What The Government Really Should Be Doing To Create Jobs

Two years ago, I wrote a short book describing what happens during The Business Cycle. Rising unemployment is always the first sign an economy is contracting. The government has a number of appropriate policies to pursue when the economy contracts. First, it should minimize human suffering with unemployment insurance, food stamps, et al. Second, it should put those unemployed people back to work, and not on some WPA make work project.

The infrastructure in the U.S. is rapidly falling apart. I described the Interstate Highway system last fall after a long, long road trip. We are going to have to pay to fix it someday, so why not now? 1) We take people off unemployment insurance. 2) We put cash back into the system and small businesses stop failing. 3) We improve the efficiency of our distribution system. It is a win-win-win policy, but Obama cannot seem to understand that simple fact.

Here is the comment from The Economic Collapse that says pretty much the same thing.

Everything Is Falling Apart: 20 Facts That You Will Not Want To Read If You Still Want To Feel Good About America’s Decaying Infrastructure

If you haven't noticed lately, America is literally falling apart all around us. Decaying infrastructure is everywhere. Our roads and bridges are crumbling and are full of holes. Our rail system is ancient. Our airports and runways have definitely seen their better days. Aging sewer systems all over the country are leaking raw sewage all over the place. The power grid is straining to keep up with the ever-increasing thirst of the American people for electricity. Dams are failing at an unprecedented rate. Virtually all of our ports are handling far more traffic than they were ever intended to handle. Meanwhile, our national spending on infrastructure is way down. Back during the 1950s and 1960s we were spending between 3 and 4 percent of our national GDP on infrastructure, but today we are spending less than 2.5 percent of our national GDP on it. According to the American Society of Civil Engineers, we need to spend approximately $2.2 trillion on infrastructure repairs and upgrades just to bring our existing infrastructure up to "good condition".

Does anyone have an extra $2.2 trillion to spare?

If you get the feeling that America is decaying as you drive around this great country of ours, it is not just your imagination. It is literally happening.

You should not read the list of facts below if you want to keep feeling good about the condition of America's infrastructure. There really is no way to sugar-coat what is happening. Previous generations handed us the greatest national infrastructure that anyone in the world has ever seen and we have neglected it and have allowed it to badly deteriorate.

This first set of facts about America's decaying infrastructure was compiled from a fact sheet entitled "The Case For U.S. Infrastructure Investment" by an organization called Building America's Future....

*****

#1 One-third of America's major roads are in poor or mediocre condition.

#2 Traffic on more than half the miles of interstate highway exceeds 70 percent of capacity, and nearly 25 percent of the miles are strained at more than 95 percent of capacity.

#3 Americans waste 4.2 billion hours and 2.8 billion gallons fuel a year sitting in traffic – equal to nearly one full work week and three weeks’ worth of gas for every traveler.

#4 Over the next 30 years, our nation is expected to grow by 100 million and highway traffic will double again. Even if highway capacity grows no faster than in the last 25 years, Americans can expect to spend 160 hours – 4 work weeks – each year in traffic by 2035.

#5 Nearly a third of all highway fatalities are due to substandard road conditions, obsolete road designs, or roadside hazards.

#6 Over 4,095 dams are "unsafe" and have deficiencies that leave them more susceptible to failure, especially during large flood events or earthquakes.

#7 Rolling blackouts and inefficiencies in the U.S. electrical grid cost an estimated $80 billion a year.

#8 By 2020, every major U.S. container port is projected to at least double the volume of cargo it was designed to handle. Some East Coast ports will triple in volume, and some West Coast ports will quadruple.

#9 Other countries are leapfrogging past us by investing in world-class ports. China is investing $6.9 billion; the port of Shanghai now has almost as much container capacity as all U.S. ports combined.

#10 By 2020, China plans to build 55,000 miles of highways, more than the total length of the U.S. interstate system.

*****

The rest of these facts were compiled from various sources around the Internet. The more research that you do into America's decaying infrastructure the more depressing it becomes....

#11 According to the U.S. Department of Transportation, more than 25 percent of America's nearly 600,000 bridges need significant repairs or are burdened with more traffic than they were designed to carry.

#12 More than a third of all dam failures or near failures since 1874 have happened in just the last decade.

#13 All across the United States, conditions at many state parks, recreation areas and historic sites are deplorable at best. Some states have backlogs of repair projects that are now over a billion dollars long. The following is a quote from a recent MSNBC article about these project backlogs....

More than a dozen states estimate that their backlogs are at least $100 million. Massachusetts and New York's are at least $1 billion. Hawaii officials called park conditions "deplorable" in a December report asking for $50 million per year for five years to tackle a $240 million backlog that covers parks, trails and harbors.

#14 Over the past year, approximately 100 of New York's state parks and historic sites have had to cut services and reduce hours.

#15 All over America, asphalt roads are being ground up and are being replaced with gravel because it is cheaper to maintain. The state of South Dakota has transformed over 100 miles of asphalt road into gravel over the past year, and 38 out of the 83 counties in the state of Michigan have transformed at least some of their asphalt roads into gravel roads.

So why don't our state and local governments just spend the money necessary to fix all of these problems?

Well, they can't spend the money because they are flat broke.

Just consider some of the financial problems that state and local governments around the nation are facing right now....

#16 One town in Michigan is so incredibly broke that it is literally begging the state to allow them to declare bankruptcy.

#17 One Alabama town is in such financial turmoil that it has decided to simply quit paying pension benefits.

#18 In Georgia, the county of Clayton recently eliminated its entire public bus system in order to save 8 million dollars.

#19 Major cities such as Philadelphia, Baltimore and Sacramento are so desperate to save money that they have instituted "rolling brownouts" in which various city fire stations are shut down on a rotating basis throughout the week.

#20 Detroit Mayor Dave Bing has come up with a unique way to save money. He wants to cut 20 percent of Detroit off from essential social services such as road repairs, police patrols, functioning street lights and garbage collection.

The truth is that there are dozens of cities across the United States that are on the brink of bankruptcy. To see a bunch of high profile examples of this, check out the following article from Business Insider: "16 US Cities Facing Bankruptcy If They Don't Make Deep Cuts In 2011".

But it just isn't local governments that are in deep trouble right now. In fact, there are quite a few state governments that are complete and total financial disaster zones at this point.

According to 60 Minutes, the state of Illinois is at least six months behind on their bill payments. 60 Minutes correspondent Steve Croft recently asked Illinois state Comptroller Dan Hynes how many people and organizations are waiting to be paid by the state, and this is how Hynes responded....

"It's fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state."

Investors across the globe are watching all this and they are starting to panic. In fact, investors are now pulling money out of municipal bonds at a rate that is absolutely staggering.

But if states get cut off from all the debt that they need to operate, things are going to get a lot worse very quickly.

Already we are seeing all kinds of troubling signs. For example, the state of Arizona recently decided to stop paying for many types of organ transplants for people enrolled in its Medicaid program.

Sadly, as much as our politicians try to "fix" our problems, things just only seem to keep getting worse.

One prominent illustration of this is our health care system. Our health care system is absolutely falling apart all around us. Thanks to the new health care reform law, doctors are flocking out of the profession in droves. According to an absolutely stunning new poll, 40 percent of all U.S. doctors plan to bail out of the profession over the next three years.

Our economy continues to fall apart as well. The number of personal bankruptcies in the United States continues to set stunning new highs. According to the American Bankruptcy Institute, more than 1.53 million Americans filed bankruptcy petitions in 2010. This was up 9 percent from 1.41 million in 2009.

Not only that, but the housing crisis shows no signs of abating. 382,000 new foreclosures were initiated during the third quarter of 2010. This was up 31.2 percent from the previous quarter and it was 3.7 percent higher than the third quarter of 2009.

The U.S. banking system is also falling apart. In 2006, no U.S. banks failed. In 2009, 140 U.S. banks failed. So did things get better in 2010? No. In 2010, 157 U.S. banks failed.

Unemployment continues to remain at depressingly high levels, and in many areas of the country it is getting even worse. According to the U.S. Labor Department, the unemployment rate rose in two-thirds of America's largest metro areas during November.

Millions of Americans have become so disgusted with the job market that they have given up altogether. The number of people who are so discouraged that they have completely given up searching for work now stands at an all-time high.

So who is doing a booming business during these hard times? Welfare agencies and food banks are. During this economic downturn, millions of American families have found themselves going to a food bank for the very first time ever.

It is getting harder and harder for average American families to feed themselves. A recent survey conducted by the Pew Research Center found that 29 percent of Americans say that it is hard to afford food, and 48 of Americans say that it is hard to afford their heating and electric bills.

So is there any hope for the future? Well, our new college graduates are supposed to lead us into the future, but most of them are saddled with overwhelming amounts of student loan debt. Those who graduated during 2009 had an average of $24,000 in student loan debt. This represented a 6 percent increase from the previous year.

Not only that, but these new college grads are not finding jobs. According to the one recent report, the unemployment rate for recent college graduates was 8.7 percent in 2009. This was up from 5.8 percent in 2008, and it was the highest unemployment rate ever recorded for college graduates between the ages of 20 to 24.

As if all of this was not bad enough, now the Baby Boomers are starting to reach retirement age. Beginning January 1st, 2011 every single day more than 10,000 Baby Boomers will reach the age of 65. That is going to keep happening every single day for the next 19 years.

So where in the world are we going to come up with all of the money to give them the retirement benefits that they are due?

The truth is that we are flat broke as a nation and so America's decaying infrastructure is going to continue to decay. We don't have the money to repair what we already have, much less add desperately needed new infrastructure.

But perhaps it is only fitting. The decay of our roads and cities will match the deep social, moral and political decay that has already been going on in this country for decades.

So will the American people awaken soon enough to be able to recapture the legacy of greatness that previous generations tried to pass on to us?

Unfortunately, the vast majority of our politicians are completely incompetent.

Reallly Hard Times Coming?

The Economic Collapse blog posted this today, and you should know about it. What he does not mention is that the whole debt problem can be inflated away by printing money. And that is what the FED is doing already with its QE, e.g. printing money. Given the spinelessness of the Congress and the failure to lead by the President, my money is on raging inflation. To prepare for that eventuality, study Germany after WW II and Argentina in the 1990's. It is not a pretty picture.

14 Eye Opening Statistics Which Reveal Just How Dramatically The U.S. Economy Has Collapsed Since 2007

Most Americans have become so accustomed to the "new normal" of continual economic decline that they don't even remember how good things were just a few short years ago. Back in 2007, unemployment was very low, good jobs were much easier to get, far fewer Americans were living in poverty or enrolled in welfare programs and government finances were in much better shape. Of course most of this prosperity was fueled by massive amounts of debt, but at least times were better. Unfortunately, things have really deteriorated over the last several years. Since 2007, unemployment has skyrocketed, foreclosures have set new all-time records, personal bankruptcies have soared and U.S. government debt has gotten completely and totally out of control. Poll after poll has shown that Americans are now far less optimistic about the future than they were in 2007. It is almost as if the past few years have literally sucked the hope out of millions upon millions of Americans.

Sadly, our economic situation is continually getting worse. Every month the United States loses more factories. Every month the United States loses more jobs. Every month the collective wealth of U.S. citizens continues to decline. Every month the federal government goes into even more debt. Every month state and local governments go into even more debt.

Unfortunately, things are going to get even worse in the years ahead. Right now we look back on 2005, 2006 and 2007 as "good times", but in a few years we will look back on 2010 and 2011 as "good times".

We are in the midst of a long-term economic decline, and the very bad economic choices that we have been making as a nation for decades are now starting to really catch up with us.

So as horrible as you may think that things are now, just keep in mind that things are going to continue to deteriorate in the years ahead.

But for the moment, let us remember how far we have fallen over the past few years. The following are 14 eye opening statistics which reveal just how dramatically the U.S. economy has collapsed since 2007....

#1 In November 2007, the official U.S. unemployment rate was just 4.7 percent. Today, the official U.S. unemployment rate is 9.4 percent.

#2 In November 2007, 18.8% of unemployed Americans had been out of work for 27 weeks or longer. Today that percentage is up to 41.9%.

#3 As 2007 began, there were just over 1 million Americans that had been unemployed for half a year or longer. Today, there are over 6 million Americans that have been unemployed for half a year or longer.

#4 Nearly 10 million Americans now receive unemployment insurance, which is almost four times as many as were receiving it back in 2007.

#5 More than half of the U.S. labor force (55 percent) has “suffered a spell of unemployment, a cut in pay, a reduction in hours or have become involuntary part-time workers” since the "recession" began in December 2007.

#6 According to one analysis, the United States has lost a total of approximately 10.5 million jobs since 2007.

#7 As 2007 began, only 26 million Americans were on food stamps. Today, an all-time record of 43.2 million Americans are enrolled in the food stamp program.

#8 In 2007, the U.S. government held a total of $725 billion in mortgage debt. As of the middle of 2010, the U.S. government held a total of $5.148 trillion in mortgage debt.

#9 In the year prior to the "official" beginning of the most recent recession in 2007, the IRS filed just 684,000 tax liens against U.S. taxpayers. During 2010, the IRS filed over a million tax liens against U.S. taxpayers.

#10 From the year 2000 through the year 2007, there were 27 bank failures in the United States. From 2008 through 2010, there were 314 bank failures in the United States.

#11 According to the U.S. Department of Housing and Urban Development, the number of U.S. families with children living in homeless shelters increased from 131,000 to 170,000 between 2007 and 2009.

#12 In 2007, one poll found that 43 percent of Americans were living "paycheck to paycheck". Sadly, according to a survey released very close to the end of 2010, approximately 55 percent of all Americans are now living paycheck to paycheck.

#13 In 2007, the "official" federal budget deficit was just 161 billion dollars. In 2010, the "official" federal budget deficit was approximately 1.3 trillion dollars.

#14 As 2007 began, the U.S. national debt was just under 8.7 trillion dollars. Today, the U.S. national debt has just surpassed 14 trillion dollars and it continues to soar into the stratosphere.

So is there any hope that we can turn all of this around?

Unfortunately, the massive amount of debt that we have piled up as a society over the last several decades has made that impossible.

If you add up all forms of debt (government debt, business debt, individual debt), it comes to approximately 360 percent of GDP. It is the biggest debt bubble in the history of the world.

If the federal government and our state governments stop borrowing and spending so much money, our economy would collapse. But if they keep borrowing and spending so much money they will continually make the eventual economic collapse even worse.

We are in the terminal stages of the most horrific debt spiral the world has ever seen, and when the debt spiral gets stopped the house of cards is going to finally come down for good.

So enjoy these times while you still have them. Yes, today is not nearly as prosperous as 2007 was, but today is most definitely a whole lot better than 2015 or 2020 is going to be.

Sadly, we could have avoided this financial disaster completely if only we had listened more carefully to those that founded this nation. Once upon a time, Thomas Jefferson said the following....

I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.

Here Is A Republican Who Understands How To Create Jobs

McDonnell to roll out massive spending campaign for roads, colleges, jobs

By Anita Kumar
Washington Post Staff Writer
Sunday, January 9, 2011; 12:47 AM

RICHMOND - Virginia Gov. Robert F. McDonnell plans a massive spending campaign that he said would unclog state roads, award thousands more college degrees and spur job creation, part of an aggressive legislative agenda he is expected to roll out this week.

McDonnell (R) will press lawmakers to approve a series of statewide projects he said would be paid in part through Virginia's $403 million budget surplus, $337 million in higher-than-expected tax revenue, and $192 million generated through cuts and savings.

And in stark contrast to other governors, who are cutting budgets and slashing payrolls, McDonnell told The Washington Post that he plans to borrow nearly $3 billion over the next three years for transportation projects and intends to spend an additional $400 million to fix the state's ailing roads, $58 million to help state colleges and universities, and $54 million to create jobs.

"When you only have four years to do things, you understand the clock is always ticking," said McDonnell, referring to Virginia law that makes it the only state in the nation where a governor can't succeed himself. "You have a sense of urgency to get things done."

Democrats said that they share many of the Republican governor's priorities but that his transportation proposal is filled with IOUs and his jobs plan is based on stimulus money that will eventually run out. "His goals are sound, but his methods for achieving them are unsuccessful," said Brian Moran, chairman of the Democratic Party of Virginia.

The governor said he is aware that his legislative package is hamstrung by a divided General Assembly - Republicans control the House, but Democrats run the Senate - and the pressures of a looming election in which all 140 legislative seats are up for grabs.

But McDonnell said that if Democrats have better ideas, they should propose them. "I am perfectly willing to be bold and say 'Here's the problem and here's my solution to fix it,' " McDonnell said during the interview in his Capitol Square office. "You can't fight something with nothing. And right now, I haven't heard any alternatives."

A former veteran legislator, McDonnell will submit 130 measures from his state agencies during the legislative session that begins Wednesday, and even more from his office that will represent his top priorities, including a scaled-back plan to privatize state liquor stores. Delegates have laughed that they are having trouble carrying the governor's bills while abiding by House rules to sponsor only 15 bills each.

"He has a big agenda - tons of bills," said Del. David B. Albo (R-Fairfax). "And he painstakingly analyzes everything."

Tackling roads

The governor, the first Republican chief executive in eight years, said the administration will also make larger payments into the Virginia Retirement System. Much of the surplus is committed by law to the Chesapeake Bay cleanup, K-12 education and transportation, but McDonnell decided to put more money into roads and give state employees a 3 percent bonus while making additional payments into the retirement system to ensure its solvency.

He also plans to release the second part of his transportation proposal, which will include both more funds for roads - but no tax increase - and a flurry of management changes after an audit of the Virginia Department of Transportation found that hundreds of millions of dollars sat unspent for years in various accounts.

Every Virginia governor in modern times has tried to tackle the state's transportation problems, and McDonnell is no different. He already announced he wants to spend $150 million from last year's budget surplus and $250 million recouped from the transportation audit.

For years, the state has struggled to allocate transportation funding, with Democrats proposing tax increases and Republicans rejecting all levy increases. Meanwhile, Virginia's billion-dollar shortfall in the transportation budget has led to thousands of job cuts and hundreds of unfinished projects.

"There's no single easy way out of the transportation problem," said Del. Timothy D. Hugo (R-Fairfax), chairman of House Republican Caucus. Legislators, he added, will find that they have to vote for a transportation plan during an election year.

Democrats and conservative Republicans initially opposed taking on more debt for roads, especially after a committee of legislative and gubernatorial staffers voted to tweak the model used to determine the state's annual debt capacity. The state would be able to borrow the same amount over a decade, but more money would be available initially under the new interpretation.

"It's too much," said Del. Brenda L. Pogge (R-York). "We can't afford it right now. We should not be borrowing and spending. We should sit tight and let the economy get well."

McDonnell flew to New York on Tuesday with Republican and Democratic legislators to meet with bond-rating agencies about the state's AAA rating. They were told that the state was still on solid footing.

Sen. R. Edward Houck (D-Spotsylvania), who went on the trip, said McDonnell's plan was "weighing heavily'' until the bond raters praised Virginia in three separate meetings. "It made the proposal a lot more palatable," Houck said.

'Short four years'

McDonnell invites legislators to the Executive Mansion to discuss policy and plans, includes them in advisory groups and was the first governor to visit with budget negotiators on their own turf. But in recent months, several lawmakers have criticized him for not giving them a heads up before proposals are announced.

Sen. Mary Margaret Whipple (D-Arlington), chairman of the Senate Democratic Caucus, said that although most governors have a learning curve, that she was surprised given McDonnell's experience in the General Assembly and as attorney general that he did not accomplish as much as he did in his first year. "I would imagine maybe he's a little disappointed," she said.

The governor finished his first session with modest victories - a $50 million economic development package, including programs to lure businesses to the state, and education bills designed to increase the number of charter schools, virtual schools and laboratory schools in Virginia.

McDonnell considered but did not call for special legislative sessions on transportation and government reform last year. And he attributes his modest agenda last year to time spent learning the job, making hundreds of appointments and helping balance a budget with a $4.2 billion shortfall. Last year's session started with Timothy M. Kaine (D) in the governor's mansion and writing the state budget.

"I just didn't think with the economy being what it was last year that it was the right time," McDonnell said. "Because we've got more stability now in the budget and more progress on jobs . . . it gives me more time to be bold and energetic on getting some of these other major reforms passed. I couldn't take on transportation, higher education, things that needed some other new investment. This year, I can."

Whipple said McDonnell spent much of last year "fixated" on his unpopular proposal to privatize the state's 76-year-old liquor wholesale, distribution and retail monopoly. But he withdrew it after considerable opposition by Democrats and some Republicans, in part because it would bring in $47 million less a year for the state.

He then hired a national financial management company to revamp the plan, and he is expected to propose next week that the state privatize only its 332 liquor stores.

"Very few people have publicly or privately defended the fact that we have a government monopoly, but how you do the details . . . is where some of the conflicts come in, and it's not easy,'' McDonnell said.

McDonnell acknowledged that it would be easier to get his priorities through the General Assembly next year if he's successful in helping the Republicans win back control of the state Senate in November. But that doesn't mean he's not going to try to get his legislative priorities through this year - after all, the clock is ticking.

"I think that you've got a short four years to try to improve the quality of life for citizens, solve problems, find solutions," said McDonnell, who is looking toward his legacy and has been mentioned as a potential vice presidential candidate when his term expires in 2014. "Coming up on a year, I realize I've got an increasingly short amount of time to get some of these ideas done," he said

As of Sunday, it's 1,097 days.

Inflation Coming?

Old bald Uncle Ben says that flooding the economy with billions of newly minted $100 bills won't lead to inflation. Then why is the price of cotton 100% higher than a year ago? Silver 70% higher. Corn, wheat and coffee are all up 50% and there is more, a lot more.

The advice we gave in The Great Recession Conspiracy looks better every day, i.e., a borrower not a lender be. Let inflation pay off your debts.

You Really Need To Hear This!!

http://video.nytimes.com/video/2011/01/08/opinion/1248069538627/bloggingheads-wall-st-to-white-house.html

Our economic problem is not the decline of manufacturing, it is the complete take-over of the economy by Wall Street. These two guys (in the video) are about as far apart politically as it is possible to be, but they agree 100% with the premise of The Great Recession Conspiracy, and that is that Wall Street has taken over the U.S. government.

The Free Money

As I promised, here is the free money. Just follow the instructions below.

Email to send winner:

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Los Angeles Times Headline January 7, 2011

"As chief of staff, Daley may help Obama mend ties with Wall Street"

Have we just walked through the Looking Glass?? Mend ties with Wall Street?? Those are the people who almost destroyed the world banking system while paying themselves ENORMOUS bonuses!!

We need jobs, jobs, jobs.........Wall Street bankers have never created jobs and they aren't doing it now.

This is so bizarre I simply cannot imagine the thinking that went into the decision.

MEND TIES WITH WALL STREET!!! Jeeezzzzzzzzz.......................What insanity comes next??