Reason.com has a spoof video of Chrysler’s “Halftime in America” Super Bowl ad. The narrator, in a raspy Clint Eastwood impersonation, says: “People are out of work and they’re hurting. And they’re wondering where all their money went. Well, $12.5 billion of it went to Chrysler. In the form of a bailout. But it’s OK, because Chrysler is all-American. Though, technically, 58.5 percent of Chrysler is owned by an Italian corporation. And Chrysler manufactures many of its vehicles in Canada. And Mexico. But I guess that doesn’t make for a great commercial.”
The U.S. economy has been doing poorly for so long now that it’s easy to get dispirited. But there are several reasons to think 2012 might be a good one for American economic performance. The financial crisis of 2008 and 2009, and the subsequent recession, forced America’s private sector to go through a painful reinvention process. American companies had no choice but to make badly needed reforms. These are the kinds of transformations that companies often avoid during good economic times. The result is an American private sector that is more productive and efficient than it has ever been. This has been a painful process for many American workers and their families who lost jobs or who faced an uncertain future. But the state of American business is strong today, with high profits and healthy balance sheets. This should serve the economy well this year and going forward. – Nick Schulz, American Enterprise Institute
The U.S. recession officially ended in June 2009, but most Americans don’t feel like we are in a recovery. That’s because it’s been a weak recovery, with the size of the economy barely bigger today than it was four years ago, when the recession started. Since America is a rich country, it is not growth itself that matters most but employment and, of course, the distribution of income. And the employment numbers have been just terrible. Although there has been some fear of the economy lapsing into recession again, the more likely scenario in the foreseeable future is slow growth with intolerable levels of unemployment, along with rising poverty and inequality, and accompanying social ills. – Mark Weisbrot, Center for Economic and Policy Research
Most of the 36 economists who responded to an Associated Press survey rated President Obama’s economic policies either “fair” or “poor.” However, that wasn’t necessarily because they opposed the 2009 stimulus package. Some of the economists thought the stimulus should have been bigger, and others thought it was poorly designed. The economists overwhelmingly said that among the GOP presidential candidates, Mitt Romney would do the best job managing the economy.
Taxpayers should resolve to put the government on a diet this coming year, columnist Cal Thomas said. “Any program or agency that wastes money ought to be updated or eliminated,” Thomas wrote. “If taxpayers don’t force big government at the state and federal levels to go on a diet, the bloating will only continue to the detriment of our economic health.”
“Real income, unemployment, consumer confidence and the stock market all hint at an economy struggling to catch its breath after getting the wind pounded out of it four years ago,” Politico reported. “The ensuing crisis in the housing and financial markets helped usher Obama into the White House but left more than 13 million Americans searching for work.” The potential election consequence, Political said, is that “Republicans have plenty of reasons to gloat,” though recent economic upswings give Democrats some signs for hope in 2012.
Sen. Jerry Moran, R-Kan., is sponsoring a bill to boost the economy that might also boost some bipartisanship in Washington, D.C. The Startup Act, which is also sponsored by Sen. Mark Warner, D-Va., seeks to help entrepreneurs with regulatory burdens, attracting business investment and other concerns. Some of the ideas for the bill came from the work of President Obama’s Council on Jobs and Competitiveness. House Republicans dismissed the council’s idea when Obama unveiled it a year ago, the Kansas City Star reported, but Moran was eager to work with the White House. “There are too many shots taken at too many people around here too often,” Moran said. “That diminishes the chance of somebody’s success. We want us all to come together and have success, not for a Republican or Democrat victory, but for improving the lives of the American people.”
Sixty percent of Americans think that the federal government should try to shrink the widening gap between the wealthy and other Americans, according to a Washington Post-ABC News poll. The more people are aware of the income disparity, which is at its highest level since the Great Depression, the more they favor government action.
Former Eagle editor Davis Merritt asks a question similar to that raised in the book “What’s the Matter With Kansas?”: Why is the middle class set on self-destruction? He argued in a commentary that most of the fiscal fundamentalists in the GOP are the very people who will pay the harshest price for such policies. “Despite decades of evidence to the contrary,” Merritt wrote, “millions of Americans still buy into trickle down, and the Republican leadership cynically encourages them to continue working against their self-interest.”
Many Americans scoff at the official declaration that the recession is over. It sure doesn’t feel like it, they say. They’re right. Household income has continued to decline since the recession ended. In fact, it has declined at a steeper rate than it did than during the recession. Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, the New York Times reported. That’s twice as steep as the 3.2 percent drop during the recession, from December 2007 to June 2009.
Good for Congress for approving this week free-trade agreements with South Korea, Columbia and Panama. The agreements, which have been delayed for up to five years, will particularly benefit Kansas farmers and ranchers, who should see direct exports increase by about $130 million. The trade agreements “will not only increase exports, lower our trade deficit and stimulate needed U.S. economic growth, but they will also erase the competitive disadvantage we’ve been suffering by providing new access to foreign markets, which were previously closed off with tariffs,” Rep. Mike Pompeo, R-Kan., said in a statement. Sen. Pat Roberts said that “opening foreign markets to U.S. goods, services and agricultural is an obvious and long overdue part of the solution” to slow economic growth. And Sen. Jerry Moran, R-Kan., said: “When American businesses are given better access to markets, they will succeed, help strengthen our economy and put more people back to work.”
After delays of up to five years, trade agreements with South Korea, Colombia and Panama are finally on the fast track. President Obama submitted the trade deals to Congress Monday, and they are expected to earn quick approval. The deals will particularly benefit Kansas farmers and ranchers. For example, total U.S. agricultural exports to South Korea are expected to increase by more than $1.9 billion annually, or about 40 percent, according to a study by the U.S. Department of Agriculture. Kansas planemakers also stand to benefit from the agreements. “Every $1 billion in new exports supports 6,000 jobs,” said Karyn Page, president and CEO of the Kansas World Trade Center in Wichita. “By implementing these trade pacts our companies will have greater opportunities to export more.”
“The prognosis for the next few years is bad with a chance of worse,” wrote columnist David Brooks. “And the economic conditions are not even the scary part. The scary part is the political class’s inability to think about the economy in a realistic way.” The problem, Brooks contends, is that instead of recognizing the many different factors contributing to the economic downturn, ideologues “pick out the one factor that best conforms to their preformed prejudices and, like blind men grabbing a piece of the elephant, they persuade themselves they understand the whole thing.” Thus many Democrats push for more government spending to combat low consumer demand, and Republicans call for lower taxes and less regulation to combat low business investment. “If we’re stuck with these two mentalities,” Brooks writes, “we will be forever presented with proposals that are incommensurate with the problem at hand.”
Though it wasn’t surprising, it was disappointing that most of the Kansas delegation responded so stridently to President Obama’s jobs speech. They complained about Obama “doubling down on these job-destroying policies” (Rep. Mike Pompeo, R-Wichita) and pushing “the same failed policies” (Sen. Jerry Moran, R-Kan.). It’s fine to disagree with specific proposals (though, as Obama noted, many of the ideas have been supported by Republicans in the past), but both sides need to ratchet down the partisan rhetoric. As Obama asked, can we “stop the political circus and actually do something to help the economy”?
The best thing that Congress can do to unleash job creation is to repeal the Patient Protection and Affordable Care Act. The law is discouraging businesses from hiring. According to a recent U.S. Chamber of Commerce survey, 39 percent of small-business owners say the law is either their greatest or second-greatest obstacle to new hiring. In the first 15 months of the Obama administration, there were early signs of an economic recovery with employers hiring workers at an average rate of 67,600 a month. But in the 15 months after the law passed, the economy added a mere 6,500 jobs each month on average — less than one-tenth the pre-health care act rate. Other factors are at work, of course. Companies must see an improvement in the business climate before they need to hire more workers. But there are enough other data points to strongly indicate that the uncertainty of health costs because of the act’s mandates is depressing hiring. — Grace-Marie Turner, Galen Institute
Republicans like to blame the 2010 health care law for creating uncertainty among businesses, which, as their theory goes, discouraged businesses from hiring. There is uncertainty, but it has been created by the Republicans. The health care law set realistic deadlines and benchmarks for businesses to meet incrementally over the next three to five years. But it is the Republicans’ endless effort to repeal the law that has created uncertainty. Businesses — and some states — are now questioning if they should proceed with implementation or hold off. The real economic problem in America is that consumers don’t want to spend and we’re not doing a good job of selling our goods overseas. Republicans don’t want to address either problem — they just want to downsize government and leave everything to the free market to solve. Our sole focus right now should be on the unemployed and employers — retraining, investing, making it easy for workers to get back in the economy and grow business. — Rep. Jim McDermott, D-Wash.
Last week provided visual proof that members of Congress will do anything these days to help create a job — or 200 full-time jobs, in the case of Topeka’s planned Mars Chocolate plant. Politico highlighted this photo from the plant’s ground-breaking featuring Sen. Jerry Moran, R-Kan., and Rep. Lynn Jenkins, R-Topeka, posing not only with two Mars officials but two life-size M&Ms.
President Obama boasted during his bus tour that we have “created 2 million private-sector jobs over the last 17 months.” But as a Washington Post fact-checker noted, though this is true, Obama is “cherry-picking the best possible job number he could find” by counting from the recession’s lowest point. If jobs are measured from the start of Obama’s presidency, which is how it is usually done, there have been nearly 2.4 million jobs lost since Obama took office. Meanwhile, Texas Gov. Rick Perry claimed last week that Obama “has killed more jobs in America than I think any president in history, certainly in my lifetime.” But as the Post’s fact-checker noted, Obama “became president in the midst of the worst recession of our lifetimes — and it seems a real stretch to make him personally responsible for every one of those lost jobs, without bothering to offer a shred of evidence for the claim.”
Good for the U.S. Department of Agriculture for modifying Conservation Reserve Program policies to help ranchers in Kansas and elsewhere affected by drought conditions. The policy changes extend the emergency grazing period on CRP land until Oct. 31 and allow producers to utilize harvested hay from expiring CRP acres when those acres are being prepared for fall seeded crops. “The modification of CRP policies is a positive step that will help Kansas producers in a difficult time,” Gov. Sam Brownback said. Sen. Pat Roberts, R-Kan., also praised the change: “I am grateful USDA has taken additional steps to expand relief to those producers suffering from this severe drought and higher feed costs.”
President Obama’s attempt Monday to reassure investors “was the sort of speech that comes at 3 a.m. from someone you thought you had succeeded in breaking up with,” columnist Alexandra Petri wrote. “‘But our universities are still the best! And we are very entrepreneurial! And Warren Buffett believes in us!’ followed by inarticulate sobbing and the sound of someone falling off a table.” Petri offered Obama some tips for his next speech. Among them: “You shouldn’t start a speech by saying that America’s problem is ‘a lack of political will in Washington’ and end the speech by saying that the great thing about America is that ‘we’ve always not just had the capacity but also the will to act.’”
No word yet on whether President Obama’s Aug. 15-17 jobs-focused bus tour through the Midwest will include Kansas. Wichita officials have been lobbying Obama for many months to come to the town that builds most of the corporate jets he loves to hate. With Obama registering a 61 percent disapproval rate with Kansans in late July, up from 57 percent in June, he could benefit from a goodwill tour through the Sunflower State. The poll was by SurveyUSA, sponsored by KWCH, Channel 12.
It was a terrible process but a good result. The agreement creates room for the private sector to continue to grow, without the threat of default and the burden of higher interest rates. It locks in at least $2 trillion in long-term savings from cuts in government spending, but those savings are phased in gradually to avoid hurting the economy in the near term. A congressional committee with fast-track authority will have a Nov. 23 deadline to recommend a balanced package of long-term reforms. The agreement creates a strong incentive to compromise: If the committee fails to reach agreement or Congress fails to act on the recommendations, government spending will automatically be cut by $1.2 trillion. These broad, automatic cuts, timed to coincide with the end of the Bush tax cuts, will make it harder for Congress to choose inaction over compromise. The agreement removes the threat of default and lowers the prospect of using the debt limit as an instrument of coercion. — Timothy Geithner, secretary of the Treasury
In the debt-ceiling melodrama, the president and tea party each had political objectives and national interests to serve. Politics won out. The deficit-reduction compromise reached by the president and congressional Republicans makes spending cuts of about $1 trillion over 10 years across all areas of government except the two areas creating the biggest problems — Social Security and accelerating Medicare and Medicaid costs. The deal establishes yet another blue-ribbon panel of senators and representatives to find another $1.5 trillion. If successful, the federal government still would be left with annual deficits much greater than $1 trillion a year — more than increased taxes can erase and certainly big enough to ensure a downgrade by credit rating agencies. The president and the tea party got their victories, but Americans will remain besieged by slow growth, high unemployment, stagnant wages and a government too expensive for its citizens to bear. — Peter Morici, University of Maryland
An article in the Wall Street Journal last week showed the challenge Wichita and the United States face in keeping aviation jobs. It reported how 85 percent of the Learjet 85, which is due out in 2013, will be manufactured in Mexico. “Five years ago, the building’s site in Queretaro was dry cactus fields. Now it is a booming assembly line of half-built fuselages and a staff of 1,600,” the newspaper reported. “. . . This fall, it plans to open another hangar-sized facility as it expands its production of fuselages and electrical harnesses for big-sellers like its Challenger business aircraft.” Mexico’s aerospace industry has averaged 20 percent growth the past five years and also attracted Cessna Aircraft Co. and suppliers for Boeing Co. and Airbus.
As the Washington Post’s Dana Milbank notes, the members of what one GOP aide calls the “Default Caucus” in Congress are using “the language of gangster films: Do as we say — or the girl gets it.” James Miller, an economist at Smith College, observed: “Your hand is greatly strengthened if you can convince the other side that you’re crazy.” How can Republicans risk default on Aug. 2? By denying that they are: 53 percent of Republicans and 65 percent of tea partiers told the Pew Research Center that the deadline can be safely ignored. Sen. Jim DeMint, R-S.C., said the president has “manufactured this crisis.” Rep. Ron Paul, R-Texas, even advocates for default in a Bloomberg commentary: “If the government defaults on its debt now, the consequences undoubtedly will be painful in the short term. The loss of its AAA rating will raise the cost of issuing new debt, but this is not altogether a bad thing. Higher borrowing costs will ensure that the government cannot continue the same old spending policies. Budgets will have to be brought into balance (as the cost of servicing debt will be so expensive as to preclude future debt financing of government operations), so hopefully, in the long term, the government will return to sound financial footing.”
Last week brought the depressing news that the Wichita area’s unemployment rate rose to 7.9 percent in June from May’s 7.6 percent. Still, the area can be heartened by the improvement since June 2010, when unemployment was 8.6 percent. And though joblessness remains worse in Wichita than in other Kansas cities and the state as a whole (6.7 percent), Wichita prevailed in another recent measurement — the “Misery Index” calculated by the Center for Economic Development and Business Research at Wichita State University using consumer spending, housing and labor data. According to the index released in late June, “people in the United States, as a whole, continue to be far more miserable than people in Kansas or Wichita,” and as of the first quarter of 2011, “Wichita now has a lower misery rate than Kansas.”
As the economy continues to struggle, New York Times columnist Paul Krugman is among those who are tired of bankers getting the “kid-gloves treatment.” The situation began under President Bush but includes current federal officials’ efforts to get state attorneys general to “accept a very modest settlement from banks that engaged in abusive mortgage practices,” he writes. Krugman argues that going easy on bankers won’t help the housing market or threaten the overall economy. “When officials tell you that we must rush to settle with the banks for the sake of the economy, don’t believe them. We should do this right, and hold bankers accountable for their actions.” In response, Sen. John McCain, R-Ariz., tweeted: “It may surprise you to know that I completely agree with Paul Krugman’s column. . . .”
According to a new SurveyUSA poll, sponsored by KWCH, Channel 12, a majority of Kansans are following the debt-ceiling fight closely (73 percent) and expecting their leaders to prevent the nation from defaulting on its debts Aug. 2 (66 percent). If it does default, 47 percent will blame both political parties. As far as the specifics of a deal: 63 percent said higher taxes on the wealthy would be acceptable, while more than 70 percent ruled out cuts to Social Security and Medicare.
Reason.com has a spoof video of Chrysler’s “Halftime in America” Super Bowl ad. The narrator, in a raspy Clint Eastwood impersonation, says: “People are out of work and they’re hurting. And they’re wondering where all their money went. Well, $12.5 billion of it went to Chrysler. In the form of a bailout. But it’s OK, because Chrysler is all-American. Though, technically, 58.5 percent of Chrysler is owned by an Italian corporation. And Chrysler manufactures many of its vehicles in Canada. And Mexico. But I guess that doesn’t make for a great commercial.”
