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Richmans' Trade and Taxes Blog
More Than a Million Workers Lost Their Jobs Since Obama's Re-Election. Recession Is in Prospect
Over one and a quarter million workers have lost their jobs since Pres. Barack Hussein Obama won re-election. In the five weeks before the election, the average number of initial claims filed for unemployment insurance amounted to 347,918 per week but the average in the 13 weeks since the election amounted to 447,908. This contradicts the administration’s and the media’s reporting that the economy is growing, but is consisted with the decline in Gross Domestic Product in the fourth quarters of 2012. At the same time, Obama’s rich friends benefited from a stock market boom as a result of his easy money policies and from government subsidies. The Fed’s increase in the money supply created few if any jobs but created an asset boom, fueled by expectations of run-away inflation.
The fact is that increased government expenditures financed by public debt creates few new productive jobs and few are lasting. As soon as government expenditures are reduced, the temporary jobs created are lost. Many of the jobs created by government deficit spending are unproductive, for example, the government subsidized jobs in wind and solar energy. Even though more than half the cost is borne by government subsidies, the favored companies are subsidized even further by tax credits and by orders to the electric utilities to buy their output even though it is more costly. In addition, the utilities must have back-up facilities for those periods in which little or no electricity is generated because of the lack of wind or sunlight. The rising cost of electricity is a burden on the economy.
Insanity has been defined as doing the same thing over and over again and expecting a different result. The President wants to increase federal government spending which he has been doing and financing by deficits for four years and which has done little or nothing to create improved economic conditions. Unemployment, including involuntary part-time employment and the number who are no longer seeking work or who have dropped out of the labor force, is higher than when he took office. Republicans on the Senate Budget Committee reported that the federal government spent more than a trillion dollars (the amount of the federal deficit last year) on welfare programs and that more than forty-seven million, a new high, were enrolled to receive food stamps.
The President is arguing for higher taxes on the rich to balance the budget and is unwilling to cut expenditures. Even his Keynesian advisers would agree that higher taxes do not stimulate the economy; they are a deterrent. They do argue for increased expenditures to stimulate the economy and are silent about waste and abuse..
Why is there so little investment in manufacturing? What the private sector really needs is a reduction in all the impediments to investing in the U.S. American corporations are investing all right but they are investing abroad. The U.S. under President Obama has proven anti-business. It is subsidizing businesses but they are mostly unproductive businesses. They are a burden on taxpayers and the economy. The federal government is not creating a business environment that makes doing business in the U.S. attractive to investors in businesses that do not require subsidies. Its easy money policy is bidding up the prices of stocks but as for businesses, easy money is good but foreign countries are proving more attractive places in which to invest. Nearly all of the high tech products Americans consume are made abroad, many by American corporations outsourcing their production.
Why has the stock market been booming? We’ve already mentioned easy money which has nowhere else to go. They are growing by cutting costs, laying off workers, and producing for the essentially unproductive sectors of the economy, government, owners of corporate securities benefitting from the stock market boom. Its growth cannot be sustained in an economy that isn’t growing at all. The declining sector of the economy, manufacturing, is still large. But these cannot sustain a growing economy.
If we fail to create conditions favorable to investors in manufacturing, the economy is in dangers of hyper-inflation and collapse.
Comment by M, 2/9/2013:
To be fair, the Reagan revolution was built on the foundation of tax cuts and deficit spending. Bush I raised income taxes and got the boot. Clinton raised income taxes and his political party lost the U.S. house and Senate. Politicians do learn from their mistakes. Today our political leaders have (collectively) chosen to reap the benfits today and push all the hard choices into the future. The Obama administration could be described as following a strategy that is akin to the Johnson administration's Guns and Butter policy.
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