April 29, 2009

AP’s Calvin Woodward Does Astonishing Fact Check on Obama

APlogo0409.jpgSomebody needs to ‘fess up. Who put truth serum in Calvin Woodward’s coffee this morning?

Whoever it is, they’re in a heap of trouble, as Woodward produced a fact-checking critique of Barack Obama that is so good you’d swear most of it was ghostwritten by a conservative talk host.

It will be interesting to see how much distribution it gets. I would suggest not counting on too much, but being open to a pleasant surprise.

Regardless of its distribution, you’d better believe they’ve read it in the White House, and they’re wondering what in the world happened.

Here are key paragraphs from Woodward’s rundown, which is really, seriously, a read (and save) the whole thing item (it is saved at my host for future reference; HT to Mark Levin, who excerpted the report on his show tonight):

FACT CHECK: Obama disowns deficit he helped shape

“That wasn’t me,” President Barack Obama said on his 100th day in office, disclaiming responsibility for the huge budget deficit waiting for him on Day One.

It actually was him — and the other Democrats controlling Congress the previous two years — who shaped a budget so out of balance.

And as a presidential candidate and president-elect, he backed the twilight Bush-era stimulus plan that made the deficit deeper, all before he took over and promoted spending plans that have made it much deeper still.

Are we having fun yet?

….. His assertion that his proposed budget “will cut the deficit in half by the end of my first term” is an eyeball-roller among many economists ….

….. OBAMA: “Number one, we inherited a $1.3 trillion deficit…. That wasn’t me.

….. THE FACTS: Congress controls the purse strings, not the president, and it was under Democratic control for Obama’s last two years as Illinois senator. Obama supported the emergency bailout package in President George W. Bush’s final months — a package Democratic leaders wanted to make bigger.

….. OBAMA: “You could cut (Social Security) benefits. You could raise the tax on everybody so everybody’s payroll tax goes up a little bit. Or you can do what I think is probably the best solution, which is you can raise the cap on the payroll tax.” — in Missouri.

THE FACTS: Obama’s proposal would reduce the Social Security trust fund’s deficit by less than half, according to the nonpartisan Tax Policy Center.

That means he would still have to cut benefits, raise the payroll tax rate, raise the retirement age or some combination to deal with the program’s long-term imbalance.

The main criticism I have of Woodward’s report is that he doesn’t understand that there has always been a correlation between Social Security taxes paid and Social Security benefits received during retirement. Thus, he sees making the payroll tax apply to incomes higher than $102,000 (the 2008 upper limit) strictly as a revenue raiser, without realizing that a failure to increase benefits commensurately, which would almost certainly not happen, would break that historic link and officially turn Social Security into a welfare program (astute readers already know that it already is a welfare program, in the sense that it is an intergenerational transfer from current workers to current retirees, because there really is no “Trust Fund” with real assets).

But there are enough zingers in one place to talk down Obama’s 100-day defenders with ease.

Enjoy it. Just don’t delude yourself into thinking a lot of people will see it, or that it marks any kind of general change in direction at AP.

Cross-posted at NewsBusters.org.

What a Difference A Few Hours Makes: Hopeful AP Reporting on GDP Goes Dour, Looks For Excuses

The Associated Press’s Jeannine Aversa, who became infamous last year for her stories of “vanishing jobs” that weren’t, sounded hopeful early this morning before the release by Uncle Sam’s Bureau of Economic Analysis (BEA) of its first-quarter report on Gross Domestic Product (GDP) growth:

Economy’s free-fall probably eased in 1Q
The recession’s grip on the country may be letting up a bit.

The government is set to release a report Wednesday expected to show the economy shrank at a pace of 5 percent in the first three months of this year. If Wall Street analysts’ forecasts’ are correct, the figure — while still extremely weak — would be viewed as a hopeful sign that the worst of the recession — in terms of lost economic activity — may be past.

“The recession is easing up,” said John Silvia, chief economist at Wachovia. “We’re probably bottoming out here in the first half of this year.”

….. Many analysts predict the economy will shrink even less in the current April-June period — at a pace of 1 to 2.5 percent. Tax cuts and increased government spending on big public works projects included in President Barack Obama’s $787 billion should help bolster economic activity. Analysts hope the economy will actually start to grow again in the final quarter of this year.

Given how unimpressed AP business reporters were during the Bush Economy’s 2003-2007 reasonably strong growth period– even during quarters of 4%-plus growth, it seemed that the economy was always on the brink of recession, regardless of how well it was performing — Aversa’s mild enthusiasm over an anticipated -5% is more than a little hard to take.

But Aversa and her chosen sources consumed crow when the BEA reported at 8:30 a.m. that the quarter’s annualized contraction was 6.1%, basically as bad as the fourth quarter of 2008.

Here is how Aversa reversed herself:

The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.

The Commerce Department’s report, released Wednesday, dashed hopes that the recession’s grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters expected a 5 percent annualized decline.

Instead, the economy ended up performing nearly as bad as it had in the final three months of last year ….

In the January-March quarter consumers came back to life, boosting their spending after two straight quarters of reductions. The 2.2 percent growth rate was the strongest in two years.

Much stronger demand for big-ticket “durable” goods, including cars, furniture and household appliances led the increase. That spending rose at a 9.4 pace, the most in a year. Consumers also boosted spending on clothing, shoes, recreation services, medical care, gasoline and other energy products. But not on food, where spending dipped slightly.

Still, the consumer rebound was swamped by heavy spending cuts in virtually every other area.

Businesses cut spending on home building, commercial construction, equipment and software, and inventories of goods.

….. White House spokesman Robert Gibbs called the first-quarter’s showing a “pretty severe contraction,” but added that some more up-to-date signals on the economy have been more encouraging. “We continue to get, as the president said, some glimmers of hope,” he said.

….. Inventory reductions shaved 2.79 percentage points off overall first-quarter economic activity.

However, the recent outbreak of the swine flu, which started out in Mexico and has spread to the United States and elsewhere, poses a new potential danger. If the flu stifles trade and forces consumers to cut back further, those negative forces would worsen the recession.

The first two bolded paragraphs are strong indicators that Aversa’s chosen experts underestimated the impact of the massive levels of uncertainty the Obama administration injected into the economy, both during the post-election transition and its first 70 days in power. A short version of a much longer list would include de facto nationalizations; attacks on corporate bonuses; arbitrary TARP decisions, including forcing banks which had money forced on them to keep it; and threats to spread micromanagement of employee compensation to all public [even non-public?] companies, and to all employees.

It’s clear that businesses have responded to the uncertainty by further battening down the hatches, reining in spending and keeping inventories (and economic exposure) as low as possible — a process whose beginning can be traced back to the beginning of what I have been calling The POR (Pelosi-Obama-Reid) Economy (now known as the POR Recession As Normal People Define It) last June.

The third bolded item carries the faint aroma of advance excuse-making.

I would suggest that as long as the heavy-handed intervention and uncertainly continue, any recovery that occurs will come later than it should have, and will be weaker than it should have been.

In fact, this paragraph from Aversa seems to expect that this is what will happen:

The national jobless rate is now at a quarter-century high of 8.5 percent and is expected to hit 10 percent by the end of this year. It will probably rise a bit higher in early 2010 before starting to slowly drift downward.

But earlier, she quotes an analyst, supposedly representing many others with a similar view, saying that “the economy will be entering a recovery by the end of this year.”

I would suggest that as long as the heavy-handed intervention and uncertainly continue, any recovery that occurs will come later than it should have, and will be weaker than it should have been.

In other words, instead of the “jobless recovery” George W. Bush’s opponents derided earlier this decade, they’re predicting that it will be a “job-loss recovery.” If so, even if the economy stops being in a recession as normal people define it, it may and probably should continue to be called a recession as the National Bureau of Economic Research inconsistently and arbitrarily defines it.

Cross-posted at NewsBusters.org.

1Q09 Advance GDP: An Annualized -6.1%; The POR Economy Continues Unchecked

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 9:55 am

Here’s the first paragraph from the Bureau of Economic Analysis:

Real gross domestic product — the output of goods and services produced by labor and property located in the United States — decreased at an annual rate of 6.1 percent in the first quarter of 2009, (that is, from the fourth quarter to the first quarter), according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.

The first three full quarters of The POR (Pelosi-Obama-Reid) Economy, aka The POR Recession As Normal People Define It, which actually began in mid- to late-June of last year, have been as follows:

  • 3Q08 — minus 0.5% (-0.125% not annualized)
  • 4Q08 — minus 6.3% (-1.614% not annualized)
  • 1Q09 — minus 6.1% (-1.561% not annualized)

Including (negative) compounding, and pending subsequent revisions to 1Q09, the documented contraction during The POR Economy has been 3.27%.

That degree of contraction alone doesn’t explain the 19%-plus drop in federal tax collections from October 2008 through April 2009 (as estimated):


The POR Economy aka POR Recession itself explains a lot of it; the Obama administration’s continued injection of uncertainty into the economy in so many forms (de facto nationalizations, attacks on corporate bonuses, arbitrary TARP decisions, and threats to spread micromanagement of pay to all public [even non-public?] companies, just for starters) is now officially a large element of that. The ongoing “Going Galt” phenomenon that also began last summer” basically explains the rest, and might also explain why the advance result was worse than expectations of -5.0%, and why the federal receipts decline is accelerating. April, when the government’s receipts are highest, will more than likely come in at least 35% lower than April of last year.


UPDATE: Previous BizzyBlog posts, including this one in December, noted that conditions such as lower gas prices and lower interest rates made an economic recovery more possible.

There has indeed been a consumer recovery. But unfortunately, the business side has cratered, as these paragraphs from AP sadly note:

In the January-March quarter consumers came back to life, boosting their spending after two straight quarters of reductions. The 2.2 percent growth rate was the strongest in two years.

Still, the consumer rebound was swamped by heavy spending cuts in virtually every other area.

Businesses cut spending on home building, commercial construction, equipment and software, and inventories of goods.

Translation: Businesses didn’t respond to the consumer uptick as one would expect because of the uncertainty over what the clowns in Washington are going to dream up next. Thus, the first quarter’s awful GDP is entirely on this administration and this Congress, and consumer spending alone can’t solve that.

UPDATE 2: John Boehner made a great point in his press release on the GDP announcement (the one I’ve bolded, though the whole thing could be bolded) –

“America has lost more than two million jobs since the beginning of the year, and middle-class families and small businesses continue to suffer during this ever-deepening recession. This is no time for Democrats in Washington to do a victory lap. The news that our economy is growing even worse should give the Administration and congressional Democrats every reason to take a step back and re-evaluate the reckless spending, taxing, and borrowing of the first 100 days. Unfortunately, they have chosen a go-it-alone approach and later today, Democrats will pass the most fiscally-irresponsible budget in American history. It spends money we don’t have, piles unprecedented debt on our children and grandchildren, and raises taxes on families and small businesses, while taking away the middle-class tax cut the President promised during the campaign. Today’s report should serve as a wake-up call and encourage both parties to work together to help this economy recover.

If a Republican administration was engaging in self-congratulation in the current circumstances, there would be no end to press commentary about the unseemliness of it all.

Best-Kept Secret in America: Ford, Toyota Gaining and Could Overtake GM; I Wonder Why?

While the business press has been preoccupied with day-to-day events in the ongoing saga of Government, er, General Motors, it has failed to note that its two closest competitors have gained substantial ground — and quickly.

This chart shows just how quickly (Sources - Feb. and March 2009; January GM and Ford; January ToyotaDecember 2008):


Gosh, I wonder why this has happened?

For three months going on four, virtually no one in the press has looked into reasons for the clear consumer shunning of GM, let alone the combined gains made by Toyota and Ford. Yes, the industry as a whole is in a slump, but, as you can see, that is nowhere near the whole story.

The government bailouts of GM and Chrysler were announced on December 20. I believe that Toyota’s dramatic gain in January occurred largely because of consumers’ negative reactions to those bailouts. Alternative explanations for such a dramatic shift are in short supply. The only question is how much of the shift occurred for principled reasons (not wanting to buy from a bailed-out company) as opposed to practical ones (long-term concerns about warranties and repairs).

Ford’s gain on GM has been more gradual. I believe this is because early media coverage of the GM and Chrysler bailouts frequently referred to “the domestic auto industry” as a whole and to “Detroit,” and significantly downplayed Ford’s non-participation. As consumer awareness of Ford’s non-bailed-out status has gradually grown, so have its sales as a percentage of GM’s, though mostly at the expense of Toyota.

The above results have occurred during just the first three months after the government first “lent” GM and Chrysler bailout funds. In late March, President Obama and his car czars took their intervention to the next level. GM CEO Rick Wagoner resigned “at Obama’s behest.” Obama deliberately and visibly decided that the government would back GM’s and Chrysler’s warranties. As of this morning, it has become clear that Uncle Sam and the United Auto Worders are gunning for dominant control of whatever is left of both companies.

What if the backlash against the bailed-out also has accelerated further in reaction to the government’s actions during the past month? If it hasn’t, why has GM, which made a big deal of not needing a bailout installment seven short weeks ago, rushed into 9-week shutdowns at most of its plants? Why is there so much talk of a smaller, leaner GM?

If there has indeed been a bigger backlash against the bailed-out, April’s sales results (or May’s, or June’s) may break news that was unthinkable as little as six months ago: that General Motors, for the first time in 80 years, is no longer the USA’s number one automaker. If that happens, it will be a big surprise to casual news consumers. It shouldn’t be, and wouldn’t be, but for myopic establishment media coverage.

Cross-posted at NewsBusters.org.

Laugher of the Day

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 6:56 am

From the Associated Press yesterday:


Trying to interpret the incoherence of the worst press secretary in my lifetime, who accomplishes something once thought impossible — making W’s Scott McLellan (a proven liar in his own right) look like a genius — I guess the government wants a 50% stake so it can be an absentee owner. Uh-huh.

A Freep.com editorial offers a few reality-based observations:

But if the definitive version of GM’s reinvention is still months away, the outlines of what will remain a year from now are coming into sharper focus:

• It will be a company whose market share, payroll, product line and dealer network are all dramatically smaller than even the most pessimistic analysts would have forecast three months ago.

It will be a manufacturer in which the U.S. government — and, by extension, U.S. taxpayers — play an unprecedented role in deciding what to build, where to compete and how to compensate employees, who will also be the government’s largest equity partners in a restructured GM.

• And it will be a concern in which institutional investors accustomed to getting their way will exercise, at least for a time, sharply diminished influence in matters of corporate governance.

If the bolded text doesn’t describe “run(ning) an auto company on a day-to-day basis,” I don’t know what does.

Positivity: Woman’s Hair Weave Stops Bullet

Filed under: Positivity — Tom @ 5:58 am

From Philadelphia (video is at link):

Last Edited: Friday, 20 Feb 2009, 3:36 PM EST
Created On: Friday, 20 Feb 2009, 11:01 AM EST

MyFox National Reports
MYFOX NATIONAL – Who needs body armor when you got a hair weave? A Missouri woman is thanking her hairstylist for saving her life after her gun-toting ex-boyfriend allegedly shot at her. She survived the attack with just a headache after one of the rounds was stopped by her hair weave.

“In the back of my head, it was like bam! That’s how it felt. It was hot, you could feel it,” 20-year-old Briana Bonds said.

The police found the spent slug tangled in her hair, and say her weave prevented it from penetrating her skull.

“I’ve been wearing it for years. I’ve invested a lot of money into this weave. It saved my life. It saved my life,” Bonds said.

The shooting happened as Bonds was pulling into a convenience store. …..

Go here for the rest of the story.