If California is really where national trends start, the nation is in trouble. The good news, though, is that an anti-big-government revolt may be brewing out there.
[Update]
Michael Barone: Are Americans getting cold feet over Obama economic proposals? Let’s hope so, finally.
…better than Obama’s first one. It’s not hard.
If they want a “second stimulus,” step one would be rescinding the first one.
It would help a lot of the government wouldn’t keep stomping them down.
But you can’t waste a crisis, and if you haven’t accomplished everything you want with it yet politically, you have to sustain it, just as the Roosevelt administration did, for years. Let’s hope that we’ll be on to them this time around.
[Update a few minutes later]
Will we be saved by California?
The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat…
…The federal picture is so bleak because the Obama administration is the most fiscally irresponsible in the history of the U.S. I would imagine that he would be the intergalactic champion as well, if we could gather the data on deficits on other worlds. Obama has taken George W. Bush’s inattention to deficits and elevated it to an art form.
The Obama administration has no shame, and is willing to abandon reason altogether to achieve its short-term political goals. Ronald Reagan ran up big deficits in part because he believed that his tax cuts would produce economic growth, and ultimately pay for themselves. He may well have been excessively optimistic about the merits of tax cuts, but at least he had a story.
Obama has no story. Nobody believes that his unprecedented expansion of the welfare state will lead to enough economic growth. Nobody believes that it will pay for itself. Everyone understands that higher spending today begets higher spending tomorrow. That means that his economic strategy simply doesn’t add up.
Well, it does to some of the economic illiterati in my comments section. As I said, let’s hope the rest of us figure it out by next November.
Ask the manufacturers:
More than 17 percent of those who answered said they would have to shut down their business because there is no way they could handle the kinds of increases being predicted.
The unscientific poll taken of Manufacturing & Technology eJournal readers from June 28th through July 1st drew 943 responses.
OTHER CHOICES INCLUDED:
Would raise the price of my product or service to customers (22 percent);
A combination of price increases, personnel cuts and reductions in pay and benefits (20 percent);
Switch to a 4-day workweek (15 percent);
Layoff workers (14.5 percent).
But hey, what do they know?
Speaker Pelosi was right that that is what this is all about. And she and the Congress continue to destroy them and prevent their creation:
…millions of full-time workers are being downgraded to part-time, as businesses slash labor costs to remain above water. Because people are working less, wages have fallen by 0.3% this year. Factories are operating at only 65% capacity, while the overall jobless rate hit 9.5%. Throw in discouraged workers who want full-time work, and the labor underutilization rate climbed to 16.5%.
The news is even worse for young people, with nearly one in four teenagers unemployed. Congress has scheduled an increase in the minimum wage later this month, which will price even more of these unskilled youths out of a vital start on the career ladder. One useful policy response would be for Congress to rescind the wage hike to $7.25 an hour (from $6.55) that is scheduled for July 24. But the union economic model that now dominates Washington holds that wages only matter for those who already have jobs. The jobs that are never created don’t count.
This is right out of the New Deal play book. Price labor out of the market by government fiat. And keep kids (many of whom live with their parents) from climbing on to the first rung of the employment ladder. Teenage unemployment is 24%, and they raise the minimum wage. Brilliant.
And then there’s this (part of a huge grand indictment of Waxman-Markey):
Naturally, Big Labor gets its piece of the pie, too. Projects receiving grants and financing under Waxman-Markey provisions will be required to implement Davis-Bacon union-wage rules, making it hard for non-union firms to compete — and ensuring that these “investments” pay out inflated union wages. And it’s not just the big research-and-development contracts, since Waxman-Markey forces union-wage rules all the way down to the plumbing-repair and light-bulb-changing level.
Via Kaus, who also notes that if this insanity is extended to health care, you can kiss any hopes of cost savings goodbye. We’ve got to put the brakes on all this economic vandalism, somehow. I hope that we can finally stop it in the Senate.
[Update a few minutes later]
The dog will hunt, but it can’t find anything.
[Late morning update]
The worst job market for teens since 1965. But let’s be sure to raise that minimum wage.
Dick Shelby wins, our space future loses:
Shelby’s argument has been that the exploration funding in the bill was intended solely for reducing the Shuttle-Constellation gap, a spokesman for the Alabama Republican told the paper (although there is no specific language dictating that in the bill). And certainly Constellation can use every bit of additional funding it can get. However, would that $100 million have a greater effect towards reducing the gap in US human space access if it’s spent on Constellation (where it might accelerate schedules by on the order of a month), or on commercial efforts that might (but are certainly not guaranteed to) be operational years before Ares 1 and Orion?
It can’t use it in any way that’s beneficial to either the taxpayer, or a space enthusiast. I almost weep when I think of the useful things we could do with a mere hundred million dollars. Shelby is quickly making himself public enemy number one of anyone who wants a sane and cost-effective space program. More over at the Sentinel.
[Update on Saturday]
A lot more comments over at NASA Watch.
Why America isn’t hiring:
America isn’t hiring precisely because of government policy. Small business owners, who are usually the first into and the first out of the job pool, are standing by the fence and watching. They are paralyzed by regulatory uncertainty. If they hire someone who ends up doing poorly, will they be able to fire that person? Will they have to pay their health care bills after they’ve been terminated? If so, for how long? Who will pay for all these stimulus checks? If it will turn out to be small business, why would they hire instead of keeping costs low to prepare for the big tax bill? Where will the market move? Are you in the right business or are your clients in a politically disfavored industry? Are your clients in health care (being nationalized), autos (already nationalized), banking (somewhat nationalized) or any energy production process which uses carbon (pulverized)? Until you know, you don’t grow, and until you grow your market, you don’t grow your payroll.
Jobs aren’t languishing despite the government’s best efforts. They’re languishing because of them.
They’re actually languishing because of the government’s worst efforts. Investors (and small business owners are investors) hate uncertainty, and will sit on the sidelines until it disappears. Right now, small business is going Galt. And I sure don’t blame them.
Unfortunately, it actually plays into the fascists’ strategy of moving more economic activity out of the private, and into the public sector.
…are not a moon shot:
“What people overlook is that accomplishing ‘big picture’ programs like Apollo require accepting the concept of unlimited spending to achieve the mission,” says Ron Cogan, editor and publisher of the industry authority Green Car Journal and editor of GreenCar.com. “Current levels of unprecedented federal spending notwithstanding, electric cars are not an exclusive answer to future transportation challenges and consumers will not be willing to buy them at all costs.”
As I pointed out at the last Apollo anniversary, it’s time to stop using this economically ignorant analogy. And that means you, Mr. President. The only time that he ever talks about space is when he can use it as an excuse for one of his non-space economically nutty programs.
Only an academic could come up with the idiotic notion that it’s Walmart’s fault. It is fascist, corporatist federal policies. And not just SOX, but a lot of general business regulation that makes the paperwork and legal liabilities too daunting for a small business.
Who gets cash and who gets IOUs in California. I’m shocked, shocked. I’m glad the state doesn’t owe me any money. I wonder how much the IOUs will be discounted for people who need the liquidity now?
[Update a few minutes later]
If they’re going to do this, instead of making some people more equal than others, wouldn’t the fair thing be to issue everyone a mix of cash and IOU in proportion to the amount that they’re short?
[Late morning update]
B of A says that it will accept the IOUs as warrants:
“To support our customers, while giving the state legislature additional time to pass a budget, we will accept California state-registered warrants — or IOUs — from existing customers and clients,” Charlotte-based BofA (NYSE:BAC) says in a written statement.
OK, so what are these things? What happens if the legislature doesn’t get its act together (and based on history, that’s the way to bet). Do they have an associated interest rate, or maturity date? What would a secondary market in them look like, and how would they be discounted? Suppose California just reneges on redeeming them? Does B of A (and Wells Fargo, and whoever else follows suit) then get made whole by TARP, thus bailing out the state of California via the US taxpayer through the back door (in more ways than one)?
What a mess.