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President Obama’s Real Accomplishments in Office   Introduction Where politics is concerned there always seems to be a real disconnect between facts on the one hand, and political rhetoric espoused by the media and the various political parties on the other. Citizens expect the media to decipher fact from fiction. But since the media is often biased in favor of one political party over another, the voting public is actually left to their own devices to determine fact from fiction. As a consequence, the average citizen is left out in the cold where unbiased evaluation of a candidate for political office is concerned. As we all know, politicians talk more about values, not facts. Facts are often used to measure results of a politician’s programs, while values are used to make promises and to encourage the public to vote for a particular candidate. Facts are too dangerous for politicians while values are safer when interacting with the public.   Purpose of Blog The purpose of this Blog is to present to my cyberspace public a factual review of the real accomplishments of the President of the United States, Barack Obama. I will review his accomplishments in two ways: Review the two most important promises the President made back in 2008 which were to lower the unemployment rate and create middle class jobs for Americans. The second way is to list the accomplishments of Barack Obama. When it came to the President’s promises, both related to economics. This was important since the country came close to a financial disaster and collapse during President Bush’s last term in office. At the time he made his promises, little did he know that his vision for America would be met by a recalcitrant and often times obstreperous Congress, particularly the House of Representatives. Despite the juggernaut of destructive gridlock offered up by the Republican Party and its Tea Party members, achievements were made in the last 6 years by the President. The Promises of President Obama The first promise was to lower the unemployment rate, and the second was to create jobs for middle-class Americans. I will present data that supports these promises, and I will carefully review actual achievements. The Unemployment Rate The President took office in January 2009. At that time the unemployment rate had been climbing during the previous year under the Bush Administration from 5.0 percent in January 2008 to 7.8 percent in January, 2009. The rate of unemployment continued to rise to a high of 10 percent in October 2009 as a lagging effect of the recession and near financial collapse in 2008. It continued to drift from 9.9 down to 9.4 percent during the rest of 2009, and continued through to the end of 2010. By this time the policies of the President and the Federal Reserve Board (primarily the economic stimulus packages) were starting to have an effect on the unemployment rate. In January 2011 the unemployment rate dropped to 9.1 percent. A year later it was 8.2 percent. By January 2013 it was 7.9 percent. In January 2014 the unemployment rate had dropped to 6.6 percent. In June 2014 the unemployment rate dropped again to 6.1 percent. During the President’s watch, the unemployment rate declined 39 percent. As of August 2014 the unemployment rate still stayed at 6.1 percent. It would, of course, be simplistic and rather naïve to either ascribe total credit or total blame to the person holding office of the presidency for the lion’s share of any economic change. The reality is economic cycles and the economy itself each have a life of its own (see my previous Blogs on economics and economic theories).  Nevertheless, fiscal and economic policies of any President do matter.  So from a policy standpoint, President Barack Obama has very much helped impact the unemployment rate in a positive way, thus achieving his first promise. Unemployment Rate (January 2004 – June 2014)

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
2004  5.7 5.6 5.8 5.6 5.6 5.6 5.5 5.4 5.4 5.5 5.4 5.4
2005  5.3 5.4 5.2 5.2 5.1 5.0 5.0 4.9 5.0 5.0 5.0 4.9
2006  4.7 4.8 4.7 4.7 4.6 4.6 4.7 4.7 4.5 4.4 4.5 4.4
2007  4.6 4.5 4.4 4.5 4.4 4.6 4.7 4.6 4.7 4.7 4.7 5.0
2008  5.0 4.9 5.1 5.0 5.4 5.6 5.8 6.1 6.1 6.5 6.8 7.3
2009  7.8 8.3 8.7 9.0 9.4 9.5 9.5 9.6 9.8 10.0 9.9 9.9
2010  9.7 9.8 9.9 9.9 9.6 9.4 9.5 9.5 9.5 9.5 9.8 9.4
2011  9.1 9.0 9.0 9.1 9.0 9.1 9.0 9.0 9.0 8.8 8.6 8.5
2012  8.2 8.3 8.2 8.2 8.2 8.2 8.2 8.1 7.8 7.8 7.8 7.9
2013  7.9 7.7 7.5 7.5 7.5 7.5 7.3 7.2 7.2 7.2 7.0 6.7
2014  6.6 6.7 6.7 6.3 6.3 6.1

  Source: Department of Labor Statistics     Job Creation and Growth   It is a fact that, since President Roosevelt, the average amount of private sector jobs created during Democratic Presidential terms is 1,463,220 and the average amount during Republican Presidential terms is a paltry 642,000 jobs.     Obama’s Second Promise

52 Straight Months of Private Sector Job Growth

July 3, 2014 Under President Obama’s leadership, the economy has added private sector jobs for 52 straight months. During this span, 9.7 million private sector jobs have been created. In the Senate,    Democrats are fighting to continue this positive trend and help speed along the economic recovery.   President Obama’s Major Accomplishments What follows is a PARTIAL list of Obama’s accomplishments so far.

 

Despite the characterizations of some Republicans, Obama’s success rate in winning congressional votes on issues was an unprecedented 96.7% for his first year in office. Though he is often cited as superior to Obama, President Lyndon Johnson’s success rate in 1965 was only 93%.

Fiscal Responsibility

Within days after taking office, Obama signed an Executive Order ordering an audit of government contracts, and combating waste and abuse. The President created the post of Chief Performance Officer, whose job it is to make operations more efficient to save the federal government money. On his first full day, he froze White House salaries. He appointed the first Federal Chief Information Officer to oversee federal IT spending. He committed to phasing out unnecessary and outdated weapons systems, and also signed the Weapons Systems Acquisition Reform Act to stop waste, fraud and abuse in the defense procurement and contracting system. Through an executive order, he created the National Commission on Fiscal Responsibility and Reform.

Improving the Economy, Preventing Depression

Obama pushed through and signed the American Recovery and Reinvestment Act, otherwise known as “the stimulus package,” despite the fact that not one Republican voted for that bill. In addition, he launched recovery.gov, so that taxpayers could track spending from the Act. In his first year, the American Recovery and Reinvestment Act created and sustained 2.1 million jobs and stimulated the economy 3.5%. Obama completed the massive TARP financial and banking rescue plan, and recovered virtually all of its costs. He created the Making Home Affordable home refinancing plan. Obama oversaw the creation of more jobs in 2010 alone than Bush did in eight years.  He oversaw a bailout of General Motors that saved at least 1.4 million jobs, and put pressure on the company to change its practices, resulting in GM returning to its place as the top car company in the world. Obama also doubled funding for the Manufacturing Extension Partnership which is designed to improve manufacturing efficiency. He signed the Fraud Enforcement and Recovery Act giving the federal government more tools to investigate and prosecute fraud in every corner of the financial system. It also created a bipartisan Financial Crisis Inquiry Commission to investigate the financial fraud that led to the economic meltdown. Obama signed the Credit Card Accountability, Responsibility and Disclosure (CARD) Act, which was designed to protect consumers from unfair and deceptive credit card practices. He increased infrastructure spending after years of neglect.  Obama signed the Helping Families Save Their Homes Act, expanding on the Making Home Affordable Program to help millions of Americans avoid preventable foreclosures. The bill also provided $2.2 billion to help combat homelessness, and to stabilize the housing market. Through the Worker, Home Ownership, and Business Assistance Act of 2009, Obama and Congressional Democrats provided tax credits to first-time home buyers, which helped the U.S. housing market recovery. He initiated a $15 billion plan designed to encourage increased lending to small businesses. Obama created business.gov, which allows for online collaboration between small businesses and experts remanaging a business. (The program has since merged with SBA.gov.) He played a lead role in getting the G-20 Summit to commit to a $1.1 trillion deal to combat the global financial crisis.  Obama took steps to improve minority access to capital.  He created a $60 billion bank to fund infrastructure improvements such as roads and bridges. He implemented an auto industry rescue plan, and saved as many as 1 million jobs.  Many are of the opinion that he saved the entire auto industry, and even the economy of the entire Midwest. Through the American Recovery and Reinvestment Act, Obama saved at least 300,000 education jobs, such as teachers, principals, librarians, and counselors that would have otherwise been lost. Obama dismantled the Minerals Management Service, thereby moving forward to cut ties between energy companies and the government. He provided funding to states and the Department of Homeland Security to save thousands of police and firefighter jobs from being cut during the recession. He used recovered TARP money to fund programs at local housing finance agencies in California, Florida, Nevada, Arizona and Michigan. Obama crafted an Executive order establishing the President’s Advisory Council on Financial Capability to assist in financial education for all Americans.

Wall Street Reforms and Consumer Protection

Obama ordered 65 executives who took bailout money to cut their own pay until they paid back all bailout money. He pushed through and got passed Dodd-Frank, one of the largest and most comprehensive Wall Street reforms since the Great Depression.  Dodd-Frank also included the creation of the Consumer Financial Protection Bureau. Obama made it so that banks could no longer use YOUR money to invest in high-risk financial instruments that work against their own customers’ interests. He supported the concept of allowing stockholders to vote on executive compensation.  Obama wholly endorsed and supported the Foreign Account Tax Compliance Act of 2009 that would close offshore tax avoidance loopholes. He made a deal with Swiss banks that permit the US government to gain access to the records of criminals and tax evaders. He established a Consumer Protection Financial Bureau designed to protect consumers from financial sector excesses. Obama oversaw and then signed the most sweeping food safety legislation since the Great Depression.

Civil Rights and Anti-Discrimination

Obama advocated for and signed the Matthew Shepard and James Byrd, Jr. Hate Crimes Prevention Act, which made it a federal crime to assault anyone based on his or her sexual orientation or gender identity. He pushed through, signed and demanded the Pentagon enact a repeal of the discriminatory “Don’t Ask Don’t Tell” policy that forced soldiers to lie to fight for their country, and put our troops at risk by disqualifying many qualified soldiers from helping. Obama appointed Kareem Dale as the first ever Special Assistant to the President for Disability Policy. Helped Congress pass and signed the Civil Rights History Act.  He extended benefits to same-sex partners of federal employees. Obama has appointed more openly gay officials than anyone in history.  He issued a Presidential Memorandum reaffirming the rights of gay couples to make medical decisions for each other. He established a White House Council on Women and Girls. He signed the Lilly Ledbetter Fair Pay Act, restoring basic protections against pay discrimination for women and other workers. This was after the GOP blocked the bill in 2007. Only 5 Republican Senators voted for the bill.    Obama wrote and signed an Executive Order establishing a White House Council on Women and Girls to ensure that all Cabinet and Cabinet-level agencies evaluate the effect of their policies and programs on women and families. He expanded funding for the Violence against Women Act. Under Obama’s watch, National Labor Relations Board has issued final rules that require all employers to prominently post employees’ rights where all employees or prospective employees can see it, including websites and intranets, beginning November 2011.

Fighting Poverty

Obama provided a $20 billion increase for the Supplemental Nutrition Assistance Program (Food Stamps). He signed an Executive Order that established the White House Office of Urban Affairs.

Improved Foreign Relations and American Status Abroad

Obama visited more countries and met with more world leaders than any previous president during his first six months in office. As he promised, he gave a speech at a major Islamic forum in Cairo early in his administration. He did much to restore America’s reputation around the world as a global leader that does the “right thing” in world affairs, at least according to the rest of the planet. He re-established and reinforced our partnership with NATO and other allies on strategic international issues. Closed a number of secret detention facilities. Obama improved relations with Middle East countries by appointing special envoys. He pushed for military to emphasize development of foreign language skills. Offered $400 million to the people living in Gaza, called on both Israel and the Palestinians to stop inciting violence. He refused to give Israel the green light to attack Iran over their possible nuclear program. He worked to make donations to Haiti tax-deductible in 2009. He established a new U.S.-China Strategic and Economic Dialogue. Issued an Executive Order blocking interference with and helped to stabilize Somalia. He established new, more reasonable policies in our relations with Cuba, such as allowing Cuban-Americans to visit their families and send money to support them. He ordered the closure of the prison at Guantanamo Bay. It was Republicans (and a smattering of Democrats) who prevented him from following through. Obama ordered a review of our detention and interrogation policy, and prohibited the use of torture, or what Bush called “enhanced interrogation.” He ordered interrogators to limit their actions to the Army Field manual. He ordered all secret detention facilities in Eastern Europe and elsewhere to be closed.  He released the Bush torture memos.   On his second day in office, he signed a detailed Executive Order that banned torture, reversed all Bush torture policies, and put the United States in compliance with the Geneva Convention. In response to the emerging “Arab Spring,” he created a Rapid Response fund, to assist emerging democracies with foreign aid, debt relief, technical assistance and investment packages in order to show that the United States stands with them. Obama passed the Iran Sanctions Act, to prevent war, and to encourage Iran to give up their nuclear program.  Obama ended the Iraq War. In response to current events with an ISIS invasion in Iraq President Obama ordered air strikes and offered humanitarian assistance to Iraq religious minorities under threat of death from ISIS. He has now created an international coalition through NATO to annihilate ISIS in Iraq and Syria. He authorized and oversaw a secret mission by SEAL Team Six to rescue two hostages held by Somali pirates. The importance of this international act of terrorism was later made into a movie with Tom Hanks.

Better Approach to Defense

Obama created a comprehensive new strategy for dealing with the international nuclear threat. He authorized a $1.4 billion reduction in Star Wars program in 2010. He restarted nuclear nonproliferation talks and built up the nuclear inspection infrastructure/protocols to where they had been before Bush. He signed and pushed to ratification a new SALT Treaty. Negotiated and signed a new START Treaty that will last until at least 2021. Through the Defense Authorization Act, he reversed the Bush Administration and committed to no permanent military bases in Iraq. He developed the first comprehensive strategy with regard to Afghanistan and Pakistan designed to facilitate the defeat of al Qaeda and the withdrawal of most troops, as well as the rebuilding of Afghanistan. He returned our focus to Afghanistan, stabilized the country, and began the process of withdrawing our troops. Obama fulfilled his campaign promise and ended our involvement in Iraq in 2011. However, current events have altered a total and complete withdrawal from Iraq. Despite the current problems in Iraq the president, during his administration, has taken steps to severely weaken al Qaeda and limit their ability to terrorize the world. Many of the top al Qaeda leaders have been killed or otherwise neutralized. He negotiated and signed a nuclear nonproliferation treaty with India. He took decisive action to use NATO to limit the slaughter of innocents in Libya, so that the Libyan people could topple a despotic government and determine their own fate.   Veterans He made sure that families of fallen soldiers could be on hand when the body arrives at Dover AFB by providing funding for it.  He also ended the media blackout on coverage of the return of fallen soldiers. He funded Department of Veterans Affairs (VA) with an extra $1.4 billion to improve veterans’ services. He provided the troops with better body armor. He created the Joint Virtual Lifetime Electronic Record program for military personnel in order to improve the quality of their medical care. He put an end to the Bush-era stop-loss policy that kept soldiers in Iraq/Afghanistan beyond their enlistment date. He supported and signed the Veterans Health Care Budget Reform and Transparency Act, which made more money available to enable better medical care for veterans. He ushered through the largest spending increase in 30 years for the Department of Veterans Affairs for improved medical facilities, and to assist states in acquiring or constructing state nursing homes and extended care facilities. He created the Green Vet Initiative, which provided special funding to the Labor Department to provide veterans with training in green jobs. He oversaw a $4.6 billion expansion of the Veterans Administration budget to pay for more mental health professionals.

Education

He has repeatedly increased funding for student financial aid, and at the same time cut the banks completely out of the process. He completely reformed the student loan program to make it possible for students to refinance at a lower rate. Through the American Recovery and Reinvestment Act, he invested heavily in elementary, secondary and post-secondary education. This includes a major expansion of broadband availability in K-12 schools nationwide as well as an expansion in school construction. Also, through the American Recovery and Reinvestment Act, he put $5 billion into early education, including Head Start. He signed the Post-9/11 GI Bill, also known as GI Bill 2.0 He oversaw expansion of the Pell Grants program to expand opportunity for low-income students to go to college. He passed the Individuals with Disabilities Education Act, which provided an extra $12.2 billion in funds.

Greater Transparency and Better Government

He signed an order banning gifts from lobbyists to anyone in the Executive Branch. He signed an order banning anyone from working in an agency they had lobbied in previous years. He also put strict limits on lobbyists’ access to the White House. He held the first-ever online town hall from the White House, and took questions from the public. The Obama White House became the first to stream every White House event, live. He established a central portal for Americans to find service opportunities. He provided the first voluntary disclosure of the White House Visitors Log in history.  He crafted an Executive Order on Presidential Records, which restored the 30-day time frame for former presidents to review records, and eliminated the right for the vice president or family members of former presidents to do the reviews. This will provide the public with greater access to historic White House documents, and severely curtails the ability to use executive privilege to shield them. He improved aspects of the Freedom of Information Act, and issued new guidelines to make FOIA more open and transparent in the processing of FOIA requests.

National Safety and Security

He’s restored federal agencies such as FEMA to the point that they have been able to manage a huge number of natural disasters successfully. He authorized Navy SEALS to successfully secure the release of a US captain held by Somali pirates and increased patrols off the Somali coast. Obama has repeatedly beefed up border security. He ordered and oversaw the Navy SEALS operation that killed Osama bin Laden.

Science, Technology and Health Care

He created a Presidential Memorandum to restore scientific integrity in government decision-making. Obama opened up the process for fast-tracking patent approval for green energy projects. He eliminated the Bush-era restrictions on embryonic stem cell research. He also provided increased federal support for biomedical and stem cell research. Through the American Recovery and Reinvestment Act, he committed more federal funding, about $18 billion, to support non-defense science and research labs. He signed the Christopher and Dana Reeve Paralysis Act, the first comprehensive attempt to improve the lives of Americans living with paralysis. He expanded the Nurse-Family Partnership program, which provides home visits by trained registered nurses to low-income expectant mothers and their families, to cover more first-time mothers.  His EPA reversed research ethics standards which allowed humans to be used as “guinea pigs” in tests of the effects of chemicals to comply with numerous codes of medical ethics. Obama conducted a cyberspace policy review. Obama provided financial support for private sector space programs. He oversaw enhanced earth mapping to provide valuable data for agricultural, educational, scientific, and government use. He ushered through a bill that authorized the Food and Drug Administration to regulate tobacco products.  As a result, the FDA has ordered tobacco companies to disclose cigarette ingredients and to ban sale of cigarettes falsely labeled as “light.” Through the American Recovery and Reinvestment Act, he provided $500 million for Health Professions Training Programs. He also increased funding for community-based prevention programs. He oversaw a 50% decrease in cost of prescription drugs for seniors. He eliminated the Bush-era practice of forbidding Medicare from negotiating with drug companies on price. Two weeks after taking office, he signed the Children’s Health Insurance Re-authorization Act, which increased the number of children covered by health insurance by 4 million. He held a quick press conference, and urged Congress to investigate Anthem Blue Cross for raising premiums 39% without explanation. Rep. Waxman responded by launching a probe, and Anthem Blue Cross put the increase on hold for two months. He ushered through and signed the Affordable Health Care Act, which expanded health insurance coverage to 30 million more people, and ended many common insurance company practices that are often detrimental to those with coverage. Through the Affordable Health Care Act, he allowed children to be covered under their parents’ policy until they turned 26. Through the Affordable Health Care Act, he provided tax breaks to allow 3.5 million small businesses to provide health insurance to their employees; thereby 29 million people will receive tax breaks to help them afford health insurance. Through the Affordable Health Care Act, he expanded Medicaid to those making up to 133% of the federal poverty level. Through the Affordable Health Care Act, health insurance companies now have to disclose how much of your premium actually goes to pay for patient care. Provisions in Obama’s Affordable Health Care Act have already resulted in Medicare costs actually declining slightly this fiscal year, for the first time in many years, according to the Congressional Budget Office. Last year’s increase was 4%. Compare that to the average 12% annual inflation rate during the previous 40 years. Strengthening the Middle Class and Families Obama worked to provide affordable, high-quality child care to working families. He cracked down on companies that were previously denying sick pay, vacation and health insurance, and Social Security and Medicare tax payments through abuse of the employee classification of independent contractor. Through the American Recovery and Reinvestment Act, he cut taxes for 95% of America’s working families. Under Obama, tax rates for average working families are the lowest they’ve been since 1950. He extended and fully funded the patch for the Alternative Minimum Tax for 10 years. He extended discounted COBRA health coverage for the unemployed from 9 months to 15 months, and he’s extended unemployment benefits several times.

Environment and Energy

Obama fast-tracked regulations to allow states to enact federal fuel efficiency standards that were above federal standards. His fast-tracked regulation increased fuel economy standards for vehicles beginning with the 2011 model year. It was the first time such standards had been increased in a decade. He oversaw the establishment of an Energy Partnership for the Americas, which creates more markets for American-made biofuels and green energy technologies. His EPA reversed a Bush-era decision to allow the largest mountaintop removal project in US history. He ordered the Department of Energy to implement more aggressive efficiency standards for common household appliances. He ordered energy plants to prepare to produce at least 15% of all energy through renewable resources like wind and solar, by 2021. (As you can see, Republicans are trying hard to kill it.) He oversaw the creation of an initiative that converts old factories and manufacturing centers into new clean technology centers. Obama bypassed Republican opposition in Congress, and ordered EPA to begin regulating and measuring carbon emissions. His EPA ruled that CO2 is a pollutant. He doubled federal spending on clean energy research. He pushed through a tax credit to help people buy plug-in hybrid cars. He created a program to develop renewable energy projects on the waters of our Outer Continental Shelf that will produce electricity from wind, wave, and ocean currents. Obama reengaged in the climate change and greenhouse gas emissions agreements talks, and even proposed one himself. He also addressed the U.N. Climate Change Conference, officially reversing the Bush-era stance that climate change was a “hoax.” He fully supported the initial phase of the creation of a legally binding treaty to reduce mercury emissions worldwide. He required states to provide incentives to utilities to reduce their energy consumption. Following Bush’s eight year reign, he reengaged in a number of treaties and agreements designed to protect the Antarctic. He created tax write-offs for purchases of hybrid automobiles, and later he and Democrats morphed that program into one that includes electric cars. Mandated that federal government fleet purchases be for fuel-efficient American vehicles, and encouraged that federal agencies support experimental, fuel-efficient vehicles. Obama oversaw and pushed through an amendment to the Oil Pollution Act of 1990 authorizing advances from Oil Spill Liability Trust Fund for the Deepwater Horizon oil spill.  He also actively tried to amend the Oil Pollution Act of 1990 to eliminate the liability limits for those companies responsible for large oil spills. He initiated Criminal and Civil inquiries into the Deepwater Horizon oil spill.  Through Obama’s EPA, he asserted federal legal supremacy, and barred Texas from authorizing new refinery permits on its own.  He strengthened the Endangered Species Act. His EPA improved boiler safety standards to improve air quality and save 6500 lives per year. Through the EPA, he took steps to severely limit the use of antibiotics in livestock feed, and to increase their efficacy in humans.  Obama increased funding for National Parks and Forests by 10%. He announced greatly improved commercial fuel efficiency standards. He announced the development of a huge increase in average fuel economy standards from 27.5mpg to 35.5mpg starting in 2016 and 54.5 starting in 2025.

Other Accomplishments

Obama has expanded trade agreements to include stricter labor and environmental agreements such as NAFTA. He oversaw funding of the design of a new Smithsonian National Museum of African-American History, which is scheduled to open on the National Mall in 2015.  He protected the funding during the recent budget negotiations. He oversaw and passed increased funding for the National Endowment for the Arts. Obama nominated Sonia Sotomayor and Elena Kagan to the Supreme Court. Sotomayor is the first Hispanic Justice in the Court’s history, and these women represent only the third and fourth women to serve on the court, out of a total of 112 justices. He appointed the most diverse Cabinet in history, including more women than any other incoming president.  He eliminated federal funding for abstinence-only education, and he rescinded the global gag rule. Obama loosened the rules, and allowed the 14 states that legalized medical marijuana to regulate themselves without federal interference.  His FDA banned the use of antibiotics in livestock production.  Obama ushered through and signed national service legislation, increasing funding for national service groups, including tripling the size of the AmeriCorps program.     The material used for the list of accomplishments was obtained from the article below. It has been altered somewhat due to many of the current events that have taken place globally in last few weeks and months. Read the original article at http://pleasecutthecrap.typepad.com/main/what-has-obama-done-since-january-20-2009.html     Post Script It is clear that President Obama is one of the most successful presidents of all time. Despite a much fractured Congress and a very disruptive Republican/Tea Party, President Barack Obama has exceeded all expectations as a president. Whoever the next president in 2016 is—one thing is for sure—she/he will definitely follow in the footstep of a presidential giant. As an aside, I hope the voting public will evaluate the Republican/Tea Party in a fair and balanced manner. It should be based on the number of their accomplishments for the American people since President Bush left office. That evaluation should be very easy based on the overwhelming number of their accomplishments. At the last count Republicans/Tea Party have ZERO ACCOMPLISHMENTS. If you really want to know which party to support in the upcoming mid-term elections this fall, just ask yourself one important question based on the following. Twenty years ago the Republicans swept into office with their promise in 1994 of a Contract with America. A November 13, 2000 article by Edward H. Crane, president of the libertarian Cato Institute, stated, “…the combined budgets of the 95 major programs that the Contract with America promised to eliminate have increased by 13%.” President Bill Clinton often remarked that the Republicans had actually put forth a “Contract on America.” The question you need to ask yourself and answer is—What part of Contract with America, if any, was ever accomplished by the Republican Party? If the answer is none of it, then you should clearly know which party or candidates to support in the upcoming mid-term elections. Why, you ask? — Because history, including political history, has a habit of repeating itself. The government shutdown, and economic harm that was subsequently felt by the American people a year ago, was caused by Republican/Tea Party members in Congress. I think it is fair to say that any Republican/Tea Party members running in the mid-term elections in 2014 (who supported the government shutdown) should have no subsequent role in that government since they tried to “deep six” it in 2013.

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Purpose of Blog

As the government goes about the business of dealing with the the Fiscal Cliff, one of the most controversial issues it will have to address is raising taxes on our wealthier citizens. Value judgments work their way into the decision-making process because everyone, democrats, republicans, and independents, all have different ideas about what constitutes “Fairness, and Fairness for Whom?”

But one thing that can help extricate decision-makers from their own prejudices and value judgments, is to shed light on the issue with data and facts. I would be naïve to suggest that this is going to be an easy process. It will take their best effort and require everyone involved to put aside their political biases. The purpose of this Blog is the answer with data and facts the following question on the revenue generating side of their deliberations:

What is the Effect on the Economy if the Wealthy Are Taxed at Higher Rates?

With the 2012 presidential election over, it is important now to review facts as President Obama and the Congress come to grips with an important issue now looming over the nation. That issue has been metaphorically described as a fiscal cliff.

What is the Fiscal Cliff?

I love the way we use metaphors in this country to describe every social or economic problem. There once was a “War on Poverty,” “The Missles of October” that was better known as the Cuban Missle Crisis (Gee! I thought it was an American crisis as well) and now we have a “Fiscal Cliff” where all our money is going to drop over the edge of a great chasm like the Grand Canyon. The latter, like all the previous metaphors, conjures up graphic images in order to convey a very important message: Whatever the crisis is or gap between people, whatever the details are, the American people need to take the “Fiscal Cliff” seriously because the consequences are important to the nation’s financial health, and may be longlasting.

So personally, I get the message and I know it’s serious. Hopefully, my fellow Americans will take the underlying metaphorical graphic image such as a “Fiscal cliff” seriously as well.

Basically, the Fiscal Cliff is a popular way to describe the confusing, difficult riddle or puzzle the U.S. government will face at the end of 2012, when the terms of the Budget Control Act of 2011 are scheduled to go into effect.

Laws will be affected when the gong hits midnight on December 31, 2012, including last year’s temporary payroll tax cuts (resulting in a 2% tax increase for workers), the end of certain tax breaks for businesses, shifts in the alternative minimum tax that would take a larger bite, the end of the tax cuts from 2001-2003, and the beginning of taxes related to President Obama’s health care law.

At the same time, the spending cuts agreed upon as part of the debt ceiling deal of 2011 will begin to go into effect. According to Barron’s, over 1,000 government programs – including the defense budget and Medicare are in line for “deep, automatic cuts.”

According to author Thomas Kenny, writing for About.com Guide, “In dealing with the fiscal cliff, U.S. lawmakers have a choice among three options, none of which are particularly attractive:

They can let the current policy scheduled for the beginning of 2013 – which features a number of tax increases and spending cuts that are expected to weigh heavily on growth and possibly drive the economy back into a recession – go into effect. The plus side: the deficit, as a percentage of GDP, would be cut in half.

They can cancel some or all of the scheduled tax increases and spending cuts, which would add to the deficit and increase the odds that the United States could face a crisis similar to that which is occurring in Europe. The flip side of this, of course, is that the United States’ debt will continue to grow.

They could take a middle course, opting for an approach that would address the budget issues to a limited extent, but that would have a more modest impact on growth.”

There are really only three things the U.S. Government can do to solve the problem of the Fiscal Cliff: Raise Taxes, Cut Spending, or both.

Fiscal Policy involves two major components: Taxes and Spending. While Monetary Policy is very important to the economy under the control of the Federal Reserve Board, my best guess at this point (as we get closer to the December 31, 2012 deadline) is that most of the compromises to be reached will be worked out between the President and Congress will mostly involve taxes and spending cuts.

The Issue of Higher Tax Rates for the Wealthy

President Barack Obama, of course, won re-election and, in a sense, is in the driver’s seat politically. The cornerstone of the President’s campaign in 2012 was to protect the middle class and require (on the tax revenue side) higher income households to pay more in taxes. Nevertheless, now is the time for a factual assessment of this issue.

According to author Chye-Ching Huang:

“Many policymakers and pundits assume that raising federal income taxes on high-income households would have serious adverse consequences for the economy. Yet this belief, which has been subject to extensive research and analysis, does not fare well under scrutiny. As three leading tax economists recently concluded in a comprehensive review of the empirical evidence, ‘there is no compelling evidence to date of real responses of upper income taxpayers to changes in tax rates.’ The literature suggests that if the alternative to raising taxes is larger deficits, then modest tax increases on high-income households would likely be more beneficial for the economy over the long run.

The debate over the economic effects of higher taxes on people with high incomes has focused on a number of issues — how increasing taxes at the top would affect taxable income and revenue as well as the effects on work and labor supply, saving and investment, small businesses, entrepreneurship, and, ultimately, economic growth and jobs.”

Economic Growth and Jobs

I found during the presidential campaign many people on both sides had something to say about job creation. All of the topics above can be found in Huang’s full report referenced at the end of this Blog. However, I want to share with you the relationship between taxing the wealthy and job creation, since it too is critically important.

History shows that higher taxes are compatible with economic growth and job creation: job creation and GDP growth were significantly stronger following the Clinton tax increases than following the Bush tax cuts. Further, the Congressional Budget Office (CBO) concludes that letting the Bush-era tax cuts expire on schedule would strengthen long-term economic growth, on balance, if policymakers used the revenue saved to reduce deficits.

In other words, any negative impact on economic growth from increasing taxes on high-income people would be more than offset by the positive effects of using the resulting revenue gain to reduce the budget deficit. I venture to say that Wall Street’s reaction  would be very positive if a major dent were to occur in our national debt. Risk/Reward ratios would favor the Bulls (“and you can take that to the bank”).

In addition, tax increases can also be used to fund, or to forestall cuts in, productive public investments in areas that support growth such as public education, basic research, and infrastructure.

Summary

According to Huang, “These findings from the research literature stand in contrast to assertions of extensive economic damage from increases in tax rates on high-income households, which are repeated so often that many policymakers, journalists, and ordinary citizens may simply assume they are solid and well-established. They are not.

These issues are of considerable importance, because sustainable deficit reduction is not likely to be possible without significant revenue increases. Unsupported claims that modest rate increases for high-income people would significantly impair growth ought not stand in the way of balanced deficit-reduction strategies that ask such individuals to share in the burden and pay somewhat more in taxes.

Raising revenues by broadening the tax base can in fact improve the efficiency of the tax code. And, because a cleaner tax code offers fewer opportunities to evade taxes, base broadening can reduce the economic cost of any rate increases also needed to achieve fiscal sustainability.

The research in the field does not provide strong evidence that modestly raising tax rates at the top of the income scale would have significant growth-reducing effects on labor supply, taxable income, savings and investment, or entrepreneurship. Moreover, as Professor Joel Slemrod has emphasized, the economic impact of tax increases depends in part on how the revenue raised is used. In the current fiscal and political environment, policymakers would likely use revenue raised by increasing marginal tax rates for high-income taxpayers to reduce deficits, which likely would have positive overall effects on long-term economic growth.

The nation faces a daunting fiscal challenge, as well as historically large income inequality and increased spending needs stemming from the graying of the population and advances in medicine that improve health but add to cost. These challenges mean that revenues, as well as spending cuts, need to make a significant contribution to deficit reduction.”

Post Script

As a political moderate, I have never been a big fan of class warfare discrimination, or any kind of discrimination for that matter. This is why it is so important to bring in facts, not just one’s value judgments. Even in “The Reasoned Society” separating facts from value judgments, in one’s own reasoning ability, can at times be a slippery-slope. The wealthy in America do in fact contribute disproportionately (as a percent and in gross dollar amounts) more money to charity than do lower-and-middle class individuals. The wealthy are to be applauded and respected for that kind of giving. Being wealthy, of course, does put one in a rather unique position to help others—and that is a good thing for society.

Nevertheless, quite clearly, the data have shown that our tax laws have disproportionately favored high-income taxpayers for decades over low and middle income citizens. Fairness as a concept is a two way street where income or tax equality is concerned. Many lower and middle class individuals often use sterotypical thinking to villify and demonize wealthy individuals to the point of appearing to be “Not Too Bright.” Nevertheless, the research data presented by Huang clearly and strongly sugggest that raising marginal tax rates on high-income individuals to help pay down our national deficit, and put our economic house in order, is both reasonable and fair.

Also, evidence shows that taxing wealthier individuals will have a positive effect on increasing GDP and job creation, what everyone, on both sides of the aisle, said was so important during the 2012 presidential election campaign.

________________________________________________________________________

The information for this Blog comes from two sources, Thomas Kenny who wrote an article in About.com Guide called The Fiscal Cliff Explained, and Chye-Ching Huang who wrote an article for the Center for Budget and Policy Priorities that answers the primary question raised in this Blog. The title of her article was Recent Studies Find Raising Taxes on High-Income Households Would Not Harm the Economy —Policy Should Be Included in Balanced Deficit-Reduction Effort. I was impressed by the clarity of writing by both these authors.

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The Political, Social, and Economic Issues in 2012:

How Do the President and Mitt Romney Stack Up?

 

 

Introduction

There is perhaps no better way to clarify how you should vote in 2012 than to lay out the plan and beliefs of each candidate regarding the critical issues of our time. As we get closer to Election Day, I hope you keep these differences between the candidates in mind. Initially, I had planned to discuss the fine points and relative value of Supply Side Economics (Republican approach to the economy) versus Demand Side Economics (Democratic approach to the economy). Instead, I have decided to cover a broader set of issues.

Back in March 2012 I began writing a six part series on Election Year Politics and the Economy. There, in the broadest sense, I covered the basics of economics and I would encourage you to review them once again. We are told incessantly by the media and party leaders that the crucial issue in 2012 is the economy. However, many many other issues are important to various segments of the population, as well as important to the voting public as a whole.

Consequently, I have layed out how each candidate views a variety of social, political, and economic issues. In this way, the larger broader view of election year politics will be covered. With this broader view, coupled with the specifics of economic theory covered in the six part series, each reader should be adequately prepared with knowledge to vote for the candidate of his or her choice on November 6, 2012.

In a final Conclusions Section I will tell my cyberspace audience how I will vote this fall and my reasons for doing so.

 

Critical Issues of Our Time

 

 The following shows how Democratic President Barack Obama and Republican presidential hopeful Mitt Romney stand on a selection of issues. This information comes mostly from the Associated Press but also from this Blogger.

 ABORTION & BIRTH CONTROL

OBAMA: Supports abortion rights Health care law that requires contraceptives to be available for free for women enrolled in workplace health plans.

ROMNEY: Opposes abortion rights. He previously supported them. Says state law should guide abortion rights, and Roe v. Wade should be reversed by a future Supreme Court ruling. Said he would end federal aid to Planned Parenthood.

WAR

OBAMA: Ended the Iraq war. He increased U.S. troop presence in Afghanistan then began drawing down the force with a plan to have all out by the end of 2014. He approved U.S. air power in NATO-led campaign that helped Libyan opposition topple government. There are major cuts coming in the size of the Army and Marine Corps as part of agreement with congressional Republicans to cut $487 billion in military spending over a decade.

ROMNEY: Endorses 2014 end to U.S. combat in Afghanistan, subject to conditions at the time. He would increase strength of armed forces, including number of troops and warships, adding almost $100 billion to the Pentagon budget in 2016.

TERRORISM

OBAMA: Approved the raid that found and killed Osama bin Laden and set policy that U.S. would no longer use harsh interrogation techniques, a practice that had essentially ended later in George W. Bush’s presidency. He largely carried forward Bush’s key anti-terrorism policies, including detention of suspects at Guantanamo Bay despite promise to close the prison. Expanded use of unmanned drone strikes against terrorist targets in Pakistan and Yemen.

ROMNEY: No constitutional rights for foreign terrorism suspects. In 2007, Romney refused to rule out use of waterboarding torture to interrogate terrorist suspects. Despite the fact the war crimes tribunal executed Japanese soldiers for waterboarding following the ending of WWII, Mitt Romney in 2011, said he does not consider waterboarding to be torture. The fact that the United States itself strongly supported all of the Geneva Convention laws prior to the Bush administration, Mitt Romney ignores the fact that the use of torture by the Bush administration dishonored and disgraced our country. Evidently, Mitt Romney would do the same by ignoring both national and international laws that forbid it.

IMMIGRATION

OBAMA: Issued directive in June that immigrants brought illegally to the United States as children be exempted from deportation and granted work permits if they apply. He took the temporary step after failing to deliver on promised immigration overhaul, with the defeat of legislation that would have created a path to citizenship for young illegal immigrants enrolled in college or enlisted in the armed forces. Says he is still committed to it. Government has deported a record number of illegal immigrants under Obama.

ROMNEY: Favors U.S.-Mexico border fence and opposes education benefits to illegal immigrants. He opposes offering legal status to illegal immigrants who attend college, but would do so for those who serve in the armed forces. Establish an immigration-status verification system for employers and punish them if they hire non-citizens who do not prove their legal status. He would end immigration caps for spouses and minor children of legal immigrants.

GUNS

OBAMA: Has not pushed for stricter gun laws as president. Signed laws letting people carry concealed weapons in national parks and in checked bags on Amtrak trains. Favors “robust steps, within existing law” to address gun issues, White House says. He voices support for renewed ban on assault-type weapons but has not tried to get that done. He previously backed stronger gun controls.

ROMNEY: Opposes stricter gun control laws. He suggested after the shooting in a Colorado theater that he favors tougher enforcement of existing gun laws. As Massachusetts governor, he vowed in 2002 to protect the state’s “tough gun laws,” and in 2004 signed a Massachusetts ban on assault weapons.

FOREIGN POLICY

OBAMA: Opposes near-term military strike on Iran but holds that option open if it proves the only way to stop Iran from getting nuclear weapons. He declined to repeat the Libya air power commitment for Syrian opposition. Instead Obama seeks international pressure against the Syrian government. Chastised Israel for continuing to build housing settlements in disputed areas and pressed both sides to begin a new round of peace talks based on the land borders established after the 1967 Arab-Israeli conflict. He signed into law to expand military and civilian cooperation with Israel. Sought penalties against China for unfair trade but opposes branding China a currency manipulator.

ROMNEY: Appears to present a clearer U.S. military threat to Iran and has spoken in more permissive terms about Israel’s right to act against Iran’s nuclear facilities, without explicitly approving of such a step. “Of course you take military action” if sanctions and internal opposition fail to dissuade Tehran from making a nuclear weapon, he has said. Has spoken in favor of covert action by the U.S. and regional allies in Syria but “the right course is not military” intervention by the U.S. Associates himself more closely with hardline Israeli Prime Minister Benjamin Netanyahu, pledges more military assistance to Israel and agreed with Israel’s position that Jerusalem is the capital, disregarding the Palestinians’ claim to the eastern sector. Branded Russia the “No. 1 geopolitical foe” of the U.S. and threatened to label China a currency manipulator in a move that could lead to broad trade sanctions.

DEBT

OBAMA: Fourth-straight year of trillion-dollar deficits is projected. He won approval to raise debt limit to avoid default. He calls for tackling the debt with a mix of spending cuts and revenue increases. Central to Obama’s plan is to let Bush-era tax cuts expire for couples making more than $250,000.

ROMNEY: Defended 2008 bailout of financial institutions as a necessary step to avoid the system’s collapse, but opposed the auto bailout. He would cap federal spending at 20 percent of gross domestic product by end of his first term, down from 23.5 percent now, with largely unspecified spending cuts. He favors a constitutional balanced budget amendment.

ECONOMY

OBAMA: Term marked by high unemployment, a deep recession that began in previous administration and has created a sustained gradual recovery. Responded to recession with a roughly $800 billion stimulus plan. Continued implementation of Wall Street and auto industry bailouts begun under George W. Bush. Proposes tax breaks for U.S. manufacturers producing domestically or repatriating jobs from abroad, and tax penalties for U.S. companies outsourcing jobs.

ROMNEY: He advocates lower taxes, less regulation, balanced budget, more trade deals to spur growth. He would replace jobless benefits with unemployment savings accounts. He proposes repeal of the law toughening financial-industry regulations after the meltdown in that sector, and the law tightening accounting regulations in response to corporate scandals.

EDUCATION

OBAMA: Has approved waivers freeing states from the most onerous requirements of the Bush-era No Child Left Behind law. “Race to the Top” competition has rewarded winning states with billions of dollars for pursuing education policies Obama supports.

ROMNEY: Supported the federal accountability standards of No Child Left Behind law. He has said that student testing, charter-school incentives and teacher evaluation standards of Obama’s “Race to the Top” competition “make sense” although the federal government should have less control of education.

ENERGY & ENVIRONMENT

 OBAMA: He ordered temporary moratorium on deep-water drilling after the massive BP oil spill in the Gulf of Mexico but has pushed for more oil and gas drilling overall. He achieved historic increases in fuel economy standards that will save money at the pump while raising the cost of new vehicles.

He achieved first-ever regulations on heat-trapping gases blamed for global warming and on toxic mercury pollution from power plants. Spent heavily on green energy and has embraced nuclear power as a clean source. Failed to persuade a Democratic Congress to pass limits he promised on carbon emissions.

ROMNEY: He supports opening the Atlantic and Pacific outer continental shelves to drilling, as well as Western lands, the Arctic National Wildlife Refuge and offshore Alaska.

Wants to reduce obstacles to coal, natural gas and nuclear energy development, and accelerate drilling permits in areas where exploration has already been approved for developers with good safety records. Says green power has yet to become viable and the causes of climate change are unknown.

GAY RIGHTS

 OBAMA: Supports legal recognition of same-sex marriage, a matter decided by states. He opposed that recognition in his 2008 presidential campaign, and in 2004 Senate campaign, while supporting the extension of legal rights and benefits to same-sex couples in civil unions. He achieved repeal of the military ban on openly gay members. He has not achieved repeal of the Defense of Marriage Act, which denies federal recognition of same-sex marriages and affirms the right of states to refuse to recognize such marriages. His administration has ceased defending the law in court but it remains on the books.

ROMNEY: Opposes legal recognition of same-sex marriage and says it should be banned with a constitutional amendment, not left to states. “Marriage is not an activity that goes on within the walls of a state.” He also opposes civil unions “if they are identical to marriage other than by name,” but says states should be left to decide what rights and benefits should be allowed under those unions. Says certain domestic partnership benefits —largely unspecified — as well as hospital visitation rights are appropriate but “others are not.” Says he would not seek to restore the ban on openly gay military members.

HEALTH CARE

 OBAMA: Achieved landmark overhaul putting U.S. on path to universal coverage now that Supreme Court has upheld the law’s mandate for almost everyone to obtain insurance.

Under the law, insurers will be banned from denying coverage to people with pre-existing illness, tax credits will subsidize premiums, people without work-based insurance will have access to new markets, small business gets help for offering insurance and Medicaid will expand.

ROMNEY: Promises to work for repeal of the law modeled largely after his universal health care achievement in Massachusetts because he says states, not Washington, should drive policy on the uninsured.

Proposes to guarantee that people who are “continuously covered” for a certain period be protected against losing insurance if they get sick, leave their job and need another policy. Would expand individual tax-advantaged medical savings accounts and let savings be used for insurance premiums as well as personal medical costs.

SOCIAL SECURITY

OBAMA: Has not proposed a comprehensive plan to address Social Security’s long-term financial problems. In 2011, he proposed a new measure of inflation that would reduce annual increases in Social Security benefits. The proposal would reduce the long-term financing shortfall by about 25 percent, according to the Social Security actuaries.

ROMNEY: Protect the status quo for people 55 and over but, for the next generation of retirees, raise the retirement age for full benefits by one or two years and reduce inflation increases in benefits for wealthier recipients.

TAXES

 OBAMA: He wants to raise taxes on the wealthy and ensure they pay 30 percent of their income at minimum. He supports extending Bush-era tax cuts for everyone making under $200,000, or $250,000 for couples. But in 2010, agreed to a two-year extension of the lower rates for all.

He wants to let the top two tax rates go back up 3 to 4 percentage points to 39.6 percent and 36 percent, and raise rates on capital gains and dividends for the wealthy. Health care law provides for tax on highest-value health insurance plans. Together with Congress, he built a first-term record of significant tax cuts, some temporary.

ROMNEY: He would keep Bush-era tax cuts for all incomes and drop all tax rates further, by 20 percent, bringing the top rate, for example, down to 28 percent from 35 percent and the lowest rate to 8 percent instead of 10 percent. Curtail deductions, credits and exemptions for the wealthiest.

He would end Alternative Minimum Tax for individuals, eliminate capital gains tax for families making below $200,000 and cut corporate tax to 25 percent from 35 percent. Does not specify which tax breaks or programs he would curtail to help cover costs.

  

Conclusions

Mitt Romney as a Choice in 2012:

And all our yesterdays have lighted fools
the way to dusty death. Out, out, brief candle!
Life’s but a walking shadow, a poor player
that struts and frets his hour upon the stage
and then is heard no more: it is a tale
told by an idiot, full of sound and fury,
Signifying nothing.

Shakespear’s MacBeth

 

This fall I’m voting to re-elect President Barack Obama to a second term as our president. While Mitt Romney appears to be a good and decent man, he does not have the experience, attitudes, or mental acuity to convince me he is more qualified to be the President of the United States.

I don’t like President Obama’s 2011 measure to eliminate inflationary increases for Social Secuirty recipients, and I do like Mitt Romney’s plan to eliminate Capital Gains taxes on those making $200,000 or less. I also don’t think the President was aggressive enough on banning assault rifles, while Romney succeeded in getting assualt rifles banned in his state of Massachusetts.

That’s it folks. The President, on balance, is still the right choice this fall because of all his tremendous accomplishments while in office.

The Accomplishments of President Barack Obama

By some accounts (Florida Professor of American Studies Robert P. Watson of Lynn University) President Obama’s accomplishments now total 244 since he took office. Here are just a few of the significant accomplishments of the president during his first term in the White House.

  • Overhauled the food safety system;
  • Approved the Lily Ledbetter ”Equal Pay” for women rule;
  • Ended “Don’t Ask/Don’t Tell” discrimination in the military;
  • Passed the Hate Crimes bill in Congress;
  • Saved the auto industry from bankruptcy which included General Motors and Chrysler;
  • Appointed two progressive women to the U.S. Supreme Court including the first Latina;
  • Pushed through the Affordable Health Care Act, outlawing denial of coverage for pre-existing conditions, extending until age 26 health care coverage of children under parent’s plans, steps toward “Medicare for All;”
  • Expanded the State Children’s Health Insurance Program (SCHIP) health care for children. This helped to cover 4 million more lower-income children;
  • Pushed through a $789 Billion economic stimulus bill that saved or created 3 million jobs and began task of repairing the nation’s infrastructure;
  • Overhauled the credit card industry, making it more consumer friendly;
  • Established the Consumer Financial Protection Bureau and used a recess appointment to keep it on track in the face of  GOP attempts to derail it;
  • Also outmaneuvered GOP in naming two members of the National Labor Relations Board blocked by the Republicans in their attempt to shut down the NLRB;
  • Won two extensions of the debt ceiling and extensions of unemployment compensation in the face of Republican threats to shut down the U.S. government;
  • Pulled troops out of Iraq and began drawing down of troops in Afghanistan;
  • Signed an omnibus public lands bill that allowed for 2 million more acres to be declared wilderness. It added 1,000 miles designated for scenic rivers, and added lands for national trails;
  • Signed into law the Family Smoking Prevention and Tobacco Control Act;
  • Signed into law the Edward M. Kennedy Serve America Act, which expanded the scope of AmeriCorps;
  • Signed an executive order easing restrictions on the use of federal money for embryonic stem cell research;
  • Created greater transparency in government by creation of White House visitor logs, a ban on lobbyist gifts, or allowing lobbyists from serving on advisory boards, and restrictions on the hiring of lobbyists.
  • Obama persuaded BP to put up $20 billion as a guarantee that the Gulf Coast residents whose livelihoods were damaged or destroyed by the spill would be compensated.
  • In 2011 President Barack Obama gave the order for Navy Seals commandos to take out Osama Bin Laden, the architect of 911. They were successful and Osama Bin Laden is dead.
  • President Barack Obama achieved, as of October 2012, the lowest unemployment rate (7.8%) since he took office. Remember folks, the unemployment rate during the recession, which the President inherited, reached a peak of (10.0%) on October, 2009. C’mon Man, give credit where credit is due! We’re now in an expansionary economic cycle. Guess what economic cycle comes after the expansinary one? That’s right genius—you guessed it—PROSPERITY!

At the value judgment level, I simply prefer the values of the democratic party than I do those of the Republican party. It seems to the objective observer that Republicans are always playing “catch-up” to the rest of society. Problem is “the Party of No” never really seems to catch-up. In addition,“Trickle Down (Supply Side Economics)” just doesn’t work because tax cuts for high income individuals, corporations, and large businesses don’t necessarily lead to economic expansion thereby creating jobs and lowering unemployment.

Why? Because there are other choices for using tax cut windfalls besides reinvestment in one’s business that might lead to job creation. One can simply save the money for a reserve or a rainy day. Or, one can invest their tax windfall in the stock market or other investments. Or, one can spend the tax windfall on hefty bonuses for executives, and salary increases for managers or staff, or one can actually plow the tax windfall back into the business.

Point is—there are many choices for what to do with a tax cut windfall. Current Republican rhetoric would have you believe that tax cuts always lead to job creation and lowering unemployment. It can, but what Republicans try to hide from the public and the voter is that, in reality, there are many other choices for spending a tax cut windfall, not just job creation.

For all these reasons around economics and taxes, as well as the President’ many other significant achievements while in office, I’m giving my support and vote in the coming election to the President of the United States—Barack Obama.

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ELECTION YEAR POLITICS

AND THE ECONOMY

 [Part I]

 

By far the most important question the voters must grapple with this coming fall presidential election is: Who best can lead the country the next four years toward greater prosperity and less unemployment? To answer that question will require that you put forth your best effort to become an informed, knowledgeable voter. I’m here to help you.

To help you in this process, I am initiating a SIX part series on Election Year Politics and the Economy. At the top just let me say that the only general tools the government has to influence the economy is known as Fiscal Policy and Monetary Policy. Generally, the President has discretionary influence over fiscal policy, and the Federal Reserve, an independent government agency, sets monetary policy.

Part I of this series will provide a description of the context for the coming fall presidential election, and provide knowledge on a very unique theory—The Presidential Election Cycle Theory.

Part II will provide an explanation of economic cycles and how they work, and provide explanations on the American economy and fiscal policy.

Part III will provide an explanation of how President Obama views fiscal policy.

Part IV will describe the American economy and monetary policy.

Part V will describe the accomplishments of President Obama during his first term in office.

Part VI will describe the accomplishments of the Republican Party.

This Blog will end with a summary that brings it all together, and I will tender a suggestion as to who I think should become President of the United States in November, 2012.

 

Context of the Fall Presidential Election

This coming presidential election in November 2012 will be one of the most provocative in recent political history. Why? Because our most critical domestic issue this coming election is the economy, something that impacts everyone’s pocketbook. And, since the economy impacts everyone’s pocketbook it is deemed the most important issue facing the American people.

Unfortunately, all of the political rhetoric, distortions, name-calling, and bombast on television or radio, tend to obscure the economic issue and all facts attendant to it. This leaves the American voting public in a quandary. Does one vote to re-elect the President or not?

Politicians on both sides of the aisle are very skilled at creating non-factual arguments because they don’t necessarily want clarity in addressing the economic issue or any other. Since survival is the name of the game in Washington, all politicians want to do is speak about values and generalities in order to promote the exclusivity of one’s own political party, personal survival, and ideology.

As we all know, once someone has been elected they tend to do what they want anyway and have a short memory for promises made. Of all our previous presidents I think it is fair to point out that President Obama has made a good faith effort to achieve what he set out to do when he made campaign promises while running for the presidency in 2008. One could argue that Barrack Obama, along with Thomas Jefferson, Woodrow Wilson, and Richard Nixon were the smartest most highly intelligent Presidents ever to occupy the White House [As an aside, John Adams was no slouch either where intelligence is concerned ]. However, being really smart does not necessarily mean one is the most effective in making things happen. You want bright people in the White House but you also want them to be effective and honestly meet the needs of the general electorate.

After reading Part’s V and VI you will have to decide whether the accomplishments of President Obama measure up (or not) to those of the Republicans during his term in office. I recommend you give strong weight in your voting decision based on actual accomplishments, not expressed or implied values, or campaign rhetoric.

It is obvious every election cycle that the public (whatever the issues are) is pretty much on its own in the whole process of fact-finding. Ever sit on a jury? If you have you know the jury’s responsibility is to do its own fact-finding, and to assess the preponderance of the evidence (or beyond a reasonable doubt) in a particular type of case. In a sense political campaigns are like jury trials. Everybody tries to make their case and then the voters retire to render their verdict. Such a verdict will unquestionably be given this coming fall presidential election.

Where this coming election is concerned, it means it is up to you to make an informed decision and take responsibility for that voting decision by becoming more knowledgeable as to how the economy really works, and to obtain those elusive facts politicians would rather dodge in a campaign.

Let me say up front that this can be a daunting task before you. Even economic experts and pundits disagree on this subject all the time. This added state of disagreement, even among the experts, pretty much confounds a voter’s ability to make a sound decision as to who should lead the charge the next four years to achieve greater prosperity and near full employment. In such a situation like voter obscuration or expert disagreements, the average voter can only scratch his head in utter confusion.

If you wish to make your voting decision this fall based on criteria like the candidate has a nice personality, or is good-looking, or you just want change come hell or high water, than don’t bother reading this Blog. If however, you want to be a good citizen and make the most intelligent, highly informed, data-driven decision you possibly can—then I recommend you read on.

Eight Areas of Importance

In our search to figure out who our next president should be come November, 2012—it is essential that you acquire an understanding of how the economy does in fact work, and its connection to politics, whatever the real level of influence politics can exert on the economy. To do this—one needs to be aware of eight areas of knowledge. And, this is the knowledge you will need: 

 

  • Context of the Fall Presidential Election
  • The Presidential Election Cycle Theory
  • Economic Cycles and How They Work
  • The American Economy and Fiscal Policy
  • How the President Views Fiscal Policy
  • The American Economy and Monetary Policy
  • The Accomplishments of President Barack Obama
  • The Accomplishments of the Republican Party

If you can acquire (and remember) the details from the above eight areas, you will be on solid ground to be able to cast that all-important vote this coming fall. Good luck in your efforts!

 

In my humble opinion, the collective knowledge gained in this crash course should sufficiently help when you cast your vote this fall. All of this knowledge, of course, gives you the ammunition. But, will such knowledge extricate you from your own biases? Probably not, because the very values that make you who you are—are exactly the same values politicians want to exploit so they appeal to the largest number of voters.

Values serve as a kind of ship’s keel as you make your way through choppy and uncertain economic waters. While values will ultimately persuade you in critical decision-making as to how to vote this fall, knowledge and facts should serve to set a proper guiding course. That is, knowledge and facts should tell you whether the country is headed in the right direction. What is the right direction for the country? Well, here is a clue to that question.

Economic cycles are predictable as to telling us whether the GDP will be expanding or contracting. The difficulty lies in knowing precisely when we as a nation are beginning to climb up that expansionary curve so often associated with prosperity and higher than normal employment levels. But there are socially relevant tradeoffs that occur in every type of cycle. It does appear that the economy, at this time, has turned a positive corner. But beware. One of the tradeoffs to occur along with a positive growing economy is the specter of everyone’s nemesis or enemy—known as inflation.

A Values Framework

Human emotions, intellect, and values play major roles in all types of human behavior—including decision-making. Collectively, they are all explanations for human behavior. Sociologists might argue that the order of importance of these explanations, where making tough political decisions are concerned, is determined first and foremost by values.

For the sake of argument let’s say the sociologists are right. If they are right here is one scenario that might explain voter behavior in an election. The goal politicians have is to inspire as many voters as they can into believing that their values are the same as the values of the candidate. They do this by infusing their message to the voter with a sufficient number of lofty “value-oriented buzz words.” By promoting values rather than facts, data, or pragmatic solutions (although they often speak of solutions in obscure generalities) they hope to corral each voter and enlist their loyalty through identification with expressed values.

Politicians are not only bright—they’ve also got your number. They know first hand that most voters hold certain values that are reinforced on an emotional level, not on an intellectual level. All I can say is—don’t let them run rough shod over you. Surprise them this time—go armed with factual knowledge—and make it a regular part of your thinking process. Values are important—no doubt about it. But don’t ever give a back seat to intelligent thinking supported by facts and knowledge. What good are values if you elect a “Bozo the Clown” to the White House?

 

The Presidential Election Cycle Theory

 

Another interesting way of looking at the economy and business cycles is based on knowing their relationship to political decisions. The partisan business cycle suggests that cycles result from the successive elections of administrations with different policy regimes. Regime A adopts expansionary policies, resulting in growth and inflation, but is voted out of office when inflation becomes unacceptably high. The replacement, Regime B, adopts contractionary policies reducing inflation and growth, and the downwards swing of the cycle. It is voted out of office when unemployment is too high, being replaced by Party A.

The political business cycle is an alternative theory stating that when an administration of any hue is elected, it initially adopts a contractionary policy to reduce inflation and gain a reputation for economic competence. It then adopts an expansionary policy in the lead up to the next election, hoping to achieve simultaneously low inflation and unemployment on election day. This did not occur with the George Walker Bush administration causing President Obama to inherit a severe contractionary recession when he first took office. This, in theory, was contrary to what the election cycle theory would have predicted. Later in this section the caveats to this theory will be described.

The political business cycle theory is strongly linked to the name of Michael Kaleck who argued that no democratic government under capitalism would allow a recession to be created by political decisions. Persistent full employment would mean increasing workers’ bargaining power to raise wages and to avoid doing unpaid labor, potentially hurting profitability. Kaleck did not see this theory as applying under fascism, which would use direct force to destroy labor’s power.

In recent years, proponents of the “electoral business cycle” theory have argued that incumbent politicians encourage prosperity before elections in order to ensure re-election—and make the citizens pay for it with recessions afterwards.

Policy with the Presidential Election Cycle Theory

The active pursuit of national full employment through interventionist government policies is associated with Keynesian economics and marked the postwar agenda of many Western nations, until the stagflation of the 1970s.

Australia

Australia was the first country in the world where full employment in a free society was made official policy by its government. On May 30, 1945, The Australian Labor Party Prime Minister John Curtin and his Employment Minister John Detman proposed a white paper in the Australian House of Representatives titled Full Employment in Australia, the first time any government apart from totalitarian regimes had unequivocally committed itself to providing work for any person who was willing and able to work. Conditions of full employment lasted in Australia from 1941 to 1975. This had been preceded by the Harvester Judgment (1907), establishing the basic wage (a living wage); while this earlier case was overturned, it remained influential.

United States

The United States is, as a statutory matter, committed to full employment (defined as 3% unemployment for persons 20 and older, and 4% for persons aged 16 and over). The government is empowered to effect this goal, and a job is a right. The relevant legislation is the Employment Act (1946), initially “Full Employment Act”, later amended in the Full Employment and balanced Growth Act (1978).

The 1946 act was passed in the aftermath of World War II, when it was feared that demobilization would result in a depression, as it had following World War I in the Depression of 1920-21, while the 1978 act was passed following the 1973-75 recession and in the midst of continuing high inflation.

The law states that full employment is one of four economic goals, in concert with growth in production, price stability, and balance of trade and budget, and that the US shall rely primarily on private enterprise to achieve these goals. Specifically, the act once again is committed to an unemployment rate of no more than 3% for persons aged 20 or over and not more than 4% for persons aged 16 or over (from 1983 onwards), and the Act expressly allows (but does not require) the government to create a “reservoir of public employment” to effect this level of employment. These jobs are required to be in the lower ranges of skill and pay so as to not draw the workforce away from the private sector.

However, since the passage of this act in 1978 (for 33 years now during several deomocrat and republican administrations I might point out), the US has, as of 2011, never achieved this level of employment, nor has such a reservoir of public employment been created.

Job Guarantee

Some, particularly Post-Keynesian economists have suggested ensuring full employment via a job guarantee program. This would mean that those who are unable to find work in the private sector would be otherwise employed by the government. Such employed public sector workers would fulfill the same function as the unemployed do when they help to control inflation, but without the human costs of unemployment.

Parenthetically, I bet many of you reading my Blog didn’t realize that having a large pool of unemployed people actually helps keep prices lower or at least stable. Sad but true. Absolute full employment, while being desirable in a social context, or as a goal of society, nevertheless fuels higher prices. Full employment creates greater demand for additional goods and services. When demand increases what do prices do? You guesses it! Prices increase in order to help supply keep pace with demand.

It may be that one of the factors right now creating higher gas prices, is a rebounding of our economy. Democrats probably hate this economic fact, and republicans would prefer to hide this economic fact. At the moment an added feature of the 2012 presidential campaign is that the Republicans blame the Democrats for higher gas prices even though it’s due to the success of the Obama administration, not its failure. The economy and the job creation plans of the president are now finally going into second gear. Said another way, higher gas prices may reflect the fact that our economy is coming back from a severe recession and is now improving every day. Conspiracy theorists would argue for other explanations having to do with oil companies, the stock market and special interests. However, oil companies, the stock market and special interests have been with us during times of high and low prices for gasoline. I don’t have all the answers here but my guess is that the best explanation is still an economic one. However, having said that, it is clear that global factors like where we obtain our oil does affect pricing. Nevertheless, regardless of what causes interruptions in the accesibility of oil (thus gasoline prices later on) supply and demand as economic forces still dominate what happens at the pump.

The Stock Market and the White House

Do you think who you vote for president will in any way affect the economy? According to the presidential election cycle theory, it may not make a difference. History suggests that the stock market and the four-year presidential election cycle follow strong, predictable patterns.

So, whether you’re voting Democrat, Republican or some third party candidate, find out what these patterns can tell you about the stock market – and perhaps even the next presidential race. One critical question is—is it better for the stock market to have a Democrat president in the White House or a Republican?

The presidential election cycle theory, which was developed by Yale Hirsch, is based on historical observations that the stock market follows, on average, a four-year pattern that corresponds to the four-year election cycle. The theory suggests that on average, the stock market has performed in the following manner in each of the four years a president is in office:

Year 1: The Post-Election Year


The first year of a presidency is characterized by relatively weak performance in the stock market. Of the four years in a presidential cycle, the first-year performance of the stock market, on average, is the worst.

Year 2: The Midterm Election Year
The second year, although better than the first, is also is noted for below-average performance. Bear market bottoms occur in the second year more often than in any other year. The Stock Traders Almanac (2005), by Jeffrey A. and Yale Hirsch, note that “wars, recessions and bear markets tend to start or occur in the first half of the term.”

Year 3: The Pre-Presidential Election Year
The third year, or the year just before the election year, is the strongest on average of the four years.

Year 4: The Election Year
In the fourth year of the presidential term and the election year, the stock market’s performance tends to be above average (If you’ll notice it’s now nearly back to its all time highs).

Stock Market Return by U.S Presidential Term Year

1948-2008

 

Year Average Annual Return
1 7.41%
2 10.21%
3 22.34%
4 9.79%

 

Source: S&P 500 Total Return Index

Although the numbers will change somewhat depending on the exact time frame used, the basic pattern has persisted – a weak first half and a strong second half of the presidential term.

 

Statistical Confidence and Conclusions Drawn
One of the problems with drawing conclusions from the presidential election cycle is that the theory is based on relatively few observations. Since 1900, there have been only 27 presidential cycles up to 2008. Many of the studies done on the theory are based on even fewer observations.

For example, since 1948 there have been only 15 different terms – when it comes to statistics, this is a very small sample, which makes it difficult to draw accurate conclusions, even without considering the inherent limitations of correlations in the first place (like attributing causation to spurious correlations).

As such, the theory could be attributed to data mining. In other words, if people are constantly looking at enough data for specific patterns, patterns can emerge, even if there is no real significance to them.

Other Spurious Correlations

An example of this is the Super Bowl Indicator which has shown to be a reasonably good measure in forecasting the market. According to this indicator, when an “original” team from the National Football League (NFL) wins the Super Bowl, the Dow Jones Industrial Average (DJIA) will rise in the following year. However, when a team from the American Football League (AFL) wins, the market is predicted to fall. By some estimates, the Super Bowl indicator has predicted the DJIA trend correctly in 35 out of 44 years.

The problem, of course, is twofold with these kinds of indicators. First, there is no logical theory to explain cause and effect. In other words, why would a sporting event have any relationship to the stock market? That is, there is no logical connection between the two. It’s a lot like attributing the cause of earthly or human events to invisible unquantifiable supernaturalism where the cause is alleged to be a sky God that judges you. There is simply no proof or measurement of either God, or His alleged effect on earthly or human events.

Second, the stock market follows cycles where many of the variables interact with each other, i.e., where every variable affects every other variable to some degree and vice-versa. Even the most sophisticated statistical models cannot show cause and effect, only mathematical theory-based correlations. I could take time to explain to you what a “convergence of the evidence” means statistically, but that is far and above what this Blog is all about. Suffice it to say what scientific thinking and analysis look for is agreement across many studies producing a convergence of the evidence. While economic principles are on solid ground, not every study suggesting cause and effect between variables can control external variables outside one’s statistical model. For now, let’s just continue with our crash course.

Academic Studies

Although the Super Bowl indicator is a statistical oddity, the presidential election cycle theory appears to have some basis to it. It has been the subject of many academic studies that have attempted to prove or disprove it and to understand the reasons behind it. Most studies support the evidence of a significant relationship between the presidential cycle and the stock market. Since political actions can influence the stock market and such a theory has received support from the data that has been collected and analyzed.

A study published by the National University of Singapore in January 2007 entitled “Mapping the Presidential Election Cycle in the U.S. Stock Market” by Wing-Keung Wong and Michael McAleer found that, “there were statistically significant presidential election cycles in the U.S. stock market during the greater part of the last four decades … stock prices decreased by a significant amount in the second year and then increased by a statistically significant amount in the third year of the presidential election cycle.”

The relationship between the presidential election cycle and the stock market makes sense – the president has considerable (however, it is debatable) impact on the economy through his policies and actions. For example, many people credit the tax cuts that President George W. Bush championed in 2003 for boosting economic activity and improving stock market performance.

Can Stock Markets Pick Presidents?

Most studies on the presidential election cycle look at the relationship the presidential cycle has on stock prices. However, rather than the election cycle predicting a trend in stock prices, maybe the trend in the stock market can predict who will be elected president.

In a study done by John Nofsinger, “The Stock Market and Political Cycles,” which was published in The Journal of Socio-Economics in 2007, Nofsinger proposed that the stock market can predict which candidate will be elected.

He analyzed the relationship between the social mood of the country and the presidential election and concluded that when the country is optimistic about the future, the stock market tends to be high and voters are more likely to vote for those in power. When the social mood is pessimistic, the market is low and people tend to vote out the incumbent and put a new party in power.

According to Nofsinger’s research, the stock market returns in the three years prior to the election is useful in predicting whether the incumbent party candidate will be elected or whether there will be a new party in power at the White House.

Republican versus Democrat Presidents

Although Republicans are generally considered to be more pro business than democrats, studies suggest that when a Democratic president is in the White House, it may be generally better for the stock market.

A research study called “The Presidential Puzzle: Political Cycles and the Stock Market” (2003) done by Pedro Santa Clara and Rossen Valkanof of the University of California, Los Angeles, demonstrated that the stock market performs better under Democratic presidents. Using data from 1927 to 2003, they found that the excess returns have been about 2% for Republican presidents, but 11% for Democratic presidents. Among small cap stocks, the difference is even greater. The bottom 10% of stocks as measured by market cap showed a difference of excess returns of about 22% for Democrats compared to when a Republican held the presidential office.

Furthermore, on average, the stock market volatility during a Republican administration was more pronounced than that during a Democratic administration.

Market Bottoms and the Presidential Cycle
Stock market cycles are well documented, with alternating bear and bull markets. When those cycles are superimposed over the election cycle, it is found that market bottoms tend to occur in the first term of a presidency.

In his study “Presidential Election and Stock Market Cycles,” Marshall Nickels of Pepperdine University analyzed stock market bottoms in relation to the presidential cycle. In the period from 1942 to 2006, there were 16 presidential terms and 16 market lows corresponding to those terms.

Three of the lows occurred in the first year of the presidential term, 12 in the second year, one in the third year, and none in the fourth. Of the 16 bottoms, 15 occurred in the first half of the term and only one in the second half of the term.

Rationale for the Presidential Election Cycle

Politicians are very astute when it comes to getting re-elected – if there is a relationship between voter approval and the state of the economy, you can bet they will capitalize on it. One of the assumptions that explain presidential elections cycle theory is the rather cynical view that many of the policies that come out of the White House and elected government officials in general are done with the primary goal of getting elected and re-elected. The impact on the economy is a secondary consideration. Policies are motivated to keep the existing political party and its representatives in power.

In the first term after the election, presidents tend to focus on campaign promises and push through tougher legislation related to tax increases, government spending cuts etc. They push for policies that are more restrictive or disruptive and that might slow down the economy. By doing the unpopular things early, they hope that the electorate will forget about them by the time the next election rolls around.

In the second year of the term, the president may use fiscal stimulus, such as tax cuts or increases in government spending. The belief is that the people will feel better and therefore be more likely to elect that president or his party again. In the time leading up to an election, the pre-election campaign promises often create a mood of optimism among voter and investors alike.

In Part II ahead of this Blog I will explain how economic cycles work as well as the American economy and fiscal policy.

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