President Obama Misses Mark Again, More of the Same

 

Sept. 9, 2011

President Obama is proposing superficial  bandaids from political motivations that would accomplish little to solve the structural economic challenges afflicting the U.S.

America’s economy is barely holding together by pins and needles. It could tear completely apart with one more catastrophe. With its $447 billion plan, the Obama Administration has proven again it does not know how to stimulate growth in jobs. If the administration gets its way, a double-dip recession is inevitable — not economic recovery.

Yes, I’m all for roads and education. But I’m troubled. Why? My sense is that the administration is making recommendations for political reasons, and not economic patriotism. More on that later.

U.S. business has too little domestic demand for products. The list of concerns is long. America is no longer a manufacturing center. Television sets and computers are made in Asia. Cars and trucks aren’t selling.

Many big companies like General Motors are investing abroad and making more money there. Yes, ask GM about cars sales in China.

All of this means a stalemate in domestic job creation.

Extend unemployment insurance?

OK, 14 million Americans are jobless. Not to sound unsympathetic, but many workers are partly to blame by not adapting to the new digital age with new skills. There are countless unfilled jobs.

At what point does a helping hand become a handout?

Recessions weren’t kind to me. Long ago, my personal situation helped coin the phrase, corporate downsizing – 14 times. Yes, 14 layoffs. Yet, I always found ways for a sustainable income. It wasn’t always in my preferred industry. Sometimes, I turned to other sectors and got a sales job and worked my way back into management.

As a former mentor, famed broadcaster Del Sharbutt, once bluntly told me: “Every experience is a learning experience.” Reading between the lines, he was also telling me mental toughness was in order. What I eventually learned was that I needed an entrepreneurial spirit. Despite all the jobs, not to be gauche, but a CBS executive referred to my resume as a “rich background.” His comment spurred an even more intense entrepreneurial conviction.

That’s what America, American workers and the Obama Administration need.

The straw that stirs job creation – small business – can’t get credit and enough customers. Studies show most is not hiring nor will they for at least 18 months. Why? Again, there’s too-little domestic consumption.

Family budgets are strained. U.S. consumers are spending more but it’s more precious dollars on food and gas. Both are heavily imported. There isn’t any new drilling for oil and natural gas. So much of domestic consumer money is going abroad but it isn’t returning as a result of exports. The trade imbalance is still way out of whack.

Disingenuous spending

President Obama is calling for more stimulus spending. He apparently thinks spending another $140 billion on roads and schools will work. But my sense is that his proposal is aimed at benefiting the unions for political donations (see this EDITORIAL: How labor unions spend dues money).

Mr. Obama is showing he does not have Bobby Kennedy-like qualities (note this revelation: Dirty work between Obama, Teamsters). Do you recall the administration of John F. Kennedy when his brother, Attorney General Robert Kennedy, had his principled legal fight with the Teamsters in the 1960s?

Meantime, the president proposes to finance his proposed new stimulus with cutbacks in Medicare and Medicaid. It’s fallacious reasoning to think it’s best to spend more for union construction jobs while healthcare workers will lose theirs.

We already know about the devastation caused by his healthcare law. The majority of small businesses are apprehensive. Their workers and all patients face higher costs in their copayments and coverage.

Launching an infrastructure bank to lend money to local and state governments and financed privately?

Please. Government budgets at all levels are stretched too thin, as it is. Government credit ratings are backsliding. Doesn’t anyone remember the U.S. downgrade?

To expect these governments to repay the money isn’t productive, just as businesses fail when they borrow money just to stay in business. At some point, they have to repay the money, or else.

President Obama wants more business regulation – more government bureaucracy. Again, talk to the majority of businesses. You’ll get an earful.

He wants to tax the wealthy at higher rates. So how will they invest and hire workers? What’s their incentive to spend? The hospitality industry – from hotels to restaurants – is barely making it now. Sticking to the wealthy might make some people feel better, but it’s not a solution.

Payroll tax cuts won’t stimulate job growth and are a threat to future Social Security recipients for their retirement. The short-term benefit would be catastrophic for the long term.

There are more red flags, but you get the idea.

We waited weeks for President Obama to outline a new public-policy approach for economic recovery and job creation – in vain.

What we need is common-sense leadership and change from the White House, not politics. Remember the campaign promise? But nearly three years later, are we getting it? No, it’s more of the same politics. There’s no infrastructure being proposed for short-term or lasting recovery.

From the Coach’s Corner, instead of just complaining, this portal’s Public Policy section is filled with solutions.

“The problem with the federal government is that common sense is not necessarily common.”

- Terry Detrick

 

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Terry Corbell is a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

How Economic, Political Freedom Got Boost from Two Reproaches

 

Updated – Feb. 1, 2012

The healthcare debacle is going to the U.S. Supreme Court, in part, thanks to ruling by an Atlanta federal appeals court and the Standard and Poor’s downgrade of the U.S. credit rating last August. In reality, they were positive developments. The two evens represent reproaches to the federal government’s behavior and performance.

While sustaining the bulk of the so-called reforms, thankfully, the 11th Circuit Court of Appeals ruled that Congress unconstitutionally required Americans to buy health insurance or pay a stiff fine. Most businesspeople feel differently about the law (How Healthcare Law Would Affect Small Business, and Healthcare Reform Increases Costs to Workers, Study).

Despite disingenuous claims by the Obama Administration, S&P’s downgrade was justified. In pandering to political cronies nearly all in Congress from both parties, has spent an obscene amount of money on unwarranted hometown pork and earmarks. Politicians must now stare at a huge red flag.

Another reason why the court’s health-law ruling is encouraging:

One of the opinions was written by Judge Frank M. Hull. He was appointed by a Democrat – President Bill Clinton in 1994. He was joined by Chief Judge Joel F. Dubina, who was appointed by Republican President H.W. Bush.

Until Judge Hull’s decision, lower court rulings were rendered along party lines. Republican appointees invalidated the health-law, and judicial appointees by Democrats upheld it.

“This economic mandate represents a wholly novel and potentially unbounded assertion of congressional authority: the ability to compel Americans to purchase an expensive health insurance product they have elected not to buy, and to make them re-purchase that insurance product every month for their entire lives,” wrote Judges Hull and Dubina.

“We have not found any generally applicable, judicially enforceable limiting principle that would permit us to uphold the mandate without obliterating the boundaries inherent in the system of enumerated congressional powers,” they also wrote.

Yes, there more legal challenges in the courts, including Virginia and the District of Columbia.

But this ruling was the most salient. The opponents’ case was pursued by attorneys general and governors from more than half of the states – 26. Other plaintiffs included the National Federation of Independent Business and two individuals.

Again, the U.S. Supreme Court will rule on the case.

Possible Ramifications

The Atlanta court’s dramatic ruling might influence the pricing of insurance policies. The Obamacare requirement guaranteed funding via the consistency in the mega pool of policyholders. Now, insurance companies started to hike premiums — just as predicted here at The Biz Coach.

Politically, there’s also a different landscape. Perhaps the Supreme Court might agree with the Atlanta court. But any legislative attempts by Congress to sidestep such a ruling would be unwise. That’s because the Democrats no longer enjoy being the majority in both houses of Congress. Republicans are unified against the law.

States governments are carrying out the law’s reforms. There has been a lot of angst about the costs in implementing the law. Many of the states’ politicians complain their rights have been trampled.

Even though the remaining portions of Obamacare were untouched by the Atlanta court, the ruling also appears to torch them. Why? The mandate to buy insurance is a source of the law’s funding, which has now been disrupted.

Only one source remains as a funding source – a decrease in Medicare benefits. Democrats have been disingenuous. They conveniently omit the devastation to recipients of Medicare.

Let’s hope the entire baggage in Obamacare is at-risk. It was clearly unconscionable for Congress to require Americans to buy private products.

The Great Recession may have technically ended but not for most businesspeople and consumers. That’s why the S&P downgrade and court ruling are beneficial. The reproaches help to end the expansion of the over-extended Federal government.

The reproaches also hold the promise of enhancing the economy by alleviating economic uncertainty for 14 million unemployed Americans and employers. Companies have been reluctant to hire, in part, because of the expense of Obamacare.

Here’s a better strategic plan: Balance the budget without increasing taxes on everyone. Make it feasible for startups and other businesses to hire and expand.

Economic and political freedom are two of America’s sacred liberties.

From the Coach’s Corner, here are related public policy columns:

Only Fiscal Sobriety Will Prevent Further Fiscal Chaos

Do We Really Honor the Declaration of Independence?

Manufacturing Jobs Might Return to U.S. as China’s Labor Costs Rise

Economic Climate for Small Business – Has Obama Misread the 3 Ms?

Government Spending Causes Companies to Cut Back, Harvard Study

“Giving money and power to government is like giving whiskey and car keys to teenage boys.”

-P.J. O’Rourke

 

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Columnist Terry Corbell is also a business-performance consultant and profit professional. Click here to see his management services (many are available online). For a complimentary chat about your business situation or to schedule Terry Corbell as a speaker, why don’t you contact him today?

Why You Can’t Get Work or Hire Workers

 

Are you one of the countless baby boomers who is relying on Social Security before you reach retirement age? You’re not alone. The dearth of jobs has prompted many Americans to accept lower Social Security payments at the age of 62. This means Social Security is forecast to start paying out more in benefits than it receives starting in 2017.

The Labor Dept. says some 2.7 million Americans will lose their unemployment parachute checks near the tax-filing deadline of April15. About 6.3 million folks have been out-of-work for six months or longer.

The government believes 15 million people are jobless. That’s only an estimate. It doesn’t include the high number of self-employed people desperately taking independent contractor projects because they can’t find jobs, or the under-employed taking temporary jobs.

These numbers also jurt job creation. Higher unemployment rates charged to business by government is a disincentive, too.

After having worked through 6 major economic downturns, my analysis of the data and the trends is that the real unemployment rate is about 25 percent. That’s depression-like, not recession-like numbers.

A recent study proves it’s getting worse for American workers. The Center for Labor Market Studies at Northeastern University in Boston sums up the problem in its study’s subtitle – “A Truly Great Depression Among the Nation’s Low Income Workers Amidst Full Employment Among the Most Affluent.”

For the nation to catch up, most experts believe 100,000 new jobs need to be created every 30 days. But veteran pragmatists know it won’t happen. Count me as one of those.

The job drought is not a new phenomenon in the sense that it’s been years in the making. The federal government began tracking the number of unemployed in 1948.

Many jobs have not and will not return. Not to over-simplify, institutional investors own increasing numbers of companies. Largely, they extract profits by slashing payrolls and encouraging offshoring of jobs in Latin America and Asia where labor is cheaper.

Since 2000, automation is responsible to cutting 5.6 million jobs.

After each recession since 1970, job-growth rates have decreased. Published reports indicate that even before the Great Recession, it was less than one percent a year and was only 2.4 percent in the 1990s and 1980s, according to the Labor Department figures.

Based on trends following recessions, I’m in agreement with economists who forecast it will be at least five years before the unemployment rate returns to more palatable levels – hence, the term, jobless recovery. Even then, I’m not sure it will happen.

Historically, consumer spending has been a key ingredient for economic recovery. But that won’t happen unless there’s a fundamental economic change.

This also means the tax revenue pie for governments at all levels will remain flat.

For good reason, Americans have returned to 1930’s money values. They’re becoming tight-fisted with their money and are demanding government accountability.

The housing bubble resulted in a high volume of excise taxes, but the high rate of foreclosures alters that scenario.

Talk to anyone who checks credit for consumers or small businesses. The aggregate level of bad credit is huge –largely caused by the predatory behavior of big lenders. They’ve nearly destroyed the livelihoods of small businesses with mega interest rate hikes for bogus reasons.

Small business has historically has been the main job-creation engine, but no more.

Small businesses do not have the financial firepower expand and create jobs. New credit card legislation does nothing to correct the injustices.

Instead of focusing on helping business, government at every level, is hindering the economic climate. Economic and political freedoms are being stolen each day by bad government policy (See this site’s other Public Policy columns). The largest employer in many communities is government. Public-sector agencies are still growing, not laying off, while spending and taxing at ever-increasing levels. For the common good of all Americans, change is needed.

Businesses and consumers can no longer afford the status quo in taxes. Government must reform.

From the Coach’s Corner, effective on Feb. 22, 2010, here is the essence of the credit card law:

1. Credit card companies cannot increase the rate in the first year until the introductory rate expires. The banks must give 45 days notice to change the rate.
2. Unless two months past due, rates can’t be changed.
3. The original interest rate must be granted once payments are on time for six months.
4. The fine print will be easier to grasp.
5. Activation and annual fees can’t exceed 25 percent of the credit limit in the first year; and will be unlimited after 12 months.
6. Credit card statements must be sent three weeks in advance.
7. Transactions can’t take place over the credit limit unless the cardholder agrees.
8. The “universal fault” nonsense (if you were late one day on one payment, the other credit card companies jacked up your rate) is stopped and interest rates on existing balances must stay the same (see No.1).
9. Companies can’t give students or anyone under 21 a car unless she/he has a co-signer or the autonomous ability to pay statements. Schools have to make public any credit-card marketing deals, and companies cannot stage publicity or giveaway events on or near campuses.