Mike Huckabee wants infrastructure jobs 'you cannot outsource'

(Gage Skidmore/Flickr)

It seems that Gov. Mike Huckabee is the latest conservative on Team Trump to fall victim to the Keynesian delusion that infrastructure spending is the way to revitalize the economy. A tweet by Fox News yesterday quoted Huckabee as saying, “The most effective way to put people on a job is to do infrastructure jobs b/c it’s the one thing you cannot outsource.”

The tweet does not offer a link to a clip of the segment, so Huckabee’s comment cannot be viewed in full context, but the statement comes after other members of the Trump transition team, including the president-elect himself, have signaled that infrastructure spending, most likely financed by debt, will be a top priority in the new administration.

While Huckabee is technically correct that construction jobs cannot be exported to foreign countries, the construction industry is a major employer of illegal immigrants. In 2012, four years into the unemployment crisis brought on by the Great Recession, Pew Research found that about 15 percent of construction and extraction jobs were held by illegal aliens.

During the campaign, it was pointed that Donald Trump had even used illegal aliens in the construction of the Trump Tower in the 1980s.  The Washington Post reported that Trump was also using illegal workers in the construction of his new hotel in Washington, DC, a charge that he denied.

Even without possibility of government infrastructure money going to illegal workers, Huckabee’s infrastructure comment shows a lack of deep thinking on the issue of jobs. Government spending on infrastructure can create jobs in the short term, but what happens when those projects are finished? Government projects often run behind schedule and over budget, but eventually they come to an end. If the underlying problems with the economy are not fixed the result will be a country with a lot of nice, new roads and bridges, a lot more debt and a chronic high unemployment rate.

The key to revitalizing the economy is to create a climate in which American companies can create things that people in the rest of the world want to buy. Tax and regulatory reform would allow American businesses to build things at prices that are competitive with the rest of the world.

When the federal government takes on more debt, it needs more tax money to pay back what is borrowed. Higher taxes and more government spending make the US less competitive. Neither families nor countries can borrow their way to prosperity.

The infrastructure stimulus has been tried and has failed numerous times. Most famously, President Roosevelt’s “New Deal” created the Works Progress Administration, an entire government agency whose purpose was to create infrastructure jobs for unskilled laborers. The WPA was responsible for many roads, bridges, parks, and post offices, but what it did not do was end the unemployment crisis.

More recently, President Obama’s American Recovery and Reinvestment Act in 2009 spent $787 billion on “shovel-ready” infrastructure jobs. The success of Obama’s program can be judged by the fact that unemployment is still a problem eight years later.

One conservative critic of Obama’s stimulus said at the time, Republicans in Congress “were elected to represent their constituents, but they can’t hardly do that and vote to pile on unimaginable debt on their grandchildren.” He continued, “If you think future generations of Americans can afford a congressional version of ‘shop-til-you-drop,’ then just remain silent, but I don’t plan to.”

Who was that outspoken critic of Obama’s stimulus boondoggle? It was Mike Huckabee.

When did borrowing money to create jobs paid for by the government become a conservative policy, governor?

Originally published on The Resurgent

Democrats love the poor

Democratic policies produce more poor people. http://www.examiner.com/article/democratic-policies-produce-more-poor-people

Economist proposes “space alien” stimulus

In a tacit admission that the left is out of ideas on how to fix the economy, economist and New York Times columnist Paul Krugman recently proposed a new stimulus program in the form a military buildup to ward off an invasion by extraterrestrial aliens. Drawing upon the history of the Great Depression and an episode of “the Twilight Zone,” Krugman postulated on CNN that government spending on military hardware to combat aliens would revitalize the U.S. economy in short order. Krugman subscribes to the Keynesian belief that World War II and the debt-financed military buildup that followed finally ended the Great Depression after ten years of FDR’s debt-financed social programs failed to restart the economy.

In reality, the military buildup of the 1940’s and the New Deal stimulus programs were very similar. The military draft that removed hundreds of thousands of workers from unemployment rolls had civilian equivalents in the Civilian Conservation Corps, the Works Progress Administration and other New Deal government organizations that hired workers for make-work projects. Similarly, government orders for military hardware that busied factories were akin to New Deal construction projects commissioned by the Public Works Administration and the Civil Works Administration.

Krugman doesn’t actually believe that an alien attack is imminent. He merely favors a hoax to provide a rationale for spending:

“If we discovered that space aliens were planning to attack and we needed a massive buildup to counter the space alien threat - and really inflation and budget deficits took secondary place to that - this slump would be over in 18 months. And then if we discovered, oops, we made a mistake there aren't actually any space aliens.”

“There was a Twilight Zone episode like this, which scientists fake an alien threat in order to achieve world peace. Well, this time we need it in order to get some fiscal stimulus.”

Krugman, a Nobel Prize winning economist, misses several important points here. The most obvious is that the U.S. is already at war. We don’t have to invent an extraterrestrial enemy because we have a very real terrestrial enemy in the form of Islamic terrorist groups. The wars in Iraq and Afghanistan have caused wear and tear on military equipment. The government could spend money to replace and refurbish our existing military hardware, as well as purchasing more F-22 Raptor and F-35 Lightning II advanced technology fighters that would ensure air superiority against a new generation of high-tech Chinese and Russian fighters. The F-22 is a built by Lockheed Martin at its plant in Marietta, Ga. Presumably real world military spending is not large enough in Krugman’s eyes.

The second point that Krugman misses is that spending on WWII did not actually jumpstart the economy. The problem is that removing hundreds of thousands of idle workers from the economy and purchasing millions of dollars of tanks, aircraft, and other equipment is not a change that could be sustained indefinitely. When the war was over, as the armed forces demobilized these workers would likely return to the unemployment line and the factories would go idle if the government did not fund new New Deal programs to provide jobs and demand for material goods. In reality, this is not what happened.

In the Wall Street Journal, Burt Folsom, author of “New Deal or Raw Deal,” notes that Congress, led by Georgia Senator Walter F. George, rejected President Truman’s attempts to revive New Deal policies after the war. According to Folsom’s research, Congress reduced income tax rates across the board, cut the corporate tax rate, and repealed the Excess Profits Tax. According to tax.org, the tax reforms and reductions began even before the war ended with the Tax Adjustment Act and the Revenue Act of 1945. The Revenue Act of 1948 was smaller, but included more comprehensive and controversial reforms.

Senator George, a resident of Vienna, Ga. who served on the Senate Finance Committee at the time, is quoted by Folsom as saying that if the tax reform “has the effect which it is hoped it will have, it will so stimulate the expansion of business as to bring in a greater total  revenue." As a chart on USgovernmentrevenue.com shows, federal revenues increased dramatically in the 1950’s even though tax rates were lower than they had been during the New Deal and war years.

Finally, Krugman ignores the fact that federal debt levels today are much higher than they were at the onset of WWII. Data from USgovernmentspending.com reveals that the federal debt as a percentage of GDP is almost as high today as it was at the end of WWII, not the beginning. The government could afford to spend billions on tanks and armies in 1941 because, even after a decade of New Deal spending, the federal debt was less of a burden than it is today. If the U.S. tried to engage in another massive military buildup today, the debt would shortly become unmanageable and the result would either be a default or inflation (which Krugman also advocates).

Krugman’s idea of an anti-alien buildup is simply a sci-fi twist on the same old Keynesian policies that have failed to work for President Obama in the past. President Obama should instead follow Senator George’s example and enact broad-based, permanent tax reforms that would encourage businesses to invest.

Photo credit:  Vince DeVries/Wikimedia

Read this article on Examiner.com

http://www.examiner.com/conservative-in-atlanta/economist-proposes-space-alien-stimulus

Lessons from 1938

An abandoned stimulus sign is symbolic of the failure of Obama's economic agenda.

While the storm clouds gather far across the sea,
Let us swear allegiance to a land that's free,
Let us all be grateful for a land so fair,
As we raise our voices in a solemn prayer.

-Irving Berlin, introduction to “God Bless America”

Composer Irving Berlin penned those words as an introduction to the patriotic song “God Bless America” in 1938.  In that year, Americans surely felt the need for God’s blessings. 

As Berlin noted, war clouds were gathering across both oceans that lapped at America’s shores.  Beyond the Atlantic, Adolf Hitler has assumed power in Nazi Germany and began to rebuild the German military in violation of the Treaty of Versailles.  That year Germany annexed Austria and Czechoslovakia’s Sudetenland as other European leaders followed a policy of appeasement.  Kristallnacht, a night of coordinated attacks and pogroms against German Jews also took place in 1938.

To the west, across the Pacific, Japan was also violating the London Naval Treaty which restricted the number of warships in its Navy.  Japan had already captured Manchuria and Shanghai in China and was attempting to conquer the rest of the country.  In 1938, Japan announced its intention to form a New Order for East Asia and to dominate the region.

By 1938, Josef Stalin had turned the Soviet Union into a police state.  In power since the death of Lenin in 1922, Stalin had already purged the Soviet Union not only of his enemies and foreign immigrants (including thousands of Americans who had fled the Great Depression), but many of his allies and innocent people as well.  Stalin’s policies also led to massive crop failures and famines that killed hundreds of thousands more.

In 1938, the situation at home was not well for the United States either.  The Great Depression had begun in 1929 and had worsened under the watch of President Franklin Roosevelt.  By 1938, Roosevelt’s policies of tax increases, high levels of government spending, and more regulation on business had turned a slow recovery into a second recession within the depression.  The country’s economic difficulties spurred strict immigration laws and an isolationist foreign policy.

In many ways, the world and America of 2011 strongly resembles the world and America of 1938.  Hostile dictatorships are rising around the world as our federal government attempts to legislate its way out of an economic crisis that was caused in part by reckless legislation in the first place. 

The most obvious threats are in the Middle East.  President Ahmadinejad of Iran is nearing the end of a nearly decade long push to develop nuclear weapons.  Iran recently unveiled underground missile silos that reportedly accommodate medium- and long-range nuclear missiles that could possibly reach Israel or beyond to Europe… or possibly even the United States.

There is little doubt of Iran’s hostility to the United States.  In June 2011, Defense Secretary Robert Gates announced that Iran is renewing arms shipments to Shiite terror groups in Iraq as American soldiers prepare to withdraw.  Gates attributes forty percent of U.S. troop deaths over the past ten months to the Iranian arms shipments. 

After the breakup of the Soviet Union twenty years ago, the Russian Empire is now resurgent under Vladimir Putin.  Putin has reversed many of Russia’s democratic reforms and killed and imprisoned dissidents and journalists, both at home and abroad.  In a case worthy of a James Bond film, Alexander Litvinenko, a former Russian agent living in exile in the U.K., was poisoned with a radioactive substance.  It is widely suspected that Litvinenko was murdered on Putin’s orders.

Putin and Ahmadinejad (www.kremlin.ru)

Putin has also leaned on other countries.  He has attempted to strong-arm the Ukraine and has cut off the flow of gas through pipelines from Russia.  Putin’s Russia is also suspected of using poison to try to assassinate Viktor Yushchenko, then a Ukrainian presidential candidate.  The poison left Yushchenko’s face scarred, but he survived and is president of the Ukraine today. 

More overtly, Putin’s Russia invaded the central Asian country of Georgia in 2008.  Russia captured two disputed areas in Georgia, South Ossetia and Abkhazia, and occupies them to this day.  Putin, who was director of the Federal Security Bureau, the successor agency to the K.G.B., is also widely considered to be largely responsible for the brutal Second Chechen War.  Under Putin, Russia has also been beaming slickly produced propaganda to the U.S. via the RT television network.

Like the Americans of 1938, the Americans of 2011 have become increasingly isolationist.  The Americans of the 1930s had not been at war for the past decade, but they had witnessed a twenty-five year occupation of Haiti, a twenty-one year occupation of Nicaragua, a sixteen year occupation of Cuba, and numerous other interventions in Central America as well as having troops in harm’s way in China.

As in our own age, war weariness likely combined with poor economic conditions to cause many Americans to embrace and isolationist view.  The America First Committee was made up of many prominent Americans who believed that the U.S. should stay out of foreign wars.  The isolationists opposed even sending military aid to the countries fighting Hitler, believing that America was safe from foreign attack.  The America First Committee was disbanded four days after the Japanese bombed Pearl Harbor, but their actions left the U.S. military woefully unprepared for war and emboldened aggressor nations.

Today, the wars in Iraq and Afghanistan have sapped much of America’s strength.  After 9/11, most Americans supported a broad war against the terrorists and believed that failure to take military action was a bigger risk than doing nothing.  Now, after the death of Osama bin Laden, almost three-quarters of Americans support President Obama’s plan to withdraw from Afghanistan, leaving the country ripe for a Taliban resurgence.  Americans now oppose the war in Iraq by a two-to-one margin, even though leaving might mean that Iran could gain control of a large portion of Persian Gulf oil fields.

Like the isolationism of yesteryear, today’s antiwar sentiment is largely because of the poor economy.  Although the current recession is not as bad as the Great Depression, it is one of the worst recessions of the last half-century.  Like the Great Depression, it is likely that the strong and swift government action taken to prop up the economy has made matters worse.  Henry Morgenthau, FDR’s treasury secretary and trusted advisor, told Congress in 1939 that “after eight years of this [Roosevelt] Administration we have just as much unemployment as when we started….  And an enormous debt to boot!”

Even though President Obama and the Democrats promised that the stimulus and a myriad of other government programs would cure the economy, the recovery has been slow.  Even worse, recent economic indicators show that a double-dip recession is becoming more likely.  For many Americans, the best that can be expected is “the new normal:” high unemployment, lower wages, and economic stagnation.   

In Georgia, the unemployment rate has been consistently above the national average during the economic crisis.  That remains true, even though Georgia unemployment has declined slightly over the last few months while national unemployment rose.

There are two lessons to learn from the America of 1938.  The first is that, as President Reagan put it, when it comes to the economy, “Government is not a solution to our problem, government is the problem.”  The attempts to control the economy by President Obama, and earlier by President Roosevelt, create uncertainty and discourage businesses from growing and investing.  Increased regulation limits the ability of businesses to grow and become profitable.  Higher taxes mean that businesses have less money with which to grow and invest.  All of this means fewer jobs and economic stagnation. 

Second, America should learn that it is a force for good in the world.  In fact, it is one of the only, and certainly the largest, such force in the world.  When America focuses its attention inward, dictators and despots rise up and take control of their nations or assault their neighbors.  Appeasement works for no one except the aggressor.  As Edmund Burke said, “All that's necessary for the forces of evil to win in the world is for enough good men [or a good nation] to do nothing.”

http://www.examiner.com/conservative-in-atlanta/why-2011-looks-a-lot-like-1938"> 

Will.i.am vs. Obama

Still an Obamunist? (nicolas genin)

My recent article published on the Atlanta Conservative Examiner page got a larger and more immediate response than anything I have published so far.  I would like to thank everyone who read and commented on the article.  All comments, even (or especially) those from contrarian viewpoints, are appreciated.  If you did not see the original article, you can read it here.  Given the large response to the article, I’d like to take this opportunity to respond to some of the comments left by readers.

First, many readers disagreed with my statement that “as Super Bowl shows go,” Sunday night’s effort by the Black Eyed Peas “was OK.”  Several readers wrote that it was the “worst Super Bowl halftime show ever.”  

I’m not a music critic.  Nor do I consider myself a fan of the Black Eyed Peas, although some of their songs are pretty good.  I usually view the Super Bowl halftime show as I view the Saturday Night Live musical guest’s performance:  a time to go to the bathroom or the kitchen.  Having said that, I don’t feel that saying it “was OK” was a ringing endorsement and it probably wasn’t the worst in history either.  Janet Jackson’s wardrobe malfunction from a few years ago comes to mind.  That show was unsalvageable even before her clothes started falling off.  To the NFL I say, next year why don’t you find a nice marching band?

Second, some readers disagreed with my claim that government workers produce nothing except for paperwork and red tape.  I stand by that claim.  Government workers require taxes for payment.  That tax money is sucked out of the larger economy, preventing people and businesses from spending it on things that would grow the economy.  Money paid in taxes to the government cannot be used to hire new workers, expand a business, buy products, or save for retirement.

Some government workers are necessary.  I am not an anarchist or anti-government.  I am a constitutionalist who believes that government should be restricted to its constitutional role.  For the federal government that means things like providing for the common defense, regulating international and interstate commerce, and establish post offices and post roads. 

Other readers disagreed with my contention that the president cannot create private sector jobs.  There is very little that the president can actively do to foster job creation.  Primarily, he can get out of the way and foster an economic climate in which business owners create jobs out of their own self-interest, the profit motive. 

On the other hand, there is much that a President can do inhibit job creation.  We have seen numerous examples of this over the past two years.  President Obama’s agenda has led to a vast enlargement of the federal bureaucracy.  The health care bill alone created 159 new federal agencies which will in turn create countless new regulations.  President Obama is also developing a history of bypassing Congress to enact new regulation.  Net neutrality and carbon regulation could not pass Congress, but they are now law by the administrative law process.  Other unpopular bills such as card check, the attempt to take away secret ballot union elections, could become law in a similar fashion.

As stated before, higher taxes leave less money for business growth and job creation.  President Obama’s budget includes over a trillion dollars in new taxes, including another attempt to roll back the low Bush-era tax rates when the current deal expires in 2012.  Business leaders and individual Americans realize that taxes will have to go up to support the onslaught of record federal spending.

Further, President Obama’s rhetorical war on business has also cost jobs.  From criticizing Las Vegas and business jets to a hasty and ill-advised offshore oil drilling moratorium, Obama’s comments have cost jobs.  Businesses don’t have to invest or spend money.  In this case, they want to wait and see which way the fickle winds of change might blow.

We have nothing to fear but a new New Deal.

Readers were also split on the New Deal.  Obama’s economic policies mirror those of FDR in many ways.  Contrary to popular opinion, the New Deal did not end the Great Depression; it prolonged it.  Neither did WWII, which could be viewed as a massive wartime stimulus program, end it.  Had New Deal policies continued after the war, hundreds of thousands of demobilizing GIs would have caused the unemployment rate to go right back up to 1930s levels.  Instead, (drum roll please) Congress cut taxes.  Georgia Senator Walter F. George, a Democrat, said that if the tax cut has “the effect which it is hoped it will have, it will so stimulate the expansion of business as to bring in a greater total revenue."  It did.

As I noted in the original articles, tax and spending cuts have stimulated the economy repeatedly.  The formula was successfully used by Presidents Harding, Coolidge, Kennedy, Reagan and Bush.  It has also been used successfully in the states.    States following the Obama model such as Michigan, New York, and California are on the brink of failure while low tax states such as Texas and the Carolinas are seeing strong economic growth.

Finally, some readers questioned whether Will.i.am, a longtime Obama supporter, was now opposed to the president’s policies.  I don’t know, but it seems to me that if Will.i.am still has to call on Obama to stimulate the economy two years after the stimulus was supposed to solve our problems, it is a tacit admission that he realizes President Obama’s programs are not working.  Unemployment has stabilized at a much higher rate than it was under President Bush.  President Obama’s seasonal numbers are overly optimistic and don’t reflect how bad the situation really is.  In Georgia, our unemployment remains even higher than the national average.

Will.i.am and other liberals may not have turned on Obama, but many of them must be becoming disenchanted and disillusioned with his failing programs.  That leaves an opening for conservatives and Republicans to convince them that free market economics is the best way to move forward.  A majority of the country was willing to give us a chance in the last election.  It is time to reward the trust they have placed in us by doing the job they asked us to do:  Cut spending, cut taxes and shrink government.  If we can move forward with that focus, we will be rewarded again in 2012.

For the record, I prefer my black eyed peas with cornbread and onions.

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Photo:   

http://www.flickr.com/photos/nicogenin/3661436170/