July 3, 2010

Good, Not-So-Good News, and Bad News on Federal Receipts

Filed under: Economy,Taxes & Government — Tom @ 4:42 pm

Note: This went up at the Washington Examiner’s OpinionZone blog and teased at BizzyBlog on Thursday afternoon. The tease has some updated info on the government’s last Daily Treasury Statement.

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First the good news: Federal tax collections in June, an important month for receipts because of payments due from those who pay quarterly estimated taxes, are up from June of last year.

The not-so-good news: Collections are nowhere near where they were in June 2008, the seventh month of the recession as determined by the supposedly erudite academicians running the National Bureau of Economic Research (the recession as normal people define it began in July 2008, when economic growth went negative for the first of four consecutive quarters.

Then there’s the bad news: Collections aren’t going to come back much more during the rest of this year as long as unemployment stays between 9%-10%, government-induced uncertainty remains omnipresent, and strangulation by regulation as exemplified by what Investors Business Daily has called “Financial Deform” continue.

Here are the key numbers for June 2010, 2009 and 2008 (2010 amounts are estimates, based on the June 28 Daily Treasury Statement and reviewing previous years’ results; 2009 and 2008 amounts come from the last Daily Treasury Statement from each year; it ignores relatively minor receipts from other sources):

USTreceiptsKeyItems3yrsToJune2010

As you can see, net receipts from the key sources listed are up, but they’re less than halfway back to where they were in June 2008.

Another good-news, bad-news point: Income taxes paid by corporations have jumped considerably from last year, but directly paid income and employment taxes paid primarily by those who are self-employed or who interests in “passthrough” entities like partnerships, Subchapter S corporations, and limited liability corporations are flat. This reflects the fact that larger companies have fared relatively well during the recession and subsequent “recovery,” while smaller companies and entrepreneurs have not. This does not bode well for job growth, as smaller entities have collectively created many more jobs than large ones during previous recoveries.

The collections story also casts doubt on the jobs numbers themselves.

That’s because every month, the government tries to estimate how many jobs have been created that they literally can’t find, along with how many that might have disappeared without notice. This exercise is embodied in something called the Birth/Death model. The model, employing calculations based on previous seasonal and cyclical behavior, estimated that 188,000 net invisible jobs were created in May, and 215,000 in June. The model’s ultimate effect on the monthly reported job growth or loss is not as great as those numbers might lead one to believe because of seasonal smoothing.

That said, if general uncertainty is really holding small business start-ups back (which I believe is the case), the Birth/Death model is causing the government to paint a prettier picture than really exists.

All of this ultimately gets corrected in annual comprehensive adjustments early each year. But in the meantime, the stagnant non-withheld collections at the Treasury Department seem to support the notion that the government is exaggerating the economy’s real job count.

AP Quietly Lowers the ‘Normal’ Unemployment Bar to 6%

DefiningTheNewNormal0610Those looking for evidence that there is a move afoot in the establishment press to lower the bar for whatever economic accomplishments might be accomplished during the Obama administration will be interested in how the Associated Press’s report on the government’s June jobs report defined “normal” unemployment.

Perhaps it’s valid for reporters Jeannine Aversa and Christopher Rugaber to refer to 6% unemployment as “normal,” if by that they mean “typical non-recessionary” or “long-term average” unemployment. But I couldn’t help but remember that during the Bush 43 and Reagan years, unemployment rates just above and occasionally even below that level were described by wire service reporters and other journalists as “persistent unemployment” — i.e., decidedly not “normal.” I quickly found several AP and other reports from those eras that confirmed my recall of what is now a demonstrated double standard.

Here is the opening sentence from the AP report, followed by the term-redefining paragraph (bold is mine):

A second straight month of lackluster hiring by American businesses is sapping strength from the economic rebound.

… Unemployment is expected to stay above 9 percent through the midterm elections in November. And the Fed predicts joblessness could still be as high as 7.5 percent two years from now. Normal is considered closer to 6 percent, and economists say it will probably take until the middle of this decade to achieve that.

“Closer to 6%” seems to imply that “normal” is really “slightly above” that level.

It’s legitimate to question whether there has really been an economic rebound when people who are looking for work aren’t finding it and so many others have abandoned their quest. The truth is that the number of people reported as working according to the Establishment Survey in yesterday’s Employment Situation Report is lower than it was a year ago, when the recession as normal people define it ended.

It’s also worth remembering, assisted by an updated version of the indispensable chart from Innocent Bystanders, that the administration predicted that its stimulus plan would return the economy to the AP’s new “normal” by the first quarter of 2012, three years earlier than “the middle of this decade”:

stimulus-vs-unemployment-june2010-d

Oops.

Here are some previous examples of situations described by the establishment press as “persistent unemployment”:

  • October 7, 2003 — Both an AP story and an item at USA Today on California’s recall election told readers that “Californians face an $8 billion state budget deficit, persistent unemployment and struggling schools.” The Golden State’s unemployment rate in September 2003 was 6.4%.
  • June 13, 2003 – A Reuters report on consumer sentiment relayed that “Consumer sentiment deteriorated sharply in early June, suggesting persistent unemployment is taking its toll on Americans’ expectations for the economy’s future.” The national unemployment rate in May 2003 was 6.1%.
  • April 4, 2004 — A Fox News item to which AP contributed claimed that “there is evidence that persistent unemployment, despite other signs of a recovering economy, is taking its toll on the president’s popularity.” On April 2, the government reported a national unemployment rate of 5.7%.
  • Going back further, in a March 29, 1987 book review at the New York Times (“No Time for Radicals”), Michael Janeway wrote this of author Robert Lekachman: “Under Ronald Reagan, the author writes, no god but that of the marketplace is worshiped, yielding ‘privatization, militarization, persistent unemployment, de-unionization, middle-class shrinkage, and the triumph of plutocracy.’ Mr. Lekachman’s cases in point, when backed by fact and figure, make for an intelligently passionate brief against the Reagan Administration.” Janeway didn’t dispute the factual accuracy of Lekachman’s claim about “persistent unemployment, which at the time was 6.5%. Gosh, who knew that “normal” was only a half-point or less below that of “a mean society”?

But what was once “persistent unemployment” is now “normal.” No double standard there (/sarcasm).

Oh, wait a minute. Maybe the AP pair is subtly informing us that as long as the Obama administration is in power and Democrats control Congress, “persistent unemployment” will be “normal.” If so, guys, thanks for letting us know.

Cross-posted at NewsBusters.org.

The ‘Private Jobs Strike,’ the POR Economy’s Devastation, and the Job-Loss Recovery

Filed under: Economy,Taxes & Government — Tom @ 7:18 am

flatlineIn a Wall Street Journal editorial dated today:

President Obama hailed yesterday’s jobs report for June as more evidence that “we’re headed in the right direction,” and with any more such good news the U.S. economy will soon be where Japan was in its lost growth decade of the 1990s. If we’re lucky.

The reality is that this is another disappointing jobs report at a time in the recovery when new hiring ought to be picking up. Economic growth turned positive about a year ago, and normal recoveries become self-sustaining: Job creation follows the pickup in growth, which means rising income, which leads to more consumer spending, which leads to more business confidence and investment, and even more job creation.

This jobs recovery seems stuck in the Washington mud.

… To get the jobless rate down even to 8% will require 250,000 new jobs a month for the next three years.

Private employers appear to be in a holding pattern, waiting on hiring decisions until they see how much more the political class will raise their costs. A pair of recent reports by the Business Roundtable and the Manufacturers Alliance have warned about the destructive impact that higher taxes, trade restrictions and more regulation, among other policies, are having on job creation and new investment.

Meanwhile, Washington continues to believe its own advertising that government spending creates growth. Speaker Nancy Pelosi asserted this week that another extension of jobless benefits will cause more people to work, and Mr. Obama responded to a question in Wisconsin about job creation by saying that he wants to create a new tax break for Americans to weatherize their homes to reduce greenhouse gas emissions. Their worst critics couldn’t make this up.

The POR (Pelosi-Obama-Reid) Economy, which yours truly contemporaneously noted began in the summer of 2008, has given us four quarters of a recession as normal people define it where 6.7 million lost their jobs, followed by the seemingly impossible — four quarters of economic growth where the net result has still been jobs lost:

BLStotalEmployment2000to2010

As seen in the red box, 6,645,000 seasonally adjusted jobs went away between June 2008 to June 2009. Though there have obviously been gains during five of the past six months, the fact remains (again seasonally adjusted) that 170,000 fewer people are working now than were working in June of last year when economic growth resumed (not seasonally adjusted, the analogous figures are -6,712,000 and -69,000).

That all of this is almost entirely on them is beyond reasonable dispute.

As detailed two years ago when I called the beginning of the POR Economy, they lit the match. The housing and lending debacles that came to a head in the fall of 2008 and seriously worsened the already-started recession have their roots in 15 years of massive fraud and nearly a decade of wholesale abandonment of prudent lending standards at Democratic crony-run Fannie Mae and Freddie Mac. Their “stimulus”-based attempts at recovery are their policy prescriptions and no one else’s. The current atmosphere of FUDGE (Fear, Uncertainty, Doubt, and Government Excess) is entirely of their own legislative, regulatory, and presidential making. Whether they have even the slightest legitimate interest in fixing things is highly questionable.

Positivity: ‘Ultrasound Jesus’ to herald true meaning of Christmas in UK

Filed under: Life-Based News,Positivity — Tom @ 6:22 am

PreBornJesusBrilliant, and long overdue — From London, England:

Jul 2, 2010 / 02:12 pm

Though Christmas is still six months away, the organization ChurchAds.net has chosen the design for its Christmas ad campaign. The selected design, called “Ultrasound Jesus,” depicts an ultrasound image of an unborn baby with a halo above his head and the caption, “He’s on His way. Christmas starts with Christ.” The image quickly angered pro-abortion and atheists groups with its alleged pro-life sentiments.

ChurchAds.net is a British marketing and advertising organization that brings together various Christian denominations such as Anglicans, Methodists and Baptists. The Catholic Church is not part of the group.

The authors state that they want to spread the true meaning and origin of Christmas. It is estimated that the ad will reach over 40 million people in the weeks before Christmas.

The vice-chair of ChurchAds.net, Mike Elms, told the Guardian newspaper, “We wanted to convey that Christmas starts with Christ. That this baby was on the way. Then we thought that the scan was a way of conveying that: it is modern currency in announcing a modern birth. We put a halo on it because theologians speak of Jesus being fully human and fully divine.”

Secular and pro-abortion organizations such as Britain’s National Secular Society (NSS) have expressed great dissatisfaction with the campaign and have called it, “politically motivated” and “naïve.” “The image is too specifically associated with pro-lifers to be seen in a benign context. They should go back to angels and cribs,” said Terry Sanderson of the NSS.

The Spanish pro-life watchdog organization, HazteOir.org has said that this campaign represents “something out of a horror movie” for the abortion industry.

“Perhaps the abortion industry fears that this campaign may be more successful than their own,” said HazteOir. “For example, Marie Stopes International (a firm responsible for approximately 65,000 abortions annually) began promoting abortion via television advertising last May, as though it were a common product, and reaped immense civic opposition.”

Though his organization had no part in creating the campaign, John Smeaton of England’s Society for the Protection of the Unborn Child told the Guardian that he welcomed the ad.

“The advert is saying that Jesus was alive as a person before he was born,” he said. “ They have a halo round his head and you don’t have a halo around the head of a blob of jelly or a cluster of cells. This is not a cluster of cells but a human person and it just happens to be the God man Jesus.” …

Go here for the rest of the story.