Category Archives: Economy
Remy says, "Raise the Debt Ceiling"
This is a pretty awesome rap, and a great way to sum up this debt ceiling bs.
If I were Speaker of the House…
I would issue an ultimatum to President Obama. First, Mr. President, we need to stop spending on wasteful programs, and we can do this by eliminating some unnecessary departments by giving control back to the states. We don’t need the Department of Education, as the states can do more by regulating their own education system and increasing teaching standards, etc. Another department to eliminate would be the Environmental Protection Agency. Once again, the states can handle the regulating the environmental standards. (Oh boy, I am waiting for BSC responses from this idea or those calling me out for such a ludicrous idea.)
If you eliminated the Department of Education and the Environmental Protection Agency, you would save a total of $78.5 billion (Source: U.S. Dept. of Education and EPA Budget). This would bring more money back to help the deficit.
Perhaps, it is time for the President to consider the solution at hand here. Unfortunately, I know this is not going to fly, since President Obama and the Democrats in Congress believe in expanding the size of government without thinking about the costs that come with the decision. At this point, no deals are being made, so I think we should head towards default. I mean we are headed that way regardless of what Congress or President Obama says in a flashy press conference or not.
U.S. Economy Grows Despite the Debt Ceiling Debate
While the debt ceiling debate continues in Washington, the U.S. Economy continued to grow at a slow rate. We should be celebrating, right? Things are looking up. Before you break out the champagne and fireworks, you might want to consider that the GDP (gross domestic product) only grew by 1.3 percent. While 1.3 percent is better than a decline, there are some factors to consider. According to The Wall Street Journal, the meager increase was caused due to a lack of consumer spending, and the reduced expenditures are only going to continue due to the rising rates of inflation and the increased prices for basic commodities, such as food and energy. The GDP will continue to experience these hardships, as many consumers have to prioritize their expenditures.
Another reason why the GDP is experiencing slow growth is due to the rise in unemployment numbers. Currently, the Bureau of Labor Statistics reports that unemployment is at 9.2 percent. This number is expected to increase, as many companies are cutting back their workforce to stay afloat in this economy.
In light of the meager economic growth, one has to wonder if this trend will continue. I would guess that the economic growth will tank before real growth occurs.
Cross posted at Bearing Drift
Economic Freedom and the Quality of Life
Economic freedom produces many societal benefits. Watch this video and find out what economic freedom is and its impact on society.
Virginia is better than Maryland…just in case, you didn't know
For the full disclosure, I was born and raised in Maryland. In fact, there are times I miss the place due to family and friends. However, in terms of the taxes and excessive regulations brought on by years of Democratic leadership, I am glad to be a Virginian.
Recently, The Washington Times had an editorial, which cited a recent American Legislative Exchange Council study that shows Virginia ranking as one of top ten states in terms of economic outlook. Maryland ranked 21st in terms of economic outlook.
Maryland is a very expensive state to live in, as property and income tax rates are higher than some of the surrounding areas. However, Virginia has been placing more focus on bringing business into the state, thus boosting the economy. Recently, CNBC ranked Virginia as the top state for business, and the state government has been placing focus on providing more tax incentives for companies looking to relocate to the Commonwealth. Maryland was ranked 29th, as the cost of living and cost of business were higher in the rankings.
Will this news serve as a wake-up call for Maryland? Probably not. It will not change until new leadership takes over the state government.
Today's Shocker: Terry McAuliffe Caught in a Lie
Granted, there are times when you can’t take people at their words. In the bloodsport of politics, there seems to be a lot of fallacies spread around, and there are times when both parties are guilty. There are times when the truth can be stretched too far.
Case in point, during a recent campaign kickoff for Del. Scott Surovell (D-Fairfax), former Democratic National Committeeman Terry McAuliffe was caught “stretching the truth,” when he made this statement:
“The $1.8 billion in [transportation] bonding, we don’t have a repayment mechanism.”
Well, this seems odd…no repayment plan for the transportation debt? Something doesn’t seem quite right here, so PolitiFact Virginia did some research and pointed out that McAuliffe hit the Pants on Fire on the Truth-o-Meter.
The General Assembly, during the 2007 session, had a plan that involved setting aside some proceeds from a tax on insurance proceeds, along with taxes on wholesale gasoline to pay for the transportation debt. Revenues are also used to repay the transportation loan.
It seems that desperation has been hitting the Democrats lately, as they try to do and say anything to get a vote.
More Wasteful Spending in Congress
How about when a second jet engine is considered extravagant and unnecessary by the person who should most want it? Or when the second jet engine costs U.S. taxpayers $28 million a month? Or when the second jet engine is the poster child for senseless government waste?
Two is not better than one when the topic is the F-35 Joint Strike Fighter. This 5th generation fighter jet needs only one engine, yet it is dogged by the extra engine program. The thinking is that competition would hold down costs and spur innovation. Unfortunately, when the alternative engine has performed so poorly in tests, and is clearly not up to scratch, this argument hardly holds water.
Pratt & Whitney, one of the developers, has an engine that has been certified for the F-35. Its F-135 engine has successfully completed 17,500 hours of testing and numerous vertical landings.
The other developer, GE/Rolls Royce, has little to show for the taxpayer dollars it has spent. Its F-136 engine has accrued nearly $3 billion in expenses at the same time hundreds of American jobs were outsourced to the U.K., where Rolls Royce is headquartered. The first complete F-136 engine began testing about two years ago and may be flight tested for the first time this year or next.
The Bush and Obama Administrations tried to pull funding for the extra engine program. In testimony before Congress, Defense Secretary Robert Gates said the second engine would cost another $3 billion to develop. According to Gates, the DOD cannot find a business case in which an alternate engine program makes sense. The Pentagon issued a work termination order to drive home the point.
Some members of Congress were listening. U.S. Rep Tom Rooney (R-Fla.) developed an amendment to the continuing budget resolution that eliminated funding for the extra engine. The amendment passed.
However, the House Armed Services Committee recently passed the 2012 defense budget. Technically, it doesn’t include funding for the extra engine program, but if you read the fine print, you’ll find otherwise.
GE/Rolls Royce is permitted to continue development of its F-136 engine as long as it pays its own way. However, the DOD would be required to give GE/ Rolls Royce access to the engine components the department has already produced and access to government testing sites. Those are not small-ticket items, and American taxpayers will have to foot the bill.
Our congressional leaders need to be reminded that we have to end excessive spending if we’re going to reduce the national deficit. And we have to limit the size of government if we’re going to get the U.S. economy back on track. The extra engine debate is a perfect example of what got us in the mess we are in to begin with and we should not repeat the mistakes of the past. Congress has an opportunity to do the right thing by not increasing the national deficit on a project that even the DoD has said they do not want or need.
Cross Posted at Bearing Drift
Your So-Called Economic Recovery at work
Where’s the hope and change that was promised to Americans in 2008, when then candidate Barack Obama was campaigning for the Presidency? Now, the hope has dissolved, along with your change. Over the course of Obama’s term as President, we have seen unemployment numbers at an all time high, and the government continues to spend above and beyond its limits.
Despite unemployment and government spending, there are two additional factors that will prove the economy is in a downslide. Take for example, yesterday, an independent ratings agency, Weiss Ratings, indicated that the U.S. rating should be a ‘C’. According to Martin Weiss, President of Weiss Ratings, a ‘C’ Rating is comparable to a triple-B S&P rating. These ratings are justified by the massive debt burden and economic volatility.
The other factor that does not bode well for economic recovery is the decline of the dollar. According to a Reuters report, the dollar fell to a three-year low due to the unemployment numbers.
The question remains: When will the federal government wake up and actually address the debt burden and unemployment? This is not recovery by any stretch of the imagination.
Economics in One Lesson
The 50th Anniversary edition of Henry Hazlitt’s classic, Economics in One Lesson, paints a straightforward depiction of free-market capitalism which is easily accessible to even the most modest of economist. Hazlitt makes the argument that the responsibility of any economy is to create “Full Production” (p. 57) and an unencumbered free market creates the most economic utility. While Hazlitt admits there are exceptions to the unencumbered free market which are primarily based around security issues, he believes the best way to create the most production in the long run is to allow the economy to manage itself.
Hazlitt greatest opposition when arguing economics utility are Keynes and other governmental redistributive theorist. Weather the opposition believes in manipulation of product or monetary supply, Hazlitt always argues that this manipulation comes at the cost of “Full Production”. Hazelitt’s argument is that politicians who intervene in the free market economy always fall into one of two fallacies. The first fallacy is economist don’t usually review all interest when they pursue public policy, but just the interest that have the greatest lobby. The other fallacy is that most politicians misconstrue short term benefit with long term gain (P.3). Some might argue that these fallacies are not fallacies at all, but just the by-products of a functional democratic republic. If a politician expects to win re-election multiple times, that politician must do what is in the best short-term interest of his or her constituency. Hazlitt would argue any politician who pursues short-term interest in lieu of long-term gain is guilty of arrogance or incompetence.
The basis of Hazlitt’s argument is that a free market is a natural law with an infinite amount of movable parts. Hazlitt writes
“The private enterprise system, then, might be compared to thousands of machines, each regulated by its own quasi-automatic governor, yet with these machines and their governors all interconnected and influencing each other, so that they act in effect like one great machine.” (p. 90)
This means that any politician who interjects redistributive policies either believes he or she can comprehend the infinite amount of effects that can be produced by a redistributive policy or that politician arbitrarily picks redistributive policies without fully understanding the consequences of his or her actions. This either means that politicians who pursue policies of redistribution without acknowledging the gamble they are taking either believe they are omnipotent or are willing to take a uninformed gamble with the wealth of others. The libertarian fears the former much more than the latter.
Business Owners Petition Congress on Swipe Card Fees
This week, 7-Eleven franchise owners in Virginia will be coming to Capitol Hill to lobby Congress to urge their Representatives to implement swipe fee reforms that were passed in the 111th Congress. The Wall Street Reform and Consumer Protection Act, signed into law last year by President Barack Obama, included a provision that would regulate debit card swipe fees, and now, the current Congress is looking at either delaying or repealing these fees. According to The Hill, banks charge 44 cents per debit card purchase and this fee would be reduced significantly.
Dennis Lane, who owns a 7-Eleven franchise and spokesman for Reform Swipe Fees Now, remarked about the urgent need to implement the reforms:
“I’m fed up. On behalf of more than 5,000 7-Eleven franchisees, thousands of employees and millions of customers who supported our historic campaign to stop unfair fees, we are going back to Washington to hold politicians accountable for the promises they made, and ask for the protection of much needed swipe fee reform that would benefit real Americans.”
Another 7-Eleven franchise owner, Brian Bonfiglio of Virginia Beach, Va. said that if these reforms are delayed, then franchise owners “will have to keep bringing prices up to cover expenses.”
While the fees are considered excessive by retailers, the American Bankers Association has another take on the swipe card fee reforms. By implementing these reforms, there could be potential problems with the pressure on banks to cover fraud prevention fees.
“Furthermore, the Fed has not even addressed the actual cost of fraud losses, which are indeed borne mostly by banks. Retailers are guaranteed payment when they swipe a debit card and obtain authorization. Even in cases where there are insufficient funds in an account or the card is counterfeit, the retailer gets paid and the bank that issued the card suffers the loss.
While I see the points being made by the American Bankers Association, I also see the need for this reform for the sake of retailers, who have been struggling due to the bad economic climate. The price of acquiring goods have risen, and retailers know the risks involved with passing the costs along to the consumers. When the cost of something rises, people generally tend not to buy, unless it is a necessity. Right now, we need to restore the economy. If this legislation is stalled, this could cause harm to retailers, such as 7-Eleven, and could cause more unemployment in the end.
