It’s Thursday, June 14th, 2012….and here’s The Gouge!

We begin the Thursday edition with a series of articles which separate fiscal facts from fantastical fiction.  First up, Jonah Goldberg details….

Obama’s ‘Fine’ Mess

 

The private sector is doing fine….no, really!

The 1990 Italian film “Everybody’s Fine” is one of the most depressing films I’ve ever seen. Starring the late Marcello Mastroianni, it’s the story of an old man who tells his wife he’s going to visit their grown kids. According to their letters the kids are doing great, but he’d like to see for himself.

It turns out that the kids are all doing badly, and the whole trip is drenched in nostalgia and regret for what might have been. When the father gets home, he can’t bring himself to tell his wife the truth, even though — the audience discovers — she’s been dead and buried for years. In the last scene, we see the old man at his wife’s grave, reassuring her, “Everybody’s fine.”

Listening to President Obama’s defenders spinning his claim that the “private sector is doing fine” reminded me of those kids and their dad, all afraid to admit everything’s not fine.

One common defense: He was just being ironic or sarcastic. New York magazine’s Jonathan Chait insists that Obama meant it “in the same basic way that I did this week when I was slowly recovering from a horrendous head cold and told people I was ‘fine’ ….” On Monday, MSNBC host Chris Hayes said on the “Today” show that Obama meant it the way somebody says “I’m fine” when they really mean “You don’t have to rush me to the emergency room” after a bloody head injury.

The only problem: There’s pretty much no evidence that’s how Obama meant it.

In his news conference last week, Obama argued that the private sector isn’t holding back the economy, the public sector is — hence “the private sector is doing fine.” When given the opportunity to retract his gaffe, he basically repeated it. “It’s absolutely clear that the economy is not doing fine,” the piqued president said. “That’s the reason I had the press conference.” (Something’s wrong when you have to explain why you had a press conference.)

Why is the economy “not doing fine”? Because, he explained, the public sector isn’t keeping up with the private sector: “Now, I think if you look at what I said this morning and what I’ve been saying consistently over the last year, we’ve actually seen some good momentum in the private sector.”

And when CNN’s Candy Crowley asked Obama senior advisor David Axelrod three times on Sunday for a yes or no answer to the question “Is the private sector doing fine?,” he refused to offer anything like a retraction. “It’s certainly doing better than the public sector,” he said on his third try. Simply: There’s been no retraction.

Two things are going on here, one substantive, one political.

Substantively, Obama believes that we can save the economy — or at least his re-election efforts — if we open the sluices of more federal spending (with money borrowed from China) and devote it to hiring a lot more government workers. Basically, it’s stimulus 2.0 (3.0, really, since Bush had a stimulus too). Obama, as he correctly insisted, has been saying this “consistently.” As The Weekly Standard’s Jay Cost notes, that the president needs another round of payoffs to his own base is a sign of Obama’s weakness.

Politically, however, this is a very hard sell. As we’ve seen in Wisconsin and California, lavishing more borrowed money on public sector workers is less popular than asking them for some shared sacrifice, particularly among independent voters.

More important, the private sector isn’t doing fine. The only reason the unemployment rate is as low as it is, is that millions of Americans have lost hope that it’s worth looking for a job. You can’t have the weakest recovery in generations and the highest sustained unemployment rate since the Depression and say the private sector is doing fine.

Actually, you can say it; it’s just that no one will believe you. And that’s Obama’s real dilemma. He can’t concede the private sector is doing badly because (1) he wants to burden it even more to spend more on the public sector, and (2) if he admits the private sector is still doing badly, he’s conceding the heart of Mitt Romney’s charge that Obama has failed economically.

So he’s stuck claiming he’s done everything right, and the only problem is the GOP’s refusal to lavish more money on state governments. And nobody in his family of advisors and supporters has it in them to tell him otherwise. It’s like he’s talking to a tombstone marked “Obama Campaign 2012.”

For those whose taste runs less to Italian dramas and more towards classic American comedies, here’s another view of The Obamao’s absurd assertion:

Next up, writing in the WSJ, Edward Lazear asks a rather rhetorical question:

Whose Fault Is Today’s Bad Economy?

What we’re experiencing is a new wave of slowdowns, not a continuation of past problems.

 

“The pitcher’s failure to throw strikes this late in the game is not a consequence of what happened during the first three innings. It is because he is throwing the wrong pitches.”

http://online.wsj.com/article/SB10001424052702303768104577462813890924418.html?mod=WSJ_Opinion_LEFTTopOpinion

And as Josh Barro, courtesy of Bloomberg.com and Conn Carroll queries,….

Does Obama Know Why the Public Sector Isn’t ’Doing Fine’?

 

On Friday President Barack Obama spoke about why the economic recovery has been so slow. People are focusing on his gaffe — saying “the private sector is doing fine” — and Ezra Klein admonishes us to focus on the president’s substantive point, which is that job losses in the public sector have undermined the recovery overall.

Unfortunately, Obama didn’t mention a major barrier to job growth in the public sector — and neither did Ezra: unsustainable compensation structures. This problem existed before the recession, but it’s gotten worse during the recession, because public pension systems are designed to have very rapid rises in current-year cost in the years following a recession.

Take a look at the attached chart from San Jose, California. As you can see, San Jose had an average of 7.5 employees per 1,000 residents from 1986 to 2005, and never dropped below 7.0. But in the last two years, that ratio has cratered — to 5.6 per thousand this year, with further cuts expected next year.

This is partly because revenue has risen only modestly, with general fund receipts rising 19 percent in a decade. But the main reason is that costs for a full-time equivalent employee are astronomical and skyrocketing. San Jose spends $142,000 per FTE on wages and benefits, up 85 percent from 10 years ago. As a result, the city shed 28 percent of its workforce over that period, even as its population was rising.

A lot of that increase is due to rising required pension payments, as the assets in the city’s pension funds have lost value. But much also had to do with what Mayor Chuck Reed, a Democrat, describes as “irresponsible policy actions” over the last 15 years. Here’s his list:

1. Giving out raises faster than revenues were growing.

2. Giving out raises and increasing benefits when revenues were falling.

3. Giving out raises and benefits retroactively.

4. Allowing employees to cash out unlimited amounts of sick leave when they retire.

5. Providing lifetime health care for retirees.

He also notes that “the City Council and outside arbitrators also significantly enhanced retirement benefits. The maximum benefit for public safety employees grew from 75 percent of final salary to 90 percent, and a guaranteed 3 percent cost-of-living adjustment was awarded to all employees.”

In other words, the city made a lot of promises that it could barely afford when times were good, and now that times are bad, it really can’t afford them.

So, why doesn’t San Jose just take away some of these generous benefits so it can afford to hire? Well, Reed is trying. But California law makes it easy to give out a pension sweetener and very hard to take one away. And binding arbitration laws make it difficult for the city to claw back benefits from police and fire workers.

Reed and San Jose’s City Council have declared a fiscal emergency, and used that declaration in order to put a referendum before voters that would sharply cut the pension benefits that workers (even those on the payroll today) earn in the future. That proposal passed on Tuesday with 70 percent of the vote, but the city’s public employee unions are suing to block its implementation.

Obama is right that it’s a problem that states and cities can’t afford to expand or retain their workforces. If the president wants to know why state and local governments can’t afford to hire, he could start by asking his own supporters in public employee unions.

Since he’s never worked….actually worked, i.e., produced ANYthing but bullsh*t and hot air….a day in his life….in either the public or private sector, we doubt very much he understands how either side functions.  And given the number of vacations he’s taken, golf rounds he’s played and foreign junkets he’s enjoyed, all while America burns, we strongly suspect his work ethic in the Oval Office hasn’t improved.

And no, we don’t count fund-raising as work.

But one things for certain: as this next bit of insightful analysis from James Sherk and Todd Zywicki writing in the WSJ describes, despite knowing nothing about business, The Dear Misleader certainly understands how to treat his friends….particularly when the steak and martinis he’s serving are on someone else’s tab!

Obama’s United Auto Workers Bailout

If the administration treated the UAW in the manner required by bankruptcy law, it could have saved U.S. taxpayers $26.5 billion.

 

“The Treasury expects the auto bailout to ultimately cost taxpayers $23 billion. The funds diverted to the UAW account for the taxpayers’ entire net loss.”

http://online.wsj.com/article/SB10001424052702303768104577462650268680454.html?mod=WSJ_Opinion_LEADTop#articleTabs%3Darticle

In a related item, as Mike Riggs notes at Reason.com, the actual list of the Boy Blunder’s accomplishments reads like the Riyadh Times obituary page:

Democratic Website Publishes List of Obama Accomplishments, Half of Them Are the Names of People He’s Killed

 

Because the studio audience needs to know when to clap, the Democratic Hub, a forum for the “Advanced Liberal Political Community,” keeps a running tab of President Obama’s accomplishments. Half the list, as Charles Davis points out, is dead people:

The rest of the list contains many more evil Muslims, which proves that Obama truly is the best.

Finally, looking across the pond, the WSJ‘s Dan Henninger asks….

Would Harry Truman Blame Paris?

Here’s pro-growth advice no one in Europe will take: Stop listening to the IMF bleeders and the Obama spenders.

 

The Europe of Charlemagne, Marco Polo and Churchill, after millennia of undoubted achievement, has finally spent itself to the verge of collapse and irrelevance. Witnessing this historic catastrophe, Barack Obama, the president of the United States, is complaining that it’s bad for business in Pittsburgh. What electorates in Europe and here have long suspected is proven true. Ours is the age of small men.

Europe is in the grip of a financial plague wiping out a generation of wealth and opportunity for millions of its citizens and threatening the world’s economies. Does anyone believe that JFK’s Treasury secretary, Douglas Dillon, would, like Tim Geithner, wave toward Europe that the solution “is in their hands”? Or that former Secretary of State Dean Acheson, the architect of NATO, would have been as screamingly silent as Hillary Clinton is now? Or that Democratic President Harry Truman, who appointed George Marshall, would blame Madrid for tanking his re-election prospects in Milwaukee?

Before American public education fell into the anti-history hands of the teachers unions and politically corrected textbooks, Europe’s heritage was routinely taught in the United States. Young Americans knew why Europe mattered in their lives. Music ed meant Mozart, Verdi, Bach and Beethoven. Art appreciation stretched from da Vinci to Picasso. Science was James Watt and Marconi. European literature, for those of us who fell into the writing trade, was an endless delirium.

Not that Europe’s modern intellectuals or its political class, with notable exceptions, have made much effort to sustain the postwar ties that unraveled in recent years. For those Americans who were subjected to the moral condescension of European journalistic and academic elites in the years before Barack Obama abandoned them, the euro’s current crisis is as good as it gets for Schadenfreude—if one is inclined to taking pleasure in the misery of others.

One problem with peace, especially in handsome Europe, is the illusion of economic prosperity. Life looks good. The restaurants are open. Nice clothing is available. If amid this seeming plenty, a profligate young man dissipated his life into ruin, all would call him a wastrel. Centuries of European schoolchildren once learned virtue and self-discipline from the fables of Aesop or Fontaine. “The Emperor’s New Clothes” comes to mind. Alas, no one writes fables for nations, and so a whole continent can dissipate the productive wealth of its people year after year on wastrel public spending and no one will notice.

The big story of the past six months isn’t the debt itself but the market’s disowning of European sovereign debt. Recall in January when this newspaper reported that investors were shifting out of European debt and buying instead the debt of such emerging market powers as Brazil, Indonesia and South Africa because of “economic fundamentals.” That is the sound of Europe losing centuries of economic and political power.

An antique phrase on the lips of every European elite just now is “economic growth.” Attending a workshop last weekend in Venice of the Council for the United States and Italy, I heard one of them sum up the problem as succinctly as a French aphorist: “The growth agenda is nice to say but difficult to fill up.” Difficult but not impossible.

A young woman working as a tour guide in Siena summarized for me over lunch the long-term prospects for her generation in a no-growth world. “We all used to go out together for dinner most nights; now we eat out one night a week. We went to the seashore twice a year but never any longer than five days. My best friend has a degree in electrical engineering, and he is working at a nothing job in a hotel.” I asked her where the ones who leave go. “Brazil. A lot have gone to Brazil. Or China. Or Australia.”

Italy’s youth unemployment rate is 36% and Spain’s an almost incomprehensible 50%. Does anyone really believe that Europe’s smart young people don’t want to work? That its engineers, designers, business-school graduates, architects, scientists and the rest wouldn’t thrive, create new companies, new jobs, and produce benefit for Italy, Spain, France or the U.K. if they had breathing room to do so and were allowed to retain their earned income rather than transfer most of it to l’état?

Here’s pro-growth advice no one in Europe will take: Stop listening to the IMF bleeders and the Obama spenders. If you wish to relearn real, long-term growth, consult the U.S. governors who did that themselves. Scott Walker in Wisconsin, Mitch Daniels in Indiana and Chris Christie in New Jersey all took over states nearly as moribund as Italy and Spain and put before their publics hard but obvious choices about spending, taxes, pensions, unions and bureaucracies. Their publics voted against dying.

One may ask: Would a European electorate, if given an honest chance to choose self-salvation rather than the bleed-to-death choices they’ve been given the past two years, vote to save themselves? The betting here is many indeed would vote for a liberated future. Or would have.

Brazil beckons.

Based on the results of recent elections in Greece and France, we’re not so sure our money isn’t on Brazil.

Moving on, it’s today’s Money Quote, and Newsbusters.org‘s Tim Graham bemoaning the anonymity of our Secretary of Commerce:

“Poor John Bryson!” exclaimed the “Reliable Source” gossips at The Washington Post on Wednesday. “Be honest: How many of you could have coughed up the name of the commerce secretary last week, even if a Jeopardy Daily Double were on the line?” (Especially, you, Chris Matthews.)

Even the newspapers ignored him: “In the year since he was nominated for the job by President Obama, Bryson had never once made it onto the front page of the Washington Post, New York Times or Wall Street Journal — until, of course, the bizarre series of traffic accidents in southern California Saturday that prompted him to take a medical leave.” Or as Jim Geraghty of National Review tweeted on Monday, “How is it that 4 years into economic hard times, most of us news junkies have no idea who the Commerce Secretary is?”

And in the Environmental Moment, a rather humorous anecdote, courtesy of Wally “Gator” Tart and Mark Perry writing at DailyMarkets.com:

Unintended Consequences/Perverse Incentives

 

Some great examples of unintended consequences from the Wikipedia listing for “Perverse Incentives“:

Fuggedaboutit!

On the Lighter Side….

Then, courtesy of Balls, from the White House website there’s The Obamao’s Memorial Day tribute….

….to himself!  No poignant picture of a wife kneeling at her husband’s grave, a mother grieving over a son she’d never hold again; not even the moving tribute of a soldiers honoring their fallen comrades.

Never in our nation’s history have we been led by such an unaccomplished, unabashed egomaniac.  And did we mention he shut down access to the Wall….on Memorial Day….for over six hours just for the photo-op?!?

Finally, we’ll call it a day with the First Amendment segment, and a bit of opinion masquerading as reporting, courtesy of an uncharacteristically unfair and unbalanced FOX News:

McDonald’s head chef says meals are not ‘unhealthy’

 

Say hello to my little red and yellow friends!

Chef Daniel Coudreaut, the senior director of culinary innovation for McDonald’s USA — the guy knows everything about what’s on the menu at the fast food chain’s 14,000 U.S., outlets recently told Cleveland’s Akron Beacon that he’s tired of critics blaming fast-food chains for the nationwide obesity epidemic.

Defending the offerings on McDonald’s menus, he said: “I don’t see anything on the menu that’s unhealthy.” Coudreaut, on a trip to promote the McDonald’s new banana nut oatmeal, said that if people stop buying Big Macs or bought more of McDonald’s healthier options, the company would have no choice but to overhaul its menu.

McDonald’s has been offering more healthier options, like smoothies made with with real fruit and apple slices in Happy Meals. But burgers and fries are still more popular. Coudreaut told the Journal that his 11-year-old daughter and seven-year-old son eat McDonald’s food about once a week, usually on the way to football practice.

“I’m sure I could eat a 2,000-calorie meal at Thomas Keller’s French Laundry,” said Coudreaut.

How unhealthy is McDonald’s, anyway? Well, Coudreaut would meet more than half of his 2,000 calorie mark with just a single item: the Chocolate Triple Thick Shake, which has 1160 calories.  I would rather eat at French Laundry.

Which is your inalienable right, you elitist snob.  Unfortunately, most of America….you know, the folks that actually produce rather than report….can’t afford to pay an arm and a leg for….

….next to nothing at The French Laundry.  Beside, Mickey D’s fries are significantly better….fresh out of the fryer with plenty of salt!

Magoo