State of the Jobs Recovery -- What Recovery?

Any time a new Bureau of Labor Statistics (BLS) report comes out with a positive number of people hired, Democrat Socialists cheer and proclaim Obama a wise and great socialist leader.  Let us put some perspective on the current state of employment in the USA:

The percentage of the population 16 and over employed according to the BLS is:

Yes, the average slope from the bottom of the recession unemployment well is positive.  But the extent of the recovery is still, after 8 years, very small.  Years ago, without very detrimental federal government policies, we would have recovered to the point of returning to employment rates close to those established in the 2004 through 2006 period.  The employment rate is now more than 4% lower than in late 2006 and more than 3% lower than early 2004.  But the never-to-be-detered Progressive Elitist only sees the data from the bottom of the dip in October 2013 to the small peak in November 2014 and attributes that increase in employment to their man Obama.

A sane man asks, "What change of Obama's policies do they imagine might have caused about a 1% improvement over that one year period?"  I do not see that he has accomplished anything that would help the economy, except having lost Democrat control of the House of Representatives in the 2010 election and then for most of this year looking as though he was going to lose control of the Senate in the 2014 election as well.  The looming loss and then the loss itself of the Democrat Socialist Senate surely did something positive to fuel the increasing optimism of the many small businessmen polled by the NFIB.

Let us look at the BLS data on the Labor Participation Rate for those 16 and older:

It sure is hard to find any good news here.  The labor participation rate is doing nothing but going downhill.

Let us look at the full-time employment rate and the under-employed rates for Americans 18 and over according to Gallup:

Payroll to population percentage counts those who are employed at least 30 hours a week.  Gallup uses the entire population, not just that part of a certain working age range population to calculate the percentage.  The 30 hour or more percentage has remained remarkably flat from the depths of the employment recession in 2010.  The percentage of people underemployed includes those who are part-time or unemployed.  These are all people who want to and can work more.  These underemployed people have been decreasing somewhat, but since the percentage with full-time employment has not increased, this means that more and more of them have simply dropped out of the labor force, consistent with the Labor Force Participation graph of the BLS shown above.  Their numbers are decreasing only because they are losing their desire to work.

People lose their desire to work when they see no hope for a decent job.  They lose their desire to work when they see that being on welfare provides them with more benefits than working does.  This removal of Americans from the working force is the one and only accomplishment of Obama.  It works for him and the many Progressive Elitists who want more and more people dependent upon the mercies of Big Government for their survival and therefore eager to vote for more socialism.

Soaking Electricity Customers with Taxes in Maryland

I just received my January electricity bill for electricity used in the 33 days from 5 December 2013 to 7 January 2014 for my laboratory.  The total BG&E bill was for $158.20, which was a very small bill compared to months when we are running air conditioning.  Our heating is with natural gas.  The bill breaks down as follows:

BG&E Distribution and Account Services = $119.92
Electricity Generation Charges = $16.08
Maryland Taxes = $22.20

My laboratory paid 1.38 times more in taxes than it paid for the actual generation of the electricity we used!  Taxes were 14.0% of my total bill.

Of these taxes, the biggest single tax is the Maryland Universal Service Program charge which is a flat monthly fee of $10.29 to provide welfare aid to the poor.  Interestingly, this fee of $10.29 is also subjected to the 6% sales tax, so this is really a charge of $10.91 each month.  Note that this is discriminatory against very small businesses, since it is a fixed fee.  It is also, as are other charges on the bill, a disincentive to reduce one's energy use since it is not proportional to energy use.

Another tax is the Francise Tax, which is proportional to the number of kWh used.  That tax is also subjected to the 6% sales tax!  The remaining tax is an Environmental Surcharge, which was the only tax not subjected to the 6% sales tax.

The 14% taxation is not the whole story.  The state of Maryland buys into the same ideas on energy that Obama does.  Gov. Martin O'Folley does everything he can to increase energy costs.  BG&E and electricity generation companies have to pay the high costs of the solar and wind generation schemes favored by the Progressive Elitists, as well as biomass fuels.  Fortunately, these increased costs have been offset by the lowered cost of natural gas and a program which allows one to buy electricity supplied by companies other than BG&E.

Samuelson - Our Sinking Welfare State

Robert Samuelson is hardly a principled believer in limited government, but he is sometimes useful for his willingness to examine the economic numbers and assess whether a particular or general government modus operandi is possible or impossible. He has no great love for the free market, but he does recognize some limits on what government is capable of doing.

His article of 22 June 2009 called Our Sinking Welfare State, is a case in point. He points out that companies in the private sector have long provided security shelters, but these have been faltering.

GM exemplified the large corporation as private welfare state. In contracts with the United Auto Workers, GM promised high wages, lifetime employment, generous pensions and comprehensive health insurance. All this is ancient history: new workers get skimpier benefits.

In 1983, 62% of male workers 50 to 54 years old had been with their firm for at least 10 years, but in 2008, the percentage was down to about 50%. In 1999, health insurance coverage by companies covered 63.9% of the population, but this was down to 59.3% in 2007. Workers used to have defined benefit retirement programs, but now they usually have defined contribution programs such as 401(k)s. A survey of 141 major companies found 22% cutting matching 401 (k) contributions, 21% reducing pay, and 72% have recently cut positions.

The situation with government security programs is also bleak. Samuelson notes that:

The trouble is that the public sector also faces enormous cost pressures, driven by an aging population and rising health costs. The Congressional Budget Office projects the federal debt to double as a share of the economy (gross domestic product) to 82 percent of GDP by 2019.

He further comments:

What most Americans identify as government "welfare" are payments to single mothers, food stamps and (perhaps) Medicaid, the federal-state health insurance program for the poor. But that's not the half of it. Since 1960, government has changed radically. Then, 52 percent of federal spending went for defense, 26 percent for "payments for individuals" -- the welfare state. By 2008, 61 percent consisted of "payments for individuals," 21 percent for defense.

Social Security and Medicare -- programs for the elderly -- represented the lion's share: $1 trillion in 2008. Most Americans don't consider these programs "welfare," but they are. Benefits are paid mainly by present taxes; there's little "saving" for future benefits; Congress can alter benefits whenever it wants. If that's not welfare, what would be?

He concludes that either taxing more heavily or allowing the debt to increase more to continue this present consumption, will only weaken the economy and make it still more difficult for the economy to bear the costs. He says, "The U.S. welfare state is weakening; insecurity is rising. The sensible thing would be to decide which forms of public welfare are needed to protect the vulnerable and to begin paring the others." Instead, we are only talking about increasing the liabilities of government by taking over the health care insurance business and with it the entire medical industry. This is doing as good a job of addressing the impossible welfare obligations of the government as GM and the Auto Workers Union did the problems of the GM welfare state. Samuelson says the coming collapse of the government welfare state seems to be following the same path as GM did.

This is just simple common sense. It is really hard to believe this is not clear to almost everyone.

Obama's Tax Cut Illusions

Obama is posing as a tax-cutter in this presidential election, despite his past history as an enthusiastic taxer. He is doing this in a particularly insidious way.

Obama is clearly buying votes and pitting large numbers of Americans against carefully crafted smaller numbers of Americans and businesses owned by Americans. This is the usual socialist technique of playing upon envy and avarice and directing them against an electoral segment which is relatively defenseless.

HE claims that HE is going to cut the taxes of 95% of working American families, though who knows what HIS definition of working families is. In reality, HE is going to give many so-called "tax credits" to Americans on their income tax returns who are not paying any income tax. This is clearly disguised welfare. Who gets this welfare? We do not know exactly, but it looks to be most of the 44% of all tax filers who will pay no income taxes under the Obama plan. The total cost of the "tax credits" is estimated to be $1.054 trillion over the next 10 years, an increase of $647 billion over the present tax credits. These tax credits, while welfare, will not be counted in the welfare part of the federal budget. They will be hidden costs.

There is another major problem with these tax credits: they are sold as an incentive to work, but in some cases they will be a disincentive. This is because as a low income family earns more, they will lose a large part of their increased earnings to a very high marginal tax rate. Some families with an income of $40,000 will lose up to $0.40 for every additional dollar they earn!

You can read more about Obama's tax plans on individuals in a good Wall Street Journal article here.

Obama also says that HE will give tax breaks to 95% of businesses. HE wants to increase taxes on large businesses, on capital gains, and on estate taxes applied to small businesses. The capital gains and estate tax increases will hurt many small businesses, as will the tax increases on large businesses. For instance, I own and operate a small business, but most of my customers are large enough businesses that they are going to be hit by massive tax increases by Obama. Somehow, all that extra money being sent out in welfare checks under the guise of tax credits and his other massive new federal programs have to be paid for. There is no such thing as a free lunch, even if the Pied Piper says there is! So, what will happen to my business when my customers are hurting under the burden of higher taxes? Will their expanded operations in India, China, Ireland, and Poland send my laboratory as many material samples for analysis as their plant in Ohio or in North Carolina does? When they close the Ohio and North Carolina plants, won't that hurt my business? What, am I supposed to be stupid enough not to know what the effect on my business will be?

So, what new start-ups and small businesses will get Obama's tax cuts? Who actually knows? HE has not told us how long a company is considered a start-up and HE has not defined what he means by a small business. But, the reality is this: Giving a small business a minor tax break while sending the economy into a depression is a badly losing proposition for almost any small business. It is better to teach a man to fish, or at least to allow him to fish, than it is to give him a fish. With businesses, it is best to allow people to run them with minimal interference. Then natural incentives and rewards for hard work and creative and useful ideas will do the rest.

Instead, HE wants to pick the winners and kick the losers in the teeth. Developers of his favored technologies will possibly prosper. So, it will be good to be developing solar energy and wind generators, but it will be bad to be a materials analysis laboratory, a computer manufacturer, a surgical tool maker, a weapons maker (Barney Franks says they will cut the defense budget by 25%), an oven maker, a specialty cloth maker, or huge numbers of other industries. You will be hurt unless you devote a massive effort to curry favor from Washington Democrat politicians, as Fanny Mae, AIG, Goldman Sachs, and PNB have done in the financial arena. Small businesses cannot do this.

So, for a single fish, we are expected to elect HIM and then find many of our customers hurt, a weakened economy, energy-use restrictions, more severe and senseless environmental restrictions, more expensive and less reliable energy, more expensive health care mandates, increased liability to claims of gender pay discrimination, and more restrictions on imports and exports. What a trade! I would rather just be allowed to do my own fishing.

Both individual tax payers and business owners should be very wary of this charlatan who will do anything to be the Wealth-Redistributor-in-Chief. How ironic that this will make HIM our Master!