Obama has already succeeded in fundamentally transforming America, from a prosperous nation that draws people the world over, voting with their feet, to a rapidly declining former superpower on the fast track to a third-world status similar to Argentina or Venezuela. That is effectively what is argued by the new book Debacle: Obama’s War on Jobs and Growth and What We Can Do Now to Regain our Future , by leading taxpayer activist Grover Norquist and economist John Lott. The Worst Economic Recovery Since the Great Depression Central to the debacle Obama has created is that he has imposed on America the worst economic recovery since the Great Depression. Yes, the country was in recession when Obama was elected. But it was Obama’s policies that turned it into the Great Recession and prevented the American economy from recovering — just like his icon Franklin Roosevelt turned the 1929 stock market collapse into the Great Depression, and prevented America from recovering for more than a decade. As Norquist and Lott explain: While this recession no doubt has been one of the worst since the Great Depression, the supposed recovery that followed it has clearly been the worst. Unemployment and job growth have been abysmal. As of October, 2011, the unemployment rate was stuck at least at 9.0 percent for 27 out of 29 months. Astoundingly, the unemployment rate during the 29 months of recovery averages three full percentage points higher than the average unemployment rate during the recession. There is no comparable recovery on record since the prolonged period of stagnation during the Great Depression in the 1930s. The Reagan recovery, starting in late 1982, hit a higher unemployment rate, but after the recovery started, it did not take more than nine months for the unemployment rate to dip below 9 percent. This latest recession started in December, 2007. The National Bureau of Economic Research, the recognized timekeeper of when recessions start and end, declared this one over in June, 2009, which would make it the longest recession since the Great Depression 75 years ago. But the historical precedent in America is that the deeper the recession, the stronger the recovery. Based on that precedent, we should be in the third year of a raging economic recovery boom by now. But instead we have experienced no real recovery at all. As Norquist and Lott explain the Obama non-recovery: The recession was painful enough. Between when the recession started in December 2007 and ended in June, 2009, 6.3 million jobs were lost. After the recession ended and this book was written in October, 2011, only 324,000 additional jobs were created—an average of just 11,000 a month over those 29 months. With the working age population growing by 160,000 a month, this meager job growth failed to make a dent in getting the jobs back, let alone find jobs for the ever-growing population. Unemployment actually rose after the recession supposedly ended in June, 2009, and did not fall back down below that level until 18 months later in December, 2010. Norquist and Lott add, “In the first 29 months during the Reagan recovery, the number of jobs grew by 8 percent. In contrast, over the same time, the number of jobs under Obama has grown by just 0.25 percent.” “But things in America are a lot worse than the simple employment and unemployment numbers indicate,” Norquist and Lott continue, “because many people have given up looking for work and have completely left the labor force, and the government no longer counts people as unemployed after they give up looking for a job. Obviously, lowering the unemployment rate through disillusioned job seekers giving up looking is not a good thing.” But that is exactly what the Obama administration is celebrating as the achievement of its economic policies — working people giving up and dropping out of the labor force. That is the only way the unemployment rate has been falling at all. Norquist and Lott explain further, “People are supposed to start looking for work during recoveries. It is during recessions that Americans give up looking for work. Unfortunately, under the Obama Administration, the reverse has happened…. It was only during the Obama recovery that Americans started dropping out of the labor force in droves. In total, 4.7 million people quit looking for work.” Today, it is 7.7 million who have dropped out of the work force under Obama. Again, the Reagan recovery is the measure. “The contrast with the Reagan recovery is striking,” Norquist and Lott write. “After the Reagan recovery started, millions more people wanted to work than even before the recession started. The sharp drop in the unemployment rate during the Reagan recovery is therefore even more impressive…. Despite all those new people looking for work, the unemployment rate fell from 10.8 percent at the end of 1982 to 7.2 percent by the presidential election in 1984.” The Obama non-recovery debacle continues to this day. Last month, while 115,000 new jobs were supposedly created, the labor force shrank by another 342,000 workers, which is the only reason the unemployment rate reportedly declined from 8.2 to 8.1 percent. Without the decline in the labor force, unemployment would have risen last month to 8.3 percent. The labor force is actually 365,000 workers smaller today than it was in June, 2009, when the recession supposedly ended. As Investor’s Business Daily reported on May 7, “That’s in stark contrast to every other post-World War II expansion, which saw the labor force climb by the millions at this point in their recoveries, even as unemployment rates were driven down.” Indeed, if the labor force participation had stayed the same as it was when the recession supposedly ended in June, 2009, without the millions fleeing Obama’s economy since then, the unemployment rate would be 11 percent, Investor’s Business Daily calculated. Moreover, as the Wall Street Journal reported in its weekend edition of May 5-6, “Even as employers added jobs last month, full time employment actually fell by 812,000.” The Bureau of Labor Statistics reports that for last month the number of involuntary part-time workers totaled nearly 8 million. The BLS says, “These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job.” The BLS reported that in April, 52 months after the recession started, the total unemployment rate counting the unemployed and involuntarily underemployed was still 14.5 percent. That’s already persistent depression level unemployment. But the Shadow Government Statistics website, which includes the long-term discouraged workers the government doesn’t count at all anymore since 1994, reports the total unemployment rate at 22.3 percent. That’s what the total unemployment rate would be today if it were calculated the same way it was before 1994. Happy days are here again, under Obamanomics. Reaganomics v. Obamanomics In a Wall Street Journal article in February, 2009, I noted that the emerging Obamanomics followed the exact opposite of every policy of Reaganomics in great detail. I predicted that it would consequently get the exact opposite results. That is what has happened. The Reagan recovery blossomed into a 25-year economic boom, from 1982 to 2007, which Art Laffer and Stephen Moore called in their book The End of Prosperity , “the greatest period of wealth creation in the history of the planet.” In the first 7 years alone, 20 million new jobs were created, which grew into 50 million new jobs over the entire boom. In contrast, as the Wall Street Journal reported on May 5-6, “Nearly three years into the [Obama] recovery, the U.S. still employs five million fewer workers than before the recession.” When Reagan entered office, the first thing he did was lead Congress to enact the initially much-derided “Reagan budget cuts,” which have now been dumped down the Left’s memory hole. Federal spending was cut by nearly 5 percent. In sharp contrast, the first thing Obama did upon taking office was pass his nearly $1 trillion so-called stimulus bill. At best, that stimulus did nothing to promote growth, because borrowing a trillion dollars out of the economy to increase government spending by a trillion dollars does nothing to enhance the economy on net. But Norquist and Lott argue that “The Stimulus made things worse.” Indeed, Lott published an article at FoxNews.com on February 3, 2009, predicting, “President Obama and the Democrats’ ‘stimulus’ package will increase the unemployment rate,” contrary to the administration’s prediction that unemployment would stop rising once the stimulus was passed. Lott proved more prescient than the entire administration’s army of hired economists. Norquist and Lott report, “Business economists and forecasters had consistently been expecting the economy to begin positive growth in the second half of 2009. But passing the Stimulus appeared to dampen the recovery economists were anticipating…. Paul Evans, the editor of the Journal of Money, Credit and Banking and an economics professor at Ohio State University, agrees, and told us: ‘Most likely the economic recovery would have been more rapid at this point without [the Stimulus package].’” Norquist and Lott note that Wall Street Journal- surveyed forecasters cut their growth expectations in half by May, after the stimulus passed, from January, before the stimulus passed. Norquist and Lott explain why the stimulus spending was counterproductive: “The resources the government spends have to come out of someone else’s pocket. Spending almost a trillion dollars on various stimulus projects means moving a lot of resources from the private sector, eliminating the jobs many people currently have.” This shift from market-directed employment to government-directed employment causes dislocation, as workers shift from one job to another, which is a net drag on the economy. On top of that, the government-created jobs are likely to be temporary and fewer than the number of jobs destroyed elsewhere. The simple reason is that many of these new jobs are artificial and will only exist as long as the government continues heavy subsidies…. Obama’s Council of Economic Advisors wrongly assumes that all of the Stimulus jobs are filled by the unemployed. But that is clearly wrong. Indeed, most of those getting the new [stimulus funded] jobs already had a job to begin with…. Whatever jobs might have been created, they did not come cheap….Accepting the Administration’s most optimistic 3.6 million number, it cost $200,000 per job. And if the survey of recipients is right, the cost per job created soars to over a million dollars…. In many cases, the money was just wasted completely. For instance, at Solyndra, the scandal-plagued solar energy company that got $535 million from the federal government, what had originally been counted as long term jobs soon disappeared when the company went bankrupt and took the half billion government loan guarantee with it. The bottom line is that what drives economic growth and recovery is not government spending, as the Obama administration’s Keynesian throwbacks imagine. What drives economic growth and recovery is incentives for increased production. That is what Reagan proved, first by cutting taxes 25 percent across the board, and then by cutting the top tax rate from 70 percent, where it was when he entered office, to 28 percent, and slashing the rate for middle income earners to just 15 percent. Cuts in tax rates , not just tax cuts, enhance incentives, because producers can then keep more of what they create. What most people do not know is that, just the opposite, Obama has already led the enactment in current law, for next year, of increases in the top tax rates of virtually every major federal tax. That is because the Obamacare tax increases go into effect, and the Bush tax cuts will expire, as Obama refuses to renew them for the nation’s small businesses, job creators, and investors. This is on top of the U.S. corporate income tax burden, which under Obama is already the highest in the industrialized world at nearly 40 percent on average, counting state corporate taxes. Yet, under Obama there is no relief in sight. Instead, he has spent the past year and a half barnstorming the country calling for still more tax increases. These pending tax rate increases help explain why so much money is sitting on the sidelines in a capital strike, or fleeing overseas in a capital flight, like in a third-world country. And that missing investment helps explain why there are no jobs. Obama is also following the exact opposite of Reagan’s policies by vastly expanding rather than reducing regulatory costs, supporting a record amount of easy money at the Fed, and restricting rather than maximizing American energy production. If Obama’s policies are not quickly reversed, the result without a doubt will be another whopping recession next year . But the decline and fall of America is not inevitable. The economy is poised to boom again, at all-time records of capitalist prosperity, if the American people will only free it this fall from the socialism of Obamanomics. The Real Obama John Lott speaks from direct personal experience with the real Obama during the days when they were both junior professors at the University of Chicago. Lott relates these personal interactions in the book, saying, When I was first introduced to Obama, he said, “Oh, you’re the gun guy.” I responded, “Yes, I guess so.” “I don’t believe that people should be able to own guns,” Obama replied. I then suggested that it might be fun to have lunch and talk about that statement sometime. He simply grimaced and turned away, ending the conversation. That was the way that numerous interactions with Obama went…. It was very clear that Obama disagreed on the gun issue and acted as if he believed that people who he disagreed with were not just wrong, but evil. Unlike other liberal academics who usually enjoyed discussing opposing ideas, Obama simply showed disdain.” This ideological rigidity and extremism are what people paying attention to Obama as President should have expected.
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Obama’s Debacle
Stephen Meyer, the director of the Discovery Institute’s Center for Science and Culture, spoke the other evening at a forum called “Socrates in the City.” Normally it’s in New York City, but tonight it was at the University Club in Washington, D.C. The founder, Eric Metaxas, gave a great introduction. He’s someone who doesn’t follow the intellectual herd. The author of an influential book, Signature in the Cell , Meyer addressed the question, “Is there a scientific controversy about the theory of evolution?” He made a strong case that there is. A few days later, I also interviewed him about the prospects for intelligent design. In his talk, inquiring how life first appeared from simpler pre-existing chemicals, Meyer emphasized the concept of biological information, which is embedded in DNA. Think of it as analogous to software code. Bill Gates said that “DNA is like a computer program but far, far more advanced than any software ever created.” Software contains instructions that direct computers to accomplish various functions. Likewise, DNA contains instructions for the assembly of tiny machines called proteins, which perform vital functions within every cell. In the 19th century the cell was thought to be simple. Darwin and his contemporaries had no way of knowing just how complex it is. Today it is compared to a high-tech factory. (Except it’s much more complex than that—factories can’t replicate themselves.) So how did the information get into the DNA in the first place? Without it, the first cell wouldn’t have been constructed, and life would not have begun. In Expelled , when Ben Stein asked Richard Dawkins how life began, he said he had no idea. We still don’t. Nucleotide bases along the spine of the DNA molecule—in effect the characters in the genetic text—direct the cell’s molecular machinery to link specific amino acids into proteins. If the sequence is incorrectly arranged the protein doesn’t get assembled. Watson and Crick described the double helical structure of DNA. But no one has yet explained the origin of the information it contains. “So that’s a huge stumbling block for evolutionary explanations of the origin of life,” Meyer said. Just as computer code comes from programmers, so functional information comes from intelligence—from mind. Intelligence, or conscious activity, is the only known cause of the kind of sequence-specific, information-rich code that we see in biology. We infer that the ultimate origin of biological information is an intelligent agent, or agents. All other proposed explanations have failed. Some think natural selection can get the job done. But as Meyer said, processes such as natural selection can’t take place until life is already up and running. Until we have a living and self-replicating cell, natural selection doesn’t enter the picture. Thus, it does nothing to explain how life first evolved from non-living chemicals. Meyer also argued that biological evolutionary theory, which “attempts to explain how new forms of life evolved from simpler pre-existing forms,” faces formidable difficulties. In particular, the modern version of Darwin’s theory, neo-Darwinism, also has an information problem. Mutations, or copying errors in the DNA, are analogous to copying errors in digital code, and they supposedly provide the grist for natural selection. But, Meyer said: “What we know from all codes and languages is that when specificity of sequence is a condition of function, random changes degrade function much faster than they come up with something new.” He mentioned the Cambrian explosion—the geologically sudden appearance of most major animal forms. It’s a dramatic event in the history of life. Animals with new body plans—arthropods, brachiopods, chordates—appeared suddenly about 530 million years ago. Nothing resembling a precursor appears in the strata below the Cambrian. So the same problem arises: What would it take to build one of those new body plans? You’d need a big instruction set, just for one body part. The trilobite had a compound, lens-focusing eye. “Each new cell for each new tissue had dedicated proteins,” Meyer said. “The proteins in turn need instructions to be built.” The problem is comparable to opening a big combination lock. He asked the audience to imagine a bike lock with ten dials and ten digits per dial. Such
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Charles C.W. Cooke has a good piece over at NRO about the standoff over the past several months between university students and the provincial government in Quebec over tuition hikes. When I attended Carleton University in Ottawa in the 1990s, we envied university students going to school across the river in Quebec because they had the lowest tuition rates in the country. Well, guess what! They still do and even with the proposed increases they probably still would (with perhaps the possible exception of Newfoundland & Labrador). But apparently Quebec university students think the world owes them a living
This week you’re likely to hear a lot more about the death of one of the Beastie Boys and the French election than what Republicans are trying to do to save the Pentagon budget from the wrecking ball of sequestration. The reasons you won’t hear about it are lessons for Mitt Romney, who remains oddly disconnected from what House Republicans are doing. That’s the first problem. Romney, the presumptive nominee, is rapidly earning the reputation attributed to the Palestinians almost forty years ago by Israeli Prime Minister Abba Eban: he never misses an opportunity to miss an opportunity. Romney could be working closely with House leaders to pass legislation — putting Senate Dems under the gun for killing the bills – to illustrate vividly how a Romney presidency would help save the nation from Obama’s spending spree, reductions in military strength and over-regulation. But he isn’t. One of the biggest problems that will come to a head soon after the election is the result of last year’s disastrous debt ceiling deal, which imposed about $600 billion in defense cuts (on top of the $400 billion Obama already made) over the next ten years. As I wrote here three weeks ago, sequestration imposes limits on future spending across the board, a decision made in perfect ignorance of whether we’d be cutting fat or muscle. Moreover, sequestration spending cuts will result in the Pentagon breaching its contracts for major weapon systems. These breaches will end up costing as much (or more) to terminate the contracts as it would to actually buy the weapon systems for which the contracts were signed. And sequestration will cost a massive number of high-tech private sector jobs. (According to one study by Dr. Stephen Fuller of George Mason University, the sequestration cuts would cost almost 600,000 jobs and $35 billion in lost earnings in 2013 alone.) Congressional sources tell me that Democrats are getting nervous about defense sequestration. But with Obama’s continued threat to veto any bill that fixes the mess, they’re not nervous enough yet to do anything to stop the coming train wreck. Fortunately, House Armed Services Committee Chairman Buck McKeon (R-Ca) and Majority Whip Kevin McCarthy (R-Ca) are stepping up to prevent it. At four syllables, sequestration is too long a word to use in politics. The fix for sequestration McKeon and McCarthy have chosen is budget reconciliation (two words, eight syllables, beyond the attention span of 98% of the media). Nevertheless, it’s a good idea that deserves our support. Reconciliation is a tool that establishes a budget figure. It bases the figure on instructions to congressional committees to produce enabling legislation that will result in spending at that level. Working over the past few weeks, House committees have come up with legislation that will enable the Pentagon to be protected from the first year of sequestration spending cuts by cutting non-defense programs, from which this week’s try at reconciliation proceeds. The differences between House conservatives, trying to impose some fiscal discipline without sacrificing national defense on one hand, and Obama and Senate Dems who refuse to even consider a federal budget, are irreconcilable. The budget reconciliation measure that McKeon, McCarthy, and others are bringing to the House floor this week will illustrate just how irresponsible Obama and the Dems are. If only people pay attention to it. This week, the House will pass a budget reconciliation bill that would prevent the sequestration of about $300 billion in defense budget authority that will come into effect in January and instruct the House committees (which have already passed the necessary bills) to make the reconciliation effective. The reconciliation bill will never see the light of day in the Senate. Which brings us to the lessons for Mitt Romney. First and foremost, the national security issue isn’t critical to the presidential campaign, at least not yet. Obama has managed to push it off the stage in the moments he isn’t spiking the ball about the death of bin Laden. In fact, the Republicans have lost their ownership of the defense issue. In years past, Republicans were the “daddy party,” trusted with the defense of the nation and some grasp of the economy. Dems were the “mommy party,” concerned only with the welfare state and increased government control of the economy. Now, after eight years of George W. Bush’s self-imposed quagmire of nation-building and his oxymoronic “big government conservatism,” Republicans are trusted with neither national defense nor the economy. Obama is engaged in the most massive reduction of our military’s capabilities in generations, and Republicans haven’t yet been effective in even slowing him down. If Romney were to get involved personally in the McKeon-McCarthy initiative, he could begin to recapture both issues. Defense spending can’t be cut without the so far unaccomplished analysis of what the Pentagon needs to deter or defeat the threats we face. Sequestration cuts defense spending without regard to the threat matrix, and borders on the criminally negligent. It also reduces jobs and GDP without regard to the negative effects on the economy. And — after the termination costs of breached contracts are paid — sequestration won’t reduce Pentagon spending nearly as much as claimed. Romney should make it his campaign theme all this week. It would gain a level of traction his campaign now lacks. Romney is now trying to consolidate his influence over the national debate and take on Obama. That’s a claim to leadership that he has to assert credibly. The other big lesson for him in the reconciliation debate this week is that Republican control of the House gives him a leadership tool that he has to use. No one really knows how many Republican voters are still queasy about Romney, but the number has to be too high for him to ignore. He is now the leader of the Republican Party and he has to demonstrate to them, and to the “moderates” and undecideds, that he is the right choice in November in a way that will convince people to go to the polls and not sit this one out. Leadership has to be proven, and if Romney were to engage fully with House Republicans, he could go a long way to proving that he is worth the effort to vote in November. Romney has endorsed the Ryan Budget Plan, which would reduce the federal debt and protect Pentagon spending from sequestration. (Ryan’s plan takes too long to bring spending under control but it’s at least a credible attempt). But Romney hasn’t done more than say he favors Ryan’s plan, and his own economic plan lacks the force and simplicity that the election demands. Obama has made it clear that the Ryan plan will be a big issue in the fall, regardless of whether Romney goes all-in on it or not. Better to go at it forcefully than to appear uncertain. And far better to link it to energy policy, defense, and jobs than to remain vaguely committed to both. And there’s much more like that to be done. Why not ask Cong. Tom Price (R-Ga.) to revive and pass his patient-oriented substitute for Obamacare? We now have the highest corporate tax rate in the civilized world. Why not pass a House bill to reduce it and really stimulate economic growth? Why not pass a House resolution damning Obama’s deal with Hamid Karzai that prohibits us from launching raids from Afghanistan into Pakistan like the one that killed bin Laden? Or a bill to rein in EPA’s and other agencies’ regulation blitzkrieg on the economy? All it would take is a few hours of meetings between Romney and House leaders and a few speeches by Romney in conjunction with their actions, which could be spread out between now and the election. That would demonstrate leadership and energize voters more than anything Romney is doing — or apparently planning — now.
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Irreconcilable Budget Differences
