MAGA: Is Trump Becoming a Liability?

January 28, 2019

In the wake of the government shutdown fiasco, you have to begin to wonder whether Trump is becoming a liability to the “Make America Great Again” movement.

It isn’t so much the fact that he reopened the government.  It’s the way he did it.  He caved in.  He totally capitulated to Democrats’ insistence on maintaining an open border, getting absolutely nothing in return.  What should he have done?  First of all, he should have followed through with his threat of declaring a national emergency.  Secondly, he should have withdrawn America from NAFTA and immediately put in place tariffs on all manufactured goods from Mexico, effectively making Mexico pay for the wall like he promised.   Finally, he should have immediately begun deporting the “deferred action” illegal aliens that he offered to protect.

The “deal” to reopen the government for three weeks, supposedly for the purpose of giving Trump and congress time to negotiate a deal on border security, is a farce.  Trump has given up all leverage that he had on the border wall issue and Democrats have made it crystal clear that they’ll never support a dime for securing the border in the only way that it can be secured – by building a barrier.  Either there’ll be an impasse again, or Trump will cave in a 2nd time and try to sell something less than a barrier – maybe more funding for border patrol agents and technology – as a win.

The problem goes far beyond the border wall issue to the half-hearted, inconsistent implementation of virtually every element of his “Make America Great Again” (or “MAGA”) program, a program consisting of three key elements:  a re-balancing of trade to bring manufacturing jobs back to the U.S.; putting an end to rampant, out-of-control immigration – both legal and illegal; and putting an end to the rest of the world behaving like a spoiled, entitled teenager treating the U.S. like a doting parent, providing everything it asks for and getting nothing but scorn in return.

We were promised a wall to virtually put an end to illegal immigration across our southern border, to be paid for by Mexico.  We were promised a prompt withdrawal from NAFTA, and tariffs on products from Mexico, which would have made fulfilling the border wall promise a snap.  We were promised tariffs on Chinese imports and on auto imports.

Soon after the inauguration, Trump invited Red China’s communist dictator to dinner at Mar A Lago and was quickly seduced into holding off on tariffs on China.  Then he caved in to pressure not to withdraw from NAFTA and instead got sucked into a ridiculously drawn out negotiation of a new agreement with Mexico and Canada that may or may not be any improvement at all, and that Congress seems in no hurry to take up.  Goodbye to any chance of getting Mexico to pay for the wall.  He did implement a small ten percent tariff on half of Chinese imports after it became clear that Chairman Xi’s promises were nothing more than a ploy, but caved in on further implementation once the global corporations began their pissing and moaning.  Now we’re sucked into the same kind of trade negotiations that the rest of the world has used for decades to stall America’s efforts to stand up for itself.

Then there’s North Korea.  Give Trump credit for using the toughest sanctions ever to forced them to agree to denuclearization, but Kim’s promises have proven hollow and North Korea seems to be off the hook once again.

I don’t blame Trump alone for all of this.  Everyone around him has been against him from the start – the Democrats who despise him and would never agree to anything he wanted, the media, global corporations, global organizations, his own staff and even members of his own family (globalists like Kushner and Ivanka) who have stonewalled his programs.

All of the backlash from the MAGA initiatives was to be expected.  I predicted as much in Five Short Blasts – a period of inflation caused by significant tariff-induced price increases, but eventually followed by explosive economic growth as manufacturing in America returned.  Trump needed to go all in with his program quickly, enduring withering criticism for a couple of years or so before having the last laugh when GDP began to explode as factories were rebuilt and as the manufacturing sector of the economy exploded.  It would have taken a lot of guts to be almost universally despised in the short term in order to have history remember him as an American hero in the long term.

However, I see a real danger in what’s happening here.  Trump’s incomplete implementation of these policies will yield only the pain without achieving the benefits that would eventually come, and will be deemed complete failures.  They’ll be forever labeled as “Trumpian” policies that no one will ever dare to attempt again.  America will be forever doomed to massive trade deficits and budget deficits, and will eventually collapse under the weight of gross overpopulation and a national debt that the rest of the world can no longer sustain.

It’s not too late for Trump, but it’s getting pretty darn close.  He needs to immediately begin ignoring all of globalist noise and whining and go all in with what he knows needs to be done.  Declare an emergency.  Build the wall.  Withdraw from NAFTA and slap tariffs on Mexico, and tell congress that if they don’t like it, then they can pass the new agreement he negotiated.  Slap tariffs on all Chinese exports and raise them to 25% or higher.  Slap 25% tariffs on all auto imports.  Tell the rest of the world that we’re willing to buy from them only as much as they buy from us.  Sure, the globalist outcry will be almost unbearable, but so what?  Continue down the path you’re on and history will remember you as a complete failure.  So what is there to lose?


Trade Deficit Soars in January

March 8, 2018

Click to access trad0118.pdf

The above-linked report, released by the Bureau of Economic Analysis (BEA) this morning, reports that the trade deficit soared in January to $56.6 billion, the worst reading since October 2008.  Here’s a chart of the data, dating back to January of 2010 when President Obama boasted that the U.S. would double its exports within five years:  Balance of Trade.

Exports of manufactured goods fell in January and remain at the same level as March of 2012.  During that time, imports of manufactured goods have risen by $36 billion.  The goods deficit rose to $76.4 billion in January, an annual rate of $917 billion.  The deficit in manufactured goods alone was $68.3 billion, and is rapidly getting worse.  Check this chart:  Manf’d Goods Balance of Trade.  Since Trump took office, the trade deficit has jumped by 16%.

The trade deficit is killing economic growth.  It cut 4th quarter GDP (gross domestic product) growth by 31%.  Without the effects of trade, 4th quarter GDP would have come in at 3.63% instead of the actual figure of 2.5%.  GDP hasn’t grown by 3% since 2005.

This isn’t what Trump promised us.  While tariffs on steel and aluminum would be a good start, what’s needed badly are tariffs that cover the entire spectrum of manufactured products until a balance of trade is restored.  Perhaps with the departure of globalist Gary Cohn from Trump’s economic team, some real progress on trade may finally be possible.


Per Capita GDP Contracts in 1st Quarter

April 29, 2016

Recessions are determined by two consecutive quarters of contraction in the nation’s Gross Domestic Product, or “GDP.”  But what if the GDP grows, but more slowly than the growth in the population?  In that case, your share of the economy has shrunk, as it has for every American, and it’ll feel like a real recession to you.  So that’s how recessions should really be defined – in terms of per capita GDP.

By that measure, the next recession may very well already be underway.  Though GDP grew in the first quarter, though by a paltry 0.5% (as announced yesterday by the Bureau of Economic Analysis), per capita GDP actually contracted by 0.2%, thanks to the population growing at an annual rate of 0.8% in the same time period.

This is the 2nd time in four quarters that per capita GDP declined.  It happened in the same 1st quarter time period last year, falling by 0.2%.  The difference is that last year the economy was already beginning to rebound by the end of the first quarter as we emerged from an extremely harsh winter.  This year, the economy stalled in spite of relatively mild weather and, with the first month of the 2nd quarter already behind us, the economic slowdown appears to be intensifying.

This stagnating of the economy isn’t just a one or two-year phenomenon.  It’s been developing for a long time now.  During the 8-year period beginning with the 1st quarter of 2008 (just before the onset of the “Great Recession”), per capita GDP grew at an annual rate of only 0.5%.  (Check this chart:  Real Per Capita GDP.)  During the 8-year period prior to that (2000-2008), it grew at an annual rate of 1.4%.  And during the 8-year period prior to that (1992-2000), it grew at an annual rate of 3%.  Though the economy continues to grow, albeit ever more slowly, in terms of GDP, per capita GDP has essentially ground to a halt.

This is exactly what the inverse relationship between population density and per capita consumption would predict – that eventually over-crowding would erode per capita consumption to a point where per capita GDP would actually begin to contract.  That’s exactly what we see happening now.  Though we continue to lean as heavily as ever on population growth to stoke the economy, that strategy has begun to backfire. We are all becoming worse off as a result.  It’s time for economists to wake up to the fact that this blatantly-flawed economic strategy is doomed to failure – that population growth has become a drag on the economy.


Per Capita GDP in Decline

July 3, 2014

The country is in an uproar over the immigration crisis that Obama’s refusal to enforce the laws has left us in and, at the same time, I find myself with limited time for writing posts.  You can read opinion pieces on the immigration mess anywhere and everywhere right now.  So I though a better use of my time would be to focus on the recent downward revision in GDP (gross domestic product) and use it as an example as to why America’s ridiculously high rate of legal immigration – not to mention Obama’s refusal to enforce the border and deport illegal immigrants – is so bad for the American economy.

The BEA (bureau of economic analysis) last week dramatically lowered its final reading of GDP for the 1st quarter to an annual rate of decline of 2.9%.  The harsh winter took much of the blame.  Adjusted for inflation, GDP still remains higher than it was in the 3rd quarter of 2013.  And it’s risen by nearly a trillion dollars since the 4th quarter of 2007, when the recession first began.

But you shouldn’t care about overall GDP.  What matters is each American’s slice of the pie, or per capita GDP.  When population growth is taken into account, per capita GDP fell to its lowest level since the 2nd quarter of 2013.  And it’s barely budged in the past seven years (going back to the 4th quarter of 2007 again).  Here’s the chart:  Real Per Capita GDP.

Since the end of 2007, per capita GDP has risen by only $317 per person, an annual rate of increase of only 0.09%.  That includes all Americans, and it’s been widely reported that all of the gains are concentrated in the top 1% of Americans.  Take away that top 1%, and per capita GDP has actually declined during the supposed “recovery” that has taken place since the end of the recession.  And that’s in spite of a trillion dollars in stimulus spending by the federal government and four trillion dollars of stimulus provided by the Federal Reserve.  Imagine how bad it’d be if we took away that $5 trillion that has been poured into the economy in the past seven years.

Declining per capita GDP is one of the outcomes predicted by the inverse relationship between population density and per capita consumption (which is inextricably linked to per capita employment).  As our population continues to grow beyond its optimal level (thanks entirely to both legal and illegal immigration), it’s inescapable that per capita GDP will decline, even as overall GDP continues to grow slowly.

In other words, immigration is the driving force behind a decline in Americans’ quality of life.  Yet, the deep pockets that fund our politicians continue to advocate for increased immigration and population growth.  They want more consumers to grow their bottom lines.


U.S. Trade with The E.U.

May 13, 2013

In his State of the Union address in February, President Obama called for a new free trade deal between the U.S. and the European Union, or EU.  (See this article for more information:  http://www.nytimes.com/2012/11/26/business/global/trade-deal-between-us-europe-may-pick-up-steam.html?pagewanted=all&_r=0.)

It’d be a huge deal, no doubt.  But would it be a good deal for the U.S.?  Since the signing of the Global Agreement on Tariffs and Trade in 1947 and since the inception in 1995 of its offspring, the World Trade Organization, the U.S. has been steadily moving toward freer trade with the rest of the world, including the 27 member states of the Euroean Union.  It only makes sense to examine the results of free trade with the EU thus far before deciding whether or not a further move toward freer trade would be a good deal for the U.S.

But first, a few facts about the EU are in order.  The European Union was established in 1993 and includes 27 members:  Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom.  In other words, most of Europe, with a couple of noteworthy exceptions:  Norway and Switzerland. 

If the EU were a nation, it would be the 7th largest in the world in terms of suface area with over 1.6 million square miles and would be the 3rd most populous, with just over a half billion people, exceeded only by China and India. 

So how have we fared in trade with the EU, particularly in the all-important, job-creating category of manufactured goods?  Here’s a chart of our balance of trade with the EU since 2001:  EU.  As you can see, the U.S. suffers a large trade deficit with the EU.  Though it began to shrink beginning in 2006 – a process helped along no doubt by the overall decline in global trade that accompanied the onset of the “Great Recession” in late 2007, it began to deteriorate rapidly again in 2010.  In only three years since 2009, our trade deficit with the EU in manufactured goods has more than doubled. 

Now, let’s consider the factors involved:

Population Density:

With 503 million people, the population density of the EU, at 309 people per square mile, is only slightly less than that of China (359 per square mile).  It is approximately 3.6 times as densely populated as the U.S. (85 per square mile).  In per capita terms, our trade deficit with the EU in manufactured goods is $223, remarkably similar to our per capita trade deficit with China ($210).  Once again, we see that population density is a consistent predictor of whether we will have a surplus or deficit with any particular country and what the size of that imbalance might be expected to be. 

Currency Exchange Rate:

Economists are fond of blaming trade deficits on exchange rates that are kept artificially low by “currency manipulation,” accomplished by tactics such as currency printing by central banks.  The theory is that a currency that is kept artificially low makes that nation’s exports cheaper for American consumers while making American exports more expensive for that nation’s consumers. 

In 2012, the Euro weakened against the U.S. dollar by 14.3%.  And, in fact, as economists would predict, our trade imbalance with the EU worsened by 14%.  But that’s just one year in which the Euro took an uncharacteristic dip.  Since 2001, the Euro has risen by 31% against the dollar.  But, instead of improving, our trade imbalance with the EU worsened by 104%. 

Wealth:

Economists also blame trade deficits on low wages in other nations.  We have no data on average or median wages, but what’s known as purchasing power parity (“PPP”) – roughly a nation’s GDP (gross domestic product) per capita – is pretty analogous.  By that measure, the EU has a PPP of $34,500 and, if it were a nation, would rank in the top 20% of the world’s 229 nations.  The EU is not poor and wages are not low.  Since 2001, of the 26 EU member nations, 14 have experienced a PPP that has grown faster than the U.S.; that is, they have grown wealthier vs. the U.S.  In spite of that, our trade imbalance has actually worsened with 10 of these 14 nations. 

That leaves twelve EU nations whose wealth deterioriated vs. the U.S.  since 2001.  Of these 12 nations, our trade imbalance worsened with 9 of them. 

So, of these 26 member nations, our trade imbalance responded as economists would predict (based on the “low wage” theory) in 13 cases – exactly half.  In other words, there’s no relationship between low wages (or wealth) and trade imbalance whatsoever.   Falling wealth and wages are no more likely to worsen our trade imbalance than they are to improve it. 

Exports to the EU:

Well, OK, maybe our trade imbalance with the EU has worsened because we’ve imported more from the EU.  Maybe a new trade deal can make that up by boosting our exports to them, right?  Not likely.  In the past year, exports of manufactured goods to the EU actually declined by 1%.  This is in spite of President Obama’s goal of doubling exports within five years.  If the EU had any capacity for absorbing more American exports, shouldn’t we have seen some evidence of that in 2012 in light of the president’s push? 

Given the results of steadily liberalizing trade with the EU – results that were quite predictable given the relationship between population density and trade imbalances – further liberalization of trade with the EU makes absolutely no sense whatsoever.  It makes no more sense than liberalizing trade with China.  The result if the same.  It only makes sense to those vested in 19th century trade policy, economists too afraid of pondering the ramifications of population growth out of fear of being exposed as frauds.


Real Per Capita GDP Declines at 0.9% Annual Rate in 4th Quarter

January 30, 2013

The Bureau of Economic Analysis released its preliminary estimate of 4th quarter GDP this morning.  Since third quarter GDP had grown at an annual rate of 3.1%, economists were expecting it to have grown further in the 4th quarter, but at a slower rate – about 1.0%.  So the financial community was shocked to learn that 4th quarter GDP actually fell at an annual rate of 0.1%, well below the low end of the range of expectations. 

Of course, thanks to population growth, this means that real per capita GDP – your slice of the pie – fell even further, at an annual rate of decline of 0.9%.  (The population grew at an annual rate of 0.8% in the 4th quarter.) 

When the big jump in 3rd quarter GDP was released in the fall, just prior to the election, I accused the Obama administration of deliberately manipulating the timing of government expenditures to trump up the data and support the president’s claim that the economic recovery was gaining steam and that we needed to stay the course.   The breakdown of 4th quarter GDP provided in the BEA news release corroborates that claim:

Real federal government consumption expenditures and gross investment decreased 15.0 percent in the fourth quarter, in contrast to an increase of 9.5 percent in the third.  National defense decreased 22.2 percent, in contrast to an increase of 12.9 percent.

Such a huge swing in expenditures – especially the defense spending – is no accident. 

But wait, what about exports?  One of the cornerstones of Obama’s economic plan was to double our exports in five years (as announced in January of 2010).  Didn’t exports help?  If you’ve been following this blog, you probably already know the answer:

Real exports of goods and services decreased 5.7 percent in the fourth quarter, in contrast to an increase of 1.9 percent in the third.

Exports are declining – 3.8% in the past 6 months.

The question now is whether the decline in GDP will continue.  Two consecutive quarterly declines constitutes a recession.  Is this the start of the double-dip that has been held at bay by massive stimulus spending, spending that’s now drying up as a result of the fiscal cliff resolution and upcoming big defense spending cuts?  Maybe.  Personal consumption expenditures held up pretty well in the 4th quarter as they usually do, fed by the holiday shopping frenzy.  But that’s not likely to continue now that tax rates have risen by 2%. 

Real per capita GDP, though it has recovered somewhat from the 2008/2009 “Great Recession,” remains almost $1,000 below its pre-recession level, and this may be as good as it gets.  In a society that has already breached its economically optimum population density – the point at which per capita consumption is driven into decline by over-crowding – it comes as no surprise that everyone’s slice of the economic pie is diminishing.


GDP Up, But Don’t Look Too Deep

January 27, 2012

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

As reported by the Bureau of Economic Analysis this morning, 4th quarter GDP (gross domestic product) accelerated to an annual rate of increase of 2.8% from the 3rd quarter’s pace of 1.8%.  The stock market fell in response.  Why?  Because contrary to the rosy economic news that we got during the 4th quarter – driven by booming holiday sales, this GDP report paints a different picture.  Of that 2.8% increase, most of it – 1.9% – was due to nothing more than increases in inventories, and rising inventories are never a good sign for the economy.  Strip that away and the real increase in GDP falls to a measley 0.8%.  Or, worse, if the increase in inventories results in slowdowns in production driven by inventory control, we could actually see a slowdown in the 1st quarter of this year.

Expressed in per capita terms, the news is even worse, of course.  Take away inventory growth and the per capita rise in GDP falls to zero.  In other words, there’s a very real possibility (or even a likelihood) that the economy has stalled.  Worse yet, federal spending under the American Recovery Act (the “stimulus” plan) is nearly finished.  And now the pentagon is in the process of slashing costs.  Additionally, the cut in payroll taxes is due to expire in a month, and it’s no sure thing that it will be extended; and it’s very unlikely to be extended without corresponding cuts in spending that will pull as much out of the economy as the tax break puts in.  All of this taken together spells big trouble for the economy.  It’s no wonder that the Federal Reserve vowed to keep interest rates at zero for another three years.

For all of these reasons, I stand behind my prediction that 2012 is going to be a bad year for the economy.  The tactic of using debt to mask the effects of the trade deficit has been exhausted and the trade deficit is steadily getting worse.  

The following is a chart of GDP per capita:  Real Per Capita GDP.  Note the convergence of the two lines -GDP per capita with and without stimulus spending – now that the stimulus spending has been virtually exhausted.


Did the Government “Rig” 3rd Quarter GDP?

October 27, 2011

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

Prior to the release of this morning’s report of 3rd quarter GDP, economists had been forecasting an annual rate of increase of 2.5%.  I thought they were crazy.  Did it feel like the economy grew in the 3rd quarter?  Not to me or to anyone else.  Most economic reports were negative during the quarter, prompting speculation that the U.S. was sliding back into recession.

But, sure enough, 3rd quarter GDP came in exactly as forecast – an annual rate of growth of 2.5%  (See the above link.)  So I began to update my spreadsheet in preparation for this post.  If you’ve been a follower of this blog, you know that I’ve been following not only GDP and expressing it in per capita terms, but I’ve also been tracking what GDP would have been without the spending attributable to the “American Recovery and Reinvestment Act of 2009,” since that spending would end in a couple of years.  It’s important to know what shape the economy is in when that spending goes away. 

Spending on the Recovery Act peaked in the 2nd quarter of 2010 – over a year ago – and has been winding down ever since.  The Act authorized a total of $807 billion in spending, which was expected to last a couple of years.  Through the 2nd quarter of 2011, $660 billion had already been spent.  Spending had slowed to $26.8 billion in the 2nd quarter of this year. 

So it seemed unlikely that the nice bump in GDP coud be attributed to spending on the Recovery Act.  But, boy, was I wrong!  Recovery Act spending in the 3rd quarter of 2011 jumped to $62.1 billion, it’s highest level since such spending had peaked in the 2nd quarter of 2010!  (Here’s a link to the Recovery Act web site:  http://www.recovery.gov/Pages/default.aspx.  And here’s a link to the cells in my spreadsheet that track the stimulus spending:  stimulus spending by quarter.)  Take away that spending and 3rd quarter GDP would have actually contracted at an annual rate of 1.8%!  Worse, if you factor in population growth and express GDP in per capita terms, it contracted at an annual rate of 2.6% in the 3rd quarter, falling to $41,958 per person – lower than it was in the 4th quarter of 2004.

Here’s my chart of GDP per capita, with and without stimulus spending:  Real Per Capita GDP

Did the government intentionally boost Recovery Act spending – through actual spending or accruals – in order to rig the 3rd quarter GDP numbers?  Or was the sudden spike in spending explainable and a mere coincidence?  The third quarter is actually the last quarter of the federal government’s fiscal year.  Was there a push to pull forward spending in order to make spending next year (an election year) appear to be reduced?  Or were there valid reasons to accrue spending at the end of the fiscal year?  I don’t know, but it looks extremely suspicious that this was a tactic used to rig the GDP number and make the economy appear to still be growing when, in fact, we are sinking deeper into recession.

What I do know is this:  the Recovery Act spending is nearly over.  In August, Congress agreed to hundreds of billions in cuts.  And, soon, the “super committee” will identify another $1.5 trillion in cuts to federal spending.  Take away all that spending (or even some of it, since it’s sure to be back-loaded over 10 years), and the result will be big downward pressure on GDP.  Anyone who looks at today’s report and draws encouragement that the worst of the downturn is behind us is making a very big mistake.


4th Quarter GDP Up, But for How Long?

January 28, 2011

http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

The Bureau of Economic Analysis (BEA) released its first estimate of 4th quarter GDP this morning.  (Link to the report provided above.)  GDP growth picked up steam in the 4th quarter, rising to 3.2% from the 3rd quarter reading of 2.6% 

What matters more than just raw GDP is the share of the pie for each American.  Since the population is constantly growing (unfortunately), GDP must grow faster in order for real per capita GDP to keep from falling behind.  It did in the 4th quarter, rising by 0.57% to $43,032 per person, its first reading above $43,000 since the 3rd quarter of 2008.  The peak was $44,091 reached in the 4th quarter of 2007. 

If stimulus spending is stripped out of the equation, providing an even better measure of the underlying economy, the results are even better.  See the red line on the following chart:

Real Per Capita GDP

Of course, there’s been no real improvement in the employment situation. 

So, is the economy really doing that much better?  Difficult to say.  The growth in GDP in the 4th quarter was driven in large part by a jump in holiday spending, riding a wave of optimism over extension of the Bush tax cuts.  Perhaps some of that was also fueled by the rising stock market, with that rise fueled in large part by the Fed’s QE2 program of buying treasuries.  That program will continue until June.  The stock market rally has continued into January, but will likely begin pulling back soon in anticipation of what happens when QE2 ends. 

But the biggest driving force behind GDP growth in the 4th quarter was trade.  Exports were up 8.5% while imports (a subtraction from GDP) were down 13.6%.  That’s a big swing.  But, if you’ve been following my reporting on trade, you know that those trade results are suspect, driven largely by gimmicks and swings in oil pricing and import timing.  I’m very skeptical that these trade results are real or sustainable. 

In addition, we’ve already begun to see erosion in economic conditions in January.  The housing market has slipped into a double-dip recession after showing glimmers of life in the fall.  Mortgage applications are falling steadily.  First time jobless claims are spiking up again and durable goods orders are declining.  The economy’s looking shaky again, regardless of the jump in 4th quarter GDP.  This economy isn’t out of the woods yet by a long shot.


State of the Union: “Winning the Future” or Embracing the Status Quo?

January 27, 2011

Obama’s thrown in the towel.  Swept into office two years ago with pledges to tackle the tough issues confronting the nation, he as much as threw up his hands Tuesday night and admitted that he’s willing to muddle along with compromise on trivial issues that, at best, will sustain the status quo.  It was a speech long on platitudes about past American greatness and talk of out-educating and out-innovating other nations to restore the American dream, but woefully short on any details about how we’ll get there.  It was more a patchwork of catchy slogans cobbled together from any and every state of the union speech that preceded it.  There was little worthy of comment, but there are a few things that I thought needed addressing.

At stake right now is not who wins the next election — after all, we just had an election. At stake is whether new jobs and industries take root in this country, or somewhere else.

Translation:  we won’t even try to bring back the jobs of our existing industries.  That would involve a change in trade policy that Obama doesn’t have the courage to make.  Yet, somehow, “new jobs and industries” will be unaffected by the same trade policies that devastated the old ones.

In a single generation, revolutions in technology have transformed the way we live, work and do business. Steel mills that once needed 1,000 workers can now do the same work with 100. Today, just about any company can set up shop, hire workers, and sell their products wherever there’s an Internet connection.

Meanwhile, nations like China and India realized that with some changes of their own, they could compete in this new world. And so they started educating their children earlier and longer, with greater emphasis on math and science. They’re investing in research and new technologies. Just recently, China became the home to the world’s largest private solar research facility, and the world’s fastest computer.

Bull.  China owes their rise to global economic super-power status to one thing:  America foolishly granting them MFN status and not insisting that trade between the two nations be balanced.  He’s blaming technology and productivity for our economic decline instead of stupid trade policy, while at the same time promoting technology and productivity as our future salvation.

So, yes, the world has changed. The competition for jobs is real.  But this shouldn’t discourage us. It should challenge us. Remember — for all the hits we’ve taken these last few years, for all the naysayers predicting our decline, America still has the largest, most prosperous economy in the world.  No workers — no workers are more productive than ours. No country has more successful companies, or grants more patents to inventors and entrepreneurs.  We’re the home to the world’s best colleges and universities, where more students come to study than any place on Earth.

Wait a minute, isn’t the whole premise of this speech that we’ve fallen behind the rest of the world in terms of competitiveness and an educated work force?  So now you’re saying that, although we’re the best, we have to be better in order to compete with less productive nations and less educated work forces?  Something doesn’t add up.

The first step in winning the future is encouraging American innovation. None of us can predict with certainty what the next big industry will be or where the new jobs will come from. Thirty years ago, we couldn’t know that something called the Internet would lead to an economic revolution. What we can do — what America does better than anyone else — is spark the creativity and imagination of our people. We’re the nation that put cars in driveways and computers in offices; the nation of Edison and the Wright brothers; of Google and Facebook. In America, innovation doesn’t just change our lives. It is how we make our living.

That’s not true.  A very small fraction of our work force made its living by inventing things.  The vast majority of Americans have always made their living by manufacturing those things, by farming and mining natural resources, and by providing the services we all need.  It’s impossible to build an entire economy out of “innovating.” 

This is our generation’s Sputnik moment. Two years ago, I said that we needed to reach a level of research and development we haven’t seen since the height of the Space Race. And in a few weeks, I will be sending a budget to Congress that helps us meet that goal. We’ll invest in biomedical research, information technology, and especially clean energy technology, an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.

“Biomedical research?”  Aren’t we trying to cut medical costs?  You can’t build an economy around a sector you’re trying to shrink.  “Information technology?”  Wasn’t that the “new economy” of the ’90s, the one whose manufacturing was quickly outsourced to China and others?  “Clean energy technology?”  That’s fine, but we pretty much already know how to build nuclear plants, wind turbines and solar farms.  The question is what change you’re going to make to trade policy to stop the outsourcing of that equipment as well.

We’re telling America’s scientists and engineers that if they assemble teams of the best minds in their fields, and focus on the hardest problems in clean energy, we’ll fund the Apollo projects of our time.

The Apollo project was funded back in the ’60s, before our financial resources were completely drained by a three-decades-plus trade deficit.  Now there’s no more source for such funding. 

At the California Institute of Technology, they’re developing a way to turn sunlight and water into fuel for our cars. At Oak Ridge National Laboratory, they’re using supercomputers to get a lot more power out of our nuclear facilities. With more research and incentives, we can break our dependence on oil with biofuels, and become the first country to have a million electric vehicles on the road by 2015.

Get serious.  Breaking the hydrogen-oxygen bond in water requires more energy than burning hydrogen could ever deliver.  It was a pipe-dream that serious scientists gave up on long ago.  It’s the very reason that fuel cell technology has stalled.  The only viable source of hydrogen is stripping it from hydrocarbons.  Might as well just burn the damn stuff in an internal combustion engine and get it over with.  And more power from our nuclear facilities by using “supercomputers” to run them hotter?  Oh, boy, can’t wait for that one.

Now, clean energy breakthroughs will only translate into clean energy jobs if businesses know there will be a market for what they’re selling. So tonight, I challenge you to join me in setting a new goal: By 2035, 80 percent of America’s electricity will come from clean energy sources.

That goal was set two years ago.  Have we made any progress?  I wonder how long this goal will be repeated before folks realize that, to get there, we needed to start making progress twenty years ago?  And, oh, by the way, wouldn’t it help if we just stopped importing an additional 1.1 million oil consumers each year?

Over the next 10 years, nearly half of all new jobs will require education that goes beyond a high school education. And yet, as many as a quarter of our students aren’t even finishing high school. The quality of our math and science education lags behind many other nations. America has fallen to ninth in the proportion of
young people with a college degree. And so the question is whether all of us — as citizens, and as parents — are willing to do what’s necessary to give every child a chance to succeed.

The ranks of the unemployed are loaded with college graduates, even those with advanced degrees, who can’t find work.  We have no shortage of educated workers.  We already give them the education they need to succeed.  What we don’t have are jobs.  Where are all these mythical jobs that are going unfilled due to a shortage of educated workers?  Obama’s been listening to too many lobbyists eager to import cheap labor through the H-1B visa program.

That responsibility begins not in our classrooms, but in our homes and communities. It’s family that first instills the love of learning in a child. Only parents can make sure the TV is turned off and homework gets done. We need to teach our kids that it’s not just the winner of the Super Bowl who deserves to be celebrated, but the winner of the science fair.  We need to teach them that success is not a function of fame or PR, but of hard work and discipline.

There’s a hell of a lot of young graduates out there who have been taught these things all their lives and still have a hard time finding work.  We need jobs, not just for the kids who win the science fairs, but for every other kid too, even the ones who came in dead last. 

Because people need to be able to train for new jobs and careers in today’s fast-changing economy, we’re also revitalizing America’s community colleges. Last month, I saw the promise of these schools at Forsyth Tech in North Carolina. Many of the students there used to work in the surrounding factories that have since left town. One mother of two, a woman named Kathy Proctor, had worked in the furniture industry since she was 18 years old. And she told me she’s earning her degree in biotechnology now, at 55 years old, not just because the furniture jobs are gone, but because she wants to inspire her children to pursue their dreams, too. As Kathy said, “I hope it tells them to never give up.”

It would be interesting to follow this story to find out if Kathy has retrained herself to be an unemployed biotechnologist instead of an unemployed furniture-maker.  There’s plenty of biotechnologists out there who can’t find work either.  Trade policy has shipped most of those jobs overseas, just like manufacturing jobs. 

One last point about education. Today, there are hundreds of thousands of students excelling in our schools who are not American citizens. Some are the children of undocumented workers, who had nothing to do with the actions of their parents. They grew up as Americans and pledge allegiance to our flag, and yet they live every day with the threat of deportation. Others come here from abroad to study in our colleges and universities. But as soon as they obtain advanced degrees, we send them back home to compete against us. It makes no sense.

I agree.  We shouldn’t bring them here and educate them in the first place.  Let’s save those seats at the universities for American students and save the jobs for American graduates. 

 And let’s stop expelling talented, responsible young people who could be staffing our research labs or starting a new business, who could be further enriching this nation.

Is he actually saying that American students are too stupid to staff labs and start businesses?

Our infrastructure used to be the best, but our lead has slipped. South Korean homes now have greater Internet access than we do.

Could that be because their population is so dense that one wi-fi connection serves a lot more people than one connection does here?

Countries in Europe and Russia invest more in their roads and railways than we do.

They’re also even more bankrupt than we are.

China is building faster trains and newer airports.

That’s because they have a huge stockpile of trade surplus money to work with.

Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail.  This could allow you to go places in half the time it takes to travel by car.

It will also cut the per capita consumption of cars, putting thousands more out of work.

To help businesses sell more products abroad, we set a goal of doubling our exports by 2014 — because the more we export, the more jobs we create here at home. Already, our exports are up. Recently, we signed agreements with India and China that will support more than 250,000 jobs here in the United States. And last month, we finalized a trade agreement with South Korea that will support at least 70,000 American jobs.

Exports are up, but not at a pace that will double them in five years.  And imports are up even more.  The result is a net loss of jobs.  And notice that the president says that his trade deal will support X number of jobs.  That’s because these exports are already baked into the existing capacity of manufacturers like Boeing.  No new jobs will be created.  We don’t just need orders for a few more planes.  We need for entire industries to return to our shores.

Now, before I took office, I made it clear that we would enforce our trade agreements, and that I would only sign deals that keep faith with American workers and promote American jobs. That’s what we did with Korea, …

Oh, really?  Signing a trade deal that caps U.S. auto exports at 75,000 while leaving South Korean imports unlimited is your idea of promoting American jobs?  Only a fool would enter into such an agreement.  This was the most disturbing portion of the speech – Obama’s willingness to sign more destructive free trade deals, not to help American workers, but out of desperation to show bipartisanship with Republicans, perhaps giving him a small boost in the polls.

We are living with a legacy of deficit spending that began almost a decade ago. And in the wake of the financial crisis, some of that was necessary to keep credit flowing, save jobs, and put money in people’s pockets.

… So tonight, I am proposing that starting this year, we freeze annual domestic spending for the next five years.  Now, this would reduce the deficit by more than $400 billion over the next decade, and will bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was President.

First of all, a 5-year freeze in domestic spending is chump change relative to the size of our fiscal mess.  Secondly, it’s completely bogus to state spending as a fraction of the economy.  GDP has grown many times over since the Eisenhower administration while the population – the people who have to pick up the tab – has only doubled, while their incomes have barely grown.  In per capita terms, the spending has skyrocketed. 

Let me take this one step further. We shouldn’t just give our people a government that’s more affordable. We should give them a government that’s more competent and more efficient. We can’t win the future with a government of the past.

We live and do business in the Information Age, but the last major reorganization of the government happened in the age of black-and-white TV.

Yeah, that’s bad.  But, hell, that’s nothing.  Our constitution hasn’t been amended in any meaningful way since passage of the 19th amendment, giving women the right to vote in 1920.  Our consitution and the bill of rights pre-date the discovery of electricity and the entire field of economics.  Land west of the Mississippi was unexplored. 

Our founding fathers couldn’t conceive of a day when speech would be controlled by the media and sold to the highest bidder, or that something like pornography would ever be considered “speech.”  They couldn’t envision global corporations or imagine that they would ever be interpreted to be “the people.”  Since no trade theories had yet been formulated, they couldn’t imagine spending any more on imports than we’d earned for our exports.  Surely no one would be dumb enough to do such a thing on a consistent basis.  Nor could they imagine spending more than revenues taken in, year-in and year-out.  That our population could ever grow to the point where it would outstrip the resources of this seemingly infinite new land was unfathomable.  The constitution was meant to be a statement of high principles, not a mundane laundry list of common sense approaches that should go without even saying.  Yet it seems that that’s exactly what we need, since a dearth of common sense has us in the fast lane on the road to ruin.  It’s high time for a constitutional convention to define the kind of country we want to have in the future.  The executive and legislative branches will never take us in that direction without it. 

To be fair, the Republican response was little better.  There was more emphasis on cutting the debt, but in the belief that smaller government will somehow grow our economy.  I’m always amazed at logic that hasn’t been tested at its limits.  If this were true, then the most prosperous nations on earth would be those without central governments at all – nations existing in a state of anarchy.  I don’t think Tunisia will be taking the title of World’s Most Prosperous Nation any time soon. 

Conversely, the nation with the most rapid growth, China, is also arguably the one with the most central control of its economy.  I’m not arguing for bigger central government.  The fact is that it isn’t so much the size of the government that’s important, but whether it’s acting in the best interest of its people.  Ours does not, placing the principle of free trade – a failed 18th century economic theory – ahead of the interest of the American people.

So the president has abandoned his vision of tackling the tough issues and rewriting trade deals to benefit U.S. workers in favor of a new agenda:  tinkering at the margins.  Cut a little spending here and move it over there.  Eliminate a few tax loopholes while enacting some new ones.  Build a few token clean energy plants.  Create a few new jobs and pretend we don’t notice others that are being eliminated.  Boost exports and ignore imports.  Use more immigration to stoke “economic” growth.  When we run out of rugs under which we can sweep our problems, simply install wall-to-wall carpeting. 

I’ve heard it all before, year after year, decade after decade.  Each president puts in his time, puts out a few fires, and writes his memoirs congratulating himself on a job well-done.  Just what we need – another care-taker president maintaining the status quo.  Another opportunity lost and another 4-8 years wasted.  America is a rudderless ship adrift amidst a school of sharks.