According to a US Chamber of Commerce press release, up to 20,000 jobs would be created immediately if the XL pipeline project were approved, with hundreds of thousands more jobs to be generated by this project in the near future.

“In spite of extensive and positive studies from the State Department, this is clearly a political decision and everyone knows it. Unfortunately, it will immediately cost more than 20,000 Americans an opportunity to get a job working on the pipeline and hundreds of thousands more jobs in the future.”

Although the Chamber believes this choice regarding the pipeline is politically motivated, and there is a superficial plausibility, after some deeper thought put toward the larger picture regarding administration actions concerning the condition of the economy, it appears to be a bit more than just politics.

 In this diary, I linked to a memo released by the White House that clears away regulatory hurdles in order to fast track infrastructure projects that are outlined in the President’s plan for “job creation,” citing the need to boost the “competitive edge” in our economy.  I pointed out the apparent lack of comprehension of where the “shovel-ready jobs” really are, and questioned who would be around to compete economically if our most dire needs are not met in short order. I received some flack about deregulation of the private sector in the comments section for that diary, but there is a huge difference between pragmatic regulation and strangling the golden goose with a rabid regulatory agenda while providing mere superficial explanations for these actions. For a nation that is desperate for a functional employment market, one would think that it would not matter so much who creates the jobs, every job and every opportunity for productivity counts for something toward having a “chicken in every pot.” In other words, when our house is burning down, we don’t stop the firemen from doing their job out of fear the fire hose will cause flood damage.

It is true that this particular instance, the Keystone XL pipeline, has to do with expanding distribution capabilities of raw materials for fossil fuels, and political reasons could very well be behind the delaying tactics. But if we consider the definition of a socialist economy, the direct allocation of economic inputs to satisfy economic demands (non-market allocation), and piece this together with the broader economic based behavior of this administration since the inauguration that even pragmatists brand as counterproductive, an ideological motivation for a general blockade of the private sector seems to explain our predicament, and the administration’s obsession with spending, directly and indirectly, much more clearly.  Even more than just a pipeline, or production of energy, it goes well beyond the financial sector where we have had the most recent bout of disorder. Instead of trying to just fix what was broken, there was truly no lie in the desire for a “fundamental transformation of America.”

If we take Greece as an example of a socialist economy, and look at the advice given to help solve its current financial crisis from nations that have their own socialist models:

1.  Privatize, privatize, privatize.

2.  Deregulate market access.

3.  Make it much easier for firms to hire and fire workers.

4.  Raise the retirement age to 67.

5.  Shrink its government, which is already smaller than the French government as a share of GDP.

It seems that even socialists can be pragmatic – too much strangling of the golden goose produces rotten eggs. Perhaps this is the perfect illustration that maybe our President as taken his ideology at least a few steps too far into the realm of unicorns.

In doing some research about what the Occupy movement is all about, I’ve watched many a youtube video, monitored the #OWS twitter feeds, read related blogs and have seen the arguments going on in the comments sections regarding the appropriateness of the movement and what it’s really about. What jumps out at me is a tendency for its defenders to say, when faced with overwhelming evidence that regardless of how it started, it has been co-opted by rent seekers, that those are just some fringe idiots or isolated incidents, and don’t represent the movement’s general character and aversion to cronyism, but no real issue with capitalism itself.

Now we are seeing rioting, vandalism, striking and disruption of commerce (a terrible thing to happen to innocent people who are trying to work to feed their families) while carrying large banners reading “Death to Capitalism” in unmistakable bold red lettering. Despite all this mounting evidence to the contrary of the movement being 1) peaceful and 2) for capitalism, but against cronyism, we are told we are the ones with the real problem for painting the movement with a large brush labeled “socialist revolutionaries.”

It seems like the OWS defenders now have a bit of a credibility problem. For many of us there is a sense of honor and personal responsibility involved in our associations that we do not take lightly. It’s an implied personal responsibility for the goings on of organizations and movements that one empowers even if simply by presence. What we hear when the defenders come out to fight off the onslaught of bad press is really just a tacit acquiescence to such happenings in the fervent disavowals of what is taking place, stopping short of disavowing the movement itself. What it really comes down to is one cannot hitch their wagon to a collectivist movement and escape responsibility for what comes out of it. Saying “It’s not me,” or “I don’t believe that,” is not an effective argument against the facts of what this movement has become. If that isn’t them, and they don’t agree with violence, destruction of property, and denial of income to innocent working people, or with the sentiments of an overwhelming number of the participants who want to nix capitalism and take what is not theirs, then why are they still there when the reality of the movement is simply indefensible?

I was sympathetic toward the movement in the beginning because I understand where most of the people who were there were coming from. I have the same kinds of problems from this economic disaster as everyone else. But there is no way I could voice any kind of support for it now that it has moved way beyond the pale of appropriateness into lawlessness, violence and leftist anarchy. The facts about what is taking place remain indefensible, and if its defenders do not wish to be a part of something that looks to be turning quite ugly, or be implicated in socialist revolution, they should get out now and find some other way to deal with the sorry state of affairs of our once great nation that doesn’t hurt anyone.

If there is one thing to ‘get’ from study of the founding generation it is that unity was the most important goal of politics and much was sacrificed to achieve that goal. Maintenance of unity is the very reason our most cherished document, the United States Constitution, was born and it is announced as such in the very first sentence: “We the People of the United States, in Order to form a more perfect Union…do ordain and establish this Constitution for the United States of America.”

In 2008, when the Democrats assumed the presidency in addition to the majority in congress that they already held, even though their party is the oldest in the country, dating back to the days of Andrew Jackson and Martin Van Buren, not only had they forgotten what the constitution says about the role of government in society, they also neglected its entire purpose – Unity – and the kinds of compromises necessary in order to maintain it. It is one thing to be bold and out on the edge, but there is never a time when it is appropriate or desirable, when entrusted with leadership and governance, to go so far out on the edge that it alienates a large portion of We the People and sacrifices the elements of unity our forbearers fought, bled and died to maintain.

When those of us who felt alienated made our feelings known in mass, we were mocked and ridiculed. We were labeled with all matters of slurs and insults, and though peaceful we were blamed for random acts of violence, all for speaking truth to power and refusing to follow them down a path to destruction like mindless lemmings. We were the first to see the coming train wreck of big government and mercantilism, and cared enough about the heart and soul of this country to become involved, using ballots instead of bullets.

Now, we are seeing a second wave of “disaffected” individuals involved in protests against the mercantilism of crony capitalism. These are the people who didn’t believe us when we told them how dangerous and devastating big government really is to our economy and our society, and likely still do not understand the true cause of their discontent. Some have wrapped the discontent in the package of what they believe, fostered by what rhetoric they have heard. Some even believe that higher taxes on others will benefit them in some way; but of course we know that serves only to make the problem worse, government bigger, and even less responsive to the General Welfare of the nation.

I am disappointed in the response of our leaders and our movement to theirs even though we are upset about many of the same things; we are ALL Americans and ALL going through hard times with a government that has a mind of its own. We are upset about the crony capitalism that caused this economic crisis in the first place that still remains unaddressed. We are upset about the Federal Reserve as an enabler, along with the role of the FDIC and the GSEs in the housing and financial crises.  We are upset that people are still out of work, that the employment market is dysfunctional, and more and more people are being reduced from sold middle class to living in boxes by the day. The most important thing we have in common, however, is the felling that government, as large as it is, is completely deaf. Yet our leaders mock these mostly young people instead of looking at the fact that many of them are affected by the same real problems we are and they likely do not really know how to solve them.  We need to show them and help them – not mock them.

We should be finding places where we agree, like those listed above, and really start working on solving them in a way that does not require drastic compromises in principle on our part. We can start working on the financial regulatory structure in a very public way, holding House hearings, etc… We can at least make those people feel like someone is listening to them, even though we do not all agree on everything. We can and should do everything we can to foster unity, and I fear greatly for the future of this great nation if we turn away.

I made a diary entry a few days ago regarding my thoughts on the TRAIN Act as it stood at that time. It was updated yesterday and in addition to requesting a report on the economic impact of certain classes of regulations, it now would prevent most of those new regulations from taking effect until at least six months after the report is finalized. That would offer Americans being devastated by the EPA some relief until we get a new occupant in the White House.

It isn’t my ideal bill to deal with the regulatory mess, but it does slow it down considerably until we can get more favorable conditions to change the face of the regulatory apparatus.

I support the new version of the bill.

Be sure to read the bill before calling your congressional representative regarding the TRAIN Act.  Many of us have seen the summary bullet points in the associated propaganda, but when compared to the actual text of the bill, a stark contrast between them can be clearly seen.

My summary is as follows:

The TRAIN Act instructs the President to form a committee of various officials within the executive branch for the purpose of studying and generating a report regarding the economic impact of certain classes of regulatory rules.

Yes, folks, that’s the extent of it. It is quite a wonder how the text of this bill translates into any form of pushback on the EPA or any other agency for that matter, unless congress plans to do it with a report generated by the likes of Turbo-Tax Timmy at the cost of $2,000,000. Those EPA bureaucrats should be shaking in their boots at the thought.  Even so, there is nothing in this bill mandating any type of action on the basis of the report, and there is no guarantee that the report won’t end up in the circular file before the ink is dry.

I hope no one was holding their breath waiting for the GOP to rip the teeth out of the EPA, because it just isn’t going to happen with the TRAIN Act.

Democrat lies are incredibly damaging. The damage is being demonstrated tonight in the form of a socialist protest on Wall St. The various signs, chants, and tweets from the participants blame Wall St. for crashing the economy and the persistence of the economic shambles our country has become. Upon pondering this for a moment, scenes of the recent past flash by, scenes of various Democrats, including Obama, stating that lack of regulation caused the mess; it’s a crisis of capitalism, and the bankers ruined everything.

But now we have Dodd-Frank. We have the Recovery Act. We’ve had trillions in Cash for Clunkers, omnibus spending, loans for green energy, extended unemployment, loan modifications, food stamps, &c, &c.  We have ObamaCare.

None of it helps. Most of us knew that it wouldn’t, but it isn’t any wonder why these young people are camping out on Wall St. They don’t know that the seeds of the crash were sown in 2001 (while many of these kids were still in elementary school) with a change in the capital reserve ratios because they have not been told. The Recourse Rule was changed in January of 2001 to reduce the amount of reserves required for banks to invest in mortgage-backed securities (MBSs) that came through the Fannie/Freddie securities clearinghouses, in addition to highly rated municipal bonds to zero, making them ultra-competitive investments versus those in the general private sector.

What took place as an effect of this change, rather than the housing bubble which was only a secondary bubble, was an investment bubble in both MBSs and municipal bonds.  For nearly a decade this rule funneled large portions of aggregate productive capital, with heavy emphasis on investment banks as middlemen, into national consumption instead of where it might have otherwise gone – to the general private sector – where it would have been expanding our economic base. The short of it is that the banking regulatory apparatus laid a huge ‘nudge’ at the feet of the markets in the form of opportunity for huge profit margins and ROI for very little perceived risk, sacrificing potentially performing investments elsewhere.  Because the reserve requirement was set to zero, when the actual risk became apparent and the bottom fell out of the MBS market, the banks did not have enough reserves to stay afloat. What normally would have been a mild economic shock turned into a financial sector liquidity crisis. The whole thing was epic fail on the part of central planning with very nearsighted ‘nudges.’

That is now all behind us. The recession from that is over. What we have now is the recession from the hungry government “cure,” as Obama and his cronies unleashed the fury of the mob on the “banksters,” the people who are supposedly destroying the planet, and the health care industry. Average Joe is pinched in the middle while government crowds out lending to the private sector with massive spending and borrowing, and ties the hands of commerce with a roll of red tape so long it could likely wrap the circumference of the earth tenfold. Without a doubt this is the Obama/Democrat Party Depression and these young people should be camping out at the White House instead. Protesting Wall St. isn’t going to help them. If only they knew the truth.

The Obama Administration is involved in yet another embarrassing moment in a seemingly endless succession of moments that leave some staffer red-cheeked and heading for the restroom to take a breather.

Only in the White House do headlines like “American Jobs Crisis,” “Big Banks Slash Growth Forecast for 2011,” and “Zero Jobs Created” splashed across every business news website, and whispers about a coming double-dip recession translate into a “Record of Success” in creating a “Stronger Economy.”

The White House Blog:
Cleaner Air and a Stronger Economy – A Record of Success

Posted by Heather Zichal on September 02, 2011 at 10:30 AM EDT

Over the last two and a half years, the Obama Administration has taken unprecedented steps forward to protect the public health of American families by reducing harmful air pollution.  Taken together, the Administration’s clean air achievements will produce enormous benefits for public health and the environment – while promoting the nation’s continued economic growth and well-being.

The first few lines of the latest White House Blog post leaves room for a great deal of speculation regarding the planet of origin of the EPA executives, who really should exercise more care than to prepare public communications that cite mostly qualitative benefits of multiple rules changes while neglecting the overall cost to the economy.

When the author finally gets around to telling us how much money will be saved in the area of fuel consumption for automobiles, we find out that no one is going to save money until 2017 at the very least, and there is no estimate of how much each American will have to spend to save the projected $8k per vehicle.

If you are interested in playing a bit of a numbers game, feel free to look at the rest of the post and have fun inducing some more syndrome of the red cheeks at the White House.

Promoted from the diaries by Bill

Today, the President released a memorandum to all Federal agencies ordering the streamlining and expedition of regulatory and permitting processes for infrastructure projects, citing the need to remedy current economic conditions, maintain the nation’s competitive edge, and improve competition for global investment.

It paints a rather rosy picture of government coming the rescue in rather pressing economic conditions, but it certainly begs the question of why the President would streamline the regulatory and permitting process for infrastructure projects only when the Chamber of Commerce summit on jobs and the economy last month headlined bureaucratic red tape as one of the major inhibiting factors to recovery of the private sector, saying very little about lack of infrastructure as an issue. This doesn’t mean that there aren’t infrastructure issues, or that there won’t be. The Chamber of Commerce, however,  appears to have a dramatically different opinion regarding ”our competitive edge,” noting that there are plenty of private projects, currently hamstrung by red tape, that can provide “shovel-ready” jobs.

This memorandum illustrates a fundamental misunderstanding of basic market economics at best and misplaced priorities at worst. There is no way for our private sector, the economic engine of the country, to compete for investments or with foreign firms while being stuck in the regulatory headlock.  Even if we were to accept the President’s plan to create government-sponsored jobs instead of private sector jobs, there would still be that bureaucratic nightmare at the end. His infrastructure plan, therefore, will not meet the stated goal.  If the president is indeed concerned about the health of our economy and economic well being of our citizenry, he should include streamlining and expediting of all regulatory processes for everyone, not just the Federal government.

There’s been so much buzz around the BBA lately, I figured I’d post what the House will be voting on in a few days so it can be read and digested, and be taken as serious as amending our constitution should. Afterword, I provide my thoughts.

Here is the text:

H.J. Res. 1

JOINT RESOLUTION

Proposing a balanced budget amendment to the Constitution of the United States.

Resolved by the Senate and House of Representatives of the United States of America in Congress assembled (two-thirds of each House concurring therein), That the following article is proposed as an amendment to the Constitution of the United States, which shall be valid to all intents and purposes as part of the Constitution when ratified by the legislatures of three-fourths of the several States within seven years after the date of its submission for ratification:

`Article–

`Section 1. Total outlays for any fiscal year shall not exceed total receipts for that fiscal year, unless three-fifths of the whole number of each House of Congress shall provide by law for a specific excess of outlays over receipts by a rollcall vote.

`Section 2. The limit on the debt of the United States held by the public shall not be increased, unless three-fifths of the whole number of each House shall provide by law for such an increase by a rollcall vote.

`Section 3. Prior to each fiscal year, the President shall transmit to the Congress a proposed budget for the United States Government for that fiscal year in which total outlays do not exceed total receipts.

`Section 4. No bill to increase revenue shall become law unless approved by a majority of the whole number of each House by a rollcall vote.

`Section 5. The Congress may waive the provisions of this article for any fiscal year in which a declaration of war is in effect. The provisions of this article may be waived for any fiscal year in which the United States is engaged in military conflict which causes an imminent and serious military threat to national security and is so declared by a joint resolution, adopted by a majority of the whole number of each House, which becomes law.

`Section 6. The Congress shall enforce and implement this article by appropriate legislation, which may rely on estimates of outlays and receipts.

`Section 7. Total receipts shall include all receipts of the United States Government except those derived from borrowing. Total outlays shall include all outlays of the United States Government except for those for repayment of debt principal.

`Section 8. This article shall take effect beginning with the later of the second fiscal year beginning after its ratification or the first fiscal year beginning after December 31, 2014.’.

I have never subscribed to the idea that a BBA would solve our problems with spending and debt, and would likely have very limited effects on the kind of statism that can be accomplished when the government still has all the authority to regulate and mandate, and to make someone else pay for it.

This particular version is not quite the kind of “Why not? It can’t hurt anything. Just jump on the “Cut, Cap, Balance” bandwagon like the good Republican you are and don’t worry about what’s in the bill,” kind of BBA that I envisioned when I got the “talking to” regarding my ever so charming hesitance. And it went something like:

“Everything will be ok!! Well? You don’t want any more debt, do you? And we don’t want to have to struggle with socialized medicine again. Do you? Or maybe you think we should go another decade without even bothering with a budget.”

Reading this bill, it appears that none of complaints I’ve heard or criticisms about the particulars, the what and how of spending, that’s been going on over the last decade are solved with this sorry excuse for doing something about the problem.

We haven’t had a budget for two years! It doesn’t require congress to pass a budget. There are no deadlines to be met. They could muddy the waters with continuing resolutions so badly no one will know how much they are spending.

They fudged the numbers on that ObamaCare bill and double counted revenue. I don’t see anything requiring honesty. And perhaps we should not need to, but after the kinds of dirty tricks we witnessed over ObamaCare, I think it is one of those things that should be at the top of the list.

Everything else that has been tried in order to achieve spending/debt limits has failed because congress kept invoking the override, so we must have a Balanced Budget Amendment. And so what is in this one? Check out “Section 5” and consider that we’ve been at war for the last decade. Which of the budgets for the last 10 years are we to suppose would have been limited by this if we had it in our constitution the whole time?  Maybe it would have limited the one with Medicare Part D in it?? Sorry for being such a monster that I would deny old ladies living in shacks their heart medicine. What about the bailouts , porkulus and ObamaCare? Oh, they didn’t pass a budget those years… Sorry, Charlie – and would you get them anyway because we have a military conflict.

Don’t have a conflict and want socialized medicine? It’s not a problem at all. It only takes a simple majority to “approve one” and I’m sure we can find some tyrant who deserves to be shot in the face with a hellfire. And don’t even worry about that nonsense of declaring war – that’s so 1787. And when the conflict is over, it won’t really ever be over because who knows what other kinds of things will come up that are too important to neglect.

What? You don’t want [insert name of social program here] or a war and you want a balanced budget?  Perhaps you just need a holiday at the lovely Federal prison* hem* resort in ANWR.

We really need to think about this, guys. This one has so many kinds of likely baggage that comes with it, and it has more holes in it than Swiss cheese.  It is a really bad way to not solve any problem at all, but incentivize some really bad behavior with potentially deadly consequences.

Ideas for dealing with entitlements (not by any means complete, but rough ideas, and comments are certainly welcome)

One huge problem I see with both Medicare and Social Security is that they really are no more than arbitrary taxation ponzi schemes in which there is no guarantee of return and no limit to what can happen to the money that is taxed in order to fund them. Because of the rather fluid structure of these programs, the scope of benefits has only increased and the programs have been expanded over time way beyond original intent with very little comprehension of reality or impact to solvency of the programs (as congress can always raise taxes or print money to make up shortfalls) and ultimately the solvency of the nation with posterity on the hook for funding the monstrosities.

Other possible problems might be that they also relieve the politicians from a large portion of political liability for inflation and for interfering with natural market pricing mechanisms in health care. Who really cares, except working folks, if the government inflates away or hammers the health care markets with liability issues and mandates if people have the idea they’ll be taken care of no matter what happens to the value of the dollar or cost of health care over the course of their lifetime. And again, our kids (whether we have any yet or not) get handed the bill for the waste and abuse of power for the sake of political expediency while struggling themselves to make ends meet.

I’m aware that these programs are “popular”, and I think that has more to do with the impact the existence of these programs have on an individual’s propensity to save over their lifetime. This is also not without impact to the condition of our macroeconomic situation over time concerning net saving and investment vs. net consumption. As an example, Japan’s debt to GDP ratio is nearing 200%, but because of the net savings and investment vs. consumption makeup, that debt is held mostly by Japanese citizens themselves, rather than by foreign entities and international debt markets have little impact on the ability of the Japanese government to borrow. Of course that degree of debt is not a healthy situation in which to be, and I am by no means advocating replicating that *exact* formula here, but is quite helpful to not be up to our eyeballs in debt to foreigners.

What I think might help solve the problem of the current entitlement situation and peripheral political problems that come with them (other than a hard stop on constitutional grounds- which isn’t really workable or fair to anyone), specifically concerning Social Security (and it might even work with Medicare) is to maintain the program as is for everyone who is receiving it now and select a reasonable place for a cut off for new recipients.  At that point, make it a voluntary program that removes the employer contribution mandate and has caps on contributions to say, 20-25% vs. contributions to other retirement savings/investment programs and provisions for emergency measures to ensure that program obligations are met during economic downturns or to allow for congressional goosing of the program based on economic conditions, within limits, from time to time. There should also be some money devoted to marketing of the program to try to impact society’s perception of the responsibility to save for the future.

This would still provide the “safety net” feature, only based on real contributions and real returns of the of the individual’s own money from government bonds, and in general our kids and grand kids won’t be on the hook to fund the majority of the program. But also it would provide a dose of reality in management of the program over time. In other words, if the program is looted or expanded to insolvency while voluntary, market discipline would be brought to affect and it would eventually disappear if the problems are not immediately corrected.

Of course, this cannot work in isolation. There are other things that should and need to be changed, as well as other beneficial impacts to be identified. One thing is there should be better treatment and enticement of charitable giving, especially to the elderly. There will always be those who decline to invest in a government safety net and I don’t think anyone would ever propose that they should be left on their own, unless that is how they prefer. States could also do their own version of the program and/or become more involved in the quality of life of the elderly if they so choose. Additionally employers would have another tool to attract employees by offering matching funds, like many already do with 401(k)s.

Other considerations are that it would not be a “privatization” of the programs. It merely puts the power of the people back into consideration regarding what happens to their retirement money and in how we are treated in markets where government tends to throw its weight around without much in the way of political consequence only to use the mess it creates to remove more of our liberties with socialized medicine. Program funds would still be invested in treasury bonds, and the government would still use the money as it does today – the only difference is that it is no longer a blank check with which people can vote themselves goodies from the Treasury virtually without limit and kicking the can down the road for posterity to deal with.