The Texas 18th District Blog

48 out of 50 States Have Lost Jobs Since Democrats’ Stimulus Passed

Friday, March 12th, 2010

Committee On Ways & Means Republicans Ranking Member, Dave Camp

Friday, March 12, 2010

While the White House claims their stimulus bill “has already created or saved up to 2 million jobs,” the table below compares the White House’s original projections of state-by-state job creation with the actual change in state payroll employment through January 2010, using the latest data from the U.S. Department of Labor. Only North Dakota, Alaska and the District of Columbia have seen net job creation since stimulus, and even those levels fall far short of what the White House forecast.

To see how the Democrats’ stimulus has failed your state, see the table below.

Tags: Barack Obama, Congress, economy, Election 2010, government control, Houston Voters, unemployment
Posted in National Issues, The U.S. Government | No Comments »

Bigger Budget = Smaller Economy

Sunday, March 7th, 2010

Forbes.com

Steve Forbes

The late Nobel prize-winning economist Milton Friedman once famously observed that he would prefer a federal government budget of $1 trillion (this was when a trillion bucks was real money) with a big deficit to a federal budget of $2 trillion that was balanced. His obvious point was that the bigger Washington is, the more of a burden it puts on the economy, whether it finances its spending via taxation, borrowing or printing money. So it’s not President Obama’s mind-numbing, from-here-to-eternity deficits that we should be worrying about but the increasing deadweight put on the rest of us by Washington’s burgeoning budget bloat.

Senate Republicans were right to put the kibosh on the formation of a formal bipartisan deficit-fighting commission. Those things always end up increasing taxes while doing little to reduce spending. America’s heavy tax burden is ominous enough–and it’s going to get worse once all the 2003 tax cuts expire at year’s end. The Administration has no conception of the damage that high tax rates wreak on sustainable growth and innovation, even when they allegedly apply to only the “rich.”

We can see what big government has done to western Europe. It has stifled entrepreneurship and innovation, which are crucial for growth, and this is why French President Nicolas Sarkozy ruefully observed years ago that one of the largest French-speaking cities in the world is now London. Prior to this government-created economic crisis, Europe’s unemployment rates, especially among young people, were significantly higher than ours.

Government is simply incapable of investing as astutely and flexibly as private investors. Take, for example, railways, which President Obama highlighted recently when he took a trip to Tampa, Florida. The U.S. government has poured tens of billions of dollars into these kinds of projects around the country, and almost all have been wasteful financial disasters that have attracted only a fraction of their anticipated ridership.

One of the biggest economic myths since the Great Depression is that governments can ameliorate or counteract the ebbs and flows of free markets. Government spending has never worked as a trigger for sustained and vibrant economic growth. Ever. Scholarship has demonstrated that the New Deal perpetuated the Depression rather than cured it. On the eve of the Depression the U.S. had the lowest unemployment rate among developed nations. But a decade later, despite six years of FDR’s New Deal, our unemployment rate was one of the highest among developed economies. Japan’s serial stimulus programs over the past two decades have repeatedly underscored this truth.

The more the government takes as a proportion of the economy, the worse equity markets do and the higher the unemployment rate. The less the government takes from the real economy, the better equities perform and the lower the unemployment rate.

The best stimulus would be to implement personal and business tax rate cuts, a strong and stable dollar and a government nonaggression pact with the private sector–that is, no more attempts at nationalizing health care, gratuitously increasing energy taxes and forcing businesses to unionize.

No Edifices Needed

What to do about Haiti in the aftermath of its horrific earthquake? The International Monetary Fund is proposing the idea of a Marshall Plan for this battered nation. Many government relief organizations and economists talk of the need for a temporary “development” authority that would, in effect, run Haiti for an indefinite period.

A Marshall Plan is a nonstarter. After World War II the U.S. pumped the equivalent of hundreds of billions in today’s dollars into war-shattered Europe, and the Continent came back to life. But Europe was an economic powerhouse before the war and had the cultural traditions and institutions to make a quick comeback possible. Haiti, sadly, has none of those.

To appreciate the daunting task facing Haiti, take a look at two annual publications: Doing Business, published by the World Bank, and Index of Economic Freedom, published by the Heritage Foundation and the Wall Street Journal.Doing Business surveys 183 economies, “investigating regulations that enhance business activity and those that constrain it.” The regulations surveyed affect everything from starting a business to getting credit to labor regulations to taxes to trade rules to licenses to enforcing contracts. The Heritage survey has ten criteria covering much the same ground, from trade to government spending to property rights to corruption.

It’s no surprise that with regard to these seemingly mundane but crucial factors, Haiti ranks miserably. The World Bank puts it, overall, at 151 out of 183 economies, the Heritage Foundation 141 out of 183 economies. The World Bank, for instance, found that Haiti is one of the toughest places in the world to establish a legal business. If you follow all the procedures and pay all the legal fees (putting aside all of the bribes), the amount comes to more than three times the country’s annual per capita income. In the Trading Across Borders category Doing Business states that Haiti requires at least ten documents to import an item (versus two in, say, France, which is hardly a bastion of laissez-faire capitalism) and eight documents to export something. As the Heritage Foundation puts it, “The overall freedom to conduct a business is severely impeded by Haiti’s burdensome regulatory environment. Corruption is perceived as rampant. Protection of investors and property is severely compromised by weak enforcement … and a dysfunctional and resource-poor legal system. Real property interests are handicapped by the absence of a comprehensive civil registry.”

Grandiose infrastructure projects will not suddenly transform this country into a Singapore or Switzerland. It will take painstaking attention to such critical areas as establishing a modern property rights system. A change that won’t happen, but should, would be to borrow a page from Panama and, in effect, make the U.S. dollar the local currency. Instituting a low-rate flat tax, which initially would affect only a handful of citizens, would also be a good move. Having the government respect investor rights would be enormously beneficial. In the late 1980s and early 1990s, when Haiti experienced one of those rare periods of nonturbulence, the country’s economy began to blossom. Foreign direct investment started to come in. Textile factories and other businesses were established, and better-paying jobs proliferated.

In a more benign environment Haiti would grow economically and begin to develop the habits and institutions necessary for sustained growth. After all, tens of thousands of Haitian immigrants to the U.S. have done very well. It’s not a lack of entrepreneurial energy that has plagued this nation but the lack of an environment allowing those energies to be channeled productively.

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Tags: Barack Obama, Congress, economy, Election 2010, government control, Houston Voters, unemployment
Posted in National Issues, The U.S. Government | No Comments »