Columnist.
The headline in newspapers one recent weekend read like an April Fool's joke, but it wasn't April 1. The Obama administration announced it wants to provide a little more juice to the now-lackluster housing market by bending the home lending rules to make it easier for banks to make loans and marginal buyers to take on a mortgage. One of the big changes: The Federal Housing Finance Agency will lower down payment requirements from an already absurdly low 5 percent to a ridiculously low 3 percent on many loans that are eligible for federal mortgage insurance assistance.
Hillary Clinton is getting deservedly attacked for her imbecilic statement at a Democratic political gathering in Massachusetts on Friday about business and jobs. "Don't let anybody tell you that, ah, you know, it's corporations and businesses that create jobs," she preached, to loud applause. "You know that old theory, trickle-down economics. That has been tried, that has failed. It has failed rather spectacularly." It may not be too surprising that Hillary can't connect the dots that it takes an employer to create an employee to create wages and salaries.
So now, Hillary Clinton is saying: Never mind, I goofed. The former senator, secretary of state and first lady on Friday declared that businesses and corporations don't create jobs. Yesterday, she, ahem, clarified things. "I short-handed this point the other day," she said. "So let me be absolutely clear about what I've been saying for a couple of decades: Our economy grows when businesses and entrepreneurs create good-paying jobs here in America, and workers and families are empowered to build from the bottom up and the middle out -- not when we hand out tax breaks for corporations that outsource jobs or stash their profits overseas."
We learned last week that new Federal Reserve Chair Janet Yellen is not so much our nation's central banker as class warrior in chief. In a widely publicized speech Ms. Yellen parroted all of the left's talking points on the divide between rich and poor. "The extent of and continuing increase in inequality in the United States greatly concern me," she lectured. "It is no secret that the past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority." Actually, that's a factually dubious claim given that the 1980s and 1990s saw wide gains for the middle class and even those at the bottom of the income pyramid. Middle income families saw a more than 30% inflation-adjusted rise in income in those years. From 1982-1997 those who started out as poor actually saw faster income gains than those who started out as rich, according the U.S. Treasury Department study on income mobility. Upward mobility defined that era of broad-based prosperity.
"What is history but a fable agreed upon?" as Napoleon once put it, and never has that been more true than the story of the Great Depression and its aftermath. With liberals again pitching more government spending "stimulus" in Washington, it's critical we get this history right. In a previous column I unmasked the historical lie that Franklin Roosevelt's New Deal programs ended the Great Depression. After seven years of New Deal-era explosions in federal debt and spending, the U.S. economy was still flat on its back, and misery could be seen on the street corners. By 1940, unemployment still averaged a sky-high 14.6 percent. That's some recovery.
President Obama declared last week during a speech at Northwestern University that he has turned the economy around and that while he might not be on the ballot in November midterm elections, his "agenda will be." Democrats across the country cringed when they heard that one. Right now Michelle is a lot more popular than he is on the campaign trail -- much like Laura Bush was more in demand than George W. in his final years as president. To be sure, there is some good news on the economic front. Employers are really starting to hire again. We got a very good employment report on Friday when it comes to jobs created. The economy picked up 248,000 new hires in September and another upward revision for July and August brings the total to more than 300,000. GDP was bumped on in the second quarter of 2014 to 4.6% after a negative first quarter.
Back in 1997 when control of Hong Kong was ceded from the British to the Chinese, the question was whether the Chinese governing system would take over Hong Kong, or Hong Kong capitalism would take over China. Well, now we know the answer -- or at least the answer that the repressive leaders of China are seeking. The tragedy of Beijing blocking Hong Kong's right of self-determination isn't just a setback for the island, but perhaps more so for mainland China itself. It is a declaration to the world that Beijing still doesn't get the freedom thing. The hope had always been that economic liberalization in China and the abandonment of 60 years of savage Maoist autocratic communism would lead to an inexorable march toward political freedom and an elevation of human rights.
President Barack Obama raised a lot of eyebrows last week when he declared in his United Nations climate change speech: "Over the past eight years, the United States has reduced our total carbon pollution by more than any other nation on Earth." That's absolutely true. And it's remarkable because we as a nation didn't ratify the Kyoto Treaty, pass a carbon tax, or enact Mr. Obama's cap and trade agenda. It's all the more remarkable because Americans have been scolded nearly every day for being a major source of all these satanic gases that are allegedly burning up the planet. Instead, since 2005, our emissions are down by roughly 10 percent and almost twice that amount on a per capita basis. Not bad.
Earlier this year the Obama administration again delayed a decision about the Keystone XL pipeline. The 1,200 mile, $5.2 billion pipeline could increase North American energy security and create more than 15,000 jobs. But behind the White House's unwillingness to move forward are environmental groups that vehemently oppose the project. Groups like the Sierra Club warn that Keystone "poses a health risk to our communities" and is a "climate disaster in the making." We've lived through these scare tactics before. Exhibit A is the 800-mile Trans-Alaska Pipeline. Since its completion in 1977, this technological marvel has conveyed more than 17 billion barrels of oil, worth more than $1.5 trillion in today's dollars, from Alaska's North Slope to the Port of Valdez for shipment to the lower 48 states. Yet the pipeline was almost not built, thanks to a propaganda campaign by environmental groups beginning in 1969. Most of their dire warnings have proved inaccurate.
My seventh-grade son recently wrote a U.S. History paper extolling the virtues of President Franklin Roosevelt's New Deal. "It ended the Great Depression," he wrote with great certainty. He's only 12 and parroting what the history texts and his teachers told him. That's his excuse. What's Ken Burns'? Mr. Burns' docudrama on the Roosevelts -- for those who weren't bored to tears -- repeats nearly all the worn-out fairy tales of the FDR presidency, including what I call the most enduring myth of the 20th century, which is that FDR's avalanche of alphabet-soup government programs ended the Great Depression. Shouldn't there be a statute of limitations on such lies?
If the Obama Administration has its way, Ronald McDonald may soon have to wipe that grin off his face as he stands beneath the Golden Arches. One of the most successful models for expanding small-business ownership in America is under full-scale attack from unions and the White House. The political strategy is to fundamentally change the legal relationship between locally owned stores like McDonald's, Popeyes, Taco Bell and their multibillion-dollar parent companies. No longer would franchisees be legally classified as independent contractors to the parent company. The left wants the employees of each of the hundreds of thousands of independently owned franchise restaurants, hotels, retail stores and others to be considered jointly employed by both the independent franchisee and parent.
Politics is often filled with paradoxes, and here is one that nearly defies explanation. The demographic groups that voted most heavily for Barack Obama in 2012 have suffered the most from this president's economic policies. Maybe the people in these demographic groups -- blacks, Hispanics, single women and young people -- are economically uninformed, or maybe for these groups, when it comes to voting, it's not the economy, stupid. Whatever the explanation, the facts speak for themselves: Obama voters have not benefited from his policies.
Japan is flush with national pride this week, thanks to Kei Nishikori, the tennis phenom who knocked off seemingly indestructible Novak Djokovic to reach the U.S. Open finals and become the first Japanese to reach a grand slam final ever. If only Japan's economy could perform half as well. For also this week, Tokyo announced that second-quarter GDP shrank by an annualized rate of 7.1%. This decline followed a rise in the national sales tax -- a monumental blunder that has sunk Japan back into recession. The bigger worry, however, is that this isn't just a bump in the road to recovery. By almost any measure of wealth and income, Japan has suffered through a two-decade-long financial malaise due to a series of catastrophic Keynesian policy mistakes.
Often during an economic recovery, welfare caseloads fall as jobs return. In this recovery, welfare caseloads kept climbing through 2012. That's the message of a new Census Bureau report released last week, which found that, at the end of 2012, the number of Americans in households collecting "means tested" welfare assistance was officially 109 million. That's close to the number of people huddled around TV sets to watch the Super Bowl. It's also 35 percent of all households that receive at least one form of public assistance -- food stamps, Medicaid, supplemental security income, nutrition programs for kids, housing aid, and so on. Many tens of millions receive multiple forms of aid.
A strange thing happened at the Federal Reserve Bank's summer-end conference in Jackson Hole, Wyo. Usually these are boring affairs, but liberal protesters crashed the party this time, and demanded that the Fed help the poor by holding interest rates close to zero and injecting more dollars into the economy. An exchange between Reggie Rounds of Ferguson, Mo., and Fed vice chairman Stanley Fischer tells the whole story: Mr. Rounds: "We're desperately needing a stimulant into this economy." Mr. Fischer: "That's what the Fed has been trying to do and will continue to try to do."
President Obama was doing a little jig on the tables last week at the White House – figuratively, or course – when we got a decent jobs and GDP report. Mr. Obama even chided those who would dare question his economic stewardship by saying: "Since I have come into office, there's almost no economic metric by which you couldn't say that the U.S. economy is better and that corporate bottom lines are better. None." Oh really. Well, you could have fooled the American people. The disconnect between the way Washington and Wall Street describe the state of the economy, and how real Americans feel its impact, is as wide as the Grand Canyon. A new Wall Street Journal/NBC News poll finds that 64% of Americans are "dissatisfied" with "the state of the economy" versus only 35% "satisfied." And 71% of Americans think the country is "on the wrong track."
News media from coast to coast are celebrating a "California comeback" after a near-decade-long Golden State economic collapse. But even this latest recovery may be much more fragile than has been reported, and the state's structural defects still imperil the left-coast economy. Certainly there are reasons for optimism. Tax collections were way up last year, and the state is balancing its budget after years of scrambling to close multibillion deficits with accounting gimmicks.
America has a deficit of workers. Willing workers. Capable workers. Skilled, or at least semi-skilled workers, who can do a job and do it well. There are at least one million jobs that go begging day after day if only employers could find workers to fill them. This probably seems hard-to-believe. After all, how can America have a worker shortage when we have about 18 million Americans who are unemployed or underemployed? When the real unemployment rate is 12 percent? Well certainly the economy isn't creating nearly as many jobs as it should -- in large part because of regulatory and tax restraints on hiring workers. ObamaCare's anti-employment impact, including the rule that caps employment at 50 workers or less at many firms to avoid the law's higher costs, is just one example of a law that adds to unemployment lines.
We talk about taxes as a "burden" because they reduce the take-home pay of American workers, the profits of American businesses, and the purchasing power of American consumers. Over the past century, the overall federal tax burden steadily grew from about 5 percent of national income to almost 20 percent. Over the last decade, tax receipts declined due to the recession and fiscal policy, but taxes have increased over the last five years. This trend roughly corresponds with the growth in government spending. Americans effectively work one day a week to pay federal taxes and the other four days to pay their bills and take care of their families. Taking into account state and local taxes, almost one in three dollars of a worker's earnings go to the tax collector. Taxes are, for many households, the single largest expenditure item in the family budget.
