Obamacare Resuscitated

March 27th, 2017

“If you don’t buy this magazine, we’ll kill this dog.”

So said a cover of National Lampoon back in 1973. We’re reminded of the infamous cover when we reflect on the ignoble fate of the American Health Care Act (AHCA), which was meant to replace the widely disliked Affordable Care Act (ACA), aka Obamacare.National Lampoon

Republicans in Congress were faced with a similar choice last week. While the Republicans gained a majority based largely on the promise of overturning Obamacare, polls showed the AHCA was also unpopular. A Quinnipiac University poll found that only 17% of American voters approved of the AHCA, while 56% opposed it.

About one in a thousand voters knows what’s in the American Health Care Act, but given media propaganda about Americans being left to die without government-subsidized health insurance, it’s understandable why the act was unpopular.

It didn’t help that the Congressional Budget Office predicted that the proposed legislation would result in 24 million Americans lacking health insurance by 2026 (note: the CBO also predicted that, thanks to Obamacare, the individual market would enroll 26 million by this year. Instead, enrollment is just 10 million). Read the rest of this entry »

The White House as Animal House

March 20th, 2017

Why has the stock market been going bonkers, even as interest rates have begun to rise?

CNBC sums it up in two words: “animal spirits.” Wall Street types aren’t talking about the ghosts of dead puppies when they use the term “animal spirits.” It’s a reference to human exuberance based on expectations.

The term was a concoction of John Maynard Keynes, the guy who has been revered by liberals everywhere because of his notion that government spending is good for the economy. Of course it’s not — when government spends, we pay — but politicians, journalists, academics and even many economists who should know better like to be called neo-Keynesians, so they follow along.

Coming up with the term “animal spirits” to describe human behavior is perhaps Mr. Keynes’ second worst offense.

Any time an alleged expert makes a reference to “animal spirits,” he or she gets quoted, since it sounds like deep thinking to most journalists and at least it’s more colorful than saying “consumers are feeling more confident about the economy, because their employers are no longer being regulated into bankruptcy.” Read the rest of this entry »

Little Enterprise, But Plenty of Free

March 13th, 2017

America’s free enterprise system was built on enterprise. Now, all that’s left is “free.” Not free, as in the freedom to work hard and prosper, but “free,” as in free money, free time, free drugs and free entitlements.

But, of course, there’s no such thing as a free lunch; when something is free for some, others have to pay for it. That would be middle-class taxpayers, of course. And yet they not only allow it to happen, they often encourage it by re-electing the same politicians and voting against real change.FF491_1

Much of the bill won’t go to today’s middle class. It will go to our children. Baby boomers, who are so into nurturing and providing the best for their kids, have stuck them and their grandchildren with a whopping bill.

Quoting Lacy Hunt, an economist with Hoisington Investment, The Wall Street Journal noted that debt in the U.S. now totals more than $69 trillion. It’s more than doubled since 2000, when Fed statisticians recorded the debt as being $30 trillion.

A doubling over more than 16 years may not seem so bad, but the economy hasn’t grown along with the debt. In 2000, debt was 294% of GDP. Today, it’s 370% of GDP. Debt will not improve the quality of life for your children as they grow and try to raise families.

Consider what’s happening. Read the rest of this entry »

The Not-Working Class

March 6th, 2017

In a capitalist country like ours, hard work is supposed to be rewarded and slothfulness is considered one of the seven deadly sins.

So what to make of the “quiet catastrophe,” which George Will describes as follows: “After 88 consecutive months of the economic expansion that began in June 2009, a smaller percentage of American males in the prime working years (ages 25 to 54) are working than were working near the end of the Great Depression in 1940, when the unemployment rate was above 14%. If the labor-force participation rate were as high today as it was as recently as 2000, nearly 10 million more Americans would have jobs.”Working

If even half of those 10 million men were working, the economy would be growing at a faster rate, productivity would increase and consumer spending would be higher. So why are they out of work when the economy is allegedly booming and the unemployment rate has fallen to just 4.8%?

Of the 23 affluent countries in the Organization for Economic Co-operation and Development, the United States ranks 22nd, ahead of only last-place Italy, in 25-to-54 year-old male labor-force participation.

Two plausible explanations exist—and neither one is complimentary to the economic policies of former President Obama or his predecessors. Read the rest of this entry »

All You Gotta Do Is Act Naturally

February 27th, 2017

The U.S. Supreme Court isn’t the only influential government entity that President Trump will have an opportunity to make his mark on.

The Federal Reserve Board will likewise bear the Trump brand in the not-too-distant future. Two of the seven seats on the Federal Reserve Board of Governors are already vacant and now a third governor, Daniel K. Tarullo, has announced that he will step down in April. Called the “lead architect of post-crisis financial regulations plans” by The Wall Street Journal, Tarullo is not likely to be replaced by a pro-regulation governor.Natural Rate

In addition, the Fed’s influential general counsel Scott Alvarez, who has sometimes been referred to as “the eighth governor,” will retire this year after a 36-year career at the central bank. And the leadership term of Chair Janet Yellen expires in January 2018, while Vice Chair Stanley Fischer’s term expires in June.

The changes are likely to result in a different perspective for the board, which has been dominated by ”academics who don’t know how finance and the economy really work,” according to Danielle DiMartino Booth, a former Federal Reserve Bank of Dallas staffer and author of a new book, Fed Up: An Insider’s Take on Why the Federal Reserve Is Bad for America.

Booth describes “a tribe of slow-moving Fed economists who dismiss those without high-level academic credentials,” and she counts Ms. Yellen and predecessor Ben Bernanke among them.

“Central bankers have invited politicians to abdicate leadership authority to an inbred society of Ph.D. academics who are infected to their core with groupthink, or as I prefer to think of it: ‘groupstink.’”

We hope the final copy offers more wit and insight than that, but you likely get the idea.  Read the rest of this entry »

What Consumer Protection?

February 20th, 2017

Imagine creating a federal agency that is accountable to no one.

Its funding is not approved by Congress. It is funded directly and automatically by the Federal Reserve.

Its current unelected director may have been appointed illegally, as the U.S. Supreme Court has ruled that other appointments made that day were illegal “recess appointments.”

Its director “enjoys more unilateral authority than any other officer in any of the three branches of government of the U.S. Government, other than the President,” according to the U.S. Court of Appeals, which ruled that the federal agency’s governing structure is unconstitutional. (Last week, the court granted a request for a review by a broader set of judges.)Dem and Rep

Many are calling President Trump autocratic, but he didn’t create this most autocratic of government agencies. It was created as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which the Trump Administration is seeking to change.

Most Powerful, Least Accountable

The agency, the Consumer Financial Protection Bureau (CFPB), is to consumer protection as the Affordable Care Act is to affordable care. It does the opposite of what its name suggests it does. Read the rest of this entry »

Financially Unsustainable

February 13th, 2017

Sustainability is a big deal. Large companies have hired chief sustainability officers whose job it is to ensure that the company minimizes its negative impact on the environment. They’ve found that it is often possible to increase profits while also reducing their companies’ impact on the environment.

In theory, a company must achieve environmental equilibrium to be sustainable. While that’s not achievable, a great deal of progress has been made. Economies throughout the world still rely on fossil fuels, but conservation efforts have made the air and water cleaner and safer in many countries.usgs_chartDp11f

This Can’t Go On Forever

But what about financial sustainability? That’s an area where we all have a long way to go, both in the U.S. and around the world. We can think of many examples of financial unsustainability that could lead to economic collapse or, at the least, a lowering of living standards. Here are a few:

Greece. Consider the ongoing saga of Greece. Greece has been in such sad shape for so long, the rest of Europe has agreed to bail it out—not once, not twice, but three times. And now, unsurprisingly, Greece may be going for a fourth.

As further proof that socialism is a nutty idea, Greece continues to resist more stringent austerity measures while allowing its debt to continue to build. The International Monetary Fund (IMF), which is hardly ever a voice of reason, is arguing that “Greece’s debts are unsustainable and on an ‘explosive’ path to reaching almost three times the country’s annual economic output by 2060.” Read the rest of this entry »

The Good, the Bad and the Ugly

February 6th, 2017

For the past eight years, the Federal Reserve Board has been the primary force behind the U.S. economy. That hasn’t worked out so well.

Now President Trump is in charge of the U.S. and its economy.

Whether that will revive the economy and make America great again remains to be seen. While the Trump presidency is still brand new, we’ve already seen more action take place that will affect the economy than we saw in the past eight years.trump_cowboy_2509705

Some of what’s taking place appears to be good. Some of it appears to be bad. And some of it appears to be ugly.

The good. Already, President Trump has signed a slew of executive orders. While we’re no fan of executive orders, every president has used them to a degree–and it was one way to make a quick impact, even before his cabinet has been confirmed.

Regulation, as we have frequently noted, has paralyzed the economy, having its greatest impact on small businesses. That President Trump is serious about deregulation is clear by what he’s done to date.

One of his executive orders requires that whenever a new regulation is approved, it must be offset by “the elimination of existing costs associated with at least two prior regulations.” The order adds that the “total incremental cost of all new regulations, including repealed regulations, to be finalized this year shall be no greater than zero, unless otherwise required by law.” Read the rest of this entry »

America First, America Last and America Only

January 30th, 2017

“From this day forward, it’s going to be only America first … ”

                                                           President Trump

When you hear the term “America First,” do you think of patriotic intentions and restoring America’s role as a world leader? Or do you think of anti-Semitism and isolationism?

For the liberal media, President Trump’s use of the “America First” theme during his campaign and his inaugural address is further proof that the president is a racist, jingoist barbarian.

Yes, there was something called the America First Committee, which had some members were were reputed to be anti-Semitic and pro-Nazi. It was also the world’s largest peace movement, with about 900,000 members, including prominent people such as Walt Disney, architect Frank Lloyd Wright, author Gore Vidal and poet e.e. cummings. Politically, members ranged from future President Gerald Ford to Socialist Party leader Norman Thomas.

An America First Committee meeting.

An America First Committee meeting.

It’s most outspoken member, aviator Charles Lindbergh, blamed Britain, Jews and the Roosevelt administration for pushing America toward World War II, so the group’s name became somewhat tarnished.

While the America First Committee dissolved shortly after the bombing of Pearl Harbor, some are criticizing the use of the slogan by President Trump because of the committee’s checkered reputation.

“It’s a rotten term that evokes the naive idiots, defeatists and pro-Nazis who wanted to appease Hitler and make friends with him before World War II,” author Susan Dunn told USA Today. Read the rest of this entry »

Good News: Fed Predicts Slow Economic Growth

January 23rd, 2017

We can now be assured of improved economic growth in the years to come.

Why?  Because the Federal Reserve Board is predicting slow growth.  And the Fed is always wrong.

That may seem harsh, but throughout the Obama administration, the Fed predicted stronger economic growth than the U.S. ultimately experienced.united-states-gdp-growth-forecast@2x

Consider the Fed’s record for the past five years. The Fed projected growth of 3.0% to 3.6% for 2011; actual growth turned out to be half that–just 1.6%. For 2012, the Fed projected growth of 2.5% to 2.9%; the actual rate was 2.3%. For 2013, the Fed projected 2.3% to 3% growth, but actual growth was 2.2%. For 2014, the Fed projected 2.8% to 3.2% growth, and the actual rate was 2.4%. Finally, for 2015, the Fed projected 2.6% to 3.0% growth and the actual rate was 2.4% again.

Are you seeing a pattern here? Five years of predictions, five years of overly optimistic projections. The Fed has been almost as incompetent about predicting growth as it’s been at producing growth.

Fed Goes Conservative

Now we have a new Republican administration, but it’s the Fed that’s gone conservative. The allegedly nonpartisan Fed is predicting that the economy will grow by just 1.9% in 2016, 2.1% in 2017, 2.0% in 2018 and 1.9% in 2019. Longer term, the growth rate is projected to be just 1.8%. Read the rest of this entry »