The government reported Q1 GDP growth figures today at 1.8% annualized.
The U.S. economy slowed markedly in the first quarter and inflation accelerated, clear evidence of the double whammy on the economy from higher gasoline prices.
In its first estimate Thursday, the Commerce Department said gross domestic product rose at a 1.8% annual rate between January and March, slower than the 3.1% pace in the prior three months.
Believe it or not, this was better than the predicted 1.7%. Economists once again “blamed” weather (is weather a new phenomenon?), but have now added high gasoline prices to their list of economic gripes. Growth estimates for 2011 remain between 3.1% and 3.3%, which now, in the context of this report, seem overly optimistic.
Let’s put into perspective how measly 1.8% growth is compared to the economic recovery experienced under Reagan. Average annual GDP growth during the Reagan expansion years was 4.3% (see here). In 1983, Reagan’s third year as President, GDP growth was 4.3%. In 1984, GDP growth was a tremendous 7.3%.
Meanwhile, as the economy cools off (did it ever heat up?), jobless claims spiked
WASHINGTON (MarketWatch) — New applications for U.S. unemployment benefits jumped last week to the highest level in three months, potentially a sign that recent improvement in hiring trends may have stalled.
The number of people who filed initial requests for jobless benefits climbed 25,000 to a seasonally adjusted 429,000 in the week ended April 23, the Labor Department reported Thursday. The last time claims were that high was in late January.
Economists surveyed by MarketWatch had expected claims to decline to 395,000. Claims in the prior week were revised up slightly to 404,000.
Finally, home values are in a “double dip.”
Home prices and sales fell again in March, according to both the Massachusetts Association of Realtors and The Warren Group, publisher of Banker & Tradesman.
The Bay State’s median home sale price dipped to $267,250 in March, down 2.8 percent from March, 2010, according to the Warren Group. Home sales were down 14 percent year-over-year.
Let’s not forget that the price of fuel and food have risen rapidly in the last few months. Consumers are paying an average of $3.87 per gallon, up from $2.85 a year ago and $3.58 a month ago (here).
In short, Obama’s policies have failed. Americans are suffering and are reaching the end of their financial rope. Another 1.5 years of Obama will only solidify the obvious.
Republicans, if they nominate the right candidate, one who talks plainly and honestly and explains why Obama’s policies have failed, have an eminently beatable opponent. From this perspective, winning the election could be the easy part; reversing course once in power will be more challenging.
NYYRC 99th Annual Dinner
JOIN US AS WE CELEBRATE OUR 100TH YEAR ANNIVERSARY!Wednesday, June 29th, 2011 6:30PM – 10:00PM Manhattan Penthouse – 80 5th Avenue (at 14th Street)
Includes passed hors d’oeuvres, open bar, and three course dinner.
The NYYRC is celebrating our 100 year anniversary! Last year’s annual dinner was our most successful annual dinner to date with over 180 attendees and this year being our 100th anniversary will be bigger and better than ever.
This event will feature Congressman Marsha Blackburn and Monica Crowley as a guest speakers, and Curtis Sliwa as emcee.
The next political showdown will be one for the ages, and could very well determine the nature of American society for generations to come.
President Obama and his party have gone on a federal spending binge unlike the nation has ever seen (with the exception of World War II). Republicans, in response, are rallying around the Paul Ryan budget, which would reduce the debt by $6 trillion over 10 years and not raise taxes. President Obama’s to Ryan’s budget is unspecific, but claims to reduce the debt by $4 trillion, while raising taxes.
Consider that our economy is in a difficult conundrum. Through intervention after intervention, we are painted into a corner of debt, inflation, unemployment, and – if the Democrats get their way – higher taxes across the board. The Democrat response to this quagmire is ostrich-like. They say, in effect, what debt problem? If a debt problem is acknowledged, the narrative is that Obama will be fixing Bush’s debt by raising taxes “on the rich,” (which happens to include most small business and two income families).
Look at the facts: The Federal government has ratcheted up its annual budget almost $1 trillion in 4 years of Democrat Congresses. Total government consumption has risen from ~$2.8 trillion in 2007 to ~$3.6 trillion in 2011. Debt has increased at the fastest pace since WWII, a time when America was engaged in a total war effort. Our central bank is monetizing $100 billion in debt/month, and providing additional so-called liquidity to already stretched loan markets. Excess bank reserves are well over $1 trillion. A recovery would involve banks actually beginning to loan again (which they have not), and this measure would accelerate the already-seen rise in prices. Food and fuel, two staples of life for every individual and family, are rising at a meteoric pace.
Meanwhile, Democrats, and especially our president, barely recognize the impending debt crisis. The response to Ryan’s prudent, moderate, and eminently responsible has been to label Republicans “radicals” and “extremists.” We know this because New York’s own Senator, Chuck Schumer, accidentally revealed himself last month, explaining that “the caucus” has instructed him to use the word “extremist” when talking about the Tea Party. Last night, President Obama read off the Democrat newest script, calling the Republican budget “radical” and “not courageous,” not once but twice in his demagogic speech at Facebook.
Posing as the moderate, Obama claims that Ryan’s budget destroys Medicare and the safety net that has defined American “social policy” over the last 50 years. He claims that Bush irresponsibly cut taxes and created the debt. Raise taxes to Clinton era levels, and our debt will go away.
Sorry, this line of reasoning is wanting. There are simply not enough so-called “rich” to foot the outrageous bill. It’s estimated that even if the government were to seize all assets of the “rich,” it would not even cover the $1.6 trillion 2011 deficit. The plain truth is that Democrats are going to have to raise taxes across the board if they refuse reform entitlements. Contrary to Obama’s claims, Obamacare has accelerated their insolvency, not reduced costs.
Moreover, Rep. Ryan predicts that under Obama’s plan, the Federal government is on course to spend about $0.40 out of every $1.00. This is a 100% rise in government spending from our historical level of $0.20/$1.00. In other words, Federal tax revenues must double for Obama to meet his spending and debt obligations. This will extinguish America’s civil society as we recognize it. It will represent a radical departure from our history; perhaps even more so than the New Deal.
Obama is aiming at permanent transformation into a post-American style government. He is emulating Europe, where bureaucrats dictate industrial policy, health policy, consumer standards, monetary policy, and just about everything else. Europe as a region is facing its own fiscal crisis. However, European governments are better equipped to deal with fractious citizens because of existing bureaucratic power. Is national healthcare getting too pricey? Then cut services. The citizens will lose in court. That, in a nut shell, is the “soft tyranny”: crisis after crisis, leading to more and more control, finally ending in fiscal disaster.
The majority of America is 100% opposed to this vision. They understand that the seemingly plausible reason Obama gives for raising taxes – that we must finance our debt to avoid default – is the result of Obama’s reckless prior spending. He went on a spending binge with the nation’s credit card, and is now using the crisis that he created to permanently increase the size of government. This necessarily demands higher Federal taxes.
Obama is not managing an economy, budget, or constitutional government. He is managing a transition from constitutionalism and limited government to omnipotent government. Tea Party members, generally speaking, do not believe that our current debt situation is absolutely intractable. It can still be solved with prudent measures that preserve American society – e.g. Rep. Ryan’s budget proposal. Our president is uninterested in solving the debt crisis. It is not his priority. As he has explained, he wants fundamental transformation. To do that requires that we dispense with our governing traditions and our hallowed Constitution – that “charter of negative liberties” that he regularly ignores.
Obama has an idea in mind – a state with X number of enforced laws, with power to accomplish what he wills. He will tax and spend until that model is in place, giving him all the power he desires. If American debt is downgraded, as S&P recently warned, this is only a minor inconvenience, a signal to fire up the propaganda mills. To paraphrase the great economist Ludwig von Mises, parliamentary control means control of the purse. The government can only control what it can afford to enforce and command. Thus, an increase of government consumption of private sector resources all but guarantees that we will live with less freedom. Obama may avoid the final collapse of the dollar, but it will come with significant concessions, which is exactly the point. We have every reason to believe this is what he intends: a pretext for increased sacrifice by the individual in order to aggrandize the State.
Appendix: Is Obama healing the economy?
“Philly Fed manufacturing slumps in April”
Country had “Right Track”: Rasmussen
“22% Say U.S. Heading in Right Direction, Ties Lowest Level of Obama’s Presidency”
See also: Great Recession, Round 2
With the recent budget battles and threat of government shutdown, you would think that the President’s party would want to be level-headed compared with their Republican competition. Once again, Democrats snatched defeat from the jaws of victory.
Harry Reid stated that cutting $61 billion from this year’s $3 trillion-plus budget was “extreme”. Really? Considering that most American’s have had to cut much more than three percent from their budgets, it’s not so extreme, but mainstream. This is why even the ever-liberal Newsweek magazine considered Obama and his minions the political losers in this budget battle. Harry Reid needs to understand that moving our country towards bankruptcy is truly extreme.
A terrific example of Obama’s willingness to sanctimoniously school us on how to be post-partisan, and then violate his own principles was on display last week. At the same time that the President demagogued Paul Ryan’s fiscal plan by alluding to how it’s going to kill Granny, a video was played from the speech President Obama made to the Republican conference in 2010 during the health care debate. In it, Obama pronounces the importance of not demagoguing an opponent’s position by saying that it’s going to kill off our loved ones or society’s most vulnerable. I guess this rule applies to everyone but the President himself. The contrast only shows how unserious the President really is about bringing about civility when his election is one year away.
Below is an excellent article by Peggy Noonan on Obama’s reelection bid:
NYYRC April Meeting
Paul Howard, Ph.D. is a Manhattan Institute senior fellow and director of the Manhattan Institute’s Center for Medical Progress. He is the managing editor of Medical Progress Today, a web magazine devoted to chronicling the connection between private sector investment and biomedical innovation, market-friendly public policies, and improved health. He will be speaking on how to avoid a collapse of health care in New York and how to prevent government takeover of the New York healthcare system.
Dr. Howard received his Ph.D. in political science from Fordham University in 2003, and is a graduate of the College of the Holy Cross in Worcester, Massachusetts.
Lee Zeldin- NY Senator, 3rd District
Please note: At our April meeting we will be conducting our Executive Board Elections for the 2011-2012 year. If you are a current dues paying member by the commencement of the April 2011 meeting you may vote at the April meeting or contact email@example.com for a ballot if you cannot attend the meeting.
Free Event, Members and Non-Members Welcome First event or coming alone? Let us know and we’ll introduce you around! Refreshments served.
Join us in the Pub afterward for drinks, food, and discussion. Cash only.
Please note: Business attire required. No jeans, sneakers, hats, sweatshirts, etc.
Careful reading of the news this week points conclusively to a worsening economy. A brief review is in order:
April 14, 2011 — MarketWatch
U.S. jobless claims surge above 400,000
The increase puts claims at their highest level since mid-February
April 14, 2011 — CNBC
Inflation ticks up, again
“U.S. core producer prices rose slightly faster than expected in March and the increase from a year ago was the largest since August 2009, pointing to a broadening in pipeline inflation pressures.”
April 14, 2011 — Yahoo Finance
“Emerging market-powers” meet to discuss a post-dollar world?
“The BRICS group of emerging-market powers kept up the pressure on Thursday for a revamped global monetary system that relies less on the dollar and for a louder voice in international financial institutions…What was needed, they said in a statement, was “a broad-based international reserve currency system providing stability and certainty” — thinly veiled criticism of what the BRICS see as Washington’s neglect of its global monetary responsibilities.”
April 13, 2011 — CNBC
Bank Face $3.6 Trillion “Wall” of Debt: IMF
“The world’s banks face a $3.6 trillion “wall of maturing debt” in the next two years and must compete with debt-laden governments to secure financing, the IMF warned on Wednesday.”
April 12, 2011 — Gallup
U.S. Economic Optimism Plummets in March
“Americans’ optimism about the future direction of the U.S. economy plunged in March for the second month in a row, as the percentage of Americans saying the economy is “getting better” fell to 33% — down from 41% in January. It is also down three points from the 36% of March 2010.”
April 12, 2011 — Bloomberg
Q1 GDP Growth Revised down to 1.5% by Morgan Stanley, Barclays
“Morgan Stanley lowered its tracking estimate for gross domestic product in the first three months of the year to a 1.5 percent annual pace from a 1.9 percent forecast prior to the data. Barclays Capital in New York lowered it to a range of 1.5 percent to 2 percent, down a half point. GDP climbed at a 3.1 percent pace in the last three months of 2010.”
April 12, 2011 — AP
Yellen sees no rush to start tightening credit
“The Federal Reserve’s second-highest ranking official on Monday said the economy is not strong enough for the Fed to begin tightening credit, countering a vocal minority of members who argue the central bank’s stimulus programs are contributing to higher inflation.”
April 12, 2011 — Reuters
Big banks are government-backed: Fed’s Hoenig
“Big banks like Bank of America Corp and Citigroup Inc should be reclassified as government-sponsored entities and have their activities restricted, a senior Fed official said on Tuesday… “That’s what they are,” Hoenig said at the National Association of Attorneys General 2011 conference.”
Meanwhile, as the nation approaches the fiscal cliff, our gutless president is castigated by the Wall Street Journal for his less than presidential response to Rep. Paul Ryan’s budget:
Mr. Obama’s fundamentally political document would have been unusual even for a Vice President in the fervor of a campaign…. Mr. Obama ludicrously claimed that Mr. Ryan favors “a fundamentally different America than the one we’ve known throughout most of our history.” Nothing is likelier to bring that future about than the President’s political indifference in the midst of a fiscal crisis.
Anybody who keeps up on the news knows that we’re supposed to be in a recovery. This was always a lie, perpetuated by a news media desperate to give Obama his due. The truth is that there can never be a meaningful recovery when America is running a $1.65 trillion annual deficit, and when our Federal Reserve is pumping hundreds of billions of dollars into banks in order to temporarily prevent total stagnation. These are the actions of desperate politicians who are in over their head and trying to keep their own jobs.
There is no problem with the American public. There is a problem with our political class, especially Obama and his Democrats, who refuses to let the market operate. This has led to crisis, unemployment, debt, and now inflation. Boehner has a stronger case to make and no reason to keep compromising our future.
An April 12th article in the New York Times asks a “trick” question: “[i]f Congress takes no action in the coming years, what will happen to the budget deficit?” As loyal promoters of the left wing agenda, the Times article concludes by pronouncing that all Congress has to do is NOTHING (i.e. let the Bush era tax cuts expire) and, hocus pocus, the deficit problem will magically vanish.
My friends, this is typical liberal misguided thinking. According to the Left, just blame and punish the thousands of small businesses and wealthy Americans across the country that work hard and pay taxes and all of America’s problems will be solved.
To the contrary, if we seek to restore fiscal sanity and discipline to the American financial system, the last thing we want is a Congress that abrogates its responsibility to make tough and meaningful choices.
We need a Congress that is willing to propose genuinely new and innovative solutions to our stagnant and enduring financial problems. How about a proposal to remake Social Security and Medicare? How about a proposal to pare down the ever ballooning entitlement programs? Why are we continuing to give so much to other countries in foreign aid? How about a proposal to limit the amount of free money we disburse to foreign nations, some of which decidedly do not reciprocate our friendship and generosity?
Why must we always ask some Americans to pay more in taxes rather than asking some Americans (and foreigners) to accept less largesse from the federal government?
Our current president has shown no leadership on this (or any other) issue. Let’s hope that our Republican led House of Representatives will show more vision and courage.
Today, Paul Ryan revealed his long-term budget plan that would start in 2012. It does dig deep into solving some of or financial problems we are facing as a nation. In a blog written by Philip Klein from the Washington Examiner, Klein mentions how Ryan would reduce spending:
So how does Ryan achieve these numbers? To start with, it isn’t with
tax hikes. In fact, revenues would actually decline significantly under his plan, something that we’ll no doubt be hearing more of among liberal critics.
Instead, Ryan focuses primarily on the spending side of the ledger.
Specifically, Ryan’s proposal would:
— Repeal the national health care law in its entirety.
— Change Medicare for those 55 and younger to give them the ability to choose among different types of health care plans that would be subsidized by the government. The value of the subsidies would vary so that poorer and sicker beneficiaries would receive more than richer and wealthier ones.
— Reform Medicaid so that it is block-granted to the states, putting it on a predictable fiscal course and giving governors’ more flexibility.
–Take Defense Secretary Robert Gates’ suggestions of $178 billion in cuts to the Pentagon budget, but use $100 billion of that to reinvest in other, higher priority, defense programs.
–Reduce domestic (non-entitlement spending) back to below 2008 levels, and then freeze that for five years, and cap the overall budget at a level below 20 percent of the economy, its historic average.
–Simplify the corporate and individual tax code, ending deductions and loopholes while lowering the corporate tax and the top individual tax bracket to 25 percent.
This is good. However, more important items are missing in order to ensure spending levels are down.
1) Red tape and regulations
The one thing that can hurt a business just as bad as high taxes is red tape and regulation. The less red tape and regulation there is in all levels of government, the better the chances of higher revenue, expansion, and success a business will have. Getting rid of Obamacare is just one big red tape, but there are others out there that need to be reduce or eliminated all together.
2) Sell Government property
Jeffrey Zients posted on the White House Blog about a month ago saying that the Federal government owns 1.2 million properties across the country and 14,000 buildings and structures are currently designated as excess or under-utilized.
Selling those 14,000 buildings is a start. That could bring some needed revenue to the government to pay off the high external debt we have. Why sell 14,000 when you can sell even more? There definitely has to be more than 14,000 buildings that have no purpose what so ever in government.
There is no guarantee Ryan’s budget will pass because of the veto pen and the U.S. Senate. However, promoting this budget helps get the news out that there are some people who actually want to do real work and real solving in Washington. It’s important we make this push for this important budget reduction. However, Ryan and those who support a better fiscal and economic future must fight very hard, very determined and very ruthless because the other side knows how to stop good things from happening in Washington and the time is now to give one hell of a fight.
Bret Stephens reports in the Wall Street Journal (I quote at length):
Much was made at the time of the care the demonstrators had taken to tidy up the square, but now it’s back to its usual shambolic state. Much was made, too, of how the protests were a secular triumph in which the Muslim Brotherhood was left to the sidelines. But that judgment now looks in need of major revision.
…In the event, the ayes had it with a whopping 77%, despite a fevered turnout effort by “No” voters. “The West seems to be convinced that the revolution was led by secular democratic forces,” says Mahmoud. “Now that myth is shattered. Which means that either the old order”—by which he means the military regime—”stays in power, or we’re headed for Islamist dominance.”
…Egypt’s Copts, some 15% of the population and the largest non-Muslim group anywhere in the Middle East, have good reasons to be worried. Though the protestors at Tahrir made a show of interfaith solidarity, the sense of fellowship is quickly returning to the poisonous pre-Tahrir norm. Earlier this month a Coptic church south of Cairo was burned to the ground, apparently on account of an objectionable Coptic-Muslim romance. The episode would seem almost farcical if it weren’t so commonplace in Egypt, and if it didn’t so often have fatal results.
Mr. Stephens, with all due respect, I don’t see how burning down a church could ever be considered farcical. So much of this was predictable back in February, to those who weren’t swept away in breathtaking excitement of it all. It looks more certain that tragedy will beset the Egyptian people, and especially their Coptic Christian population.
Next time, before America begins cheerleading a rudderless revolution, it might be helpful to understand who the opposition parties are, and their designs.
David Miller at The Jerusalem Post, reports
Officials of the Muslim Brotherhood, Egypt’s leading Islamic group, have called for the establishment of a Saudi-style modesty police to combat “immoral” behavior in public areas in what observers say in another sign of a growing Islamic self-confidence in the post-Mubarak era.
In the political sphere, the Brotherhood led a successful drive to get voters to approve a package of constitutional amendments. On the street level, at least 20 attacks were perpetrated against the tombs of Muslim mystics (suffis), who are the subject of popular veneration but disparaged by Islamic fundamentalists, or salafis. After some initial hesitation, Islamic leaders have publicly praised the revolution.