Research Briefing

“Christina D. Romer, Chairwoman Of The Council Of Economic Advisers, Will Speak To The National Press Club In Washington (Wednesday).”  (“Economic Reports This Week,” The New York Times, 8/29/10)

WILL ROMER MENTION THAT OBAMA’S STIMULUS PROJECTIONS WERE OVERLY OPTIMISTIC AND HIS POLICIES ARE CAUSING UNCERTAINTY?

Business Owners Have Been “Operating For The Last Year And A Half In Conditions Of Perfect Uncertainty.” “Economists and business owners say they've never seen anything like it: The Bush tax cuts are expiring, health care reform is confusing, deficits are exploding, cap-and-trade is looming - and political leaders are too busy fighting among themselves to offer any reliable vision of the future. Little wonder, then, that businesses are frozen, afraid to hire or make any other long-term plans. ‘We've been operating for the last year and a half in conditions of perfect uncertainty,’ said David J. Ward, president of Madison-based consulting firm NorthStar Economics Inc., adding that he has never before seen such economic doubt in his 45 years as an economist.” (Joe Taschler, “As Politicians Fight, Businesses Wait For A 'Go' Sign,” Milwaukee Journal-Sentinal, 8/29/10)

• President Of Madison, WI-Based Consulting Firm NorthStar Economics Inc. Says Businesses Aren’t Going To Hire Until They Know What “Direction The Economy Is Going.” “‘They're Not Going To Hire A Lot Of New People Until They Have A Better Sense Of The Direction The Economy Is Going,’ Ward Said. That's Certainly The Sentiment At Many Companies Around Southeast Wisconsin.” (Joe Taschler, “As Politicians Fight, Businesses Wait For A 'Go' Sign,” Milwaukee Journal-Sentinal, 8/29/10)

Wisconsin Business Owner Patrick Cherone: “[W]e’re Looking Down The Barrel of A Gun, Saying To Ourselves, ‘I Don’t Know If It’s Loaded Or Not.’” “Patrick Cherone, owner of Wisconsin Machine Tool Corp. in Brookfield, says he won't try to grow his business as long as the uncertainty persists. His focus, for now, is survival. ‘Myself and my customers, we're looking down the barrel of a gun, saying to ourselves, ‘I don't know if it's loaded or not.’ So, I'm not going to really do anything. It's the safest move I can make,’ Cherone said.” (Joe Taschler, “As Politicians Fight, Businesses Wait For A 'Go' Sign,” Milwaukee Journal-Sentinal, 8/29/10)

• “‘It's Just Stagnant. It Is Not Moving,’ He Said. ‘(Politicians) Can Get On TV All They Want And Tell Me It's Looking Brighter. Well, I Might Not Be Here In A Month.’” (Joe Taschler, “As Politicians Fight, Businesses Wait For A 'Go' Sign,” Milwaukee Journal-Sentinal, 8/29/10)

Small Businessman In Massachusetts Says “Oppressive” Taxes And More Government Regulations Are Hurting Small Businesses. “However, as a small businessman I would like to ask all pundits, academics and politicians to please shut up and visit a small business and see firsthand what the problems are. Taxes are oppressive and strangling the U.S. economy. Tax credits and other tax gimmicks can't have the dynamic impact of an across-the-board tax reduction. Irrational government spending goes hand in hand with the need for more and more taxation. Government regulation is at the point of insanity.” (Paul C. Ryan, Letter To The Editor, “We Want To Be Optimistic, But That’s Hard Just Now,” The Wall Street Journal, 8/31/10)

• A Small Business Doesn’t Create Jobs “Simply Because It Can Get A Loan At A Low Rate.” “There is a complete misunderstanding of just how small business actually functions. No small business ‘creates’ jobs simply because it can get a loan at a low rate. small businesses simply fill positions as needed if it contributes to the development and greater profit of the enterprise.”  (Paul C. Ryan, Letter To The Editor, “We Want To Be Optimistic, But That’s Hard Just Now,” The Wall Street Journal, 8/31/10)
• If The Government Wants To Fix The Economy, It Will Lower Taxes And Get “Off The Backs Of All Businessmen.” “If the government really wants a turnaround in the economy, it will find no better solution than lowering taxes and getting off the backs of all businessmen. There are many Bill Gateses and Warren Buffetts out there who are still in their ‘garage’ phase of operation and need only the right government attitude to allow them to blossom in this, the greatest country in the world.”  (Paul C. Ryan, Letter To The Editor, “We Want To Be Optimistic, But That’s Hard Just Now,” The Wall Street Journal, 8/31/10)

Small Business & Entrepreneurship Council President And CEO Urges Dems To Stop Pushing Small Business Bill Saying It Does Not Address The Real Reasons Small Businesses Are Hurting. “Small Business & Entrepreneurship Council President and CEO Karen Kerrigan on Tuesday urged Democratic leaders to stop pushing for passage of the small-business lending bill because it does not address the underlying reasons for why small-business expansion has stalled. ‘The concerns and needs of most business owners go much deeper, and this legislation does not address broader issues related to taxes, regulations and excessive spending which threaten to aggravate currently poor economic conditions,’ she said in prepared remarks. ‘At the end of the day, proposed tax hikes along with legislation and regulatory initiatives in the pipeline will drive business costs higher and drain more private capital from our economy.’” (Jay Heflin, “Small-Business Advocate Says Lending Bill Will Not Help Economy,” The Hill, 8/31/10)

OR THAT ECONOMY KEEPS FALTERING AND OBAMA IS FAILING TO ADDRESS THE PROBLEM?

The Boston Globe: Obama’s Plans To Fix Economy Were “Neither New Nor Inspiring.” “Rather, Obama needs to lay out a post-stimulus economic plan. The hints offered yesterday — extending the Bush tax cuts for the middle class, taking more steps toward a clean-energy future — were neither new nor inspiring. And Obama’s slumping body language couldn’t have looked less confident if he were dragging a coffin.” (Editorial, “Obama: Plug In The Microphone,” The Boston Globe, 8/31/10)

Detroit News:  It Is “Evident That President Barack Obama Cares More About His Ideological Agenda Than He Does About The Well-Being Of The American People.” “By now, it should be evident that President Barack Obama cares more about his ideological agenda than he does about the well-being of the American people. Last week, we learned that senior Obama administration officials knew that the federal moratorium on deep-water oil drilling would cost the jobs of 23,000 workers. And yet the president imposed the ban anyway.”  (Editorial, “Jobs Take Back Seat To Obama Agenda,” Detroit News, 8/30/10)

The Albuquerque Journal Slammed VP Biden For Trying To Spin The Stimulus’ Effect On Economy. “While the administration perhaps gets high-fives for good intentions, the reality is that much of the stimulus has gone to upgrade existing systems or to backfill government agencies, not to new initiatives with the potential to create jobs and sustain long-term economic growth. Reality check for Joe: It will take more than spin to erase serious concerns about the economy, high unemployment and a lagging housing market.” (Editorial, “Get Real, Joe. Economy Really Is About Jobs,” The Albuquerque Journal, 8/30/10)

The Dow Is On Track To Have Its Worst August In Nine Years. “Stocks lost much of their forward momentum in afternoon trading, with major indexes on track to post steep losses for the month of August.  The Dow Jones Industrial Average was recently up about 10 points to 10020, but is down nearly 4% this month, on track for its worst August since 2001.”  (Kristina Peterson, “Dow Faces Worst August In 9 Years,” The Wall Street Journal, 8/31/10)

More Than One Tenth Of U.S. Banks Are on The FDIC’s “Problem List.” “More than a tenth of U.S. banks remain at risk of failure even as some industry indicators, including credit quality, show some nascent signs of revival.  The Federal Deposit Insurance Corp. said Tuesday that 829 of the nation's roughly 7,800 banks were on its "problem list" at the end of June, up from 775 at the end of the first three months of the year.” (Michael R. Crittenden, “FDIC Finds 829 U.S. Banks At Risk,” The Wall Street Journal, 8/31/10)

• “Already 118 Banks Have Failed This Year, Well Ahead Of The Pace Set Last Year When 140 Were Seized By Regulators.” (Michael R. Crittenden, “FDIC Finds 829 U.S. Banks At Risk,” The Wall Street Journal, 8/31/10)

The Only New Bank This Year Is Being Operated Out Of A Double-Wide Trailer. “The only new start-up bank to open in the United States this year operates out of a secondhand double-wide trailer, on a bare lot in front of the cavernous Trinity Baptist Church. A blue awning covers the makeshift drive-through window.”  (Andrew Martin, “In Hard Times, One New Bank (Double-Wide)” The New York Times, 8/28/10)

A Massive Spike In Delinquent Mortgages Signals That A Wave Of Foreclosures Is In The Works. “What you’re seeing here isn’t subprime dreck: it’s sensibly-underwritten conforming loans which were bought by Fannie and Freddie. Through 2009 and the first half of 2010, the rate at which those loans entered foreclosure proceedings was pretty steady. But as we enter the second half of 2010, there’s a huge spike, especially in the loans which have been delinquent for more than six months.” (Felix Salmon, “Foreclosure Datapoint Of The Day,” Reuters “Felix Salmon” Blog, 8/31/10)

 “Government Anti-Poverty Programs That Have Grown To Meet The Needs Of Recession Victims Now Serve A Record One In Six Americans And Are Continuing To Expand.” (Richard Wolf, “Record number in government anti-poverty programs,” USA Today, 8/30/10)

• Staggering Demand Has Caused The Price Tag For Government’s Safety Net To Soar. “As caseloads for all the programs have soared, so have costs. The federal price tag for Medicaid has jumped 36% in two years, to $273 billion. Jobless benefits have soared from $43 billion to $160 billion. The food stamps program has risen 80%, to $70 billion. Welfare is up 24%, to $22 billion. Taken together, they cost more than Medicare.” (Richard Wolf, “Record number in government anti-poverty programs,” USA Today, 8/30/10)