Surge in Regulations

I was going to title this post ‘regulatory creep’ cause it sounds cool, but when you look at the data, ‘creep’ wholly understates the trend. Surge is a better word.

Seems to me that increasing regulations has to be taking a pretty healthy bite out of the rate of growth (or lack thereof). You’d think that in the midst of such a serious recession, we’d be trimming back on regulations to accelerate growth. But a lot of liberals believe that lack of regulation is what got us into this mess, so we must crank up the regulatory supervision of industry to get back to the right place.

Illustrating the point, one of the commentors on this blog believes we are in an aggressively unbounded period reminiscent of the Robber Baron era of the late 1800’s and early 1900’s. Not sure how that can be believed, but it is.

Here are a few charts.

First, total cost of regulation to private industry is about $1.7T per year – >10% of US GDP. That’s a pile. Source: Competitive Enterprise Institute

Source: Competitive Enterprise Institute

Continue reading Surge in Regulations

Oil sands pipeline approved – energy is the ticket to structural growth

Amazingly, the State Department appears to have actually approved the Keystone XL oil sands pipeline that is supposed to transport crude heavy oil from Canada to the US Gulf Coast. If all goes smoothly, it could be operational by 2013. I can’t imagine that’ll happen, but it would be great if it did.

Here’s a story about it from the New York Times: U.S. Offers Key Support to Canadian Pipeline.

Lots of good sources on this project: State Dept reportTransCanada. Chart below is from the TransCanada website. If you click thru, they have some good info on the phases of the project, etc.

Source: TransCanada

I had not read too much about the details of the permitting process, but had the sense it would get dinged due to environmental concerns and opposition to development. Maybe this gives the necessary juice to get it thru.

Continue reading Oil sands pipeline approved – energy is the ticket to structural growth

Does government need to be even bigger?

Liberals strongly argue that government is not big enough to accomplish what it needs to do. There needs to be more civil servants helping disadvantaged folks. There need to be a lot more regulators keeping a lid on the excesses of corporations.

Intuitively this is not right to me and raises the question: In total, how much are we spending on federal, state, and local government today (and historically)? And if that’s not enough, what would be enough?

I can’t answer the second question, but here’s some data on the first one.

1. Total government spending per household is approximately equal to median income per household (Heritage Foundation). This can’t be good.

2. Total federal, state, and local government spending is currently about 43% of GDP. From 1996 – 2007, it ranged between 35.5% and 38.8% of GDP. One might explain the spike in recent years totally to the slowing economy – and that’s part of it, but if you look at Obama’s budgets, the trend continues regardless due to a permanent increase at the federal level. (USGovernmentSpending.com)

3. US is rapidly catching up to the OECD average spend as a percentage of GDP. Liberals will probably applaud this, but to me it is not a desirable direction to go. Not like it will rain misery down upon us, but it surely leads to slower growth and less prosperity for all. (Cato Institute)

Great government budget charts

Came upon a fantastic set of charts about the federal government budget published by The Heritage Foundation. It touches on state and local spending, too, but the focus is federal.

Heritage Foundation Budget Charts.

I love seeing data like this. It’s easier to understand and it grounds the conversation.

There are any number of excellent charts. Here are a few of the most interesting ones to me.

This next one is amazing to me: Total government spending per household is almost equal to median income per household. Geez, that’s whacked.

Joe Nocera supports Boeing!

After castigating the Tea Party in the most ridiculous terms a few weeks ago (Tea Party’s War on America), Joe Nocera has something useful to say in today’s column about the ridiculous handling of the new Boeing plant in South Carolina.

Credit: Earl Wilson/The New York Times

Of all the lugheaded things the Obama administration has done in the way of regulation, this has to be one of the most obvious and most obviously hurtful to the economy. It is absurd that filing was even made by the NLRB, much less that they have pursued it.

As Nocera says:

“The law, to be sure, forbids a company from retaliating against a union. But the word “retaliation” suggests direct payback — a company shutting down a factory after a strike, for instance. Boeing did nothing like that. It not only hasn’t laid off a single worker in Washington State, it has added around 3,000 new ones. Seven out of every 10 Dreamliners will be assembled in Puget Sound.”

I should also note Nocera is not blanketly admonishing Dems on regulations – he thinks just this one situation has gone too far. He goes on to say that Republicans are blocking a lot of other regulations that would actually create jobs. He says he will write about that situation after Labor Day. I can’t really envision too many regulations that are net job creators, but we shall see what he’s got in mind.

Source: How Democrats Hurt Jobs

Sanctimonious NYT Op-Ed piece

Very sanctimonious op-ed piece in the NYT indicting the GOP for tough times for state and local governments. This is the kind of thing that drives economic conservatives crazy.

Source: New York Times: A Growing Gloom for States and Cities

Washington should have been trying to find a way to help states avoid the layoffs and cutbacks that have contributed heavily to the high unemployment rate.”

The Republicans who produced this artificial crisis, and are responsible for its effects, say they would like nothing more than to see a reduction in state as well as federal spending. That is where government hits closest to home, affecting the size of classrooms, the bulbs in streetlights, the asphalt in potholes, and the lines in emergency rooms.”

I have two problems with this.

First, here and elsewhere liberals lament the loss of any amount of gov’t jobs even as the job losses in the private sector are many, many times larger – at least 10:1 if not a lot higher.

Here is a chart showing North Carolina data. It shows that in the state during the period of the Great Recession, 311,400 private sector jobs were lost (8.90% loss) while public sector has actually added 500 jobs (0.07% gain).

Source: Carolina Journal: Government Jobs Untouched by the Great Recession

I have seen this type of data before at the national level, but not having any luck finding it just now.

Ah, here’s something recent that shows percentage change in employment in private sector vs. state and local governments (still looking for Federal).

Source: Nelson A. Rockefeller Institute of Government, at the University at Albany: State and Local Government Employment Shows Broad, Continuing Declines

So we see that after initially rising during the heart of the recession, state and local governments have now been contracting for some months. Sure, this is an issue, but even after recovering from the deepest trough, private employment is still down over 5% whereas public employment is down by only 2%. Is that really so unfair given the severity of what we are going thru?

And here’s some reasonably current data showing federal employment: it’s up!! 98,000 more federal government jobs at the end of 2010 than at the outset of the recession. Yikes. That’s totally ridiculous. Even worse, most of those jobs are probably new regulatory positions to implement rules to clamp down on the private sector. Ugh.

Source: George Mason University: Even Accounting for Census, Federal Employment Grows During Recession

Then my second problem is the unquestioned assumption that the federal gov’t has the obligation to subsidize states so heavily even as many of them have grossly overspent just like the Feds. States need to be figuring out how to tighten their belts just like everybody else. If they don’t have enough money, they should figure out how to deliver more with less – businesses have been doing for decades. It is a skill set government needs to learn – and fast.

Great line from Romney about Obama and the economy

Mark Helperin of Time magazine published this quote from Mitt Romney:

“When you see what this president has done to the economy in just three years, you know why America doesn’t want to find out what he can do in eight.”

Darn funny!

And, of course, quite right. Obama is an economic disaster. No feel for how business is done and no respect for capitalism.

Original source: http://thepage.time.com/#ixzz1UCC9el3e

How much taxes are actually paid by income level

As part of this massive debt ceiling debate, I’ve been wondering how much income tax revenue is actually taken in by the Treasury and how much of that is paid by each income group.

Found a chart from the Tax Foundation that shows this.

Original source: TaxFoundation.org

This is awesome stuff. If you combine it with other data, you know that the group most vilified by the media are the folks in the Top 1%. These are the guys who make over $250,000 a year (top 1-5% make on avg $211K, top 5-10% make $127K).

Continue reading How much taxes are actually paid by income level

Income distribution is out of balance

This is a great chart from the Washington Post. Actual data from a liberal media source, go figure?

Original source: Washington Post

It shows a disturbing trend that needs to be addressed for many reasons. But it is a very, very tough problem and I’m not sure how you solve it.

I don’t think more taxes are the answer (though they might be a partial solution). Taxes are the default answer for liberals, but they are an after-the-fact attempt to redress a more fundamental problem which is that too few people are making the lionshare of the money. Why is that? We need to figure it out.

A better solution would be to spread the wealth more widely upfront – to create more high income jobs and to raise the net worth of lots more households. To just throw more taxes into the mix will do little but perpetuate dynamics that have been leading towards a smaller and smaller percentage of people taking in more and more.

In some future post, I’ll try to touch on one of the mechanisms that I see that helps lead to increasing concentration – and it’s something that Democrats strongly favor even though it helps produce the result shown here.