Obama

In The Wall Street Journal, James Bovard, a former CEI Warren T. Brookes Journalism Fellow, takes aim at some of the billions in waste contained in President Obama’s recent “jobs” proposal, the “American Jobs Act,” which would fund proven government failures in the form of federal job “training.” Federal “job-training” programs, which Obama likes, are so dismally ineffective that they cause “significant earnings losses” for young people who participate in them, and result in participants ending up on food stamps at higher rates:

Last Thursday, President Obama proposed new federal jobs and job-training programs for youth and the long-term unemployed. The federal government has experimented with these programs for almost a half century. The record is one of failure and scandal.

In 1962, Congress passed the Manpower Development and Training Act (MDTA) . . . A decade after MDTA’s inception, GAO reported that it was failing to teach valuable job skills or place trainees in private jobs and was marred by an “overriding concern with filling available slots for a particular program,” regardless of what trainees actually needed.

Congress responded in 1973 by enacting the Comprehensive Employment and Training Act (CETA). . . CETA spent vastly more money. .  .[such as] providing nude sculpture classes (where, as the Pharos-Tribune of Logansport, Ind., explained, “aspiring artists pawed each others bodies to recognize that they had ‘both male and female characteristics’”), and conducting door-to-door food-stamp recruiting campaigns.

Between 1961 and 1980, the feds spent tens of billions on federal job-training and employment programs. To what effect? A 1979 Washington Post investigation concluded, “Incredibly, the government has kept no meaningful statistics on the effectiveness of these programs—making the past 15 years’ effort almost worthless in terms of learning what works.” CETA hirees were often assigned to do whatever benefited the government agency or nonprofit that put them on the payroll, with no concern for the trainees’ development. An Urban Institute study of the mid-1980s concluded that participation in CETA programs resulted in “significant earnings losses for young men of all races and no significant effects for young women.”

After CETA became a laughingstock, Congress replaced it in 1982 with the Job Training Partnership Act. JTPA spent lavishly—to expand an Indiana circus museum, teach Washington taxi drivers to smile, provide foreign junkets for state and local politicians, and bankroll business relocations. . .  young trainees were twice as likely to rely on food stamps after JTPA involvement than before since the “training” often included instructions on applying for an array of government benefits.

For years the Labor Department scorned the mandate in the 1982 legislation to speedily and thoroughly evaluate whether the programs actually benefitted trainees. Finally, in 1993, it released a study that showed participation in JTPA “actually reduced the earnings of male out-of-school youths.” Young males enrolled in JTPA programs had 10% lower earnings than a control group that never participated. . .

In his speech to Congress, Mr. Obama called for funding hundreds of thousands of summer jobs for teens, which he labeled “investing in low-income youth and adults.” Yet such programs have been blighting work ethics for decades.

The GAO warned in 1969 that many teens in federal summer jobs programs “regressed in their conception of what should reasonably be required in return for wages paid.” A decade later, it reported that most urban teens “were exposed to a worksite where good work habits were not learned or reinforced.” And in 1985, a National Academy of Science study found that government jobs and training programs isolated disadvantaged youth, thus making it harder for them to fit into the real job market.

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Have a listen here.

In a speech tonight, President Obama is expected to announce the creation of a government infrastucture bank as part of his plan to reduce unemployment. Vice President for Policy Wayne Crews explains why it won’t work as planned, and offers an alternative idea: liberalization.

In a vain effort to try to stimulate the economy, the Obama administration reportedly wants to dump more money into school construction, even though “K-12 facilities spending” is “up 150 percent in two decades,” including monumentally wasteful spending such as the $578 million spent on L.A.’s RFK high school. Obama also wants to dump more money into “K-12 employment” that “has been growing 10 times faster than enrollment for forty years.” In so doing, President Obama has turned a deaf ear to experts who say it makes no sense to increase education spending further. (Much federal education spending is wasted, like the $130,000 in stimulus money spent on a book that demonized white people and promoted racial stereotypes.)

Most education spending does not qualify as a “stimulus,” since it has no short-term economic payoff, and thus can’t jump-start the economy. During the Great Depression, President Roosevelt, a pioneer of “stimulus” spending, actually cut federal education spending, as historian Gordon Lloyd has noted. (See Gordon Lloyd, The Two Faces of Liberalism: How the Hoover-Roosevelt Debate Shapes the 21st Century (2006).) While Roosevelt spent lots of money on other things, and spent more than any other President before him, even the big-spending Roosevelt realized that education spending does nothing to end recessions, and does not jump-start the economy, even if it might be helpful to the economy in the long-run. The Obama administration does not have a clue about how to revive the economy. It claimed that Obama’s $800 billion stimulus package would deliver a short-run “jolt” that would quickly lift the economy, but unemployment rose very rapidly after its passage, and it destroyed thousands of jobs in America’s export sector and elsewhere while outsourcing thousands of energy jobs to foreign countries like China.

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The Wall Street Journal today writes about how the Obama administration is repeating the “mistakes of the past by intimidating banks into lending to minority borrowers at below-market rates in the name of combating discrimination.” Assistant Attorney General for Civil Rights Thomas Perez has argued that bankers who don’t make as many loans to blacks as whites (because they make lending decisions based on traditional lending criteria like credit scores, which tend to be higher among white applicants than black applicants) are engaged in a “form of discrimination and bigotry” as serious as “cross-burning.” Perez has compared bankers to “Klansmen,” and extracted settlements from banks “setting aside prime-rate mortgages for low-income blacks and Hispanics with blemished credit,” treating welfare “as valid income in mortgage applications” and providing “favorable interest rates and down-payment assistance for minority borrowers with weak credit,” notes Investors Business Daily.

Under Perez’s “disparate impact” theory, banks are guilty of racial discrimination even if they harbor no discriminatory intent, and use facially-neutral lending criteria, as long as these criteria weed out more black than white applicants. The Supreme Court has blessed a more limited version of this theory in the workplace, but has rejected this “disparate impact” theory in most other contexts, such as discrimination claims brought under the Constitution’s equal protection clause; discrimination claims alleging racial discrimination in the making of contracts; and discrimination claims brought under Title VI, the civil-rights statute governing racial discrimination in education and federally-funded programs. Despite court rulings casting doubt on this “disparate impact” theory outside the workplace, the Obama administration has paid liberal trial lawyers countless millions of dollars to settle baseless “disparate impact” lawsuits brought against government agencies by minority plaintiffs, even after federal judges have expressed skepticism about those very lawsuits, suggesting that they were meritless.

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Washington Examiner columnist (and former CEI Warren Brookes Fellow) Tim Carney has a must-read column today on Texas Governor Rick Perry’s economic policies. They appear suspiciously similar to Bush and Obama’s policies:

“I’m a pro-business governor — I don’t make any apologies about it,” Rick Perry told the crowds in Iowa this week. He’s right, but we can get more specific. Perry is pro-Merck, pro-Boeing, pro-Mesa Wind, pro-Texas Instruments, pro-Convergen, and pro-dozens of businesses that donate to his campaigns and hire his aides as lobbyists.

Perry promises to “get Americans back to work,” but his policies — from backroom drug company giveaways to green energy subsidies — eerily mirror the unseemly big business-big government collusion that has characterized President Obama’s presidency. Judging by his record in Texas, Perrynomics might just be low-tax Obamanomics.

Pro-business politicians are a dime a dozen. What the economy needs to recover are more pro-market politicians. Instead of putting their thumbs on the competitive scales to favor one business or another, Congress and the president should allow an open, competitive market process.

That means the rules of the game would be both clear and few; they would also be consistently enforced. Unlike politicians, markets respect no special interest. If they did, no company would bother with a Washington office.

Consumers do a much better job of picking winners and losers than politicians with campaigning and fundraising on the brain. They should be allowed to try it sometime.

What a shame that few politicians are likely to admit that; such is the curse of “do-something” bias.

“The total number of U.S. food stamp recipients” surged “to an all-time high of 45.8 million people in May,” the most recent month for which data is available.  That’s “nearly 15 percent of the U.S. population.” “The average food stamp benefit was $133.80 per person” — which is more than I spent on food as a bachelor — “and $283.65 per household”  — which is more than my family typically spends on food in a month.

Loopholes in the law have enabled even millionaires to collect food stamps.   Food stamp fraud has also exploded.  As states have sought to implement antifraud measures, “The Obama administration is responding by cracking down on state governments’ antifraud measures,” notes James Bovard in the Wall Street Journal.  Food stamp amounts are generous enough to make fraud worthwhile for even some non-poor people.

Earlier, I wrote about how it is not difficult to live on a food stamps budget.  The Washington Post ran a story in its health section about how various people, such as the chef for a law firm and a natural foods store owner, were able to live quite well on a food stamps budget. For example, Rick Hindle, executive chef for the Skadden, Arps law firm “showed recently that you don’t have to spend hours in the kitchen to prepare healthful food for $1 or less per meal.”

The president pushed the health care bill through Congress using a series of fables — health insurance horror stories that turned out to be false. Michelle Malkin chronicles just a few of the false anecdotes told by President Obama in making the case for Obamacare. The most famous was the false claim that his mother’s health insurer tried to avoid paying for his dying mother’s treatment based on a pre-existing condition — when it in fact did no such thing and paid her benefits in full. (As the Washington Post notes, Obama’s misleading stories about his mother’s final months “often spoke as if he had been at his mother’s side,” even though he actually failed to visit her at all in the months leading up to her death from cancer.)

As Malkin notes, Obama’s “sham-ecdote” about his mother “is just the latest entry in an ever-expanding catalogue of Obamacare fables,” which include the following:

Otto Raddatz. In 2009, Obama publicized the plight of this Illinois cancer patient, who supposedly died after he was dropped from his Fortis/Assurant Health insurance plan when his insurer discovered an unreported gallstone the patient hadn’t known about. The truth? He got the treatment he needed in 2005 and lived for nearly four more years.

Robin Beaton. Also in 2009, Obama claimed Beaton — a breast cancer patient — lost her insurance after “she forgot to declare a case of acne.” In fact, she failed to disclose a previous heart condition and did not list her weight accurately, but had her insurance restored anyway after intense public lobbying.”

Natoma Canfield. The White House made the Ohio cancer patient a poster child for Obamacare in 2010 after she wrote a letter complaining about skyrocketing premiums and the prospect of losing her home. After Obama gave Canfield a shout-out at a health care rally in Strongsville, Ohio, and promised to control costs, officials at the renowned Cleveland Clinic, which is treating her, made clear that they would “not put a lien on her home” and that she was eligible for a wide variety of state aid and private charity care.

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It’s not easy being a governor or state legislator these days. With states facing deep budget deficits, state lawmakers around the nation are working to close their budget gaps by tackling one of the biggest costs they face: government employee compensation. As we saw in Wisconsin (and to a lesser extent in Ohio), Republican lawmakers who take on the government employee union lobby can expect an all-out backlash from it.

But it’s not just Republicans. Some Democratic state elected officials are also trying to close their own states’ budget gaps. While public employee unions have not been as vocal in their opposition to Blue Team-proposed cuts, Democrats depend on campaign support from unions in a way Republicans do not, so alienating those unions could prove costly politically — at least in theory.

That’s difficult enough, but now it appears that Massachusetts Governor Deval Patrick, a Democrat, recently had to deal with the Obama administration on this issue. The Boston Globe reported this week:

The White House took the unusual step this spring of calling Governor Deval Patrick to discuss his plan to curb the collective bargaining rights of public employees, an indication that the Obama administration may have been concerned about the potential for national political fallout.

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In the Daily Caller, Chris Edwards has an interesting article about why government spending doesn’t “stimulate” the economy over the short-run or the long-run. Rather than growing the economy, stimulus packages are typically wasteful wealth transfers akin to a “leaky bucket,” which harm the economy in the long run, whether or not there are any short-run stimulus effects.

As Edwards notes, “Despite ongoing federal deficits of more than $1 trillion a year, many liberals are calling for more government spending to ‘create jobs.’” But if government spending creates jobs, it’s hard to understand why unemployment has soared, even as government spending has exploded in recent years: “Federal spending has soared over the past decade. As a share of gross domestic product, spending grew from 18 percent in 2001 to 24 percent in 2011.” As he notes, “government spending and taxing creates ‘deadweight losses,’ which result from distortions to working, investment and other activities. The CBO says that deadweight loss estimates ‘range from 20 cents to 60 cents over and above the revenue raised.’ Harvard University’s Martin Feldstein thinks that deadweight losses ‘may exceed one dollar per dollar of revenue raised.’” Due partly to this “leaky-bucket” effect, Texas A&M economist Edgar Browning concluded that “It costs taxpayers $3 to provide a benefit worth $1 to recipients,” and that “today’s welfare state reduces GDP — or average U.S. incomes — by about 25 percent.”

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Post image for CEI Podcast for June 15, 2011: Do ATMs Kill Jobs?

Have a listen here.

In a recent NBC interview, President Obama blamed ATMs for taking away bank tellers’ jobs, and computerized airline check-in kiosks for eliminating aviation jobs. Communications Coordinator Lee Doren points out that innovation doesn’t affect the number of jobs so much as the types of jobs. Accomplishing more while using less labor is actually the key to prosperity. People looking for an explanation for today’s high unemployment need to look elsewhere.