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Economy

Without Tax and Regulatory Reform, Manufacturing and Other High-Paying Sectors are Unlikely to Make Meaningful Recoveries

ISM-manufacturing-index

The Institute for Supply Management’s Manufacturing Report On Business Survey. (Photo: REUTERS)

The month of September was an all-around disappointing month for the U.S. manufacturing sector, in which we have observed a 7-year decline that has pounded workers’ wages. Absent dramatic tax and regulatory reform, longer-term trends suggest there is a real danger the sector is unlikely to make any meaningful recovery.

In September, regional manufacturing indexes all showed contraction, with the national ISM survey coming in at a level barely above growth. The Institute for Supply Management’s Manufacturing Report On Business Survey released Thursday slowed to its lowest level since May 2013. The gauge of national factory activity fell to 50.2 from 51.1 the month before, just above the threshold for growth. The ISM report was the latest in a string of disappointing manufacturing data released for the month.

The Chicago Business Barometer, the Institute for Supply Management-Chicago’s gauge of Midwest manufacturing activity, fell into contraction at 48.7, down from 54.4 the month prior. Economists polled by Reuter expected a decline only to 53, which is still above contraction. The Commerce Department reported on Thursday the week prior that new orders for long-lasting manufactured durable goods fell 2%. The durable goods report came after two closely-watched surveys of regional manufacturing activity also indicated contraction last month.

The Philadelphia Federal Reserve’s regional Manufacturing Business Outlook Survey for the mid-Atlantic tanked to -6, down from 8.3 the month prior. The Fed’s reading came in far below economists’ expectations for a drop to positive 6. The report marked the second major regional manufacturing survey released that week showing the sector contracting. The New York Federal Reserve’s Empire State Manufacturing Survey out the day before showed regional manufacturing activity contracted for a second straight month, remaining well below zero at -14.7. Steep declines were reported for both orders and shipments, with the new orders index tanking to -12.9 and the shipments index falling -8.0, respectively.

Weakness in the manufacturing sector has contributed to the concerning trends screaming in the Bureau of Labor Statistics September jobs report, which was released by the Labor Department on Friday. The U.S. economy added only 142,000 jobs and the number of Americans in the labor force fell to the lowest level since October 1977.

The civilian labor participation rate declined to 62.4%, a clear sign that discouraged job seekers, of which there were 635,000, are no longer even looking for work. The jobs report showed the smallest number of men ever are currently participating in the labor force, an obvious but partial result of a continuously weak manufacturing sector. The more important but less-cited employment-population ratio also fell to 59.2% in September, and has shown zero movement–let alone improvement–for the first 8 months of the year.

Even more concerning, average hourly earnings (wages) actually fell to $25.09 per hour after seeing an increase of 9 cents per hour in August. While many economists were hopeful the August increase represented an upward trend in wage growth, it was apparently temporary and gave way to pressure from established negative trends in higher-paying sectors such as manufacturing and energy. Wage growth has been a key indicator for the Federal Reserve, which is weighing the timing and trajectory of an expected rate hike later this year. The Fed policy-making members at the Federal Open Markets Committee (FOMC) were looking for signs of sustained growth in the U.S. economy, but they clearly didn’t get it in September.

In theory and historically, wages increase on simple supply and demand. If more people are working, then it is harder for employers to fill openings. Thus, they are forced to raise wages to compete to fill empty positions. But that isn’t happening, at all. The higher-wage paying sectors continue to trend poorly amid overly burdensome government regulations and the highest corporate tax rates in the developed world. Employment in mining, as well, continued to decline (-10,000), with losses concentrated in support activities for mining (-7,000). Mining employment has declined by 102,000 since December 2014.

Meanwhile, job creation numbers for the summer months were revised downward from the Labor Department’s initial reporting. The number of jobs created in July was initially reported at 245,000 but was revised downward to 223,000, while August was revised from 173,000 to 136,000. With these new revisions, job gains in July and August combined were a whopping 59,000 less than initially reported. Further, job gains have averaged just 167,000 per month over the past 3 months, well below the historical averages and the 250,000 needed to simply keep pace with population growth.

The good news is nearly all of the top Republican presidential candidates have introduced serious tax reform proposals that experts agree will foster an economic boom and create an environment far more friendly to U.S. manufacturing companies. Billionaire real estate mogul and current frontrunner Donald Trump was the latest to put a plan forward to increase U.S. companies’ abilities to compete globally, though we have also analyzed plans put forth by Gov. Jeb Bush, Marco Rubio and Rand Paul..

“If we compare what he’s proposing to what we have now, the answer is easy,” says CATO economist and PPD contributor Dan Mitchell. “Trump’s plan is far better than the status quo.”

The month of September was an all-around

Polls

Mitch-McConnell-AP

Senate Majority Leader Mitch McConnell, R-Kty., speaks to the press in the halls of the Senate. (PHOTO: AP)

House Speaker John Boehner, R-Ohio, made a surprising announcement in September he is resigning his speakership and his seat effective October 30. The development was a welcomed one to Republican voters, and now they want Senate Majority Leader Mitch McConnell to go, as well.

According to a new Rasmussen Reports poll, just 22% of likely Republican voters want the longtime Kentucky senator to continue to serve as majority leader. Following Boehner’s decision, which only 14% thought was a bad thing for congressional Republicans, 46% think Sen. McConnell also should resign and a sizable 32% said they are undecided. Conservatives viewed Boehner’s resignation as a victory and some now think it is the opportune time to target McConnell.

“Now it’s time for Senate Majority Leader Mitch McConnell (R-KY) to do the same. We are launching a new campaign today to organize grassroots opposition to Senator McConnell across the country,” Senate Conservatives Fund President Ken Cuccinelli said in an email. “Senator McConnell is just as hostile to conservatives and our principles, if not more so, than Speaker Boehner.”

As I have argued repeatedly, a bit of house cleaning is likely needed for the party to significantly change their perception among certain blocs of voters and to excite the party base enough to avoid a mass stay-at-home turnout as was seen in 2012. An August Gallup survey similarly found nearly twice as many Americans overall view him unfavorably (41%) than favorably (22%), which is largely fueled by deep unpopularity among those in his own party and GOP-leaning independents. Only outgoing Minority Leader Harry Reid, D-Nev., had a more unfavorable opinion held of him among American adults, but only by 1 point.

McConnell pretty much broke even among Republicans, with 34% seeing him favorably and 32% unfavorably. But still another third of Republicans in the poll said they don’t really know McConnell or haven’t heard of him (34%). Yet, in the more recent Rasmussen poll, more than half (52%) of self-described conservative voters think McConnell should quit as majority leader, while 32% of moderates and 38% of liberal voters agreed. Still, among all likely voters, 42% say McConnell should resign, while 25% disagree and 33% are undecided.

Interestingly, the highest levels of support for McConnell’s resignation are among those who Strongly Approve of Obama’s job performance and those who Strongly Disapprove of it. But Congress’ ginormous disapproval rating spread–currently -59.5, according to the PPD average–is largely driven by Republicans. Most Republican voters have long felt that their congressional representatives are out of touch with the party’s base, but only 24% now believe Republicans in Congress have done a good job representing their party’s values.

The survey of 1,000 Likely Voters was conducted on September 28-29, 2015 by Rasmussen Reports and has margin of sampling error of +/- 3.0 percentage points with a 95% level of confidence.

Speaker John Boehner's resignation was a welcomed

Politics

US-VOTE-REPUBLICANS-DEBATE

Republican presidential candidates arrive on stage for the Republican presidential debate on August 6, 2015 at the Quicken Loans Arena in Cleveland, Ohio. From left are: New Jersey Gov. Chris Christie; Florida Sen. Marco Rubio; retired neurosurgeon Ben Carson; Wisconsin Gov. Scott Walker; real estate magnate Donald Trump; former Florida Gov. Jeb Bush; former Arkansas Gov. Mike Huckabee; Texas Sen. Ted Cruz; Kentucky Sen. Rand Paul; and Ohio Gov. John Kasich. AFP PHOTO / MANDEL NGAN (Photo credit should read MANDEL NGAN/AFP/Getty Images)

Back in March, I asked why Republican presidential candidates were willing to openly violate federal anti-bribery law by supporting agriculture subsidies in exchange for campaign loot. My question was merely rhetorical, of course, since politician supposedly aren’t violating the law because the money goes to their campaigns rather than their personal bank accounts.

But that doesn’t change the fact that there’s a sleazy quid pro quo. If you think I’m exaggerating, you’ll change your mind after reading these excerpts from a column by the superb muckraking journalist Tim Carney. The target of his piece in the Washington Examiner is Congressman Stephen Fincher of Tennessee.

Congressman Stephen Fincher…, once an opponent of the Export-Import Bank —a federal agency that subsidizes foreign buyers of U.S.-made goods — now is trying to undermine his party’s leadership by teaming up with Nancy Pelosi and her party in order to reauthorize Ex-Im Bank as President Obama and his big donors in the business lobby have demanded. …Fincher has pulled up his Tennessee roots and is now firmly planted in D.C. Instead of serving Western Tennessee, Fincher..now represents Wall Street and K Street.

Is this hyperbole? Well, check out what Tim found out about his fundraising.

Fincher has raised a quarter-million for his re-election, according to his most recent campaign finance filing. Exactly two of his approximately 150 donations have come from Tennessee residents. Tennessee residents have given Fincher a combined $750, which rounds to 0 percent of his money raised.

And why are out-of-state donors lining up to give Fincher money? Draw your own conclusions.

Fincher introduced his bill to reauthorize Ex-Im on Jan. 28. Two days later his campaign deposited a $2,000 check from General Electric, Ex-Im’s second-largest beneficiary and most ruthless defender. …Boeing (which benefits from 40 percent of Ex-Im subsidies) and United Technologies chipped in about a week and a half later. All of Ex-Im’s top beneficiaries, exporters and lenders (notably Ex-Im’s leading lender JPMorgan), have given to Fincher’s re-election.

The corrupt Ex-Im Bank is just one example of the for-sale sign in Fincher’s office. Odious agriculture subsidies also can be purchased, even though none of the loot winds up in the pockets of Tennesseans.

Fincher has voted to protect the federal sugar program, whereby our government keeps out foreign sugar and issues taxpayer-backed loans to guarantee high prices for U.S. sugar growers. This hurts families, U.S.-based foodmakers and the economy, while benefitting a handful of privileged sugar companies. Tennessee produces no sugarcane or sugar beets… But Fincher’s donors do. Sugar Cane Growers of Florida PAC, American Crystal Sugar PAC, American Sugar Cane League PAC, Florida Sugar Cane League PAC, Southern Minnesota Beet Sugar Co-Op PAC and the U.S. Beet Sugar PAC are all Fincher donors and all beneficiaries of the corporate welfare Fincher supports.

By the way, I should hasten to add that this doesn’t mean that Fincher is especially corrupt by congressional standards. Or that he’s completely bad. I’ve made the point before that most politicians are a combination of good and bad characteristics. It’s like they have a devil on one shoulder whispering bad advice and an angel on the other shoulder trying to get them to do the right thing.

And when the devil has a lot of PAC checks and the angel is a wonky think tank economist like yours truly, the bad guys oftentimes triumph. But not always. Fincher, for instance, has voted for budgets based on genuine entitlement reform. And in the grand scheme of things, reining in those programs is much more important to the nation’s long-run fiscal health than curtailing sleazy corporate welfare.

That’s still no excuse, though, for Fincher’s behavior. He’s using the coercive power of government to steal from one group of people in order to provide unearned and undeserved goodies for another group. Democrats do the same thing, of course, and they’re quite promiscuous. They seemingly favor all forms of redistribution, ranging from traditional welfare to corporate welfare.

But you can make a strong argument that Republicans are being even more immoral since they generally redistribute from the poor and middle class to the rich.

P.S. Since I’m not feeling particularly charitable to the political class, let’s close with some biting humor against the crowd in Washington. Regular readers know I’m not a big fan of Pope Francis, and I’ve shared some criticism based on the insights of Walter Williams and Thomas Sowell. But I definitely think this clever image is worth sharing.

pope francis

P.P.S. If you like mocking the political class, I have lots of other material for you to enjoy. You can read about how the men and women in DC spend their time screwing us and wasting our money. We also have some examples of what people in Montana, Louisiana, Nevada, and Wyoming think about big-spending politicians. This little girl has a succinct message for our political masters, here are a couple of good images capturing the relationship between politicians and taxpayers, and here is a somewhat off-color Little Johnny joke. Speaking of risqué humor, here’s a portrayal of a politician and lobbyist interacting.

Returning to G-rated material, you can read about the blind rabbit who finds a politician. And everyone enjoys political satire, as can be found in these excerpts from the always popular Dave Barry. Let’s not forgot to include this joke by doctors about the crowd in Washington. And last but not least, here’s the motivational motto of the average politician.

P.P.P.S. One serious point. If we want to clean up corruption in Washington, more campaign finance laws won’t work. The only way to reduce corruption is to shrink the size of government.

Are politicians, including Republican and Democrat presidential

World

Pope-Francis-Festival-of-Families

Pope Francis takes the stage at the Festival of Families in Philadelphia on Sept. 26, 2015. (Photo: AP/Alessandra Tarantino)

VATICAN CITY (PPD/AP) — The Vatican fired a gay priest who came out on the eve of a big meeting of the world’s bishops to discuss Catholic Church outreach to gays, divorcees and traditional Catholic families. Monsignor Krzyzstof Charamsa, previously a mid-level official in the Vatican’s doctrine office, said in a newspaper interview published in Italy and Poland Saturday that he was happy and proud to be a gay priest.

But that wasn’t the end to his public announcement. Charamsa also shockingly admitted he was in love with a man whom he identified as his boyfriend.

Vatican spokesman Rev. Federico Lombardi said in a statement Saturday Charamsa’s public statements were “serious and irresponsible,” particularly since he decided to come out on the eve of the synod. Rev. Lombardi added that he could no longer continue working at the Vatican or its pontifical universities. Yet, despite Vatican dismissal and openly admitting to having a same-sex relationship, Charamsa remains a priest.

However, though Pope Francis is already beginning to hear criticism from voices on the American left and the liberal wing of the Catholic Church, overall he has opened doors in the church to gays and others that had previously been closed. During the pope’s historical trip to the U.S., he reportedly held a private meeting with a gay couple just one day before meeting with defiant Kentucky clerk Kim Davis and her husband.

The Vatican fired a gay priest who

Politics

Jason-Chaffetz

House Oversight and Government Reform Chairman Jason Chaffetz, R-Utah. (Photo: AP)

Chairman of the House Oversight Committee Jason Chaffetz, R-Utah, will challenge Majority Leader Kevin McCarthy, R-Calif., and Rep. Daniel Webster, R-Fla., for House speaker. The news comes after McCarthy made a controversial comment about the Benghazi committee investigation, which Chaffetz called an “absolutely inappropriate statement.”

Chaffetz, who was elected into Congress in 2008, hasn’t been the darling of the conservative base since they helped him get in and retain office. The House Oversign chairman came under heavy fire for stripping Rep. Mark Meadows, R-N.C., of his subcommittee chairmanship after he defied party leaders on a vote granting President Obama fast-track authority on the Trans-Pacific Partnership bill. Meadows was one of 34 conservatives who voted against the rule to move the trade deal forward, which also expanded Trade Adjustment Assistance–a leftwing entitlement program that was added to grease Democrats’ palms.

Conservative talk radio host Mark Levin referred to the top three House leaders—House Speaker John Boehner,, R-Ohio, McCarthy and Majority Whip Steve Scalise, R-La.—as “Moe, Larry and Curley,” with Chaffetz being the “shrimp in there somewhere.” Scalise, worth noting, announced he would run to replace McCarthy as majority leader.

Conservatives accused the outgoing speaker and his leadership team of presiding over “a culture of punishment and fear” in the House. But Chaffetz buckled, and shortly after asking him to resign he reinstated Meadows as subcommittee chairman.

“Obviously I believe in Mark Meadows or I would not have appointed him to this position in the first place,” Chaffetz said in a joint statement with Meadows. “It is in the best interest of the committee to move forward together. Therefore, I have asked Mark to continue in his role as subcommittee chairman.”

Prior to being named chairman of the Oversight Committee, Chairman Chaffetz, 48, played key roles in investigating the Benghazi terrorist attack, the Fast and Furious gun running operation, IRS targeting of conservatives, and the Secret Service. Still, he is a long shot.

Majority Leader McCarthy is the “odds-on favorite” to replace Boehner, who after roughly a quarter century in Congress and eight years with the gavel announced he will resign effective October 30. McCarthy, a 50-year-old Bakersfield native, would be only the second Californian after Democrat Nancy Pelosi to serve as speaker of the House.

“I certainly think he [McCarthy] has the inside track,” Rep. Mick Mulvaney, R-S.C. said in an e-mail before Boehner’s resignation announcement. Mulvaney helped found the House Freedom Caucus, which has been a stalwart fighter for conservative principles against a forever-caving GOP leadership team. Yet, he and other Freedom Caucus members have at least suggested he is far more willing to listen as a leader than either Boehner or Chaffetz.

House Oversight Chair Jason Chaffetz, R-Utah, will

Video

[brid video=”16953″ player=”1929″ title=”CATO Economist Mitchell Talks Spending Caps with Neil Cavuto”]

CATO economist and PPD contributor Dan Mitchell discusses the need to preserve and expand on current spending caps with Neil Cavuto on Fox Business. Mitchell said advocates of limited government are willing to have a shutdown fight that will create short-term uncertainty to avert a major debt crisis in the future.

CATO economist Dan Mitchell told Cavuto advocates

Politics

Washington is Divided Between the Evil Party and the Stupid Party

John-Boehner-Kevin-McCarthy

U.S House Majority Leader Rep. Kevin McCarthy and Speaker of the House John Boehner in Washington on Sept. 29, 2015. (Photo: Alex Wong/Getty)

What’s worse, Democrats who deliberately seek to make government bigger because of their ideological belief in statism, or Republicans who sort of realize that big government is bad yet make government bigger because of incompetence?

I’m not sure, though this is a perfect example of why I often joke that Washington is divided between the Evil Party and the Stupid Party. And the fight over spending caps is a perfect example.

President Obama and the Democrats despise this small bit of fiscal discipline, which was created as part of the 2011 Budget Control Act (BCA). They’re aggressively seeking to eviscerate the law, particularly the sequester enforcement mechanism. And since they believe in bigger government, their actions make sense.

Republicans, by contrast, claim to believe in smaller government and fiscal responsibility. So they should be in the driver’s seat on this fight. After all, the BCA is the law of the land and the spending caps – assuming they are not changed – will automatically limit overspending in Washington. In other words, the BCA fight is like the fight over reauthorizing the corrupt Export-Import Bank. Republicans can win simply by doing nothing.

Seems like a slam dunk win for taxpayers, right?

Not exactly. With apologies for mixing my sports metaphors, the Republicans are poised to fumble the ball at the one-yard line. Which would be a very depressing development. In this interview, I explain that preserving the spending caps should be the most important goal for advocates of limited government.

[brid video=”16953″ player=”1929″ title=”CATO Economist Mitchell Talks Spending Caps with Neil Cavuto”]

And you’ll see that I also explained that fighting for good policy today is necessary if we want to avoid huge fiscal problems in the future.

But that doesn’t seem to matter very much for a lot of Republicans. Let’s look at what other fiscal policy experts are saying about this issue. Writing for Reason, Veronique de Rugy of the Mercatus Center explains that the key to good fiscal policy (including tax cuts) is to have effective and enforceable long-run spending restraint.

If lawmakers want big tax cuts, there will need to be commensurately greater levels of spending restraint. The difficulty, of course, is to persuade politicians to implement such spending constraints and actually stick to them in the long run.

Amen.

That’s basically the same message I shared yesterday. President Obama, however, has threatened to veto the budget and shut down the government if Congress doesn’t agree to bust the current spending caps. And plenty of Republicans, either because they also want to buy votes with other people’s money or because they’re scared of a shutdown fight, are willing to throw in the towel. The battle isn’t lost, at least not yet, but it’s very discouraging that this fight even exists. Controlling discretionary spending should be the easy part.

After all, if politicians balk at the modest requirements of the BCA, what hope is there that they’ll properly address entitlements? As Veronique notes, those are the programs that are driving America’s long-run fiscal crisis.

…the only realistic way to limit spending growth to 2 or 3 percent per year is to reform the fastest-growing programs in our budget, or the so-called entitlements.

What makes this issue especially frustrating is that we know sustained spending restraint is possible. Nations such have Switzerland have shown how spending caps produce very positive results. But that requires some commitment for good policy by at least some people in Washington. And that may be lacking. In a column for the Wall Street Journal, Steve Moore takes a closer look at how GOPers are poised to throw away their biggest fiscal victory of the Obama years. Let’s start with an excerpt illustrating how the BCA and sequestration have worked.

…the Budget Control Act helped slam the brakes on Mr. Obama’s first-term spending spree. …In 2009 the federal government accounted for nearly a quarter of the American economy, 24.4%. That fell by 2014 to 20.3% of GDP.

He’s right. I’ve shared similar numbers showing how Obama’s spending binge was halted. And that’s led to the biggest five-year reduction in the burden of government spending since the end of World War II.

Obama-Spending-GDP

Federal Spending from start of Obama administration to the present. (Source: Dan Mitchell)

But fiscal sobriety needs to be sustained. Deciding to have “just one drink” at the big spender’s bar is not a good way to stay on the wagon. And Steve shares some bad news on this issue.

Congress and the White House are quietly negotiating a deal for the new fiscal year that would bust the spending caps that have brought down the deficit. Breaking the caps yet again—this would be the third violation in four years—is lousy policy. …the GOP is reportedly forging a compromise with Mr. Obama that would raise the caps by $70 billion to $100 billion. …What’s worse, the deal would likely raise the spending caps permanently, meaning…nearly $1 trillion…over the next decade.

By the way, there’s a reason why this sounds like déjà vu all over again. Republicans already agreed to bust the spending caps at the end of 2013. That was an unambiguous victory for Obama. And now it may happen again. Steven discusses the implications of this looming GOP surrender.

The mystery is why Republicans are so ready to throw away their best fiscal weapon… Liberals hate the sequester because it squeezes their favorite programs, from transit grants to Head Start. But it is the law of the land. President Obama can do nothing to circumvent the sequester—unless Republicans in Congress cave in. …Busting the spending caps will only reverse progress toward a balanced budget, fatten liberal social programs, and confirm what many tea-party voters have been shouting for years: that Republicans break their promises once elected.

For all intents and purposes, the battle over BCA spending caps is a huge test of GOP sincerity. Do they really believe in limited government, or is that just empty rhetoric they reserve for campaign speeches.

P.S. Some Republicans argue that they favor smaller government, but that the sequester is “unfair” and the spending caps are too “harsh” because the defense budget is disproportionately affected. It’s true that the defense budget is being capped while most domestic spending (specifically entitlement programs) is left unconstrained. But that doesn’t mean the nation’s security is threatened. Defense spending still grows under these laws and our military budget is still far bigger than the combined budgets of all possible adversaries.

For further information, read George Will’s sober analysis and also peruse some writings by Mark Steyn and Steve Chapman.

President Obama and Democrats are aggressively seeking

Economy

long-term-unemployed-jobless-benefits

IRS building in New York. (Photo: Mario Tama/Getty Images)

The U.S. economy added only 142,000 jobs in September and the number of Americans in labor force participation is at the lowest level since October 1977. The Labor Department said the headline unemployment rate held steady 5.1% due to labor participation and real unemployment remained above 10%.

The civilian labor participation rate declined to 62.4% in September, a clear sign that discouraged job seekers, of which there were 635,000, are no longer even looking for work. The September jobs report showed the smallest number of men ever are currently participating in the labor force. The more important but less-cited employment-population ratio also fell to 59.2% in September, and has shown zero movement–let alone improvement–for the first 8 months of the year.

The number of persons unemployed for less than 5 weeks increased by 268,000 to 2.4 million in September, offsetting a decline in August. The number of long-term unemployed Americans–those jobless for 27 weeks or more–clocked in at 2.1 million in September and accounted for over a quarter (26.6%) of the unemployed. Nearly 2 million (1.9M) were marginally attached to the labor force. These are Americans who were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. However, they are not counted in the unemployment numbers because they had not searched for work in the 4 weeks prior to the Bureau of Labor Statistics survey.

The number of persons employed part time for economic reasons–also called “involuntary part-time workers”–actually declined by 447,000 to 6.0 million in September. But not becauuse they found full-time jobs. Most of these individuals, who would have preferred full-time employment, were working part time because their hours had been cut back or because they were unable to find a full-time job, simply quit on the American dream.

Even more concerning, average hourly earnings (wages) actually fell to $25.09 per hour in September after seeing an increase of 9 cents per hour in August. While many economcists were hopeful the August increase represented an upward trend in wage growth, it was apparently temporary. Wage growth has been a key indicator for the Federal Reserve, which is weighing the timing and trajectory of an expected rate hike later this year. The Fed policy-making members at FOMC were looking for signs of sustained growth in the U.S. economy, but they clearly didn’t get it in September.

In theory and historically, wages increase on simple supply and demand. If more people are working then it is harder for employers to fill positions. Thus, they are forced to raise wages to compete to fill empty positions. But that isn’t happening. The higher-wage paying sectors continue to trend negative amid overly burdensome government regulations. Employment in mining, for instance, continued to decline in September (-10,000), with losses concentrated in support activities for mining (-7,000). Mining employment has declined by 102,000 since December 2014. Similarly, manufacturing growth has been non-existent.  In fact, in September regional manufacturing indexes all showed contraction, with the national ISM survey barely above growth.

Meanwhile, job creation numbers for the summer months were revised downward from the Labor Department’s initial reporting. The number of jobs created in July was initially reported as 245,000 but was revised downward to 223,000, and August was revised from 173,000 to 136,000. With the revisions, job gains in July and August combined were a whopping 59,000 less than initially reported. Now, job gains have averaged 167,000 per month over the past 3 months, well below the historical averages and the 250,000 needed to simply keep pace with population growth.

The U.S. economy added only 142,000 jobs

Editorials

NYT Editorial Board Chief Andy Rosenthal Owes Gov. Romney, the Nation and Their Readers an Apology

Romney-Obama-foreign-policy-debate

Republican presidential candidate Mitt Romney, left, and President Barack Obama, right, spar over foreign policy in the third and final debate moderated by Bob Schieffer, center, of CBS News.

Like it or not, Russian military operations in Syria this week served to vindicate Mitt Romney, the former governor of Massachusetts and 2012 Republican nominee. Romney was chastised by President Obama and The New York Times Editorial Board for calling Russia America’s “No. 1 geopolitical foe,” both of whom exposed their ignorance to basic international relations theory by citing a non-state actor (al-Qaeda) as an example of a far greater “geopolitical” adversary.

“Gov. Romney, I’m glad you recognize al-Qaeda is a threat, because a few months ago when you were asked what is the biggest geopolitical group facing America, you said Russia—not al-Qaeda,” Obama said during the third and final 2012 presidential debate. “And the 1980’s are now calling to ask for their foreign policy back—because the Cold War has been over for 20 years.”

While it may have given the president’s supporters–including his cheerleaders at the New York Times Editorial Board–a good chuckle at the time, nobody is laughing now. Exposed now are the faux intelligentsia who naively or ignorantly viewed Russia as a partner in a post-Cold War, post-Bush world order in which U.S. supremacy is no longer needed to stabilize what is and always will be the international state of anarchy.

“Two decades after the end of the cold war, Mitt Romney still considers Russia to be America’s ‘No. 1 geopolitical foe,'” wrote The New York Times Editorial Board headed up by Andrew Rosenthal. “His comments display either a shocking lack of knowledge about international affairs or just craven politics. Either way, they are reckless and unworthy of a major presidential contender.”

Exposed indeed. A version of that editorial also appeared in print on March 29, 2012, on page A26 with the headline: The Never-Ending Cold War. It should’ve appeared with the headline: The Never-Ending War on Reality; or, The Never-Ending Pitcher of Kool-Aid.

The New York Times Editorial Board owes Gov. Romney, the country and their readers an apology. They’re not members of the nation’s intelligentsia, they’re pretentious half-witted political hacks masquerading as intellectual elites. They carry the Democratic Party’s water and ignore decades of proven foreign policy scholarship. Gov. Romney, juxtaposed to Andy Rosenthal & Co., didn’t ignore the lessons and warnings from Mr. George Kennan, the architect of America’s wildly successful policy of containment toward the Soviet Union.

George-F-Kennan-1947

George F. Kennan in 1947, the year the X Article was published.

Kennan, who joined the State Department in 1926 and was U.S. Ambassador to Moscow in 1952, authored what came to be known as the Long Telegram, or X Article. Formally titled The Sources of Soviet Conduct, Kennan, then-Deputy Chief of Mission of the United States to the USSR, correctly argued the nationalistic Russian nation-state was “impervious to the logic of reason,” not to be confused with rational behavior, but “highly sensitive to the logic of force.”

Worth noting, Kennan also warned that Russia would use sympathetic and controllable left-wingers in the U.S. and other capitalist nations as allies in their struggle. They view the likes of Andy Rosenthal & Co., who they see as an even worse group than the proponents of freedom, as feeble-minded and weak-willed “useful idiots,” to borrow the term used by Vladimir Lenin. And in that group sits President Obama, whom Putin played liked a fiddle. Make no mistake, Putin and his generals were clanking the shot glasses of vodka the night after his speech in front of the U.N. General Assembly, toasting Obama as a man completely out of his depth on foreign affairs.

In the academic world, it is a rare phenomena indeed when the real world lines up with theory. But in the field of security studies and foreign policy that truly is the case, though you would never know it reading The New York Times or listening to other proponents of the debunked, disproven and failed theories of liberal internationalism. In the real world, absent propaganda from useful idiots like Rosenthal, there is no supplanting realpolitik with non-existent international norms and paper tiger institutions that lack the teeth needed to bite unruly nation-state actors. As Jack Levy put it in War in the Modern Great Power System, there is no “government over governments.”

While there remains a legitimate debate among top foreign policy scholars between proponents of the various schools of realism, there is no empirical support for the democratic peace theory or leftwing theories of global cooperation. That simply isn’t how the world works. Great powers blackmail, bait and bleed, bandwagon, balance and buck pass, all with the end of either survival or regional hegemony. That is, depending to which school (offensive or defensive) of realism you might legitimately subscribe. The pursuit of power is simply a means to either end.

“There are real threats out there: Al Qaeda and its imitators, Iran, North Korea, economic stresses,” The New York Times Editorial Board hacks also wrote. “Mr. Romney owes Americans a discussion of the real challenges facing this country and his solutions to them.”

We submit the American people are owed an honest and intellectual discussion of the issues during election cycles, whether on the presidential or local level. We believe, unlike pretentious elitists like Mr. Rosenthal, Americans are capable of participating in that intellectual discussion if they seek out or are given accurate information. Readers who feel they deserve one, as well, should vote with their wallet and allow the long-failing New York Times to finally fail.

The New York Times Editorial Board, specifically

World

C-130-Jalalabad

The Taliban is taking credit for a C-130 crashing in Afghanistan Thursday night, killing 11 people, including six US service members and five contracted civilians. The Pentagon would not confirm which branch of the U.S. military–the Air Force or Marine Corps–was flying the C-130, which crashed in Jalalabad.

There was no official explanation offered as a cause for the crash, but a source tells PPD that the evidence thus far “makes it more than likely that hostile fire took down this aircraft.” However, U.S. officials vehemently denied that to be the case and said there is no evidence to support the Taliban’s claim. There are about 1,000 coalition forces in eastern Afghanistan, including U.S. and Polish forces as well as about 40,000 Afghan troops, according to NATO.

The U.S. has about 9,800 troops in Afghanistan, a number President Obama plans to decrease by the end of the year despite recent violence. Afghan forces continue to clash with Taliban fighters in the northern city of Kunduz, and the government said they had cleared Kunduz in an overnight operation. The insurgents deny the city had been retaken, putting them again at odds with U.S.-led coalition claims.

Kunduz is both strategically and symbolically significant, as the city was the first urban center to fall to the Taliban since the 2001 invasion. With the help of Afghan, U.S., and NATO Special Forces, the Afghan army returned to kick in the door and is on the verge of retaken the city, as parts are already under coalition control.

The Taliban is taking credit for a

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