and-a-half year long recession did not deliver on its promise. While more than half of Democrats said they thought the stimulus worked, 87 percent of Republicans and 58 percent of Independents said they thought it did not.

Opposition to another round of stimulus runs two-to-one, according to the poll. This could be because 73 percent of voters polled say cutting government spending would be more likely to help strengthen the nation’s economy — as opposed to just 15 percent who believe increasing spending would do the trick.

While Obama reportedly has said he doesn’t believe the government has a spending problem, the poll showed that out of 13 issues tested, more voters are “extremely” concerned about government spending than any other issue.

Even a majority of Democrats — 55 percent — agreed that cutting spending is the way to help the economy. Ninety-one percent of Republicans held that view.

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It Took America’s Oldest President To Make Her Feel Young Again

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Photo Credit: REUTERS/Chas CancellareRonald Reagan’s birthday will be commemorated this week. He took office just a few weeks shy of his 70th birthday in 1981 making him the oldest man elected to serve as our Chief Executive and Commander-in-Chief, that is until he stood for re-election in 1984. In fact, one of the most well-known lines in Presidential debate history came in response to Reagan being questioned whether his age would be an important factor in his re-election campaign. Reagan, in his famous Irish wit, said, “I am not going to exploit for political purposes my opponent’s youth and inexperience,” which drew a roar of laughter from the crowd and even his opponent, Walter Mondale. Reagan won the election 49 states to 1.

The irony is that it would take America’s oldest President to remind her what it means to be young again. The lessons he taught hold some key insights into not only renewing the American economy (showing strong signs of lethargy), but the American spirit.

A youthful spirit, which Reagan clearly possessed in great measure, has been described as “a quality of the imagination, a vigor of the emotions; it is the freshness of the deep springs of life” and manifests in a “temperamental predominance of courage over timidity of the appetite for adventure over the love of ease.” The former California Governor displayed this vitality when he made his announcement that he would seek the Presidency in 1980. He exhorted, “Someone once said that the difference between an American and any other kind of person is that an American lives in anticipation of the future because he knows it will be a great place.”

But, Reagan contrasted, “There are those in our land today, however, who would have us believe that the United States, like other great civilizations of the past, has reached the zenith of its power; that we are weak and fearful, reduced to bickering with each other and no longer possessed of the will to cope with our problems.” He continued, “They tell us we must learn to live with less, and teach our children that their lives will be less full and prosperous than ours have been; that the America of the coming years will be a place where – because of our past excesses – it will be impossible to dream and make those dreams come true. I don’t believe that. And, I don’t believe you do either. That is why I am seeking the presidency.”

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Counting The Ways The Media Lies About The Economy

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Photo Credit: John NoltePop quiz: What was the biggest news story this week? And I don’t mean, what was the biggest news story according to Obama’s media.

Obviously, it was the economy taking a nosedive into negative territory last quarter, along with the fact that hardly enough jobs were created last month to keep up with population growth. Oh, and the unemployment rate increased. Of course the economy is the biggest story; it affects the most people and Obama’s doing it wrong.

But not only is the media never-minding the economy, much of the media coverage related to economic bad news is forever being spun into good news. A few examples…

Politico saw the jobs numbers as something that “could soothe some of the renewed economic anxiety in Washington[.]”

The AP saw the jobs numbers as proof “[t]he U.S. job market is proving sturdier than expected” and “mostly encouraging.”

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Obama Recovery: January Unemployment Rises to 7.9%

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Photo Credit: Susan Trigg The new year started off with an old story: Employment grew again in January but not at a pace able to lower the jobless rate.

Nonfarm payrolls rose 157,000 for the first month of 2013 while the unemployment rate edged higher to 7.9 percent, news unlikely to alter the Federal Reserve’s monetary policy or instill confidence that the recovery is gaining steam.

Economists were looking for 160,000 net new jobs created with the unemployment rate holding steady at 7.8 percent.

The ho-hum jobs numbers for January were accompanied by substantial revisions higher for previous months, according to the report from the Bureau of Labor Statistics . . .

A report earlier this week indicated that third-quarter growth actually contracted 0.1 percent, but Friday’s jobs numbers contradicted the gross domestic product read.

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The Spending Sequester Will Grow the Private Economy — Don’t Back Off

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Photo Credit: Tax CreditsYesterday’s report of a 0.1 percent GDP decline for the fourth quarter came as a surprise to most forecasters. But it actually masks considerable strength in the private economy. Namely, housing investment in the fourth quarter jumped 15.3 percent annually, business equipment and software spiked 12.4 percent, and real private final sales rose 2.6 percent. All in, the domestic private sector of the economy increased 3.4 percent annually — a very respectable gain.

And here’s one for the record books: Working ahead of year-end tax hikes, individuals shifted so much money to the fourth quarter at the 35 percent top rate that personal income grew by 7.9 percent annually — a huge number. And there’s more: In order to beat the taxman, dividend income rose 85.2 percent annually. You think tax incentives don’t matter? Guess again.

Now, all this private-sector strength occurred despite the fact that government spending — namely military spending — dropped 6.6 percent. Inventories also lost ground and the trade deficit widened.

But here’s a key point: Military spending has now fallen virtually to its lower sequester-spending-cut baseline. It did so in one quarter by about $40 billion. So the brunt of the impact over the coming years has already been felt. (Normally, as of recent years, military spending has been virtually flat.)

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