On the jobs front, the Labor Department said initial claims for unemployment insurance fell to a seasonally adjusted 550,000 from an upwardly revised 576,000 in the previous week. The number of people continuing to receive benefits fell by 159,000 to nearly 6.1 million, the lowest level since early April.

via The Associated Press: Trade, jobless claims figures show recession fades.

Us American’s really appreciate the fact that now for 35 months straight new jobless claims have top 500,000 mark.   At this rate another 2 years from now the rate might actually dip below the half a million mark.  Usually people look at the the results of their work to determine if they’re doing any good.  Not American politicians they look at the words they speak if they say loosing 500,000 jobs is  a good thing then it is a good thing.  So, hooray only 500,000 jobs were lost this month.

Yet, I don’t feel happy? And why do I get an ominous feeling?

Arnold Kling makes a pretty good summary of the speech here.

Medicare spending will never be brought under control under his watch. And if Medicare spending is not brought under control, then he certainly will not be the last President to have to address health care reform.

Basically, it was a “Win one for the Gipper” (in this case, Ted Kennedy) speech. Intellectually, it amounted to a vacuous claim that health reform will be a free lunch, because we’ll get rid of all the waste, fraud, and abuse.

via What’s Wrong with Obama’s Health Care Speech – The Atlantic Business Channel.

Blah blah let’s just start this revolution and get the darn thing over with…

Personally I fear it may be worse then sluggish.

Not only are there issues with “failing” banks some of which like AIG that should have already failed but weren’t allowed to and still need to fail (only now fail with taxpayer dollars). There is this issue regarding the commercial retail market that is in the midst of serious deterioration. And also there is the bubble in treasuries which Buffet has been warning about created by our government. Then on top of that there is the mortgage backed securities market which is up over 40% while at the same time defaults are approaching 10%. This is a government created bubble still being pushed by Frannie and Freddie.

Add to this “sluggish” economic recovery a monstrous health care spending and taxes coupled with energy taxes and control under the guises of health care reform and cap-n-trade and “our economy being sluggish” may be quite an understated.

Gird your loins. The signs are growing that there’s a new Wall Street gold rush under way—for those complex bundles of mortgage loans that fueled banks’ profits between 2005 and 2007. This year, prices for mortgage-backed securities are rocketing as federal stimulus dollars flood the market. But the difference with this “boom” is the center of gravity has shifted: from giddy, cowboy bankers to the Federal Reserve. The Fed is so eager to save banks, create a demand for these securities, and stabilize the housing market that it’s taking troubled loans and mortgages onto its own books. The problem is the Fed may be in well over its head.

- CNBC.com – The Next Credit Bubble is Now

Deliquencies expand to 9.24% while mortgage securities increase this year by 40%?  Can anybody say, “Stupid!”  But that is the government we elected that can run up the price of a worthless asset!  What did we expect?

Quite ideological. I could agree that these entitlements are a drag on the economy and ideally should eventually be done away with. But you can’t simply cancel these systems. It isn’t feasible. While I am not a fan of these systems, they are in fact obligations that this country has promised. An outright cancel is akin to default on a debt. And while I do subscribe to the notion that the Government is not the savior of mankind, it is the duty of the government to provide the environment for commerce. Besides, if the government were to simply up and dump these three entitlements, it would not solve the current issues within the health care system. The issues being affordability of care and insurance.

- Tennessee Paul

Yes, ideological.  But I think this misses the point.  Medicare/Medicaid is in fact insolvent.  They cannot be paid for quite simply.  I realized I used the word cancel Medicare which applies something dramatic.  But I wouldn’t be the technocrat doing the canceling.  I’m sure it would be canceled in a slower planned and organized way.  However, it may be akin to default on debt as Tennessee Paul suggests.  A ugly word, default, and an ugly thought but not out of the realm of possibility.

The financial structure of the U.S. government currently has two nominal firewalls. The first, between Treasury debt and unfunded liabilities, is provided by the trust funds of Social Security, Medicare, and other, smaller federal insurance programs. These give investors the illusion that the shaky fiscal status of social insurance has no direct effect on the government’s formal debt. But according to the latest intermediate projections of the trustees, the Hospital Insurance (HI-Medicare Part A) trust fund will be out of money in 2017, whereas the Social Security (OASDI) trust funds will be empty by 2037. Although other parts of Medicare are already funded from general revenues, when HI and OASDI need to dip into general revenues, the first firewall is gone. If investors respond by requiring a risk premium on Treasuries, the unwinding could move very fast, much like the sudden collapse of the Soviet Union. Politicians will be unable to react.
-Why Default on U.S. Treasuries is Likely
Jeffrey Rogers Hummel

Further, Tennessee Paul states that Medicare and Medicaid being dumped wouldn’t solve the health care crisis [CORRECTION: TP used the term "current issues" not crisis].  To which I respond, “What health care crisis?” [To which I should have responded, "What are the issues?"] There is no crisis yet the crisis will come when Medicare/Medicaid collapse.  The crisis to me is the impending economic, social and political chaos that will come when the world economy follows the U.S. economy into the abyss while the last bastions of freedom are surround by egoists and tyranny.

The solutions I have read, put forth by many conservative pundits are directed at creating just such an environment to facilitate more economically feasible solutions for health care reform.

- Tennessee Paul

I agree with Tennessee Paul there are many conservative pundits calling for better solutions out there.  The problem is the Republican party isn’t proposing them.  I know Tennessee Paul thinks I’m being to harsh on politicians.  But I think it’s time to be harsh.  It’s getting late in the game politicians feet need to be held to the fire.  It’s up to us the voters to do this.  So even more then the politicians we the American people need to come down on our respective parties and demand change.  The more we dilly-dally around the issues and fail to address those things which are pressing on our society, culture, and lives the greater risk we are in of losing it all.  Perhaps, Paul doesn’t have the same fears I have but I think things are going to get MUCH worse before they get better.

As for Tennessee Paul’s point about doing away with Medicare/Medicaid not being the end all solution I agree.  There needs to be deregulation and a decoupling of employer provided health care in concert with the cancel/phase out/end of Medicare.   These two points I know Tennessee Paul agrees with but a deregulation and a decoupling of employer health care but these are still to me meaningless without true reform of the system.  Medicare still places way to large a constraint on the U.S. health care system.  It is the elephant in the room and it’s growing way to fast.  And it’s not being debated, solutions aren’t being proposed and I still believe there has yet to be proposals from either sides towards true reform.

Again, let me say the truth there is no health care debate.  It’s all fictional.  Like the spoon in the movie the Matrix.  It is a straw man meant to grab our attention while the true fight lays behind the scenes.

The health care debate is two sides fighting over maintaining their entrenched status quo’s.  It is a power struggle that has nothing to do about costs, health care, insurance, taxes or anything remotely resembling what the American people actually would and should care about.

Democrats are arguing to expand the Medicare/caid status quo and further entrench this with other public pay or “co-op” options.  It’s nothing new it’s been around it is wasteful money sucking, completely insolvent and nearly bankrupt power harness on the American people.

Republican’s are arguing to “contain” costs with various deregulation schemes/tort reform/etc.  Which is really again just more of the same a mix of somewhat less regulated insurance companies and lower malpratice claims meaning more money for insurance companies and less for lawyers.  (i.e. the government still picks and chooses the winners and lossers)

Neither of these choices are change the GOP or the Dems are both selling snake oil and laughing all the way to the bank.  These are just power grabbing rockstar babies fighting over the territory of the average American taxpayer.

I KNOW a thing or two about TRUE leaders.  My father and grandfather are and were both TRUE leaders, I’ve study leaders, my second business mentor wrote books on leadership, and HISTORY is full of true leaders.   A true leader is one that is willing to give away their power. Look at Washington, Ghandi, Christ, King, etc. when offered power, money, fame, and thrones they gave it up. True change would be doing away with power Washington turned down the thrown to America.   The opposite of our modern day politicians who on both sides are SEEKING power.

Deregulating an industry 50% controlled by government is meaningless. Tort reform is something that can ebb a flow with swaying legislation and is meaningless.  These are temporary band-aids for an entrenched system of opperations.  It’s like a band-aid for a man with cancer.  While the Democrats are are calling for blood-letting by bleeding the already dying system.  Both sides are fighting for their own political and corrupted power.

So, what is the answer.  If the system is broken or dying what would a true leader do?  True reform will be ending the idiocy of Medicare/Medicaid/Social Security to name a few.  Cancel these systems tell the American people to solve their own problems government is not the savior of mankind.  It is time for the children of the elderaly to step up and care for their parents.  It’s time for the baby-boomers to wake-up and realize there isn’t going to be a free lunch.  And it’s time for American’s to demonstrate responsibility, earning ones way, and hardwork to younger generations.  I am not alone in my call for true reform and am not alone in seeking true leadership – as this article points out.  Although, along with that article I feel that I’m deeply in the minority.     The American people and for that matter the world are wading through a sea of lies, power hungry, egoists seldom seen in the course of human history.

The Financial White Paper: A Fabulous Tale

Once upon a time, there was a summer camp. To entertain the kids, the counselors handed out matches¹, lighter fluid², and newspapers³. The camp burned down.

Afterwards, a white paper was written, proposing more supervision by counselors. It called for a systemic counselor to watch out for camp-wide fire hazards, and it called for procedures to put out fires that are “too big to let burn.”

The white paper was written under the direction of two counselors, Larry and Tim, with input from another counselor, Ben.

The end.

¹housing policy that encourages speculative purchases and subsidizes mortgage indebtedness
²tax policy that encourages banks and other firms to maximize debt relative to equity
³bank capital regulations that reward securitization and the creation of off-balance sheet entities

One moment it’s all pie in the sky “green shoots” and the next it is we must act now.  What is the rush to get these things done?

Geithner, in testimony to the Senate Banking Committee, said the administration considered a full range of options and “decided that now is the time to pursue the essential reforms, those that address the core causes of the current crisis; and that will help to prevent or contain future crises.”

via Geithner Urges US Lawmakers To Move Quickly on Reforms – Politics and Government * US * News * Story – CNBC.com.

Not even acknowledging the very serious intellectual reasons for not doing this because I’ve discussed it in the past.  It seems most people are forgetting the ancient fable of the sky is falling.  When ever anybody says DO IT NOW we should take a minute to think.  Especially if those people are politicians! 

Geithner (Bush and Paulson did the same) remind me of one of those sales people trying to get you to buy it now to get 50% off, we’ll throw in a free widget worth $75 dollars, and pay your shipping charges if you buy it in the next 5 minutes!  It only costs several trillion buy now before it’s to late!

The Death Tax: Another Obama Tax Hike Target

by Curtis S. Dubay

WebMemo #2489

President Barack Obama recently unveiled yet another round of tax hikes. This latest one, which would increase the death tax on family farms and small businesses, would raise $60 billion more over 10 years for the reserve fund to help pay for the President’s massive health care spending. This troubling trend is likely just the beginning of higher taxes as far as the eye can see. President Obama will want even more revenue to reduce massive projected deficits and fund government expansion into areas like health care reform and the environment. With no indication that he plans to restrain spending, higher tax burdens for all Americans are inevitable, despite the President’s repeated claims that he will not raise taxes on anyone making under $250,000 a year. President Obama should stop hiking taxes and restrain spending immediately. The economy is in a precarious position and cannot afford the damage tax hikes will inflict. Death Tax the Newest Target Under current law, the death tax expires for 2010 but comes back in full force for 2011 and beyond. President Obama’s budget assumes that Congress will not let the death tax die and will extend it permanently at 2009 levels–a 45 percent rate and $3.5 million exemption. President Obama then targets tax increases through the death tax in two ways: Disallowing recipients from claiming higher basis costs. Under current law, when recipients of willed property eventually sell inherited or gifted items, they can claim a higher cost for them than the donor estate claimed when paying the death tax. This provision lowers the capital gains tax liability for the recipient. A recipient’s base cost of property transferred at the donor’s death, or by gift, should equal the value of the item at the time of the donor’s death or when he gave it as a gift. Closing this loophole and equalizing the values is sound tax policy, but the additional revenue should be used to lower other taxes; it should not be a revenue raiser. Since the additional revenue would go into the health care reserve fund and not to lower other taxes, it is nothing more than a revenue grab. Increasing taxes on family farms and businesses. Current law allows the recipients of certain assets–such as family-owned businesses or farms–to discount those assets’ value to account for the fact that it is difficult to sell them in order to pay the death tax. The Obama Administration would disallow this discount and force families to pay the death tax on the full value of the assets, even though there would be no new cash generated to pay the tax. Disallowing the discount of difficult-to-sell property is a burden on families that cannot raise the necessary money to pay the death tax on those assets. Instead, Congress and the Obama Administration should re-institute the discount and allow families to spread the cost of the death tax over several years. Closing loopholes in the death tax would be unnecessary if Congress rightly repealed this harmful tax. It stifles economic growth because it discourages saving and investment and undermines job creation and wage growth.[1] Rather than dealing with real and perceived loopholes individually, Congress should abolish them by killing the death tax for good. Tax Hikes Really Add Up On top of the death tax increases, President Obama has signed into law a tax hike on cigarettes, which falls hardest on the poorest Americans. This legislation increased the tax on a pack of cigarettes from $0.39 per pack to $1.00 and broke President Obama’s pledge not to raise taxes on anyone making less than $250,000 a year. The tax could raise $33 billion over the next four-and-a-half years.[2] The President has also proposed several new tax hikes in his budget: Tax hikes for high-earners. President Obama would raise the income and investment taxes of those making over $250,000.[3] Energy tax. He would also create a cap-and-trade program that would raise the taxes on energy for every American and inflict substantial damage on the economy.[4] Tax hikes on international businesses. President Obama targeted U.S. businesses operating internationally by proposing to raise the taxes on the income they earn overseas. This tax increase would severely damage the international competitiveness of U.S. businesses.[5] When President Obama originally released his “Budget Blueprint” in February, it increased taxes by $1,368 billion over 10 years.[6] But when he released the full details of his budget in May, it increased taxes $1,779 billion even after tax cuts are factored in.[7] Thus the Obama Administration has increased its tax hikes by $411 billion in just three months. After factoring in the cigarette tax hike, the tab totals $1,812 billion over the next 10 years. This means that under Obama’s tax plan, every household in America would face $15,359 in higher taxes over the next 10 years. How Much Higher Could Taxes Rise? If projected deficits are an indication of how much more revenue Congress and the Obama Administration might target, the amount of needed revenue could be immense. The Office of Management and Budget estimates the deficit for 2009 to be $1,841 billion.[8] That is more than four times larger than the 2008 deficit of $459 billion, which was then an all-time high. During the entire 10-year span of the Obama budget proposal, the deficit never dips below $512 billion. Using the Obama budget as a conservative estimate, additional tax hikes of $60,237 per household would be necessary to balance the budget over the next 10 years. Taxes would need to increase an additional $21,339 per household just to get the average deficit over the next 10 years down to it previous record high. Tax Hikes Threaten Economy Because of the more than 3 million jobs lost since he made his pledge to create 3.5 million jobs by 2010, President Obama must now create a total of 6.5 million jobs to meet his stated goal.[9] Increasing taxes will only destroy more jobs and make it harder for him close this deep jobs deficit. Congress and the President should stop hiking taxes and instead begin seriously reducing spending and cutting taxes. Tax hikes at any time are economically harmful, but proposing them during this severe recession is irresponsible and threatens to slow, or even prevent, recovery.[10] First, Stop Digging Congress and the Administration should take these actions immediately: Drop their proposals to raise taxes, Permanently extend the 2001 and 2003 tax cuts for all taxpayers–not just for those making less than $250,000, Abolish the death tax, and Lower top rates on income and investments. These steps will provide a needed boost to the ailing economy and actually create the jobs President Obama pledged his recovery plan would produce.[11] Of course, these tax cuts will necessitate deep spending cuts–yet another reason to pass them–and a course correction on President Obama’s spending binge. Curtis S. Dubay is a Senior Analyst in Tax Policy in the Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. [1]William W. Beach, “Now Is (Still) the Time to Permanently Repeal Federal Death Taxes,” Heritage Foundation WebMemo No. 720, April 12, 2005, at http://www.heritage.org/Research/Taxes/wm720.cfm. [2]Gerald Prante and Joseph Henchman, “Funding S-CHIP with Federal Cigarette Tax Increase is Poor Tax Policy,” Tax Foundation Fiscal Fact No. 158, January 15, 2009, at http://www.taxfoundation.org/news/show/24208.html (May 11, 2009). [3]J. D. Foster, “Obama Budget’s Tax Proposals: Wrong and Risky,” Heritage Foundation WebMemo No. 2362, March 25, 2009, at http://www.heritage.org/Research/Economy/wm2362.cfm#_ftnref2. [4]William W. Beach, David Kreutzer,Karen Campbell, and Ben Lieberman, “Son of Waxman–Markey: More Politics Makes for a More Costly Bill,” Heritage Foundation WebMemo No. 2450, June 16, 2009, at http://www.heritage.org/Research/EnergyandEnvironment/wm2450.cfm. [5]J. D. Foster and Curtis S. Dubay, “Obama International Tax Plan Would Weaken Global Competitiveness,” Heritage Foundation WebMemo No. 2426, May 5, 2009, at http://www.heritage.org/Research/Taxes/wm2426.cfm. [6]Foster, “Obama Budget’s Tax Proposals.” [7]Office of Management and Budget, “Updated Summary Tables”; U.S. Department of Treasury, “General Explanations of the Administration’s Fiscal Year 2010 Revenue Proposals.” [8]Office of Management and Budget, Updated Summary Tables, Table S-1. [9]J. D. Foster, “Obama Jobs Deficit Grows by Another 563,000,” Heritage Foundation WebMemo No. 2430, May 8, 2009, at http://www.heritage.org/Research/Economy/wm2430.cfm;see also Rea S. Hederman, Jr., and James Sherk, “Heritage Jobs Report: May Report Shows Small Silver Lining,” Heritage Foundation WebMemo No. 2467, June 5, 2009, at http://www.heritage.org/Research/economy/wm2467.cfm. [10]Martin Feldstein, “Tax Increases Could Kill the Recovery,” The Wall Street Journal, May 13, 2009, at http://online.wsj.com/article/SB124217336075913063.html (May 13, 2009).

[11]J. D. Foster and William W. Beach, “Economic Recovery: How Best to End the Recession,” Heritage Foundation WebMemo No. 2191, January 7, 2009, at http://www.heritage.org/Research/Economy/wm2191.cfm.