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
Mark Twain famously remarked, “No man's life, liberty, or property are safe while the legislature is in session.” So when Massachusetts Senate candidate Elizabeth Warren proclaimed “the system is rigged” in her prime-time speech at the democratic convention -- Bill Clinton’s warm-up act – it appeared she agreed with Twain and 69 percent of Americans who believe “politicians break the rules to help people who give them money,” according to an August Rasmussen poll.
Before assuming Warren blames politicians for rigging the system, Think Again. In fact, as an advocate of an assertive and growing federal government run by benevolent and enlightened policymakers, Warren is out of sync with Mark Twain, public opinion, and America’s founders who feared a system rigged by powerful elites, like the British one they overturned.
When Thomas Jefferson asked if a “man cannot be trusted with the government of himself, can he then be trusted with the government of others,” he expressed our founders’ concern that future politicians would encroach on our newly declared natural rights and liberties, leading America into “debt, corruption and rottenness.” Hence, our founders designed a government with limited powers to serve -- not rule -- the people, and to protect our inalienable rights, not confer privileges to special interests.
Today, our founders’ worst nightmares are reality -- the system is indeed rigged. The government’s share of the economy has exploded to 25 percent, dampening the private sector as powerful politicians allow favored beneficiaries to feed at the federal trough. The negative returns from these policies Warren calls “investments” have pushed America down the “global competitiveness” rankings -- from number one in 2008 to number seven today -- according to the newly released World Economic Forum report that blames unsustainable debt, cronyism, regulation, and economic stagnation for the fall.
Politicians promised that “investments” like the 2009 Stimulus would revive our economy and reduce unemployment, yet $830 billion later we’re worse off. Even since the official start of the “recovery” in June 2009: economic growth is 40 percent of the historic average for post-recession rebounds; the percentage of Americans with a job is the lowest in decades and the real unemployment rate is 19 percent as four times more workers left the workforce last month than entered it; median household income is down sharply while food stamp usage and federal disability checks have skyrocketed; and poverty rates are near a 50-year high.
As she laments the suffering middle class, why doesn’t Warren evaluate whether the activist government policies she advocates actually underlie this despair? Shouldn’t she query why the president’s 2013 Federal Budget garnered no votes in Congress and why the Senate has failed for the fourth consecutive year to uphold it’s constitutional duty to pass a budget?
She'd find politicians fearful of endorsing a budget that borrows $1.3 trillion to fund the government, after paying for mandatory expenditures such as Social Security, Medicare, Medicaid and interest on the debt. But as federal debt spiked $5.4 trillion since January 2009, topping $16 trillion last week — a sum one-quarter of the combined gross domestic product of every country in the world — why isn't Warren proposing a plan to avert the looming fiscal crisis?
Unless reformed, Social Security and Medicare won’t exist for younger generations. Nevertheless, Warren ignores this tragedy preferring to wax eloquent about “a level playing field where everyone pays a fair share and everyone has a real shot”…. because “the economy doesn’t grow from the top down, but from the middle class out and the bottom up.” But how do we secure a middle class out of government jobs paid for with borrowed dollars? Does our undisciplined, indebted and special interest-oriented government subvert the private economy, undermining the middle class and those who aspire to it?
This is the argument of Senator Tom Coburn’s book “The Debt Bomb,” endorsed by Alan Simpson and Erskine Bowles on whose fiscal commission he served. Contrary to the narrative that blames lobbyists and gridlock, Coburn contends, “Congress has been an assembly line of new programs and a favor factory for special interests. Our economy is on the brink of collapse not because politicians can’t agree, but because they have agreed for decades…to borrow and spend far beyond our means… to create or expand nearly forty entitlement programs, carve out tax advantages for special interests, build bridges to nowhere and earmark tens of thousands of other pork projects.”
Anxious to prevent an economic calamity worse than 2008, Coburn urges Americans to drain Washington’s stagnant pond, refilling it with public servants committed to un-rigging the system that’s left millions of Americans “on their own,” deprived of jobs and hopes of finding one. Without a plan to solve our economic and fiscal woes, Warren is an accomplice to the rigged system she denounces.
Think Again Elizabeth Warren — telling the truth and taking responsibility distinguish great leaders from mere politicians.
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
As if accompanying Dorothy en route to the Emerald City of Oz, Americans seek a green wizard to fulfill our hearts’ desires -- a world powered by renewable energies like solar, wind and bio-fuels. Bedazzled by Glenda the Good Witch’s solar-powered ruby slippers, we want the green-brick-road to lead us to a cleaner energy future.
However, without Auntie Em to awaken us to reality, Americans must Think Again. Though cast as the Wicked Witch of the West, over the last decade the conventional energy industry has revolutionized America’s energy outlook. Today we’re the most energy-endowed nation in the world, with enough clean, reliable, abundant, and cheap natural gas to last for generations.
It’s “like adding another Venezuela or Kuwait by 2020”, according to Pulitzer-prize winning energy expert Daniel Yergin who believes the world energy map now centers on North America, not the Middle East. Energy consultant Wood Mackenzie estimates that tapping new reserves would generate one million jobs by 2018 and generate $803 billion in governmental revenue through 2030. Additionally, these new extraction technologies require far fewer wells, though they present fresh environmental challenges that several states (including Colorado) have addressed with new regulations to protect the environment and secure water supplies.
Thus, rather than crucify the conventional energy industry, we should celebrate the entrepreneurialism and technological ingenuity that’s enabled the US to become a net energy exporter for the first time since 1949. The government need only permit development of new reserves -- not subsidize -- to further American energy independence, fuel our vehicles, lower energy costs and reap economic gains.
Meanwhile, promoters of green energy policies continue to argue that “investments” in renewable energies are environmental and job-creation boons for America, though our journey along the green-brick-road proves otherwise. Whether evaluating wind power in tornado-swept Kansas or solar energy in sunny California, renewable technologies are woefully uneconomical, wickedly unreliable and surprisingly unsound environmentally.
It’s understandable Americans dream green, considering we were told in 2008 that by investing $150 billion over the next decade in renewable energies, we’d reap five million new jobs. But as former Treasury Secretary Larry Summers noted, “The government is a crappy venture capitalist”. That’s because lobbying prowess and political viability outweigh economic viability when government picks winners and losers.
After “investing” $110 billion since 2009, the sector is littered with taxpayer backed, bankrupt companies like Solyndra, Beacon Power, and Ener1, all of which paid bonuses before going under. Reuters reported last month “the wind industry… has shed 10,000 jobs since 2009 even as the energy capacity of wind farms has nearly doubled”… while the demonized “oil and gas industry added 75,000 jobs.”
The truth is, industries that aren’t economically viable don’t create real jobs, and those that are viable, don’t need subsidies. Plagued by competitive disadvantages like sun and wind intermittency, and expensive land, capital, transmission and backup capacity, these technologies are uncompetitive, small market players and remain subsidy-dependent.
Despite receiving 53.5 percent of federal financial support for the electric power sector, wind and solar supply only four percent of US power at a cost 100-300 percent more than conventional sources, according to the Energy Information Administration. A University of Wyoming study notes that because green policies increase prices, the “economic benefits derived from building renewable energy facilities in the short-run are more than offset by losses in economic output and employment”, thus hurting the poorest and most vulnerable.
Additionally, given renewables’ green patina, many don’t appreciate their adverse environmental impacts beyond the eyesore, noise, water usage, and wildlife destruction. Called “energy sprawl” by the Nature Conservancy, renewable energies require vastly more land while producing significantly less energy than conventional energy. Most disconcerting, their incurable intermittency requires utilities to rely on conventional power to cycle up when there’s no wind or sun, and power down when there is, thus diminishing carbon reduction advantages.
If policymakers weren’t brainless scarecrows, cowardly lions and heartless tin men, they’d adopt Bill Gates’ proposition that cheap energy is “a fantastic vaccine” for the economy. That’s what Americans deserve – a booster shot to deliver authentic solutions, real jobs and genuine economic growth. Moving beyond fossil fuels will happen eventually when superior and affordable energies are scaled for mass use.
Energy development isn’t a zero sum game, as the Wyoming study concludes: “Environmentally responsible development of fossil fuel resources could be complementary with renewable energy development, creating jobs and generating tax revenues to ensure a robust economy capable of creating and funding innovative renewable energy technologies of the future.”
Given our economic straits and the remoteness of the green dream, the underlying question is how much more are Americans willing to pay to harness wind and sun. Isn’t it time to demand that our leaders propose energy solutions based not on ideology but on how to best guarantee prosperity for generations of Americans?
Think Again – a secure, affordable and environmentally sound energy future is not over the rainbow.
Melanie Sturm | @ThinkAgainUSA
When Paul Simon sang “Mama don't take my Kodachrome” in 1973, he claimed he'd “read the writing on the wall,” but he couldn't have foreseen how a transformative technology — making photos from digits — would render obsolete his precious color film. The global brand icon that revolutionized photography, making it affordable and convenient for ordinary people, now teeters on the brink of bankruptcy. Unfortunately for Kodak workers and the residents of Rochester, N.Y., consumer choice — not Mama — vaporized Kodachrome.
Because election season coincides with economic stagnation, lost jobs and defunct companies are political hot potatoes, putting capitalism on trial. Before joining free-enterprise bashers who bemoan investors who find opportunity in “the gales of creative destruction,” Think Again. As Kodak's ascent and decline demonstrate, this tenet of capitalism is what sparks entrepreneurship, innovation, growth and continuous progress, improving everyone's standard of living.
Preoccupied as we are with economic hardship, it's hard to appreciate the upending phase of “creative destruction.” But without disruptive transformations and the financial capital they attract, the entrepreneurial innovation that fueled America's economic preeminence — and job-creators like Boeing, Apple, Amazon, FedEx and Intel — couldn't have occurred. To paraphrase labor leader Samuel Gompers, the biggest enemy of the worker is an unprofitable, poorly managed company.
We'd also be saddled with outmoded horseshoes, floppy disks, typewriters and eight-track tapes. By reallocating scarce resources to better businesses such as automobiles, digital memory devices, laptop computers, CDs and online retailers, consumers realize previously unimaginable conveniences and value as obsolete products end up in the dustbin of history.
Capitalism is like cancer surgery — though risky and unpleasant to watch, it's a life-enhancing, regenerative process allowing productive cells to flourish where unhealthy ones once permeated. Since not all practitioners are well-trained surgeons, the process can be messy and imperfect. Sometimes the patient weakens before recovering vitality; sometimes he dies, making room for the healthy.
What's worse is when government subverts free-market capitalism by rescuing the suicidal from the consequences of their own errors. When they connect the nearly dead to life-sustaining “bailout-IVs,” governments play Dr. Frankenstein — creating economic zombies who dwell malodorously in our midst, suck up scarce resources and prolong everyone's suffering. What's protest-worthy are the prolonged and expensive hospital stays as government gets to appear beneficent with other people's money! This is “crony capitalism.”
In free enterprise, companies must reinvent or bear the consequences. Consider Smith Corona, the world's leading typewriter manufacturer, whose consumer breakthroughs included the automatic carriage return, electronic dictionaries, grammar checkers, word processors and the PDA. This reinvention process stopped in 1992 with the classically ironic shortsightedness of its CEO, who dissolved the company's joint venture with Acer Computers, saying, “Many people believe the typewriter and word-processor business is a buggy-whip industry, which is far from true.“ By 1995, Smith Corona was bankrupt, and Acer was the world's fourth-largest computer company.
Smith Corona learned the hard way that maintaining one's practices can be a formula for obsolescence. In contrast, Apple Computer, now the world's most valuable company, faced bankruptcy in 1996 before its reinvention accomplished the greatest turnaround in corporate history. It took rehiring founder Steve Jobs — whose reinvention followed being pink-slipped a decade prior — to reposition the company, its product line and marketing strategy.
Struggling companies whose shortsighted and complacent management fail to reinvent can be attractive to private equity investors who believe their risk capital (not taxpayers) and expertise can enable small and sometimes-troubled companies to profitably reincarnate. Though risky and uncertain, corporate turnarounds involve losing excess weight, consolidation and the injection of new ideas and fresh money. Successful ventures yield returns commensurate with the risk and “smart money” reputations; failure assures the reverse.
When opportunistic politicians cherry-pick failures in order to compare “turnaround capitalists” to rapacious corporate raiders or “vulture capitalists,” they're themselves birdbrains whose intellectual honesty is as compromised as their intellectual capacity. Where is the advantage in stealing from yourself? That's the implication when “turnaround capitalists” are accused of looting the companies they own.
As Mr. Eastman spins in his grave and Kodak struggles with its own death spiral, ambitious politicians prey like vultures on our economic insecurity, luring votes with tales of government-insured utopia. Real leadership involves explaining that in a world characterized by constant change and where status quos lead to obsolescence, Americans have historically prospered, often in the wake of adversity, chaos and even failure. Considering the scores of American companies founded during recessionary times, Americans should be reassured that the free market on which innovation and economic dynamism depend is the key to renewed prosperity.
Unfortunately, expecting intellectually bankrupt politicians to Think Again may be futile since, as Upton Sinclair observed, “It is very difficult to make a man understand something when his salary depends on his not understanding it.”
Melanie Sturm | @ThinkAgainUSA
Even with Tax Day in the rear-view mirror, many are still agog that General Electric is paying hardly any corporate income taxes, despite reporting a profit of $14.2 billion. As though GE hit the jackpot, many politicians claim to be shocked, shocked that gambling is going on here!
Melanie Sturm | @ThinkAgainUSA
Is the free market the best system for the world's future? So asked GlobeScan in its annual survey of 25 countries, conducted since 2002. Then, American confidence in the free market topped the poll at 80 percent.
Melanie Sturm | @ThinkAgainUSA
Winston Churchill famously quipped, “However beautiful the strategy, you should occasionally look at the results.” What could be more beautiful, never mind seductive, than the strategy to promote renewable energies and a “green economy,” heralded as cure-alls for America's greatest challenges, most particularly economic stagnation?
Melanie Sturm | @ThinkAgainUSA
I didn't “Occupy” Wall Street, though I spent enough hours working there that a sleeping bag could have come in handy. I can attest to one of the protesters' claims about Wall Street bankers: While most are good and ethical people, they are supremely money-oriented, and, like the bear that sniffed out a Payday in my trash, they'll take the path of least resistance to find theirs.
Melanie Sturm | @ThinkAgainUSA
Back in September when President Obama was arguing for his third stimulus, he pronounced America soft and said we lacked a competitive edge. At the same time, the NFL cognoscenti were declaring Tim Tebow an NFL bust despite being a first-round draft pick. Remarkably, Tim Tebow and the U.S. economy are showing signs of resurgence.