Lies, Damnable Lies, and the Growth of GDP

The 3.5 percent jump in the Gross Domestic Product (GDP) has many (particularly in government) declaring that "the recession is over!" Tell that to the 10 percent of the population that remains unemployed and to the thousands of small businesses limping along in an economy that is still flat, at best. There is an old saying, "any increase is significant when you are starting at zero." That is a fair summation of the "jump" in the GDP.

Many who are well versed on what is going on in the political and economic front are far more cautious than those in politics with an agenda and those in the media who are die hard fans of those with an agenda. Many economists are approaching this increase in the GDP with a healthy amount of cynicism, which may be why you are seeing little about their criticisms in the media. But there are many with serious business and economic credentials that are pleading for caution.

RDQ Economics states that "We need many quarters of GDP running at this pace (or faster) to make significant inroads into reducing unemployment." Great point, jumping to conclusions about the recession will have us making 10 percent unemployment a reasonable expectation for a healthy economy. I do not believe any of us are ready for that.

Stephen Stanley, RBS stated that consumption played a big role in getting the increase, but the "details look less promising. About 40% of the increase in consumer spending came from motor vehicles, reflecting the transitory boost from the cash-for-clunkers program. As auto sales recede in the fourth quarter, consumer spending is likely to grow much less rapidly. Similarly, state and local governments seem likely to face tougher cutbacks with no further boost from the fiscal stimulus while defense spending is likely to cool. Meanwhile, residential investment looks likely to keep growing but at a less vigorous pace while business investment spending growth looks unlikely to improve much more until a clearer picture on consumer demand emerges." The increase is caused by government, which can only be sustained by continued increases in spending, which will only further destabilize the long term economy. Our GDP is built on a house of cards and Stanley's suggestion that the fourth quarter will see another decline makes perfect sense.

Guy LeBas, Janney Montgomery Scott, note that "The final handful of dirt on the Great Recession's grave: today's data provides a needed psychological end to seven quarters of shrinking economic output. While there's a great deal of uncertainty as to conditions for the coming few quarters and years, at least we can say the last few months have been good ones for output. We remain very much concerned, however, that the pace of consumer activity will slow sharply now that government spending incentives are expiring." Bottom line is that there is a genuine concern that the increase is driven by government smoke and mirrors, and not in a real increase in consumer demand.

Paul Ashworth of Capital Economics stated that "Our concern, however, is that all those positive factors will fade badly in the second half of next year. If consumption growth remains unusually lackluster, then GDP growth would slow to a crawl again." Ashworth, like many economists, recognizes that this demand is artificial and driven by the government. When the government pressure subsides, the GDP will likely shrink.

Millan L. B. Mulraine of TD Securities suggests that "with the significant fiscal and monetary stimulus providing the main impetus for this sharp rebound, we expect GDP growth in the coming quarters to be less robust as their impact wanes..." Again, government created GDP.

Finally there is John Silvia of Wells Fargo who noted that "Big contributors were consumer spending on autos - cash for clunkers - federal government, inventories and housing - tax credit… Core issue: how much of this is sustainable without Fed programs?" What an excellent question, one I wish was asked by more people in politics and the media.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Will Gingrich Regret his Endorsement?

I like Newt Gingrich. He is smart, optimistic, and brings a credible perspective to issues that the left has a difficult time dismissing. However, Gingrich's best days may be behind him and the type of politician that believes political success (getting Republicans elected) is more important than policy, simply does not resonate with the growing number of Republicans who are not going to be satisfied with a candidate simply because he or she is in the GOP. There was a time that Gingrich was a rebel. I remember back in the 1980s and early 1990s, when Republicans were largely an inconsequential minority in the US House (like they are today) and he stormed the floor of the US House with other unhappy members, when the Congress was not in session and performed "special orders," which is the giving of speeches to an empty House. These messages informed voters via C-Span about what the Congress was doing and went against the "get along" decorum that politicians were so noted for.

Gingrich created a group of political insurgents that he called COS -- the Conservative Optimistic Society. These members, largely of the neoconservative variety, chipped away at the status quo and by 1994 became a big enough player to get the US House into the GOP's hands for the first time in decades.

When the COS got started in the 1980s, I was working for a US Senator and, later, with Washington think tanks. Although I was impressed with Gingrich's ability to get dissent of Democrat policies noticed, I was never comfortable was his fundamental approach to governing. Gingrich, who was one of the only members of Congress with a PhD in history (in his case, from Tulane) is an excellent debater. The problem is, the former Speaker rarely fought against the growth of government, but the pace of which government grew. Gingrich has never been opposed to more government, but the speed of the expansion. This has been reflected in his role as leader of the GOP in the House; the way he addresses policy issues in general, and is even demonstrated in his values when he made an endorsement in an up coming Congressional race.

The Wall Street Journal sets the stage: "You might have heard about the unusual election next week in New York's 23rd Congressional District. It's unusual for several reasons: It's taking place in an odd-numbered year, there was no primary, and there are three candidates." This is due to the President choosing the sitting Congressman (Rep. John McHugh) to be Army Secretary. The Journal goes on to lay out the landscape of the race, "Local GOP bosses nominated a state legislator, Dede Scozzafava, who is so liberal that she also received the endorsement of the Acornite Working Families Party. (Under New York's unusual 'fusion; system, several minor parties have spots on the ballot, and a candidate may receive multiple party nominations.) Doug Hoffman, who had been passed over for the GOP nod, won the Conservative Party nomination. Establishment Republicans like Newt Gingrich lined up behind Scozzafava, while conservatives like Sarah Palin endorsed Hoffman. This threatened or promised, depending on your point of view, to split the Republican vote to the benefit of Democrat Bill Owens."

If Owens wins, Gingrich and other Republicans who put party above ideas will blame people like Palin who places philosophy above party. Like many of us, Palin believes the party is only a vehicle and the GOP is one that is broke. The reality is, if Owens wins, it will be because establishment conservatives doing the expedient thing, rather than the right one. If Republican Scozzafava wins, the GOP will be the biggest loser of all as that brand continues to stand for nothing. If Owens wins, it will be because of a lack of courage among those who should do the right thing.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Alarming Communist Rhetoric and Reality

Increasingly we hear that the US government is moving rapidly towards communism. Most dismiss such rhetoric as alarmist and irresponsible, but Karl Marx himself left certain benchmarks on the characteristics of a communist regime. These are among the "essential elements" of this form of government, found in his Communist Manifesto.

• Under communism, we are told there "should be an abolition of property in land and application of all rents of land to public purposes." We have this, to a certain extent, already, since virtually every county, city, or other local jurisdiction has property taxes. You could own your property "free and clear" for years, but you will continually pay "rent" to your county or other local government for as long as you live in it.




• Marx called for a heavy progressive or graduated income tax. We have it, according to Steve Moore of the Wall Street Journal, "The latest data show that a big portion of the federal income tax burden is shouldered by a small group of the very richest Americans. The wealthiest 1 percent of the population earn 19 per­cent of the income but pay 37 percent of the income tax. The top 10 percent pay 68 percent of the tab. Meanwhile, the bottom 50 percent—those below the median income level—now earn 13 percent of the income but pay just 3 percent of the taxes."




• Communism advocates the abolition of all rights of inheritance. The government is not quite there yet, but is working on it. The trend had been towards increasing the amount people were allowed to pass on to their children and grandchildren. This administration will have them rise to levels we have not seen in decades.




• Communism calls for the centralization of credit in the banks of the state, by means of a national bank with state capital and an exclusive monopoly. Have you heard of the Federal Reserve? This institution mirrors Marx's image to a tee.



• Marx advocated the extension of factories and instruments of production owned by the state. Who would have believed that we would have the President of the United States accepting the resignation of the CEO of General Motors? The government has exploited our economic crisis as a basis for massive expansion. The relationship between government and business has been "too close for comfort" for years, now the entanglements of where government ends and business begins is almost impossible to determine.
  


• The control of transportation and communications are also parts of the Marxist agenda. It has been under government coordination for decades. As government tries to introduce "fairness doctrines" and wages a war on media networks, the possibilities are endless. If the government starts to bailout dying publications, you can only imagine what that will due to further distort media bias.



• Communism argues for the equal obligation of all to work. This almost sounds like a "responsible" government notion...if you do not work, after all, you should not eat. However, Marx argued that people should be required to work and only be able to retire when the government says you can do such. The government has not reached that point yet (although tax and other laws have enormous influence on when people choose to retire), but it is designing tax and other regulatory law to make retirement all the more unobtainable.



• Free education for all children in public schools. Public education is imperative if a government is going to dictate to a people what it can and cannot do. In the US, it was not until the 1830s that the state governments even established department of educations and there were virtually no government schools for the first 50 years of the republic. The Founders believed education was a check against a government that could grow out of control. Today, most Americans have no idea about what the government can and cannot do, because they have no idea what rights the Constitution gives them or what limits the Constitution puts on the state.
  

The rhetoric is not nearly as alarming as the moves towards Communism the country has been taking for years. It is time for Americans to get honest about the state of our nation, no matter how unpleasant the rhetoric.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Canadians Die Waiting for Health Care

The Canadian health care system, which is often touted as the future of medicine, has been the subject of controversy for years. So much so, in fact, that the Canadian government is seriously entertaining privatizing major elements of the system.


The surface of the program should discourage most. It is touted as free, but is funded through taxpayer dollars. We are told it is universal, but the country's own Supreme Court says that is only in its lines. In fact, two Canadian justices wrote three years ago that "access to a waiting list is not access to health care."



The system is overused, there is virtually no consumer incentive to act responsibly regarding it, and the results are huge lines, delayed treatments, and even death.

In spite the government's best efforts of controlling every aspect of Canada's health care system, the market has risen to address the needs of a public that has grown discontent of having to wait on a list. Seventeen weeks from the time a general practitioner says one needs a specialist and one actually sees one, is too long for most Canadians. Responding to the need, the British Columbia Automobile Association recently began offering "waiting-list insurance" to some of its members as part of a pilot program.

Those who buy the coverage receive treatment in a private clinic in British Columbia or the United States if they were placed on a government care waiting list longer than 45 days. 45 days is still too long for most, but it was an improvment. The kind of improvement the government could not handle as it shut it down to investigate if the program was legal.


"This is an example of a company that's actively soliciting for clients that have the ability to pay for the privilege of queue-jumping," said Adrian Dix, a member of B.C.'s Legislative Assembly. "In my view, and in the view of the legal opinion that we obtained, it is illegal, and it violated both provincial and national health legislation." This is one of the many dark sides of socialized health care. Not do its proponents want to put everyone in a collective system, they do not want anyone who can afford to do more (like insurance for waiting lists) to have that opportunity. The idea of any elected official -- or any responsible individual -- being opposed to such a program is beyond comprehesion. What is "fair" and "equal" in the Canadian system is the misery.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Do Health Insurance Companies make too Much?

We are told, daily, about the "exploitative" profits being made by the large health insurance companies in the form of premiums. The "huge" amount of dollars collected should be grounds for the massive take over of health care by the government, we are often told by the media. Politicians discuss these companies like preachers from the pulpit, using terms such as "immoral" and "disgusting" as measures of the amounts they make. According to the Associated Press, the real numbers show a different story.

Health insurance profit margins run around 6 percent, give or take a point or two. That is very small compared to other forms of insurance and below the standard 7 percent most of us learned in economic classes as the corporate average for profits.

Here are some of the points from the AP article:

• Health insurers posted a 2.2 percent profit margin last year, placing them 35th on the Fortune 500 list of top industries. It is not at all surprising that other health sectors did far better -- drugs and medical products and services were both in the top 10.
  
• Doing better still -- at the top of the list -- network and other communications equipment, at 20.4 percent; the railroads brought in a 12.6 percent profit margin.
  
• HealthSpring, the best performer in the health insurance industry, posted 5.4 percent; that mark proved less than Tupperware, Clorox bleach and Molson and Coors beers.
  
• UnitedHealth Group, reporting third quarter results last week, saw a better picture; it obtained a 5 percent profit margin on an 8 percent growth in revenue.


• We have been told that the Bush Administration provided the "hot years" for health insurance companies. Reality, again, shows something else as industry's overall profits grew only 8.8 percent from 2003 to 2008, and its margins year to year, from 2005 forward, never cracked 8 percent.
  
• So what companies were the real performers? Surprisingly the list includes Tupperware Brands, 7.5 percent; Yahoo, 5.9 percent; Hershey, 6.1 percent; Clorox, 8.7 percent; Molson Coors Brewing, 8.1 percent; construction and farm machinery, 5 percent; Yum Brands 8.5 percent.

I personally do not care how much a business makes as long as its profits are legal and they face competition. The Obama Administration likes to complain about the health insurance industry "monopoly" on health care, as if we were all dealing with a single company. In light of the fact health insurance companies are making considerably less than other industries, it is clear that these companies do not enjoy anything like a monopoly. We will not, however, be able to say the same about Obama's public option.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Are the Democrats really for the Poor?

One of the big debates over fiscal policy is the discussion of "priorities." Government, is going to spend, it is merely a question in what areas, we are told. In that debate we are told that Democrats (or liberals of any political party) are for the "poor," while conservatives are for the "rich." We often hear about "rich Republicans" and "poor Democrats," but how does this line up with reality?

In the last Presidential election, the only two serious contenders on the Democrats side were Barack Obama (who eventually won) and Sen. Hillary Clinton. Both used very populist rhetoric and to varying degrees, both sounded as thought they were pulling chapters out of the works of Karl Marx. Yet there is a cloud that hang over these "poor Democrats." That is the political realities that financially drove both of their political campaigns.

Personal income is a strong indicator of ones relationship to the constituents they represent. Barack Obama made ten times more than Sen. John McCain (who became the Republican nominee in the last year) accounted, with over $4 million in income. Meanwhile his wife cries poverty over having to have to make "outrageous" student loan payments to their old schools -- Princeton, Columbia, and Harvard (where's the violin music when you need it?).

In the same vein, Sen. Hillary Clinton, made an impressive five times more than Obama at approximately $20 million. My mathematical skills suggests I refrain from attempting to calculate the difference between McCain and her.

But personal wealth is only the beginning, there is also the lessons we learn from those who supported their campaigns. From the media we would have to assume that McCain certainly received much more from his rich Republican buddies than either (or even both) of the Democrats. The reality could not be further from the truth, Sen. John McCain raised a fraction of what Obama raised (who broke a presidential campaign record) and during the primaries, he could not keep pace with Clinton.

The debate about wealth, poverty, and politics, is really quite cloudy. I sincerely doubt that homeless and other poor people (the alleged beneficiaries of Democrat policies) are fueling their Presidential campaigns. In fact, a Fortune Magazine article implied that business was voting for Hillary. What kind of business? The big corporations that can actually afford liberal and big government policies and see such as a way of keeping smaller competitors at bay. We saw from the so-called stimulus packages (designed by Democrats in Congress, yet supported by both parties) in September of 2008 and again in the early days of the Obama Administration, that some of the biggest beneficiaries were the largest corporations in the United States.

The truth of the matter is that the mega rich support liberals over conservatives. In fact, Obama's support was 3 to 1 in that category. The reasons the rich supports liberal candidates might be quite cynical. Major corporations know they can absorb the regulations, tax requirements, and other obligations that come with being large. They also know such laws could put their aspiring competition -- the rising enterprises often driven by the middle class -- out of existence. Americans need to get serious about this issue and start by asking the question, what type of policies actually help the poor?

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

The Truth About Trade Deficits.

The dreaded "trade deficit" is shrinking...let's celebrate! Wait a minute, this is happening in the context of the worst unemployment in a quarter of a century, a jump in inflation, and a period of protracted economic decline.

The balance of trade -- the amount of goods imported versus goods exported -- has been a tool used by those who are shallow in their economic knowledge and deep in their fear of competition. We are told by many politicians that trade deficits (importing more than we export) is a "terrible" thing and demonstrates an economy in decline. As a result of decades of trade deficits, the US is a "debtor" nation, we are told.

So the recent news stories should be good news: "Trade Gap Continues to Narrow." This narrowing is because the amount of goods we are importing each year is actually shrinking. There are few, if any, who would argue that this economy is anything but weak and has been in a downward spiral. This reality should not be a surprise to any student of history. When the economy is weak, we can't afford to buy. Our trade deficit shrinks with our spending power.

In 1928 Republican Herbert Hoover was running for President of the United States against Democrat Al Smith of New York. Hoover, the Secretary of Commerce under one of the most successful Presidents in US history, was running against a very popular governor. It was easy for Hoover to defend the record of the President he served, Calvin Coolidge, as virtually every indicator pointed to an administration noted for its prosperity. "A chicken in every pot and a car in every garage" was a message that rang true to most voters.

During the 20s, Coolidge and his allies took a tax rate that was as high as 70 percent under their predecessor and lowered the top rate to a low of 5 percent. Coolidge opened economic trade with countries and unleashed a level of prosperity we had not seen in generations. The number of people who made six digits (a very high income in the 1920s) increased four fold. Inflation was less than 2 percent and unemployment was at a comparable amount. They called it the "Roaring Twenties" for a reason.

In spite all the glitter, there were signs of "rust" for those who cannot look beyond the surface. That was the trade deficit that grew rapidly during his administration. This area fell under the Secretary of Commerce and Hoover was taunted by his opponent through out the race as the man who over saw this area of "decline." Finally Hoover got on the protectionist bandwagon and told voters that if Smith or he were elected, there would be quotas and tariffs placed on trade. Hoover won and by the Fall of 1929, he was sticking to his guns and pursuing protectionism in the form of the Smoot-Hawley Tariff Act.

That law did exactly what it intended to do -- slash the import of goods. Within a few years, the US had its first trade surplus in decades and also one of the highest unemployment rates in history. The Stock Market crash that proceeded the Depression was fueled by this trade protectionism. Wall Street knew that, if we penalized imports, foreign countries would retaliate. That led to the Market crash because investors knew that the value of goods would decline as the trade markets would shrink.

The high unemployment rate was associated with the trade surplus for a very simple reason. We imported more goods than we exported because our buying power had declined dramatically. Through out our nation's history over the last century, our periods of highest prosperity were accompanied by eras of trade deficits. Meanwhile, trade surpluses accompanied economic decline. In our prosperity we were buying more, from everywhere.

Today, the trade deficit is shrinking because the economy is weak. Our national buying power is in decline. Trade deficits continue to do what they have done for centuries -- indicate strength and not weakness.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Congress is bent on making "Public Option" Inevitable

The phrase "public option," when it comes to the health care debate, has become so poisonous that everyone who supports socialized medicine have distanced themselves from that language. No longer will the government mandate everyone to be on "public" insurance. Rather, the government is going to force everyone out of private options and to government care. It is not as "cut and dry" as the approach they prefer and some (the very rich) will still enjoy private coverage, but the vast majority will find themselves with no other practical option than the government.

Peter Landers of the Wall Street Journal reports that "Insurance companies have another made-to-order report saying that the Senate Finance Committee's health bill would drive up health costs." Citing a report from PriceWaterHouseCooper, Landers notes that "The Oliver Wyman report says that unless the Senate beefs up the proposed mandate on Americans to carry insurance, average annual medical claims five years after the overhaul takes effect would be 50% higher than today, not accounting for medical inflation. That would increase the premiums for family coverage by $3,300 in today's dollars, it says." Many families who are struggling to hold on to the health insurance they have will feel forced to give up that private option, especially if there is a government option in the wings and regardless of how poor of an alternative it is.

That is the other side of the two edged sword; not only will Obamacare drive up the prices of health insurance for all those who stay in the private option, it will also put taxes on virtually everyone to pay for it, including (or maybe, especially) those who are already paying for insurance of their own. Just like those individuals forced to pay property taxes while their own kids attend private schools, socialized health care will mandate every taxpayer to pay for the services, even if they are not using the programs themselves.

The demagogues that are currently driving the debate are telling those that have private insurance (approximately 85 percent of the population according to US News and World Reports) will continue to have such after a socialized medicine program becomes law. The truth is, they might have the right, but between being forced to pay for a service they do not want to use and having the cost of the insurance they want to use growing exponentially, they will find themselves "crowded out" of the private option and forced in to the public one.

Because of the same "crowding out" effect in education (people being forced to pay taxes for it, even if they prefer their children to go to private school), 90 percent of all children in the US are in public schools. In England, where public health care is financed in a similar way as we are moving, 90 percent of the population is under socialized medicine. This is not a mere coincidence, but a clear warning for us today.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Obama Declares war on Fox

We are all familiar with Obama's distaste for dissenting opinion when it comes to the media. Back in his 2008 campaign for President, the Obama campaign left reporters from The New York Post, The Dallas Morning News, and The Washington Times on an airport tarmac. The Post and Times are noted for their conservative bent and all three were guilty of endorsing John McCain. Once those endorsements were announced, reporters from each of these newspapers were left out in the cold.

ABC News reported at the time that "The campaign says that a limited number of seats forced it to make the tough decision of which journalists would be permitted to follow the Democratic presidential candidate in the last four days of the campaign, but the papers are calling foul, claiming they were targeted for their editorial-page positions and kicked off while nonpolitical publications like Glamour and Jet magazines remained on board." It would seem any news publication would have a stronger case to stay on board than Glamour.

Even before Obama was elected there was talk of restoring the "Fairness Doctrine" that had silenced conservative voices for decades until Ronald Reagan reversed the policy in the 1980s, leading to the rise of Rush Limbaugh and others. Obama says he favors consensus, the kind of consensus that only comes from controlling the media.

The Obama Administration is at it again and is now declaring war on the Fox News Channel and many in the media are weighing in.

The "war" against Fox came from pretty high sources in the Administration with White House communications director Anita Dunn describing a new, aggressive, press strategy regarding the network. PRNewser reports on, and has video of White House communications director Anita Dunn's strategy which "she explained in a straightforward slam of Fox News Channel during an appearance on CNN's 'Reliable Sources,'" stating "Fox News often operates almost as either the research arm or the communications arm of the Republican Party," said Dunn. "Let's not pretend they're a news network the way CNN is." The senior aide added, "What I think is fair to say about Fox, and certainly the way we view it, is that it really is more a wing of the Republican Party."

Reports of the White House attack is drawing comments from around the news industry. Time Magazine's James Poniewozik discusses what the Administration has to gain from such an approach, "Of course, it's possible that the Administration is simply making the case because it believes that it's right and Fox News is wrong. But politically, you would think that the White House seeks to gain something from a fight, since Fox News probably is." There is little doubt that Fox loves the attention, and many of my friends with the network have brought Obama's attack to my attention and the personalities themselves discuss it on the air. With Obama's rapidly shrinking numbers, why would not Fox want to be the place to go if you are unhappy with the Administration?

There is certainly a concern that the White House is going too far in its stance. The Orlando Sentinel's Hal Boedeker writes that "Maybe the White House should get out of the press-critiquing business. It's never been a wise move for any White House. The complaints come off as whining. The White House certainly should stop condescending to Fox News, which is a slap against that channel's fans. The smarter move would be for Obama to engage. Why doesn't he put his smooth, unflappable style to the test on Fox News?"

Even liberal publications have echoed a similar concern. The Nation's John Nichols thinks the strategy is weak from both a political and historical perspective: "Whether the grumbling is about Republicans on Fox or bloggers in pajamas, there's a word for what the president and his aides are doing. That word is 'whining.' And nothing -- no attack by Glenn Beck, no blogger busting about Guantanamo -- does more damage to Obama's credibility or authority than the sense that a popular president is becoming the whiner-in-chief."

With the other major news media being little more than a microphone for an increasingly unpopular Administration, voters are going to look for an alternative. Obama and his staff have made it easy to identify where to go to for that.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

One Simple Election Reform Could Stem Tide to Socialism

The United States government has, for years, put a premium on the act of voting. The idea is, the more people voting, the better. Are you getting your license renewed? Apply for a voters registration! Are you applying for Food Stamps? Go ahead and register to vote! This idea, however, goes completely against the grain of trying to maintain a responsible government. Our Founding Fathers believed in the idea of "quality of vote" versus "quantity of vote," which is the mantra we have today.

We all know that in the early days of our republic, an entire gender (females) and ethnic group (Blacks) were not allowed to vote. What most of us are not taught, however is that the vast majority of the population (regardless of race) was not allowed to vote in those early years. Voting was largely determined by states and virtually all of them had property ownership requirements that excluded, by many estimates, as much as 90 percent of the population. The discrimination practiced by the early leaders was not nearly as inclined toward race, as it was making sure that those who participate had a vested interest in the process. Those with property had to pay taxes directly, giving them (in the eyes of the early leaders) a right to participate in the process.

The classical economist John Stuart Mill argued that, if any person was receiving money from the government, they should be prohibited from voting until they were financially free from any assistance. This idea would not be merely welfare recipients, but corporate "fat cats" getting subsidies from Uncle Sam. Mill argued that there was no way to maintain a small and reasonable government if people could vote benefits for themselves. It was similar to serving on the board of an organization and being allowed to vote on something that directly benefits you. That would be bad form and everyone would expect you to "abstain." "Abstain" we all should do if we are eating at the trough.

Unfortunately, that was then, and this is now. Such a proposal would not be politically palpable. What if there was a third way beyond the "anyone with a pulse can vote" mentality pervasive today and the elitist position found earlier in our nation's history? It is against the law for candidates to campaign for office within a certain distance of voting locations. That is why, when you walk up, you are bombarded with people offering you flyers up to an invisible line. Yet, the single most important information -- party affiliation -- is actually seen on your ballots. Worse still, we allow people to vote "straight ticket," requiring absolutely no thought at all.

To restore integrity in the ballot box, we should remove party affiliation from every ballot entirely and from voting locations. This will require every person who goes in to vote to know exactly for whom they are voting and why. They should not be provided a "cheat sheet" in the form of the ballot for the most important test they take for liberty each election cycle. Those who cry "foul" will be implying their followers cannot read or lack the faculties to make such decisions. What an insult to their constituents. Without party identification, our elections will become a sober task in maintaining our liberty and not a celebration of ignorance. Will we have fewer voters? Most definitely, but we will have more thoughtful voters.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Are the Rich Necessary?

Hunter Lewis, author of the provocative Where Keynes Went Wrong, produced another winning book in Are the Rich Necessary?. Clearly policy makers in Washington, DC do not seem to think so and seem to have a very hostile view of the affluent. The "goose that lays the golden egg" is certainly in season. Lewis asks several tough questions that people need to ask in order to get a better understand of the economy and the world..

Lewis is a prolific writer who has written for The Atlantic, The New York Times, and the Washington Post and is the author of six books including the before mentioned Where Kenynes Went Wrong. He co-founded Cambridge Associates, a global investment firm whose clientele reads like a who's who of leading endowments and families, and includes the most prominent American universities. he has also served on boards and committees of fifteen leading nonprofits including the World Bank. He has appeared on "The Today Show," NPR, Fox and the BBC. He lives in Charlottesville, Virginia.

Lewis tackles many important questions, including:

Does Obama's objective of limiting charitable deductions for the rich make sense?

What impact is Wall Street having on politics (and vice versa)?

Is the income gap actually widening and if it is, what can be done to reverse that trend?

Has anything really been done to prevent another crash like the one in 2008?

Was the crash attributed to our profit system? Are there viable alternatives to such?

Should we tax average Americans to bailout major financial corporations?

Are the rich even compatible with a free society?

His answers are thorough, thoughtful, and even humorous. He loves to challenge conventional wisdom and does so on virtually every page of the book. The book is thorough and covers many areas of economics and could actually be an introductory text or compliment to such in an introductory economics class. Unfortunately, in our current academic culture, that is largely a dream and not likely to be found in your local college. This is all the more reason why you need to find it yourself.

The best may have been saved for last, in this important book. There, Lewis argues a new way to fill the gap between the rich and poor, of those who want free enterprise and those who want to make sure there are safety nets for the needy. His answer is to foster massive growth of nonprofits through changes in the tax structure. His ultimate goal is to raise nonprofits to the same stature as government when it comes to being a source of help in the eyes of the public.

Lewis brings to light the stark realities that mandate that we need informed voters who can help restore a healthy attitude towards the engines of prosperity that are currently an endangered species. Are the Rich Necessary? is an excellent place to begin that journey.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

The GOP needs to be put in its Place

The Republican Party could serve itself well by remembering a man that helped to define the GOP. Ronald Reagan was noted for saying that "I didn't leave the Democratic Party, the Democratic Party left me." That message resonated with millions of Americans and led to the rise of "Reagan Democrats." Many of them left that Democratic Party too and some (but certainly not all) of them, joined the GOP. This was part of the Reagan formula for success. It was about values, philosophy, and optimism built on common sense. It had little to do with parties.

In 1980, I was a student at Abilene Christian University and was Chairman of that school's Young Conservatives of Texas chapter. I was also a regional coordinator of Students for Reagan. I was attracted to certain ideas and not partisanship. In my area, Grant Jones was a conservative state senator and also a Democrat. Back then, Charlie Stenholm was a conservative Democrat Congressman. I consistently voted for each of them back in those days because their Republican opponents ran to the left of them.

At this time, there was a Young Republicans chapter at my school and many of them would say, after the Gipper got the nomination, "Reagan in '80, Bush in '81." Reagan was the oldest man elected President and you see how these GOP activists thought about his future.

The Republican Party, at that time was dominated by people that, today, we would call "Republicans in Name Only" (RINOs). The GOP had an Eastern Establishment bent that saw followers of Reagan as among the "unwashed masses" and a mere "necessary evil" to promote their cause. Thanks to Reagan, things changed some what. It became "cool" to be conservative.
Some where over the last two decades, things changed again. When the GOP did something well (cut taxes for job creation, increase economic growth, etc.), they were remarkably silent. Instead, they tried to get fame in a sick form of "me tooism." The left believes government needs to bailout financial institutions and the automobile industry. The GOP's response is "we do too." As a result, I hear conservatives defend Bush's bailout policies. This is a terrible mistake. We should only embrace a candidate's policies that reflect our values and not the candidate because of his party affiliation. Supporting liberty and being Republican are not necessarily the same thing. The last several years have shown that.

Conservatives who continue to defend Republicans who behave like Democrats are like the "co-dependents" who always apologize for their drunk spouse and abusive friends. People who know such individuals (either the abuser or the abused) tend to lose sympathy and in our case, will only chase away potential supporters to our cause. If we want to grow our ranks, we need to stop defending Republicans for being Republicans in Name Only and hold them to the same high standards we have for Democrats. In fact, we should demand an even higher standard. That will disarm Democrats and independents who think our agenda is a Republican agenda and will make them feel comfortable to look more closely at our positions.

Republicans like to say that Democrats spend like drunken sailors. Unfortunately this transcends party lines. Someone needs to hold government accountable and party affiliation should not matter.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Stock Market grows with Unemployment Numbers

The United States have seen monthly increases in unemployment of hundreds of thousands of people each month for several months in 2009. In fact, the US has experienced the largest increase in unemployment in a quarter of a century. What was Wall Street's response? A remarkable increase in the growth of the stock market numbers. In fact, in March of this year the market had plummeted to just above 6,000 and has gained approximately 80 percent of that since that time.

There is a clear divide between the short term interests of the public and business in general and an even bigger gap between the average person and Wall Street. The latter is all about profits and bottom lines. They could not be happier about the Draconian steps being taken by businesses these past months for several reasons:

• When economic environments get to this point, there is nothing that Wall Street desires more than action. Often "retreat" (cutting costs and employees) is one of the most attractive actions in the eyes of investors.



• There is no quicker way to cut costs than to cut employees. Employees are one of the most expensive aspects of doing business and so Wall Street is particularly excited by such cuts. The more harsh, the better.



• Wall Street has been waiting for the market to capitulate. They have been waiting to see investors hit bottom (the DJA is now roughly half of what it was a year ago) and another indicator that the decline has plateaued is when you start to see massive layoffs. Such job losses are horrific for the recipient of the pink slip, but is great news for those who are investing in those businesses.

I don't believe the job cutting is over. Virtually every publicly owned company is going to seek ways to increase investor confidence in their companies. There is no quicker way to achieve that following a decline in profits than through layoffs. Those who have not cut yet are watching the Market's response favorably and you can expect many more to jump on board. Furthermore, many of the companies that have had layoffs also have vendor relationships that are dependent on them. As we see these companies lay people off, expect many more businesses that are dependent on them to do the same thing.

Unfortunately this ugly trend will continue, in my opinion, until there is a decidedly different approach to policy. Cutting taxes on job creators (AKA, the affluent and business owners), restoring moral hazard (e.g., allowing businesses to fail), and resisting the temptation of regulating our businesses out of existence are just a few of the steps that are needed to restore fiscal responsibility and to encourage a stable economy.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Dancing with Democracy

Recently I was reading Glenn Beck's Common Sense and found it an excellent read. The book is full of sound reasoning as he made a case for liberty and limited government. In it, however, he discusses the virtues of democracy and how that force will restore our government.

Rush Limbaugh, the conservative radio host who saved the AM dial and made that radio band the hot property it is today has a section of his website and a recurring feature on his program in which he refers to himself as "The Doctor of Democracy."

The late Jack Kemp wrote in his excellent book, An American Renaissance that "bad mouthing democracy" was becoming an occupational hazard of Republicans and that they should embrace that form of government rather than distance them from it. The book was excellent, but like all other things I have read and enjoyed, I certainly do not agree with everything in it. Democracy is an extreme form of government that inevitably we lead to totalitarianism. The US has democratic institutions that are checked by the restraints of republican form of government. In these confusing times, "democrat" and "republican" have nothing to do with parties, but philosophies in this article.

The Founders warned of the excesses of democracy and spoke passionately about limited government:

John Adams: "Remember, democracy never lasts long. It soon wastes, exhausts, and murders itself."

Benjamin Franklin: "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!"

Fisher Aimes: "The known propensity of a democracy is to licentiousness which the ambitious call, and ignorant believe to be liberty."

Even Thomas Jefferson, considered by most of his contemporaries to be the most sympathetic of democracy, was quoted as saying: “A democracy is nothing more than mob rule, where fifty-one percent of the people may take away the rights of the other forty-nine.”

When I traveled to Eastern Europe and the former Soviet Union following the fall of Communism, there were often protests because the people were seeking a quicker pace of reforms. You would find signs, in English to get the message to the United States via TV, that would say "Democracy equals Freedom" and similar themes. Ironically, the first free elections in Germany’s history were in 1932 and led to the rise of Adolph Hitler, whose party enjoyed a mandate. Democracy leads to mob rule and mobs behave in a most destructive fashion riddled with socialism and financial ruin.

We need writers, radio hosts, TV personalities and more to discuss the virtues of republican government, which is found in rule by law. Government should only do those things the people cannot do for themselves. It must be based on law and confined, in our country’s place, to the 17 powers listed in the Constitution. This is why I say that the term "conservative" is a misnomer. There is little liberty left to conserve. The proper term is restore. We must restore liberty, limited government, private property, and free market economics. It needs to become "cool" again to point out the virtues of republican government and to dismiss and to discredit the extremes of pure democracy.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

Understanding Human Nature Matters in an Economy

There has been a war that has raged for centuries in the fields of politics, economics, and the social sciences in general. It is a debate between those who say that all public policy should be developed on how people actually behave versus those who argue that public policy should be developed with the end result or intention in mind. Members of the former group are generally called "positive" theorists when it comes to approaching issues because they make decisions based on the way things are. They strive to take an objective view of public policy. The latter group has a "normative" view of economics. These individuals have a subjective view of human behavior. They want a disconnect between the policy and the intended result, because that goal is the only thing that matters. Unfortunately for them, we silly people tend to undermine that goal.

The examples of this are too numerous to cite in a space this small, but I will give a few examples.

Minimum Wage


The minimum wage is an excellent example of normative economics at work and is proof that the "road to hell is paved with good intentions." "Well meaning" politicians want to raise the standard of living for those who are earning a low salary and they raise the minimum wage. Ironically, this policy is always followed with a spike in unemployment, particularly for low income workers, and leads to higher prices (thus devouring the increase in income). In July of both last year and this there were significant increases in unemployment that accompanied a jump in minimum wage. People are paid based on what value the job has to the employer. If minimum wage raises the cost of the job above its value, the job has to go.


Taxing Business

Another popular area to attack is businesses through increasing taxation. This is the ultimate opportunity, we are told to "soak the rich" and to pound those greedy corporations. Unfortunately, businesses don't pay taxes. Period. Taxes are a fixed cost of doing business, like employees, office supplies, office space, and any of the other over head necessary to stay in business. Just like these other items, higher taxes are simply a fixed cost. Businesses don't pay taxes they collect them. They collect them, that is, until they get too high and they lose their competitive advantage, which is how corporations and the jobs they created are exported. If the cost of business is too high, businesses move to where it is more affordable because when humans (or businesses run by humans) are attacked, they either fight or flight. If we want the US to be the greatest job creator in the world, we would have a truly honest government that doesn't tax business at all. A consumption tax, which every person feels in every transaction, is far more honest that waging a war on wealth creation, be it on businesses and individuals.

Why Bureaucracy is Bureaucratic

I keep hearing stories of how much could be saved if government cut this program or that expenditure and am amazed by people who are shocked that the reductions in spending never happen. The reason is simple, while business operates on a "profit motive," government operates on a "spending motive." While saving money and making the most of every dollar makes sense in business, it does not in government when power is measured by how much is spent, how many employees one has, and the size of budgets. Short of getting bonuses for cutting agency budgets, bureaucracies will only grow. That is human nature.

These are just a few of the areas where government defies the laws of human nature. If you see a public policy that does not "make sense," you are likely right. Government rarely recognizes human nature in decision making, which is among the reasons government is out of control.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.

When Taxes hurt, Government is more Accountable

Recently I received a pitch on a guest who argued that we could have "life and government without taxes." It was a slow news day and the thesis was interesting, so I thought, "why not?" After the show I could name several reasons. In essence this guest took my audience through a maze that was evasive when it came to the question of where revenue would come from. He indicated that it came from sources that "would typically to to the employees of the company" or "consumers in lower prices." So, there were taxes, just the type of taxes that people or business would not "feel." These are the worst kind of taxes.

The government has been striving to develop ways of taxing people, without us realizing it. Two examples of this are inflation and taxes on business.

The first, inflation, is obvious. Inflation is not just "high prices," as we have been taught in high school economics, but "too much money chasing too few goods." Inflation does not mean "expanding prices," but means "growing money supply." Why does the government do it? Ostensibly to encourage economic activity in a stagnant economy. Some times that happens since it is politically popular and most people do not understand the larger consequences. The real reason is far more sinister. It took over 180 years for the federal government to reach a national debt of $1 trillion. Obama is raising it that amount annually for the next ten years. These have to be paid for and the United States has taken a chapter out of Zimbabwe's playbook by pumping $1.2 trillion into the money supply in an attempt to pay off its bills. Many Americans have (rightly) been alarmed by the more than $1.5 trillion we have seen in bailouts. According to the Washington Post, these inflationary efforts have the potential of being much more far reaching, noting that "combined with the billions already deployed by the Fed, the new money dwarfs even the biggest government bailouts of financial companies." Inflation is a hidden tax that takes value from every dollar out there without a vote of a Member of Congress.

The other is business taxes. Populists love these type of taxes, done in the spirt of the late Sen. Russell Long, "Don't tax you, don't tax me, tax the fellow behind the tree." That "fellow" is the business, which is such an easy target for government because it does not vote (lobby, yes, but does not vote). The thing that government does not admit is that businesses do not pay taxes, but are merely tax collectors. Businesses do not pay taxes any more than they pay rent, for employees, transportation, or any other cost of doing business. Businesses do not pay taxes, but collect them. When those taxes become too high, businesses move to places that have lower taxes. The US now has the second highest tax rate of any industrialized country in the world and over twenty countries have simple flat tax rates that are considerably less than ours. This has led to the exporting of both jobs and businesses.

The best taxes hurt those that vote and should be seen frequently. That is why I would eliminate all taxes on wealth creation (including business tax) and replace it with a consumption tax that would hurt every time someone makes a purchase. Furthermore, it would allow us to collect money from illegals and criminals that slip under the radar screen. For every painful purchase we would have one more reminder of the need to vote and to put those who are fiscally responsible in power.

Kevin Price is Host of the Price of Business, the longest running show on AM 650 (M-F at 11 am) in Houston, Texas and on AOL Radio. His articles often appear in Chicago Sun Times, Reuters, USA Today, and other national media. Steve Moore of the Wall Street Journal calls Price the “best business talk show host in the country.” Find out why and visit his blog at www.BizPlusBlog.com and his show site at www.PriceofBusiness.com. You can also find Price on Strategy Room at FoxNews.com.