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A Grim Jobs Report for America
Townhall.com ^ | June 2, 2012 | Larry Kudlow

Posted on 06/02/2012 4:41:04 AM PDT by Kaslin

You would think $1 trillion in spending stimulus and $2.5 trillion of Fed pump-priming would produce an economy a whole lot stronger than 1.9 percent GDP, which was the revised first-quarter number. And you’d think all that government spending would deliver a whole lot more jobs than 69,000 in May.

But it hasn’t happened.

The Keynesian government-spending model has proven a complete failure. It’s the Obama model. And it has produced such an anemic recovery that frankly, at 2 percent growth, we’re back on the front end of a potential recession. If anything goes wrong -- like another blow-up in Europe -- there’s no safety margin to stop a new recession.

And that brings us to the grim May employment report, which generated only 69,000 nonfarm payrolls. It’s the third consecutive subpar tally, replete with downward revisions for the two prior months. It’s a devastating number for the American economy, and a catastrophic number for Obama’s reelection hopes. All momentum on jobs and the economy has evaporated.

Inside the May report, the data is just as bad. The unemployment rate rose slightly from 8.1 to 8.2 percent. The so called U6 unemployment rate, tracking the marginally employed or completely discouraged, increased to 14.8 percent from 14.5 percent. And labor earnings are barely rising at 1.7 percent over the past year, almost in line with the inflation rate. In fact, through April, after-tax, after-inflation income is scarcely rising at 0.6 percent for the past year.

The private workweek also fell in May. So did the manufacturing workweek and aggregate hours worked for all employees. The small-business household survey did rise, but that follows declines in the prior two months.

Barack Obama doesn’t get this, but businesses create jobs. And firms have to be profitable in order to hire. Yet the president is on the campaign trail criticizing Mitt Romney by degrading the importance of profits. Huh?

Without profits businesses can’t expand. And if they don’t expand, they can’t hire. And if they don’t have profitable rates of return, they’re not going to attract new capital for investment.

Which brings us to a couple of important reasons for the virtual freeze in hiring.

First there’s the fiscal tax cliff. If all the Bush tax rates go up, incentives will go down and liquidity will leave the system. You can’t pick up a newspaper these days and not find a story about how the fiscal cliff is elevating uncertainty and slowing U.S. growth. House Speaker John Boehner asked Obama for help in extending the Bush tax cuts this summer. But Obama said no. Instead, he wants to raise marginal tax rates on successful upper-income earners, capital gains, dividends, estates, and many successful corporations.

Where’s the corporate tax reform that would lower rates and broaden the base and end the double-taxation of the overseas profits of American companies? A business tax cut would help enormously, but it’s nowhere in sight. Neither is the Keystone Pipeline, which is a surefire job-creator. Obama is too busy trashing Bain Capital profits and Romney’s business career, both of which, by the way, have recently been praised by former president Bill Clinton. (It was Clinton, you might recall, who lowered investment taxes and presided over an economic boom.)

A second uncertainty facing businesses is the Supreme Court decision on Obamacare due in a few weeks. If all those crazy tax-and-regulation mandates are deemed unconstitutional, it’s Katy bar the door as businesses put profits to work and hire. But they’re not going to move until they see that court decision.

Then there’s the whole European mess with the threat of banking contagion from Spain, Greece, and Italy. That could blow up the whole world economy if it goes completely sour. The Europeans should guarantee all bank deposits, interbank loans, and bank debt until this story is straightened out. But they’re not. So the problem festers.

And now European companies are withdrawing money from local banks and investing in dollars (especially through Treasury bonds that are yielding an incredibly low 1.5 percent). But the rapid rise of King Dollar is generating commodity deflation, which is a deterrent to manufacturing production. According to the May ISM report, manufacturing is slowing.

The Fed may yet launch a new quantitative easing to stop commodity deflation and accommodate the gigantic worldwide dollar demand. But the merits of this move are dubious. On the other hand, an extension of the Bush tax cuts right now would stop the economic and job slide and reestablish certainty.

In fact, all the countries around the world should move to the supply side with lower tax rates to spur economic-growth incentives. Europe, China, and Latin America ought to go back and read Ronald Reagan’s speeches and examine his actions when he faced a similar crisis 30 years ago. It would be an hour or two well spent.


TOPICS: Business/Economy; Culture/Society; Editorial; Politics/Elections
KEYWORDS: 2012; 2012election; bhoeconomy; bhofascism; democrateconomy; democrats; economy; election2012; elections; kenyanbornmuzzie; mittromney; nobama2012; obama; obamacare; obamanomics; romney; socialism; taxes; theamateur; unemployment

1 posted on 06/02/2012 4:41:09 AM PDT by Kaslin
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To: Kaslin

You can lead a horse to water, but you can’t make him drink.


2 posted on 06/02/2012 4:47:06 AM PDT by ez (When you're a hammer, everything looks like a nail.)
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To: Kaslin
The Keynesian government-spending model has proven a complete failure. It’s the Obama model. And it has produced such an anemic recovery that frankly, at 2 percent growth, we’re back on the front end of a potential recession. If anything goes wrong -- like another blow-up in Europe -- there’s no safety margin to stop a new recession.

And if Obama somehow manages to pull out the election, three years from now he'll still be blaming Bush. The fact of the matter is, Obama and his economic team haven't a clue on what to do.

3 posted on 06/02/2012 4:51:23 AM PDT by corlorde (forWARD of the state)
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To: Kaslin

Bammy thinks the tooth fairy hands out money. He’s a boy in a man’s job. Absolutely no clue!


4 posted on 06/02/2012 4:53:05 AM PDT by New Jersey Realist (America: home of the free because of the brave)
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To: New Jersey Realist

I just heard that affirmative action idiot blathering about how we need to hire more cops, teachers, and firemen. Living in NJ, I know what havoc all three of these wreak on taxpayers (and I also know they are simply a means of channeling my paycheck to the Democratic Party).

He is a clueless token, and it is now obvious to all. He will have a very hard time winning in November.


5 posted on 06/02/2012 5:01:09 AM PDT by kearnyirish2
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To: Kaslin
Keynesian economics has been disproved time after time. We have many decades of solid evidence that it is utterly wrong-headed.

But by all means, let's keep hoping it works out next time!

6 posted on 06/02/2012 5:04:03 AM PDT by ClearCase_guy (Like Emmett Till, Trayvon Martin has become simply a stick with which to beat Whites.)
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To: corlorde

Never elect a community agitator, oh unless he’s dreamy has a line a bullsh##, and of coarse he’s the new tephlon...............black


7 posted on 06/02/2012 5:07:09 AM PDT by ronnie raygun (B B)
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To: corlorde

They know exactly what they’re doing. They’re doing it on purpose because their purpose is to destroy the American economy.


8 posted on 06/02/2012 5:10:44 AM PDT by Tea Party Terrorist (they all stink)
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To: Kaslin

This is unpossible! Obama just ran a commercial saying he created over 4 million jobs and everything is OK now that Bush is gone!


9 posted on 06/02/2012 5:11:14 AM PDT by NonValueAdded (Extraneous Wind sends ...)
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To: ez

Probably ought to leave Michelle out of this.


10 posted on 06/02/2012 5:12:55 AM PDT by maddog55 (OBAMA: Why stupid people shouldn't vote.)
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To: New Jersey Realist

I don’t believe for a second that he and the rest of the Marxists in his Admin are clueless - they know exactly what they’re doing.


11 posted on 06/02/2012 5:16:18 AM PDT by gnawbone
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To: ez
You can lead a horse to water, but you can’t make him drink.

However, if the horse is a conservative, who loves this Nation, he might be apt to turn to drink from sheer despair...

12 posted on 06/02/2012 5:17:13 AM PDT by trebb ("If a man will not work, he should not eat" From 2 Thes 3)
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To: NonValueAdded
Don't you mean impossible? Sure it is. I like to know where the jobs were created. Unfortunately there are

Who will buy his lies, hook line and sinker

13 posted on 06/02/2012 5:26:35 AM PDT by Kaslin (Acronym for OBAMA: One Big Ass Mistake America)
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To: Kaslin

The Kenyan’s Keynesian socialist crony spending model.


14 posted on 06/02/2012 5:29:13 AM PDT by King Moonracer (Bad lighting and cheap fabric, that's how you sell clothing.....)
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To: Kaslin

> If all those crazy tax-and-regulation mandates are deemed unconstitutional, it’s Katy bar the door as businesses put profits to work and hire.

Oh, i think that they will wait a bit...


15 posted on 06/02/2012 5:30:53 AM PDT by bill1952 (Choice is an illusion created between those with power - and those without)
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To: Tea Party Terrorist; corlorde

“They know exactly what they’re doing. They’re doing it on purpose because their purpose is to destroy the American economy.”
//////////////////////////////////////////////////////////////////////////////////////////////////////////////////////////
Absolutely, I find it amazing that so many still seem to insist that this is all the result of incompetence and stupidity. All who believe this disaster is UNintentional should arrange to take a multiple choice test on a subject about which they know NOTHING and attempt to make a zero score. It cannot be done! You will have to study the subject until you know enough to make a perfect score before you are able to score zero! In other words it takes hard work and dedication to be wrong every single time and never make a correct decision. This is what we are witnessing, this is what happens when people who have their agenda down pat do the exact opposite of what THEY KNOW would produce positive results.


16 posted on 06/02/2012 5:56:21 AM PDT by RipSawyer
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To: ez

I read this man in the 1970’s. It is time for a re-read.

Jude Wanniski, Man Who Coined the Term “Supply-Side Economics

http://www.freerepublic.com/focus/f-news/1473133/posts

“The Way the World Works” by Jude Wanniski (1978)


17 posted on 06/02/2012 5:56:38 AM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
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To: Tea Party Terrorist

Bump!


18 posted on 06/02/2012 5:57:51 AM PDT by Texas Fossil (Government, even in its best state is but a necessary evil; in its worst state an intolerable one)
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To: Kaslin

BaBaRock has only one card to play, “blame everyone else for the country’s problems.” Someone has to take responsibility. Whatever happened to the idea “The buck stops here?”


19 posted on 06/02/2012 6:03:33 AM PDT by FreedBird
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To: Kaslin

Who is strong enough to take the responsibility for the weak economy? The habit of playing the blame game is weak and inferior behavior.


20 posted on 06/02/2012 6:06:57 AM PDT by FreedBird
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To: ClearCase_guy
Keynesian economics has been disproved time after time. We have many decades of solid evidence that it is utterly wrong-headed.

But by all means, let's keep hoping it works out next time!


You just don't get it. The last crew didn't quite do it right. This new crew is so much smarter. /sarc
21 posted on 06/02/2012 6:16:37 AM PDT by khelus
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To: Kaslin

The Bureau of Labor Statistics reported Labor Force Participation Rates remain near 30-year lows.


22 posted on 06/02/2012 6:26:56 AM PDT by Son House (The Economic Boom Heard Around The World => TEA Party 2012)
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To: Kaslin
It's a good thing Holder's People Number One is so Gawd Awful stupid and vain. Otherwise, he would start issuing Gulf drilling permits, and take the EPA out behind the barn and shoot it.

He could turn those unemployment and stock market numbers around in a few weeks, but he is stuck on stupid, trying to find more federal money for "shovel-ready" public works projects.

He's going to crash and burn, and perhaps even find out that such Lords of the Earth, like Mubarek, and maybe Barak Obama, can go to the slam...

Was it Napoleon who said, "Never interrupt your enemy when he is making a mistake."?

23 posted on 06/02/2012 6:44:50 AM PDT by jonascord (Any Democrat = Classic examples of the Downing Effect.)
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To: Kaslin

The Keynesian government-spending model has proven a complete failure.

The Kenyan g’mint Prezbo model has proven a complete failure as well.
Time to let a true Reagan supply sider like Romney in there.

yipes.


24 posted on 06/02/2012 7:11:12 AM PDT by Leep (Enemy of the Statist)
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To: Kaslin

“The Keynesian government-spending model has proven a complete failure.”

The Kenyan g’mint Prezbo model has proven a complete failure as well.
Time to let a true Reagan supply sider like Romney in there.

yipes.


25 posted on 06/02/2012 7:11:52 AM PDT by Leep (Enemy of the Statist)
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To: ez

“A second uncertainty facing businesses is the Supreme Court decision on Obamacare due in a few weeks. If all those crazy tax-and-regulation mandates are deemed unconstitutional, it’s Katy bar the door as businesses put profits to work and hire. But they’re not going to move until they see that court decision.”

Wouldn’t it be ironic if the Supremes deem Obamacare unconstitutional and it does give rise to boomlet of business investment. Of course. the Obamabots will take credit for the boomlet while screaming that Repubs and the Court want to take your health care away.


26 posted on 06/02/2012 7:46:06 AM PDT by vekzen
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To: Kaslin

27 posted on 06/02/2012 11:34:22 AM PDT by Windflier (To anger a conservative, tell him a lie. To anger a liberal, tell him the truth.)
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