Economic Madness Update

Now that it's Obama's economy, we need to continue to keep a special eye on it to see how he's doing to recover it. Thus far, it's not good. You've seen the numbers already, but it goes downhill from there.

First, we see that the man in charge of running the non-stimulating 'stimulus', VP Joe Biden, admits to what we already knew: he doesn't have a clue what he's doing.

Vice President Joe Biden said the Obama administration “misread the economy” when it forecast unemployment would peak at 8 percent if Congress enacted a $787 billion fiscal stimulus.

Biden, appearing on the ABC News program “This Week,” said that in crafting its initial economic policies, the Obama administration followed consensus views of the severity of the crisis. Unemployment reached 9.5 percent last month, the Labor Department said July 2.

“The truth is, there was a misread” of how bad the economy was earlier this year, Biden said.

A 'misread'? They had no idea how bad it was? Um...bull:

Despite using the word 'crisis' 25 times in a single speech, Obama apparently didn't realize how bad things were. So, after admitting they don't have a clue and that they botched the first stimulus, Obama then claims that if he had to do it all over again, he wouldn't have done anything different:

Well, isn't that comforting? Yes, let's definitely trust the future economic policy of this nation to these same people! Whaddya' think?

To make up for their failures of policy, they're going to have to raise taxes. One of them will be a penalize-the-'rich' tax, but it won't stop there. If health care 'reform' and cap-n-tax goes through, it'll slap every American with a higher tax burden every year. And those are all on top of the additional taxes that every American will pay when Bush's 2003 tax cuts are allowed to expire! Lying liars spouting lies.

But it's not just taxes. Once again, Joe Biden has done direct harm to a specific industry simply by talking about it:

Shares of major metal manufacturers traded sharply lower Monday, a day after Vice President Joe Biden said the White House “misread” the economy, prompting concerns that an economic recovery could be slower than expected.

[snip]

During the second quarter, commodity prices “went through the roof,” and investors snapped up metal makers stocks on word that the economy was “less bad” than before, he said.

But, now, the market has switched its thinking amid broader concerns about the economy, he said.

But don't worry, I'm sure they'll 'create or save' a couple of jobs in that industry, too. They just need a couple trillion dollars more out of your pocket first.

All this talk these threats of destroying the American economy through oppressive taxation and regulation are already beginning to take effect:

Last week, the donut chain Tim Horton’s, which operates on both sides of the border but is incorporated in the state of Delaware, announced that it was reorganizing itself as a Canadian corporation to take advantage of Canadian tax rates.

This is going to become more and more common, as the escalating tax burden on American businesses make doing business in America more and more expensive. Jobs will be lost, and companies will move out of the country. How's that for hope-n-change?

The Obama administration has also often promised to track 'every penny' of the money they stole taxed from American taxpayers. How's that working out? So well they've won an award for it:

The Heritage Foundation is proud to announce that the FCC is the recipient of the First Annual Wanton Abuse of State-funded Technological Elucidation (WASTE) Award.

Yes, the name is clunky, but so is their website. If you don’t believe it, see for yourself. The website’s search function leaves much to be desired. Also, as Cynthia Brumfield of IP Democracy has noted, everything on the website is published as a separate file (Word documents, PDF, etc.) to be downloaded by the user.

The agency that is responsible for the nation-wide broadband strategy ought to be a model, rather than a blight on the digital highway. On Wednesday, Vice President Biden, Secretaries Vilsack and Locke, and newly-installed FCC Chairman Genachowski gathered to announce the “availability of $4 billion…to increase broadband access.” Given the amount of money being spent, shouldn’t the FCC bring itself into the 21st century?

For too long, businessmen and policy wonks alike have been frustrated, searching in vain for the information they seek. The solution seems clear: make a website that is easily accessible and functional for the user.

This issue is not new, nor has its mention been limited to individuals of any one political leaning. Heritage’s James Gattuso wrote about this problem almost two years ago. The Benton Foundation (located on the left side of the spectrum) has raised many of the same complaints. The technology blog Ars Technica said that fcc.gov “still looks like it was thrown together six weeks after Netscape went public over a decade ago.”

These individuals and groups are not alone in their complaints. During the recent Senate confirmation hearings for Chairman Genachowski several senators raised this very issue. Senator Klobuchar suggested updating the website more frequently. Senator Rockefeller cited a GAO report that criticized the lack of transparency on the website. The full hearing can be viewed here. Genachowski has indicated that fixing the FCC website is a priority for him.

During the confirmation hearing Senator Rockefeller laid down the gauntlet “fix [the FCC]…or we will fix it for you.” Hopefully, the folks at the FCC can fix their own website before the senator is forced to program it himself. We wish them well in this endeavor, and hope that the FCC website will soon no longer be a WASTE.

I guess the FCC didn't get the memo about change, did they?

As we've discussed here many times before, all these stupid and disastrous economic policies will inevitably end badly:

In 2003, Thomas Laubach, an economist in the Federal Reserve's Division of Research and Statistics, wrote a paper titled "New Evidence on the Interest Rate Effects of Budget Deficits and Debt." At the time, federal debt here in the U.S. seemed to be under control, and I'm not sure how much notice the paper received. But its conclusion has obvious implications today, as we contemplate the unprecedented mountain of debt that the Obama administration intends to incur in the years to come:

This study has shown that statistically significant and economically plausible estimates of the effects of government deficits and debt on interest rates can be obtained by focusing on long-horizon forecasts of future deficits or debt, and future interest rates. The projections of deficits and debt published by the CBO and the OMB are arguably among the best publicly available forecasts for these variables. The effects of these projections manifest themselves at the longer end of the yield curve, as economic reasoning would predict. All else equal, the results of this study suggest that interest rates rise by about 25 basis points in response to a percentage point increase in the projected deficit-to-GDP ratio, and by about 4 basis points in response to a percentage point increase in the projected debt-to-GDP ratio.

If, like me, you're not an economist, that may seem a little dry. The Telegraph supplies some context: "US lurching towards 'debt explosion' with long-term interest rates on course to double."

Long-term interest rates have indeed begun to rise. The Fed appears to be more or less complicit in the Obama administration's scheme to run up debt that, as a percentage of GDP, is unprecedented except for the last year or two of World War II. Maybe someone in Congress--it would have to be a Republican--should ask Ben Bernanke whether he has some reason to disagree with the Fed's own economist's projections.

The Obama administration, with the enthusiastic connivance of the Democratic leadership in Congress, has set the nation on an economic course that cannot possibly have a happy ending.

Elections have consequences. Electing Obama and a Democrat majority have resulted in a typical recession blossoming into a major (and genuine) economic crisis, with no signs of stopping until the country is buried.

There's my two cents.