Out with the old, in with the new, goes the standard cliche every year about this time.Â No, this is not a reference to Nancy Pelosi’s age, although incoming House Speaker John Boehner is 9 years younger.Â Speaker Boehner does representÂ a new attitude and the resulting optimism is being reflected in the markets and the broader economy.
- Retail sales, Christmas sales, were up significantly over 2009
- Consumer and business confidence for November and December have inched higher
- Jobless numbers are moving downward, evidenced by today’s ADP employment report that suggested 297,000 new private sector jobs were created in December (this is a big number!)
This is not a coincidence.Â This is, however a direct result of increased optimism in the country due to the November election and subsequent Republican control of the House.Â It is a direct result of Congress extending the Bush tax cuts in November.Â It is a direct result of the repudiation of the Obama/Reid/Pelosi economic agenda.Â Republicans have a huge opportunity to make the economy and employmentÂ the primary issue in 2011.Â In the words of that great philosopher James Carville, “It’s the economy, stupid”.
In addition to repealing the two collosal and horrid pieces of legislation, (ObamaCare and Financial Institutions Reform), Congress needs to deal with several other hangovers from the Pelosi/Reid years.Â First, Julian Assange should be tried and convicted of being the cyber-terrorist that he is, and he needs to be treated like any other terrorist.Â Second, the federal government needs to be starved into submission.Â Follow the model Chris Christie has set in New Jersey.Â Get the unions under control (and with it, the unfunded pension liabilities).Â Finally, any free trade agreements with valued allies and trading partners, such as Colombia and South Korea, should be ratified and signed as soon as possible.
Movement in these directions will reinforce the current optimism prevailing in the country, promote private sector job growth, encourage banks to lend again, and as a result, generate revenues for not only the federal treasury, but state and local governments as well.Â The last two years nearly ruined us as a nation.Â We have an opportunity to correct the damage.Â 2011 is a new year.Â Let’s hope the new Congress can build on it.
The news events of the last few months have certainly put the Obama Administration in a peculiar position.Â The Gulf crisis notwithstanding, most of these events have been created by this president and his staff.
Team Obama went the the G20 Summit in Toronto this weekend to chide the other 19 nations to continue to stimulate their economy through Keynsian economic principles.Â “Not so fast”, said the other countries.Â “We have to make choices, and right now, we choose fiscal solvency and prudence”.Â What a concept!
Passage of the Financial Institutions Reform package was always tenuous, at best, but the death of Senator Robert Byrd over the weekend makes passage more difficult.Â One less Democratic vote means that it’s more likely that Republicans can filibuster this package, and this is a good thing.Â Here’s why:Â Any bill that increases regulation, drives up costs to the consumer, and squeezes financial services companies’ margins will negatively affect the economy.Â The costs of increased regulation always get passed along to the consumer in some way, shape or form.Â Limiting profits also limit tax revenues to the US Treasury in the form of corporate taxes, as well as limiting the taxes paid on dividends.Â Finally, no company will hire if they have to choose between new employees and profitability.Â Profits first, then job growth.
Of course, this Administration believes that more government, and more regulation is better than the alternative.Â Which brings us back to the oil slick in the Gulf of Mexico.Â Government could not solve this problem.Â President Obama’s unwillingnes to recognize this fact, rather, to pin it on the previous Administration, has convinced me that less Washington is the answer, not more.Â Incidentally, government could not solve the Katrina problem either.Â It was private philanthropy, including church-based organizations, that had the greatest impact during the Katrina aftermath.
It would seem that if anything, this Administration, and especially the President, is deliberately trying to keep people from focusing their attention on the economy, jobs and the fact that companies continue to shed them.Â This is preferable to actually implementing policies that will create jobs, stimulate the economy, and generate revenues back to federal, state and local treasuries.
On Friday, the Labor Department will release the non-farm employment numbers for June.Â Consensus estimates suggest that the economy shed 145,000 jobs this month, and if so, that the unemployment rate will rise to 9.8% from 9.7%.Â Look for President Obama to do some if not all of the following:
- Create a diversion
- Blame it on the financial crisis and the previous administration
- Express a need for additional stimulus
Do not expect him to take responsibility, or offer any potential solutions other than those expressed above.Â This will prove to solidify Republican gains in both houses of Congress in November.Â The country wants solutions and for aÂ responsible President.Â It will have to wait another two and a half years.