Rent Seeking General Electric to Head Obama’s “Jobs” Council

Originally posted at FreedomWorks.org.

On Friday, President Obama signed an executive order to establish the “Council on Jobs and Competitiveness” led by General Electric’s (GE) CEO Jeffrey Immelt. President Obama and Immelt released statements claiming that the new council would “put our economy into overdrive.” To those paying attention to their relationship, it should come as no surprise that Immelt was selected as chairman. The Obama administration and GE have had a disturbingly close relationship for the past two years.

First, it’s important to distinguish the difference between free enterprise and crony capitalism. Free enterprise means that businesses must provide a product or service that consumers want in order to thrive. With no special government protections, every business must compete with each other through innovation and entrepreneurship. GE, however, has epitomized crony capitalism. Instead of earning an honest dollar in the marketplace, GE has used government largesse to advance their interests. GE has become the definition of a rent-seeking company. This economic term refers to a company that seeks to obtain benefits through the political arena.

General Electric’s lobbying efforts have paid off for them. In the 2008 elections, GE’s political action committee shelled out $1.55 million to mainly Democratic candidates. By far, then-presidential candidate Barack Obama was the largest recipient of GE’s money. How has Congress paid off General Electric for their past political contributions? During the Bush administration, GE persuaded the government to expand the Temporary Liquidity Guarantee Program so it would qualify as a recipient. As the Washington Post noted a year later, “General Electric, the world’s largest industrial company, has quietly become the biggest beneficiary of one of the government’s key rescue programs for banks.”

Furthermore, “Public records show that GE Capital, the company’s massive financing arm, has issued nearly a quarter of the $340 billion in debt backed by the program, which is known as the Temporary Liquidity Guarantee Program, or TLGP. The government’s actions have been ‘powerful and helpful’ to the company, GE chief executive Jeffrey Immelt acknowledged in December.”

The rent seeking company has become a main spokesperson for self-serving legislation such as the costly cap and trade legislation. If passed, it would add to the company’s bottom line at the expense of taxpayers and the American economy. In a leaked email, GE Vice Chairman John G. Rice wrote,

On climate change. We were able to work closely with key authors of the Waxman-Markey climate and energy bill, recently passed by the House of Representatives. If this bill is enacted into law it would benefit many GE businesses.

Listed in President Obama’s budget is a line item titled “climate revenues” totaling $646 billion over eight years. This has inspired GE to start a joint venture called Greenhouse Gas Services in order to invest and manage in trading greenhouse gases. As Washington Examiner writer Tim Carney reports,

In short, GE plans to get rich by being one of the government’s closest partners — which it has always been, thanks to its unmatched lobbying efforts… While many companies hire lobbyists to win earmarks, General Electric’s unmatched lobbying force has secured a tax increase — or its equivalent — in President Barack Obama’s budget.

It’s clear that the new council’s mission is not to boost jobs or competition. In fact, the opposite is the case. As Tom Borelli of the Free Enterprise Project said, it’s “not about jobs creation but the 2012 election. Obama needs to rally big business donors from companies such as General Electric. Obama and Immelt are mutually dependent on each other.” Rent-seeking General Electric will likely use the council to further line their pockets with taxpayer dollars and restrict their competitors. Simply, this is a prime case of special interest politics.

 

Obama v. Kennedy on Tax Hikes

Originally posted on FreedomWorks.org.

During President Obama’s speech in Cleveland, he indicated that he still wants to raise taxes on small businesses making over $250,000 a year on January 1st. He criticized House Minority Leader John Boehner for wanting to  extend Bush-era  tax cuts to the “rich” claiming that these were “not new ideas.” He stated: 

Make no mistake: he and his party believe we should also give a permanent tax cut to the wealthiest two percent of Americans. With all the other budgetary pressures we have – with all the Republicans’ talk about wanting to shrink the deficit – they would have us borrow $700 billion over the next ten years to give a tax cut of about $100,000 to folks who are already millionaires.

It is true that tax cuts are not a new idea. In 1964, Democratic President Kennedy’s tax cuts represented 8.8 percent of the budget—far greater than even the Bush or Reagan tax cuts. While the federal government faced a budget deficit, Kennedy favored “an across-the-board, top-to-bottom cut in personal in corporate income taxes.” Kennedy’s tax cuts reduced the top income tax bracket from 91 percent to 70 percent. In the eight years that Kennedy’s tax cuts were in effect, tax revenue actually doubled. In fact, every time that a President has dramatically lowered taxes, tax revenue has increased. According to Kennedy,  

 It is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now.

On January 1, 2011, the top income tax bracket will rise from 35 percent to 39.6 percent. If history is any indication, these high taxes will discourage production and lead to a decrease in tax revenue. In the end, the “rich” will end up paying fewer taxes due to Obama’s proposed tax hikes.

Tax cuts are a proven method of decreasing the deficit and expanding job growth. As the video below shows, Obama should take a lesson from one of his Democratic predecessors:

Despite Obama’s Promise of “Recovery Summer”, 54,000 Jobs Lost in August

Originally posted at TruthinJobs.com.

The American people were told by the Obama administration that this would be the “summer of recovery.” Joe Biden notoriously claimed that “you’re going to see, come the spring, net increase in jobs every month.” Thus far, the economy has lost a total of 283,000 jobs this summer alone. The latest Labor Department’s report reveals that the US lost 54,000 jobs in the month of August. The unemployment rate rose to 9.6 percent from 9.5 percent in July. Back in January 2009, the Obama administration predicted that without the “stimulus” the unemployment rate would rise 9.5 percent. Even by the Obama administration’s original measures, the “stimulus” has made the economy even worse.

Last week, the Congressional Budget Office released a report claiming that the $814 billion “stimulus” had created or saved up to 3.3 million jobs last quarter and lowered the unemployment rate by 1.8 percent. Of course, this comes to a shock to the 14.9 million people currently jobless. Where are all the jobs that the “stimulus” supposedly created?

The Congressional Budget Office’s report used the discredited Keynesian multiplier to make these false claims. This Keynesian model ignores the actual state of the economy. Instead, it claims that for every dollar the government spends, the GDP will be increased by more than a dollar. In short, the discredited multiplier irrationally  says that the more money the government spends, the more jobs will be made.

Therefore, the Keynesian model would conclude that the “stimulus” created jobs no matter what. Unlike the model suggests the “stimulus” did not inject new money into the economy.  The money to pay for the $814 “stimulus” was first taken away from taxpayers or borrowed out of the economy. Since the “stimulus” only transferred money from one group to another, it is impossible to justify that it created new net jobs.

To be fair, the “stimulus” likely created some new jobs. It is easy to see new workers being hired for federal “stimulus” projects. However, the evidence is clear that the “stimulus” destroyed more potential jobs than it created. The Keynesian multiplier fails to factor in the 10 million jobs that were not created in the private sector due to “stimulus” spending.

The “stimulus” merely takes away money from productive citizens—who likely would have used this money to create new jobs— to fund typically unprofitable and unproductive projects. For instance, the “stimulus” included over $700,000 to develop joke telling robots and $3.4 million to construct tunnels to allow only turtles to cross underneath a Florida road. While some taxpayers may not be able to afford the high price of a Blackberry smart phone, the “stimulus” gave $1 million worth of tax-funded smart phones to smokers to help them quit their habit.

On Wednesday, Council of Economic Advisers Chairman Christina Romer claimed that she doesn’t “fully understand why firms cut production as much as they did or why they cut labor so much more than they normally would.” The reason is clear—high taxation deters job growth. Businesses are discouraged from hiring new employees since they are uncertain on how complicated legislation such as ObamaCare, the government overhaul of the financial services rules and the proposed cap and trade tax scheme will affect their costs. As House Minority Leader John Boehner said in a released statement:

We will not solve our fiscal challenges until we cut spending and have real economic growth – and we won’t have real economic growth if we keep raising taxes on small businesses.

With the largest tax hike in history just four months away, taxes on two-thirds of small businesses will increase by 13 percent. Unless we change course by cutting taxes for all Americans and rejecting more proposed “stimulus” plans, future job reports will likely be even more dismal.

BOEHNER TO OBAMA: FIRE ALL ECONOMIC ADVISERS

Originally posted on August 24, 2010 on FreedomWorks’ website.

Clearly, President Obama’s economic advisers’ policies have failed to produce any signs of economic recovery. A new report shows that 48 out of 50 states have lost jobs since the “stimulus” was enacted in February 2009. According to the report, government employment in Washington DC has increased while private sector jobs have stagnated across the country. Despite the loss of 2.5 million private sector jobs since 2009, the Obama administration continues to tout the “success” of the “stimulus” on their propaganda filled summer tour.

In his speech today, House Minority Leader John Boehner (R-OH) called on Obama to fire all of his economic advisers starting with Treasury Secretary Tim Geithner and White House adviser Larry Summers. Recently, Tim Geithner wrote a New York Times column titled “Welcome to the Recovery.” In his column, he claims that:

the actions we took at its height to stimulate the economy helped arrest the freefall, preventing an even deeper collapse and putting the economy on the road to recovery.

Of course, this is far from the truth. No government in history has ever spent a country into prosperity. On the contrary, government “stimulus” programs have made the economy worse by preventing the growth of the productive private sector. Due to the unpopularity of the “stimulus”, Obama’s economic advisers have purposely removed the word stimulus from their vocabulary. The “stimulus” has been such a disappointment that Obama’s economic advisers now refer to it as the “recovery act.” Whether it’s called the “stimulus” or the “recovery act”, the plan has still likely prevented the creation of 10 million jobs in the private sector.

Minority Leader John Boehner is not alone in his recommendation that Obama should fire his entire economic team. According to Representative Connie Mack (R-FL),

From his questionable role in the AIG bailout to his mishandling of our economic recovery, Secretary Geithner has been a disappointment from the start.

Needless to say, the current state of the economy makes it difficult for anyone to defend the flawed “stimulus.” In fact, Christina Romer recently resigned as Obama’s Chief Economic Advisor midstream into her appointment. Romer was a co-author of a study back in 2009 that claimed that the “stimulus” would keep unemployment below 8 percent. According to the Washington Post,

Christina Romer said Friday that she wishes she could redo one of her first official acts for the president: last January’s forecast that a big shot of federal spending would save millions of jobs and keep the unemployment rate under 8 percent. The forecast was wrong.

Instead, the unemployment rate has remained above 8 percent since February 2009. In late 2009, the unemployment rate reached double digits and has hovered around 10 percent ever since. It’s no wonder that Romer decided to give up her job defending a “stimulus” plan that has failed by its own measure. As House Minority Leader John Boehner said in his speech regarding the resignation of Budget Director Peter Orszag and Christina Romer,

Clearly, they see the writing on the wall, and the president should too.

House Minority Leader John Boehner is correct that America needs a “fresh start.” One solution is to fire Obama’s economic advisers who refuse to admit that the “stimulus” was indeed a colossal failure. Hopefully, Tim Geithner and Larry Summers will be the next to follow in the direction of top economic advisers that have already resigned from the Obama administration. America’s economic policy needs to pursue a new course that focuses on lowering taxes and eliminating harmful regulations instead of repeating the same old “stimulus” economic policy that got us into this deep mess in the first place.

PRESIDENT OBAMA TOUTS “SUCCESS” OF AUTO-BAILOUT

Originally posted on August 2, 2010 on FreedomWorks’ website.

Last week, President Obama continued his propaganda filled Summer of “Recovery” tour by touting the “success” of the auto-bailout in Detroit. According to Obama, the growth of the auto industry has proven that the auto-bailout worked as planned,

You are proving the naysayers wrong. If some folks had their way, none of this would have been happening. They said, ‘You should just walk away and let those jobs go.’

A new White House report claims that the auto industry would have lost 1.1 million jobs without the bailout. White House press secretary calls the bailout a “success story” that has allowed the industry to re-hire 55,000 workers. While it is true that the bailouts helped automakers expand their payrolls, it also took away over $60 billion from taxpayers. Ultimately, the bailout prevented jobs from being made in other industries in the private sector.

Back in 2009, President Obama’s task force on the Financial Stability Oversight board reported that General Motors’ plan for the Chevy Volt would be too expensive to develop. According to the report, the plug-in hybrid electric vehicle would be “likely be too expensive to be commercially successful in the short term” and it will “be much more expensive than its gasoline-fueled peers.” Despite the high cost and likely failure of the Chevy Volt, the Obama administration continues to support the project with American’s tax dollars.

While visiting the General Motors’ Hamtramck in Michigan, Obama took a test drive in the new Chevy Volt expected to hit car dealers in November.  Although Obama called it “pretty smooth”, the car may not be worth its steep price tag. The Chevy Volt that is priced at $41,000 requires premium gasoline, can only fit four people and has less room that its competitors.  According to a New York Times article,

So the future of General Motors (and the $50 billion taxpayer investment in it) now depends on a vehicle that costs $41,000 but offers the performance and interior space of a $15,000 economy car… Quantifying just how much taxpayer money will have been wasted on the hastily developed Volt is no easy feat. Start with the $50 billion bailout (without which none of this would have been necessary), add $240 million in Energy Department grants doled out to G.M. last summer, $150 million in federal money to the Volt’s Korean battery supplier, up to $1.5 billion in tax breaks for purchasers and other consumer incentives, and some significant portion of the $14 billion loan G.M. got in 2008 for “retooling” its plants, and you’ve got some idea of how much taxpayer cash is built into every Volt.

This is not to say that plug-in hybrid electric vehicles are not a good investment. The private sector is likely to invest in these initiatives if there is a potential profit to be made. However, taxpayers should not be forced to invest in General Motor’s Chevy Volt. Since everyone values different features in a car, the government cannot possible know what millions of Americans want or need. For this reason, every single car should be subjected to true market forces so that consumers can decide what cars are best. If a car manufacturer does not provide cars that the American people want to buy, they do not deserve to be rewarded by an involuntarily taxpayer bail out. While Obama claims that “we going to get all the money back that we invested”, it seems that General Motors has not learned its lesson by producing expensive cars that are not likely to be “commercially successful in the short term.”

OBAMACARE’S ENDLESS WEB OF BUREAUCRACY

Originally posted on July 28, 2010.

In a Thomas Sowell column, he states:

It is amazing that people who think we cannot afford to pay for doctors, hospitals, and medication somehow think that we can afford to pay for doctors, hospitals, medication and a government bureaucracy to administer it.

Today, the Joint Economic Committee released a flowchart to illustrate the bureaucratic nightmare known as ObamaCare.

PDF version available here.

It gets worse. The committee analysis could only fit one-third of the complexity of Obamacare on the above flowchart. Finally, Nancy Pelosi and the other lawmakers that did not bother to read the entirety of the 2,801 page bill can find out what actually was in it. As it turns out, the creation of 159 new bureaucracies, insurance mandates and higher taxes were hidden in the complex law.

For comparison purposes, here’s what the free market health care flow chart looks like:

The free market health care plan is a simple model that leaves health care decisions between a patient and a doctor instead of a complex web of bureaucracy. We will continue to fight until the bureaucratic monstrosity that is Obamacare is repealed and replaced with a simple free market model that emphasizes freedom. Use FreedomWorks’ congressional directory to call your representatives and tell them to take action to repeal unconstitutional Obamacare!

1 Year Later: Obama’s Approval Rating Plummeting

Originally posted on January 20, 2010.

On January 20, 2009, President Obama spoke of hope and change as he was sworn into office with a 64% approval rating. Today, exactly one year later, Obama’s approval rate continues to nose-dive as more Americans lose hope in his big-spending agendas.

Reports claim that Obama’s approval rating has hit an all-time low at 50%-45%.

A year ago during his inauguration speech, Obama stated:

On this day, we come to proclaim an end to the petty grievances and false promises.

Despite his promises, the American people have seen taxes, federal spending and the national debt significantly increase. In the last year, bills have been passed with gigantic earmarks. The promise of government transparency has been broken as closed-door health care negotiations continue to occur. He even pledged that all legislation would be placed online for five days before signing to allow for public commenting- no such thing has happened. He stated that he would work together with Republicans to:

end the petty partisanship that has consumed Washington for so long.

However, as Politifact reports, Obama initiated legislation has been overwhelmingly partisan:

On the economic stimulus bill that passed in February 2009, only three Republicans in the Senate supported the measure, and in the House, no Republicans supported it. On the initial votes for a health care overhaul, he got one Republican in the House but no Republicans in the Senate.

It is no wonder that Obama’s approval rating has notably dropped within the past year. Reckless spending, big-government takeovers and secrecy are the opposite of what we were promised.  We were instead promised a transparent and fiscally responsible government–which is where the center of American politics is, where the Tea Party movement is, and is what Massachusetts newly elected Senator Scott Brown ran on–and why he was elected.