Economic Armageddon, Here We Come?

The Obama administration admitted today that the federal debt will, over the next decade, grow wildly larger than it had previously said--so much for a recovery. Now the estimate is $9 trillion!

And that doesn't count the $1.0 to $1.6 trillion Congress is contemplating spending on ObamaCare.

Nor does it count the massive additional new spending Obama has promised, for example, legalizing the 13-20 million illegals, who will thereby become eligible for ObamaCare, increasing the debt further.

And Obama is considering "Stimulus" 3. For our trillion dollars, "Stimuli/Bailouts" 1 and 2 have resulted in the highest unemployment rate since 1983 and wildly accelerating debt, yet he contemplates Grandson of "Stimulus"/Bailout.

China owns ever more of America and the U.S. is becoming ever less creditworthy. Just the interest on the national debt is approaching the total budget for national defense!

And federal spending is accelerating?! Will we, not to mention our children and grandchildren, suffer profoundly from our government's profligacy?

Government programs (yes, Republican-initiated programs, for example, the Bush bailouts and the Iraq War, are equally at fault) are usually terribly inefficient. Think Amtrak, the Postal Service, the public schools, the nearly bankrupt Social Security and Medicare, the Bailouts, $85 hammers, the Bridge to Nowhere.

Many government programs are actually negative in effect. Consider, for example, Cash for Clunkers: dangling taxpayer dollars in front of people poor enough to own bad-gas mileage clunkers so they can go deeply in debt to buy a new car (80% of which have been foreign, by the way). And of course, dumping much of their toxic components and fluids into landfills is an environmental disaster. Plus, car dealers are screaming that they have laid out the $4,500 per car to customers and often have not yet been paid by the government, thereby killing their cash flow, a business's lifeblood. The government can't even write a promised check in a timely manner and it wants to run a "public option" health care system?

An individual and especially a nation in debt is at-risk. A nation that has assumed unprecedentedly, incomprehensibly mammoth debt is doomed. Even Keynes did not imagine this magnitude of government spending. To pay for its metastasizing number and scope of programs and interest on its soon-to-be $9 trillion debt, the government will, unchecked, continue to raise taxes and print ever more money, thereby decreasing the value of our life's savings and purchasing power.

As a result, American workers will likely end up joining most of the world's workers in earning a net $1 an hour. As reported in a recent blog post, we already work into August just to pay all the costs imposed by government. Does anyone really think we get fair value for the government's taking over half our money from us each year?

Our only savior is for us to demand that the government to return most our tax dollars to us and for government to live within its then more modest means: scale down so it can balance its budget and pay down its debt. Anything else is too likely to lead us to economic Armageddon.

A Pessimistic View of the U.S. Job Market

Observers such as Harvard's Tammy Erickson argue that, at least long-term, U.S. job seekers especially the educated, will find it easier to find employment.

I strongly disagree. While the Obama stimulus plan may short-term create some government and government-mandated jobs, I predict that the U.S. unemployment rate will, over the coming decade at least, continue to increase.

The following factors will dramatically reduce the need for U.S. employees:

Ever-accelerating automation fueled by dramatic increases in the cost of employing people. Most of these costs will come as the result of the already large but likely to grow still larger government-imposed mandates on employers. Here's just one example. The Family And Marriage Leave Act, because of its heavy fraudulent use by employees wreaks havoc on workplace. That burden will become even more onerous if it becomes paid family leave, which the Obama administration advocates. In addition, wrongful termination, sexual harassment, and racial discrimination grievances and suits grow as do demands for "accommodations" for everything from depression to hyperactivity (to conform to the Americans with Disabilities Act.) Health care costs will continue to grow and be cost-shifted to employers under Obama's plan--those costs will include paying for the 45 million uninsured, who are low-income or unemployed and thus would pay little or nothing into the system, leaving the employer and taxpayer to foot their health care costs.

Globalization. Ever more work product can be transmitted over the Internet, which increases the possibility of offshoring. And while offshoring 1.0 was only modestly successful, it is being re-pursued with a vengeance because companies are now armed with the knowledge it takes to do it successfully. A net saving of 35% is now standard and Accenture, for example, has a large and growing business in helping companies to offshore employees. The public is unaware of the extent of offshoring because companies saw the anger it engendered among the public even when unemployment was low. So, now offshoring is done with as little publicity as possible.

In addition, other countries, notably China, India, Russia, and Brazil, are producing ever more and better products and services, at a much lower cost that U.S. products and services.

The continued elimination of the 52-week-a-year/lifetime employee. Workers are becoming fungible work units, used only as needed. That will mean a dramatic reduction in the number of U.S. full-time-equivalent employees.

The greening of America. Environmental restrictions and voluntary de-emphasis on materialism will result in a contracting economy and, in turn, fewer jobs.

The tax increases on companies. The Democrats, which all signs suggest will be in power for a long time, want to fund their expansion of government by printing money and increasing taxes on companies, which will reduce the amount of real dollars companies have to hire people and to develop new products, which in turn, would have created more jobs.

All signs point to these being long-term and potent factors, so I cannot envision a realistic scenario under which the unemployment rate will decline except perhaps temporarily in late 2009 or early 2010.

A Summary of My Environmental Views

Today, I received an email inviting me to join an environmentalist organization. Here was my response:

I would not join such an organization. I am distressed at how environmental policy has become "religion," going well beyond the science, claiming consensus where it doesn't exist, and censoring the hundreds of dissenting, responsible scientists.  (They had to create their own annual conference because they were shut out of the UN/IPCC's, which these scientists blast as politically motivated.) Here is Reason Magazine's coverage of this year's conference, which concluded today.

Especially in these tight economic times, we should not be doing what Obama and the Al Gore-led ExtremeGreens want to force us to do--divert massive amounts of our precious fiscal and human resources in a (vain) attempt to cool the earth.

Nor do I support the onerous restrictions on our lives that Obama and his ExtremeGreen-packed team plan to force upon us in an attempt to obtain energy independence, for example, pressuring us onto time-wasting mass transit by building no new freeways and converting existing ones into toll roads. Meanwhile, TeamObama is  wildly spending our tax dollars on physics-delimited solar and wind power and his green allies are throwing as many roadblocks as possible in front of building nuclear plants, which Europe and China wisely recognize as core to the energy-independence solution. 

If America intentionally were trying to destroy itself, it could hardly do a better job than Obama and his ExtremeGreens are doing, powerfully promulgating policies most of which, at their root, are based on bailing out bad and irresponsible businesses and individuals with money from the good and the responsible. He generally follows Marx's core tenet: from those who have to those who don't. Per the fall of the Soviet Union, all the Eastern bloc countries, and Cuba, that's a formula for a society's demise. 

When our children grow up, they will shake their heads wondering what we did to America.

My Final Post on Obama

I am dispirited by the media's accelerating failure to do what it has heretofore always considered its primary responsibility: to provide tough, fair-minded investigation of the issues of the day.

Alas, as CBS veteran Bernard Goldberg says in his new book, A Slobbering Love Afair: The True (And Pathetic) Story of the Torrid Romance Between Barack Obama and the Mainstream Media:

"The media's liberal bias has crossed an important line-moving from their usual unthinking liberal bias to crass partisanship of the crudest kind, practically acting as spin doctors for Barack Obama."  

I teach my career coaching clients to assess the probability of an effort being worth the time. In light of the ever accelerating tidal wave of media-driven ObamaMania, I've decided to move on to topics where my efforts are more likely to make a difference.

So here, I'll just offer my summative thought regarding Obama's policies: Those policies, at their core, are united by one principle: that resources should be redistributed from the haves to the have-nots. In practice, that means redistributing from the pool of people and businesses with the greatest potential for using the resources wisely and for creating positive societal ripple effect to those people and businesses with the least. That formula ensures America's failure. 

That's especially true when Obama's spending will be so massive. On top of the Republican-initiated $700 billion TARP bank bailout which heretofore has been a disaster, Obama wants to spend an incomprehensibly large $1 TRILLION dollars in this spending spree. And experts agree that more TRILLIONS will be spent in Obama's next round or two of spending sprees. And these are trillions the government simply doesn't have and can't get with the proposed tax increases. So, the result will be yet more taxes, including on the middle class, an attempt to borrow huge sums of money from what may be an unwilling world of lenders, and/or print lots of money, which will create painful inflation.

Alas, I believe Obama will able to get his policies enacted to a greater extent than any president in history thanks to his perfect storm of communication skills, a liberal Congress, and an unprecedentedly unquestioning media.

So I predict that Obama's policies will yes, short-term, create jobs and do other public-pleasing things but by the time he's completed his eight years in office, he will have done more to destroy this country than all our enemies combined. 

Of course, the public will not think that: The media has overstated the economy's problems to give Obama nowhere to go but up (for example, today's 7.6% unemployment rate is near the historical average,) will hyperinflate his accomplishments, and blame America's troubles on remnants of conservatism and libertarianism.

That all said, I'd love to be wrong and for Obama to succeed--His intentions are most noble.

Obama Exaggerates Expert Consensus

President Obama claims broad expert agreement with his economic and global warming plans.

Unfortunately, it's untrue. First, let's look at Obama's stimulus plan:

From the Cato Institute's Fiscal Reality Center:

President Obama says that "economists from across the political spectrum agree" on the need for massive government spending to stimulate the economy.

In fact, hundreds of leading economists disagree including Nobel laureates and other prominent scholars. They have all signed the statement that appears in the Cato Institute's ad in the New York Times and in other national publications.

With regard to the need to spend massively to stop global warming, Obama has appointed only true believers to his science, environment, and energy committees. Yet hundreds of leading climate scientists dissent from the so-called consensus. Indeed, the International Conference of Climate Change to be held this March "calls attention to new research that contradicts claims that the moderate warming during the 20th century was primarily man-made and is a crisis." Speakers will include dozens of eminent scientists including Richard Lindzen .the Alfred P Sloan Professor of Meteorology at MIT, Willie Soon, physicist at the Solar and Stellar Physics Division of the Harvard-Smithsonian Center for Astrophysics, and Lord Christopher Monckton, chief policy advisor to Britain's Science and Public Policy Institute and former advisor to Prime Minister Margaret Thatcher.

Sure, "economists (and scientists) from across the political spectrum" support Obama's policies but Obama carefully avoids saying whether it's 1 or 1,000 right-of-center experts. Could Obama be taking word-parsing lessons from Bill Clinton? Is IS Is.