November 29, 2012

CBO: Extending Unemployment Benefits Would Cost $100K Per Job Created

Today, the Congressional Budget Office released a report informing readers that extending unemployment benefits for a year, an outlay which would cost the federal government $30 billion, would, because of its allegedly stimulative impact, generate 300,000 jobs.

Even if true, neither the CBO, nor the Associated Press in covering the report, noted that this result works out to a cost $100,000 per job. Bravely assuming that each new job created pays $40,000 per year, that’s a $60,000 loss in value received compared to money spent. The government’s tax take at all levels on that amount of earnings is likely about $10,000 or so. All of this is apparently considered pretty smart by the AP’s Sam Hananel and a quoted leading Democrat:

Most News Reports Don’t Tell Readers or Viewers How Little Money ‘Buffett Rule’ or Even Obama’s Tax Hikes Will Raise

A search at the Associated Press’s national website on Warren Buffett’s last name at about 5 p.m. ET returned two recent items which are still present there. Each item (here and here) mentions the Obama Fan of Omaha’s idea to “impose a minimum tax of 30 percent on income between $1 million and $10 million, and a 35 percent rate for income above that.” Neither mentions the pathetically small amount such a tax would raise while seriously impacting the ability of high income earners who own or run businesses to expand them — or in some cases causing them to shrink.

It’s the same at other establishment press outlets. Two recent New York Times items found in a search on Buffett’s full name (here and here, the latter item being Buffett’s own op-ed on Sunday) fail to note how little money Buffett’s proposed tax hikes would raise. So how little is “little”?


Forbes calls OH a ‘Death Spiral State’

Filed under: Economy,Ohio Economy,Ohio Politics,Taxes & Government — Tom @ 5:05 pm

Makers vs. takers.

This post went up with slight revisions at earlier this afternoon.

In a November 25 item at Forbes, William Baldwin warned readers that Ohio is a “death spiral state” which is “at high risk of a fiscal tailspin.”

Baldwin used two factors to identify what he describes as the nation’s “fiscal hellholes”:

The first is whether it has more takers than makers. A taker is someone who draws money from the government, as an employee, pensioner or welfare recipient. A maker is someone gainfully employed in the private sector.

… The second element … is a scorecard of state credit-worthiness done by Conning & Co., a money manager known for its measures of risk in insurance company portfolios.

The Buckeye State’s “taker-maker” ratio is 1.00, meaning that Baldwin determined that it has just as many takers as makers. Other states with worse ratios, indicating that they have more takers than makers, include Hawaii (1.02), Illinois (1.03), Kentucky (1.05), South Carolina (1.06), New York (1.07), Maine (1.07), Alabama (1.10), California (1.39), Mississippi (1.49), and New Mexico (1.53).

Ohioans should take little comfort in having the least objectionable situation of the eleven states Baldwin identified. The state is paying the price for years of entitlement expansion under its previous governor. Current governor John Kasich, despite all he has accomplished in the past two years, has failed to stem the tide of dependency.

Food stamp program participation in the Buckeye State is out of control. In August, despite a seasonally adjusted unemployment rate of 7.2 percent, 1.68 million individuals, over 14 percent of the state’s population, were on the food stamp rolls — an astonishing one-month increase of over 110,000. In October 2008, the last time the state’s unemployment rate was about that low, it had over 25 percent fewer participants.

What happened? For starters, state government, with federal blessing, loosened the program’s eligibility requirements to the point where, as shown in early 2009, a couple with $80,000 in the bank and a paid-off house in an upscale suburb was able to qualify. College students, even those with wealthy parents, can receive benefits if they claim that they are receiving no or little support from them. Beyond that, I suspect that many who have found work which would disqualify them from receiving benefits or cause them to be greatly reduced have been slow to report their improved situation — if they have reported it at all.

In September 2008 Ohio had almost 179,000 people receiving benefits under the Temporary Assistance for Needy Families (TANF, also known as “traditional welfare) program.  At the end of 2011, apparently the latest data available, it was over 193,000, a significant decline from a peak of over 240,000 the previous year. That’s fine, but Ohio’s 1.61 percent of the population on welfare was still 60 percent above the non-California national average of barely over one percent.

As to credit quality, the Conning scorecard to which Baldwin referred ranks Ohio 47th out of all 50 states. In their view, only New York, New Jersey, and Connecticut are worse off. The scorecard uses a variety of factors in its evaluation, many of which relate to a state’s economic vibrancy, an area where Ohio badly trails its peers.

Baldwin’s bottom line: Unless things change, his “death spiral states” are ones which “can look forward to a rising tax burden, deteriorating state finances and an exodus of employers.”

What should Kasich and Ohio’s state leaders do? Besides limiting programs for the needy to the truly needy, prosecuting those who are gaming the system, and maintaining what has for the most part been a fiscally conservative posture, they need to recognize that a longer-term solution is right beneath their feet in the form of retrievable oil and gas resources. Rather than heavily tax the companies in these industries, as Kasich has proposed, Ohio should be encouraging them to explore and drill. Rapid economic growth is what has the greatest potential for solving the “taker-maker” problem, and these industries have the greatest potential for such growth.

Latest PJ Media Column (‘A $12 Minimum Wage in Retail?’) Is Up

Filed under: Economy,Taxes & Government — Tom @ 10:06 am

It’s here.

It will go up here at BizzyBlog on Saturday (link won’t work until then) after the blackout expires.

Initial Unemployment Claims (112912): 393K SA; NSA Claims Only Down 4% Year-Over-Year

Filed under: Economy,Taxes & Government — Tom @ 9:34 am

From the Department of Labor:


In the week ending November 24, the advance figure for seasonally adjusted initial claims was 393,000, a decrease of 23,000 from the previous week’s revised figure of 416,000. The 4-week moving average was 405,250, an increase of 7,500 from the previous week’s revised average of 397,750.


The advance number of actual initial claims under state programs, unadjusted, totaled 357,015 in the week ending November 24, a decrease of 46,541 from the previous week. There were 372,640 initial claims in the comparable week in 2011.

Last week’s figure of 410,000 was revised up by 6,000.

One doesn’t want to conclude too hastily when what we’re looking at is the week of Thanksgiving, but 393K is really not a good number. On a seasonally adjusted basis, it came in below last year’s comparable week (also containing Thanksgiving) by less than 2 percent.

This week’s seasonal factor of 90.8 was somewhat lower than last year’s comparable 93.4. If last year’s factor had been applied to this week’s raw claims, the reported seasonally adjusted number would have been 382,000 (357,015 divided by .934, rounded), or 11.000 claims lower. Still, being in the 380s isn’t impressive either.

It’s starting to look like this is more than just a “Sandy” thing, but I’ll wait until next week before more fully evaluating.

3Q12 GDP, 1st Revision: An Annualized 2.7%, Up From Original 2.0%; Less Than Meets the Eye

Filed under: Economy,Taxes & Government — Tom @ 9:18 am

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 — increased at an annual rate of 2.7 percent in the third quarter of 2012 (that is, from the second quarter to the third quarter), according to the “second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 1.3 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent.

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, federal government spending, residential fixed investment, and exports that were partly offset by negative contributions from nonresidential fixed investment and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased slightly.

I suppose the left will attempt to use this supposedly wonderful information to say that “the rich” can afford a tax increase without the economy getting hurt too badly. They’re wrong, of course, but that has never stopped them before.

ReaganVsObamaRecoveriesThru13qtrs112912Meanwhile, some historical perspective is seen on the right.

13 quarters after the end of the Reagan recession, the economy still had far more momentum than the current Obama economy, and there’s plenty of reason to believe that the Obama economy is running out of steam.

UPDATE: Zero Hedge’s reax, sparing me the effort of writing up a similar assessment (bolds and additional paragraph breaks are mine) –

One glance at today’s second read of Q3 GDP may leave some with the false impression that the US economy is soaring, because after sliding to 1.3% in Q2, and after a preliminary read of 2.0% in the first Q3 estimate, today’s print, which missed estimates of a 2.8% print, did nonetheless rise to 2.7%.

“A stunning success”, the administration sycophants would say. Absolutely wrong. Because a quick glance at the underlying numbers shows the true picture of the economy which contracted far more than most expected, with personal consumption collapsing to 1.4% Q/Q, on hopes of a 1.9% rise, and down from 2.0%. In fact, at 0.99% personal consumption expenditures – the core driver of 70% of the US economy – were a tiny 36% of the headline number.

Ironically today’s second GDP revision was far worse when analyzed at the component level, than the first Q3 estimate, which while lower overall at 2.0%, at least had personal consumption nearly 50% higher at 1.42%, or well over half of the total contribution.

So what drove “growth” in Q3? Nothing short of the most hollow and worst components of GDP: Government Spending, which soared to 0.67% of the annualized number, the first positive print in years, and of course, Inventories, which were responsible for 30% of the headline number. Finally, and most importantly, Fixed Investment, aka CapEx, was a meager 0.1%, or the lowest GDP contribution since Q1 2011. Without CapEx there is no corporate revenue growth (and future hiring intentions) period.

… all those hoping that the US consumer is finally waking up from his slumber and is spending (on credit of course) like a drunken sailor (for anything more than iPads using student loan proceeds), will have to wait until Q1 2013, as the Q4 2012 number will be even uglier than the one just released.

UPDATE 2: One clarification to ZH — its “first positive print in years” for all government spending is the first in nine quarters (2Q10, when Q/Q government spending grew by an annualized 2.8%). Federal spending growth in that quarter was an annualized 9.7%. The latest quarter’s federal component is an annualized 9.5%.

Five Days After Morsi’s Virtually Absolute Power Grab, AP Pair Writes That Egypt Is ‘Moving to a More Democratic Government’

In a Tuesday evening dispatch at the Associated Press (saved here for future reference, fair use and discussion purposes) on the status of U.S. foreign policy in Egypt, Bradley Klapper and Julie Pace either displayed an amazing level of clairvoyance or indulged in a level of fantasy ordinarily reserved for trips to Disneyland. I’m betting that it’s the latter, that this AP report will in short order come to be seen as a complete journalistic embarrassment, and that the Obama administration is drinking from the same koolaid jug.

The good news is that they at least finally acknowledged a linkage that most of the rest of the establishment press has studiously ignored, namely that “After winning U.S. and worldwide praise (for brokering an Israel-Hamas ceasefire), Morsi immediately cashed in on his new political capital by seizing more power at home.” But it’s all downhill from there (bolds and numbered tags are mine):


Thursday Off-Topic (Moderated) Open Thread (112912)

Filed under: Lucid Links — Tom @ 6:05 am

Rules are here. Possible comment fodder may follow later. Other topics are also fair game.


Positivity: RIP, Zig Ziglar

Filed under: Positivity — Tom @ 6:00 am

From the Associated Press’s obituary:

… “He got saved at the age of 42, which means that he accepted Jesus Christ as his savior,” Hellwig said. “Ever since that day is what he said was the turning point of his life. The last 41 years of his life he lived fully with that as his mission.”

“He also had the uncanny ability to make everyone he ran into feel like they were his friend,” Hellwig said.

Ziglar was a World War II veteran who grew up in Yazoo City, Miss., and then went to work in sales for a series of companies, where his interest in motivational speaking grew, according to his Plano-based company’s website. Hellwig said Ziglar moved to Dallas in the late 1960s.

Ziglar’s company, which features more than a dozen speakers advocating the “Ziglar Way,” offers motivation and performance training.

His book, “Confessions of a Grieving Christian,” was written after the 1995 death of his oldest daughter, Suzan, at the age of 46.

After a 2007 fall down a flight of stairs left him with a brain injury, Ziglar, along with another daughter, Julie Ziglar Norman, wrote “Embrace the Struggle,” a book that described how his life changed after the injury.

In addition to his daughter, Ziglar is survived by his wife Jean, with whom he celebrated 66 years of marriage on Monday; his son, Tom Ziglar; and daughter Cindy Oates. …

Go here for the full story.