Obama Taps Proven Failure to Lead New Economic Team (ContributorNetwork)
COMMENTARY | Ahead of the much anticipated new economy/jobs speech the president will read from his teleprompter, the Associated Press announced the commander-in-chief has "tapped labor economist Alan Krueger for a top administration post Monday, thereby "rounding out his White House economic team." What I am curious to know is; what is Barack Obama expecting to accomplish by naming a proven failure as head of anything?
While Obama just introduced Alan Kruger to America as the new kid on the "White House economic team" block, it's really more of a homecoming.
Krueger spent the first two years of the Obama administration as an assistant treasury secretary for economic policy.
More specifically, Kruger is one of the geniuses behind several of Obama's previous failed attempts to boost jobs and the economy. One was the colossal exercise in stupidity known as the Car Allowance Rebate System (CARS). The other waste of time known as the Hiring Incentives to Restore Employment (HIRE) Act of 2010.
You remember CARS, that nifty little program of 2009 more widely known as Cash for Clunkers, which encouraged owners of primarily American made "high polluting automobiles" by offering $3,500 and $4,500 vouchers to "offset the purchase or lease price for a qualifying passenger automobile or truck" made mostly in Japan?
As the program states, the purpose of the initiative was to "accelerate motor fuel savings nationwide and provide incentives to registered owners of high polluting automobiles to replace such automobiles with new fuel efficient and less polluting automobiles."
Dealerships who accepted those evil less efficient higher polluting cars as trade-ins had to swear that the vehicles would be "crushed or shredded, or transferred to an entity that will ensure it will be crushed or shredded, within the period of the Program; and (2) has not been, and will not be, sold, leased, exchanged, or otherwise disposed of for use as an automobile in the United States or in any other country."
Furthermore, according to the Star Tribune, "Normally when salvage yards take in a scrapped car, they pull out the engine and any other highly valuable parts, then lay the car out in the yard for sometimes over a year, until its less-valuable parts are all stripped and it's finally crushed and sold for scrap metal."
Not only did the "cash for clunkers" program, junk that system "with tight federal restrictions that complicate the process while speeding up the timeline for salvage yards" it squeezed even the smallest of profits from the pockets of scrap yard owners who expected to cash in on the cash-for-clunkers program.
In other words, cash for clunkers was a green program that took evil, "less efficient/more polluting" cars off the roads and dumped them forever in a landfill or scrap yard.
According to the official CARS website (curiously set to be shut down on Sept. 30 even though the program will run through Dec.), "the CARS program achieved the objectives set out by Congress to increase automotive sales and aid the environment" and "the nation's economy benefited immediately from this stimulus program, which caused a distinct upward movement in GDP and created or saved tens of thousands of jobs at a very critical time in the recovery process."
That's funny. According to Business Insider the only thing the program created was a temporary distortion in the U.S. economic figures "in an unsustainable fashion" and a report by the Bureau of Labor Statistics covering that time frame the motor vehicles and parts manufacturers actually shed 15,000 jobs.
In his article, "Cash For Clunkers Postmortem: Epic Fail," Rick Davis, of Consumer Metrics Institute studied the impact of consumer oriented stimulus programs between June 2009 and May 2010. After collecting and crunching numbers Mr. Davis concluded that "if the intent of Congress was to use U.S. taxpayer funds to get clunkers off the road, the stimulus package was a huge success." However, if the intent of the program was "to create sustained growth in the automotive sector of the economy," the results have been far less successful" and "might even have been counterproductive."
Additionally, while Davis conceded that the program "created the glaringly obvious upward demand blip" the blip "withered and died when the spigot of Federal stimulus was turned off" leaving "no signs of organic or structural recovery."
In other words, it didn't work ... at all.
Alan Kruger's next clever effort was the Hiring Incentives to Restore Employment (HIRE) Act. That was the Obama administration's 2010 failed effort to promote job growth.
According to the official website the idea behind HIRE was to offer "new tax incentives for businesses to hire unemployed workers." A need to clarify that the program was designed to inspire employers to hire the "unemployed" speaks for itself.
Essentially, the HIRE Act proposed the brilliant strategy of offering a temporary suspension on the employer share of the Social Security Old-Age, Survivors, and Disability Insurance (OASDI) Trust Fund payroll tax as an incentive to hire a new employee.
Unfortunately, the amount of the "incentive" to hire a new employee equals far less than the expense of actually hiring a new employee.
According to John Ligon, economist and current policy analyst for the Heritage Foundation, "a qualified employer hiring a worker earning $10,000 in annual wages would receive a wage subsidy roughly equal to $52 per month; this amount would equal roughly $264 per month for a worker earning $51,000 in annual wages."
According to the U.S. Bureau of Labor Statistics, the average direct cost for an employer to hire a new employee is $57,967.88.
"The Hiring Incentives to Restore Employment (HIRE) Act could be considered an excellent piece of legislation," John Ligon concluded. "If, that is, the goal of the legislation was to ensure massive Social Security deficits without creating a single new job."
Kruger was also one of the gifted minds behind two other Obama failures; the Small Business Lending Fund and Build America Bonds.
When it passed in September 2010, the Small Business Jobs Act set aside a $30 billion fund designed for smaller banks, those with less than $10 billion in assets, to lend to small business owners.
Almost one year later, not one single dollar had been dispersed by the Treasury Department, and only about one-third of the total funds available to the banks had been requested.
The success of Build America Bonds is questionable at best.
Build America Bonds (BABs) was smuggled in as part of the They are supposed to help states and cities that are short of cash build roads, schools and bridges," Julie Creswell of the New York Times explained in 2010 but the biggest benefits were made by Wall Street banks who charged larger commissions for BABs than for normal municipal bonds "which actually increased the cost to states and cities."
A report conducted by Jordan Eizenga and Seth Hanlon, for the liberal Center for American Progress asserts that Build America Bonds are better than tax-exempt bonds "based on the inefficient nature of tax-exempt debt for the federal government."
In other words, the only thing that makes Build America Bonds better is that the government can tax them.
Therefore, Eizenga and Hanlon think it would be a good idea to impose "a federal cap on tax-exempt bonds" in an effort to "gradually wean investors and issuers off" of the traditional muni market and "toward a permanent, expanded Build America Bond market."
Hmmm ... sounds a lot like the purpose behind Obamacare , to "gradually wean" Americans off of private insurance policies and onto the government controlled plan.
If confirmed by the Senate, Krueger would replace previous Council of Economic Advisers chair Austan Goolsbee, who left the administration earlier this month. Treasury Secretary Timothy Geithner is now the only one from Obama's original economics team who has yet to jump the sinking ship.
Oh, and one last thought. If the president is just now "rounding out" his economic team does this mean he doesn't even have a real jobs plan to tell us about in September and now we'll have to put our faith in Alan "Cash for Clunkers/HIRE Act/ Small Business Lending Fund and Build America Bonds" Kruger to come up with one?
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