The IUSB Vision Weblog

The way to crush the middle class is to grind them between the millstones of taxation and inflation. – Vladimir Lenin

Economic News Roundup II – Breaking: Obama Reverses on Outsourcing!

Posted by iusbvision on November 14, 2010

Please examine our “Summer of Recovery” and “ObamaCare” roundup posts!

UPDATEVideo: Sarah Palin shows off her expertise in monetary policy and commodities markets

Brit Hume: How Democrats Undermined Business Confidence. Federal Reserve Revises Economic Forcast Downward

New – China raises US debt holdings as others offload – LINK

New – Soros: China has better functioning government than U.S. –  LINK George Soros is the Democratic Party’s top sugar daddy.

CATO Institute Debunks White House Pro Tax Increase Propaganda

Dan Mitchell of the CATO Institute:

The White House recently released a video, narrated by Austan Goolsbee of the Council of Economic Advisers, asserting that higher tax rates on the so-called rich would be a good idea.

Since Goolsbee’s video made so many unsubstantiated assertions and was guilty of so many sins of omission, here’s a rebuttal video, narrated by yours truly.

This rebuttal video, incidentally, only scratches the surface. There was not enough time to cite the wealth of data and research showing how higher taxes undermine economic performance. There was not enough time to address some of the additional flaws of class-warfare tax policy. And there was not enough time to show how simple it is to balance the budget without higher taxes.

Given the time constraints, the video highlights three fundamental flaws in Goolsbee’s presentation.

1. The economy is not a fixed pie. Notwithstanding all evidence, there is a near-religious view on the left that the rest of us somehow must have less if a rich person earns more. The video highlights important evidence on income mobility and economic growth.

2. There is a Laffer Curve. Folks on the left assume that higher tax rates have no impact on economic performance. Not surprisingly, there is widespread evidence that taxpayers are very responsive to changes in tax rates. Using IRS data, the video explains what happened with tax collections from the rich during the Reagan years.

3. Keynesianism is wrong. The Obama Administration has a simplistic Keynesian approach to fiscal policy. As such, they only think tax cuts help growth if people rush out and spend the money. Yet this was the same rationale for the failed stimulus, and the video shows how unemployment is far higher than the White House promised.

Pelosi and Reid will convene a lame-duck session next week and taxes will be one of the key issues since the 2001 and 2003 tax cuts will expire at the end of the year without further action. The White House is willing to keep some of those tax cuts, but they want higher tax rates on the rich. Goolsbee’s video shows that the Obama Administration has a very weak argument.

[IUSB Vision Editor Piles On: Indeed the Obama Administration’s approach to economic policy is such an oversimplified approach to an already oversimplified economic theory (Keynesianism) that Goolsbee’s approach to the subject is laughable. I wish I could say that I was exaggerating or wiping my feet on the truth for effect, but to describe his argument as laughable is, if anything, an understatement as the prolonged economic suffering caused by the regulatory uncertainty and flat-lining of the economy are no laughing matter.

Even Obama’s own deficit commission suggested that the top marginal tax rate be drastically cut from the upcoming 39.9% to 23% and with it a deep cut in the corporate tax rate as well. Why? We all know that wealth goes where it is treated well. The worlds capital investment (and this means jobs) are more and more going to China and other places where the cost of government isn’t punitive. When the government starts whacking people and businesses at 40% people will hide their money or simply park it somewhere where it will not be taxed up the wazoo (like investing it in China).  The deficit commission has rightly concluded that if we have a tax rate that promotes taking on economic activity instead of punishing it the result will be more dollars flowing into the Treasury, and of course they are correct.

As a result of punitive state policy in California 153 businesses have left California and moved to Texas from last year.

The deficit commission also asked for a greatly simplified and flatter tax code as the cost of compliance is in itself a huge tax. The tax code is rife with corrupt paybacks and favors that pick winners and losers and prevents a level and open playing field.]

Factory Jobs Fell 24% Since 1998 – LINK

Heritage Foundation – How to cut 343 Billion from the Federal Government – LINK (We don’t agree with all of these but most of them)

AMA: Physicians Outraged at Today’s Steep Medicare Cut – LINK

American Thinker: The Bio-fuels Scam – LINK

The Hill:  Spending up 84% under Obama = LINK

Debt Has Increased $5 Trillion Since Speaker Pelosi Vowed, ‘No New Deficit Spending’ – CNSnews

Yahoo Finance: New York state manufacturing plunges – LINK What? How can this be in the liberal progressive mecca?…

UK Telegraph:  China may be bigger economy than US within two years – LINK

The Blaze: Professor Exposes Federally Funded ‘Revisionist’ History Conference – LINK

Malkin: Obama job-killlers Salazar, Browner lied about drilling ban rationale – LINK

Morrissey: Personal income drops for first time in 14 months, spending slows. Consumer spending drops – Reuters blows it. – LINK

CNBC – Secret Walmart Survey Shows Inflation Already Here

American Business Analytics & Research tells the Salem-News that if the government still calculated inflation the way it was calculated during Carter and Reagan (changed under Clinton) the inflation rate would be 10%.

Wall Street Journal: “Food Sellers Grit Teeth, Raise PricesPackagers and Supermarkets Pressured to Pass Along Rising Costs, Even as Consumers Pinch Pennies.”

Sarah Palin comments on inflation.

American Thinker: Pro-ObamaCare Group – CBO Underestimated Costs of new law by 600%

Breaking: Obama reverses on outsourcing; tells Indian audience that outsourcing out high paying IT jobs is good and opponents are proponents of stereotyping.

Via Times of India and Tammy Bruce:
BANGALORE: The resilient Indian IT industry on Wednesday lauded US President Barack Obama for terming those against outsourcing as holding onto old stereotypes and for committing to do away with protectionism.

“Obama did a great job for our industry by terming them (anti-outsourcing lobbies) as stereotypes. I think his administration will also do a great job in terms of changing those stereotypes,” IT industry lobby Nasscom president Som Mittal told reporters here.

For positioning India as the market for US businesses and declaring that India was no longer emerging but had emerged, the US administration’s efforts to change the stereotypes would get support of the industry, Mittal said.

“I think we too have to do our job to change those stereotypes and ensure there is a much larger community that understands our business model that we are part of the solution rather than creating the problem itself,” Mittal said on the margins of Nasscom’s annual Product Conclave & Expo 2010.

Expressing the industry’s satisfaction over the outsourcing issue figuring at the discussions between Obama and Prime Minister Manmohan Singh Monday, Mittal said that both the governments were committed to do away with protectionism.

Tammy Bruce:

They say travel broadens you. Apparently so. Obama’s trip to India seems to have changed his thinking about outsourcing.

Democrats have been demonizing outsourcing at least since John Kerry’s campaign in 2004. We sure heard a lot from Democrats about the issue this election year. So much so that many Indian-Americans were motivated to raise money for Republicans.

The US midterm elections: India, China and outsourcing become attack ad topics

  • On the East End of Long Island in New York, Democratic Rep. Tim Bishop is accusing GOP candidate Randy Altschuler of shipping American jobs to India who in turn is saying that he created hundreds of jobs in the USA.
  • In the Connecticut Senate race, Democrat Richard Blumenthal is accusing his challenger, former wrestling CEO Linda McMahon, that her company had profited from manufacturing that was done in foreign countries.
  • In the Arkansas Senate race, Democratic Sen. Blanche Lincoln’s supporters ran attack ads against Bill Halter during the primary that caricatured Indians.
  • In Illinois, Democratic Rep. Phil Hare is running attack ads against Republican Bobby Schilling that flatly states: “Bobby Schilling: Good for India and China.” The ads then state that be is focused on creating jobs in places like India and China.
  • In Ohio, Democratic Rep. Zack Space is accusing his Republican opponent, Bob Gibbs, of supporting free-trade deals that sent jobs to China by running attack ads with a giant dragon while a narrator sarcastically thanks the Republican by commenting: “As they say in China, xie xie Mr. Gibbs!”
  • In California, Democratic Sen. Barbara Boxer is running ads against her opponent, Carly Fiona [sic], the former CEO of Hewlett-Packard, accusing her of creating thousands of jobs in Shanghai and Bangalore instead of San Jose or Burbank and of proudly stamping her products “Made in China.”

Ohio Governor Strickland, for whom Obama made several campaign trips, went so far as to ban using Ohio public funds for outsourcing by executive order.

Democrats are determined to punish corporations for overseas business operations. As recently as September, Obama was scolding Republicans for favoring outsourcing over the American worker. Less than two months later, Obama is in India saying wonderful things about outsourcing. It’s part of a win-win opportunity. Well, not so much for Obama.

[IUSB Vision Editor’s Note – Tammy Bruce had linked to a YouTube video of Obama’s reversal. Google, who now owns YouTube and is very close to the administration promptly not only banned the video, but also banned the account of the person who posted it. This is yet another in a long string of political censorship at YouTube, which is why we now post our new videos at DailyMotion and Eyeblast.tv.]

Business Insider:

Germany Was Right When It Called Our Financial Policy “Clueless”

It’s never a good thing when another country calls your financial policy clueless. It’s particularly bad if that other country is one of the world’s leading economies, and if it also happens to be right.“With all due respect, U.S. policy is clueless,” German Finance Minister Wolfgang Schaeuble said recently, referring to the Federal Reserve’s decision to throw $600 billion at our sluggish economy.The Fed can create as much money as it likes, but the U.S. economy is presently unable to productively put that money to work. By setting near-zero interest rates, the Fed has established that money in this country has no real value. We give it to the banks for nothing, and the banks lend it back to the deficit-ridden U.S. Treasury for almost nothing. The result is a guaranteed profit for the banks, but no incentive to lend cash to creative entrepreneurs or expanding businesses.

Yahoo Finance:

18 Iconic Products That America Doesn’t Make Anymore

Rawlings baseballs

Last production date: 1969

Rawlings is the official supplier of baseballs to Major League Baseball. The St. Louis shop was founded in 1887 by George and Alfred Rawlings. In 1969 the brothers moved the baseball-manufacturing plant from Puerto Rico to Haiti and then later to Costa Rica.

Etch a Sketch

Last production date: 2000

Etch A Sketch, an iconic American toy since the 1960s, used to be produced in Bryan, Ohio, a small town of 8,000. Then in Dec. 2000, toymaker Ohio Art decided to move production to Shenzhen, China.

Converse shoes

Last production date: 2001

Marquis M. Converse opened Converse Rubber Show Company in Massachusetts in 1908. Chuck Taylors– named after All American high school basketball player Chuck Taylor– began selling in 1918 as the show eventually produced an industry record of over 550 million pairs by 1997. But in 2001 sales were on the decline and the U.S. factory closed. Now Chuck Taylors are made in Indonesia.

Stainless steel rebar

Last production date: circa 2001

Many forms of this basic steel product are not available domestically. Multiple waivers to the Buy America Act have allowed purchase of rebar internationally.

Note: The Buy America Act requires government mass transportation spending to use American products.

Dress shirts*

Last production date: Oct. 2002

The last major shirt factory in America closed in October 2002, according to NYT. C.F. Hathaway’s Maine factory had been producing shirts since 1837.

*We know there are other shirt manufacturers in America. They do not produce in large quantities or supply major brands.

Mattel toys

Last production date: 2002

The largest toy company in the world closed their last American factory in 2002. Mattel, headquartered in California, produces 65 percent of their products in China as of August 2007.

Minivans

Last production date: circa 2003

A waiver to the Buy America Act permitted an American producer of wheel-chair accessible minivans to purchase Canadian chassis for use in government contracts, because no chassis were available from the United States. The waiver specified: “General Motors and Chrysler minivan chassis, including those used on the Chevrolet Uplander, Pontiac Montana, Buick Terraza, Saturn Relay, Chrysler Town & Country, and Dodge Grand Caravan, are no longer manufactured in the United States.”

Note: The Buy America Act requires government mass transportation spending to use American products.

Vending machines

Last production date: circa 2003

You know that thing you put bills into on a vending machine? It isn’t made in America, according to a waiver to the Buy America Act.

Neither is the coin dispenser, according to this federal waiver.

Note: The Buy America Act requires government mass transportation spending to use American products.

Levi jeans

Last production date: Dec. 2003

Levi Strauss & Co. shut down all its American operations and outsourced  production to Latin America and Asia in Dec. 2003. The company’s denim products have been an iconic American product for 150 years.

Radio Flyer’s Red Wagon

Last production date: March 2004

The little red wagon has been an iconic image of America for years. But once Radio Flyer decided its Chicago plant was too expensive, it began producing most products, including the red wagon, in China.

Televisions

Last production date: Oct. 2004

Five Rivers Electronic Innovations was the last American owned TV color maker in the US. The Tennessee company used LCoS (liquid crystal on silicon) technology to produce televisions for Philips Electronics. But after Philips decided to stop selling TVs with LCoS, Five Rivers eventually filed for Chapter 11 bankruptcy protection in Oct. 2004. As part of its reorganization plan, the company stopped manufacturing TVs.

Now there are ZERO televisions made in America, according to Business Week.

Cell phones

Last production date: circa 2007

Of the 1.2 billion cell phones sold worldwide in 2008, NOT ONE was made in America, according to Manufacturing & Technology publisher Richard McCormick.

After studying the websites of cell phone companies, we could not identify a single phone that was not manufactured primarily overseas.

Railroads (parts including manganese turnout castings, U69 guard bars, LV braces and weld kits)

Last production date: circa 2008

Here’s another standout from dozens of waivers to the Buy America Act: railroad turnouts and weld kits.

Manganese turnout castings are used to widen railroad tracks, and they were used to build our once-great railroad system. U69 guard bars, LV braces and Weld Kits, along with 22 mm Industrial steel chain are basic items that were certifiably not available in the US.

Note: The Buy America Act requires government mass transportation spending to use American products.

Dell computers

Last production date: Jan. 2010

In January 2010, Dell closed its North Carolina PC factory, its last large U.S. plant. Analysts said Dell would be outsourcing work to Asian manufacturers in an attempt to catch up with the rest of the industry, said analyst Ashok Kumar.

Canned sardines

Last production date: April 2010

Stinson Seafood plant, the last sardine cannery in Maine and the U.S., shut down in April. The first U.S. sardine cannery opened in Maine in 1875, but since the demand for the small, oily fish declined, more canneries closed shop.

Pontiac cars

Last production date: May 2010

The last Pontiac was produced last May. The brand was formally killed on Halloween, as GM contracts Pontiac dealerships expired.

The 84-year-old GM brand was famous for muscle cars.

Forks, spoons, and knives

Last production date: June 2010

The last flatware factory in the US closed last summer. Sherrill Manufacturing bought Oneida Ltd. in 2005, but shut down its fork & knife operations due to the tough economy. CEO Greg Owens says his company may resume production “when the general economic climate improves and as Sherrill Manufacturing is able to put itself back on its feet and recapitalize and regroup.”

Incandescent light bulb

Last production date: Sept. 2010

The incandescent light bulb (invented by Thomas Edison) has been phased out.

Our last major factory that made incandescent light bulbs closed in September 2010. In 2007, Congress passed a measure that will ban incandescents by 2014, prompting GE to close its domestic factory.

Note: A reader pointed out that the Osram/Sylvania Plant in St. Mary’s, Penn. is still producing light bulbs to fill old and international contracts. However, the plant has announced plans to wind down incandescent production.

Beloved Democrat New York Times’ Paul Krugman Advocates Death Panels:

More HERE.

And here is former Lobor Sec. Robert Reich saying the same –

We are going to let the old die because its too expensive and we are going to make the drug companies poor so they cant innovate new drugs so you young people likely will not live much longer than your parents. We have to make the young pay more.

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