US beats many European Countries in the Spending Arena

We all realize that different types of governments cost various amounts to run. Those in which the government does less, typically have stronger financial portfolios. Those in which the government does more have much weaker financial pictures.

Fox News recently asked "How much money does it take for the governments of sovereign nations to do their job?" Those that are socialist or social democratic suffer from huge budgets and looming deficits as they strive to provide "cradle-to-grave" spending programs. Most Americans assume that countries like Sweden and France have massive governments compared to the US. They also think France, Finland, and the UK are much larger in their spending per person. This is not the case anymore, according to economist and author, John Lott. Those who oppose European style socialism do not have to wait for that system to arrive in the US. Lott warns that type of government has already arrived.

Most Americans are probably not surprised that US spending is higher than other countries, but when you factor in cost of living and total population, our budgets "are much lower" than other countries, it is often perceived. In reality, government spending accounts for more real resources per capita than "95 percent of the countries in the world," according to Lott. In fact, only "166 out of 175" countries have smaller real budgets than the US, according to Lott.

The numbers, when it comes to government spending, are frightening. The US government spends 276 percent more than is spent by the average government of another country around the world. This type of spending amounts to about $17,400 per person living in the United States or $70,000 for a family of four.

The one country that is most famous for its "welfare state" is Sweden, yet it only spends about 8.6 percent more per capita than the US. This figure is far less than most Americans would likely assume. How about France? Americans seem to enjoy making fun of France's fame for government dependency. The bad news for Americans is that France spends virtually the same amount as the United States. The difference between the US and France is a mere 1.6 percent when it comes to spending.

It gets worse from here. Finland actually spends 6 percent less than the US and countries such as Germany, Italy, and the United Kingdom do not even compare. Meanwhile, Canada spends 14 percent less than the US per capita and Japan's spending is a fraction of the United State, standing at 32 percent less. What is interesting is that this current fiscal state is before the costs of President's Obama's trillion dollar health care bill was signed into law. After the impact of that law is fully felt, the US could easily find itself close to number one in the "cradle-to-grave" socialism department, compared to its European friends.

The US government has more control of its nation's resources, per capita, than virtually all the other countries in the world This government determines an entire nation's financial future and controls from whom money comes from, who gets that money, and, ultimately, how that money is spent. Lott also points out that "Of course, the money also pays for the enforcement of all the regulations and laws that tell us what to do." The old saying that "the government is out of control" may no longer hold true. Government is in total control of virtually every aspect of our lives and economic freedom is held in very low regard.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is also host of the Price of Business (M-F at 11 AM on CNN radio). Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

The Road to Hyperinflation

There is a great deal of discussion about inflation and even hyperinflation, but most are not really aware of what either are and how they come about. Inflation is not, as you have often heard, "high prices." High prices are among the symptoms of inflation. The classical definition of inflation, simply put, is "too much money chasing too few goods." We have a great deal of that going on in our economy today. The result is not only high prices, but outrageously high interest rates (which are right around the corner) and a massive drop in the value of US bonds in the eyes of international buyers. Those bonds are one of the primary vehicles our country uses to avoid bankruptcy, because of the size of our debt and deficits.

Many Americans believe we have not had a problem with inflation in decades, but the reality is inflation has grown steadily at approximately 4 percent for years. For example, items that totaled $100 in 1988 would cost almost twice that today. Those higher prices did not go up because the items became more scarce or the ability to produce them had declined (in fact, the exact opposite has happened; technology and the ability to easily do business internationally should have drove pricing down), it is due to a reduction in the value of the currency itself. This is a cowardly form of taxation, with the government decreasing the value of all money by printing fiat dollars as a form of paying bills. It is much easier to do that than the government behaving in a fiscally responsible manner.

So we have had inflation for decades, yet it has largely gone unnoticed by millions of Americans who remember the double digit inflation of the 1970s and are too busy trying to make a living to notice the government chipping away at the value of all money today. Now the federal government is going much further in its efforts to devalue our nation's money. We have got into the mode of adding $1 trillion to the deficit annually. Twenty years ago, this was the amount of the entire national debt and took almost two centuries to accumulate. The Obama administration has to do something in order to make this shell game of fiscal insanity work. There is no doubt Obama wants to raise our taxes and has moved aggressively in that direction. However, the US already has the second highest corporate tax rates in the world among industrialized countries according to the G-20. Unless the US wants to shut this economic machine down entirely, they will have to look for strategies beyond tax increases. One of those clearly include more inflation and it has already begun to happen.

On one day earlier this year, the United States took 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."

Historically, this type of monetary policy leads to the kind of inflation that we have seen in history books, where it is cheaper to use money for wallpaper than to buy it or it requiring a barrel of money to buy a simple loaf of bread. One of my favorite photos is a Weimar Republic sanitation worker in the days before World War II literally sweeping money in the gutter because it was both worthless and in excess. Printing worthless money will not sweep our problems away, but make issues we never imagined.

Kevin Price is a syndicated columnist whose articles frequently appear at ChicagoSunTimes.com, Reuters.com, USAToday.com, and other national media. Kevin Price is Host of the Price of Business (M-F at 11 AM on CNN 650) and Publisher of the Houston Business Review. Hear the show live and online at PriceofBusiness.com. Visit the archive of past shows here.

Corporate Salaries are under Microscope as Federal Wages Explode

You have seen the headlines, "The Worst Unemployment in 25 years," "First Mark of Double Digit Unemployment in Decades," and more. Unemployment is rampant and the American people are rightly concerned. Many US employees are taking salary cuts, hour cuts, and any other type of cuts necessary to stay employed. We live in very trying times indeed.

We are told that the government is concerned about the disparity between employers and employees and we see additional headlines that reflect this fact. "Retro TAX on AIG Executives," "Corporate Salaries need to be brought to Earth," and "New Czar will Tackle Outrageous Salaries.” The Obama administration has responded by hiring a "pay czar" who wants to put limits on how much CEOs make. What we are not seeing much of in the news is that while millions are unemployed, the government has its own salary issues that have created a scandal of its own.

According to a recent article in USA Today, the number of federal workers earning six-figure salaries has exploded during the last year and a half. Leary taxpayers are not very comfortable with reports such as this in the best economy, it is even more disconcerting as we navigate through one of the worst recessions that we have experienced in a quarter of a century.

The growth in the number of people who work for the government and earn six digits is significant. Federal employees that are earning salaries of $100,000 or more jumped from 14 percent to 19 percent of civil servants during the recession's first 18 months -- and that does not include overtime pay and bonuses. Federal workers are enjoying an extraordinary boost at this time -- in both pay and hiring -- during a recession that has cost 7.3 million jobs in the private sector. Remember, every new job that comes from taxpayer dollars cost significantly higher than one created by the free market. These jobs are always more expensive because the average government salary is virtually always higher than a job in the private sector and they come with bureaucratic and other costs that are not found in the market place.

According to the USA Today article (depending on the Congressional Budget Office), the highest-paid federal employees are doing best of all on salary increases. Defense Department civilian employees earning $150,000 or more increased from 1,868 in December 2007 to 10,100 in June 2009, according to the most recent figures available. When the recession started, the Transportation Department had only one person earning a salary of $170,000 or more; 18 months later and you will find 1,690 employees with salaries above $170,000. The trend towards six-figure salaries is occurring throughout the federal government, in virtually every agency and in virtually every job type. What are the reasons for the huge jump? There have been substantial pay raises and new salary rules.

The growth in six-figure salaries has pushed the average federal worker's pay to $71,206, compared to only $40,331 in the private sector. Each one of these jobs, paid for with taxpayer dollars, would create two truly profit making jobs outside of government. Congressman Jason Chaffetz (R-UT) is quoted by USA Today as noting that "There's no way to justify this to the American people. It's ridiculous." I believe that the vast majority of Americans would agree whole heartedly.

Public Funding of Elections Provide Predictable Results

Many have been crying for government funding of elections as a vehicle to make elected office more accessible for those who are not rich and to weaken the influence of money on the policy process. A new report by the Goldwater Institute indicates that may not be the case. The Goldwater Institute is a state public policy foundation for the state of Arizona and its recent report shows that public financing has empowered substantially more "big government believers" than supporters of smaller government to the process, according to the Director of its Center for Constitutional Government, Nick Dranias.

The report takes a rather objective look of the impact of public funding on candidates by grading and ranking state legislators based on their commitment to small government as demonstrated by the bills they supported. The institution's philosophy is best described as classical liberal, meaning that government simply should tax, spend, and regulate as little as possible. Like those report cards you received in school, the grading looks familiar -- an "A" for those who would vote like the organization's namesake (Barry Goldwater) and an F of those who reflect the views of the current sitting President, Mr. Obama.

Here are some of the facts from the study:

• As shown in the Institute's report, publicly-financed candidates in both the State Senate and House disproportionately receive failing grades.


• More publicly-financed candidates rank in the bottom half than in the top half.


• And publicly-financed candidates that rank in the bottom 10 are nearly double the number of publicly-financed candidates in the top 10.
  

The report went far and wide in its scope and its grading scale made the legislature's work very clear. The report was also quite thorough, going through over 1,200 bills, memorials, and resolutions introduced this pass session. It gives a solid framework for individuals to determine what work their elected officials are about: protecting taxpayers or exploiting them.
The National Center for Policy Analysis summarized the report by pointing out that, "Scores for the 49th Arizona Legislature remain around the 50 percent mark, indicating a near equal amount of votes that undermined liberty as upheld it. While legislators with the highest scores received a letter grade of A, it should be remembered that this rating represents a percentage score of 80, leaving much room for improvement. Likewise, these scores illustrate legislators' relative commitment to liberty. They are not absolute measures of a legislator's merit, and do not constitute any endorsement, says Dranias."

In my opinion, this study's findings should not surprise anyone. If one uses welfare to get elected (public funding), how can one expect them to hold a tough line on welfare for the general population once elected. That would be the epitome of hypocrisy. The moral legs necessary for supporting smaller government are wiped out by the power of government subsidies for these candidates. Like virtually every other area of discussion, more government in election funding is not the solution to our problems.

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.

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.

Nancy Pelosi Visits Houston

Nancy Pelosi recently visited Houston, Texas and she received a rude awakening. Texas is not San Francisco. Glenn Beck loves to discuss the unique way Texans think about government, economy, politics, individual responsibilities, and liberty. Nancy Pelosi represents an area that fundamentally believes that people are victims, that government is the solution, that freedom is selective, and that some people deserve better treatment than others based on income, ethnic group, gender, and other factors. In many respects, Houston is the anti-San Francisco.

The reason for Nancy's visit? Pelosi was in town to promote her book, "Know Your Power: A Message to America's Daughters" at the Progressive Forum Houston ("progressive" is a euphemism for socialism). What she found was a large group (approximately 1,000) of Texans who are members of the Tea Party Society. This group was delighted to politely remind her that Houston's values are a little different than San Francisco's.

Pelosi's values includes:

• A record of increased government growth and higher taxes. She fundamentally believes government is the solution to many problems that are best solved by people.


• Consistently voting for energy policies that directly leads to higher prices at the gas pump and increases dependence on foreign countries.


• Calling illegal aliens "patriots" for violating immigration laws in this country.


• Voting against protecting America's election process by opposing efforts to require IDs at elections.


• Being an architect of the largest take over by the government in our history through regulations, taxes, and spending. It took over 180 years to reach a trillion dollar debt. Obama, Pelosi, and company are adding that amount annually through the current budget.

The crowd in Houston -- and seen in Tea Party movements around the country -- are looking for a different agenda and they come with a completely different sense of values.

The Tea Party movement is made up of hard working Americans. moms and dads, students, employers, employees, and entrepreneurs. Many are wondering who has been at the wheel and they are believing it is time to change those at the controls.

Pelosi loves to tell people about the problems she has inherited as Speaker of the House. The reality is, she has been in Congress since 1987. During that time she has served in numerous leadership positions and has consistently voted for more government, taxes, and regulations at every turn. It is safe to say, when given the opportunity to choose budgets, she always chose the biggest. Tax rates? The highest. Regulations? More. This is why so many people are up in arms today.

"The times, they are a changing." One of the people that needs to go, is Nancy Pelosi.

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. Eric Bolling of Fox News and Fox Business says that Price’s Blog “is very influential and moves the blogosphere.” 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.