Economy & Budget

How deep does the stimulus rabbit-hole go? 'Who knows, man? Who knows?' (Rep. Trent Franks)

Reports are surfacing about hundreds of fake Congressional Districts appearing on the list of locations where stimulus funds are being spent. (Note also that the fake Congressional districts in dispute on are in addition to the phony jobs being listed in legitimate districts.)

Ed Pound, Director of Communications for Recovery.com-- President Obama's stimulus "transparency" website-- uttered a scintillatingly clear response when asked about how these fictitious districts were receiving federal stimulus funds:

               "...Who knows, man? Who really knows?" 


Just another illustration of the prescient clarity we are learning to expect from the Obama Administration.

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The Big Question: Will the deficit or jobs be more important in '10?

Some of the nation's top political commentators, legislators and intellectuals offer some insight into the biggest question burning up the blogosphere today.

Today's question:

Which issue will be more important to voters in 2010 -- the deficit or jobs?


John Castellani,
president of Business Roundtable, said:

This is not an either-or situation but rather one that requires a yes-and approach. My organization’s top priority is to push for policies that will create more and better-paying jobs for U.S. workers. At the same time, it’s clear that the large deficits forecast over the next few years are simply unsustainable over the long-term. In short, we must find a way to create more jobs that will support today’s workforce, but not at the expense of laying untenable debt obligations and sky-high inflation at the feet of future generations.

One effective approach to this challenge is to create more competitive international tax policies and increase our nation’s international trade and investment. The Administration’s decision this week to actively participate in the Trans-Pacific Partnership negotiations is an encouraging sign that our President understands that expanding trade is a fundamental (and deficit-free) way to create well-paying U.S. jobs. In fact, it is one of the only approaches that would cost our country almost nothing while supporting the fragile recovery and, most importantly, promoting job growth.

Bernie Quigley, Pundits blog contributor, said:

Deficits and a new approach. The Virginia race set the new paradigm. The conservative Bob McDonald won by 17%. This is an astonishing change of political culture. Jobs are important but the country - the heartland - sees and understands that we are not a country of factory workers and field hands as we were in the 1830s and it is incongruous to use these strategies with the kind of work force we have today. The Virginia governor's race in 2008 was prelude to 2010. 2010 will be prelude to 2012.

Sen. Carl Levin (D-Mich.) said:

Where I come from, jobs.

Sen. Mike Johanns (R-Neb.) said:

I just did some town hall meetings in Nebraska, and I do these all the time. I can tell you, it's jobs, economy and deficit -- all these things.

Healthcare's getting a lot of attention right now, and people are very, very mad about it. People see the waste in it. I was in the Bush administration's second term, and the honeymoon was over. People were mad. Well, this administration's redefined big government, big spending and big debt. I think anybody in leadership who ignores the anger of the American voter at this point in time is in very serious trouble. I don't see how you can survive any re-election. Their concern is economy, jobs and spending, and those guys are talking about healthcare and climate change. There's a disconnect, and the American people don't want to be ignored.

Sen. Kent Conrad (D-N.D.) said:

Both. I don't think its 'either-or'. We've got to do things that strengthen the economy and help job creation, but also, simultaneously, we have to commit to a long-term plan to deal with the debt. Both jobs and debt affect the economy."

Sen. Roland Burris (D-Ill.) said:

Jobs, of course, is key and that is what we're working on in the Senate. I'm pretty sure you'll see a job bill once we work on healthcare.

In Illinois, we need jobs. You're looking at over 10.5 percent unemployment in Illinois and across the country. So what we need now in order to get this economy going and the deficit down is people working. We also have to bring back manufacturing jobs.

We're started work on the prison for Guantanamo prisoners which could help the economy and be a major boost to the western part of the state, which is devastated by unemployment."

John F. McManus, president of The John Birch Society, said:

Despite the efforts of groups like the one I lead, the American people do not have as solid an appreciation of the destructiveness of deficits as they should.  The need for jobs will, therefore, be a greater concern for a sizeable number of voters.  But if this concern leads to government "creating" jobs with more spending and greater deficits, the current economic travails will only worsen. Jobs created by the private sector are real; jobs created by government are an additional problem, not a solution.

Dean Baker, co-director of the Center for Economic Policy Research, said:

People care about jobs. They don't even know what the deficit is. The reporters at the major news outlets who cover the deficit don't know what the deficit is.

Suppose President Obama manages to cut the deficit by 50 percent from 2009 to 2010, leaving a deficit of around $800 billion. (For the record, this would be an absurdly large amount of deficit reduction.) The Republicans would still run around the country complaining about an $800 billion deficit! They would tell their audiences that President Obama was adding more than $2 billion a day to the national debt -- money that will have to be repaid by our children and grandchildren.

The major news outlets like National Public Radio and the Washington Post would write balance pieces saying things like: "the Obama administration boasts about its success in deficit reduction, but Republicans point out that the deficit is still the second highest ever, exceeded only by the deficit that President Obama ran in 2009."

The politics of deficit reduction are a deadend and President Obama and his team are far too smart to go that route. Their focus will be on creating jobs. This is what matters to the public -- and thankfully it is also what is good for the economy.

Michelle D. Bernard, president & CEO of the Independent Women’s Forum, said:

When more than 1 in 10 Americans is out of work and looking for a job, and many more are working fewer hours than they would like, jobs and the economic climate will be the number one issue on voters' minds.
 
Yet as people think about the overall health of the economy, they will consider if current spending and deficit trends are sustainable.  And it is clearly not, or at least not without serious repercussions.  In the short term, many may be willing to trade more debt today if it bought us job creation and economic growth, but after the first so-called "stimulus" bill and the current debate about spending another trillion dollars on health care, few believe that this Congress is using deficit spending to create jobs.  Far from it, much of what has been and is being proposed are giveaways to interest  groups and expand government's reach as an end in itself.
 
Jobs will be foremost in most people's mind, but the reckless expansion of government--both in terms of power and in terms of debt--will also motivate a lot of voters.

Craig Newmark, founder of Craigslist, said:

I feel jobs will be much more important. The challenge will be for voters to remember that job losses were caused by neglect, etc, in the middle years of this decade. Sometimes, it's hard to remember that.

Stuart Roy, Pundits Blog contributor, said:

This would be an easy question if it weren’t a false dichotomy. The era of Ross Perot and his famous charts was the last time deficit reduction was sexy. But even that wasn’t enough for the businessman cum politician.

But that is not the choice facing policy makers today. The available polling shows a growing unease with the growth, scope and ineptitude of government. The deficit is a symptom of that. While the deficit alone is generally abstract Americans sense the connection with their real lives. That leads us to jobs.

The jobs side of the equation is about more than the government spending billions to create some temporary make-work jobs and many fictional jobs. In fact, that severely adds to the anxiety about the growth and cost of government. And it’s ineptitude. Americans are concerned about the future – will my job still exist and will it just remain stagnant if it does? - as they are about the right-now.

There is a solution: Job-growth tax relief. A bitter bill for the majority party who despises tax cuts but a proven remedy. Some taxes build revenue for the Treasury, some don’t. Target the ones that do. They generally happen to be the same ones that promote job growth. And cut spending. Return TARP money to the Treasury for deficit reduction. Use unspent so-called Stimulus funds for deficit reduction or target it to “offset” tax relief. Let the cap and trade bill die a peaceful death or severely alter its contents. 

Americans, especially those with jobs, will respond to a trend line on the deficit going the right direction even if it isn’t fully corrected by the next election.

Justin Raimondo, editorial director of Antiwar.com, said:

The government’s deficit, by now, is considered a permanent fact of reality, which most voters are cynical about: they recognize lawmakers will continue to spend, handing out goodies to their friends. That’s the way of Washington. Aside from which, the deficit is an abstraction: most voters believe (as do their elected representatives, apparently) that all Congress has to do is vote to raise the debt limit, and that “solves” the problem – although they have an uneasy feeling that it really is just staving off the inevitable (which never seems to come, or, at least, won’t arrive in their lifetime).

The jobs issue has an immediacy, however, that cannot be put off – especially when you have a mortgage to pay and no income, or greatly-reduced income. What most voters don’t realize, however, is that the jobs issue and rising government debt are inextricably linked.

As the Obama administration continues on its course of propping up companies supposedly “too big to fail,” soaking up available investment capital, punishing savers, and harassing employers with costly new regulations, capital will flee the country – and the ranks of the employed will continue to shrink.

With unemployment growing, and the economy going into a tailspin, voters are bound  to notice that some are prospering, however – the politically-connected. As more people lose their jobs, and the government announces more bailout measures, traditional concern with deficit spending and despair over job losses will combine into an all-encompassing populist rage – and then, watch out.

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Trade is best stimulus (Rep. Dave Reichert)

President Obama’s trip to Asia this week comes at a critical economic time for American workers. With unemployment eclipsing 10 percent, it’s clear that the stimulus package passed by Congress has so far proven ineffective in getting Americans back to work.

Free trade, a pillar of economic recovery that has been overlooked, plays a pivotal role in growing our economy and creating American jobs. Opening new markets to trade is a proven stimulus and job creator that comes without a several hundred billion dollar bill for taxpayers.

Among the many stops on his trip this week, President Obama will visit South Korea, a critical trading partner for the U.S. and one with whom we’ve had a free trade agreement pending congressional approval for more than two years. This visit presents the President the perfect opportunity to convey to the world that the U.S. remains open to global trade, and to assure American workers we will continue to support them and pursue every opportunity to create jobs and spur innovation.

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Senator Chris Dodd's financial services regulatory reform bill could hurt property/casualty insurance companies

Last Tuesday, Senate Banking Committee Chairman Chris Dodd unveiled a sweeping financial services regulatory reform bill that would restructure how virtually every financial institution in the country is regulated.

We appreciate the hard work that Sen. Dodd has done on this legislation. He has shown during the past year that he understands there are thousands of companies operating on Main St., like NAMIC members, who did not contribute to causing the financial crisis and should be made to suffer in the name of fixing it. However, we have some concerns with how the bill would determine what companies are “systemically significant” and how it would address insurance specifically.

The National Association of Mutual Insurance Companies (NAMIC) is the largest trade association representing property/casualty insurance companies. We have many members of various sizes operating across the country that would never be considered “systemically significant.” Because of our conservative and liquid investment portfolios, low leverage ratios, strong solvency regulation, and a highly competitive and diverse marketplace, the property/casualty insurance industry does not pose a systemic risk.

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Administration alseep at the wheel on FHA oversight (Rep. Darrell Issa)

Have you heard? Wall Street -- stoked by never-ending taxpayer largesse -- is again chugging down the rails. Destination: raising its own stock prices in the midst of a jobless recovery. But don't be fooled: the engineers of this paper recovery are still asleep at the wheel, allowing runaway mortgage giants Fannie Mae and Freddie Mac to burn through billions more tax dollars without an Inspector General or independent oversight.

Meanwhile, the capital reserves of the Federal Housing Administration (FHA) have dropped dangerously low, raising the specter of another taxpayer bailout of a federal housing agency. As these Casey Joneses watch the next economic train wreck pick up steam, Congress should slam on the brakes and take a long hard look at whether it makes sense to continue pouring public money into a broken federal housing bureaucracy without holding it accountable for every tax dollar it receives.

We recently learned that the Justice Department ruled in September that the Inspector General of the Federal Housing Finance Agency (FHFA) -- the regulator of Fannie Mae and Freddie Mac - could not continue as an independent overseer of the mortgage giants. Instead, IG Ed Kelley has been relegated to the position of "internal auditor," lacking independence and reporting to a political appointee.

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Passage of Small Business Development Centers bill will help small businesses, stimulate economic growth and increase American competiveness (Rep. Aaron Schock)

On Saturday, as we awaited action on Speaker Pelosi’s massive health care legislation, the House passed H.R. 1845, legislation I introduced earlier this year to help modernize the Small Business Development Center Program. This legislation will provide SBDC’s with the resources they need to deal with increased demand and usage.

This bill is a text book example of how a bipartisan House should work.  I worked with both Chairwoman Nydia Velazquez and Ranking Member Sam Graves to write, tweak and improve this legislation as it moved through the Small Business Committee and to the House Floor.

Nationwide, the over 1000 SBDCs serve as important and informative resources for growing small businesses. SBDC’s provide emerging entrepreneurs with the tools needed to successfully take their small business concepts into reality. Additionally, they provide existing small business owners with important financial and budgeting consulting to assist in long-term growth and management. The investments made into the SBDC network provide a cost effective way to help grow the economy while enhancing American competiveness.

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Cap-and-Trade creates more certainty… for higher unemployment

The Senate Finance Committee yesterday convened a hearing to consider the impacts to jobs in the United States that would result from approval of pending climate change legislation. Given the state of the financial markets, how a carbon trading scheme would operate and who would be in charge of it, it is entirely appropriate that this Committee be involved in the process.

The National Petrochemical & Refiners Association (NPRA) submitted written testimony for the record highlighting the effects pending climate legislation would have on American energy jobs.  Simply stated, NPRA believes that both H.R. 2454 and S. 1733 would drive domestic gasoline and diesel production offshore, resulting in lost jobs for American workers and the outsourcing of our nation’s energy security to regions of the world that do not follow our already stringent environmental protections.  Dr. Kenneth Green of the American Enterprise Institute delivered essentially the same message to the Committee orally:

As energy prices rise, and American companies find themselves less competitive, businesses and jobs will flow to countries without greenhouse gas controls, and without stringent environmental controls of any kind, potentially allowing emissions to increase. The remedy to this, border tax adjustment, is only likely to cause a trade war that will further damage the U.S. economy. As increased energy costs raise the cost of all U.S. goods and services, consumption will decline, causing still more job losses.
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Increase job opportunities for unemployed veterans (Rep. John Boozman)

As the son of a Master Sergeant in the Air Force, I grew up in a family that had values rooted in military tradition and today I carry those with me as I craft legislation to help our veterans. As a member of the House Veterans' Affairs Committee and Ranking Member of the Economic Opportunity Subcommittee, I am uniquely positioned to usher legislation through Congress that provides our veterans with the tools they need to succeed in today's competitive economy.

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Too big to fail--too big to exist (Sen. Bernie Sanders)

More than a year has gone by since Congress passed the $700 billion bailout of Wall Street. The Federal Reserve has committed trillions of additional dollars in virtually zero-interest loans and other assistance to large financial institutions resulting in the largest taxpayer bailout in the history of the world.

President Bush and Ben Bernanke told us we needed to bail out Wall Street because we could not allow big financial institutions and insurance giants to fail because if they failed it would have led to the collapse of the U.S. and global economies.

Today, most of the huge financial institutions still standing have become even bigger -- so big that the four largest banks in America (JP Morgan Chase, Bank of America, Wells Fargo, and Citigroup) now issue one out of every two mortgages; two out of three credit cards; and hold $4 out of every $10 in bank deposits in the entire country.

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Hell No! We Won’t Send Our Tax Dollars to China

Taking candy from a baby: A consortium of Chinese and American companies goes to Washington and announces plans to build a $1.5 billion windmill farm in West Texas using $450 million in U.S. Stimulus funds, which will create 2,330 jobs – 2,000 of them in China. 

The baby – Washington -- doesn’t cry or whine or spit in the consortium’s face. That’s what’s really wrong with this story.

So accustomed to being bought and sold, Washington simply begins processing forms so it can hand over your tax dollars to create jobs in a turbine factory in the city of Shenyang, China at a subsidy of $193,133 each.

It’s like these bureaucrats live in Wonderland. Or an America where the unemployment rate isn’t 10.2 percent. Or where 40,000 American manufacturing facilities didn’t disappear in the past decade. Or where banks didn’t repossess nearly a quarter million American homes in the past three months.

We’ve got a message for Washington: Hell no! We’re not giving tax dollars to China. What’s wrong with these businesses and our government? It is the $787 billion American Recovery and Reinvestment Act of 2009. It’s not the Chinese Recovery and Reinvestment Act.

It’s bad enough that we’ve off-shored our factories and technology and jobs over the past 20 years.  We’re not off-shoring our Stimulus cash too. In fact, we’re tired of serving as the schoolyard wimp of the world. We need our own industrial policy so we can stand up and compete in the world market manufacturing the likes of wind turbines. And we need it now.

China has an industrial policy. And it uses that policy to dominate.  Here is how Keith Bradsher of the New York Times described China’s policy to become a world leader in renewable energy, which of course, would include construction of wind turbine factories:

“Calling renewable energy a strategic industry, China is trying hard to make sure that its companies dominate globally. Just as Japan and South Korea made it hard for Detroit automakers to compete in those countries – giving their own automakers time to amass economies of scale in sheltered domestic markets – China is shielding its clean energy sector while it grows to a point where it can take on the world.”


China protects its chosen industries in many ways. It provides low interest loans, some of which don’t have to be repaid. It may give free land on which to construct buildings. And there are other perks that Bradsher described:

“When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data. . . even as Chinese companies that had never built a turbine were approved. . .”

Later, Bradsher describes European disgust at the Chinese treatment:

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