Detailed Abstractions

A mere 10 days ago, we were told by our President, that his recovery act has diverted a disaster (here):

Good evening.  Before I take your questions, I want to talk for a few minutes about the progress we’re making on health insurance reform and where it fits into our broader economic strategy.

Six months ago, I took office amid the worst recession in half a century.  We were losing an average of 700,000 jobs per month and our financial system was on the verge of collapse.

As a result of the action we took in those first weeks, we have been able to pull our economy back from the brink. We took steps to stabilize our financial institutions and our housing market. And we….

…passed a Recovery Act that has already saved jobs and created new ones; delivered billions in tax relief to families and small businesses; and extended unemployment insurance and health insurance to those who have been laid off.

Of course, we still have a long way to go. And the Recovery Act will continue to save and create more jobs over the next two years – just like it was designed to do. I realize this is little comfort to those Americans who are currently out of work, and I’ll be honest with you – new hiring is always one of the last things to bounce back after a recession.

As I wrote previously, I’m not sure what a “saved” job is or how one goes about calculating a figure, but we do know the unemployment rate is 2% higher than predicted.  Additionally, when one is contemplating whether this or any other President is truthful, we should ask if any of their other projections were correct in the first place.

From Bloomberg:

July 31 (Bloomberg) — The first 12 months of the U.S. recession saw the economy shrink more than twice as much as previously estimated, reflecting even bigger declines in consumer spending and housing, revised figures showed.

& for comparison, something we also know.  When Senator Kerry, then Senator Obama, and many other people, liberals and independents all, were dismayed by President Bush’s tax cuts during a recession and a war:

The revisions showed that the 2001 recession was less severe than originally estimated, reflecting a smaller decline in business investment. The economy actually grew 0.1 percent from the fourth quarter of 2000 to the third quarter of 2001, erasing the 0.2 percent drop previously reported.

Of course Bush started us down our current road with the first stimulus bill, because something just had to be done… which I guess presupposes that allowing 300 million people to work to bring back the economy is “nothing”…

Either way – lastly, and most importantly, we know that this has been tried before.  It took several decades to move beyond the blindness people had due to FDR’s almost cult-like status to revise the books written at the time, but the New Deal did in fact lead to a longer Great Depression that was necessary (here):

The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a “new” New Deal to address the current crisis. But the facts do not support the perception that FDR’s policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

The goal of the New Deal was to get Americans back to work. But the New Deal didn’t restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32…

No worries though – I’m sure the government is telling the complete truth about how much health care will cost, what it will do to the current system (good & bad), and all the rest of it.  We just have to believe!

…Some other articles on this as well here @ Reason.com, article on economist research @ UCLA here, & detailed research paper here @ Cato.org.

Mr. President, are you kidding?

I listened intently to your entire speech and for a gifted speaker, all I heard were disjointed platitudes, class warfare rhetoric, and a little political bashing just for good measure.

Let’s start at the top (all quotes are paraphrased, not direct quotes):

Obama:  As a result of the actions taken in the first weeks of  my administration, we stabilized the housing market, saved jobs – created new ones, and gave tax relief to millions.

Wow!  I wasn’t aware the government was this powerful.  Maybe unicorns really do exist?

Seriously though, first, the housing market is still declining.  It is not stabilized yet and in some parts of the country is still losing quite a bit of value.

Second, I’m not sure what a “saved” job is or how one would go about calculating it, but what we do know is that on net, jobs continue to be lost.  So growing jobs is absolutely incorrect and saving jobs is a feel good phrase that would be impossible to prove (or disprove).

But who cares about little things like facts when you’re trying to take credit.  By the way, who’s really to blame?

Obama: Through the last few decades of unprecedented growth, only a small minority of wealthy people actually saw their incomes grow, while the economy was not making good paying jobs or green jobs like it should’ve.

Oh, ok.  So it’s the rich’s fault?  They should have to pay!

Come on Mr. President, this is class warfare and theoretically beneath someone who promised to usher in “Hope & Change” and a new kind of politics.  Just to clarify for you Mr. President, class warfare has existed for centuries.  It’s not new and it’s not built on a foundation of “Hope & Change”.

But why do we need this Mr. President?

Obama:  Because middle class families have been struggling due to the constant rise in health care costs.  They have had wage increases, but due to increasing health care costs, the wage increases were offset.  This is also causing employers to not be able to afford health insurance anymore either.

So, the government medaling in health care through medicaid, medicare, FDA, and the myriad of laws that cover things such as, what qualifies a surgeon, what kind of needle can I use to draw blood, what drugs have to be based on prescription, and ever other intrustion they’ve made have pushed costs higher and  higher.

Additionally,

Obama:  I’m confident that when people look to see the costs of doing nothing at all, the people will support me.

Mr. President, if you’re not aware of the current level of intrusion into the current health care system, then it’s possible GWB might have a lead in the IQ race.

We’ve tried.  & time and time again, health care has become harder to deal with and more expensive.  Each time the government does something like this, it costs more than they thought it would, usually by multiples of at least 10, and the savings they say they’ll get never materialize.  But this time will be different.  Why?  Cause I’m Barak!

How will we do it?

Obama:  First, the government will not get in between you and your doctor.  What we will do is pass a bunch of laws that change the way insurance decisions are made, work towards decisions on “end-of-life” care, put limits on the amount of money a person will pay out of pocket, and many other laws.

But this is definitely NOT government interference.

Mr. President, congrats.  I have to applaud you as I couldn’t have said all that with a straight face.  You deserve an Oscar for logic twists needed for this.

What will it cost?

Obama:  Nothing of course.  We will save billions by fixing existing inefficencies and taxing the top 1% just a little bit.

So, we get everything we want and it costs hardly anything?  Someone once told me about things too good to be true, but I’m so enamored now by his speaking ability that I forgot.  But basically he seems to believe that to fix government intrusion into health care, more government intrusion is needed.

He seems to believe that while every time the government has gotten into health care or retirement funds or any other social spending they’ve always gotten the numbers wrong.  But this time is different.

What’s stopping you?

Obama:  I heard a Republican strategist state that it’s better to go for the kill against Obama than pass meaningful reform.  I heard a Republican Senator state, we want him to fail.

So… you have the executive branch, the House by a good majority and a filibuster proof majority in the Senate.  But the Republicans are causing problems?

It’s quite an exciting time to live for those people who love to see barriers broken.  We’ve come a long ways from the 50′s segregation to the first African-American President and likely to be the first Hispanic female Supreme Court Justice.

Of course if those were the only firsts, we’d be doing just fine, but there are others to list:

First time in American History where the budget will include a 1 to 2 trillion dollar deficit (here):

WASHINGTON — The federal deficit has topped $1 trillion for the first time ever and could grow to nearly $2 trillion by this fall, intensifying fears about higher inflation rates, inflation and the strength of the dollar.

The deficit has been widened by the huge sum the government has spent to ease the recession, combined with a sharp decline in tax revenues. The cost of wars in Iraq and Afghanistan also is a major factor.

(that I’m aware of) The first time in history we will waste tax payer money, during a recession, to investigate a non-existent program (here – emphasis added is mine):

WASHINGTON – Congressional demands for an investigation grew on Monday over new disclosures that a secret CIA program to capture or kill al-Qaida leaders was concealed from Congress for eight years, perhaps at the behest of former vice President Dick Cheney.

The program, which never got off the ground and remains shrouded in mystery, was designed to target leaders of the terrorism network at close range, rather than with air strikes that risked civilian casualties, government officials with knowledge of the operation said Monday.

& finally, the brand new era of the czars (here) with names such as:

1. Infotech Czar
2. Faith Based Czar
3. Cybersecurity Czar
4. Compensation Czar

In  a time fraught with issues such as nuclear proliferation (there is a czar for that as well) from Iran & NK, a declining economy (new unemployment figure 9.5%), continuing wars, we might be looking into the future with an undeserved pride in our decision making abilities.

Getting back to the basics of what made our country able to stand as the the superpower it does today would be a better use of our time than hiring more czars to control more of our economy.

We seem to be moving fairly quickly from a society that was known for fierce independence.  A society known for arrogance, but revolutionary innovations which have increased the standard of living for millions. A society that truly stood as a beacon of freedom in a world where the majority live in crippling dictatorships.

We moved from a society that would rather ask their neighbors for help, but instead they now ask the government (or call a lawyer).  A society that wanted to live free, to a society that believes it’s ok to take by force money from your neighbors so long as most people feel they are spending it incorrectly.

Maybe instead of attempting to fix everything, as if the current decision makers have more of the truth than did previous generations, we should instead follow the doctors’ calling:  First, do no harm.

This isn’t to say changes aren’t needed, but the last time some sales guy told me I had very little time to make a decision, I laughed and walked away. & that was a for some piece of electronics I didn’t really need.  It even took me three months to buy a new car.

If we truly want to make effective changes that will really impact others’ lives in a  positive way, prudence and open skepticism of our government is warranted.

Of course yelling fire in a crowded theater makes for better tv debates and news reports, but it’s possible prudence is the virtue we should be heeding at this time.

Before the last stimulus bill, the Obama administration trotted out how dire and desperate things are and would be without the all powerful government.  According to their reports, unemployment rates without the money would hit 10%, while with spending would not go above 8% (here).

By the government’s own standards and the new unemployment numbers of 9.5%, they have failed. But like true politicians, facts are just numbers that haven’t yet been spun.

With trillions of dollars in “stimulus” already spent on pet projects, buying up failed companies,  green jobs, and anything else the government can think of, the only thing they are now positive of is that it wasn’t enough.

Through Mr. Obama’s remarks after the G8 summit (here):

“While our markets are improving, too many people are still struggling,” Obama said at a press conference in L’Aquila, Italy after a summit of the Group of Eight nations. “Full recovery is still a ways off.”

and senior administration officials putting our feelers (here):

Senior administration officials think further stimulus might eventually be needed but they do not want to have this fight now. Both the economics and the politics call for postponing a decision to late this year or early in 2010.

& of course, the sage Warren Buffet’s self-serving advice (here):

As folks in Washington and the rest of the country grumble about the depressed job market and underwhelming consumer spending reports, the calls for a second stimulus continue.

“I think that a second one may well be called for,” Warren Buffett , the widely respected investor, said Thursday morning on ABC’s “Good Morning America.”

It appears we’re on a path to spend more money we don’t have.  Effectively, the government is acting just like the poor investors and home buyers did – buying a lot of stuff for too much money, which is completely borrowed.

As Cato notes:

Investors understand that increased government spending diverts valuable resources away from the private sector and ends up imposing even more demoralizing taxes on labor and capital.

A major study of 18 large economies by Alberto Alesina of Harvard and three colleagues appeared in the 2002 American Economic Review. This paper, “Fiscal Policy, Profits and Investment” found that the surest way to make economies boom can be through deep cuts in government spending–the exact opposite of the “fiscal stimulus” snake oil.

Like the problems of social security, medicare, and medicaid though, we’re simply going to borrow all of this money and kick the major problems down the road for whatever generation will suffer from our mistakes.  They will pay the higher taxes for lower benefits all because we can’t control our spending.

So for those playing the home game – the solution to alcoholism is to drink, just as the solution to a spending binge is more spending.