Columnist.
Four years ago, North Carolina's unemployment rate was above 10 percent and the state still bore the effects of its battering in the recession. Many rural towns faced jobless rates of more than 20 percent. But in 2013, a combination of the biggest tax rate reductions in the state's history and a gutsy but controversial unemployment insurance reform supercharged the state's economy and has even helped finance budget surpluses. As Wells Fargo's Economics Group recently put it: "North Carolina's economy has shifted into high gear. Hiring has picked up across nearly every industry." The tax cut slashed the state's top personal income tax rate to 5.75 percent, near the regional average, from 7.75 percent, which had been the highest in the South. The corporate tax rate was cut to 5 percent from 6.9 percent. The estate tax was eliminated.
"What a tragedy if courts in other states prevent legislatures from defusing these fiscal time bombs."
Here's a half-serious question: How much do taxpayers have to pay off Boeing to make the Export-Import Bank finally and irrevocably go away? If the feds wrote a check to Boeing for $100 million, would they then let the Ex-Im Bank fade away after the current portfolio winds down? I ask this because the aerospace giant is the largest beneficiary of the Ex-Im Bank. The bank provides subsidized loans and insurance contracts to foreign companies that buy American exports. Ex-Im Bank doles out billions of dollars of loans and insurance subsidies every year and has become the poster child for corporate cronyism in Washington. Think of the bank as food stamps for America's Fortune 500 companies. Ever since the early Reagan years, conservatives have been trying to eliminate the subsidies, but the bank has multiple lives.
Earlier this month the Illinois Supreme Court overturned a state law that would help fix the state's notorious pension crisis. What a tragedy for the state's taxpayers. The justices basically ruled that the pension arrangements are iron-clad, although these pensions are on a course to bankrupt the state and imperil public services that Illinois families depend on. The unions come first. This could have negative consequences for more than half the states that are trying to defuse government employee pension time bombs. By way of background: Illinois has one of the deepest public employee pension holes in the nation. The long-term deficit is estimated at above $110 billion and the red ink rises every year. Even in California — where several cities have declared bankruptcy — the pension sink hole isn't as deep on a per capita basis. The watchdog group Open the Books reports that there are more than 5,000 teacher and other education officials who receive an annual pension of more than $100,000 a year. Worse yet, half of all government employees retire with benefits before age 60. That's more than twice what a typical private worker gets for having worked 12 months, not nine months, a year.
Our class warrior in chief was at it again last week complaining about our "ideological divides that have prevented us from making progress" in solving problems like poverty. Just when you thought you'd heard it all. Our most ideological president perhaps ever is arguing that there is too much ideology in Washington. Wow. Apparently an ideology is a firmly held belief that is held by other people — especially those on the right. In a discussion on poverty at Georgetown University, the president managed to blame the slow-growth economy and stagnant wages on everything from Ayn Rand (who promoted "cold hearted policies" and classified everyone as a "moocher") to California's Proposition 13 (which is responsible for the Golden State's dreadful schools). Everything has contributed to our current malaise except for his own failed policies.
Last week the Illinois Supreme Court overturned a state law that would help fix the state's notorious pension crisis. What a tragedy for the state's taxpayers. The justices basically ruled that the pension arrangements are iron-clad, although these pensions are on a course to bankrupt the state and imperil public services that Illinois families depend on. The unions come first. This could have negative consequences for more than half the states that are trying to defuse government employee pension time bombs. By way of background: Illinois has one of the deepest public employee pension holes in the nation. The long term deficit is estimated at above $110 billion and the red ink rises every year. Even in California — where several cities have declared bankruptcy — the pension sink hole isn't as deep on a per capita basis.
The scenes of Baltimore set ablaze have many Americans thinking: What can be done to rescue families trapped in an inner-city culture of violence, despair and joblessness? There are no easy answers, but down the road from Baltimore in Washington, D.C., an education program is giving children in poor neighborhoods a big lift up. The D.C. Opportunity Scholarship Program, which George W. Bush signed into law in 2004, has so far funded private school tuition for nearly 5,000 students, 95 percent of whom are African-American. They attend religious schools, music and arts schools, even elite college-prep schools. Last month at The Heritage Foundation in Washington, I met with about 20 parents and children who participate in the program. I also visited several of these families in their homes — which are located in some of the most beaten-down neighborhoods in the city, places that in many ways resemble the trouble spots in Baltimore.
The green energy movement in America is dead. May it rest in peace. No, a majority of American energy over the next 20 years is not going to come from windmills and solar panels. One important lesson to be learned from the green energy fad's rapid and expensive demise is that central planning doesn't work. What crushed green energy was the boom in shale oil and gas along with the steep decline in the price of fossil fuel that few saw coming just a few years ago. A new International Energy Agency report concedes that green energy is in fast retreat and is getting crushed by "the recent drop in fossil fuel prices." It finds that the huge price advantage for oil and natural gas means "fossil plants still dominate recent (electric power) capacity additions."
Think about this: There is no time in the history of mankind that would be a better time to be alive than today. Although most people resist this message, and perhaps it is natural to have a yearning for the simpler times of yesteryear, nearly every objective measure of the state of the planet and the state of human progress shows vast improvement over time. You can find proof of this in about 30 seconds on your iPhone, which has about as much computing power than every computer used by all the nations of World War II. Why is there so much pessimism about the state of our planet? I recently watched the Earth Day speeches on the Washington Mall and they were drenched with Chicken Little tales of a coming apocalypse. Here is the way CNN explained what we have to look forward to: "Think super droughts, rising seas, mass extinctions, and acidifying oceans." Then it warned: "Disappearing coasts," and "bye bye, animals."
Are the alarm bells finally ringing at the White House and in Congress? They should be. Last week's pitiful 0.2 percent economic growth for the first quarter of this year means the Obama slow-growth machine trudges onward. It's the slowest recovery in half a century. The Summer of Recovery that Joe Biden promised in 2009 still hasn't arrived, six years later. This is a national crisis, not any less significant than the burning of Baltimore last week. Actually, the two may be tied together. Economist Arthur Laffer shows that racial rioting in big cities is negatively associated with the economic growth rate. In the late 1960s and 1970s, cities became war zones, but the rioting almost entirely disappeared in the high-flying 1980s and 1990s, when incomes were rising, and job growth surged. Under Obama's slow-growth economy, urban unrest is bubbling over.
Here's some advice to the White House: it might be time for President Obama to cancel the rest of his economic "mission accomplished" tour and help figure out how to get the U.S. growing again. The Department of Commerce delivered the miserable news Wednesday morning that economic growth nearly ground to a halt during the first quarter, up a microscopic 0.2%. Even more disturbing, because the population is growing at about 0.8%, real per capita GDP is actually negative. Remember we also had an abysmal jobs growth number for March. Once again economists blamed the frigid and blizzard conditions on the east coast; and no doubt weather was a factor in the subpar performance. But this is a long-term pattern under Obama, not a seasonal blip. Back in 2009, Vice President Biden promised us a "Summer of Recovery" and nearly six years later we are all still eagerly waiting for it.
Barack Obama, Hillary Clinton, Elizabeth Warren and the whole gang of Democratic leaders claim that one of their highest priorities is to lift up the middle class and reduce the income gap between rich and poor. That goal collides with what they admit is their very highest priority: stopping climate change. Their agenda is driven by the millionaire and billionaire Democratic donors who make the party possible. But the agenda also involves making energy, home heating, transportation and just about everything else less efficient and more expensive to the middle class and poor. The people who lose their jobs when the climate-change Stalinists prevail are the people at the bottom and the middle of the income ladder. The billionaire club members don't seem to mind this collateral damage. Last week billionaire Tom Steyer convened the uber-rich liberal donor base at the Four Seasons Hotel in Seattle — nice — to pontificate about how much they care about polar bears, the Arctic ice caps and rising sea levels.
"[I]f income redistribution policies are the solution to shrinking the gap between rich and poor, why do they fail so miserably in the states?"
Five years ago this week a blowout of BP's Deepwater Horizon oil rig 40 miles from the Gulf Coast tragically claimed 11 lives and spilled 3 million barrels of oil from the damaged wellhead into the Gulf. It's hard to forget the video images of thick oil day after day gushing into the region's waters. It was a horrific accident that caused substantial damage to the ecology and commerce of the region. Gulf area wildlife, portions of the shoreline, tourism, fishers and shrimpers, and energy sector employment suffered large losses in the aftermath of the spill. BP has paid close to $27 billion in penalties, payments to aggrieved parties, and clean up costs in one of the largest payouts for an accident in American history. This is enough money to hand every man, woman, boy, and girl in Chicago or Houston a $10,000 check. In addition, as the result of a court ruling last fall finding BP acted with willful misconduct and gross negligence leading up to the spill, BP could have to pay another $13.7 billion in Clean Water Act penalties.
Massachusetts Sen. Elizabeth Warren recently appeared on one of the late night talk shows, beating the class warfare drum and arguing for billions of dollars in new social programs paid for with higher taxes on millionaires and billionaires. In recent years, though, blue states such as California, Illinois, Delaware, Connecticut, Hawaii, Maryland and Minnesota adopted this very strategy, and they raised taxes on their wealthy residents. How did it work out? Almost all of these states lag behind the national average in growth of jobs and incomes. So, if income redistribution policies are the solution to shrinking the gap between rich and poor, why do they fail so miserably in the states? The blue states that try to lift up the poor with high taxes, high welfare benefits, high minimum wages and other Robin Hood policies tend to be the places where the rich end up the richest and the poor the poorest.
The House voted to repeal the death tax on Thursday. There are lots of persuasive reasons to kill this odious tax. The money in a person's estate has already been taxed over the lifetime that it was earned. The tax breaks up family-owned businesses. It reduces capital investment and lifetime savings. It encourages people with wealth to avoid leaving up to half their financial legacy to the IRS (including state estate taxes) and instead die broke. All of these things make future generations of Americans worse off. But here's an argument against the tax that isn't well understood. It hardly raises any money. This tax is all economic pain, with no gain.
Poor Barbra Streisand. Just last month the renowned economist (who also describes herself as a "singer," "actress," and "activist") penned an opinion piece titled "Have You Heard the Good News?" about how well the economy is performing under Barack Obama. It was a pep rally of sorts, and all that was missing were the pom-poms. "President Obama's administration, with only opposition from the Republicans," she gushed, "has steadily helped put more than 11 million Americans back to work in the private sector." Then two days later the dismal jobs report for March was released. Bad timing, for sure. The statistic Streisand failed to mention was 6.6 million jobs. This is the deficit of payroll increases compared with the number at this point — five and a half years in, roughly the same duration of the Obama administration to date — in the Reagan administration, which oversaw the recovery of the 1980s. Where are those jobs? Yes, we've created 11 million jobs, but that number should be closer to 18 million. Of course, this gap of 6.6 million is even more startling when we take into consideration the population increase over the past 30 years. The jobs boom under Reagan dwarfs the meager Obama recovery even though Obama started with a jobs base nearly 50 percent higher!
Nearly everyone is thinking about cancer these days thanks to the Ken Burns film on PBS, "Cancer: The Emperor of All Maladies." All of us, including Burns himself, who as a child lost his mother to cancer, know a family member or a close friend who has died of the Killer C. The film tells us the magnitude of the murderous disease we are up against: "Cancer is a worldwide scourge. The fastest growing disease on earth. By 2030 there will be as many as 22 million cases worldwide. Cancer afflicts 1.7 million Americans each year and kills 600,000 of them. More will die from cancer over the next 2 years than died in combat in all the wars the United States has ever fought — combined." That's terribly true, but it hides the good news that doesn't get enough play in this film. And that is the astonishing progress that has been made in diagnosing and treating cancer. No, there isn't a cure. But we are getting there and the treatments since Brian Piccolo's famous bout with cancer nearly half a century ago are nearly miraculous. In twenty years, nearly 1.5 million lives have been saved because of medical know-how and highly effective new treatments.
The great conundrum of the U.S. economy today is that we have record numbers of working age people out of the labor force at the same time we have businesses desperately trying to find workers. As an example, the American Transportation Research Institute estimates there are 30,000-35,000 trucker jobs that could be filled tomorrow if workers would take these jobs -- a shortage that could rise to 240,000 by 2022. While the jobs market overall remains weak, demand is high for in certain sectors. For skilled and reliable mechanics, welders, engineers, electricians, plumbers, computer technicians, and nurses, jobs are plentiful; one can often find a job in 48 hours. As Bob Funk, the president of Express Services, which matches almost one-half million temporary workers with employers each year, "If you have a useful skill, we can find you a job. But too many are graduating from high school and college without any skills at all."
