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January 06, 2011

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Is Obama Listening?

Could it be that the President is actually listening to us? Or is he using us? Or neither or both? This is a paragraph I wrote a week or so ago in the comments section of www.RISF.com:

2. Regulation and legislation of interference on businesses constrain solutions from being competative, reduce inventories of natural resources raising their costs, mandates benefits raising the cost of labor enticing overseas relocation. So, it is in the interest of government to conduct frequent and exhaustive reviews of regulations and legislation (including laws) and repeal those that are outdated or over constraining American businesses. Review and change mandates for benefits and labor agreements with both public and private labor to update and improve them to make them managable for government and businesses. Today we have a Congress and an Administration that for all their good intentions do the opposite. They favor unions, they go around Congress to use regulation when they cannot legislate and they increase spending at will in the name of "stimulating" jobs. It has the opposite effect long term. Normal people with budgets and credit cards know the lesson all too well.

This came out yesterday:

the Obama Administration is desperate to convince the public that their war on business is over. Hence President Barack Obama’s Wall Street Journal op-ed yesterday announcing “a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive

Interesting --a coincidence??

Here is the response by conservative reviewers:

This is a nice sentiment. But even a cursory examination of the President’s actual order shows he is all talk and no action.

First of all, the President’s executive order doesn’t actually require federal agencies to identify harmful regulations during the next 120 days. It merely requires that they submit a “preliminary plan” for reviewing regulations sometime in the future. This is not an order to reduce a single regulation. It is an order to plan to plan to maybe someday reduce regulations! Second, the order exempts “independent” agencies like the Securities and Exchange Commission, the Federal Communications Commission, and the new Consumer Financial Protection Bureau. Finally, even if an existing rule is found that stifles job creation, it will take years to actually repeal it. Kauffman Foundation Vice President Robert Litan tells The New York Times: “It’s more of a talking point than a policy. Even if you find a rule you don’t like, and they probably will, then they’re going to have to go through rule-making and then it’s going to take a year or two or longer.”

There is a very simple way to tell if President Obama is serious about stopping job-killing government regulations: He can stop the torrent of new regulations his Administration is set to start producing this year.

The 2,319-page financial regulation bill requires 243 new formal rule-makings by 11 different federal agencies. The 2,700-page Obamacare bill contains more than 1,000 instances where Congress instructed Health and Human Services (HHS) Secretary Kathleen Sebelius to regulate the health care industry. And, in the ultimate example of power-hungry federal regulators providing “solutions” where no problem currently exists, for the first time in the history of the Internet, the federal government will begin to regulate service providers with “net neutrality” regulations.

The American people are not powerless against President Obama’s expansionist administrative state. The new conservative Congress has a number of weapons at their disposal to slow government’s regulatory rise. Congress can withhold funding from the Environmental Protection Agency for writing global warming regulations. The Congressional Review Act allows Congress to review and overrule regulations issued by government agencies. And today, the House of Representatives will take a big first step in rolling back HHS’s czar-like power over one-sixth of our economy when they vote to repeal Obamacare.

President Obama may be signaling that he plans to slow the federal government’s regulatory explosion, but America’s job creators should not believe him for a second.

One more bailout -- Say it isn't true!
A 66% tax hike for Illinois citizens means another indirect bailout by the rest of us. It wasn't enough for us to bailout California with Federal funds --now Illinois uses a 66% state tax increase to pass along the pain to the rest of us. how? State tax is dedutible on Fereal taxes so guess what? We pay 30% or so of the Illinois bill. Funny isn't it how the Dems can avoid the Christie approach to balancing the budget? Noe the richer folks will leave the state and the projected revenue increase will come in low. The New York and California model of frustration.

Jobs is all about opportunity to compete to solve a problem that customers are willing to pay to have solved. In marketing 101 we learn that those with the best solutions at the lowest cost within their segments get the most sales and therefore have the most revenue to employ people, reward people , invest in new solutions to maintain or expand market share, etc. Government interferes with this process in many ways: they tax the system--taking away revenue, they regulate the system placing constraints on the solution--increasing costs or reducing the effectiveness of the solution , they regulate the compensation system--increasing the cost of the solution, etc. Within the country the feds impose similar interferences throughout all of the staes. The states on the other hand compete for industry by offering "incentives" for businesses to locate in their territory bringing with them jobs. For the country this is a zero sum game. Jobs remain in the US but move from state to state. It gets trickier when we examine the impact of government interference in business operations for those who compete with overseas solution providers. The more interference the government legislates/regulates the more constrained and costly the solution becomes and the less competative the business becomes and the lower the revenue it earns relative to businesses not so constrained operating in other countries. To adjust to the ever increasing government interference businesses relocate all or part of their operations outside the US. The US loses the jobs but perhaps gains revenues and remains competative and sustainable.

This is very simplistic but it does represent how the government impacts jobs by interfering with business. That is not to say government shouldn't. But, there are two things government should look at:
1. It's expendatures. Every dollar that government spends must be taken out of the economy in the form of taxes. And, taxes impact business either directly when levied on the business in the many forms government taxes businesses. Or, indirectly when levied on the workers in the form of lower dollars for the workers to spend on goods and services provided by the businesses therby lowering business revenues. In both cases government expenditures cost businesses reveunue and that reduces businesses ability to support jobs, benefits and better solutions. This is exactly the case of the US today--higher and higher government expenditures/mandates requiring higher and higher taxes. We focus only on the personal and payroll taxes. But, gasoline tax, real estate tax, license fees, the new local favorite-- revenue taxes, road taxes,sales taxes, rental car taxes, etc all take revenue away from businesses and cost jobs.
2. Regulation and legislation of interference on businesses constrain solutions from being competative, reduce inventories of natural resources raising their costs, mandates benefits raising the cost of labor enticing overseas relocation. So, it is in the interest of government to conduct frequent and exhaustive reviews of regulations and legislation (including laws) and repeal those that are outdated or over constraining American businesses. Review and change mandates for benefits and labor agreements with both public and private labor to update and improve them to make them managable for government and businesses. Today we have a Congress and an Administration that for all their good intentions do the opposite. They favor unions, they go around Congress to use regulation when they cannot legislate and they increase spending at will in the name of "stimulating" jobs. It has the opposite effect long term. Normal people with budgets and credit cards know the lesson all too well.

Part I --for today

This weekends senseless,idiotic act reminds us all of the danger that our public officials face when they act on our behalf and serve. We owe them a debt of gratitude for their willingness to put up with the threat to their safety and the well being of their families. It is just as important to thank them when you have the opportunity as it is to express your opinions of their ideas whether you agree with them or not.

While this act of cowardice will open the floodgates for debate about the way we debate in America we cannot forget that there is a difference between the terrorists who attack us and the distrubed minds who operate on logic there is little hope to understand. Mass murders of postal workers, McDonald's customers, school children; assassination attempts on Robert and John Kennedy, Reagan,Ford, Governor Wallace, Martin Luther King; the unibomber, the Anthrax attacks, the federal building bombing, serial killers continually stalking our citizens, etc all are examples of people with confused minds are driven to unleash horror on their victim's, their families and society as a whole. To attempt to place blame on a particular reason is difficult and speculative at best. The small fraction of people with malfunctioning minds will always exist just as disease takes it's toll on our fiends and family each day.

Best to say a prayer for the victims in this sad event and to thank a soldier, public official ,police officer, firefighter, teacher,etc for serving.

I have not the time to discuss jobs today but I will. I leave you with two thoughts:

1. Focus on JOBS is something that politicians tend to do during campaigns and quickly gets lost after the election.

2. Jobs are difficult for the government to create or even stimulate long term. Government's roll is to create the environment in which businesses can flourish competitively and in doing so businesses create jobs and wealth.

More later. Thanks, Bill.

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