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• Obama “Economic Stimulus” Isn’t Working

  The Financial Times recently reported these dismal figures for private sector hiring: “Since the stimulus began, about 400,000 public sector jobs have been added (through May 2010) while 2.7 million private sector jobs were lost.” The National Federation of Independent Business has a study showing that small businesses in the United States lost jobs in twelve of the last fourteen months. What is equally disturbing in the NFIB survey is that its small business members have no plans to increase hiring in the foreseeable future. Considering that small businesses are responsible for the creation of a majority of new private sector jobs, this is particularly worrisome.

  One group of employees, however, continues to do well even in these difficult recessionary times. Federal employment has increased by 225,000 since President Obama took office. Moreover, according to USA TODAY, federal workers now earn more than twice as much as employees in the private sector doing comparable jobs.

  For every other sector of the American economy, unemployment remains high, and those who have gone back to work after losing their jobs in this recession often are making less than they were before. The U.S. Bureau of Labor Statistics reports that 46 percent of the unemployed have been out of work for 27 weeks or longer. Economist Martin Hutchison notes that long-term unemployment in the U.S. “has reached levels not seen since World War II.”

  All of this data should make it clear to most Americans that the so-called stimulus programs aren’t helping to get Americans back to work. The thrust of these various government spending packages has been to encourage the American consumer to spend more as a means to get us out of this recession. The problem with this approach is that, if the consumer is worried about holding a job, keeping a business going, making mortgage payments on a house, or paying down credit card debt, he or she is going to spend less and save more – which is precisely what is happening.

  That’s why consumer confidence continues to remain weak. In fact, the latest consumer index from the Conference Board for July states that “confidence had hit a five-month low,” down to near the 50 percent range. It was at the 100 percent level a little less than three years ago.

  Scott Burns had it right in a recent column in which he warned of “the idea that government could stimulate demand with deficit spending.” Burns quotes economist Lacy Hunt: “Deficit spending, rather than energizing the economy, is debilitating it. Worse, after the spending is done, the private sector has to service the new debt.”

  If the current policies aren’t effective in putting Americans back to work, then what should we do instead? The key is to provide incentives to get the private sector moving again similar to what we did with the Congressional passage of the Kemp-Roth Job Creation Act in 1981 during President Ronald Reagan’s first term in office. The economic circumstances are different than what we faced back then (government debt is a lot higher), but the concept is similar: How do we encourage savings and capital investment in order to create jobs here in the United States? I would submit that the best way to do that is to replace our corporate tax system and its 35 percent tax rate with an 8 percent revenue-neutral, business consumption tax. That tax would be applicable on goods and services coming into the U.S., while U.S. exports would get a comparable tax credit. This gets rid of our onerous tax on businesses operating here in the U.S., while leveling the playing field with our trading competitors who currently enjoy a huge trade advantage over American exporters.

  Adopting a business consumption tax to replace our current system would reduce the outsourcing of American jobs, encourage long-term investment in U.S. businesses, rebuild our manufacturing base, reduce our trade deficits, and put business owners back in charge of the American economy.
  This is a real economic stimulus plan to get Americans back to work.

  Tom Pauken is the Chairman of the Texas Workforce Commission.

Featured

• House Has Opportunity to Strengthen Property Rights

  Two months ago the Senate passed it’s eminent domain bill (SB18) that doesn’t necessarily do additional harm to private property rights, but certainly left major room for improvement. Wednesday, the House has it’s opportunity to drastically improve this bill by adding necessary property rights protections.

  As we originally noted regarding SB18′s passage from the Senate, it lacks important private property protections and reforms. Paramount are the clarification between “public use” and public purpose”, establishment of “necessity” for the taking, and institution of a better “buyback” option.

  Texas Public Policy Foundation’s Bill Peacock expertly summarizes these necessary amendments to SB18 below:

  The “Buyback” amendment by Rep. Kolkhorst (p. 46): A major flaw with Texas eminent domain law is that once a property has been condemned, it can be used for just about any purpose—the condemnor is not required to use it for the purpose it was taken. SB 18 currently contains a buyback provision that attempts to address this problem by letting a property owner repurchase her property under certain circumstances. However, in most cases a condemnor can get around the buyback provision even if it does not use the property for the use specified in the condemnation proceedings. This amendment adds a new trigger to the buyback provision that would grant property owners the right to repurchase their property if the initial use of the taken property is not the public use for which the property was taken. It applies in all situations and is not tied to the 10 year time frame currently in SB 18, so avoids the concerns that both property rights advocates and condemnors have with the current provision.
                                               
  The “Public Necessity” amendment by Rep. Sheffield (p. 35): Reflecting the U.S. and Texas constitutions provisions, SB 18 prohibits taking of private property unless the taking is for a public use. While this is a good provision, it falls short of accurately reflecting current takings law on public use. A 2005 3rd Court of Appeals decision in Whittington v. City of Austin clearly explains the current requirement in law: “There are two aspects to the ‘public use’ requirement. First, the condemnor must intend a use for the property that constitutes a ‘public use’ under Texas law. Second, the condemnation must actually be necessary to advance or achieve the ostensible public use. …. This second aspect of public use is commonly termed the ‘necessity’ or ‘public necessity’ requirement.” This is also seen in the inclusion of the term “necessary” in many sections of statute, such as Section 251.001(a), Local Government Code: “When the governing body of a municipality considers it necessary, the municipality may exercise the right of eminent.” This amendment simply inserts the word “necessary” into SB 18 so that a taking is prohibited unless it is necessary for a public use.

  The “Public Use” amendment by Rep. Phil King (p. 58): According to the United States and Texas constitutions, eminent domain can only be used for a public use. However, the Texas Legislature and Texas courts have closely followed the national trend of blurring the distinction between public use and public purpose. This confusion between public use and public purpose is what led the Supreme Court in its Kelo decision to allow takings for the purposes of increasing tax revenue and economic development, rather than limiting takings to public uses like building public schools and roads. This amendment simply inserts the constitutional term “public use” in place of “public purpose” in the provisions in statute that authorize the use of eminent domain for cities, counties and school districts. This is the next step—after banning takings for economic development purposes—to ensure that takings conform with the original vision of public use as contained in the Texas and U.S. constitutions.

  Additionally you can find a more extensive explanation of the “Public Use vs Public Purpose”, “Necessity”, and “Buy-Back” amendments on TPPF’s website.

  Because central role property rights play in the maintenance of a free and healthy economy, it is important that the Texas House adds these perfecting amendments to SB18. Please contact your state representative and tell them to support these amendments today!

  Don’t know who to call? – Find out here: Who Represents Me?

  —

  Andrew Kerr is the Executive Director of Empower Texans / Texans for Fiscal Responsibility

  Connect with Andrew on Twitter

• Fiscal Pop-Quiz

  In their first budget vote of the legislative session, House members will have the chance to prove they meant it when campaigning on a fiscally conservative platform in November. Failing on this vote will set a poor precedent for the rest of Session.
  �…

• John Bird-dogs worthless Chinese stocks

  I found this article of local interest: Austin investor John Bird uncovered fraud in some US-listed Chinese stocks, and he went about shorting the stocks and telling others to expose the fraud. Interesting story.

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