Constant Conservative

I know the man whose name appears above is a pretty good shot with a bow, a rifle or pistol, but he doesn’t do poorly with his pen either:

Anyone with a lick of common sense will tell you that when you are in a hole, you need to quit digging. Continuing to dig will only create a larger problem. Do schools teach this?

Recently, even President Obama’s national debt commission told him that his continuing spending orgy is digging America into a gigantic fiscal hole.

Next year, America’s total debt is expected to exceed $14 trillion. Each American’s share of that debt totals just short of $50,000. If Fedzilla would be honest and put all the figures on the table, we would see that we are in debt more than $100 trillion because of the financial obligations for Social Security, Medicare and Medicaid.

That’s $100 trillion. One hundred percent predictable, 100 percent preventable.

Go read it all.

Andrew adds: “Quit digging”.  I like it.  I think I’ve heard something like this before.  Hmmm…

Milton Friedman closes his 10 part series by helping us see what is necessary for us to stay free. Some of what he says is frightening in light of recent moves by the federal government to drive its influence ever deeper into our country’s business.

Free to Choose: Part 1
Free to Choose: Part 2
Free to Choose: Part 3
Free to Choose: Part 4
Free to Choose: Part 5
Free to Choose: Part 6
Free to Choose: Part 7
Free to Choose: Part 8
Free to Choose: Part 9

I’m frustrated with the new emphasis on “saving and creating jobs” and find this state’s claims of X jobs saved or created to be little more than sucking up to the federal government teat which is currently on offer: the stimulus.

Keith Hennessey has a number of useful observations regarding a whole slew of economic indicators and related matters. I found the following dissection of the “saved and created” idea to be quite useful:

Their “jobs created or saved” numbers are claims, not measures.  Since we can’t know how many jobs would have been lost without policy changes, we can’t measure the change that policies have caused.

This means they cannot prove their statements about the number of jobs saved or created by policy, and critics cannot prove those statements are incorrect.  This lack of verifiability, and the vulnerability of these statistics to political bias, allow the Administration flexibility to adjust their claimed success to meet political demands.  It is irresponsible for an Administration to use these numbers as definitive, and irresponsible for the press to report them without heavy caveats.

Every time I hear “[number] jobs saved or created,” I ignore the number and assume I am being spun.  This is particularly true when the numbers are specific, e.g., “250,000 education jobs saved or created.”  I think this is irresponsible and misleading.  It feels like they’re just making these numbers up.  Reading the methodology behind the numbers only reaffirms this view.

The fiscal stimulus is one of several policy moves contributing to stronger (or less weak) economic growth.  The Fed’s and Treasury’s actions (begun last September) to stabilize large financial institutions and financial markets helped a lot.  The Fed is also keeping interest rates extremely low.  Administration officials routinely attribute all of the unmeasurable economic benefit to one of three major policy changes.  This is invalid.

The second item is the most damning, in my view. No way to verify these numbers means that its like punching a bean-bag to try: We’ll wear ourselves out and find the beanbag to materially unaffected by our exertions.

Via John at Power Line, come these facts on the debt we owe but seem unable to pay:

As of Sept. 30, 2009, the national debt was almost $12 trillion and interest on that debt was $383 billion for the year, according to the Treasury Department’s Bureau of the Public Debt. The Congressional Budget Office on Oct. 7 estimated the 2009 budget deficit to be almost $1.4 trillion (about 10% of GDP). In August, the White House Office of Management and Budget (OMB) estimated total government revenues at about $2 trillion. The revenue estimate included $904 billion from individual income taxes. This means the cost of interest on the debt represented more than 40 cents of every dollar that came in from individual income taxes.

[...]

In stark but simple terms, unless Americans are made aware of this financial crisis and demand accountability, the very fabric of our society will be destroyed. Interest rates and interest costs will soar and government revenues will be devoured by interest on the national debt. Eventually, most of what we spend on Social Security, Medicare, education, national defense and much more may have to come from new borrowing, if such funding can be obtained. Left unchecked, this destructive deficit-debt cycle will leave the White House and Congress with either having to default on the national debt or instruct the Treasury to run the printing presses into a policy of hyperinflation.

[emphasis added]

As I’ve noted previously, we cannot not deal with the real results of inflating the supply of currency and expect all things to continue merrily as they have. There will, there must, be an adjustment of values. If we do not make the needed reductions in spending, it is difficult to say just what a sharp drop in in the full faith and credit of the United States will do to you and me.

The good professor who is funding his own Legal Insurrection is spot on:

There is one supreme Democratic idiocy in the health care debate which has not received enough attention. The entire focus of the Democratic proposals — whether HR3200, the Senate HELP Committee bill, the Baucus Concepts, or the Obama non-plan — is to increase the cost of private health insurance.

Of course, this increase is not the public focus because this whole “reform” is about decreasing the cost, right?

[P]rice competition through consumer choice should be encouraged, not eliminated. To eliminate such insurance completely, and to refuse to consider alternatives such as national insurance markets which lower private coverage costs, shows that something else is at play.

When will more people understand that it is not about the cost? It has always been about the power. Today’s vote by the panel in the Senate seems to reflect that. As the professor notes elsewhere, the Baucus bill isn’t even something which can be properly quantified, yet it can be voted upon? If the issue were truly of facts and figures, then why do we need a vote on something which is not even factually figurable?

I suppose, given that the President is beyond partisanship, the Senate has finally found itself beyond language. In keeping with such beyondness, how long will it be before you and I are beyond feeling?

I was probably about 12 the first time I remember hearing the term “inflation.” From what I can recall (since that was a quarter century ago) I believe I placed it into the same category as the “heat waves” which caused the deaths of elderly folks without air conditioning: Bad, but not something I could control or really understand.

Thankfully, I’ve learned a bit since then.

From Investor Words we have the following definition: “The overall general upward price movement of goods and services in an economy, usually as measured by the Consumer Price Index and the Producer Price Index.” I’d have to go with technical but off-base.

Let’s try one from Your Dictionary:

1. an increase in the amount of money and credit in relation to the supply of goods and services
2. an increase in the general price level, resulting from this, specif., an excessive or persistent increase, causing a decline in purchasing power

Ahh, much better. You see, the real cause of inflation is the currency/credit supply, not the price levels. Price levels are a secondary effect.  Of course, since very few of us actually keep our eyes on how much currency/credit is available, we generally think in terms of price levels, as in “Based on inflation, a pound of beef now costs 3 times what it did in 19XX.” At the same time, price levels are affected by much more than inflation. Despite the fact that we trade within a market which is far from free, the once robust market (unwilling to go gently into that good night) still has an influence via the laws of supply and demand.

That said, inflation may be safely laid at the feet of government (assuming that government is in charge of printing currency). Milton Friedman must receive the credit for this understanding of how inflation works (as this was not always the case):

Against the conventional wisdom, Mr. Friedman argued that “inflation is always and everywhere a monetary phenomenon.” Inflation had nothing to do with aggressive unions, greedy businesses or even oil cartels — the bad guys who took the blame in the confusing 1970′s. Prices shot up everywhere because the federal government made the supply of money grow faster than the real economy created value. Based on the historical record, he argued, the effects of monetary policy were fairly predictable.

Given this, and the fact that our duly elected Senators are being called upon to raise the debt ceiling to $12.1 trillion within the next few weeks or the world will end default will occur, let me ask another question.

What have we not learned in the last 25 years? Massive increases in the money supply are inevitably followed by a massive uptick in inflation. For any of our elected officials to simply talk about inflation as though it falls into the category with death and taxes (as one of a few things which are certain) is wrong. The only thing which is certain about inflation is that it, like taxes, is something under the control of government. By the time inflation is felt, it is true that government can do little to mitigate its impact on the economy at that time, but government can change the policies which caused the problem in the first place, allowing the inflation to decrease over time.

Of course, instead of submitting ourselves to the inflation hyperinflation, we could just default on outstanding Treasury-bond backed loans, thereby torching the money supply. Unfortunately, that choice would result in massive disruption of the economy if not create the environment for a shooting war with, oh, China?

At present, assuming we don’t go the default route, we are floating somewhere above the waterfall, within earshot of the cataract yet unable to move the boat to shore. Let’s hope, for a change, that we can all swim once we hit bottom.

From today’s Argus Leader:

Rural America faces the same challenges in this recession as corporate America, but the federal government has the ideas and money to energize small communities, a U.S. Department of Agriculture official says.

That paragraph doesn’t sit well with me: a small-government, fiscal conservative.

First, the government has OUR money.  That it now has even more of our money to give back to us is not reassuring.

Second, economic development in “Rural America” is the responsibility of those who live in “Rural America.”  It is free-enterprising individuals who devise the viable ideas that “energize small communities.”  Each community is different.  Each has its own particular needs.  The members of these communities know better how to meet these needs than any bureaucrat from Washington.

Government’s proper role in economic development is debatable.  If any form of government is involved in economic development is should start at the local level, but not proceed beyond that of the state.   The federal government may have ideas that work well on paper, but their one-size-fits-all  nature severely limits their effectiveness across the cities and town of this nation.

The best thing the federal government can do to promote economic growth in “Rural America” is to let us keep our money and stay out of the way as we find the best ways to invest it.

Michael adds:

According to the USDA, rural America is home to 1/6th of the nation’s populace and consists of 3/4ths of the land. To say that the government has the money to energize this sector is remarkable–given how deeply in debt we already are. Perhaps that money (if it actually exists) should cover existing obligations?

Unemployment rates (state, regional, and national) are featured regularly in the news. We have all heard where the official numbers are right now (in the neighborhood of 9 percent nationally). I had not thought much previously about how that number was derived. Now, thanks to the following, I’m wondering if the official numbers are reflecting reality–or just numbers (kind of like the “jobs saved or created” numbers we are about to hear). From Forbes:

One recent example [of unhappiness with the President's financial policies] comes from a new report issued my old colleagues at the liberal-leaning New America Foundation called “Not Out of the Woods: A Report on the Jobless Recovery Underway.” It amounts to a blistering, if largely unintentional, critique of the administration’s policies, providing a sobering antidote to manufactured euphoria peddled by both presidential spin-meisters and some Wall Streeters.

[...]

Hindery [an expert cited in the above report] is no conservative. He was an adviser to John Edwards and, more recently, to the president himself. Yet his prognosis is grimmer than the ones offered by most right-wingers. He calculates that the real unemployment rate in the country last month was not 9.3%, which is the figure that was reported, but rather closer to an alarming 16.8%. By that measure, more than 30 million people are effectively out of work. That’s nearly one-fifth of the labor force.

30 million people? Wow.

While I am hardly a follower of Saturday Night Live, the show (like the proverbial blind tree rat) does occasional find a nut or two. The following video provides us with one such example (and yes, I realize it is 3 years ago).

Earlier, when I was watching the video about the Department of Agriculture, I started wondering just how many government employees there are–just in the various cabinet level departments. So, I did a bit of checking. The following graph shows the number of direct, civilian, employees (not contractors) for the 15 departments. Note that this does not include more than 2 million members of the military and those who work for agencies, bureaus, government corporations (such as Amtrak), the courts and many more. For a list of all the different entities where one can find our tax dollars at work supporting the federal government payroll, one can start here.

For purposes of the comparison that I would like to set up, here is a chart for the 15 agencies showing their employees (from the most recent years I could find data–some as old as 2004, some as recent as 2009).

The chart gives one a visual comparison, but here are the numbers: Education (5,000); Housing (10,600); Energy (16,000); Labor (17,000); State (30,000); Commerce (36,000); Transportation (58,000) Health (67,000); Interior (71,000); Agriculture (105,000); Justice (112,000); Treasury (115,000); Homeland (208,000);Veterans (278,000); Defense (700,000).

In sum this works out to about 1.82 million federal employees.

By simple comparison, let us look at the current (2009) Fortune 15–assuming that is good name for the top 15 companies on the Fortune 500 list.

First, here is the chart.

Now, here are the numbers from which the chart was derived: Valero Energy (21,600);

Berkshire Hathaway (23,300); McKesson ( 32,000); ConocoPhillips ( 32,600); Chevron (60,000); Exxon-Mobil 82,000); BOA (171,000); Ford (245,000); GM (252,000); AT&T (303,000); HP (321,000); GE (323,000); Citigroup (326,900); IBM (398,000); WalMart (2,100,000).

(One notices that WalMart does rather kill the curve, doesn’t it?)

In sum this works out to about 4.69 million employees, or about 2.5 times as many employees in these public companies as in the departments we are comparing them to.

Let’s now do one more thing and look at how many of these corporate employees are now directly being driven by federal government control (Bank of America, GM, and Citigroup for certain). If we do that, 750,000 employees would need to change categories.

That is not unsubstantial. Further, that is just from those businesses in our list of 15 and does not include Chrysler and others who may have fewer employees than some of those listed here but are nonetheless major players.

I do realize that one ought to be careful about drawing particular conclusions. I know that this comparison is flawed (for example, not all of these employees are US employees) but I think, at the very least is shows the massive and increasing influence of the federal government as either an employer or a employer by proxy for substantial portions of the working populace.

UPDATE

Here is the corporate graph without WalMart (so that the scale is closer to that used for the federal graph).

Context is critical. Here is some video context for the much ballyhooed $100 million federal budget cut.

The other comparison I’ve heard is that this sum of money is about what the federal government will spend in 13 minutes (assuming an even expenditure of money every minute of every day of the entire budget year). There you have it: an unknown number of government bureaucrats will spend some portion of 90 days figuring out how not to spend 13 minutes.

HT: Fastidious

Let’s walk through this one more time.

Global warming by reason of mankind’s activity (AGW) is far from proven science, as this article by someone who spent six years accounting for carbon points out. Europe’s attempt to set up a carbon market for what is termed the “cap and trade” approach to managing carbon as a pollutant recently failed. Nonetheless, members of the US House of Representative are boldly going down a new path with approach which will somehow change the answers. How, you ask? Simple, we’ll make it make money for the farmers:

The House Agriculture Committee will canvass 400 groups for ways that American farmers can make money from efforts to control greenhouse gases, Chairman Collin Peterson said on Monday.

[...]

Agriculture Secretary Tom Vilsack and a handful of other lawmakers told NFU members there was the chance to make money by adapting agricultural practices that lock carbon into the soil and reduce global warming.

Representative Stephanie Herseth Sandlin pointed to estimates that businesses could pay from $4 to $30 per ton of reduced carbon emissions from farms and ranches.

Wonderful. Instead of the solving the problem of how we can make agriculture sustainable as an industry by letting the market drive the price of crops (without government subsidies) we are looking to fabricate a new product/market from nothingness to prop up the current agricultural economy.

The old joke was that the farmer was tired one year of getting paid to not raise corn. He decided to ask the government if it paid the same to not raise beans, just for a change of pace. Should Herseth Sandlin and others have their way, farmers will be  participating in a government-run market for a product that just doesn’t add up (in corn or beans).

That money that will be made for the farmers? That’s just going to come from those businesses which emit carbon to survive. In other words, this is simply another plan to redistribute wealth from one group of people who are evil (non-farmers who produce carbon) to another group which are righteous (farmers who are able to not produce carbon).

It is wrong, wrong, wrong.