Labor Force Stagnation Concealed by Obama

25 More Terms

– By: Larry Walker, Jr. –

Forget about four more years. Based on the USA’s current trajectory, it would take another 25 terms, or 98 years, for Barack Obama’s bizarre economic policies to restore the U.S. Labor Force to where it should be in the next four years, when compared to the growth rates achieved under the policies of George W. Bush. And then once that’s been achieved, based on the trajectory of the USA’s 11,832,000 Jobs Deficit, it will take something on the order of infinity to reach full-employment. So what’s the point of another Obama term, to fundamentally destroy the Global economy?

Earlier this month micro-journalists were roused over the fact that 368,000 additional workers dropped out of the labor force during the month of August. For the first time many were awakened to the fact that this was the only reason the official unemployment rate declined from 8.3% to 8.1%, but that’s about as far as they ventured. A handful went on to extrapolate that the real unemployment rate is actually 11.2% when based on the same labor force participation rate in place when Obama entered office, but hindsight is 20/20. A more substantive analysis would involve utilizing this information in order to project where we are headed.

Backwards

Last Friday, Egan-Jones Ratings Co. downgraded its U.S. sovereign rating to AA- from AA on concerns that the Fed’s new round of quantitative easing, or QE3, will hurt the U.S. economy. The ratings agency said the Fed’s plan of buying $40 billion in mortgage-backed securities a month and keeping interest rates near zero does little to raise GDP, reduces the value of the dollar, and raises the price of commodities. In a note Egan-Jones said, “From 2006 to present, the US’s debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%. In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%.”

Topping this, according to the Economic Cycle Research Institute, the federal government’s release of overstated preliminary data is obscuring real-time evidence of recession. For example, the Obama Administration is purposefully overstating preliminary labor statistics in order to give a boost to his re-election bid, but this is a dangerous practice, because by the time economists are able to determine that we are in recession, it will be too late to issue a warning. In contrast, under the Bush Administration preliminary statistics were typically understated, and thus we had warning several month’s prior to the Great Recession.

Based on the August Employment Situation Report, the economy added a mere 96,000 jobs, while June and July’s numbers were revised downward by 41,000. Thus, the U.S. realized a net gain of just 55,000 Nonfarm jobs in the month of August. But micro-journalists ran with the 96,000 figure, basically ignoring a history of 42 consecutive months of subsequent downward revisions, as though this figure won’t also be revised downward next month. Nevertheless, since the economy needs to create 127,000 jobs a month just to keep up with population growth, the result led to an increase in the jobs deficit, which currently stands at 11,832,000.

As outlined in the last post, U.S. Jobs Deficit Increases by 72,000 in August, to be meaningful, the number of jobs needed to return to more or less full employment by December 2014, or within the next 28 months, is now 549,571 jobs a month. And even if we extend the target date to 5 years from today, which will be more than 8 years from the time the recession ended, the number of jobs needed to return to more or less full employment by August 2017, or within the next 60 months, is now 324,200 jobs a month. So even though micro-journalists ignored the fact that only 55,000 jobs were added in August, and instead sought to convince the public that 96,000 were added, it really doesn’t matter. What should be made clear is the point that we will never reach full-employment at the current trajectory.

Labor Force Stagnation

According the Bureau of Labor Statistics, the labor force grew by 10,436,000 during George W. Bush’s term, which encompassed two recessions (see chart below). During the first recession, which lasted from March 2001 to November 2001, the labor force grew by 539,000. And even during the first 13 months of the Great Recession (end of the Bush term), from December 2007 through January 2009, the labor force continued to expand by 401,000. In contrast, during Barack Obama’s full term to-date, the labor force has grown by a mere 409,000. In other words during Obama’s entire term the labor force has grown at a recession pace.

Even worse, the Great Recession ended in June 2009, yet from July 2009 to August 2012 the labor force actually shrank by 85,000. This means that, under the policies of Barack Obama, the U.S. labor force has performed worse than during the most recent recessions – way worse. Thus, the economy is not growing, it’s shrinking. So what about that?

  • Labor Force Growth During Bush Term (+)10,436,000

  • Annual Labor Force Growth Rate During Bush Term 0.907%

  • Labor Force Growth During Obama Term (+)409,000

  • Annual Labor Force Growth Rate During Obama Term 0.076%

  • Labor Force Contraction Since June 2009 (-)85,000

The Labor Force grew at an annual rate of 0.907% during both Bush terms, which is close to the rate of population growth, while annual growth has been almost immeasurable during Obama’s term, at just 0.076%. So what does this mean? It means that under Barack Obama’s trickle-down-government, borrow-and-spend economic policies, and based on the USA’s current trajectory, it will take approximately 25 more terms (98.1 years) for the labor force to grow to where it should be in the next four years. So perhaps instead of crying “four more years,” Obama loyalists should be shouting “98 more years,” because four more just won’t cut it.

Aside from the Constitution, the only other problem with anointing Barack Obama as our first Dictator is that even if all 7,031,000 Americans who have dropped out of the labor force during his term, those who still want jobs now, suddenly decided to return to the labor market, there’s no guarantee they would find work, because of the Jobs Deficit which currently stands at 11,832,000. In fact, based on the USA’s current trajectory, it will take something on the order of infinity to reach full-employment. Thus, hardcore Obama loyalists might as well be shouting, “Obama forever”.

But fortunately, most of us don’t have forever to wait, which is precisely why we need to end this ridiculous charade right now. There’s only one Plan on the ballot this November, and only one man capable of turning things around. And by turning things around, no, I don’t mean going back to the same policies which caused the last recession. That would be lame. I mean returning our government to some semblance of honesty and integrity. A POTUS who ignores his own jobs council, and then inundates the nation with lies and distortions, while concealing the truth about the economy, isn’t a problem solver; he is the problem of our day, the present, right now, today.

The first step in repairing the Republic is to vote this deceiver out of office. The second step involves hiring a turnaround guy, someone who doesn’t know how to fail, and then trusting in God to help him get us back on the right track.

Data: Worksheet on Google Drive

U.S. Jobs Deficit Increases by 72,000 in August

Obama’s Cure – More Jokes

– By: Larry Walker, Jr. –

The U.S. Jobs Deficit increased by 72,000 in August, rising from a deficit of 11,760,000 in July to 11,832,000, based on Friday’s Employment Situation Report. The economy added a mere 96,000 jobs in August, while June and July’s numbers were revised downward by 41,000. Thus, the U.S. realized a net gain of 55,000 Nonfarm jobs in the month of August. But since the economy needs to create 127,000 jobs a month in order to keep up with population growth, this resulted in an overall increase to the jobs deficit of 72,000, as compared to the previous report.

Having been informed of the news prior to his DNC acceptance speech, that the hopes and dreams of another 72,000 Americans had been decimated, along with those of an estimated 27 million who were already unemployed or underemployed, Barack Obama slid into his quotidian comedy routine, ridiculing conservative economic policies, stating that, “They want your vote, but they don’t want you to know their plan. And that’s because all they have to offer is the same prescription they’ve had for the last thirty years: ‘Have a surplus? Try a tax cut.’ ‘Deficit too high? Try another.’ ‘Feel a cold coming on? Take two tax cuts, roll back some regulations, and call us in the morning!’”

Here’s the big picture. We had a recession which lasted for the last 12 month’s of the Bush term through the first 6 month’s of Obama’s, not for the last 30 years. Today 12,544,000 Americans are counted as officially unemployed. Another 7,031,000 are unemployed and want jobs, but have dropped out of the labor force and are thus not officially counted. And still another 8,031,000 are employed part-time for economic reasons. The truth is that if Barack Obama’s government-down, borrow-and-spend policies worked, then the jobs deficit wouldn’t be worse-off today than it was in December 2009, yet it is. So enough with the jokes, how many jobs need to be created each month in order to reach full-employment, and how long will it take? And in light of the answer, is four more years of Obama’s deficit spending and light-mindedness the cure?

Obama Got Jokes

No Mr. President, it’s not a surplus, or a cold that we feel coming on, it’s something much more fatal. You see, the U.S. National Debt surpassed the $16 trillion mark before Obama took to the podium. And why is this problematic? Well for one, the USA’s credit rating was already downgraded once on Obama’s watch, on August 5, 2011, the first such occurrence in American history. And secondly, because Barack Obama’s prescription for all that ails our economy is the same one he’s offered for the last 4 years: ‘Debt too high? Borrow and spend some more.’ ‘Entitlement spending bankrupting the nation? Add a new entitlement (Obamacare), then borrow and spend even more.’ ‘Job creation numbers insufficient? Tell more jokes, then borrow and spend a little bit more.’

Yet while Barack Obama has elected to waste the last four years of our lives running up the national debt, while capping on conservative economic policies, the U.S. jobs deficit has increased from 5,165,000 in December 2008 to 11,832,000, an increase of 6,667,000 (see chart below). Essentially, what this means is that since Obama implemented his $831 billion Stimulus plan, the economy has been unable to create a sufficient number of jobs for 6,667,000 new entrants, many of whom have been ushered straight out of high school or college into hopelessness and generational dependency. Do you think this is funny? I don’t. Exactly where have four years of Barack Obama’s borrow-and-spend prescription refills landed us?

Updated Jobs Benchmark

Updating Economist Paul Krugman’s job creation benchmark with the latest figures, we discover that to be meaningful, the number of jobs needed to return to more or less full employment by December of 2014, or within the next 28 months, is now 549,571 jobs a month, as follows:

  • In order to keep up with population growth, we would need to create 127,000 jobs times 28 months, or 3,556,000. Add in the need to make up for the jobs deficit and we’re at around 15,388,000 (3,556,000 + 11,832,000) over the next 28 months — or 549,571 jobs a month.

If we extend the target date to 5 years from today, which will be more than 8 years from the time the recession ended, then the number of jobs needed to return to more or less full employment by August of 2017, or within the next 60 months, is now 324,200 jobs a month, as follows:

  • In order to keep up with population growth, we would need to create 127,000 jobs times 60 months, or 7,620,000. Add in the need to make up for the jobs deficit and we’re at around 19,452,000 (7,620,000 + 11,832,000) over the next 60 months — or 324,200 jobs a month.

Did the U.S. add 549,571 jobs last month? Nope. In fact we haven’t come anywhere close in any month during the entire Obama recovery. Did employers add 324,200 jobs last month? Nope. In fact, we haven’t even come close to this number in any month during the entire Obama recovery, except for the single month of May 2010, but those were just temporary Census jobs that went away in subsequent months (see the related table).

The sad truth is that the U.S. only added 55,000 Nonfarm jobs in August (+96,000 minus 41,000 of previous overstatements). And because the jobs deficit increased by 72,000, we are currently on track towards a permanent decline. In other words, it is impossible to reach full-employment while the jobs deficit is increasing. Thus, we are NOT moving in the right direction, we are moving towards another recession. We have wasted 44 months coping with the unreasonable economic policies of Barack Obama, and what did we get in return? We are worse off today than before he started.

Incomplete or Deficient?

At this point, we either need to create 549,571 jobs each and every month to be on a track towards full employment within the next 28 months, or 324,200 jobs each and every month to be on track towards full employment within the next 5 years (which will be more than 8 years from the end of the recession). And although Barack Obama has orated a plan which would add 600,000 new jobs in Natural Gas by 2020 (or over the next 8 years), and 1,000,000 new Manufacturing jobs over the next four years, we are forced to give his plan a grade of “D” for deficient. Under Obama’s government-down, borrow-and-spend economic policies, most of us will indeed be in “a better place” by the time the U.S. reaches full-employment.

A lot of my friends, neighbors, and clients lost their jobs, lost their homes, divorced or filed for bankruptcy over the last 3 years and eight months. My neighborhood has been decimated, as our homes have lost a third of their value. Our business revenues have declined and leveled off at a lower tier. And as far as I can see, only one political party offers any hope of turning things around. The Obama-Biden plan includes a goal of creating 1,000,000 new manufacturing jobs over the next four years, which would be great, because their policies have thus far resulted in a loss of 582,000 manufacturing jobs since January 2009. In stark contrast, the Romney-Ryan Plan includes a goal of creating more than 12,000,000 jobs in the next four years, which is entirely doable.

I don’t care what the policies are as long as they lead to the desired result. The Obama-Biden goal is deficient. Even if the plan works, it won’t result in a sufficient number of new jobs to even keep pace with population growth (127,000 a month / 1,524,000 per year). In fact, Obama has set the bar so low that his plan is incapable of eliminating the jobs deficit, even if granted a second term. So what’s the point? Based on our current trajectory, Obama’s plan never comes close to full-employment, ever.

If you think that adding $5.3 trillion to the national debt over four years, establishing a goal of 1,000,000 new jobs when more than 12,000,000 are needed, and sprinkling it over with meaningless ramblings of a far-left gagman is a plan, then you might need to get your head examined. But if the cure for what ails America today really does involve reducing the growth of government spending, reducing income taxes and capital gains taxes, reducing the number of government regulations, and creating more than 12,000,000 new jobs in the next four years, and you reject it in favor of the former, then God help us all. If you’re still sane after filtering through all the nonsense, then you know what you have to do. Vote for the Plan, there’s only one.

Data: Worksheet on Google Drive

Obama’s Loot-and-Plunder Theory on Steroids

:: Use It or Lose It: We Can’t Wait

– By: Larry Walker, Jr. –

According to unelected hoodlums within the Obama Administration, from 2003 to 2006, Congress set aside $473 million in earmark transportation funds that have never been spent. “These idle earmarks have sat on the shelf as our infrastructure continued to age and construction workers stood on the sideline,” Transportation Secretary Ray LaHood said in a conference call Friday. “I’m taking that unspent money and giving it right back to the states so they can put it to work on the infrastructure projects that they need most — projects that will put people to work.”

So according to Mr. LaHood he’s going to take (i.e. steal) $473 million that was earmarked for infrastructure projects from 2003 through 2006, and send it right back (i.e. 6 to 9 years after the fact) to the states so they can spend it on the infrastructure projects they need the most (i.e. for purposes other than Congress intended). Aside from the fact that this proposal is felonious, the money Mr. LaHood is referring to no longer exists.

The idea of taking funds earmarked towards specific projects, which were deemed unworthy of pursuit during a previous administration, and shifting them towards other purposes today is felonious. What does the term “earmarked funds” mean? It means if Congress passes legislation to repair a certain bridge, the money to repair that bridge is “set aside”. But following Mr. LaHood’s gangster logic, ‘fictitious’ funds earmarked towards certain projects, six to nine years ago, may now be used to fund projects such as California’s Bullet Train to Nowhere. Perhaps a pair of handcuffs is in order.

Common sense dictates that if a bridge still needs fixing, and if the funds still exist and are not barred by the statute of limitations, then it should be fixed. But if the bridge doesn’t need fixing, if it was subsequently replaced by another project, or if the statute of limitations has expired, then the funds, assuming they still exist, should be returned to the Treasury. The notion of “use it or lose it” in this matter is felonious. According to Mr. LaHood, States now have around 45 days, or until October 1st, to identify projects for which they plan to use the money, or else they will lose it. In other words, the funds were not lost after sitting idle for 6, 7, 8 and 9 years, but suddenly there is an arbitrary 45-day deadline. Who passed that law? What is the statute of limitations for spending on earmarked transportation projects – 9, 8, 7, or 6 years? Is there one, or do bureaucrats just get to make up the rules as they go along?

Where’s the Money?

The following analysis from John A. Swinford on his blog, People, Places, News and Other Stuff, answers a key question: Where’s the money?

“Sounds reasonable, right? Hold on to your horses; remember this is a politician speaking. According to Transportation Secretary Ray LaHood, “These idle earmarks have sat on a shelf…” Well, OK, they were authorized but not used. I get that, but what happened to the funding for those earmarks…where is the money…in a lock box or a savings account…or somewhere else? Secretary Hood claims the earmarks were authorized during a period between 2003 and 2006 but not actually spent and therefore, the cash is still available.”

“Before you buy that explanation consider the difference between a budget and cash accounting. If you go to the St. Louis Federal Reserve Bank website you can pull up the actual Federal cash receipts and outlays. In each of the years to which Secretary Hood refers, the cash deficits ran $378 billion, $413 billion, $318 billion and $248 billion respectively (in current dollars). OMG, Washington spent more cash than it took in…What a surprise… But if that is so how could there possibly be some extra loose cash sitting around. Answer… there is none. The only way to fund “Use It or Lose It” is what? You guessed it…more borrowing.”

In fact, according to the Bureau of Economic Analysis, in real terms, the federal government operated at deficits of -1,955.2 billion from 2003 to 2008, and another -4,678.1 billion from 2009 to 2012 (shown in Constant FY 2005 Dollars). So not only was there nothing leftover, the money was never there to begin with.

The annual deficits shown in the chart above and listed below are shown in billions of constant (FY 2005) dollars. Note that the federal budget was nearly balanced in FY 2007.

  • 2003 -402.6
  • 2004 -427.9
  • 2005 -318.3
  • 2006 -239.7
  • 2007 -151.0
  • 2008 -415.7
  • 2009 -1,274.4
  • 2010 -1,153.0
  • 2011 -1,127.6
  • 2012 -1,123.1 (estimate)

The chart below summarizes receipts and outlays as percentages of Gross Domestic Product. Notice how the budget gap has widened dramatically since 2009.

Obama’s ideas on the economy are nothing more than classic Loot-and-Plunder, trickle-up, middle-out snake oil. In other words, borrow now – pay never. It didn’t work during the Great Depression, it hasn’t worked since 2009, it has never worked and it never will. Proposing to implement 1/16th of President Clinton’s 1990’s tax policies, while ignoring the fact that back then, income tax rates were higher on every American across-the-board, isn’t a serious plan for either growing the economy or balancing the budget. It’s a notion that most certainly fails to justify the felonious borrowing conjured up by Transportation Secretary LaHood just yesterday.

It’s time to return to supply-side economics which proved itself during the Roaring 20’s, the 1960’s, the 1980’s, the 1990’s and most of the 2000’s (through 2007). Obama has no plan to pay down the $5.3 trillion (in current dollars) which he’s added to the national debt, let alone the $16 trillion overall balance. Yet he seems to have no problem borrowing another $500 million under the guise that it’s somehow Bush’s fault. That’s right! Expect the extra $500 million in borrowing to magically be credited to George W. Bush, while Obama continues to promote the obvious lie that spending hasn’t increased on his watch.

But as each of the above charts show, whether in terms of current dollars, constant (FY 2005) dollars, or as percentages of GDP, Obama has allowed spending to skyrocket while revenues have continued to suffer due to a weak economy and high unemployment, symptoms of his failed economic policies. It’s time to put an end to this churlish presidency. Borrow It or Save It? We can wait – all the way to November 6th.

“The debt and the deficit is just getting out of control, and the administration is still pumping through billions upon trillions of new spending. That does not grow the economy.” ~ Paul Ryan

Addendum:

During 2008 the Highway Trust Fund required support of $8 billion from general revenue funds to cover a shortage in the fund. This shortage was due to lower gas consumption as a result of the recession and higher gas prices. Further transfers of $7 billion and $19.5 billion were made in 2009 and 2010 respectively.

^ Weiss, Eric M. (September 6, 2008). “Highway Trust Fund Is Nearly Out of Gas“. The Washington Post. Retrieved May 4, 2010.

^ “President Signs Bill Providing 9-Month Extension, $19.5 Billion for Highway Trust Fund“. The Washington Post. March 19, 1010. Retrieved August 15, 2011.

———————————————

References:

THE OLD WASHINGTON SHELL GAME? | John A. Swinford

Trickle Up Economics | Peter Schiff

Chart Data: Spreadsheet | Google Drive

Understanding Obama’s Loot and Plunder Theory

A.K.A. Trickle-up, or Trickle-sideways

– By: Larry Walker, Jr. –

The ignorance of one voter in a democracy impairs the security of all.” ~ John F. Kennedy –

“Trickle-down theory” is a pejorative term in United States politics which refers to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole. In the real world, and called by its proper name, supply-side economics has never failed. In fact, in spite of the ignorance of a few, any improvement in our economy since the end of the Great Recession can be attributed directly to the remaining bands of supply-side tax policies left over from the Bush Tax Cuts, which are scheduled to expire on December 31st.

In the 1980’s what was known as Reaganomics was pejoratively referred to by RINO’s and the far-left as “trickle-down” or “voodoo” economics. But they were wrong. Supply-side economics worked then and it will work now. Yet according to our clueless president, Barack Obama, it’s just “fairy dust”. We have to remind the far-left, including our clownish president (act like a clown and you get called one), that the four pillars of Reagan’s economic policy were to reduce growth of government spending, reduce income taxes and capital gains taxes, reduce government regulation of the economy, and control the money supply to reduce inflation. Now if that’s just “fairy dust” to you, then perhaps like Mr. Obama, back in your college days, you took one drag too many off a marijuana cigarette.

Mitt Romney’s five-point plan is the closest platform on the ballot to Reagan’s four pillars. Romney’s policies would also cut the deficit, reduce income taxes and capital gains taxes, reduce the number of government regulations, and would create a Reagan Economic Zone to strengthen free-enterprise and the U.S. Dollar world-wide. We call this supply-side economics. What’s the alternative? Does Obama have a better plan? Economist George Reisman, a proponent of tax cuts, said the following:

“Of course, many people will characterize the line of argument I have just given as the ‘trickle-down’ theory. There is nothing trickle-down about it. There is only the fact that capital accumulation and economic progress depend on saving and innovation and that these in turn depend on the freedom to make high profits and accumulate great wealth. The only alternative to improvement for all, through economic progress, achieved in this way, is the futile attempt of some men to gain at the expense of others by means of looting and plundering. This, the loot-and-plunder theory, is the alternative advocated by the critics of the misnamed trickle-down theory.”

On the other side of reality is Barack Obama’s one-point plan, also known as Obamanomics, “trickle-up”, “trickle-sideways” or “loot-and-plunder theory”. Under the Obama hypothesis, the deficit isn’t cut, income and capital gains taxes are hiked on those making over $250,000 while remaining static on those making less, the number of government regulations on the economy continue to expand, and nothing is done to improve the U.S. trade deficit or to strengthen the dollar. In other words, his one-term plan lacks a growth catalyst. Raising taxes on businesses and the wealthy isn’t an economic growth strategy, not even according to its chief proponent, Barack Obama. It’s merely a futile attempt of some men to gain at the expense of others by means of looting and plundering.

The Ends of Obama’s Loot-and-Plunder Theory

There are many countries with top tax rates higher than the 35% paid by the wealthiest Americans. In fact, the U.S. is ranked #23 in terms of top marginal tax rates among the 96 countries surveyed by KPMG in 2011. In the U.S. the top rate kicks in at around $388,350 of taxable income in 2012. Workers are also mandated to pay social security taxes of 4.2% (10.4% if self-employed) on the first $110,100 in wages, plus another 1.45% (2.9% if self-employed) on an unlimited amount of earned income. The U.S. tax on capital gains is currently 15%. The top U.S. corporate tax rate also clocks in at a healthy 35%, in addition to a matching portion of social security and Medicare taxes (6.2% of the first $110,100 and an unlimited 1.45%) on wages paid.

Among nations with the highest tax rates in the world, Ireland ranks #10. Its top tax rate of 48% kicks in at about $43,900 USD of taxable income (including a Universal Social Tax of 7.0%). Other notable taxes include a capital gains rate of 30%, and a pay related social insurance tax of 4% (also 4% if self-employed, with a 10.75% employer match). But while its personal tax rates are high, it has among the lowest corporate tax rates in Europe at just 12.5%.

The country with the #1 tax rate in the world is the Dutch territory of Aruba. Its top marginal rate of 58.95% kicks in at around $165,000 USD of taxable income, but the 35% rate kicks it at around $38,500 USD. Other notable taxes include a capital gains tax of 25%, a 1.6% (9.5% if self-employed) health insurance tax, a 4.0% (13.5% if self-employed) pension and accident insurance tax, and a 3% national sales tax. While its individual tax rates are the highest in the world, Aruba levies a flat corporate tax rate of just 28%, which is better than in the U.S.

A quick analysis of nations with the highest tax rates in the world reveals one common thread. Once a populace is conned into loot-and-plunder theory and tax rates begin to rise, it’s not long before tax brackets fall to a level where top tax rates affect almost everyone except for those below the poverty line. The top tax rate of 48% in Ireland kicks in at around $43,900 USD of taxable income and a tax rate of 35% kicks in at around $38,500 USD in Aruba. And that’s not including social insurance, health care, and VAT or national sales taxes which always follow. Where loot-and-plunder theory ends is when every middle-class worker is forking over 40% or more of their income to the government.

Live by the sword, die by the sword. If you’re in favor of hiking taxes on businesses and the wealthy, then you’re in favor of having your own and everyone else’s taxes hiked as well. That’s the deal. That’s the choice. The only one on the ballot offering a 20% across-the-board tax rate cut on every American is Mitt Romney. The only one offering not to tax interest, dividends or capital gains for those making less than $200,000 is Mitt Romney. The only one offering to eliminate the Alternative Minimum Tax and the Death Tax is Mitt Romney. The only one offering to cut the top corporate tax rate to 25% is Mitt Romney. The only pro-growth, deficit reduction plan on the ballot is Mitt Romney’s. The only things standing in the way are the clueless clown and part-time president Barack Obama (no I’m not laughing), and the ignorance of a few.

“Our tax system still siphons out of the private economy too large a share of personal and business purchasing power and reduces the incentive for risk, investment and effort – thereby aborting our recoveries and stifling our national growth rate.” ~ John F. Kennedy, Jan. 24, 1963, message to Congress on tax reduction and reform, House Doc. 43, 88th Congress, 1st Session

References:

Oxford English Dictionary

“The General Benefit from Reducing Taxes on the ‘Rich'”.Capitalism: A Treatise on Economics. p. 308. ISBN 978-0915463732

Countries With the Highest Income Tax Rates | CNBC

Aruba Tax Rates

Ireland Income Taxes and Tax Laws 2012

U.S. Jobs Deficit Holds at 11,760,000 in July

Break Out the Fairy Dust –

“The largest single barrier to full employment of our manpower and resources and to a higher rate of economic growth is the unrealistically heavy drag of federal income taxes on private purchasing power, initiative and incentive.” ~ John F. Kennedy, Jan. 24, 1963, special message to Congress on tax reduction and reform

– By: Larry Walker, Jr. –

The U.S. Jobs Deficit declined by 30,000 in July, falling from 11,790,000 in June, to 11,760,000, based on yesterday’s Employment Situation Report. While May’s number was revised upward by 10,000, and June’s number was revised downward by 16,000, the economy added a mere 163,000 jobs in July. And since we need to create 127,000 jobs a month, just to keep up with population growth, this resulted in an overall decline in the jobs deficit of 30,000 compared to the month prior (see chart below).

Emboldened by the 30,000 net improvement to the jobs deficit, Barack Obama ridiculed Mitt Romney’s economic plan, stating that, ‘the idea that tax cuts would pay for themselves by way of a “massive boom in the economy” is “fairy dust” that the GOP has “tried to sell” in the past and hasn’t worked.’ But what’s ironic is that even July’s tiny increase in jobs can be attributed to nothing more than traces of fairy dust leftover from the Bush Tax Cuts of 2003. To state otherwise, would infer that allowing the Bush Tax Cuts to expire would have yielded a better result, and surely not even Obama believes that one.

According to U.C. Berkley Professor and President Obama’s former Chair of his Council of Economic Advisers (CEA), Christina Romer, in a paper published in 2010, a tax increase of 1.0% of GDP, reduces output over the next three years by nearly 3.0%. I would add that a decline of 3.0% in output equates to a loss of around 12.7 million jobs. So does it take a rocket scientist to understand that a tax cut of 1.0% of GDP would have the opposite effect, increasing output over the next three years by nearly 3.0%, and adding around 12.7 million jobs? Call it voodoo, fairy dust, Reaganomics, supply-side economics or whatever you wish, but it’s really just common sense.

“Tax increases appear to have a very large, sustained and highly significant negative impact on the economy.” ~ Christina Romer (just prior to leaving the Obama Administration)

What’s wrong with a little fairy dust?

Obama’s misconception is steeped in the theory of Static Revenue Analysis, while Mitt Romney’s plan is based on Dynamic Revenue Analysis, or if you prefer “fairy dust”. Obama wants to raise taxes on the top 2% of income earners while doing absolutely, positively, nothing for the other 98% of Americans. Great plan Stan. On the other hand, Romney wants to cut personal income tax rates by 20% across-the-board on all Americans, eliminate taxes on interest, dividends and capital gains on those making less than $200,000, eliminate the death tax, eliminate the alternative minimum tax and lower the top corporate tax rate from 35% to 25%. What’s wrong with that?

Under Obama’s static theory, the size of the economy, the number employed persons, personal incomes, and the amount of income tax collected are all fixed. Following are five common assumptions under his static theory.

  1. If you’re not working today, you will never work again.

  2. If you are working today and making $25,000 a year, you’ll be making $25,000 for the rest of your life.

  3. Since the official U-6 unemployment rate is currently 15.0%, it will remain so indefinitely.

  4. If taxes are cut, the rich will pay less in taxes (unproven).

  5. Because the government collected roughly $2.4 trillion in taxes last year, unless tax rates are hiked, it will collect roughly the same amount every year going forward, from exactly the same taxpayers.

Thus, under static theory, the only way the government can get more money, Obama’s ultimate goal, is by raising taxes, and any reduction in tax rates would result in a permanent reduction in revenue.

Under Romney’s dynamic theory, the belief is that the stimulative effect of allowing citizens to keep and spend more of their own money will result in growth in the size of the economy, the number of working persons, personal incomes and the amount of tax revenue. Following are five common assumptions under dynamic theory.

  1. If you’re not working today, you will eventually find a job and start paying income taxes.

  2. If you are already working and making $25,000, your income will eventually rise and you’ll end up paying more in taxes than you were before, albeit at a lower tax rate.

  3. The economy will reach full-employment.

  4. When taxes are cut, the rich will pay more in taxes (proven), and more people will become rich.

  5. An increase in economic output yields an increase in the number of working persons, which means more taxpayers, and thus greater government revenues.

What we should understand is that supply-side economics has always worked in the past and always will in the future. In the 1980’s it was called Reaganomics, but pejoratively referred to as “trickle-down” or “voodoo” economics. Today, according to Barack Obama it’s just “fairy dust”. How original. Call it what you will, it does work, and that’s more than can be said of Obamanomics.

In the 1980’s, the four pillars (i.e. fairy dust) of Reagan’s economic policy were to reduce the growth of government spending, reduce income tax and capital gains tax, reduce government regulation of economy, and control the money supply to reduce inflation. Mitt Romney’s five point plan builds on Reagan’s four pillars, his policies also cut the deficit, reduce income and capital gains taxes, reduce the number of government regulations and create a Reagan Economic Zone to strengthen free-enterprise and the U.S. Dollar world-wide. What’s wrong with that?

Revised Jobs Benchmark

So where have Barack Obama’s policies gotten us? Well, extending Economist Paul Krugman’s job creation benchmark and updating it with the latest figures, we discover that to be meaningful, the number of jobs needed to return to more or less full employment by December of 2014, or within the next 29 months, is now 532,517 jobs a month, as follows:

In order to keep up with population growth, we would need to create 127,000 jobs times 29 months, or 3,683,000. Add in the need to make up for the jobs deficit and we’re at around 15,443,000 (3,683,000 + 11,760,000) over the next 29 months — or 532,517 jobs a month.

If we extend the target date to 5 years from today, then the number of jobs needed to return to more or less full employment by July of 2017, or within the next 60 months, is now 323,000 jobs a month, as follows:

In order to keep up with population growth, we would need to create 127,000 jobs times 60 months, or 7,620,000. Add in the need to make up for the jobs deficit and we’re at around 19,380,000 (7,620,000 + 11,760,000) over the next 60 months — or 323,000 jobs a month.

The Bottom Line: Since we only created 163,000 jobs in July, and since the jobs deficit declined by a mere 30,000, under the policies of Barack Obama, we are something in the order of 54 years away from full-employment [(323,000 / 30,000 = 10.8) and (10.8 * 5 = 54 years)]. In other words, we are NOT moving in the right direction, we aren’t moving at all. Due to a waste of 43 months under the failed policies of Barack Obama, we must now create 532,000 jobs each and every month to be on a track towards full employment within 29 months, or 323,000 jobs each and every month to be on track towards full employment within 5 years. Thus, since Obamanomics has pushed us so far away from the mark that most of us living today will never see full-employment again within our lifetimes; perhaps a little “fairy dust” is in order.

Photo Credit: Where’s the antimatter then? | Michigan State University

Data: Worksheet on Google Drive

U.S. Jobs Deficit Grows by 47,000 in June

Going Around in Circles

~ “If you’re lost in the woods and you feel like you’re walking in circles, you probably are.” ~ Discovery News

– By: Larry Walker, Jr. –

According to the Economic Policy Institute (EPI), the U.S. economy needs to create a minimum of 127,000 each month in order to keep pace with population growth. And based on today’s Employment Situation Report, the economy created just 80,000 jobs in June. That means the jobs deficit increased by another 47,000 last month. Yet, according to Barack Obama, “That’s a step in the right direction.” However, according to economic common sense, it’s another step towards stagnation, then decay and dissolution.

He added, “We can’t be satisfied because our goal was never to just keep on working to get back to where we were back in 2007.” So according to Obama, his goal was never to just keep working to get back to where we were in 2007, a day when we had 4,805,000 jobs more than we have currently. “I want to get back to a time when middle-class families and those working to get into the middle class have some basic security,” he said. We are left to wonder what time that was – the 1920’s, 50’s, 60’s, 80’s, 90’s, or the 2000’s. But based on the latest jobs report, that time could have been any year prior to Obama’s term.

Returning to December of 2007, the month the last known recession began, and applying the Economic Policy Institute’s (EPI) estimate — that we need to create a minimum of 127,000 jobs each and every month to keep up with population growth — we discover that the jobs deficit, since then, has grown to 11,790,000. The deficit stood at 5,165,000 jobs when Obama was inaugurated, and has since grown by an additional 6,625,000. So does that sound like, “a step in the right direction?”

As you can see graphically in the chart above, the jobs deficit has little changed since left-wing Economist Paul Krugman’s December of 2009 assessment. According to Krugman, to be meaningful, the economy needed to add 300,000 jobs a month, from the end of Obama’s 11th month in office, through December of 2014. But since then, as shown in the corresponding table, the jobs deficit hasn’t decreased at all.

Last month, according to the Bureau of Labor Statistics, the U.S. economy created a mere 80,000 jobs, on top of a revised 78,000 in May, and 68,000 in April. But the economy needs to create 127,000 jobs a month just to keep pace with population growth. So that means we’ve fallen 156,000 jobs farther behind over the last quarter. In fact, at last quarter’s pace, the U.S. will find itself another 3,120,000 jobs in arrears in another 5 years (156,000 jobs * 20 quarters). We know that any result short of a 127,000 monthly increase in Nonfarm payroll jobs adds to the current jobs deficit, but we should be mindful of an even more important statistic: The number of jobs we need to create each and every month, in order to catch up.

New Jobs Benchmark

When we tweak Krugman’s December 2009 benchmark with the latest figures, we discover that to be meaningful, the number of jobs needed to return to more or less full employment by December of 2014, or within 2 ½ years is now 520,000 jobs a month, as follows:

  • In order to keep up with population growth, we would need to create 127,000 jobs times 30 months, or 3,810,000. Add in the need to make up for lost ground and we’re at around 15,600,000 (3,810,000 + 11,790,000) over the next 30 months — or 520,000 jobs a month.

However, if we just simply write-off Barack Obama’s last 3 ½ years as a foolish, but costly experiment, and extend the target date out another 5 years, or through June of 2017, then we come up with 323,500 jobs a month, as follows:

  • In order to keep up with population growth, we would need to create 127,000 jobs times 60 months, or 7,620,000. Add in the need to make up for lost ground and we’re at around 19,410,000 (7,620,000 + 11,790,000) over the next 60 months — or 323,500 jobs a month.

In other words, we aren’t moving in the right direction, we’re going in circles. Since the economy now needs to create 520,000 each and every month to be on a track towards full employment within 2 ½ years, or 323,500 jobs each and every month to be on track towards full employment within 5 years, Obama’s record of 80,000 jobs in June has only pushed us farther away from the mark. In fact, as I alluded to above, instead of heading towards full-employment, we are currently on track towards increasing the jobs deficit by another 3,120,000 jobs over the next 5 years.

The Bottom Line: As each month passes in which fewer than 127,000 jobs are created, the goal of full employment is pushed farther away. When Barack Obama was sworn into office, the U.S. was running at a deficit of 5,165,000 jobs, but since then the deficit has increased by an additional 6,625,000 jobs (see table). So we are NOT moving in the right direction, no matter what Barack Obama thinks. We’re just going around in circles. The Spiritual Principle behind Step One in any recovery program is Honesty. When Barack Obama says we are moving in the right direction, he’s not being honest with himself, or with the American people.

Photo Credit: Mr. Barlow’s Blog – Are you going round in circles?

Data: Worksheet on Google Docs

The Real Jobs Deficit | Moving in the wrong direction.

“Every time in this century we’ve lowered the tax rates across the board, on employment, on saving, investment and risk-taking in this economy, revenues went up, not down.” ~ Jack Kemp

* By: Larry Walker, Jr. *

A total of 3,514,000 Nonfarm jobs had already been lost by the time President Bush handed the keys over to Barack Obama, yet even though the Great Recession officially ended in June of 2009, an additional 4,889,000 jobs were lost during Obama’s first 11 months in office (see table). By November of 2009 the recession had eliminated an estimated 8,403,000 jobs. It was at this point that Nobel Prize Winning Economist Paul Krugman set forth a reasonable benchmark for a return to more or less full employment within 5 years.

According to Mr. Krugman’s theory, in order to keep up with population growth and recover the number of jobs lost would have required the creation of 300,000 jobs per month, through December of 2014. But, as I pointed out in Obama Jobs Scorecard – Part 3, today we find ourselves more than 5.4 million jobs short of this mark. However, the real jobs deficit is even more dire.

The Real Jobs Deficit

If we return to December of 2007, the month the recession began, and apply the Economic Policy Institute’s estimate — that we need to create a minimum of 127,000 jobs each and every month to keep up with population growth — we find that the real jobs deficit, since the recession began, is currently 11,742,000 (see table). As you can see graphically in the chart below, the jobs deficit hasn’t changed much since Paul Krugman set the benchmark at 300,000 jobs a month. Since then, as shown in the corresponding table, the jobs deficit hasn’t decreased at all, but has rather increased by 291,000.

Real Jobs Deficit

Last month, according to the Bureau of Labor Statistics, the U.S. economy created a mere 69,000 jobs (only 77,000 in the month prior). Since we need to create 127,000 a month just to keep pace with population growth that means lately we’ve been falling even farther behind. In fact, at last month’s rate, the U.S. will find itself another 3,190,000 jobs in arrears after another 4 ½ years of Obama’s economic policies [(127,000 – 69,000) * 55 months]. So we need to keep a close eye on the next official Employment Situation Report, and each subsequent report through Election Day. Anything short of a 127,000 increase in Nonfarm payroll jobs adds to the current jobs deficit, while a greater result means we’re at least moving in the right direction.

The New Jobs Benchmark

If we tweak Paul Krugman’s original jobs benchmark with the revised figures, we discover that to be meaningful, the number of jobs we need to create to return to more or less full employment by December of 2014 is now as follows:

  • In order to keep up with population growth, we would need to create 127,000 jobs times 31 months, or 3,937,000. Add in the need to make up for lost ground and we’re at around 15,679,000 (3,937,000 + 11,742,000) over the next 31 months — or 505,774 jobs a month.

However, if we just simply write-off Barack Obama’s first 3 ½ years as a foolish, but costly experiment, and extend the target date until May of 2017, then we come up with the following:

  • In order to keep up with population growth, we would need to create 127,000 jobs times 60 months, or 7,620,000. Add in the need to make up for lost ground and we’re at around 19,362,000 (7,620,000 + 11,742,000) over the next 60 months — or 322,700 jobs a month.

In other words, we are worse off today than we were 2 ½ years ago. Every month that we create 506,000 jobs or more puts us on track towards full employment within 2 ½ years. Every month we create 320,000 jobs puts us on track towards full employment within 5 years. But every month we create fewer than 127,000 jobs increases the jobs deficit and pushes the goal of full employment farther away.

The Bottom Line: Due to the Great Recession, we already had a jobs deficit of 5,165,000 when Barack Obama was sworn into office, but since then the deficit has increased by an additional 6,577,000 (see table). In other words, we’re NOT moving in the right direction, no matter what Barack Obama says. So who’s going to get us out of this ditch — the same guy who just dug a hole twice as deep as the one we were already in — or someone else?

Data Table: Real Jobs Deficit Spreadsheet on Google Docs

Obama Jobs Scorecard, Part 3 : The American Dream

“53 Percent of All Young College Graduates in America are either Unemployed or Underemployed” ~ The Economic Collapse

* By: Larry Walker, Jr. *

It is a fact that the U.S. economy has lost a total of 4,884,000 Nonfarm jobs since the beginning of the Great Recession. But according to the National Bureau of Economic Research, the recession officially ended three years ago. We would all like to believe that things aren’t so bad, that the glass is half full, but for many the American Dream appears to be fading away. The question we should be asking ourselves, three years into this economic recovery, is whether we are creating a sufficient number of jobs each and every month: (1) to keep pace with population growth, and (2) to recover the number of jobs already lost? Today, we will provide the answer.

The Working-Age Population

The Civilian Non-institutional Population, or as I prefer to call it, the Working-Age Population, includes persons 16 years of age and older residing in the 50 States and the District of Columbia, who are not inmates of institutions (i.e. penal and mental facilities, or homes for the aged), and who are not on active duty in the Armed Forces. According to the Bureau of Labor Statistics, Table A-1, one month before the recession began, the working-age population totaled 232,939,000, and as of May 31, 2012 it had grown to 242,966,000. Thus, the working-age population has increased by 10,027,000 persons since the start of the recession, and by 7,931,000 since they keys were handed to Barack Obama (see chart below).

Since we know that the economy had already lost a total of 3,514,000 jobs during the last 13 month’s of President Bush’s term, that it has shed another 1,370,000 jobs since Barack Obama’s inauguration, and that the working-age population has grown by 10,027,000 persons over the same period, the question is how many jobs must we create each and every month in order to catch-up? And in light of the answer, how does anyone get away with a statement like the following: We’ve created 4.3 million new jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine?

Krugman’s Benchmark

In Paul Krugman’s December 2009 article entitled, The Jobs Deficit, he proposed a rather useful benchmark for the level of jobs the U.S. must create each month to really matter. As of November 2009 we had lost about 8.4 million jobs from the time the recession began. He began with the Economic Policy Institute’s (EPI) estimate that we need to add 127,000 jobs per month just to keep pace with population growth. That very same month, EPI pointed out that when you put together the number of jobs lost since the recession, along with the number required to keep pace with the population, that in order to return to pre-crisis unemployment within two years we needed to add 580,000 jobs a month.

Krugman conceded that there was no way this was going to happen within two years. So he proffered a more modest goal: a return to more or less full employment in 5 years. According to his formula, in order to keep up with population growth over those 7 years (December 2007 to December 2014), “the United States would have had to add 84 times 127,000 or 10.668 million jobs.” Krugman stated, “If that sounds high, bear in mind that we added more than 20 million jobs over the 8 Clinton years.” He continued, “Add in the need to make up lost ground, and we’re at around 18 million jobs over the next five years — or 300,000 a month.”

So using Krugman’s 300,000 jobs per month benchmark beginning in December 2009, I have created the following chart showing where we are today (in red), versus where we would be if we were truly keeping pace with population growth and making up for the jobs lost due to the recession (in blue). As you can see, we are currently more than 5.4 million jobs short of where we need to be.

The Great Recession officially ended in June of 2009 (a fact that many seem to gloss over), and as of November 30, 2009 it had consumed 8,403,000 jobs. A total of 3,514,000 had already been lost when President Bush handed the job off to Barack Obama, but an additional 4,889,000 jobs were lost during Obama’s first 11 months. It was at this point that Paul Krugman set forth this reasonable benchmark. We have needed to create 300,000 jobs per month, since December 2009, to keep up with population growth, and to recover the jobs lost up to that point. However, where we find ourselves today is 5,481,000 jobs short of the mark.

Yet, it was on June 8, 2012 when Barack Obama declared, “We’ve created 4.3 million new jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine.” However, what he was talking about was the number private sector jobs recovered since March 2010. What he conveniently forgot to mention is the fact that we also lost 5,135,000 Nonfarm jobs during his first 14 months in office. What about that Mr. President? In fact, had he bothered to include the number of public sector, or government jobs, his statement would have been more accurately stated as follows: ‘We’ve recovered 3,765,000 Nonfarm jobs over the last 27 months, but we lost 5,135,000 during my first 14 months in addition to the 3,514,000 lost under President Bush, so we have a long, long way to go.’

Yes it’s true, we have lost 1,370,000 jobs since Barack Obama was sworn into office, and that’s on top of the 3,514,000 jobs lost from the time the recession began until President Bush handed the keys to Mr. Obama. But the bad news is that not only have we suffered the loss of 4,884,000 Nonfarm jobs since December of 2007, but we must also account for the fact that during the current recovery, we are 5,481,000 jobs short of where we ought to be. At this point we need to not only make up for the 5,481,000 jobs we are short, but we need to do so while creating an additional 300,000 jobs per month by the end of 2014. In other words, if we apply Paul Krugman’s benchmark, we now have 31 months left to create 14,781,000 jobs (9,300,000 + 5,481,000). That means we need to seriously up the pace from last month’s gain of 69,000 jobs to 476,806 jobs per month.

When Barack Obama stood before a teleprompter this month, and gloated about how well his policies have done over the last 27 months of his 41-month term, he wasn’t being honest with the American people. His dishonesty regarding the economy, among other things, is why he deserves to lose this election by a landslide.

Labor Force Participation Ages 16 to 19

Like many Americans my age, I started working at the age of 16. Although my first job was only a part-time summer job, it was my first, and thus the beginning of my personal quest for the American Dream. My dream at the time was to open a savings account, buy a car (or at least pitch in on the gas), buy my own food and clothing, gain a sense of independence, and learn to be personally responsible.

There are kids who were 12 years old when the recession commenced, who are now 16 and looking forward to their first summer job, but if they can’t find work, they will miss out on some valuable lessons in the quest for the American Dream. There are others who are now 20 years of age who couldn’t find work four and a half years ago, and are still looking today. And there are yet others who were just starting college when the recession hit. We learned this month, that among recent college graduates, 53 percent find themselves either unemployed or underemployed. The dream is fading.

The Labor Force Participation Rate measures the Labor Force as a percentage of the Civilian Noninstitutional Population. According to the Bureau of Labor Statistics, Table A-1, the labor force participation rate for 16 to 19 year olds averaged 54.5% in 1976, when I was 16 years old (see chart above). It stood at 41.5% prior to the recession, but had declined to 38.5% by the time Barack Obama was sworn in. It has since continued in decline to an all time low of 34.2% as of May 31, 2012. So when I was 16, a young person had about a 50/50 shot at finding a job, but for today’s youth the chances are more like 30 out of 100.

The American Dream appears to be fading into the sunset, but according to Barack Obama, the private sector is doing fine. Apparently the economy is doing well enough in his eyes that last Friday was a prefect time for him to singlehandedly grant amnesty to the children of those who have crossed our borders illegally. Oh, give me a break! How does Obama get away with it? He gets away with it because Democrats let him. You all better wake up. You’re either part of the solution, or part of the problem. If you’re so stuck on a political ideology or party brand, that you can’t see the light of day, then God help you. God help us all. If you’re still on the fence, then what are you waiting for? It’s time for a plan that works, not four more years of lecturing, finger pointing and Constitutional violations.

The bottom line: After three and a half years of Barack Obama, we find ourselves 5,481,000 jobs in the hole. At this point we must not only make up this shortfall, but must do so while creating an additional 300,000 jobs per month. In other words, if we apply Paul Krugman’s reasonable benchmark, we have 31 months remaining to create 14,781,000 jobs (9,300,000 + 5,481,000). That means we need to seriously up the pace from last month’s anemic 69,000 jobs to 476,806 jobs per month. But that’s not going to happen until Barack Obama is sent back to Chicago.

Continued from…

Obama Jobs Scorecard, Part 2 : Beyond the Private Sector

Obama Jobs Scorecard, Part 1 : The Private Sector

Data:

Spreadsheets

Obama Jobs Scorecard, Part 2 : Beyond the Private Sector

“He might as well have said that his stimulus plan would provide a temporary fix and a temporary economic recovery, which may have to be repeated over and over again to provide the impression that we are getting somewhere, even if we are really just going broke.”

* By: Larry Walker, Jr. *

The Great Recession lasted for a total of 19 months, beginning in December 2007 and ending in June 2009. So the U.S. economy has technically been in a state of recovery for exactly three years. Yet, other than the federal government, which has realized a net gain of 234,300 non-postal employees, since the recession began, the rest of the economy is worse off today than it was on the day Barack Obama was sworn in.

We addressed the Private Sector in Part 1. Today we’ll examine Total Nonfarm Employment, which includes the Private Sector, the Federal government, and State & Local governments, in order to assess our economic progress, since Barack Obama promised to deliver “a new foundation for our lasting economic growth and prosperity”.

Government Sector

The chart below summarizes the Government employment situation since the start of the Great Recession. The figures come from the Bureau of Labor Statistics, Table B-1 – Establishment Data. The main highlights are outlined below the chart.

  1. The number of Federal government employees has increased by +75,000 from December 2007 through May of 2012. The federal government is the only sector of the economy with a net employment gain since the recession began. (Note: The huge spike represents temporary hiring by the U.S. Census Bureau.)

    1. Federal jobs grew by +33,000 during the last 13 months of President Bush’s term.

    1. Federal jobs have grown by an additional +42,000 during Barack Obama’s 41-month term.

    1. Non-postal workers increased by +234,300 [+82,100 during Bush’s last 13 months, and +152,200 during Obama’s 41-month term to-date].

    1. Postal workers decreased by -158,500 [-48,500 during Bush’s last 13 months, and -110,000 during Obama’s first 41 months].

  1. The number of State government employees has declined by -64,000 since December of 2007.

    1. State government jobs actually grew by +52,000 during the last 13 months of President Bush’s term.

    1. State government jobs have declined by -116,000 during Obama’s 41-month term to-date.

  1. The number of Local government employees has declined by -376,000 since the start of the Great Recession.

    1. Local government jobs continued to increase by +136,000 during the last 13 months of President Bush’s term.

    1. Local government jobs have since declined by -512,000 under the policies of Barack Obama.

Overall, the Government Sector has suffered a net loss of 365,000 jobs since the start of the Great Recession. But it’s important to note that 221,000 jobs were gained during President Bush’s final 13 months in office, while 586,000 jobs have been lost during Barack Obama’s 41-month term to-date. Digging a little deeper, we find that, since the baton was passed to Obama, 628,000 State and Local government jobs have been lost, while 42,000 Federal jobs were gained. Since government employment did not decline during the 19 months comprising the Great Recession, nor during President Bush’s term, who’s to blame for the decline?

You would think that a decline in the number of State & Local government workers is a good thing, but Barack Obama doesn’t think so. He has thus proffered more government borrowing and spending to fix the alleged problem. But as I pointed out previously, and it’s only common sense, even if the Federal government handed State and Local governments $1.0 trillion to rehire all 628,000 workers, whom they can obviously no longer afford, they will find themselves dumbfounded when the taxpayer funded handout expires.

Thus far, all of Barack Obama’s economic proposals have been temporary fixes, one after another. But the barrage of temporary measures hardly lines up with his 2009 rhetorical promise, that his stimulus plan would ‘lay a new foundation for our lasting economic growth and prosperity’. It’s been three and a half years, and he still doesn’t seem to understand that government stimulus is by its very definition, temporary. He might as well have said that his stimulus plan would provide a temporary fix and a temporary economic recovery, which may have to be repeated over and over again to provide the impression that we are getting somewhere, even if we are really just going broke.

Total Nonfarm Jobs

In Part 1, we discovered that a total of 3,735,000 Private Sector jobs were lost during the first 13 months of the Great Recession, and that an additional 784,000 have been lost since Barack Obama promised that his stimulus plan would, save or create more than 3.5 million jobs by January of 2011’. But now, as we factor in the number of government sector jobs gained or lost since the recession began, we discover the following facts.

  1. Total Nonfarm jobs declined by 3,514,000 during the last 13 months of President Bush’s term.

  2. Total Nonfarm jobs have declined by an additional 1,370,000 during Barack Obama’s 41-month term to-date.

Overall, the U.S. economy has lost a total of 4,884,000 nonfarm jobs since December of 2007. Among them, 1,370,000 have been lost since Barack Obama was sworn into office. So his claim, that we have created 4.3 million jobs over the last 27 months, is wishful thinking. In reality, we lost 5,135,000 nonfarm jobs during his first 14 months in office. Do the math. The facts speak for themselves. And although the Federal government has gained 234,300 new non-postal workers, 152,200 of which are attributable to Mr. Obama, we haven’t created a single net job in the last 54 months. The chart above summarizes where we are statically, but as we shall see, the real employment situation is far worse.

That’s the end of Part 2, but it’s still not the end of the story. In Part 3 we’ll discuss how the increase in the Working-Age Population, since December 2007, in conjunction with a decline in the Labor Force Participation Rate, has made the real employment situation far worse than it appears, placing the American Dream in jeopardy.

To be continued… Obama Jobs Scorecard, Part 3 : The American Dream

Continued from… Obama Jobs Scorecard, Part 1 : The Private Sector

Obama Jobs Scorecard, Part 1 : The Private Sector

According to Barack Obama, “We’ve created 4.3 million new jobs over the last 27 months, over 800,000 just this year alone. The private sector is doing fine.” But what he failed to mention is what any American paying attention already knows, that we lost 5.0 million jobs during the first 14 months of his 41-month term.

* By: Larry Walker, Jr. *

Using simple math, it doesn’t take much for any American to figure out that Mr. Obama has been in office for a total of 41 months. Curiosity leads us to believe that there must be some reason Mr. Obama isn’t saying anything about his first 14 months in office. So here’s what we found. By the time Mr. Obama reached the White House, the private sector had already lost 3.7 million jobs to the Great Recession. Then between January of 2009 and February of 2010, his first 14 months in office, another 5.0 million jobs were lost. And finally, over the last 27 months, 4.3 million jobs were either created or saved. Once again simple math leads us to the conclusion that the private sector is worse off today than before Mr. Obama was sworn in, by roughly 700,000 jobs.

Over George W. Bush’s eight-year term, the economy went through two recessions. The first was much shorter than the second, lasting only nine months, from March of 2001 to November of 2001. But the Great Recession lasted for a period of 19 months, commencing in December of 2007 and not ending until June of 2009, six months into Mr. Obama’s term. However, in the month after the Great Recession began, the number of private sector jobs reached an all-time record high of 115,647,000. In fact, when we summed together all private sector employment gains and losses during Mr. Bush’s time in office, it resulted in a net gain of 3,970,000 jobs through January of 2008. But once the recession heated up, from its beginning until the baton was passed to Barack Obama in January of 2009, a total of 3,735,000 of this net gain had been wiped out. As a result, the number of net jobs gained during the Bush presidency was a paltry 147,000 (see chart above, and table below).

Obama’s First 14 Months

In January of 2009, Barack Obama stepped in to rescue us from the disaster of 2008. His stimulus plan was passed by both houses of Congress on February 14, 2009. At the time, Mr. Obama delivered the following statement. “Congress has passed my economic recovery plan – an ambitious plan at a time we badly need it. It will save or create more than 3.5 million jobs over the next two years, ignite spending by business and consumers alike, and lay a new foundation for our lasting economic growth and prosperity. But the promises he made on that day would soon come back to bite him.

Obama’s economic team calculated that without the stimulus plan, the economy would lose another 1,613,000 jobs over the ensuing two-year period. But with passage of the stimulus bill, they claimed that not only would those 1,613,000 jobs be saved, but an additional 1,887,000 would be created, all by January of 2011. But as you can see in the table below, Mr. Obama’s economic team was way off the mark. By February of 2010, just one year later, an additional 5,051,000 private sector jobs were lost. This brought the total number of jobs lost from the beginning of the Great Recession to 8,786,000. Fortunately, this turned out to be the end of the decline.

Obama’s Broken Promises

By January of 2011 it was time to tally the results of Mr. Obama’s $831 billion stimulus plan. As the next table reveals, instead of saving 1,613,000 jobs and creating another 1,887,000, from the beginning of his term through January of 2011 the private sector had instead lost a net total of 3,617,000 jobs. This brought the total number of private sector jobs lost since the beginning of the Great Recession to 7,352,000.

Since the recession had already wiped out 3,735,000 private sector jobs before Mr. Obama came along, if his plan had worked as promised, then the number of jobs lost to the recession should have been reduced to 1,848,000 by January of 2011. But instead this number rose to 7,352,000. In other words, if 1,613,000 jobs were expected to be lost and saved over his first 25 months, then there should not have been any losses at all. And since we were already 3,735,000 jobs in the red before Mr. Obama’s time, if the private sector had created 1.887,000 jobs as promised, then by his 25th month we should have only been off target by 1,848,000 jobs (3,735,000 minus 1,887,000). Thus, the stimulus plan failed miserably. When Barack Obama was sworn in, he inherited an economy that was 3,735,000 jobs in the hole, but after two years of his policies, and $831 billion tax dollars squandered on his stimulus plan, the private sector lost an additional 3,617,000 jobs.

Are we there yet?

Skipping ahead to May of 2012, we find that since the time of Mr. Obama’s inauguration, the private sector has lost a total of 784,000 private sector jobs, for an average loss of 19,122 jobs per month. This is in addition to the 3,735,000 lost under Mr. Bush, for a cumulative loss of 4,519,000 jobs since the beginning of the Great Recession (see table below). In other words, the private sector is worse off today than it was on the day Barack Obama was sworn into office. And if you will, not only is the private sector worse off than it was three years and five months ago, the Federal government has taken on an additional $5.3 trillion in debt just to get us where we are – nowhere.

The total number of private sector jobs lost, since the beginning of the Great Recession, is shown graphically in the chart below. In spite of his repetitious rhetoric, and no matter how many times he boasts that his policies have “created 4.3 million private sector jobs over the last 27 months,” the truth is that not one private sector job has been created since the beginning of Barack Obama’s 41-month term.

The Bottom Line: No one likes to discuss Mr. Obama’s initial 14 months in office, but it will nevertheless go down in history as a part of his record. The truth is that over his first 14 months the private sector lost 5,051,000 jobs. Then during his last 27 months it recovered 4,267,000 of the jobs lost during his first 14 months. So it was only after suffering far worse job losses under the influence of Mr. Obama than we started with, that the private sector was able to recover 4,267,000 of the 5,051,000 jobs lost during his 41-month term. So where is the private sector today? We are still down by the same 3,735,000 jobs lost to the Great Recession before Mr. Obama arrived, plus an additional 784,000 lost during his 41-month term to-date. Yet, Mr. Obama seems to think that the private sector is doing fine, and that for some reason he deserves a second shot. Sorry pal, but we don’t have another $5.3 trillion to throw away.

That’s the end of Part 1, but it’s not the end of the story. In Part 2 we’ll tack on the total number of Government sector jobs, Federal, State and Local, lost over Mr. Obama’s 41-month term. Then we’ll discuss how the 8.2 million person increase in the Working-Age Population, during Mr. Obama’s term, has made the real employment situation far worse than it appears to a casual observer.

Note: Some economists and pundits will attribute the 839,000 jobs lost in January of 2009, Mr. Obama’s first month in office, to Mr. Bush. If you insist on doing so, then that would mean that the total number of private sector jobs gained over Mr. Obama’s 40-month term would be 55,000 (i.e. 839,000 minus 784,000). However, the number of jobs lost since the beginning of the Great Recession is unchanged, at 4,519,000. But before you start boasting about how Barack Obama added 55,000 private sector jobs over his 40-month term, you might want to consider whether a job creation record averaging just 1,375 jobs per month is worth the effort.

To be continued… Obama Jobs Scorecard, Part 2 : Beyond the Private Sector