Goldman Sachs Downgrades Economic Forecasts

Bad news for Barack Obama and his failed economic policies but more importantly, bad news for America, via James Pethokoukis:

Following another week of weak economic data, we have cut our estimates for real GDP growth in the second and third quarter of 2011 to 1.5% and 2.5%, respectively, from 2% and 3.25%. Our forecasts for Q4 and 2012 are under review, but even excluding any further changes we now expect the unemployment rate to come down only modestly to 8¾% at the end of 2012.

The main reason for the downgrade is that the high-frequency information on overall economic activity has continued to fall substantially short of our expectations. … Some of this weakness is undoubtedly related to the disruptions to the supply chain—specifically in the auto sector—following the East Japan earthquake. By our estimates, this disruption has subtracted around ½ percentage point from second-quarter GDP growth. We expect this hit to reverse fully in the next couple of months, and this could add ½ point to third-quarter GDP growth. Moreover, some of the hit from higher energy costs is probably also temporary, as crude prices are down on net over the past three months. But the slowdown of recent months goes well beyond what can be explained with these temporary effects. … final demand growth has slowed to a pace that is typically only seen in recessions. .. Moreover, if the economy returns to recession—not our forecast, but clearly a possibility given the recent numbers …

Definitely read the rest.

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Karl Rove: Obama Has Governed As An Incompetent Liberal

"The president has not only governed as a liberal—he's governed as an incompetent liberal"... Karl Rove, Wall Street Journal

Wall Street Journal has a must-read piece explaining how Obama owns this whole debt ceiling fiasco and how dishonest his threats against senior citizens receiving social security are nothing but lies to terrify the elderly.

On Tuesday, Mr. Obama told Scott Pelley of CBS News that "there may simply not be the money in the coffers" to issue Social Security, veterans and disability checks after Aug. 3.

Not so. The $172 billion in revenues collected over the rest of the month can pay the $29 billion interest charges on the national debt, Social Security benefits ($49 billion), Medicaid and Medicare ($50 billion), active duty military pay ($2.9 billion), Department of Defense vendors ($31.7 billion), IRS refunds ($3.9 billion), and about a quarter of the $12.8 billion in unemployment checks due that month.

Obama publicly tossed out a figure of $4 trillion in deficit reduction, yet provided no details, no plan, simply used it as a sound bite in his never ending campaign for reelection.

Behind closed doors in negotiations, Barack Obama has thrown out road block after road block, making a bipartisan deal nearly impossible, hoping the American public would simply blame the Republicans for his fiasco and dishonesty.

The president has made a bipartisan agreement even more difficult by declaring certain spending off-limits to cuts. Mr. Obama's "untouchable" list includes his $1 trillion health-care reform, $128 billion in unspent stimulus funds, education and training outlays, his $53 billion high-speed rail proposal, spending on "green" jobs and student loans, and virtually any structural changes to entitlements except further squeezing payments to doctors, hospitals and health-care professionals.

Mr. Obama has offered no evidence since becoming president that he wants to restrain the upward trajectory of government spending. He does want higher taxes to pay for significantly higher federal spending. But he wants Republicans to deliver the tax increases, since Democrats couldn't pass them last year despite controlling both chambers of Congress.

The GOP is right in not bowing down to Obama and bringing the argument to the public as they have been doing, informing the public of each step as evidenced by Gallup's latest finding that out of those watching the debate closely 53 percent are against a debt ceiling increase.

The ceiling will be raised but with a majority (51%) more concerned with raising the ceiling without spending reductions than they are of the economic consequences of not raising the ceiling, the public is proving to be more interested, involved and more importantly, informed, therefore able to see through Obama and Democrats political posturing.

The equation started off simply enough for the GOP, the simple basis being if Obama wants a vote to increase the debt ceiling, to get passage through the Republican controlled House of Representatives, there must be an equal amount in spending reductions and/or cuts to the $2.4 trillion Obama wants added to our allowable debt limit.

Obama's goal to play to his base in his reelection campaign is to continue to try to force tax increases into the debt limit debate, which some polls show to be not as popular with those not self identified as Democrats.

Just 34% think a tax hike should be included in any legislation to raise the debt ceiling. A new Rasmussen Reports national telephone survey finds that 55% disagree and say it should not. (To see survey question wording, click here.)

There is a huge partisan divide on the question. Fifty-eight percent (58%) of Democrats want a tax hike in the deal while 82% of Republicans do not. Among those not affiliated with either major political party, 35% favor a tax hike and 51% are opposed.

James Pethokoukis provides an email from a GOP aide which explains how Obama's finally becoming involved in the debt ceiling debate after the Biden's negotiating group fell apart, has complicated matters and made them worse, not better.

Over the last several days the White House has been walking back the savings on the Biden number. Thursday it was $2 trillion, Monday it was $1.7-1.8 trillion, Tuesday it was $1.6-1.7-1.8 trillion. This morning our staff met with White House folks and the wrap up from that meeting said that the WH is now at $1.5 trillion.

Given those figures, [Cantor] pointed out that wherever we are- it’s a long way from the $2.4 trillion needed to meet House GOP goals of dollar for dollar so he suggested a possible short-term goal in order to avoid default. He then said to the President that since we can only reach so much in savings and you (President) keep moving the goalposts, I will move off my position of only doing one vote in order to avoid default.

Poll after poll after poll show that Obama's approval rating on the economy reaches new lows consistently as his record is established and Americans have something to which to judge his job performance via the last 2 1/2 years.

Economy Performance Ratings

Obama’s performance ratings drop significantly when the focus turns to his management of the economy, jobs and deficits. By a margin of 61 percent to 32 percent, Americans disapprove of the job Obama is doing to tackle the budget deficit. Fifty-seven percent of respondents disapproved of his efforts to create jobs and overall 57 percent disapproved of his handling of the economy.

Headlines such as "Obama warns Cantor: 'Don't call my bluff' in debt-ceiling talks" and "President Obama abruptly walks out of talks", certainly will not help the public's perception of his handling of the economy.

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Redistributing the Wealth

cross posted from MarstonChronicles.info

One only has to look around to see that some people have a great deal of wealth and some people are desperately poor. Is this fair? After all, the wealthy have more money than they can ever use so why not take some of their excess money and give it to the poor who need it so much? Since the wealthy clearly do not give enough to charity, why not harness the power of the federal government to force a more equitable distribution of the wealth? Before we can answer that question we need to determine why some people have more money than other people in the first place. In order to justify seizing this "excess" wealth which Obama thinks should be making more than $250,000 a year, we need to determine that the wealthy came by their wealth unjustly. We need to determine that they stole it directly or indirectly by taking unfair advantage of other people.

Most of all we need to determine that everyone is equally talented at making money as everyone else. If the explanation is that for the most part, the wealthy simply are better at managing money than poor people then even if we take their excess money and give it to the poor, in a relatively short period of time, the more talented people at making money will soon be the wealthy people again and the poor people will revert to being poor once they have spent the money the government gave them and be no better off than they were before. This in turn forces us to look at the uneven distribution of talent in general among our population.

Some people are more athletically talented than others and make the big leagues. Others are better singers, dancers, mathematicians, etc. Unlike money, we cannot force an even redistribution of those kinds of talents. You are either good at something or you are not. Granted you can practice and become better at most things but some people just seem to be more gifted than others at just about anything you care to name. The only way to adjust for this uneven distribution is to deliberately handicap the more talented by playing favorites with the less talented. We see this in things like little leagues and even admission to colleges where everyone gets a chance to play regardless of their talent. The technical name for this attempt to force an even distribution of talent is egalitarianism. The uneven distribution of talent we see in the real world must be compensated for in the name of simple fairness or justice. Everyone should be just as good as everyone else at everything.

The question then is how this well this tendency towards egalitarianism works in the real world. A simple example will suffice to determine this. Some people are more talented at doing schoolwork than others. It may be that they are smarter or work harder or are driven just to be good at everything. Other people may be lazy or simply just not motivated enough to be good at schoolwork in addition to perhaps being less talented at doing it in the first place. Still this is manifestly unfair so let's see how we can adjust for this in practice. A new teacher comes into the classroom who is determined to right this manifest wrong. Since everyone should be equal to everyone else, he gives a "C" grade to everyone regardless of how good or how poorly a student performs.

It does not take a doctorate in psychology to figure out what the effects of such a policy will have. The good students think to themselves that they busted their butts to get a good grade and all they got was a "C" so what is the point of continuing to put in the extra effort? They promptly stop trying to make an extra effort. The poor students see that they got a "C" when inside their heads they know they did not deserve it. Since they know they will get a "C" anyway, why bother to try at all? It will come as no surprise to any student of human behavior, when standardized tests are given to this class of students; they will score abysmally compared to classes with teachers who are not committed to the doctrine of egalitarianism. All that happens under egalitarianism is that everybody is much worse off than before. There simply is no workable way to use some system to "force" a correction for the uneven distribution of talent.

This simple fact of life is why capitalism always wins out over communism, socialism, etc. because it employs a system of rewards and punishment to provide incentives for outstanding achievement. Communism and socialism do not provide such incentives so everyone is encouraged to "goof off" since there is no incentive to do more than just enough to get by. This can be made even worse by introducing a system where no one can be fired for poor work performance. In such a system, productivity goes out the window. This then brings us back to the question of whether money making ability is a talent that is also unequally distributed or not. There seems no reason to assume that it is any different from any other talent and that some people have a "knack" for making money and others do not.

That being the case how will taxing the rich to force them to give to the poor work out any better than giving everybody a "C" in a classroom? Why should the rich bother to bust their butts to start up new businesses or expand their old ones using the capital they have accumulated when the government is going to confiscate everything over a certain amount of money per person? Their incentive to put their money to work to make still more money is destroyed. All that happens is that everyone is worse off or poorer than they were before. Are you better off now than you were a few years ago? Most of us are not. Could it be that Obama's policies have discouraged the wealthy from creating more wealth for everyone and that is why everyone but the rich are worse off than ever?

Capitalism works best when the government is no more than a referee to insure that reasonable rules for fair play are enforced. Whenever it gets into the business of meddling with the mechanics of the economy in the interests of enforcing equality, it just makes a mess out of everything. Government then is in the business of picking winners and losers. Not surprisingly, the winners always turn out to be those individuals and entities that support whoever is running the government. All that happens is that crony capitalism runs wild as businesses figure out that there is money to be made by playing the game that those in power want to play by any means necessary. This distortion of the free marketplace causes a recovery from an economic downturn to be very anemic at best or even drives it back into another recession.

Government always screws up everything it touches. It simply is the nature of the beast. Government is an evil. It may be a necessary evil but it is still an evil. It will always pick winners and losers because it is run by humans who want to harness the power of government to reward their friends and punish their enemies. Unlike capitalism that rewards achievers, all government does is reward ass kissers and such people are seldom wealth producers for anyone but themselves. When capitalism works freely, it spreads wealth around to everyone, It does not spread it evenly because it rewards risk takers and producers and not just somebody who has a buddy in the government.

The other problem with government micromanaging everything is that it makes our decisions for us with a one size fits all mentality. All this does besides making us poorer is that we become less free as well. We are no longer in charge of our own lives because government elitists who think they are smarter than everyone else but themselves are making all of our decisions for us in the belief that we are too stupid to make them for ourselves. The fact that their policies are attempting to right "supposed" wrongs that cannot be fixed in the real world, this will not turn out well except for them. The rest of us will just get screwed, blued and tattooed and that we submit is exactly what is happening.

House And Senate Leaders Agree To 2 Week Government Funding Extension

Via Wapo:

House and Senate leaders on Tuesday bought themselves a little more time in their efforts to avoid a government shutdown, agreeing to a two-week funding extension that also includes $4 billion in spending cuts.

The deal, which eliminates dozens of earmarks and a handful of little-known programs that President Obama has identified as unnecessary, sailed through the House on a 335 to 91 vote. Senate Majority Leader Harry M. Reid (D-Nev.), who initially resisted including any cuts in a short-term funding extension, predicted that it will pass that chamber as early as Wednesday.

Obama also got involved, after largely staying on the sidelines. He placed a 10-minute call to House Speaker John A. Boehner (R-Ohio) to discuss the temporary spending bill.

If the Senate approves the measure, the two parties will have until March 18 before the government runs out of money. Both parties know there is a limit to the short-term reprieves they can come up with, however. Ultimately, they must find common ground on a longer-term spending plan that will keep the government in business through the end of the fiscal year, on Sept. 30.

The House passed a measure last month that would reduce spending by $61 billion over the seven months left in this fiscal year. The Democrats who control the Senate say those cuts are far too steep and would endanger both the economic recovery and a host of vital programs. Obama has said he would veto the bill.

Also read "Conceding defeat this time, Senate Dems pledge to win next round" from The Hill and "The public no longer sees government shutdown as a 'train wreck'" from Washington Examiner.

H/T Memeorandum.

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Speaker Of The House, John Boehner, Speaks About State And Government Budget Fights "We're Broke!!!!''

In an interview with The Brody File, Speaker Of The House, John Boehner, said the one phrase that the citizens of the United States Of America need to have drummed into their heads, over and over and over until it sinks in.

We're Broke!!! States are broke. The country is broke. States are in debt and failing. The country is in debt and failing.

Video below, followed by the transcript of the excerpt shown:

Speaker John Boehner: “It’s not just Wisconsin. It’s Ohio. It’s Indiana. You’re going to see these types of actions taken in a lot of states because the states are broke and over the last couple of years the Obama administration, the Democrat controlled Congress bailed out the states where they could avoid making the tough decisions. Well, there are no more bailouts coming from Washington. We’re broke. We’re broke! We don’t have money to dish out to the states so all these Governors are trying to find ways to balance their budgets, which they’re required to do. In some of these states you’ve got collective bargaining laws that are so weighted in favor of the public employees that there’s almost no bargaining. We’ve given them a machine gun and put it right at the heads of the local officials and they really have their hands tied. And I think what you're seeing in these states is they’re trying to bring some balance to these negotiations that when you look at the pay of public employees today and you look at their retirement benefits they are way out of line with many other working Americans. So all of these Governors are going to have big challenges and it’s not just going to be the Governors. You’re going to see every political jurisdiction in America grapple with what do we need to do as opposed to what do we want to do. All of them are going to go through a very difficult period.”

David Brody: “And the outcome here means quite a bit to the future of this country because this is a proxy fight on a lot of different levels.”

Speaker John Boehner: “Yes and when the President engaged in this what he’s trying to do is make what’s going on in Washington and what’s going on in the states all part of one big fight gambling that Americans really don’t want to cut spending. I think he should not have gotten involved in this but I understand that this is not just about the Continuing Resolution to keep the government funded through September 30th. We’ve got a big budget for the next fiscal year that starts October 1st that we’ve got to debate and come to some agreement on and then the President has asked us to increase the debt limit which all of this is going to end up being one giant fight over the future for our country.”

David Brody: “But you’re going to get something. If you guys are going to raise the debt limit you’re going to get something in return for it.”

Speaker John Boehner: “We sure are.”

He is right, we are broke. We spend more than we take in. Anyone who lives on a budget understands, you cannot continue to spend money you do not have. If ordinary citizens did that, their credit line would be cut off, their credit cards would be useless.

Related

Obama's Budget 2012: At No Point In Projections Would Government Spend Less Than They Take In

Obama Threatens To Cut Budget That Cuts $100 Billion

House Passes Budget Bill To Fund Government With Amendments To Defund Obamacare

More Would Blame Democrats For Government Shut Down Than Would Blame Republicans And Here's Why

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51 Percent Say They Are Worse Off Since Obama Took Office

Of course at the end of the article written about the poll that showed 51 percent of Americans say they are worse off since Barack Obama took office, Bloomberg trots out the old it's Bush's fault argument, which falls flat two years after Obama took office, but the numbers themselves from the poll are clear.

More than 50 percent of Americans say they are worse off now than they were two years ago when President Barack Obama took office, and two-thirds believe the country is headed in the wrong direction, a Bloomberg National Poll shows.

The survey, conducted Dec. 4-7, finds that 51 percent of respondents think their situation has deteriorated, compared with 35 percent who say they’re doing better. The balance isn’t sure. Americans have grown more downbeat about the country’s future in just the last couple of months, the poll shows. The pessimism cuts across political parties and age groups, and is common to both sexes.

The media can spin all they want, but the American people are the ones that vote during presidential elections and when the voters feel the pain in their wallet two years after a president takes office, they will stop pointing at the president before him and start pointing their fingers directly at him.

Since Bloomberg decided to use Ronald Reagan as an example in their article, I point you to Willisms who pulls a chart from Heritage showing the visible difference between Reagan's economics and Obama's and what both have done for unemployment and recovery.



I am going to give the last word to Jim Geraghty over at NRO:

Actually, I’m sure there are some Americans who are better off now than they were two years ago: Gun-shop owners, Juan Williams, Fox News Channel advertising sales directors, all of the new GOP members of Congress . . .

HEH.

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55% of U.S. Voters Oppose Second Stimulus

Rasmussen:

President Obama is expected to announce on Wednesday plans for at least $50 billion in new government spending on the nation’s transportation infrastructure and billions more in tax credits in hopes of jumpstarting the troubled economy with midterm elections less than two months away. But the administration has been careful not to call the new spending a second economic stimulus plan, although Republicans and others view it that way.

A new Rasmussen Reports national telephone survey finds that 55% of U.S. voters continue to oppose a second economic stimulus package. Only 31% support a second stimulus, and 14% more are undecided.

Problem is, the majority of voters also believe Obama and the Democrats will ignore the majority once again.

However, 63% of voters believe it is at least somewhat likely that Congress will try and pass another economic stimulus package this year. Only 24% view an effort by Congress to pass another stimulus as unlikely. This includes 32% who say it is Very Likely and a mere two percent (2%) who think it is Not At All Likely.

If the polls are correct and the Democrats are looking at a GOP Tsunami in the midterms, Democratic leaders, Pelosi and Reid, may come back figuring they have nothing to lose and try to jam through as much as they can before GOP takes leadership control.

If Democrats that lose their seats truly hear the message the midterms tell them, they will refuse to do so on the basis that their constituents have spoken loud and clearly.

Yeah, I laughed at the thought of them actually listening to their constituents too.

Good news here is that once the GOP takes control, they will hold the purse strings so anything the Dems do jam through after November won't get funded.

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Outgoing Obama Admin Economist Admits Stimulus Failed

Dana Milbank describes lunch at the National Press Club where Christina Romer, chairman of President Obama's Council of Economic Advisers was giving a farewell speech and the news, while not surprising to some, was dismal.

She had no idea how bad the economic collapse would be. She still doesn't understand exactly why it was so bad. The response to the collapse was inadequate. And she doesn't have much of an idea about how to fix things.

What she did have was a binder full of scary descriptions and warnings, offered with a perma-smile and singsong delivery: "Terrible recession. . . . Incredibly searing. . . . Dramatically below trend. . . . Suffering terribly. . . . Risk of making high unemployment permanent. . . . Economic nightmare."

Anybody want dessert?

One key portion of Milbank's article caught my eye:

....When she and her colleagues began work, she acknowledged, they did not realize "how quickly and strongly the financial crisis would affect the economy." They "failed to anticipate just how violent the recession would be."

Even now, Romer said, mystery persists. "To this day, economists don't fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would." Her defense was that "almost all analysts were surprised by the violent reaction."

Not true, all analysts were not surprised, just the ones in the Obama administration were surprised that massive borrowing and spending on the part of the government, passing trillion dollar initiatives, threatening to raise taxes on those producing and employing, would cause such a "violent reaction."

Threaten their money, they will stop spending it. Threaten to massively tax their businesses and they will stop hiring and producing. Spend money you do not have to spend and they will stop investing.

That is not a violent reaction, that is a response to the Obama administration and the Democrat's policies.

That miscalculation, in turn, led to her miscalculation that the stimulus package would be enough to keep the unemployment rate from exceeding 8 percent. Without the policy, she had predicted, unemployment would soar to 9.5 percent. The plan passed, and unemployment went to 10 percent.

Hell of a miscalculation. Now she calculates that more spending is needed?

She is not the only one that needs to go. Obama's whole economic team has failed and now they want to throw more money at the problem instead of.. what was that term they constantly used about George Bush?...oh yessssssss..... instead of changing course.

Stop the spending, extend any and all tax cuts, stop with the punish the rich mentality, which will in turn punish businesses, and perhaps they will start producing at level again, perhaps they will start hiring, perhaps they will start spending their money to stimulate the economy.

Newsflash:





[Update] Must Read- Summer of Economic Discontent.

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