WASHINGTON — The compromise economic stimulus plan agreed to by negotiators from the House of Representatives and the Senate is short on incentives to get consumers spending again and long on social goals that won't stimulate economic activity, according to a range of respected economists.
"I think (doing) nothing would have been better," said Ed Yardeni, an investment analyst who's usually an optimist, in an interview with McClatchy. He argued that the plan fails to provide the right incentives to spur spending.
"It's unfocused. That is my problem. It is a lot of money for a lot of nickel-and- dime programs. I would have rather had a lot of money for (promoting purchase of) housing and autos . . . . Most of this plan is really, I think, aimed at stabilizing the situation and helping people get through the recession, rather than getting us out of the recession. They are actually providing less short-term stimulus by cutting back, from what I understand, some of the tax credits."
House and Senate negotiators this week narrowed the differences between their competing stimulus plans. In so doing, they scrapped a large tax credit for buying automobiles that would've caused positive ripple effects across the manufacturing sector. They settled instead on letting purchasers of new vehicles deduct from their federal taxes the state and local sales taxes on the cars they bought.
The exception to this is for buyers of plug-in hybrids, cars that run off a battery that can be charged at home or in the office. Buyers of these vehicles, available in very limited supply, could get a tax credit of up to $9,100.
A Republican-backed proposal that would've provided a $15,000 tax credit to first-time homebuyers also was scaled back dramatically. Instead, the compromise provides first-time homebuyers a tax credit of up to $8,000, and it doesn't have to be repaid over the life of the mortgage. Incentives already in place offer buyers a $7,500 credit that must be repaid, so the bill is an improvement, but short of what many economists think is necessary.
Another reason that some analysts frown on the stimulus is the social spending it includes on things such as the Head Start program for disadvantaged children and aid to NASA for climate-change research. Both may be worthy efforts, but they aren't aimed at delivering short-term boosts to economic activity.
"All this is 25 years of government expansion jammed into one bill and sold as stimulus," said Brian Riedl, the director of budget analysis for the Heritage Foundation, a conservative policy research group.
The view wasn't much more supportive on the other side of the political spectrum. In a brief on the stimulus compromise, William Galston, a senior fellow at the center-left Brookings Institution and a former Clinton White House adviser, warned Thursday that a bank-rescue plan being finalized will make the $789 billion look like "pocket change."
"While the stimulus bill is a necessary condition for economic stabilization and recovery, it is hardly sufficient," Galston wrote. "As the lesson of Japan in the 1990s shows, fiscal stimulus without financial rescue yields stagnation — at best."
" . . . Serious observers believe that recovery cannot begin until we acknowledge that losses in the financial system amount to some trillions of dollars, rendering many institutions insolvent. The temptation will be to muddle along, hoping that these institutions can gradually regain strength without putting massive amounts of taxpayers' money at risk. If we go down that road, we are likely to end up with zombie banks whose balance sheets are riddled with near-worthless investments — banks that cannot lend to credit-worthy customers and who cannot trust one another," Galston wrote.
With the economy in a tailspin, doing nothing isn't an option, however.
"Something is better than nothing, and bigger was better than smaller in terms of the stimulus needed," said Chris Varvares, president of prominent forecaster Macroeconomic Advisers in St. Louis. "The economy needs a fiscal jolt."
Even some proponents of a stimulus are disappointed, however. Harvard University economist Martin Feldstein, a former adviser to President Ronald Reagan, was an early supporter. He said that government is now the only engine left to spark economic activity, but he said that the compromise falls short of what's needed.
"If the choice is between the current bill and an improved bill, I would say wait and improve the bill," Feldstein told CNBC on Wednesday after the compromise was announced. "I am disappointed with the structure of this bill."
Like Yardeni and other analysts, Feldstein wanted more incentives for consumers to make big purchases that have ripple effects across the economy. When a car is purchased, it helps not only the carmaker, but its suppliers, the trucking companies and railroads that transport cars, the states that issue license plates and so on.
Still, could this stimulus get the U.S. economy back on its feet?
By itself, probably not. The stimulus plan, however, is supposed to work in tandem with new efforts by the Treasury and the Federal Reserve to rid banks of distressed assets that are poisoning their balance sheets, and with other federal efforts to halt mortgage delinquencies and foreclosures. Much will depend on the details of both federal attack plans, which the Obama administration promises are coming soon.
There's also the problem of time. Much of the stimulus is to be spread over a two-year period or longer — and 2009 looks increasingly bleak.
A Wall Street Journal survey of 52 mainstream economic forecasters published Thursday found that while most forecasters still think there could be slow growth by the second half of the year, that won't offset steeper-than-projected declines in the first half of 2009.
That means this is essentially a lost year for the economy. Most scenarios envision the economy picking back up again next year.
The president of the U.S. Chamber of Commerce, in a speech in Detroit Thursday, tried to put a brave face on the tough year ahead. Thomas Donohue acknowledged that big business didn't get in the stimulus bill some of the tax-relief measures it most wanted, but promised the Chamber's support.
"The bottom line is that at the end of the day, we're going to support the legislation. Why? Because with the markets functioning so poorly, the government is the only game in town capable of jump-starting the economy," Donohue said.
Friday, February 13, 2009
The house passes this crap bill.
WASHINGTON (AP) - Handing the new administration a big win, House Democrats passed President Barack Obama's $787 billion plan to resuscitate the economy on Friday despite a wall of Republican opposition. The bill was approved 246-183 and sent to the Senate, where a vote was scheduled late Friday afternoon.
That vote was to be held open for hours, waiting for Ohio Democrat Sherrod Brown, who was attending a memorial service for his mother and then flying back to cast the deciding vote.
Senate passage would meet a deadline of sending the bill to Obama before a congressional recess begins next week.
The 1,071 page, 8-inch-thick measure combines $281 billion in tax cuts for individuals and businesses with more than a half-trillion dollars in government spending. The money would go for infrastructure, health care and help for cash-starved state governments, among scores of programs. Seniors would get a $250 bonus Social Security check.
Told that no Republican backed the measure, White House press secretary Robert Gibbs reacted by citing another number: "3.5 million jobs that we look forward to saving or creating."
Seven Democrats voted against the bill.
Republicans said the package won't work because it has too little in tax cuts and spreads too much money around to everyday projects like computer upgrades for federal agencies.
"This legislation falls woefully short," said House GOP Leader John Boehner of Ohio. "With a price tag of more than $1 trillion when you factor in interest, it costs every family almost $10,000 in added debt. This is an act of generational theft that our children and grandchildren will be paying for far into the future."
The final $787 billion measure has been pared back from versions previously debated in order to attract support from three Senate GOP moderates—Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania. Their help is essential to meeting a 60-vote threshold in the Senate, required to overcome a Republican objection that the bill adds to the deficit.
The bill originally passed the Senate by a 61-37 tally, but Sen. Edward Kennedy, D-Mass., suffering from brain cancer, is not expected to vote this time.
Sen. Judd Gregg, R-N.H., who withdrew his nomination to be Obama's Commerce secretary, said he would vote against the bill.
Democrats lavished praise on the measure, which combines tax cuts for workers and businesses with more than a half-trillion dollars in government spending aimed at boosting economic demand.
"By investing in new jobs, in science and innovation, in energy, in education ... we are investing in the American people, which is the best guarantee of the success of our nation," said House Speaker Nancy Pelosi, D-Calif.
The plan is the signature initiative of the fledgling Obama administration, which is betting that combining tax cuts of $400 a year for individuals and $800 for couples with an infusion of spending for unemployment assistance, $250 payments to people on Social Security, and extra money for states to help with the Medicaid health program for the poor and disabled will arrest the economy's fall.
Local school districts would receive $70 billion in additional funding for K-12 programs and special education and to prevent cutbacks and layoffs and repair crumbling schools. There's about $50 billion for energy programs, much of which goes to efficiency programs and renewable energy.
Some $46 billion would go to transportation projects, not enough to please many lawmakers.
Negotiators insisted on including a $70 billion tax break to make sure middle- to upper-income taxpayers won't get hit by the alternative minimum tax and forced a reduction of Obama's signature tax break for 95 percent of workers.
The AMT was designed 40 years ago to make sure wealthy people pay at least some tax, but is updated for inflation each year to avoid tax increases averaging $2,300 a year. Fixing the annual problems now allows lawmakers to avoid difficult battles down the road, but economists say the move won't do much to lift the economy.
Republicans pointed out a bevy of questionable spending items that made the final cut in House-Senate negotiations, including money to replace computers at federal agencies, inspect canals, and issue coupons for convertor boxes to help people watch TV when the changeover to digital signals occurs this summer.
"This measure is not bipartisan. It contains much that is not stimulative," said Sen. John McCain, R-Ariz., Obama's rival for the White House. "And is nothing short—nothing short—of generational theft" since it burdens future generations with so much debt, he added.
____
Associated Press Writer Ben Feller contributed to this report.
That vote was to be held open for hours, waiting for Ohio Democrat Sherrod Brown, who was attending a memorial service for his mother and then flying back to cast the deciding vote.
Senate passage would meet a deadline of sending the bill to Obama before a congressional recess begins next week.
The 1,071 page, 8-inch-thick measure combines $281 billion in tax cuts for individuals and businesses with more than a half-trillion dollars in government spending. The money would go for infrastructure, health care and help for cash-starved state governments, among scores of programs. Seniors would get a $250 bonus Social Security check.
Told that no Republican backed the measure, White House press secretary Robert Gibbs reacted by citing another number: "3.5 million jobs that we look forward to saving or creating."
Seven Democrats voted against the bill.
Republicans said the package won't work because it has too little in tax cuts and spreads too much money around to everyday projects like computer upgrades for federal agencies.
"This legislation falls woefully short," said House GOP Leader John Boehner of Ohio. "With a price tag of more than $1 trillion when you factor in interest, it costs every family almost $10,000 in added debt. This is an act of generational theft that our children and grandchildren will be paying for far into the future."
The final $787 billion measure has been pared back from versions previously debated in order to attract support from three Senate GOP moderates—Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania. Their help is essential to meeting a 60-vote threshold in the Senate, required to overcome a Republican objection that the bill adds to the deficit.
The bill originally passed the Senate by a 61-37 tally, but Sen. Edward Kennedy, D-Mass., suffering from brain cancer, is not expected to vote this time.
Sen. Judd Gregg, R-N.H., who withdrew his nomination to be Obama's Commerce secretary, said he would vote against the bill.
Democrats lavished praise on the measure, which combines tax cuts for workers and businesses with more than a half-trillion dollars in government spending aimed at boosting economic demand.
"By investing in new jobs, in science and innovation, in energy, in education ... we are investing in the American people, which is the best guarantee of the success of our nation," said House Speaker Nancy Pelosi, D-Calif.
The plan is the signature initiative of the fledgling Obama administration, which is betting that combining tax cuts of $400 a year for individuals and $800 for couples with an infusion of spending for unemployment assistance, $250 payments to people on Social Security, and extra money for states to help with the Medicaid health program for the poor and disabled will arrest the economy's fall.
Local school districts would receive $70 billion in additional funding for K-12 programs and special education and to prevent cutbacks and layoffs and repair crumbling schools. There's about $50 billion for energy programs, much of which goes to efficiency programs and renewable energy.
Some $46 billion would go to transportation projects, not enough to please many lawmakers.
Negotiators insisted on including a $70 billion tax break to make sure middle- to upper-income taxpayers won't get hit by the alternative minimum tax and forced a reduction of Obama's signature tax break for 95 percent of workers.
The AMT was designed 40 years ago to make sure wealthy people pay at least some tax, but is updated for inflation each year to avoid tax increases averaging $2,300 a year. Fixing the annual problems now allows lawmakers to avoid difficult battles down the road, but economists say the move won't do much to lift the economy.
Republicans pointed out a bevy of questionable spending items that made the final cut in House-Senate negotiations, including money to replace computers at federal agencies, inspect canals, and issue coupons for convertor boxes to help people watch TV when the changeover to digital signals occurs this summer.
"This measure is not bipartisan. It contains much that is not stimulative," said Sen. John McCain, R-Ariz., Obama's rival for the White House. "And is nothing short—nothing short—of generational theft" since it burdens future generations with so much debt, he added.
____
Associated Press Writer Ben Feller contributed to this report.
Thursday, February 12, 2009
A Raw Deal for American Families
The Democrats’ trillion dollar spending bill provides $1.10 per day in tax relief to workers, while saddling every American family with $9,400.00 in added debt.
Following are some very tentative quick facts on the trillion-dollar “stimulus” spending deal slated to be rushed through the House and Senate today or tomorrow by Congressional Democrats, as compiled by the Office of House Republican Leader John Boehner (R-OH). These are based on best estimates on legislative text and scoring and may be subject to revision. Keep in mind that the Democrats haven’t actually released the actual text yet.
1. Generational Theft. The final agreement will cost each and every household more than $9,400 in additional debt (including interest on the bill), paid for by our children and grandchildren.
2. Paltry Tax Relief for Working Families and Small Businesses. The “Making Work Pay” tax credit at the center of the plan amounts to $1.10 a day, not even enough to ride the bus one-way to work.
3. Massive Government Expansion. The final agreement is almost as much as the annual discretionary budget for the entire federal government.
4. A Trillion-Dollar Spending Bill. The $789.5 billion final agreement slated for a House vote either today or tomorrow will exceed more than $1 trillion when adding in the interest of approximately $300 billion between 2009-2019.
5. Unnecessary Spending That Won’t Create Jobs. Apparently included in the final “jobs” bill is money for plug-in vehicles, money for STD prevention, and money for ACORN (via the Neighborhood Stabilization Program and CDBG program). The final agreement also creates new programs and funds existing programs that can be used to fund earmarks and pork-barrel projects.
6. The bill contains enough spending - $789.5 billion – to give every man, woman and child in America $2,600. $789.5 billion is enough to give every person in Ohio more than $68,000.
7. Supporters of the bill say it saves or creates 3.67 million new jobs. But, the data they are circulating shows only 3.46 million – that’s 210,000 fewer than their talking points claim, 500,000 fewer than President Obama promised, and a staggering 2.74 million fewer than the 6.2 million jobs that would be created by the House GOP alternative.
8. The bill creates 31 new programs totaling $97 billion (31% of all appropriations) and expands 73 programs by $92 billion which are part of the regular appropriations process, not “stimulative spending.”
9. Almost one-third of the so called “tax relief” in the bill is spending in disguise, meaning that true tax relief makes up only 26% of the total package – a far cry from the 40 percent that President Obama had requested.
10. A provision tucked in the bill will further increase government involvement in health care by putting bureaucrats – not doctors - in charge of health care choices for families and seniors.
Following are some very tentative quick facts on the trillion-dollar “stimulus” spending deal slated to be rushed through the House and Senate today or tomorrow by Congressional Democrats, as compiled by the Office of House Republican Leader John Boehner (R-OH). These are based on best estimates on legislative text and scoring and may be subject to revision. Keep in mind that the Democrats haven’t actually released the actual text yet.
1. Generational Theft. The final agreement will cost each and every household more than $9,400 in additional debt (including interest on the bill), paid for by our children and grandchildren.
2. Paltry Tax Relief for Working Families and Small Businesses. The “Making Work Pay” tax credit at the center of the plan amounts to $1.10 a day, not even enough to ride the bus one-way to work.
3. Massive Government Expansion. The final agreement is almost as much as the annual discretionary budget for the entire federal government.
4. A Trillion-Dollar Spending Bill. The $789.5 billion final agreement slated for a House vote either today or tomorrow will exceed more than $1 trillion when adding in the interest of approximately $300 billion between 2009-2019.
5. Unnecessary Spending That Won’t Create Jobs. Apparently included in the final “jobs” bill is money for plug-in vehicles, money for STD prevention, and money for ACORN (via the Neighborhood Stabilization Program and CDBG program). The final agreement also creates new programs and funds existing programs that can be used to fund earmarks and pork-barrel projects.
6. The bill contains enough spending - $789.5 billion – to give every man, woman and child in America $2,600. $789.5 billion is enough to give every person in Ohio more than $68,000.
7. Supporters of the bill say it saves or creates 3.67 million new jobs. But, the data they are circulating shows only 3.46 million – that’s 210,000 fewer than their talking points claim, 500,000 fewer than President Obama promised, and a staggering 2.74 million fewer than the 6.2 million jobs that would be created by the House GOP alternative.
8. The bill creates 31 new programs totaling $97 billion (31% of all appropriations) and expands 73 programs by $92 billion which are part of the regular appropriations process, not “stimulative spending.”
9. Almost one-third of the so called “tax relief” in the bill is spending in disguise, meaning that true tax relief makes up only 26% of the total package – a far cry from the 40 percent that President Obama had requested.
10. A provision tucked in the bill will further increase government involvement in health care by putting bureaucrats – not doctors - in charge of health care choices for families and seniors.
Tuesday, February 10, 2009
The trade war that the Democratic Congress is inviting
Posted by Soren Dayton (Profile)
Tuesday, February 10th at 12:31PM EST
2 Comments
Canadian unions are urging retaliation against a Buy America provision:
Two of Canada’s largest unions are urging the federal government to adopt a Buy Canadian policy similar to the proposal that has been criticized in the United States.
The Europeans and the Chinese haven’t kicked in yet. President Obama and the Democrats in Congress are standing at the edge of a precipice, trying to decide whether to jump and further damage our economy.
H/T Greg Mankiw.
Tuesday, February 10th at 12:31PM EST
2 Comments
Canadian unions are urging retaliation against a Buy America provision:
Two of Canada’s largest unions are urging the federal government to adopt a Buy Canadian policy similar to the proposal that has been criticized in the United States.
The Europeans and the Chinese haven’t kicked in yet. President Obama and the Democrats in Congress are standing at the edge of a precipice, trying to decide whether to jump and further damage our economy.
H/T Greg Mankiw.
Obama kills the ability for the Oil companies to drill off the coast. there goes the gas price again.
Let’s put aside for the moment that this story is from PMSNBC and “Bush era” refers to the long-past times of approximately six months ago. In the latest in a series of panders nods to the desires of his Leftist supporters, the President has overturned President Bush’s offshore drilling plan.
From the article:
The move comes a week after the Interior Department shelved energy leases on 130,000 acres near two national parks and other federally protected lands in Utah.
In Congress, Democrats have long wanted to rewrite the rules on royalties from offshore drilling, arguing that energy companies have been paying too little.
In the words of my near-twin here on RS, NightTwister, “$6/gallon gas, here we come”
Don’t forget to send those thank-you cards and letters to 1600 Pennsylvania Avenue. Oh, and also - Ken’s brother John T. Salazar is up for re-election next year….those of you in his district out in Colorado can thank his bro’ by supporting John’s opponent in 2010. Tell him Ken Salazar sent you.
PS: Just heard about this - help Heritage fight this one - go to http://freeourenergy.com/ and support a conservative approach to energy independence.
PPS: Yet more - this time, from the American Petroleum Institute, which points out:
Secretary Salazar’s announcement means that development of our offshore resources could be stalled indefinitely. That would delay Americans’ access to nearly 160,000 new, well-paying jobs, $1.7 trillion in revenues to federal, state and local governments and greater energy security.
Lovely.
From the article:
The move comes a week after the Interior Department shelved energy leases on 130,000 acres near two national parks and other federally protected lands in Utah.
In Congress, Democrats have long wanted to rewrite the rules on royalties from offshore drilling, arguing that energy companies have been paying too little.
In the words of my near-twin here on RS, NightTwister, “$6/gallon gas, here we come”
Don’t forget to send those thank-you cards and letters to 1600 Pennsylvania Avenue. Oh, and also - Ken’s brother John T. Salazar is up for re-election next year….those of you in his district out in Colorado can thank his bro’ by supporting John’s opponent in 2010. Tell him Ken Salazar sent you.
PS: Just heard about this - help Heritage fight this one - go to http://freeourenergy.com/ and support a conservative approach to energy independence.
PPS: Yet more - this time, from the American Petroleum Institute, which points out:
Secretary Salazar’s announcement means that development of our offshore resources could be stalled indefinitely. That would delay Americans’ access to nearly 160,000 new, well-paying jobs, $1.7 trillion in revenues to federal, state and local governments and greater energy security.
Lovely.
Monday, February 9, 2009
12 American Solutions for Jobs and Prosperity
This is from Newt Gingrich. This make much more sense than the current spending bill that Obama is trying to pass.
1. Payroll Tax Stimulus. With a temporary new tax credit to offset 50% of the payroll tax, every small business would have more money, and all Americans would take home more of what they earn.
2. Real Middle-Income Tax Relief. Reduce the marginal tax rate of 25% down to 15%, in effect establishing a flat-rate tax of 15% for close to 9 out of 10 American workers.
3. Reduce the Business Tax Rate. Match Ireland’s rate of 12.5% to keep more jobs in America.
4. Homeowner’s Assistance. Provide tax credit incentives to responsible home buyers so they can keep their homes.
5. Controlling Spending So We Can Move to a Balanced Budget. This begins with eliminating Congressional earmarks and wasteful pork-barrel spending.
6. No State Aid Without Protection From Fraud. Require state governments to adopt anti-fraud and anti-theft policies before giving them more money.
7. More American Energy Now. Explore for more American oil and gas and invest in affordable energy for the future, including clean coal, ethanol, nuclear power and renewable fuels.
8. Abolish Taxes on Capital Gains. Match China, Singapore and many other competitors. More investment in America means more jobs in America.
9. Protect Our Right to Vote in the Workplace. We must protect a worker’s right to decide by secret ballot whether to join a union.
10. Replace Sarbanes-Oxley. This failed law is crippling entrepreneurial startups. Replace it with affordable rules that help create jobs, not destroy them.
11. Abolish the Death Tax. Americans should work for their families, not for Washington.
12. Invest in Energy and Transportation Infrastructure. This includes a new, expanded electric power grid and a 21st century air traffic control system that will reduce delays in air travel and save passengers, employees and airlines billions of dollars per year.
1. Payroll Tax Stimulus. With a temporary new tax credit to offset 50% of the payroll tax, every small business would have more money, and all Americans would take home more of what they earn.
2. Real Middle-Income Tax Relief. Reduce the marginal tax rate of 25% down to 15%, in effect establishing a flat-rate tax of 15% for close to 9 out of 10 American workers.
3. Reduce the Business Tax Rate. Match Ireland’s rate of 12.5% to keep more jobs in America.
4. Homeowner’s Assistance. Provide tax credit incentives to responsible home buyers so they can keep their homes.
5. Controlling Spending So We Can Move to a Balanced Budget. This begins with eliminating Congressional earmarks and wasteful pork-barrel spending.
6. No State Aid Without Protection From Fraud. Require state governments to adopt anti-fraud and anti-theft policies before giving them more money.
7. More American Energy Now. Explore for more American oil and gas and invest in affordable energy for the future, including clean coal, ethanol, nuclear power and renewable fuels.
8. Abolish Taxes on Capital Gains. Match China, Singapore and many other competitors. More investment in America means more jobs in America.
9. Protect Our Right to Vote in the Workplace. We must protect a worker’s right to decide by secret ballot whether to join a union.
10. Replace Sarbanes-Oxley. This failed law is crippling entrepreneurial startups. Replace it with affordable rules that help create jobs, not destroy them.
11. Abolish the Death Tax. Americans should work for their families, not for Washington.
12. Invest in Energy and Transportation Infrastructure. This includes a new, expanded electric power grid and a 21st century air traffic control system that will reduce delays in air travel and save passengers, employees and airlines billions of dollars per year.
FLY ON THE WAL UNDERCOVER AT WAL-MART, THE HEARTLAND SUPERSTORE THAT MAY SAVE THE ECONOMY
By CHARLES PLATT
Writer Charles Platt during his stint as a Wal-Mart employee in Flagstaff, Ariz.
Writer Charles Platt during his stint as a Wal-Mart employee in Flagstaff, Ariz.
PreviousPauseNext
Some people, usually community activists, loath Wal-Mart. Others, like the family of four struggling to make ends meet, are in love with the chain. I, meanwhile, am in awe of it.
With more than 7,000 facilities worldwide, coordinating more than 2 million employees in its fanatical mission to maintain an inventory from more than 60,000 American suppliers, it has become a system containing more components than the Space Shuttle - yet it runs as reliably as a Timex watch.
Sheltered by rabble rousers who forced Wal-Mart's CEO to admit it "wasn't worth the effort" to try to open in Queens or anywhere else in the city, New Yorkers may not fully realize the unique, irreplaceable status of the World's Largest Retailer in rural and suburban America. Merchandise from Wal-Mart has become as ubiquitous as the water supply. Yet still the company is rebuked and reviled by anyone claiming a social conscience, and is lambasted by legislators as if its bad behavior places it somewhere between investment bankers and the Taliban.
Considering this is a company that is helping families ride out the economic downturn, which is providing jobs and stimulus while Congress bickers, which had sales growth of 2% this last quarter while other companies struggled, you have to wonder why. At least, I wondered why. And in that spirit of curiosity, I applied for an entry-level position at my local Wal-Mart.
*
Getting hired turned out to be a challenge. The personnel manager told me she had received more than 100 applications during that month alone, chasing just a handful of jobs. Thus the mystery deepened. If Wal-Mart was such an exploiter of the working poor, why were the working poor so eager to be exploited? And after they were hired, why did they seem so happy to be there? Anytime I shopped at the store, blue-clad Walmartians encouraged me to "Have a nice day" with the sincerity of the pope issuing a benediction.
I found my first clue in the application screening process. A diabolically ingenious quiz probed for my slightest hesitation or uncertainty regarding four big no-nos of retailing: theft, insubordination, poor timekeeping and substance abuse. (The quiz also tried to make sure that I wasn't accident-prone.) After I cleared that hurdle, I was called in for an interview. At the Flagstaff, Ariz., store where I applied, this took place in a vinyl-floored, gray-walled, windowless room, tucked away at the back of the store and crowded with people sitting on cheap folding chairs at cheap folding tables. Some of these people were talking on phones, some were doing job interviews, some were typing on computer terminals, and some seemed to be eating lunch.
I sat at a table that was covered in untrimmed fabric under a protective layer of sticky transparent vinyl, like a couch cover. I'd seen better-looking decor at firehouse bingo evenings. Was Wal-Mart going out of its way to emphasize its commitment to cost-cutting? I guessed that the utilitarian ethic was so deeply embedded, it was just taken for granted.
A friendly lady in her 50s, wearing the Wal-Mart Smile, sat opposite me and started asking questions from a printed form. Meanwhile another job applicant was going through his interview right behind me. Privacy, apparently, was as unaffordable here as tasteful decor.
"Are you easy to work with?" the lady asked. Since I couldn't imagine anyone being dumb enough to say "No," I concluded that the content of my answer must be irrelevant, and the way I answered must be the real issue. To judge from my interviewer's sunny demeanor, enthusiasm and sincerity were key. Fortunately, I had no problem reflecting her positivism, because I was becoming so fascinated with the Wal-Mart phenomenon, I really did want to work there.
I managed to satisfy her expectations, and then went through two additional interviews, followed by a drug test, before I received formal approval. It may have been one of the most intense hiring processes I've been through; hardly the schedule of a company that didn't care who it hired, or employees who didn't care about getting a job.
*
A week later, I found myself in an elite group of 10 successful applicants convening for two (paid) days of training in the same claustrophobic, windowless room. As we introduced ourselves, I discovered that more than half had already worked at other Wal-Marts. Having relocated to this area, they were eager for more of the same.
Why? Gradually the answer became clear. Imagine that you are young and relatively unskilled, lacking academic qualifications. Which would you prefer: standing behind the register at a local gas station, or doing the same thing in the most aggressively successful retailer in the world, where ruthless expansion is a way of life, creating a constant demand for people to fill low-level managerial positions? A future at Wal-Mart may sound a less-than-stellar prospect, but it's a whole lot better than no future at all.
In addition, despite its huge size, the corporation turned out to have an eerie resemblance to a Silicon Valley startup. There was the same gung-ho spirit, same lack of dogma, same lax dress code, same informality - and same interest in owning a piece of the company. All of my coworkers accepted the offer to buy Wal-Mart stock by setting aside $2 of every paycheck.
They were less enthused about health benefits, which offered minimal coverage during our first six months. The full corporate plan would kick in after that, but seemed to require significant employee contributions. Still, my fellow trainees assured me that health plans at other retail chains were even worse, and since the federal government had raised the limits for Medicaid eligibility, that was an option for people with children. (In the time since my experience at Wal-Mart, the company has improved its health plans significantly.) The assistant manager who served as our trainer was still in her 20s, highly motivated, friendly, smart, and perceptive. Naturally she overflowed with Wal-Mart positivism. In fact she projected the feel-good sincerity of a Baptist running a bake sale.
Still, she wasn't afraid to tackle the topic of termination. During our initial six months on the job, we would be on probation on a "three strikes" basis. One major screw-up would trigger a session of "verbal coaching." (Since positivism is endemic in Wal-Mart, words such as "discipline" are seldom used. The goal is self-improvement.) A second offense would trigger some written coaching. On the third offense, the employee would be sent home to think long and hard about what happened, and would have to come back the next day with a good argument for not being fired. In effect, Wal-Mart would say, "You seem to be a hopeless case. Now tell us why we're wrong." We were given only a handful of outright prohibitions. No swearing in the store, for instance - not even the word "damn," because some people might be offended. No funny-colored hair or blatant skin piercings, because some people might be offended. In fact almost all the rules devolved to the sacred principle of never, ever offending a customer - or "guest," in Wal-Mart terminology.
The reason was clearly articulated. On average, anyone walking into Wal-Mart is likely to spend more than $200,000 at the store during the rest of his life. Therefore, any clueless employee who alienates that customer will cost the store around a quarter-million dollars. "If we don't remember that our customers are in charge," our trainer warned us, "we turn into Kmart." She made that sound like devolving into some lesser being - a toad, maybe, or an ameba.
And so we came to the Wal-Mart Pledge. Solemnly, each of us raised one hand and intoned: "If a customer comes within 10 feet of me, I'm going to look him in the eye, smile and greet him." Having pledged ourselves, we encountered the aspect of Wal-Mart employment that impressed me most: The Telxon, pronounced "Telzon," a hand-held bar-code scanner with a wireless connection to the store's computer. When pointed at any product, the Telxon would reveal astonishing amounts of information: the quantity that should be on the shelf, the availability from the nearest warehouse, the retail price, and (most amazing of all) the markup.
All of us were given access to this information, because - in theory, at least - anyone in the store could order a couple extra pallets of anything, and could discount it heavily as a Volume Producing Item (known as a VPI), competing with other departments to rack up the most profitable sales each month. Floor clerks even had portable equipment to print their own price stickers. This was how Wal-Mart detected demand and responded to it: by distributing decision-making power to grass-roots level. It was as simple yet as radical as that.
We received an inspirational talk on this subject, from an employee who reacted after the store test-marketed tents that could protect cars for people who didn't have enough garage space. They sold out quickly, and several customers came in asking for more. Clearly this was a singular, exceptional case of word-of-mouth, so he ordered literally a truckload of tent-garages, "Which I shouldn't have done really without asking someone," he said with a shrug, "because I hadn't been working at the store for long." But the item was a huge success. His VPI was the biggest in store history - and that kind of thing doesn't go unnoticed in Arkansas.
He was invited to corporate HQ as a guest at a management conference. "It was totally different from what I expected," he told us. "I thought it would be these fatcats talking about money, but no one even mentioned money. All they cared about was finding new ways to satisfy customers. I met everyone including the chairman of the company."
*
After my two days of instruction I returned for the first real day of work. Inevitably, it was anticlimactic. The essence of life on the sales floor should be obvious to anyone: It is extremely boring.
I had chosen the pet department, which sells goldfish, cat food, dog food and accessories. As I patrolled the aisles, repositioning misplaced items and filling gaps in the shelves, I realized that Wal-Mart "guests" really are like guests. They are visitors who move things around and create a mess before they go home. Cleaning up after them was not very different from doing housework.
My amiable, laid-back department supervisor had been doing this kind of thing for 15 years. When I asked him why, he took a moment to process the question. He had to think back to other employers he'd worked for in the distant past. None of them, he said, had treated him so well.
What exactly did he mean by that?
His answer lay in the structure of the store. "It's deceptive, because Wal-Mart isn't divided into separate stores like a mall," he said. "But really, that's how it works. Each section is separate. This is - my pet store! No one comes here and tells me how to run it. I could go for weeks without a supervisor asking any questions." Here was the unseen, unreported side of the corporate behemoth. Big as it was, it was smart enough to give employees a feeling of autonomy.
During my few subsequent days as a Walmartian, everyone at every level was friendly and decent toward me. No one had the slightest clue that I might write about my experiences; no one even knew that I had a former career as a journalist. Still, they behaved like poster children for enlightened capitalism.
My supervisor reminded me unfailingly to take my mandatory two (paid) quarter-hour breaks during each eight hours of working time. I was cautioned never to abbreviate my lunch hour. Most of all I was encouraged to educate myself using instructional videos on computer terminals at the back of the store.
These videos served Wal-Mart's self-interest by teaching skills ranging from customer service to the art of lifting heavy boxes without hurting your back. I was paid to view them, and was rewarded with an increased hourly rate when I finished the course.
My starting wage was so low (around $7 per hour), a modest increment still didn't leave me with enough to live on comfortably, but when I looked at the alternatives, many of them were worse. Coworkers assured me that the nearest Target paid its hourly full-timers less than Wal-Mart, while fast-food franchises were at the bottom of everyone's list.
I found myself reaching an inescapable conclusion. Low wages are not a Wal-Mart problem. They are an industry-wide problem, afflicting all unskilled entry-level jobs, and the reason should be obvious.
In our free-enterprise system, employees are valued largely in terms of what they can do. This is why teenagers fresh out of high school often go to vocational training institutes to become auto mechanics or electricians. They understand a basic principle that seems to elude social commentators, politicians and union organizers. If you want better pay, you need to learn skills that are in demand.
The blunt tools of legislation or union power can force a corporation to pay higher wages, but if employees don't create an equal amount of additional value, there's no net gain. All other factors remaining equal, the store will have to charge higher prices for its merchandise, and its competitive position will suffer.
This is Economics 101, but no one wants to believe it, because it tells us that a legislative or unionized quick-fix is not going to work in the long term. If you want people to be wealthier, they have to create additional wealth.
To my mind, the real scandal is not that a large corporation doesn't pay people more. The scandal is that so many people have so little economic value. Despite (or because of) a free public school system, millions of teenagers enter the work force without marketable skills. So why would anyone expect them to be well paid?
In fact, the deal at Wal-Mart is better than at many other employers. The company states that its regular full-time hourly associates in the US average $10.86 per hour, while the mean hourly wage for retail sales associates in department stores generally is $8.67. The federal minimum wage is $6.55 per hour. Also every Wal-Mart employee gets a 10% store discount, while an additional 4% of wages go into profit-sharing and 401(k) plans.
*
As for the horror stories: Let's take a couple of random examples. Unpaid overtime? Maybe it happened at some stores in the past, but an instructional video warned me that if anyone in management ever encouraged such a heinous transgression, I should report him to his superiors immediately. Illegal aliens? That particular news story really referred to a cleaning company retained by Wal-Mart. The cleaning company hired the illegals.
You have to wonder, then, why the store has such a terrible reputation, and I have to tell you that so far as I can determine, trade unions have done most of the mudslinging. Web sites that serve as a source for negative stories are often affiliated with unions. Walmartwatch.com, for instance, is partnered with the Service Employees International Union; Wakeupwalmart.com is entirely owned by United Food and Commercial Workers International Union. For years, now, they've campaigned against Wal-Mart, for reasons that may have more to do with money than compassion for the working poor. If more than one million Wal-Mart employees in the United States could be induced to join a union, by my calculation they'd be compelled to pay more than half-billion dollars each year in dues.
Anti-growth activists are the other primary source of anti-Wal-Mart sentiment. In the town where I worked, I was told that activists even opposed a new Barnes & Noble because it was "too big." If they're offended by a large bookstore, you can imagine how they feel about a discount retailer.
The argument, of course, is that smaller enterprises cannot compete. My outlook on this is hardcore: I think that many of the "mom-and-pop" stores so beloved by activists don't deserve to remain in business.
When I first ventured from New York City to the American heartland, I did my best to patronize quaint little places on Main Street and quickly discovered the penalties for doing so. At a small appliance store, I wasn't allowed to buy a microwave oven on display. I had to place an order and wait a couple of weeks for delivery. At a stationery store where I tried to buy a file cabinet, I found the same problem. Think back, if you are old enough to do so, and you may recall that this is how small-town retailing used to function in the 1960s.
As a customer, I don't see why I should protect a business from the harsh realities of commerce if it can't maintain a good inventory at a competitive price. And as an employee, I see no advantage in working at a small place where I am subject to the quixotic moods of a sole proprietor, and can never appeal to his superior, because there isn't one.
By the same logic, I see no reason for legislators to protect Safeway supermarkets with ploys such as zoning restrictions, which just happen to allow a supermarket-sized building while outlawing a Wal-Mart SuperCenter that's a few thousand square feet bigger.
Based on my experience (admittedly, only at one location) I reached a conclusion which is utterly opposed to almost everything ever written about Wal-Mart. I came to regard it as one of the all-time enlightened American employers, right up there with IBM in the 1960s. Wal-Mart is not the enemy. It's the best friend we could ask for.
Charles Platt is a former senior writer for Wired magazine.
Writer Charles Platt during his stint as a Wal-Mart employee in Flagstaff, Ariz.
Writer Charles Platt during his stint as a Wal-Mart employee in Flagstaff, Ariz.
PreviousPauseNext
Some people, usually community activists, loath Wal-Mart. Others, like the family of four struggling to make ends meet, are in love with the chain. I, meanwhile, am in awe of it.
With more than 7,000 facilities worldwide, coordinating more than 2 million employees in its fanatical mission to maintain an inventory from more than 60,000 American suppliers, it has become a system containing more components than the Space Shuttle - yet it runs as reliably as a Timex watch.
Sheltered by rabble rousers who forced Wal-Mart's CEO to admit it "wasn't worth the effort" to try to open in Queens or anywhere else in the city, New Yorkers may not fully realize the unique, irreplaceable status of the World's Largest Retailer in rural and suburban America. Merchandise from Wal-Mart has become as ubiquitous as the water supply. Yet still the company is rebuked and reviled by anyone claiming a social conscience, and is lambasted by legislators as if its bad behavior places it somewhere between investment bankers and the Taliban.
Considering this is a company that is helping families ride out the economic downturn, which is providing jobs and stimulus while Congress bickers, which had sales growth of 2% this last quarter while other companies struggled, you have to wonder why. At least, I wondered why. And in that spirit of curiosity, I applied for an entry-level position at my local Wal-Mart.
*
Getting hired turned out to be a challenge. The personnel manager told me she had received more than 100 applications during that month alone, chasing just a handful of jobs. Thus the mystery deepened. If Wal-Mart was such an exploiter of the working poor, why were the working poor so eager to be exploited? And after they were hired, why did they seem so happy to be there? Anytime I shopped at the store, blue-clad Walmartians encouraged me to "Have a nice day" with the sincerity of the pope issuing a benediction.
I found my first clue in the application screening process. A diabolically ingenious quiz probed for my slightest hesitation or uncertainty regarding four big no-nos of retailing: theft, insubordination, poor timekeeping and substance abuse. (The quiz also tried to make sure that I wasn't accident-prone.) After I cleared that hurdle, I was called in for an interview. At the Flagstaff, Ariz., store where I applied, this took place in a vinyl-floored, gray-walled, windowless room, tucked away at the back of the store and crowded with people sitting on cheap folding chairs at cheap folding tables. Some of these people were talking on phones, some were doing job interviews, some were typing on computer terminals, and some seemed to be eating lunch.
I sat at a table that was covered in untrimmed fabric under a protective layer of sticky transparent vinyl, like a couch cover. I'd seen better-looking decor at firehouse bingo evenings. Was Wal-Mart going out of its way to emphasize its commitment to cost-cutting? I guessed that the utilitarian ethic was so deeply embedded, it was just taken for granted.
A friendly lady in her 50s, wearing the Wal-Mart Smile, sat opposite me and started asking questions from a printed form. Meanwhile another job applicant was going through his interview right behind me. Privacy, apparently, was as unaffordable here as tasteful decor.
"Are you easy to work with?" the lady asked. Since I couldn't imagine anyone being dumb enough to say "No," I concluded that the content of my answer must be irrelevant, and the way I answered must be the real issue. To judge from my interviewer's sunny demeanor, enthusiasm and sincerity were key. Fortunately, I had no problem reflecting her positivism, because I was becoming so fascinated with the Wal-Mart phenomenon, I really did want to work there.
I managed to satisfy her expectations, and then went through two additional interviews, followed by a drug test, before I received formal approval. It may have been one of the most intense hiring processes I've been through; hardly the schedule of a company that didn't care who it hired, or employees who didn't care about getting a job.
*
A week later, I found myself in an elite group of 10 successful applicants convening for two (paid) days of training in the same claustrophobic, windowless room. As we introduced ourselves, I discovered that more than half had already worked at other Wal-Marts. Having relocated to this area, they were eager for more of the same.
Why? Gradually the answer became clear. Imagine that you are young and relatively unskilled, lacking academic qualifications. Which would you prefer: standing behind the register at a local gas station, or doing the same thing in the most aggressively successful retailer in the world, where ruthless expansion is a way of life, creating a constant demand for people to fill low-level managerial positions? A future at Wal-Mart may sound a less-than-stellar prospect, but it's a whole lot better than no future at all.
In addition, despite its huge size, the corporation turned out to have an eerie resemblance to a Silicon Valley startup. There was the same gung-ho spirit, same lack of dogma, same lax dress code, same informality - and same interest in owning a piece of the company. All of my coworkers accepted the offer to buy Wal-Mart stock by setting aside $2 of every paycheck.
They were less enthused about health benefits, which offered minimal coverage during our first six months. The full corporate plan would kick in after that, but seemed to require significant employee contributions. Still, my fellow trainees assured me that health plans at other retail chains were even worse, and since the federal government had raised the limits for Medicaid eligibility, that was an option for people with children. (In the time since my experience at Wal-Mart, the company has improved its health plans significantly.) The assistant manager who served as our trainer was still in her 20s, highly motivated, friendly, smart, and perceptive. Naturally she overflowed with Wal-Mart positivism. In fact she projected the feel-good sincerity of a Baptist running a bake sale.
Still, she wasn't afraid to tackle the topic of termination. During our initial six months on the job, we would be on probation on a "three strikes" basis. One major screw-up would trigger a session of "verbal coaching." (Since positivism is endemic in Wal-Mart, words such as "discipline" are seldom used. The goal is self-improvement.) A second offense would trigger some written coaching. On the third offense, the employee would be sent home to think long and hard about what happened, and would have to come back the next day with a good argument for not being fired. In effect, Wal-Mart would say, "You seem to be a hopeless case. Now tell us why we're wrong." We were given only a handful of outright prohibitions. No swearing in the store, for instance - not even the word "damn," because some people might be offended. No funny-colored hair or blatant skin piercings, because some people might be offended. In fact almost all the rules devolved to the sacred principle of never, ever offending a customer - or "guest," in Wal-Mart terminology.
The reason was clearly articulated. On average, anyone walking into Wal-Mart is likely to spend more than $200,000 at the store during the rest of his life. Therefore, any clueless employee who alienates that customer will cost the store around a quarter-million dollars. "If we don't remember that our customers are in charge," our trainer warned us, "we turn into Kmart." She made that sound like devolving into some lesser being - a toad, maybe, or an ameba.
And so we came to the Wal-Mart Pledge. Solemnly, each of us raised one hand and intoned: "If a customer comes within 10 feet of me, I'm going to look him in the eye, smile and greet him." Having pledged ourselves, we encountered the aspect of Wal-Mart employment that impressed me most: The Telxon, pronounced "Telzon," a hand-held bar-code scanner with a wireless connection to the store's computer. When pointed at any product, the Telxon would reveal astonishing amounts of information: the quantity that should be on the shelf, the availability from the nearest warehouse, the retail price, and (most amazing of all) the markup.
All of us were given access to this information, because - in theory, at least - anyone in the store could order a couple extra pallets of anything, and could discount it heavily as a Volume Producing Item (known as a VPI), competing with other departments to rack up the most profitable sales each month. Floor clerks even had portable equipment to print their own price stickers. This was how Wal-Mart detected demand and responded to it: by distributing decision-making power to grass-roots level. It was as simple yet as radical as that.
We received an inspirational talk on this subject, from an employee who reacted after the store test-marketed tents that could protect cars for people who didn't have enough garage space. They sold out quickly, and several customers came in asking for more. Clearly this was a singular, exceptional case of word-of-mouth, so he ordered literally a truckload of tent-garages, "Which I shouldn't have done really without asking someone," he said with a shrug, "because I hadn't been working at the store for long." But the item was a huge success. His VPI was the biggest in store history - and that kind of thing doesn't go unnoticed in Arkansas.
He was invited to corporate HQ as a guest at a management conference. "It was totally different from what I expected," he told us. "I thought it would be these fatcats talking about money, but no one even mentioned money. All they cared about was finding new ways to satisfy customers. I met everyone including the chairman of the company."
*
After my two days of instruction I returned for the first real day of work. Inevitably, it was anticlimactic. The essence of life on the sales floor should be obvious to anyone: It is extremely boring.
I had chosen the pet department, which sells goldfish, cat food, dog food and accessories. As I patrolled the aisles, repositioning misplaced items and filling gaps in the shelves, I realized that Wal-Mart "guests" really are like guests. They are visitors who move things around and create a mess before they go home. Cleaning up after them was not very different from doing housework.
My amiable, laid-back department supervisor had been doing this kind of thing for 15 years. When I asked him why, he took a moment to process the question. He had to think back to other employers he'd worked for in the distant past. None of them, he said, had treated him so well.
What exactly did he mean by that?
His answer lay in the structure of the store. "It's deceptive, because Wal-Mart isn't divided into separate stores like a mall," he said. "But really, that's how it works. Each section is separate. This is - my pet store! No one comes here and tells me how to run it. I could go for weeks without a supervisor asking any questions." Here was the unseen, unreported side of the corporate behemoth. Big as it was, it was smart enough to give employees a feeling of autonomy.
During my few subsequent days as a Walmartian, everyone at every level was friendly and decent toward me. No one had the slightest clue that I might write about my experiences; no one even knew that I had a former career as a journalist. Still, they behaved like poster children for enlightened capitalism.
My supervisor reminded me unfailingly to take my mandatory two (paid) quarter-hour breaks during each eight hours of working time. I was cautioned never to abbreviate my lunch hour. Most of all I was encouraged to educate myself using instructional videos on computer terminals at the back of the store.
These videos served Wal-Mart's self-interest by teaching skills ranging from customer service to the art of lifting heavy boxes without hurting your back. I was paid to view them, and was rewarded with an increased hourly rate when I finished the course.
My starting wage was so low (around $7 per hour), a modest increment still didn't leave me with enough to live on comfortably, but when I looked at the alternatives, many of them were worse. Coworkers assured me that the nearest Target paid its hourly full-timers less than Wal-Mart, while fast-food franchises were at the bottom of everyone's list.
I found myself reaching an inescapable conclusion. Low wages are not a Wal-Mart problem. They are an industry-wide problem, afflicting all unskilled entry-level jobs, and the reason should be obvious.
In our free-enterprise system, employees are valued largely in terms of what they can do. This is why teenagers fresh out of high school often go to vocational training institutes to become auto mechanics or electricians. They understand a basic principle that seems to elude social commentators, politicians and union organizers. If you want better pay, you need to learn skills that are in demand.
The blunt tools of legislation or union power can force a corporation to pay higher wages, but if employees don't create an equal amount of additional value, there's no net gain. All other factors remaining equal, the store will have to charge higher prices for its merchandise, and its competitive position will suffer.
This is Economics 101, but no one wants to believe it, because it tells us that a legislative or unionized quick-fix is not going to work in the long term. If you want people to be wealthier, they have to create additional wealth.
To my mind, the real scandal is not that a large corporation doesn't pay people more. The scandal is that so many people have so little economic value. Despite (or because of) a free public school system, millions of teenagers enter the work force without marketable skills. So why would anyone expect them to be well paid?
In fact, the deal at Wal-Mart is better than at many other employers. The company states that its regular full-time hourly associates in the US average $10.86 per hour, while the mean hourly wage for retail sales associates in department stores generally is $8.67. The federal minimum wage is $6.55 per hour. Also every Wal-Mart employee gets a 10% store discount, while an additional 4% of wages go into profit-sharing and 401(k) plans.
*
As for the horror stories: Let's take a couple of random examples. Unpaid overtime? Maybe it happened at some stores in the past, but an instructional video warned me that if anyone in management ever encouraged such a heinous transgression, I should report him to his superiors immediately. Illegal aliens? That particular news story really referred to a cleaning company retained by Wal-Mart. The cleaning company hired the illegals.
You have to wonder, then, why the store has such a terrible reputation, and I have to tell you that so far as I can determine, trade unions have done most of the mudslinging. Web sites that serve as a source for negative stories are often affiliated with unions. Walmartwatch.com, for instance, is partnered with the Service Employees International Union; Wakeupwalmart.com is entirely owned by United Food and Commercial Workers International Union. For years, now, they've campaigned against Wal-Mart, for reasons that may have more to do with money than compassion for the working poor. If more than one million Wal-Mart employees in the United States could be induced to join a union, by my calculation they'd be compelled to pay more than half-billion dollars each year in dues.
Anti-growth activists are the other primary source of anti-Wal-Mart sentiment. In the town where I worked, I was told that activists even opposed a new Barnes & Noble because it was "too big." If they're offended by a large bookstore, you can imagine how they feel about a discount retailer.
The argument, of course, is that smaller enterprises cannot compete. My outlook on this is hardcore: I think that many of the "mom-and-pop" stores so beloved by activists don't deserve to remain in business.
When I first ventured from New York City to the American heartland, I did my best to patronize quaint little places on Main Street and quickly discovered the penalties for doing so. At a small appliance store, I wasn't allowed to buy a microwave oven on display. I had to place an order and wait a couple of weeks for delivery. At a stationery store where I tried to buy a file cabinet, I found the same problem. Think back, if you are old enough to do so, and you may recall that this is how small-town retailing used to function in the 1960s.
As a customer, I don't see why I should protect a business from the harsh realities of commerce if it can't maintain a good inventory at a competitive price. And as an employee, I see no advantage in working at a small place where I am subject to the quixotic moods of a sole proprietor, and can never appeal to his superior, because there isn't one.
By the same logic, I see no reason for legislators to protect Safeway supermarkets with ploys such as zoning restrictions, which just happen to allow a supermarket-sized building while outlawing a Wal-Mart SuperCenter that's a few thousand square feet bigger.
Based on my experience (admittedly, only at one location) I reached a conclusion which is utterly opposed to almost everything ever written about Wal-Mart. I came to regard it as one of the all-time enlightened American employers, right up there with IBM in the 1960s. Wal-Mart is not the enemy. It's the best friend we could ask for.
Charles Platt is a former senior writer for Wired magazine.
Saturday, February 7, 2009
CBO To The President: Your Stimulus Plan Stinks
The nonpartisan Congressional Budget Office has taken a good look at the President’s stimulus plan. It does not like what it sees:
President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.
CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.
CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.
It would, of course, behoove Senator Gregg to tell his soon-to-be-boss that the stimulus plan being pushed by the Obama Administration will have deleterious long term effects. I am surprised that CBO actually believes the plan will work in the short term, given the mountain of evidence indicating the stimulus bill to be an impending short term failure. At bottom, even if one assumes that Keynesian stimulus can work–and let us remember that historically, it hasn’t–the current legislative package is nothing more than a mini-budget that is more dedicated to funding Democratic domestic priorities than it is to stimulating the economy. Americans asked for an economic jump start. What they got instead was a Christmas tree for Democratic special interest groups.
President Obama now wants to address the country on Monday to revive support for his stimulus plan. The impending address presumes that the problem with the current legislative effort behind the stimulus plan is a public relations issue. It is not. Rather, the problem is that the legislative package the Administration is trying to sell has no intellectual credibility behind it and would constitute a massive public policy failure. No address will work unless it includes words like “we are scrapping this turkey of a bill and starting over.”
President Obama’s economic recovery package will actually hurt the economy more in the long run than if he were to do nothing, the nonpartisan Congressional Budget Office said Wednesday.
CBO, the official scorekeepers for legislation, said the House and Senate bills will help in the short term but result in so much government debt that within a few years they would crowd out private investment, actually leading to a lower Gross Domestic Product over the next 10 years than if the government had done nothing.
CBO estimates that by 2019 the Senate legislation would reduce GDP by 0.1 percent to 0.3 percent on net. [The House bill] would have similar long-run effects, CBO said in a letter to Sen. Judd Gregg, New Hampshire Republican, who was tapped by Mr. Obama on Tuesday to be Commerce Secretary.
It would, of course, behoove Senator Gregg to tell his soon-to-be-boss that the stimulus plan being pushed by the Obama Administration will have deleterious long term effects. I am surprised that CBO actually believes the plan will work in the short term, given the mountain of evidence indicating the stimulus bill to be an impending short term failure. At bottom, even if one assumes that Keynesian stimulus can work–and let us remember that historically, it hasn’t–the current legislative package is nothing more than a mini-budget that is more dedicated to funding Democratic domestic priorities than it is to stimulating the economy. Americans asked for an economic jump start. What they got instead was a Christmas tree for Democratic special interest groups.
President Obama now wants to address the country on Monday to revive support for his stimulus plan. The impending address presumes that the problem with the current legislative effort behind the stimulus plan is a public relations issue. It is not. Rather, the problem is that the legislative package the Administration is trying to sell has no intellectual credibility behind it and would constitute a massive public policy failure. No address will work unless it includes words like “we are scrapping this turkey of a bill and starting over.”
Friday, February 6, 2009
It looks like a deal
From Powerline blog
February 6, 2009 Posted by John at 6:22 PM
"Moderate" Senators have apparently agreed on a $780 billion pork bill that reportedly will draw three or four Republican votes. The reduction in the bill's size was achieved by reducing both spending and tax cuts; I haven't seen any details on what the changes were. The process still has some distance to go; House Democrats are already talking about restoring whatever spending was cut by the Senate in conference (not the tax cuts, though).
The important thing, I think, is that Barack Obama and the Democrats own this bill, and they will own the consequences that almost certainly will result: delayed recovery (although this will be impossible to prove), unprecedented deficits, tax increases and inflation. Republicans, meanwhile, continue to come up with better alternatives, most recently John Thune's proposal to scrub the entire pork bill and:
...replace it with a $936 billion across-the-board-middle-class tax rebate for 182 million Americans. The amendment would result in a tax rebate of $5,143 for single filers and $10,286 for married couples who file jointly.
That's obviously a better idea, but it wouldn't increase the power of government, so the Democrats aren't interested.
One question: is there a single Democratic pundit who has acknowledged what an awful bill the Dems have cobbled together? No observer of any sophistication could seriously defend what the Democrats are doing, but I haven't seen any Democratic pundit show enough integrity to acknowledge what we all know. Maybe some have and I missed it; I don't read liberal pundits very assiduously.
UPDATE: Senate Republicans are rebutting press claims that the "compromise" bill costs $780 billion:
The $780 billion figure doesn't include the $46.5 billion in amendments added to the stimulus bill this week. According to our numbers, the deal is at least $827 billion, $7 billion MORE than the House passed bill. With debt, that comes to $1.175 trillion total cost for the new deal.
You know things have come to a sad pass when reporters try to tell us that a pork bill costs *only* $780 billion.
February 6, 2009 Posted by John at 6:22 PM
"Moderate" Senators have apparently agreed on a $780 billion pork bill that reportedly will draw three or four Republican votes. The reduction in the bill's size was achieved by reducing both spending and tax cuts; I haven't seen any details on what the changes were. The process still has some distance to go; House Democrats are already talking about restoring whatever spending was cut by the Senate in conference (not the tax cuts, though).
The important thing, I think, is that Barack Obama and the Democrats own this bill, and they will own the consequences that almost certainly will result: delayed recovery (although this will be impossible to prove), unprecedented deficits, tax increases and inflation. Republicans, meanwhile, continue to come up with better alternatives, most recently John Thune's proposal to scrub the entire pork bill and:
...replace it with a $936 billion across-the-board-middle-class tax rebate for 182 million Americans. The amendment would result in a tax rebate of $5,143 for single filers and $10,286 for married couples who file jointly.
That's obviously a better idea, but it wouldn't increase the power of government, so the Democrats aren't interested.
One question: is there a single Democratic pundit who has acknowledged what an awful bill the Dems have cobbled together? No observer of any sophistication could seriously defend what the Democrats are doing, but I haven't seen any Democratic pundit show enough integrity to acknowledge what we all know. Maybe some have and I missed it; I don't read liberal pundits very assiduously.
UPDATE: Senate Republicans are rebutting press claims that the "compromise" bill costs $780 billion:
The $780 billion figure doesn't include the $46.5 billion in amendments added to the stimulus bill this week. According to our numbers, the deal is at least $827 billion, $7 billion MORE than the House passed bill. With debt, that comes to $1.175 trillion total cost for the new deal.
You know things have come to a sad pass when reporters try to tell us that a pork bill costs *only* $780 billion.
Thursday, February 5, 2009
Labor secretary for Obama has tax issues also.
Is another Obama nominee in trouble? A Senate panel today postponed a vote on his nominee to be labor secretary, Hilda Solis, after USA Today laid out her husband’s tax problems. The newspaper reported today that Sam Solis paid $6,400 to settle liens dating back 16 years against his business. Shortly afterward, the committee said it would give the administration time to investigate.
It’s not clear if the information is a deal-killer. “She’s not a partner in that business,” said White House spokesman Robert Gibbs. “We’re not going to penalize her for her husband’s business mistakes.” A statement from the Senate panel, headed by Ted Kennedy, suggested Solis might survive, Reuters notes: “We will continue to work together to move this nomination forward as soon as possible.”
It’s not clear if the information is a deal-killer. “She’s not a partner in that business,” said White House spokesman Robert Gibbs. “We’re not going to penalize her for her husband’s business mistakes.” A statement from the Senate panel, headed by Ted Kennedy, suggested Solis might survive, Reuters notes: “We will continue to work together to move this nomination forward as soon as possible.”
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