Economics

One reason Republicans lost in 2006 is that they stopped being reliable stewards of the public trust.  It is becoming clear, however, that the Democrats who now control Congress are much worse–whereas Republicans screwed up due to their ineptitude, the Democrats are wasting money as a matter of policy.

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THE PRESIDENT: Good morning.

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This week was filled with more good news about America’s economy. We learned that our economy grew at an annual rate of 3.5 percent in the fourth quarter of last year. Overall, our economy grew 3.4 percent in 2006 — up from 3.1 percent in 2005. The Dow Jones reached an all-time high this week for the 27th time in the past four months. And we learned that America created 111,000 new jobs in January, which means we have added over 7.4 million jobs in the past three-and-a-half years.

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This good news is a result of the hard work of the American people and pro-growth economic policies like tax relief. By cutting taxes, we put more money into the hands of American families and small businesses. You have used this money to produce strong and lasting economic growth. And now Congress needs to make this tax relief permanent, so we can keep America’s economy growing.

Pro-growth economic policies also play a vital role in our plan to balance the Federal budget. Our growing economy has produced record levels of tax revenue. This increase in tax revenue has helped us cut the deficit in half three years ahead of schedule. And on Monday, we will take the next step when I submit to Congress a budget that will eliminate the deficit by 2012.

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To meet this goal, we must set priorities for government spending. My top priority will continue to be keeping America safe and winning the war against extremists who want to destroy our way of life. The budget I will submit to Congress includes the cost of funding the global war on terror, including in Iraq and Afghanistan. Our troops deserve our full support, and this budget gives them the resources they need.

Cutting the deficit during a time of war requires us to restrain spending in other areas. One good way to help eliminate wasteful spending is to pass earmark reform.

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THE PRESIDENT: Good morning. Christmas is fast approaching, and I know many of you are busy trying to finish up your holiday shopping. This week, we received good news about the economy that should brighten the season and keep us optimistic about the year ahead.

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First, the Commerce Department released figures showing that sales for America’s retailers were up in November and that the increase is much larger than expected. These figures are important because for many American businesses November and December are their highest sales months for the year. So the healthy increase in retail sales is a good sign for American employers and workers.

America’s working families also received another bit of holiday cheer this week: We learned that real hourly wages rose by 2.3 percent over the past year. That may not sound like a lot, but for the typical family of four with both parents working, it means an extra $1,350 for this year. At the same time, our growing economy continues to create jobs and that has brought unemployment down to just 4.5 percent. These numbers give all Americans a reason to celebrate: More people are working than ever before, and paychecks are going further than they used to.

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Little attention has been paid to the New Hampshire Retirement System, the 4.5 billion dollar public pension system on which fireman, policemen, teachers and municipal workers depend for retirement income. When Governor Benson was in Concord he tried to reform the system but was ignored. Many times over the last 5 years I have wondered when the obvious problems with the pension system would come home to roost. 

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Only about 2/3rds of the present value of the promises made to public employees have been met. The story is one of human error, bad judgment, hubris, arrogance and ignorance. In short, the problems with the pension system start with very poor assumptions about return expectations that any prudent person would know are too high. From there the contributions from employees are too small, particularly when compared to the contribution rates that private investors are taught are adequate in their own un-guaranteed plans.  Return assumptions should be lower and contributions higher.

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The fees the NHRS has paid its investment managers over the years are excessive. Here are the fees other pensions have paid, using 2002 as an example (as a percentage of net assets):
• NH: .70 percent
• WV: .20 percent
• MT: .10 percent
• NE:  .20 percent

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It’s also important to note that during this year each of the above paid much less and got higher returns.

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This might not sound like much until going over an actual example. Say the 4.5 billion dollar fund pays .65 percent (as NH did in 2002), or about 30 million dollars per year as investment fees. Ok, so what that this is .40% too much? Nebraska would have paid 9 million per year. That’s almost 20 million per year less. Well, over 20 years this equals a simple figure of 400 million dollars. This is a simplistic analysis and does not take into account the growth of the fund over time, but certainly if the NHRS had been paying what other like pensions were paying the problem today would be much smaller. Why has the NHRS continuously paid so much in extra fees?

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Our primary question in those early years was: How do we reform government and return money and power back to the American people?

Eventually, the policy innovators and the "Spirit of ’94" were largely replaced by political bureaucrats driven by a narrow vision. Their question became: How do we hold onto political power? The aberrant behavior and scandals that ended up defining the Republican majority in 2006 were a direct consequence of this shift in choice criteria from policy to political power.

Nowhere was this turn more evident than in the complete collapse of fiscal discipline in the budgeting process. For most Republican candidates, fiscal responsibility is our political bread and butter. No matter how voters view other, more divisive issues from abortion to stem-cell research, Republicans have traditionally enjoyed a clear advantage with a majority of Americans on basic pocketbook issues. "We will spend your money carefully and we will keep your taxes low." That was our commitment.

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This year, no incumbent Republican (even those who fought for restraint) could credibly make that claim. The national vision — less government and lower taxes — was replaced with what Jack Abramoff infamously called his "favor factory." One Republican leader actually defended a questionable appropriation of taxpayer dollars, saying it was a reasonable price to pay for holding a Republican seat. What was most remarkable was not even the admission itself, but that it was acknowledged so openly. Wasn’t that the attitude we were fighting against in 1994?

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WASHINGTON, DC — Catherine Smith, interim chairwoman of Working Families for Wal-Mart, issued the following statement today regarding Sen. Barack Obama (D-Ill.) and former Sen. John Edwards’ union-sponsored attacks on Wal- Mart:

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"As a lifelong Democrat, I am disappointed that instead of leading, some politicians in my party are attacking a company that does more to help working families than perhaps any other private institution in America. Wal-Mart saves working families money, creates quality jobs in areas where they are needed most and is a corporate leader on environmental sustainability efforts. They are attacking the wrong company. On behalf of the 150,000 Democrat, Republican, and Independent volunteer members of our organization, we urge all of our elected leaders to pursue the work that we have elected them to do, and most importantly to get the facts about Wal-Mart, a company that is creating needed jobs and saving working families money every day."

According to an October 2006 poll conducted by Democratic pollster Thom Riehle for Working Families for Wal-Mart (margin of error + 3.1), two-in-three voters (68 percent) would disapprove of a candidate making Wal-Mart an issue in the campaign.

Additionally, Riehle found many of the key target groups for the union leadership’s anti-Wal-Mart campaign are turned off, not turned on, by the campaign: 64 percent of Democratic voters disapprove, as do 66 percent of those who hoped Democrats would take control of Congress in the 2006 elections. 72 percent of those in union households disapprove of the premise of this anti-Wal-Mart campaign.

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Perhaps this is why during the 2006 election cycle, Connecticut gubernatorial candidate John DeStefano was the only candidate for statewide office who attempted to turn Wal-Mart into a significant campaign issue. But even in heavily Democratic Connecticut, and in a strongly pro-Democratic year, DeStefano’s attacks were resoundingly rejected, and he was defeated by the second-largest margin of any Democratic gubernatorial candidate in the country.

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THE PRESIDENT: Good morning. I’m speaking to you today from the Mile High Coffee Shop in Englewood, Colorado. Mile High Coffee was founded by Brian Verbeck who is the city’s entrepreneur of the year. I’m here to have a cup of his famous coffee, and have breakfast with a group of local entrepreneurs to discuss our strong and growing economy.

Yesterday, [Friday] we received more good news about our economy. The national unemployment rate has dropped to 4.4 percent. It’s the lowest rate in more than five years. Over the past three months, America has added 470,000 new jobs, for a total of more than 6.8 million new jobs since August of 2003. Real wages rose 2.4 percent over the past year, which means an extra $1,327 for the typical family of four with two wage earners. Americans are finding jobs, and they’re taking home more pay.

The President then rightfully identifies the major reason for this good economic news: the American people, led by small business. When government staeps aside and lets the people do their thing, we all flourish.

The main reason for our growing economy is that we cut taxes and left more money in the hands of families and workers and small business owners. Entrepreneurs like the ones I’m having breakfast with this morning have put that money to good use. They expanded their businesses and they’re creating jobs in their communities

Man, this guy is just singin’ my song! It is because I know these are the true beliefs of President Bush that I am still in his "strong supporter" camp (other than the border issue). I have long maintained that the administration does many small, little noticed things behind the scenes in support of business and hardworking people that goes under-appreciated.

President Bush continued, highlighting several businesses that exemplify the entrepenurial spirit contributing to America’s continued economic successes:

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The laws of economics are not as certain as the laws of physics, but if we ignore them and substitute liberal political rhetoric instead,  we remain ignorant of the cause-effect relationships that effect our lives.  Supply-demand, the costs of regulation, labor, and capital infrastructure, market uncertainty…all of these go into the price we pay at the pump.  Too bad so few Americans understand this.  Link is here.

Big Oil’s record profits attract attention and outrage, but an independent study has found that oil companies do exactly what economic textbooks say they should do with all that money: They invest it in oil exploration and development efforts that eventually should relieve pressure on prices.

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