What Jobs Program, Mr. President?

President Obama took advantage of the signing of the debt limit increase to “pivot” to jobs.

He proposed that Congress pass the following jobs program:

1)      Extend unemployment insurance

2)      Enact a payroll tax credit for employees

3)      Overhaul patents

4)      Approve free trade deals

5)      Create an infrastructure funding bank

In his remarks, the President rebuked Congress: “It should not take the risk of economic catastrophe to get folks in this town to work together and do their jobs.”

The problem is that, other than approving free trade deals, the President’s job programs will not create any jobs.

Extending unemployment benefits subsidizes unemployment and keeps the unemployment rate high.

A temporary payroll tax credit does not alter firms’ hiring decisions because they know the credit cannot last long. (PS. Economists know that it does not matter who pays the tax – the employer or employee, but having the employee payment credit makes for better politics.)

The overhaul of patents may be a good idea, but its effect will not be felt for a very long period of time.

The approval of free trade deal will raise employment but this will not happen because of Democrat lobbying for too generous adjustment benefits for displaced workers.

The infrastructure bank would be a new Fannie Mae financial disaster set up to fund boondoggles for political cronies. It would establish yet another “independent” corporation with implicit guarantees of government bailout. Ten years down the road we must face the huge cost of bailing out Obama’s infrastructure bank.

In my view, this is not an employment program, Mr. President. Congress should ignore it. We'd be better off if the President pivots to something else where he can do little harm.

Cuban Missiles, Three Mile Island, and Default: An Odd Combination

Advancing age offers unusual perspectives. The frenzied countdown to “default on the full faith and credit of the United States” reminded me of  two events of long ago.

I remember October 20, 1962 as President Kennedy informed the American public of missiles in Cuba. We college students spent the next few days not knowing whether we would be alive the next day.

Then I remembered Three Mile Island in 1979 – our first brush with a nuclear accident. Again the whole nation sat glued to the television not knowing whether we would lose the entire Northeast.

It is remarkable, to say the least, that the American people are glued to cable news and the internet worrying  that our economy, as we know it, might end with the default of the U.S. government on its debt.

Although many political commentators decry the evil Tea Party, “disgusting” Washington politics, and congressional stalemate, I am heartened that we had, perhaps for a brief period of time, the attention of the American people, who might actually tell Washington that the days of “business as usual” are over. Maybe the time is ripe for a serious national dialog leading up to the 2012 elections.

Obama Has Nearly Achieved His European Welfare State

But we cannot pay for it.

The debt-ceiling brouhaha diverts attention from the most fundamental economic issue we face: Do we want a European-style welfare state? If we do, how in the world are we going to pay for it?

Presidential candidate Barack Obama called for "hope and change," but he was deliberately vague on the "fundamental change" part. In speeches as president both at home and abroad, he appeared to reject American exceptionalism and intimated we have much to learn from Europe, especially its cradle-to-grave welfare state.

continue on Forbes.com

July 29, 2011: A Very Bad Day for the Anti-Nuclear Crowd (If Nothing is Left, Attack the Model)

The Union of Concerned Scientists has every reason to be concerned. On July 29, the New York Times, no less, featured two pieces that raised their hackles. The first – “NRC Lowers Estimate of How Many Would Die in Meltdown” – announced a radical revision of the effects of a nuclear power plant core meltdown.

In past studies, NRC researchers estimated that 60 percent of a reactor core’s cesium inventory could escape. The NRC’s the new estimate is only 1 to 2 percent. The chance of a death from acute radiation exposure within 10 miles is near zero, although some one in five thousand might receive doses high enough to cause fatal cancers later in life. Earlier estimates had this at one in 167.

The second blow came in an op ed in the same edition by the CEO of the Tennessee Valley Authority, entitled “Why We Still Need Nuclear.” In his piece, he concluded: “We believe that nuclear power, developed properly, is not only a promising option, but the best available. Our forecasts for the region’s energy demands by the end of the decade show we will need more base-load electricity — or continuous minimum power — something nuclear plants excel at providing.” In other words: If our customers want reliable electricity, we must use have nuclear power.

With the TVA as a corporation owned by the U.S. government, the Union of Concerned Scientists could scarcely launch their usual epithets of corporate greed and capitalist recklessness. After all, government-private partnerships are supposed to be our salvation from  unfettered capitalism.

The Union of Concerned Scientists was left with only one defense: to attack the scientific merit of the NRC’s six year study. They countered that when dealing with estimates based on so many variables — including more than 100 reactors of different designs and vintage, in areas with disparate population densities — a difference of a factor of three is not important. 

Although differences in the new study are actually thirty to one or higher, the concerned scientists come to the bizarre conclusion that “the study reconfirms that reactors pose serious risks.”

Such a conclusion strongly suggests that the Union of Concerned Scientists” should remove “Scientists” from their organization’s title.

The computer models of climate change, which the Union of Concerned Scientists endorses, contain more variables and model much greater complexities than the NRC’s.  They yield predictions of very small and gradual temperature changes, which likely fall well within the margin of error. This fact does not concern the Union of Concerned Scientists. The climate models give them what they want to hear. The NRC’s does not.

The Speech of a Grown-Up President

My Fellow Americans:

I come before you tonight as the President of all the people, Republican, Democrat, and Independent. Just as your Commander in Chief is responsible for our national defense, so must  he or she guarantee the full faith and credit of the United States of America.

We are now engaged in a national debate over the future of our country. In this debate, we have put forth a vision of a country in which its government forcefully provides for the health and welfare of our people. The opposition Party puts forward a different vision of smaller government with more self reliance of the people. This is a legitimate and valuable political debate. In our democracy such issues are resolved by the ballot box, and the voters will be called upon to decide in the looming 2012 election.

Issues such as the proper size of government, how that government will pay for itself, and its expanding role in health care and regulation are not resolved overnight. They must be carefully debated for the voter to decide.

We have engaged this debate. We can see how difficult it is to resolve, but in the mean time, we must make sure that this healthy and ongoing debate does not harm the full faith and credit of the United States of America. We cannot allow politics, in any way, to jeopardize our national creditworthiness. We must remove any fear mongering on this issue from the political discourse.

Therefore, I have instructed the Secretary of Treasury to prepare a plan that insures that due interest and principle by paid to all of our bondholders, both at home and abroad, until we reach an agreement on raising the debt limit. We have sufficient revenues incoming to make sure we will meet our debt obligations as a nation.

I have also instructed my administration that all social security checks be sent out on schedule. The American people have made their Social Security Contributions into the Social Security Trust Fund in good faith, and we must honor our obligations to them as well. The Social Security Trust Fund is solvent, as we have stated in the past. There is no reason not to meet our obligations to retirees and other recipients who rely on these checks.

The plan that the Secretary of Treasury is preparing will prioritize our needs and see us through this difficult period, if necessary, by minimizing the impact of any disruptions in government services.

In closing, let us resolve this national debate in an orderly fashion through normal political processes without scare tactics and fear mongering, which will only make things worse. As President Roosevelt said many years ago: “We have nothing to fear but fear itself.”  We have seen the harmful effects of fear in the past three years. We have had enough of it.

China's Flawed Case For One-Party Rule

In democracies, leaders who make bad and even disastrous decisions are punished at the ballot box.



Robert Lawrence Kuhn, an international investment banker, biographer, corporate strategist and paid advisor to the Chinese government, is the face of China's PR campaign for the Chinese Communist Party's (CPC) 90th anniversary. The publication of his China Daily article "China 'best served'' with CPC at the helm" as two-page advertising supplements in the New York Times and Wall Street Journal shows China's desire to legitimize itself in the eyes of the international community.

Kuhn is not the only advocate of Chinese-style one-party rule. Among those joining him are New York Times journalist Thomas Friedman and investor-philanthropist George Soros. Both praise the CPC's sound and timely decision making. Some scholars also argue that "benevolent" one-party rule is better for poor countries that cannot afford "messy" democracies at early stages of development. They point to contemporary China, South Korea and Taiwan in their early years as cases in point. (Both South Korea and Taiwan transitioned to democracy within two decades. The CPC has exercised one-party rule for more than a half century with no end in sight.)

for rest of article at Forbes.com