Obama links debt ceiling debate to unemployment

And when they agree to the deficit cuts, then unemployment will fall…

“The sooner we get this done, the sooner that the markets know that the debt limit ceiling will have been raised and that we have a serious plan to deal with our debt and deficit, the sooner that we give our businesses the certainty that will need in order to make additional investments to grow and hire,” Obama said.

He made his remarks just hours after the government reported anemic job growth for June and a new, higher unemployment rate of 9.2 percent.

Obama on deficit reduction and jobs

He has to tax where there is negative propensity to spend and cut where there is negative propensity to save.

>   
>   (email exchange)
>   
>   On Thu, Jun 16, 2011 at 8:15 AM, Stephanie wrote:
>   

Obama’s White House Press Secretary says, ”Obama approaches the deficit talks with a “singular concern, which is that the outcome of the deficit reduction talks produce a result that significantly reduces the deficit while doing no damage to the economic recovery and no damage to our progress in creating jobs.”

Obama Warns Against `Panic’ As Economy Has Ups and Downs

OBAMA WARNS AGAINST `PANIC’ AS ECONOMY HAS UPS AND DOWNS

From Marshall Auerback:

Amazing that Obama is telling people not to panic over the economy. Means to me he is panicking.

Then again, he should be. He’s basically negotiating terms of surrender on Republican terms. And we have the spectacle of his Treasury Secretary and the soon to depart head of the CEA telling us that we’ve just hit a small “bump in the road”, along with trumpeting the idea of how ‘profitable’ the bailouts have turned out to be. This gives the impression that the trillions thrown at the problem are sufficient and therefore, we have to “rein in” fiscal stimulus, or we become the next Greece.

It’s all insane. Obama really doesn’t deserve another term of office, as he’s a complete fraud, but the other party has undergone a bout of Glenn Beck induced insanity and that probably saves the President.

Then again, he’s following the old model: if you’re going to panic, best to panic early.

Obama Tells Companies to ‘Step Up’ and Hire Workers

The rhetoric continues to deteriorate.
Labor is fundamentally a scarce resource.
Policy should encourage business to use as few workers as possible.
And, of course for any given size govt taxes can always be adjusted to sustain aggregate demand for optimal employment/output.

Obama Tells Companies to ‘Step Up’ and Hire Workers

May 12 (Reuters) — President Obama urged businesses to “step up” and hire workers, pressing banks and other corporations to do more to help an economy that he said would take “several years” to recover fully.

In a town-hall style meeting conducted by CBS News on Wednesday, Obama said the weak housing market and high gasoline prices were the biggest “headwinds” dragging on the economy.

“We’ve got a lot more work to do to get businesses to invest and to hire,” he told the audience in remarks broadcast on Thursday.

“It’s going to take us several years for us to get back where we need to be.”

The strength of the U.S. economy is likely to be the main factor that determines whether Obama will succeed in holding on to the White House next year.

He said businesses and banks that reaped the rewards of extraordinary measures to pull the country out of a deep recession had a responsibility now to invest hordes of cash into U.S. jobs.

“It is time for companies to step up,” Obama said.

“American taxpayers contributed to that process of stabilizing the economy. Companies havebenefited from that, and they’re making a lot of money, and now’s the time for them to start betting on American workers and American products.”

U.S. companies created jobs at the fastest pace in five years in April, according to the Labor Department, pointing to underlying strength in the economy even as the jobless rate hit 9.0 percent.

Saving Money by Selling Excess Property | The White House

It may indeed serve public purpose to sell federal property.

In fact, the burden of proof of public purpose is with the federal government as to why it would own any specific property in the first place.

However, selling property does remove net financial assets from the economy, make the dollar ‘harder to get’, and is thereby a contractionary/deflationary bias that reduces aggregate demand/output and employment.

The continuing problem is that deficit reduction doesn’t currently serve any public purpose that I can discern, but it’s actively being pursued by both sides, now trying to out do each other in what’s shaping up to be a death race to the bottom.

The good news is that at least so far the Saudis seem to be following/allowing crude oil prices to decline. Possible reasons range from the demand destruction or looming supply increases due to the higher prices, to the possibility they got short in their personal accounts. There’s no telling why they do what they do, and as a simple point of logic they remain swing producer/price setter.

Falling crude prices serve to directly make US dollars ‘harder to get’ as the US bill for imported crude and products falls, and thereby offers substantial and ongoing fundamental support to a US dollar that has to be one of the most oversold items of all time.

The only negative for the US dollar I can see is the chart, which has been telling me there continuous portfolio shifting away from the US dollar, which, when assisted by the rising crude prices, combined to keep the US dollar in decline. Without the support of the rising crude prices the tide could be turning.

The White House Blog: Saving Money by Selling Excess Property

By Jeffrey Zients

May 4 — As we look at our fiscal situation, the President understands that the Federal Government must do what American families are doing all across the country: find ways to live within our means and invest in the future. That means cracking down on waste and getting the most from taxpayer dollars.

Since President Obama took office, we’ve made unprecedented progress in reforming the way Washington works – saving billions of taxpayer dollars through IT reform, cut contracting spending, and eliminated duplicative and ineffective programs.

In his State of the Union address, the President discussed another area that is ripe for savings and reform — the real estate footprint of the Federal government. For too long, the American people’s hard-earned tax dollars have gone to waste, funding empty buildings and holding on to valuable properties the government no longer needs. That is something that shouldn’t be tolerated at any time, but especially with this challenging fiscal environment, it’s unacceptable.

Today, we’re sending legislation to the Hill that will cut through red tape and politics to rid the government of the burden of excess property and save taxpayers at least $15 billion. We look forward to working with members of Congress to pass this legislation, the Civilian Property Realignment Act.

Saudi oil production, Donald Trump, and President Obama

The Saudis operate by posting prices for their refiners and then filling all orders at their posted prices.

It looks like the spike in demand for Saudi crude due to Libya has pretty much passed, and Libya is not back to full production.

So look for Saudi production to fall further when Libya comes back on line.

Prices, however, will remain at whatever level the Saudis decide to post, much like Donald Trump has been proclaiming. And with Trump having the President’s ear, there’s at least an outside chance the President figures it out and lets the Saudis know he’s on to them and works out a price cut?

MMT to Obama- Taxes Function to Regulate Aggregate Demand, Not to Raise Revenue per se

We, the undersigned economics and financial professionals,
seeking to foster world prosperity,
send the following urgent message to President Obama and the US Congress:

Taxes Function to Regulate Aggregate Demand (total spending),
Not to Raise Revenue per se

That means:

Federal spending is NOT inherently dependent on revenues from taxing or borrowing.

ANY constraints, including debt ceilings and budgeting rules, are necessarily self imposed by Congress.

The US can’t EVER have a funding crisis like Greece- there is no such thing for ANY issuer of its own currency.

The correct analogy is between Greece and the US states.
A US state can indeed become unable to fund itself, and look to the US Federal Reserve Bank for funding, much like Greece is getting assistance from the European Central Bank. But as issuers of their own currencies, the notion of a funding crisis for the US Federal Reserve Bank or the European Central Bank is entirely inapplicable.

Furthermore, federal borrowing is nothing more than a matter of the Federal Reserve debiting reserve accounts and crediting securities accounts. And paying off the Federal debt, as done continuously as US Treasury securities mature, is nothing more than a matter of the Federal Reserve debiting securities accounts and crediting reserve accounts.

THERE ARE NO GRANDCHILDREN INVOLVED IN THIS PROCESS!!!

Nor is there any inherent financial risk posed by foreigners or anyone else buying or not buying US Treasury securities.

Additionally, the risk of federal overspending relative to taxation, as available labor and materials become fully employed,
is higher prices, and not insolvency or any kind of funding crisis.

Therefore, with our currently recognized and highly problematic shortage of aggregate demand,
as evidenced by unemployment and economic slack in general, you’ve all got it backwards.

Given the current depressed state of the US economy, an informed Congress would be in heated debate
over whether to increase federal spending, or decrease taxes.

And with the current risk of inflation largely from crude oil prices and food prices,
which are now closely linked, for all practical purposes price stability is also currently in your hands.

Signed:

Warren Mosler
President, Valance Co.

Roger Erickson, PhD; Chairman
Operations Institute

Joseph M. Firestone, Ph.D.
Managing Director, CEO
Knowledge Management Consortium International
A Division of Executive Information Systems, Inc.

Stephanie Kelton, Ph.d
University of Missouri, Kansas City

Thomas E. Nugent
Chief Investment Officer, Victoria Capital Management, Inc.

Chris Hanley
Owner/Broker Farchette & Hanley Real Estate, US Virgin Islands

Art Patten
President, Symmetry Capital Management, LLC

Andrea Terzi
Franklin College Switzerland

Bernard J. Weis
Norfolk Markets

***If you wish to sign on, return this email with how you would like your name and associations to appear, thanks, and please distribute this to other academics and financial professionals who may be interested in signing on***

Obama Urges Democrats Help Him ‘Finish the Job’

April 15 (Reuters) — President Barack Obama said Thursday a Republican debt-reduction plan would create “a nation of potholes” as he used the first events of his 2012 re-election bid to strike a sharp contrast with his opponents.

Seeking to reignite the energy of supporters that propelled his candidacy in 2008, Obama said “extraordinary progress” has been made during his two years in the White House but much work remains.

He called on supporters to help him finish the job.

The president, who offered a 12-year plan Wednesday to reduce the U.S. deficit by $4 trillion, skewered a proposal by Republican Representative Paul Ryan.

Ryan would trim about the same amount without raising taxes and by making cuts in spending, such as on medical and social programs for the poor and elderly. Republicans have attacked Obama’s plan for raising taxes on wealthy Americans.

“Under their vision, we can’t invest in roads and bridges and broadband and high-speed rail,” Obama said.

“We would be a nation of potholes.”

The Republican approach, he said, is that “we can’t afford to do big things anymore” and says to the underprivileged, “tough luck, they’re on their own.”

Obama, who reluctantly agreed to extend Bush-era tax cuts late last year even for the richest Americans, said if the wealthy were to “pay a little more in taxes,” it would help solve America’s fiscal challenge without forsaking its responsibility to its people.

“If we apply some practical common sense to this, we can solve our fiscal challenges and still have the America that we believe in. That’s what this budget debate is about and that’s what the presidential campaign is going to be about.”

Obama has tried to straddle a middle ground and sought compromise with his political adversaries since Republicans took command of the House of Representatives and picked up strength in the Senate in elections last November.

He said he recognized that some of his liberal supporters have been frustrated “because we’ve had to compromise with the Republicans a couple of times,” and that he felt the same way sometimes.

“We knew this wasn’t going to be easy.”

Death by 1000 cuts: The economics of innocent subversion

Even NY Fed Chief Bill Dudley, well aware of his role as a manager of expectations, is worried:

Dudley Headlines:

DUDLEY SAYS IMPORTANT NOT TO OVERREACT TO RISING INFLATION
DUDLEY ATTRIBUTES LOSS OF MOMENTUM TO RISING OIL PRICES
DUDLEY SAYS U.S. ECONOMY LOST SOME MOMENTUM IN PAST TWO MONTHS

Last I heard Congress agreed cut $38 billion in spending from this year’s budget as a ‘down payment’ on reducing the federal deficit.

Followed by every economic forecaster on Wall St. and Main St. reducing estimates for this years’s GDP by maybe 1/2% or more. (These are people who get paid to be right, and not to produce propaganda.)

I have no problem with cutting wasteful and unnecessary spending, but when we have this kind of shortage of aggregate demand said cuts would be more than matched with either tax cuts and/or other spending increases, to sustain aggregate demand.

(Aggregate demand is the total spending, private and public, that supports employment and output).

The proposals are now to get to work on more serious deficit reduction- maybe $5 trillion over the next 10 years, or about $500 billion or so per year.

Ask your favorite forecasters what that does to GDP. I’ll guess they’ll tell you it would be a proactive reduction of more than 3% per year. Plus multipliers. And maybe a 50% increase in unemployment as the output gap skyrockets from already insanely high levels.

In other words, maybe 10 years of negative growth, unless private sector (including non residents) spending somehow increases at least by that much.

For domestic sector spending to increase to fill what my mate Bill Mitchell likes to call the spending gap, there would need to be an increase in private sector debt (which is likewise measured as a drop in private sector savings).

With today’s credit conditions, I don’t see where that could possibly come from. Borrowing to spend on houses and cars- the traditional engine of consumer growth- rising to levels sufficient to close the output gap seems highly unlikely. Particularly when federal deficit reduction is cutting incomes and savings.

For the foreign sector (non residents) to fill that spending gap, the trade gap would have to somehow stop going up and suddenly drop down by that amount. Not impossible, but a very ugly process (for us)- massive decline in our real terms of trade, etc.- should that actually happen.

So why is this happening? Why are we drinking the hemlock?

Because both sides- Democrats and Republicans- have it all dead wrong.

They both agree the federal deficit is too large and is a dire threat to our well being.

When, in fact, the exact opposite is the case- the output gap/unemployment is telling us- screaming at us- that the federal deficit is too small, and that Congress should be arguing over whether they should cut taxes and/or increase spending.

(And throw in an energy policy, and fast, but that’s for another post).

But because they think we could be the next Greece and face a federal funding crisis, they continue to work to turn us into the next Japan with two lost decades- and worse.

It’s either ignorance or subversion, so let me take the liberty to again borrow from John Kenneth Galbraith and call it innocent subversion.

“The worst part is that, because both sides have no clue about the real functioning of the monetary system, they have both been hard at work misinforming the public. And, since they both watch and react to daily polling numbers, unless something is done, they will continue to react to the reflections of their own ignorance.”

Atty Donovan Hamm

Obama and McConnell

Stupid headline and stupid response.

Unemployment is a macro problem, and cutting spending does’t create jobs.

It’s the continuing saga of the blind leading the blind.

Looking for $31 billion in federal spending cuts this week.
And that’s just a down payment.

Obama: Shift From Foreign Oil Will Help Create More Jobs

April 2 (AP) — President Barack Obama says shifting the U.S. away from imported oil and toward cleaner forms of energy will add momentum to a trend that has led to 1.8 million new jobs in the past 13 months.

Obama used his weekly radio and Internet address Saturday to promote his ideas for bringing down gasoline prices by decreasing U.S. dependence on foreign oil. A blueprint he outlined in a recent speech calls for increasing domestic oil exploration and production, making cars and trucks more energy efficient and building vehicles that run on alternative fuels or electricity.

Noting that the U.S. doesn’t have enough oil reserves to meet its needs, he set a goal of reducing imports by one-third by 2025.

“By doing so, we’re going to make our economy less vulnerable to wild swings in oil prices,” Obama said. “We’re going to use cleaner sources of energy that don’t imperil our climate. And we’re going to spark new products and businesses all over the country by tapping America’s greatest renewable resource: our ingenuity.”

The address was Obama’s third in recent days on the issue. On Wednesday, he travels to the Philadelphia area to visit an arm of the Spanish company Gamesa, maker of giant turbines that generate electricity from wind.

Oil prices have climbed because of increasing demand in China and instability in some oil-producing countries in the Middle East. That, in turn, has pushed U.S. gasoline prices to new highs. The national average for a gallon of gas hit $3.619 on Friday, the highest price ever for this time of year, according to AAA and other sources. Prices have climbed 23.2 cents in the past month and more than 81 cents in the past year.

Senate Republican leader Mitch McConnell agreed with Obama on encouraging more domestic energy production. But he accused the administration of stifling that industry’s growth by canceling drilling leases, halting drilling off the Gulf Coast after last summer’s oil spill and increasing permit fees.

“As a result, thousands of U.S. workers have lost their jobs, as companies have been forced to move their operations overseas. That must end,” the Kentucky Republican said. “We must do more to find energy here at home, and the jobs that go with it.”

Obama said that sparking new products and businesses during a transition away from imported oil will help create jobs. The government reported Friday that 230,000 private sector jobs were created in March, bringing the total number created in the past 13 months to 1.8 million. The national unemployment rate also dipped to a two-year low of 8.8 percent last month.

“That’s a good sign,” Obama said. He recorded the address at a UPS shipping facility in suburban Maryland, where he examined all-electric and hybrid vehicles used by AT&T, Verizon, PepsiCo and other companies.

“But we have to keep up the momentum, and transitioning to a clean energy economy will help us do that,” Obama said.

House Speaker John Boehner, R-Ohio, focused his party’s weekly message on steps he said the government must take to encourage small businesses to create jobs. Among those steps are continuing to cut spending, blocking tax increases, reducing the bureaucracy and eliminating regulations. Boehner once owned a small plastics and packaging business in Ohio.

Boehner said Congress also needs to pass a bill funding the government through Sept. 30, when the budget year ends, and avoid a shutdown. The government’s authority to spend money expires next Friday.

“Washington’s inability to get spending under control is creating uncertainty for our job creators,” Boehner said. “It’s discouraging investment in small businesses and eroding confidence in our economy. To put it simply, the spending binge in Washington is holding our country back and keeping our economy from creating jobs.”

Haley Barbour’s ‘innanity’

Barbour slams Obama on taxes, economy

By Jillian Harding

March 26 (CNN) — Mississippi Republican Gov. Haley Barbour on Saturday criticized President Obama’s economic policies and urged fiscal discipline in Washington.

Speaking in Des Moines, Iowa, to a crowd of conservative activists, the potential 2012 GOP presidential contender said, “When the government sucks all the money out of the economy, how is the private sector supposed to create jobs?”

Spending $1.5t more than taxing ADDS that much income and $financial assets to the economy

Barbour slammed the Obama administration’s tax policies for placing an extra burden on taxpayers and inhibiting job growth.

“The president from the beginning has been calling for the largest tax increase in American history,” Barbour said, adding “the policies of this administration in every case have made it harder to create jobs.”

What tax increases? Just talking about them?

Barbour also struck out at taxes placed on the oil industry, saying they would be passed on to consumers.

“Who’s he think is going to pay that? Exxon?” Barbour said, “That’s going to be paid by the people who are pumping gas and diesel fuel into their cars & trucks.”

Citing the need to jumpstart the economy, Barbour told the crowd that reducing spending would be key.

“I urge you to remember the most important thing, cutting spending is the means to an end, the end is to continue to grow our economy,” he said.

What sense does that make???

He’s a menace.