2 years, 11 months ago
How bad have things gotten for President Obama?
So bad that even the slavish State Run Media are beginning to point out the obvious fibs and flaws in Obama’s September 8th speech to Congress.
The Associated Press notes here at least four instances of fibbing by Obama in the speech. The lede paragraph alone is something that we would not have seen even 10 months ago:
WASHINGTON (AP) — President Barack Obama’s promise Thursday that everything in his jobs plan will be paid for rests on highly iffy propositions.
It will only be paid for if a committee he can’t control does his bidding, if Congress puts that into law and if leaders in the future – the ones who will feel the fiscal pinch of his proposals – don’t roll it back.
The AP article points out that Obama’s claim that his new calls for stimulus spending will be fully paid for is unlikely at best given the reliance on a future Congress and president to come up with the money and/or cuts. Obama’s assertion that his proposals have all been supported by Republicans at one time or another is also a distortion that does not take into account the changed circumstances of the economy and the federal deficits, nor Republican opposition to these very proposals. The AP correctly notes that Obama’s claim that the new stimulus measures “will not add to the deficit” is patently untrue: since federal revenues are completely absorbed by defense and entitlement spending, any additional spending on stimulus can only come from borrowed (i.e. deficit) funds. Finally, the AP calls out Obama on his claim that the new stimulus will create immediate employment as several of the proposals, such as the “infrastructure bank,” will take months if not years to set up.
In addition, as we saw with Stimulus I, even Obama admitted that there were no “shovel ready jobs” as he expected. Repairs of roads, bridges, highway projects all take time to plan and implement and, given the contraction in the construction industry over the last, few years, it is quite possible that any infrastructure jobs that are ready to implement now will be given to the few, remaining companies that have managed to stay alive. And we can never discount the crony factor when huge amounts of federal dollars are being doled out. Much of that money will wind up in the pockets of political supporters rather than creating any new jobs.
But the Associated Press is not alone.
The New York Times and CNBC are pointing out the inherent weakness in Obama’s plan to jump start the economy. CNBC reprints an article from the NYT printed September 10, 2011 titled, “Employers Say Jobs Plan Won’t Lead to Hiring Spur.”
The dismal state of the economy is the main reason many companies are reluctant to hire workers, and few executives are saying that President Obama’s jobs plan — while welcomed — will change their minds any time soon.
That sentiment was echoed across numerous industries by executives in companies big and small on Friday, underscoring the challenge for the Obama administration as it tries to encourage hiring and perk up the moribund economy.
The plan failed to generate any optimism on Wall Street as the Standard & Poor’s 500-stock index and the Dow Jones industrial average each fell about 2.7 percent.
As President Obama faced an uphill battle in Congress to win support even for portions of the plan, many employers dismissed the notion that any particular tax break or incentive would be persuasive. Instead, they said they tended to hire more workers or expand when the economy improved.
This is such a fundamental concept of business that it amazes me that a president of the United States could not grasp it. As a small business owner myself, I can attest to the fact that no amount of payroll tax breaks or tax credits would induce me to hire an employee that I do not need. In a business that is functioning normally — i.e., not skewed by cronyism, subsidies or other factors that distort profit-loss considerations– hiring is driven by demand for products or services that cannot be met with current staffing. A tax break or credit, particularly one that is temporary, is not a reason to hire.
So this is the tectonic divide between the Obamas of the world and The Rest of Us. In Obama’s unshakeable faith in the Keynesian Religion, the only answer, always and forever, is stimulus. He simply cannot see that the biggest obstacle to hiring is the very government action to which he is irrevocably committed. For The Rest of Us, a government that is imposing a huge, yet-to-be understood healthcare mandate, spending us and the next 3 generations into debt oblivion, corrupting the natural order of free markets in competition for customers and innovation, and going out of its way to demonize the “rich,” punish them and redistribute wealth to the unproductive class of society is ample reason to hunker down, save up your cash (or convert to hard assets), hire no one you will have to be regulated for, and wait out the storm of insanity that is Washington, D.C. right now.
Allow me to suggest two actions the government could take that could produce dramatic effects on the economy: repealing Obamacare (or at least waiving its effects for all 50 states as suggested by Romney), and lifting most of the federal restrictions and bans on domestic energy production. On this second point, the economic impact of oil and gas production (to say nothing of coal and nuclear) is astounding: both Texas and North Dakota (North Dakota!) have seen huge increases in employment due to a booming oil and gas industry exploiting both old wells and new ones with the process of hydraulic fracturing.
And to show that this boom is not limited to what we think of as the typical oil and gas states like Texas, there is this article from The Dayton Daily News that sketches the outlines of just how vast the natural gas reserves in Ohio might be:
DAYTON — Ohio appears on the cusp of a 21st-century oil and gas boom that could net tens of thousands of new jobs and perhaps build a foundation for new industry, proponents say. The source is natural gas-rich shale rock beneath three-quarters of the state.
The Utica Shale, which geologists say has yet to be fully analyzed, extends westward across three-quarters of the state from Ohio’s eastern border, state estimates show. It also lies under New York, New Jersey, Pennsylvania, Maryland, West Virginia, Virginia, Kentucky, and Tennessee.
It could extend to Montgomery County, but drilling potential remains unknown. Chesapeake said it will increase drilling rigs in the Utica to 20 by the end of 2012 and 40 by 2014.
This year, the state opened up parks and other public land to drilling over opposition from environmentalists.
It might seem a stretch that Ohio could profit from a boom based on oil and gas, an industry with roots here that date to the 19th century. But a new boom appears possible if Pennsylvania’s recent experience with new drilling in another formation, the Marcellus Shale, is any guide. The Marcellus has a smaller footprint in Ohio than the Utica and lies beneath Ohio’s easternmost counties.
Pennsylvania is weathering an iffy economy well, with an unemployment rate of 7.8 percent. Its share of the Marcellus is helping. The Pennsylvania Department of Labor & Industry issued its estimate this month that natural-gas and crude oil extraction and related industries created 72,000 new hires from the fourth quarter of 2009 to the first quarter of 2011.
It’s too tricky to attribute all the hires to new drilling, said Tim McElhinny, an analyst with the department. But there are so many new hires that a portion must be due to the Marcellus. Those jobs include well drilling, engineering, trucking, highway and bridge building, testing, metal fabrication and new government hires.
The jump in employment in the core gas industries — extraction, drilling and pipeline work — is smaller but nevertheless doubled to 18,837 from the fourth quarter of 2007 to the fourth quarter of 2010.
For the immediate future, it looks like the eastern third of Ohio and the Marcellus Shale is where the action will occur. But longer term, besides offering job opportunities to out-of-work or underemployed residents, low-cost natural gas from the Utica could fuel industrial redevelopment in Ohio, propoponents say.
The U.S. Geological Survey in August updated its estimates for the Marcellus Shale region underlying New York, Pennsylvania and Ohio, saying it contains 84 trillion cubic feet of undiscovered, recoverable natural gas, vastly more than thought nearly a decade ago in large part because of new drilling and extraction technology. The last government assessment in 2002 suggested about 2 trillion cubic feet of recoverable gas.
The Utica Shale, some experts believe, could be bigger still. Tom Stewart, executive vice president for the Ohio Oil and Gas Association, said more drilling and analysis is needed to fully comprehend the Utica.
Consider for a moment the vast increase of estimated gas reserves cited above: from 2 trillion in 2002 to 84 trillion as of August 2011. This is only covering the Marcellus Shale formation. The Utica Shale formation “could be bigger still.”
And lest anyone think that the impact of these dramatic discoveries is limited to the energy industry, the article notes:
Also promising have been expressions of interest by the chemical industry about locating close to a rich supply of low-cost, natural gas. New Ohio natural gas could be a key feedstock of chemical production, Stewart said. That could prove a rich spin-off from the finds, he said.
Natural gas has been touted by some as a potential transitional energy source to renewables because it’s a cleaner fuel than coal and has reduced impact on climate change.
Ignore the bit about “climate change” which is bunk. Nonetheless, few people in the U.S. today realize that our economic salvation is at hand. I hope to post an article in the near future on the amazing energy wealth that has been discovered in the U.S., but for now it is enough to say that the advances in technology hold out the very real potential to revolutionize our economy with cheap and abundant oil and natural gas. Beyond the huge number of new jobs in the industry itself nationwide, estimated by some at 1 million in the next seven years, imagine the many ripple effects. Even the very announcement of a new policy to fully tap into our energy resources is enough to significantly affect the global price of oil and bring down U.S. energy costs, effectively pumping billions of dollars into the economy. As the price of oil goes down, the money flowing to fascist states like Iran is severely restricted. Want to bring down the tyrants in Tehran? Bring the price of oil down to even $60 per barrel and the Mullahs’ economy crashes and burns.
Of course, this kind of commitment to energy independence is not going to happen under this Administration. Nor is any, other sensible plan going to emerge that would free up private enterprise and restore the shaky nerves of consumers. So, barring a dramatic change at the White House, it is time to batten down the hatches and ride out the storm. We will all have to wait until November 7, 2012, the day after the national elections. Assuming that the American people come to their senses and reject Obama for a second term, I am officially putting on my Nostradamus hat and predicting, here and now, that the economy will begin a dramatic comeback from that point onward.