Don't Be Fooled by the Unemployment Rate Dropping

This morning we received news that the unemployment rate unexpectedly dropped to 9.7%. Hooray!...... right? Not exactly. Actually, not at all. The economy lost 20,000 jobs last month, but the unemployment rate fell to 9.7% at the same time. If you're having trouble understanding how the unemployment rate falls when jobs are lost you're probably not alone. All you need to know is how the unemployment rate is calculated. The equation is:

Unemployment Rate = (Unemployed Workers / Total Labor Force) * 100

The "Total Labor Force" is defined as people of working age and under retirement age who are actively participating in the workforce or actively looking for work. If you look at the equation you can quickly understand that two factors can cause the unemployment rate to fluctuate.

1. The economy adds jobs, therefore resulting in fewer unemployed workers. See below:

a. Let's say the unemployment rate is 10%. The equation goes as follows:

10% = 10 unemployed workers / 100 people in labor force * 100

b. Now let's say that the economy adds two jobs, resulting in two people getting a job and the unemployment rate drops to 8%.

8% = 8 unemployed workers / 100 people in labor force * 100

2. People who are unemployed stop looking for work, therefore resulting in a smaller labor force. Yes, the unemployment rate drops, but not because people have found jobs. Again, see below:

a. Again, start with a 10% unemployment rate.

10% = 10 unemployed workers / 100 people in labor force * 100

b. Now let's say two of those people just gave up looking for work, causing a drop in the unemployment rate.

8.2% = 8 unemployed workers / 98 people in labor force * 100

Now you can see why the drop in the unemployment rate is so incredibly misleading. It is not an indication that the economy is recovering. It is an indication that people are simply giving up on the job search, because they aren't finding jobs! That's not exactly the change in unemployment that we're looking for. The bottom line is that there is so much political uncertainty these days that employers are afraid to hire. And by "employers" I'm really talking about small businesses. They are the economic engine that truly drives the economy, and they create most of the jobs in this country. When a business owner wants to hire someone he or she sits down and calculates how much it will cost to employ that person (salary, benefits, payroll taxes etc.). Business owners cannot make that calculation right now, because they don't know what to calculate. Are they going to have to pay a healthcare payroll tax? Are they going to have to pay a higher income tax? They don't know, and until they can predict their costs with a reasonable amount of certainty they are not going to hire anyone.

Our president and Congress need to understand this. They need to begin to understand that government spending does not create jobs, because government does not and cannot create wealth. In order for the government to create a job it must first take a dollar (through taxes) from someone and then give it to someone else. Zero value is added to either party. On the other hand, when money exchanges hands in private business value is added, and both parties gain something from the exchange. That is how our economy will grow. That is how our economy will add jobs, and that is how the unemployment rate will drop in a positive way. Until then, the drops we will see will be those of despair, people throwing up their hands saying "I give up."

A New Jobs Program...... Really?

I have heard quite a few reports lately about Obama mulling over using repaid TARP money to fund a new jobs program. God forbid we actually use it to pay down our debt, since we had to borrow the money in the first place. This one started with President Bush who said "I've abandoned free market principles to save the free market system," in reference to his decision to implement the TARP. I'm not going to harp on this poor decision that Bush made, even though I could, because Bush isn't the president any longer. Obama is the president, and he has the power to chart a new course. Unfortunately, he is taking the deficits that the Republicans racked up during the Bush years and injecting levels of steroids far worse than all of the MLB players combined!

We have already had the $787 billion "stimulus" plan, billed as an effort to jumpstart the economy and create jobs, and on that basis it has been an overwhelming failure. So what is Obama going to do? He's going to waste even more money in the name of creating jobs. I have already explained that he is not creating jobs, only work. People need jobs, not work. All of this is old news, however. The main point I want to make is that it is downright illegal for Obama to use the TARP funds for a new jobs program. That money was appropriated by Congress for one purpose, to purchase bad assets from banks. Going back to the Bush Administration, they didn't even use the money for that purpose. Hank Paulson, the Treasury Secretary at the time, ended up using it to buy equity stakes in the banks. While this may have served the same purpose of aiding the banks and been a better tactical decision, the money was not appropriated for that specific reason, and he should have asked Congress to pass a new law. Now Obama wants to take the money and use it for a different purpose entirely.

Here is the danger in this situation. We have a government that is printing obscene amounts of money (love him or hate him, look at this chart that Glenn Beck walks through here for a good illustration). We have a national deficit that is out of control. Meanwhile, we have tens of billions of TARP dollars (that are part of the deficit) being repaid to the government, and what are we going to do with it? Spend it..... illegally.

Nope, we're not going to pay down the deficit like we should. We are going to do exactly what myself and many others feared we would do once the money was repaid: waste it away on some ineffective program. The bottom line is that this sets a very dangerous precedent (actually, the precedent has already been set, because the government has done this before) of completely ignoring our laws. However, we've already been doing that for years by trampling on the Constitution. Clearly the Speaker of the House doesn't care, as she aptly demonstrated when asked about the constitutionality of the health care legislation. If we are going to pass a law saying one thing and then do an entirely different thing then why pass laws at all? Let's just put all of the money in the Treasury in one big room and let members of Congress and the President grab what they want. Wait, it pretty much works that way already. Obama, while he and Congress have the chance to truly change things, is just making the situation worse.

Undermining Our Soldiers

Do you remember the 4 Blackwater security guards who were ambushed and killed in Iraq in 2004? Insurgents burned the guards' bodies, dragged them through Fallujah and then hung two of the bodies from a bridge. Well, the alleged mastermind behind the attack, Ahmed Hashim Abed, has recently been captured by Navy SEALs. Fantastic, right? Not so much. Three of the SEALs who helped capture Ahmed Hashim Abed now face assault charges, because Abed claims that he was punched by one of them. He has a bloody lip as evidence.

This is beyond infuriating. Honestly, it is beyond anything that I could have imagined would happen within our military. These guys risk their lives to capture a high profile target in Iraq, a terrorist responsible for killing four Americans, burning their bodies and hanging two of them from a bridge, and now the SEALs are on trial, because the guy has a bloody lip. I don't even know where to start with this one. We, The United States of America, now go so far out of our way to appease organizations like the U.N., countries who might get offended at the slightest slip up, human rights organizations etc. that we have completely undermined and made a complete joke out of ourselves, our military and anything we try to do. We're sending the message, "You can shoot us, burn our bodies, mutilate, humiliate and do any number of inhumane things to us, but don't worry. We won't hurt you!" No word in the English language can even begin to describe the absurdity of this situation.

The main reverberation that I fear we will see from this fiasco is that soldiers will now think twice before doing so much as laying a hand on or even breathing near the enemy. Heaven forbid the terrorist catch a cold from one of our soldiers! Future captures might go like this:

Soldier 1: "We have a visual on the target. He is in the building."

Soldier 2: "Okay, we are go for capture."

Soldier 1: "Move in!"

[Lots of yelling and screaming as the soldiers storm the building]

Soldier 1: "There he is! Objective Amber [the target] is in sight! He's running up the stairs!"

[Soldiers run up stairs..... shots are fired]

Soldier 2: "Get on the ground, ON THE GROUND!!! HANDS ON YOUR HEAD!"

[Objective Amber is now lying on his stomach with his hands on his head]

Soldier 1: "We have the target."

Soldier 2 [to Objective Amber]: "Sir, are you comfortable? Are you offended in any way? We want to make sure you feel okay before we put the handcuffs on you, so you just let us know if anything hurts now, okay?"

Soldier 1: "Why don't we let him sit up? Being on his stomach probably hurts a bit. We can't let him get scratched or something. Don't wanna end up like those SEALs, ya know?"

If you think something like this will not happen, think again. Yes, I'm exaggerating a bit with the "are you comfortable" comment, but soldiers will certainly think twice before taking certain actions against the enemy. This could cost lives. Our military is out there to protect us. Why aren't we protecting them? Instead we are protecting our enemies from fat lips. Unbelievable.

Only in Congress...

Last week Senate Majority Leader Harry Reid revealed the Senate's version of a health care reform bill. The bill is estimated to cost $849 billion and reduce the federal budget deficit by $127 billion over ten years. Anyone else see a problem with this? Somehow there are folks in Congress that think they can save $127 billion by spending $849 billion. For those of you who might not be able to relate to the incomprehensible, not-even-close-to-human logic of Congress, picture this...... you decided last January that you are going to save money in 2009. Black Friday is coming up, and you want to take advantage of some sales. You find some great 50% off sales and end up spending $10,000. You then claim that you have saved $10,000 in 2009 (remember, everything was 50% off, so you would have spent $20,000 without the sales)! Congratulations, you have accomplished your goal for 2009! But wait, your bank account does not have $10,000 more in it. It has $10K less! But I thought you were saving? Oh wait, you subscribe to the Congressional Savings Plan, the one where you claim to save money by spending it.

This is Congressional Math. If you really want to save $127 billion, REDUCE SPENDING BY $127 BILLION! It's really quite simple. There are 3rd graders in this country that can figure that out, but somehow Harry Reid and other members of Congress cannot. Actually, the truth is that they know exactly what they are doing. They aren't trying to save money at all. The real purpose is power. They simply want to gain power over our healthcare system under the guise of fiscal responsibility, and they are arrogant enough to think we, the American people, are stupid enough to buy their pitches. Oh, and the $849 billion total cost estimate is completely bogus. The true cost is about $2.5 trillion. You did read that correctly, by the way.... $2.5 TRILLION! Not $849 billion....... $2,500,000,000,000 (yeah, that's a lot of zeroes!)!! This is accomplished through accounting gimmicks hidden inside the bill combined with conveniently excluding certain spending matters from the bill. For example, the bill pushes $25 billion worth of spending on to the states, therefore, it is not counted in the CBO's estimate. That's like borrowing $250 from a friend but telling him/her that you don't owe the money, because your parents are going to pay it.

The things that some people are trying to pull in Congress are beyond ridiculous. None of what they are doing makes any logical or mathematical sense. This explains Obama and the Democrats' falling poll numbers. The fact is that people aren't stupid, and they are speaking out. It doesn't take a genius to figure out that spending $849 billion does not save money. Even if they were saving money, they're talking about reducing the federal budget deficit by $127 billion over ten years. That might sound significant until you understand what the budget deficit is projected to be over that time period. As it stands now, the CBO estimates that the budget deficit from 2010-2019 will be $7.137 trillion. $127 billion is a measly 1.78% of that. Add that $7+ trillion to the current national debt, and you get $19 trillion. Since Harry Reid and the Democrats plan on "saving" us $127 billion by spending $849 billion (actually $2.5 trillion) our national deficit will be .67% lower than if they hadn't spent the money. What would we do without them? Only in Congress does this math work.

Health Insurance Profits: The Comments

I get comments on almost every post, but one post in particular gets at least a comment or two per week. Health Insurance Profits has sparked some serious outrage from some people, many of whom think that the health insurance companies should not be allowed to make profits and a few who claim that health insurance companies "have no legitimate claim to existence." Often times I want to respond to these people directly, but most people who disagree with me post anonymously. I find this cowardly. If you really want to open up a dialogue and you truly believe in your statements at least put a name with them. What I will do over the next week or so is share with you some of the comments that stand out to me. I will also respond to them as if the people who wrote them had the courage and enough confidence in their arguments to actually put their names on them. Here goes....

Comment #1: "Your being a "real conservative" has biased your article before you even typed the first letter. Explain this, how does politics and profit fit into the health and well being of citizens?? How are going to explain your "conservative" leanings when one of your family or friends is without insurance and becomes sick and can't afford to pay the medical bills? Are you going to tell them, it's okay because the insurance company is not making that much by way of "profit margin"?? You need to do some more growing up son and realize that the health care debate isn't about profit or what political party you follow, it's about people living or dying because of what they can and can't afford when it comes to health care."

My Response: Thank you for your comment and thank you for reading. I find it interesting that your perception of me being a "real conservative" makes you think that I am the one who is biased. Your assertion that my political leanings have anything to do with this issue at all is amusing. The truth is that the roots of my beliefs are based on fact, not political ideology. "Beliefs" is actually the wrong word to use here. Facts are based on objective reality. Facts are observed. Beliefs are not. You believe that money has no place and serves no purpose in the health care industry. In doing so you ignore the objective reality that healthcare costs money and the money must come from somewhere. Merriam-Webster defines bias as "a personal and sometimes unreasoned judgment." It is not my personal judgment that healthcare costs money. I have simply observed that healthcare costs money and that the laws of economics apply equally to the healthcare industry as they do to any other. It may not be the patient who pays for the care, but that does not make the costs vanish. It is, in fact, your bias that taints your perception of my observation of reality. It is your willful ignorance of the facts that forms the premise of your bias, causes your outrage and evokes your condescending tone. Reality is what drives me. Reality is the basis of all of my writings, and reality is the space in which I choose to live.

You assert that the healthcare debate is not about politics. If you believe that the government should provide healthcare for everyone, that it should be "free," then you undermine your very statement, because government is politics. Are you telling me that Medicare and Medicaid are not driven by politics? Why, then, can I not qualify for Medicaid? I am ineligible for Medicaid, because a politician has deemed me as such. If we move to a single payer system in the United States or we have a public "option" then politicians will be the ones deciding who gets care and who does not. Politicians will set the payment rates for doctors and politicians will tell us which treatments we can and cannot receive. They will do this because healthcare is not free, and when the government is paying the bills the issue at hand is political in nature. This is a fact. You can choose to ignore it, but you will face the consequences of your choice. Eventually, if you get your wish, you will go to the doctor and he or she will recommend a treatment only to have a politician will tell you that you cannot have it. But it's not political, right?

You also asked how profit fits into the health and well being of citizens. To illustrate the necessity or, more accurately, reality, of profits in healthcare let us assume that a hospital takes in $10,000,000 per year in gross revenue. This hospital has decided that it is in the best interest of the people not to make a profit. 75% of their revenue, $7,500,000, goes to pay for utilities, property taxes, hospital gowns, medicines, surgical gloves and all of the other medical supplies necessary to run the hospital. The other 25%, $2,500,000, goes to pay the salaries and benefits of the doctors, nurses, assistants and other employees of the hospital. 75% + 25% = 100%. This hospital has achieved your goal of zero profit. However, the hospital suddenly needs a new X-Ray machine, or maybe they have found out about a new lifesaving surgical procedure that requires an investment in new equipment. Unfortunately, the hospital cannot afford to purchase the X-Ray machine or the new equipment, because they have no money with which to do so. Since they make no profit, every penny in revenue that they take in is spent on taking care of patients. It's okay though, because they are following your desire of keeping profits out of the healthcare picture. People can no longer get X-Rays at this hospital, but at least the hospital is not making a profit.

The same profit illustration could be made for device manufacturers, pharmaceutical companies and insurance firms. I agree with you that people living and dying because of what they can and cannot afford is a component of the root of the issue. Reality is the other component. Handing over healthcare to the government does not make it free, nor does it remove you and me from the responsibility of its costs. The healthcare industry is not independent of the laws of economics. The government does not make money on its own. It only seizes money from us to pay for the services that it provides (many of which are perfectly legitimate). The government pays for nothing. You and I, through taxes, provide the government with every penny that it spends. The belief that government spending allows us to keep the dollars in our wallets is nothing more than a belief.

You can go next door and ask your neighbor to feed your family for a while. You will then pocket the money you would have spent on food, but eventually your neighbor will run out of money. You will then have to find another neighbor to feed you. There will come a time, however, when you will have emptied all of your neighbors' pantries. They will not be able to feed themselves, having spent their money on your food, and they will turn to you as the only one who has money to buy food since you have been mooching off of them for so long. Your coffers will quickly be depleted as well. The objective reality is that when the government spends more, the government must seize more. We will pay for healthcare in one way or another. You can choose to ignore reality, but you will soon find that what you desire simply does not exist.

Who Knew It Was So Easy?

President Obama, today, was awarded the Nobel Peace Prize. Yes, that's right. The Norwegian Nobel Committee awarded Barack Obama the Nobel Peace Prize today for "his extraordinary efforts to strengthen international diplomacy and cooperation between peoples." It seems as if the criteria for winning the prize have changed. No longer must one actually accomplish anything so long as a person exerts "extraordinary efforts" to do something.

Tomorrow, I start work on my teleportation machine, an instant food multiplying laser to feed the hungry and a cure for cancer! I will work extraordinarily hard over the next year, harder than anyone else, to ensure that I win the Nobel Prize in something next year. It shouldn't matter that I have a degree in marketing, no physics or medical background whatsoever and I work in the advertising industry. President Obama has shown us that all that is needed to win the Noble Prize is "extraordinary efforts," and that's what I will give.

I really try hard to stay away from the satirical and stick to the facts, but I just can't help it right now, because this is so laughable. The man has accomplished nothing! No, I am not just being an "Obama hater" or a "racist" by saying that. It's true, and I can back it up. On to the facts....

January 22, 2009: Obama's signs an executive order to close the Guantanamo Bay detention facility. Is it closed? No. Failure #1.

February 17, 2009: Obama signs the "stimulus package" into law. Obama promised that, with the stimulus package, the unemployment rate would not rise above 8%. The unemployment rate now stands at 9.8%. Failure #2.

April 5, 2009: North Korea conducts a ballistic missile test despite the pleadings of world leaders, including President Obama, not to do so. Failure #3.

June 2009: Iran conducts fraudulent elections, attempts to silence protestors and takes other oppresive measures against its own people. President Obama stands by and largely does nothing save the utterance of a few words telling Iran to stop. Did this "strengthen international diplomacy"? No. Failure #4.

June 2009: The Honduran Supreme Court orders the military to arrest Honduran President Manuel Zelaya for attempting to undermine democracy and violate their nation's constitution. President Obama, and his administration has continually backed Zelaya ever since, working to get him reinstated as president of Honduras. Meanwhile, the Honduran Congress is busy setting up democratic elections to elect their next president, per their constitution. Failure #5.

Summer 2009: President Obama attempts to get health care legislation passed before the August Congressional recess. It's October, and the legislation still hasn't passed. Failure #6.

I could go on, but this is getting boring. The man has not accomplished anything, domestically or internationally. Kudos to him for winning the prize and giving some nice speeches, but there are a lot of people out there who can give speeches. There are very few who can actually back them up and accomplish things. President Obama is yet to prove that he is one of these few individuals. The world is full of great intentions. However, if intention equals accomplishment then our world should be free of war, hunger, disease, murder, abuse, etc. There is one key thing missing from this equation: reality.

One cannot ignore reality, and it seems as if the Nobel Committee is trying to do just that. The intentions are great, for sure. Few people, if any, want war, hunger, disease etc. The reality of the situation is that they exist. Evil exists in the world, and it must be dealt with accordingly.

Oh, and one little known fact is that the nominations for the Nobel Prize are due on February 1st of each year. President Obama had been in office for eleven days at that point. What had he accomplished before February 1, 2009? What had he done to "to strengthen international diplomacy and cooperation between peoples," at that point? The answer is absolutely nothing. He was a community organizer in Chicago, an Illinois state legislator and a United States Senator. I cannot think of a single international accomplishment that could have been put on his application for nomination prior to February 1, 2009.

According to Nobelprize.org, the Nobel Prizes have been "honoring men and women from all corners of the globe for outstanding achievements." No longer is the award about achievement. President Obama has clearly demonstrated this. Anyone who receives the award from this point forward must live with the reality that this prestegious award now requires nothing but setting aside reality and thinking good thoughts. Maybe we should just rename it the Nobel Good Intentions Prize.

Your Tax Dollars at Work!

First of all, sorry for the lack of posts lately. I've been pretty busy, and I haven't had the time to do the research that I would like to put into this blog. I have opted not to post rather than just throw up thoughts and commentary.

Recently, the Heritage Foundation posted a list of "50 Examples of Government Waste." Some of these examples are absolutely absurd. Some of the highlights include:

#7 Washington will spend $2.6 million training Chinese prostitutes to drink more responsibly on the job.

#15 The refusal of many federal employees to fly coach costs taxpayers $146 million annually in flight upgrades.

#23 Fraud related to Hurricane Katrina spending is estimated to top $2 billion. In addition, debit cards provided to hurricane victims were used to pay for Caribbean vacations, NFL tickets, Dom Perignon champagne, "Girls Gone Wild" videos, and at least one sex change operation.

#24 Auditors discovered that 900,000 of the 2.5 million recipients of emergency Katrina assistance provided false names, addresses, or Social Security numbers or submitted multiple applications.

#49 The Conservation Reserve program pays farmers $2 billion annually not to farm their land.

What you just read is only 1/10th of the examples provided by The Heritage Foundation. There are 45 more in the article, guaranteed to make you take a second look at the deductions section of your paycheck. Taking things a step further, these examples are only a small portion of the total waste and abuse of our money that takes place in Washington. Also note that they are almost exclusively dealing with the federal government here. Tack on state and local waste, and you've got hundreds of billions of dollars that belong to you and me being wasted every year.

Do you really think a government takeover of our healthcare system will reduce costs?