state of economy
Melanie Sturm | @ThinkAgainUSA
“First comes love, then comes marriage, then comes the baby in the baby carriage,” goes the rhyme. Unfortunately, in large swaths of American society, this rhyme is playing in reverse, with dire consequences for lower-income Americans.
Given five decades of deteriorating marriage trends, it appears Americans concur with H.L. Menken who joked, “Marriage is a wonderful institution, but who’d want to live in an institution?” Since 1960, the percentage of married Americans plunged from 72 percent to 51 percent last year, a record low. Meanwhile, babies born to unwed mothers skyrocketed from 4 percent in 1960 to 41 percent in 2011, another ominous record considering out-of-wedlock children are 82 percent more likely to suffer poverty and other social ills.
However, Think Again before assuming Americans, like Menken, believe “The longest sentence you can form with two words is ‘I do’.”
A 2010 Pew Research/Time Magazine survey concluded that the institution of marriage “remains revered and desired.” Though marriage isn’t “as necessary as it used to be,” the study reveals: married people are significantly happier with their family lives; seven-in-ten 18 to 29-year olds want to marry; and 77 percent of Americans believe marriage makes raising a family easier, which remains a “very important” reason to marry. If marriage is so revered, why aren’t more Americans marrying and having in-wedlock children?
The Pew study confirms what Charles Murray chronicles in his best-selling book “Coming Apart: The State of White America, 1960-2010.” American society is becoming as socially stratified as the vintage English world of “Downton Abbey.” Whereas in 1960, Americans shared bedrock moral values, behaviors and even neighborhoods, irrespective of class and education, today we’re separated into cultural and income enclaves with profoundly differing values and practices — upper-class “Belmont” neighborhoods where college-educated white-collar elites reside, and “Fishtown” where less-educated working-classes live.
“It’s not the existence of classes that is new,” Murray contends, “but the emergence of classes that diverge on core behaviors and values.” As Fishtown’s civil society atrophied, its residents suffered joblessness, family instability, poverty, government-dependency, crime and unhappiness. Meanwhile, cocooned Belmonters work, invest, marry, raise children, volunteer in the community, practice a religion – they prosper. To recover, Fishtown needs a civic Great Awakening to revive America’s original foundations of family, vocation, community, and faith.
More marriage and family formation is also needed to counter another grave challenge – declining fertility. After decades of deteriorating demographic trends, America needs more babies, asserts Jonathan Last in his new book, “What to Expect When No One’s Expecting: America’s Coming Demographic Disaster.” Since low birthrates are infectious, “there’s no precedent in recorded history of societies experiencing long-term peace and prosperity in the face of declining fertility and shrinking population.”
Low fertility and aging societies are less entrepreneurial, economically dynamic, and secure because risk-averse older people seek to preserve -- not invest -- capital; a shrinking base of workers must support ever-growing retiree expenditures; when older majorities disallow entitlement cuts requiring tax increases on the younger, it makes having babies (future taxpayers) less affordable; entitlements crowd out defense spending.
Notwithstanding the explosion of out-of-wedlock babies in Fishtown, America hasn’t sustained a fertility rate above the replacement rate of 2.1 births per woman since the 1960s. In 2011, it hit a record low 1.93. Consequently, America’s median age rose from 29.5 in 1960 to 37 today. Meanwhile, the ratio of workers to retirees shrank from 40 in 1946 to 2.9 today.
Though foreboding, America’s prospects are better than the rapidly aging nations of East Asia and Europe where decades of sub-replacement fertility rates are causing dramatic population contractions. Ironically, fertility decline was already a global phenomenon in 1968 when “The Population Bomb” by Paul Ehrlich predicted overpopulation would trigger imminent mass starvation.
Today, 97 percent of the world’s population lives in countries with declining fertility. To avert “turning into a decaying nation,” and facing a 1.3 fertility rate and devastating population declines, Russian President Vladimir Putin invited the trio Boys II Men to romance Russians into Valentine’s Day baby making.
In Japan -- where the fertility rate has been sub-1.5 since 1995 -- more adult diapers than baby diapers are sold and the economy has been stagnant for decades. With a median age of 45 and 2.6 workers per retiree (falling to 1.2 by 2050), spending on the elderly has exploded Japan’s debt-to-GDP to 229 percent. Last month, Japan’s new Finance Minister made headlines when he told a social security reform committee that the elderly should “hurry up and die.”
To avoid these economic and societal death rattles, America needs more marriages and babies – in that order. With an “ideal fertility rate” of 2.5 (according to Gallup), Americans actually want more babies, and as the Pitt/Jolie children attest, kids prefer married parents.
Think Again -- Wouldn’t it be wonderful to renew these commitments on Valentine’s Day?
Melanie Sturm | @ThinkAgainUSA
During the Civil War when the union’s preservation and slavery’s abolition were in doubt, President Lincoln roused the nation with his dream “of a place and a time where America will once again be seen as the last best hope of earth.” In rekindling our Founders’ vision, Lincoln helped assure that America would become the freest and most prosperous nation on earth, a status successive US presidents have dutifully maintained, or they were cast aside by voters.
As Americans Think Again about President Obama, consider that no president has won re-election amid such economic stagnation, declining incomes, high gas prices and business pessimism. Living astonishingly beyond our means and more indebted than any other nation in world history, Americans face a reduced standard of living, diminished opportunities for our children, and a weakened capacity to secure our national interests in a menacing world.
After trillions in fiscal and monetary stimulus, the 39-month old economic recovery has one-seventh the GDP growth rate of the Reagan recovery in which double-digit inflation and interest rates were also slain. With 261,000 fewer jobs today than January 2009 (despite population growth of 9 million), exploding poverty, government dependency, and income inequality imperil Lincoln’s dream.
During the economic turmoil of 2008, Obama sounded Lincoln-esque, promising to “provide good jobs to the jobless…secure our nation and restore our image as the last best hope on Earth.” But unlike Presidents Kennedy, Reagan and Clinton who understood the benefits of economic growth policies – more and better jobs, larger paychecks, growing tax revenues without tax rate increases, and deficit and debt mitigation -- Obama doubled down on government-centric and budget-busting policies.
Having inherited a government moving in the wrong direction on bailouts, spending, deficits and debt accumulation, Obama floored the gas. Though critical of Bush’s $4 trillion in accumulated debt and vowing to halve the annual deficit by now, Obama has run four successive trillion-dollar deficits – each nearly triple Bush’s average -- while increasing debt nearly $6 trillion to a sum ($16.1 trillion) that exceeds the US economy. Historically, America’s economy has grown faster than its debt -- until Obama, under whom debt is growing $2.50 for every dollar of GDP growth.
With 10,000 baby boomers turning 65 every day, manditory expenditures for Medicare, Social Security and Medicaid are exploding, consuming more annually than the combined cost of the Iraq and Afghanistan wars and TARP bailouts. Rather than address the looming entitlement crisis, Obama’s budget projects massive deficits and $20 trillion in debt by the end of his second term. So fiscally irresponsible, not one member of Congress -- not even a single Democrat -- has voted to approve either of Obama’s last two annual budgets.
Meanwhile, with Democrats in complete control of Congress through January 2011, Obama’s signature legislative “reforms” – Obamacare and Dodd-Frank – ignored Republican solutions, and imposed thousands of complex regulations and new taxes on the private economy, nearly paralyzing job creation and economic growth.
Though sold as “Wall Street reform”, Dodd-Frank makes bailouts more likely by designating selected banks “too-big-to-fail” and failing to reform the financial crisis’ real culprits -- housing-finance giants Fannie Mae and Freddie Mac. With smaller banks competitively disadvantaged, lending is down, consumer prices are up, and expensive consultants, like the former chiefs-of-staff to both Dodd and Frank, are in demand.
Neither is Obamacare meeting its promises. Insurance premiums are up $2,500 and according to the Congressional Budget Office (CBO), Obamacare will cost nearly twice its original estimate, leave 30 million Americans uninsured, and cause 20 million people to lose their employer-provided health insurance. Additionally, it imposes 20 new taxes on families and small businesses and incentivizes employers to hire part-time instead of full-time workers.
Thanks to recent technological breakthroughs, America is now the most energy-endowed nation in the world. Allowing the responsible development of our resources would generate millions of jobs while turbo-charging the economy and revitalizing distressed communities. Yet despite promising an “all-of-the-above” energy policy while investing $90 billion in uncompetitive green energy companies, Obama blocked the Keystone XL pipeline and reduced drilling permits on public lands by 36 percent, compared to increases of 116 and 58 percent under Bush and Clinton, respectively.
Meanwhile, GDP growth slumped to 1.3 percent in the second quarter, but Obama proposes to increase tax rates on “millionaires and billionaires” (individuals and small businesses making over $250,000) to promote fairness, after opposing them in 2010 when the economy was growing at twice its current rate. But how can it be fair to implement a policy that the CBO considers economically injurious and would yield only enough revenue to fund 8.5 days of government spending? Given Obama’s track record, how could another four years of the same policies result in enough economic growth to overcome our economic challenges?
Mindful of these challenges and eager to diffuse the debt bomb while preserving entitlement programs for future generations, Governor Romney proposes to expand the private economy with spending, regulatory, tax and entitlement reforms reminiscent of those enacted by Kennedy, Reagan and Clinton – modern America’s most successful economic stewards. Romney proposes to cut tax rates by 20 percent for all Americans while maintaining the same share of taxes paid by the wealthy. But unlike Bush, he’ll pay for them by eliminating expensive loopholes only accessible to wealthy individuals and companies like GE.
Divided as we were during the Civil War, Americans long to be unified by a leader, like Lincoln, committed to expanding liberty and increasing individual opportunity -- the source of human flourishing and America’s promise.
Think Again – only by restoring these cultural bulwarks can we pass our children a strong America, and remain the last best hope of earth.
Melanie Sturm | @ThinkAgainUSA
Beyond the realm of inconvenient truths, there’s a dimension to which Bill Clinton occasionally retreats. It’s a dimension of fertile imaginations, sound bites and mind games whose boundaries the gullible determine. In this wondrous land, tokes aren’t inhaled, sex with interns isn’t sex, and the meaning of “is” isn’t always is. When Clinton wags his finger to punctuate a claim, like “no president – not me or any of my predecessors -- could have repaired all the damage in just four years,” it’s his poker “tell.” Next stop: the Twilight Zone.
Ironically, the president who rode to victory in 1992 on the theme “it’s the economy, stupid,” now suggests it’s stupid to examine the 39-month old economic recovery which, we were promised, would yield 4 percent gross-domestic-product growth and 5.6 percent unemployment -- not the current 1.6 percent and 7.8 percent, respectively. Before crossing over to the land of suspended disbelief, Think Again.
In fact, until now, all presidents over the last 75 years have performed better. As Milton Friedman observed, and a November 2011 Federal Reserve study verified, the worse the recession – even when caused by a financial crisis -- the stronger the recovery, absent bad government policies like those that prolonged and deepened the Great Depression.
Despite record levels of stimulation that exploded government spending to 25 percent of GDP (up from a 60-year 18 percent average) and four consecutive years of trillion-dollar deficits, an Associated Press study concluded “that by just about any measure”…this is “the feeblest economic recovery since the Great Depression. More than any other …people who have jobs are hurting: Their paychecks have fallen behind inflation.” Consequently, income inequality has materially worsened and, as Vice President Biden noted last week, “the middle class has been buried the last four years.”
The annals of post World War II economic recoveries show Biden is right. Never before have Americans suffered such poor prospects nor sought such refuge in safety net programs. When counting the millions of discouraged Americans no longer in the labor force, true unemployment is 14.7 percent. Meanwhile median household income has dropped nearly 5 percent, amidst exploding gas and food prices. Not surprisingly, a record number of Americans now claim federal disability checks and food stamps, up nearly 20 and 44 percent, respectively.
President Reagan inherited the other “worst” post WW II recession and, unlike the most recent, had to contend with double-digit inflation and interest rates, in addition to double-digit unemployment. By this point in his presidency, Reagan’s pro-growth policies had unleashed the economy, resulting in 7.1 percent unemployment, rising median incomes and 11 percent GDP growth.
Most importantly, Reagan’s work with Democratic house leader Tip O’Neill to implement historic tax, social security and immigration reforms -- and Clinton’s collaboration with Republican house leader Newt Gingrich to reduce government spending, lower taxes on investment, implement “consensus deregulation,” and reform welfare -- fueled the greatest economic boom in world history from 1982 to 2007. As business investment grew, so did the job market and the number of Americans paying taxes, confirming what President Kennedy said “is a paradoxical truth that…the soundest way to raise [tax] revenues in the long run is to cut [tax] rates now.”
If the current “recovery” had merely performed as well as the average of all post-World War II recoveries, current US GDP would be $1.2 trillion larger and 7.9 million more Americans would have jobs. Americans have been denied this prosperity because of unprecedented levels of government spending, job-killing regulation, and crony capitalism – partisan policies which large majorities of business leaders in two recent surveys (Business Roundtable and National Federation of Independent Business) say hurt them.
That 55 percent of small business owners surveyed wouldn’t start their business today reflects a lack of confidence in the economy’s future, imperiled as it is by $16 trillion in debt (up 50 percent since January 2009), a sum larger than the US economy. When interest rates increase from historic lows, larger interest payments will necessitate draconian budget cuts and increased taxes. Absent rapid GDP growth to bring debt-to-GDP levels down to manageable norms, Americans can’t be confident in a future that holds only two unacceptable alternatives – substantial tax increases or sustained inflation.
As the president who declared the era of big government over, Clinton understands our perilous fiscal state. Were he to emerge from the Twilight Zone, he’d agree that government spending should be capped at 20 percent of GDP -- the average during his presidency and a Romney campaign promise. He’d be opposed to increasing taxes in a fragile economy, as President Obama proposes. Most importantly, he’d be appalled at the lack of leadership evident in Obama’s budget – no plan to address the looming fiscal crisis and trillion-dollar deficits into oblivion.
Think Again – outside the Twilight Zone, it’s the pro-growth policies, stupid!
Melanie Sturm | @ThinkAgainUSA
The French celebrated Bastille Day last week, 219 years after beheading Marie-Antoinette in the French Revolution’s Reign of Terror. To this day, she’s the poster-child for upper-class excess, entitlement and insensitivity -- the ultimate “1 Percenter.”
However, Think Again before believing every demonization you hear, especially without factcheck.org. In truth, though a privileged aristocrat, Marie-Antoinette was not only a faithful Good Samaritan, she actually never uttered the notorious catchphrase “Let them eat cake.” Never mind those silly details -- social justice was at stake!
By portraying Marie-Anoinette as selfish and out-of-touch, the revolutionaries justified their bloodthirsty mob rule and indiscriminate savagery. Declaring “liberty, equality and fraternity,” they ushered in an anti-democratic period of unlimited governmental power, civil strife, and economic despair, though eventually Enlightenment principles transformed France into a vibrant democracy.
Today, France has Europe’s most state-directed economy, and among its most stagnant and indebted. Prioritizing “the collective interest,” the French prefer government to free market solutions spending more on social welfare than any other developed country. Recently, the anti-wealth rhetoric of newly elected President Hollande -- and his plans to hike taxes – made London the sixth largest French city, to its mayor’s delight.
Similarly Enlightenment-inspired, though resentful of strong government, American revolutionaries devised a system to protect individual liberties. James Madison wrote, “If men were angels, no government would be necessary. If angels were to govern men… controls on government would (not) be necessary. In framing a government… you must first enable the government to control the governed; and in the next place oblige it to control itself.”
While the French were sticking dissenters’ heads on bayonets, Americans enacted a Constitution designed to disperse authority in order to protect the moral promise in our Declaration of Independence: that every individual is born with equal and inalienable rights to life, liberty, property, and the pursuit of happiness. Thus, the American Revolution facilitated the creation of the freest and most prosperous society on earth.
Over the last century, while America’s free economy boomed attracting immigrants to our opportunity society, politicians were busy encumbering it, à la française. They instituted the income tax, asserted extra-constitutional powers to regulate, dabbled in cronyism and created entitlement programs that now consume 65 percent of the federal budget. Once 3 percent of gross domestic product, government spending is now 25 percent, crowding out the private economy and producing daily deficits of $4 billion.
Consequently, we suffer French-size economic stagnation, unemployment, and debt (up 50 percent since January 2009). Poverty rates are the highest since tracking began in 1959; food stamp dependency is exploding; and the percentage of Americans with a job is the lowest in decades. Not surprisingly, two-thirds of Americans say we’re on the wrong track and that there’s too much government power and too little individual freedom.
Meanwhile, clueless that government policies influence economic decisions, politicians now propose increasing taxes. “Taxmageddon” -- the toxic mix of year-end tax increases – is causing businesses to defer hiring and investment. Even if limited to the top two-percent with incomes over $250,000 (which includes small businesses responsible for half of private sector jobs and $720 billion in earnings), tax increases would create serious recessionary headwinds while funding only 8.5 days of federal spending, per the Congressional Budget Office. This is a blueprint to cripple job creation, and 23 million job-seeking Americans.
Though they agreed it was economically injurious to hike taxes in 2010 when the economy was growing at twice its current rate, tax-hikers argue it’s now about fairness while referencing the “roaring 90’s” when rates were higher but before explosions in spending, debt, and stagnation. What's fair about increasing taxes knowing the vulnerable will suffer disproportionately?
What is fair considering 2009 IRS data shows the top one-percent and top five-percent paid 37 percent and 64 percent respectively of federal income taxes, while the bottom half paid two percent? If the richest aren’t yet paying their fair share, doesn’t that suggest they don’t merit their earned success? By denying some Americans their earned success, doesn’t that undermine our opportunity society and social cohesion?
Having migrated toward French values, practices and even their anti-wealth rhetoric, its hard to recall our Founders' belief that government’s role is to protect – not grant -- individual rights and property. To reinvigorate our free society and market economy, we need a true “fairness agenda”: a simpler tax code with fewer special interest loopholes, no more corporate welfare, and reforms that preserve entitlement programs for future generations.
Most importantly, we must recover the private initiative that French historian Alexis de Tocqueville found exceptional in 1830s America: ““In every case at the head of any new undertaking, where in France you would find the government ... in America you’re sure to find an association.”
By renewing our commitment to individual liberties and the ethic that each of us – not government -- is our brother’s keeper, Americans “have it in our power to begin the world all over again,” as American revolutionary Thomas Paine wrote.
Wouldn’t our Founders want us to Think Again?
Melanie Sturm | @ThinkAgainUSA
“The higher up in the tree the monkey goes, the more of his backside that shows,” goes the maxim. It would be hard to climb higher than Warren Buffett, the world's most celebrated investor. However, as the namesake of the Buffett Rule that imposes higher tax rates on the wealthy, Buffett and his backside dangle precariously “out on a limb.”
Melanie Sturm | @ThinkAgainUSA
In a Russian joke, there are two friendly farmers, Boris and Ivan. Both are prosperous, though Boris owns chickens and Ivan doesn't. When a genie offers Ivan anything he desires, he ponders his wish and orders, “Kill Boris' chickens!”
Melanie Sturm | @ThinkAgainUSA
Like a snuff video, footage of Moammar Gadhafi's final moments saturated our screens last week. Despite revulsion for Libya's depraved and ruthless despot, I cringed at the ingloriousness of a once-powerful man holed up in a filthy drainage pipe begging for mercy. The cowardly dictator screamed “don't shoot” and ironically asked the rebels if they knew right from wrong, before a bullet to the temple ended his 42-year reign.