Obama’s Job Bill: Real Organic Economic Growth or Just Another Stimulus Bill in Disguise?

In his first State of the Union speech in 2010, President Barack Obama
carefully chose his words in calling for a new jobs bill to stimulate
real organic economic growth. Historically, politicians have garnered widespread public support for bills that otherwise would have been despised through the use of deceptive labeling. For example, past US Presidents labeled bills that ultimately weakened pollution regulations as “Clean Air Acts”, and so on. In response to this newly proposed jobs bill, US Congressman Brad Sherman (D-CA) relayed that he, along with other colleagues, were specifically instructed not to refer to this jobs bill as a stimulus bill in the media:

"The other thing I'll point out is we now have...we are working on a...we're told not to call it another stimulus bill. We're calling it a jobs bill."

However, politicians have always been extremely deft about making speeches that present a united front with the people against corruption, while often hammering out legislation behind closed doors that ensures no real change will ever occur. To determine if the wool is being pulled over our eyes once again, let’s turn to the actual text of President Obama’s State of the Union speech.

President Obama: “But the devastation remains. One in ten Americans still cannot find work. Many businesses have shuttered. Home values have declined. Small towns and rural communities have been hit especially hard. For those who had already known poverty, life has become that much harder.
This recession has also compounded the burdens that America's families have been dealing with for decades - the burden of working harder and longer for less; of being unable to save enough to retire or help kids with college.”

Reality: The real rate of unemployment, if you include long-term discouraged workers, who are truly unemployed, is presently more than twice the figure President Obama quoted, at 22%. The reality is more than 1 out of 5 American workers are unemployed and this figure is likely to top out at more than 30% to 35% before this monetary crisis starts to recede. Though the residential housing market has yet to bottom in the US, a second more serious phase of the US real estate crisis will commence, just as it has in Spain, once large US banks stop lying about the true value of their commercial real estate portfolios. It’s good that President Obama addressed the burden of families that have to work harder for less money but his transparency in addressing this issue rates a zero on a scale of 1 to 10 as he does not mention that it is the Central Bankers’ institution of a corrupt and fraudulent monetary system that has given rise to this tremendous burden for American families.

President Obama: “Our most urgent task upon taking office was to shore up the same banks that helped cause this crisis. It was not easy to do. And if there's one thing that has unified Democrats and Republicans, it's that we all hated the bank bailout. I hated it. You hated it. It was about as popular as a root canal. But when I ran for President, I promised I wouldn't just do what was popular - I would do what was necessary. And if we had allowed the meltdown of the financial system, unemployment might be double what it is today. More businesses would certainly have closed. More homes would have surely been lost. So I supported the last administration's efforts to create the financial rescue program. And when we took the program over, we made it more transparent and accountable. As a result, the markets are now stabilized, and we have recovered most of the money we spent on the banks.”

Reality: The real unemployment is double the fake figure the President has told the country. Again, words are easily spoken but only actions reveal the true nature of politicians. The President’s words that he hated the bailout rings hollow when every single key economic advisor he appointed was a key architect of this crisis. It is impossible to invite criminals that robbed your house to change all the locks to your house after it has been robbed and improve the security of your house. One of President Obama’s key economic strongman, Larry Summers, a former US Treasury Secretary and World Bank Chief Economist, was instrumental in silencing CFTC Chairman Brooksley Born more than a decade ago when she attempted to warn Americans of the disaster looming in the derivatives markets. Born was the last courageous American to work for any US financial regulatory agency in more than a decade and for her integrity, she was unceremoniously forced out of the CFTC.

President Obama: “Let me repeat: we cut taxes. We cut taxes for 95% of working families. We cut taxes for small businesses. We cut taxes for first-time homebuyers. We cut taxes for parents trying to care for their children. We cut taxes for 8 million Americans paying for college. As a result, millions of Americans had more to spend on gas, and food, and other necessities, all of which helped businesses keep more workers. And we haven't raised income taxes by a single dime on a single person. Not a single dime.”

Reality: Inflation is one of the biggest taxes that the US Federal Reserve levies every year on all Americans. When the Obama administration offered zero resistance to the Federal Reserve’s reckless expansion of the monetary base by trillions, an act that eventually will expand the monetary supply exponentially, they silently stood by as one of the most reckless, immoral monetary policies in American history was executed. The Federal Reserve’s actions in 2008 and 2009 will create one of the largest taxes upon, and thefts of, American wealth in the future. If Americans truly understand what is going on, the “Not a single dime” phrase should come back to haunt President Obama as much as the now infamous senior Bush 1998 statement of “Read my lips. No new taxes”.

President Obama: “And after two years of recession, the economy is growing again. Retirement funds have started to gain back some of their value. Businesses are beginning to invest again, and slowly some are starting to hire again. But I realize that for every success story, there are other stories, of men and women who wake up with the anguish of not knowing where their next paycheck will come from; who send out resumes week after week and hear nothing in response. That is why jobs must be our number one focus in 2010, and that is why I am calling for a new jobs bill tonight. Now, the true engine of job creation in this country will always be America's businesses. But government can create the conditions necessary for businesses to expand and hire more workers.”

Reality: Retirement funds gained very little value last year if one subtracts the devaluation of the US dollar that bankers engineered last year. If a retirement portfolio now has a greater absolute amount of dollars, but that absolute amount can barely purchase more goods and services than the prior year due to currency devaluation, then the greater absolute amount of dollars is of marginal utility. Loose monetary policy and near-free credit create reckless expansions of distortions in capital markets, not recovery. Governments can never create the conditions necessary for business to expand and hire more workers. Only free markets can achieve this, and as long as governments and Central Banks collude to implement unsound monetary policies, free markets will never rein.

President Obama: “So tonight, I'm proposing that we take $30 billion of the money Wall Street banks have repaid and use it to help community banks give small businesses the credit they need to stay afloat. I am also proposing a new small business tax credit - one that will go to over one million small businesses who hire new workers or raise wages. While we're at it, let's also eliminate all capital gains taxes on small business investment; and provide a tax incentive for all businesses, large and small, to invest in new plants and equipment.”

Reality: The $30 billion that Wall Street banks have repaid is our tax money that was forcibly taken from us and given to the bankers. It is true that support should be given to community banks and small businesses. In fact, visit Move Your Money and Sound Money Now! to discover how you can be part of a movement to forcibly remove power from Wall Street and return it to Main Street. However, as long as these things are done within the confines of an unsound monetary system, they will never be effective long-term in preventing corruption from rearing its ugly head again and from preventing the boom-bust cycles that Central Banks so deftly engineer for the benefit of the financial oligarchy.

President Obama: “One place to start is serious financial reform. Look, I am not interested in punishing banks, I'm interested in protecting our economy. A strong, healthy financial market makes it possible for businesses to access credit and create new jobs. It channels the savings of families into investments that raise incomes. But that can only happen if we guard against the same recklessness that nearly brought down our entire economy. We need to make sure consumers and middle-class families have the information they need to make financial decisions. We can't allow financial institutions, including those that take your deposits, to take risks that threaten the whole economy. The House has already passed financial reform with many of these changes. And the lobbyists are already trying to kill it. Well, we cannot let them win this fight. And if the bill that ends up on my desk does not meet the test of real reform, I will send it back.”

Reality: The statement “Look, I am not interested in punishing banks, I’m interested in protecting our economy” is an oxymoron. Bankers created this crisis, so if the President was sincere in his interest to protect the US economy, by definition, he would have to rid the system of the corrupt banks that engineered this crisis. That means, goodbye Goldman Sachs, JP Morgan, Bank of America, Wells Fargo and Citigroup. But of course, this will never happen. If consumers and middle-class families are truly to have the “information they need to make financial decisions” then we must begin with education about how our monetary system truly works, not the propaganda about 10% reserve ratio requirements (RRR) and other nonsense that is disseminated via our academic system at every level.

Remember that just one week prior, President Obama delivered a speech on January 21, 2010 in which he stated:

“Banks will no longer be allowed to own, invest, or sponsor hedge funds, private equity funds, or proprietary trading operations for their own profit, unrelated to serving their customers. If financial firms want to trade for profit, that’s something they’re free to do. Indeed, doing so -- responsibly -- is a good thing for the markets and the economy. But these firms should not be allowed to run these hedge funds and private equities funds while running a bank backed by the American people.”

By now we all know that AIG failed because of its executives, in their pursuit of huge profits, transformed the company from an insurance company into a giant hedge fund riddled with enormous risk. Goldman Sachs, JP Morgan, Wells Fargo, Citigroup and Bank of America have all transformed themselves into massive hedge funds as well. So if President Obama was sincere in his statement above that “Banks will no longer be allowed to own, invest or sponsor hedge funds”, he would immediately begin the process of shuttering every one of these institutions to restore integrity to the US financial sector.

I have no allegiances to any political party or any man. I have only allegiances to a higher power above, truth, and the Constitutional ideals of the Republic of America. It is my sincere hope that those that formulate their opinions within the extremely narrow and limited framework of political allegiances re-think their perspective and start to formulate their opinions within the framework of justice and morality only. This is the framework by which all men and women should make their decisions. As Socrates stated, “I cannot teach anybody anything. I can only make them think.”

About the author: JS Kim is the Managing Director and Chief Investment Strategist of SmartKnowledgeU, LLC, a fiercely independent investment education and consulting firm that seeks to provide strategies to help investors preserve their wealth against banking fraud and to create wealth during this developing monetary crisis.

Comments

[Shameful]

Great article, but I think most of us know by know that everything our elected thieves say is a total fraud. Still very well written thank you!

[Anonymous]

It is very easy to criticize all ideas to fix the economy. This is mostly because no politician and few citizens are willing to address the real problems. The problem is our denial of our insistence on being number one in the world. This means our personal incomes, standard of living, use of earth's resources, our broken financial system, broken government, greed, etc. Until we address these realities we are correct in criticizing solutions since none of them will work until we address the real problems, our denials. However this criticism does not get us anywhere, only makes us more depressed maybe. We may need a real hard economic depression to wake us up and get back to reality. It will hurt.

[Tic tock]

Jobs come more from small companies while R&D comes more from large companies. Ideally, big business would be encouraged to hived into smaller, at least more independant, units and R&D become even more centered around Universities. DARPA is currently preparing a paper to re-invent US manufacturing along these sorts of lines (design specialization). ..so in the medium term there lies the possibility of an emerging US in a stronger employment situation. To get there the question of Demand in the short-term remains sticky. That's where the hegemoney of Wall St. plays such an important role; as long as bumper EPS are required - the consumer is grinded down: the Fed has picked up some of the liabliities from the financial sector but even if it wanted to, it simply can't do the same for the rest of the economy. That puts the Merchant Banks squarely in a catch.22 position.

There is a vague answer, alter the tax-system to provide for an optimal/pre-determined range of ROE with progressive taxation above that set, and exempt smaller companies. An unexpected increase in ROE could result in next years range being set higher and the current years excess can be set within next years difference, and so on. 

The idea is to provide stability while avoiding penalizing performance.

(idea 4, and it was a good read, your article)

[Mr Lennon Hendrix]

No comparisons to Reagan?  JK.  Great analysis! 

[Anonymous]

The biggest tax ever on the savers and retiree is the 0~0.25% fed fund rate. your saving is taxed at 3~4% rate because of losing interest income. You are forced to chase higher yield, the root of current crisis, and hand in your money to Wall Street. There are no winners in the capital market, the sole winner is the Wall Street.

[Sancho Ponzi]

Eliminating the capital gains tax does nothing for virtually all small/medium businesses. The O Team is instead attempting to lure businesses into investing in equities. 

[Anonymous]

Obama to nation:

"What I want to say is that all your money, all of it, are belong to us, brought to you by the house of Fraud Street"

He can't find his way out of a paper bag, and if the average citizen believed any of it, they are the sucker!

Meanwhile, speculation on taxpayer funded banker bonuses for 2010 anyone?

Sucker.

[Trifecta Man]

J S Kim:  excellent commentary.

[Trifecta Man]

I just heard another big lie by a guest on CNBC.  He said that everybody is for job creation.  I've seen too many stocks go up on job destruction.

[Daedal]

Another great article, JS Kim!

To add a small tid bit regarding "And we haven't raised income taxes by a single dime on a single person. Not a single dime."

What is a logical fallacy here is, in addition to your point about the unseen tax of inflation (and it is a major point), there are the unseen repurcussions of various other taxes and policies.

For instance, businesses who are levied with new taxes or costly health care provisions may impact economy by not hiring as much, firing more, providing lower salaries, etc. Further, new taxes levied by state and local governments will take the piece of the pie not collected by the Federal government.

[Winisk]

I love the way he downplays the true unemployment figure and follows up by saying the unemployment rate would be double what it is today if they had not bailed out the banks.  So that would mean the unemployment rate would be in the 20% range then.  Very clever Mr. President, you trickster, except few people you speak of are falling for your illusions.

[Anonymous]

It is not appropriate ....nor is it logical to broker individual or corporate earnings in the form of taxation....and expect efficient sustainable job creation....

In order to invite sustainable business to and within the US....the US must change its tax structure....that invites this to happen....This change must be permanent for planning purposes....and make sense in that the efficiency that is required in order to compete head on with the rising emerging markets can happen....

A proper tax structure change has not been discussed in any way by either political US party and therefore one must act accordingly.

The sole solution for the US is a simple 15% Consumption Tax....which would be split betweeen State and Fed....
Absolutely no other taxes....

The end result of such a change would be a tax take that would dwarf that of the current system....

Less now is more in the future....The sooner this is fully implemented ....the faster the recovery....

No change in structural taxes to this degree WILL RESULT in a future LESSOR US....

I invite any politician or economist to prove otherwise....

[mikla]

+1

The dumbest thing any society can do is to punish work.

That's what happens with the income tax:  Punish the workers.

[Bear]

You won't see this analysis on NBC, but we will be reading the book about it "The Lost Decade 2010-2020" (on our third generation iPad). 

[Anonymous]

See "Stock Shock" for a real education on Wall Street and hedge funds. What a difference an hour or so makes!!! Yikes! DVD is cheaper at www.stockshockmovie.com but it can be rented or bought pretty much anywhere.

[Noah Vail]

Our government can be likened to two crime families that try to avoid destroying each other by sharing power in the same city. They end up destroying the city instead. There is no out for the inhabitants because the mobsters are in contol of every facet. Get used to it; we lost our nation by default as we accepted their bribes and failed to resist their extorions.

[MarketTruth]

You must be referring to the mafia families of Rothschild and Morgan.

www.save-a-patriot.org/files/view/whofed.html