Print

e-News August 27, 2010

The Week Just Past: Uncertainty in Jobs and Investment
Unwelcome Health Care Surprise for Seniors
The Good News and Bad News About South Korean Trade
New Administration Defense Posture: Postponement of Critical Investments in Army, Navy and Air Force Programs?
WhartonCanalDay

The Week Just Past: Uncertainty in Jobs and Investment

“Despite the lowest home mortgage interest rates in recent history, sales of existing single-family homes plunged last month to their lowest level since May 1995 - a drop of over 25 percent!

“And that’s not the only bad economic news these days.

“Initial claims for unemployment benefits surged to 500,000 this month.  This level of first-time requests for jobless benefits seem more typical of an economy in recession than an economy in recovery.

“As I listen to my constituents in New Jersey, I am keenly aware that they do not have to rely on statistics and other economic data to know that the recession is not really over.  Continuing uncertainty about additional taxes, government regulation and bureaucratic red-tape is preventing businesses from growing and employers from hiring. 

“And now there are indications that ongoing economic uncertainty is affecting our attitude about the stock market. According to a report from a major mutual fund industry trade group, investors withdrew a staggering $33 billion from domestic stock market mutual funds in the first seven months of this year.  These are not people attempting to ‘make a killing’ or a fortune in stocks.  These are people building a ‘nest-egg’ and preparing – as they should - for their own retirement.

“People are not going to return to the stock market on a sustained basis until they feel more confident of employment growth and the sustainability of the economic recovery.  And that economic growth and recovery will not take place until American business – especially small business – is confident that the federal government will not add to their current burden. 

“Job creation and opportunity must be our #1 priority.  I hope that when Congress returns to Washington in September, President Obama and Speaker Pelosi will make it clear that they intend to put the federal budget on a diet and permanently extend the tax cuts of 2001 and 2003.

“Failing to do that, starting January 1, they will impose a $3.8 trillion tax hike on hard-working Americans.  This tax increase will affect every American who pays income taxes through higher tax rates on individuals, families, and small businesses. 

“What’s worse is that these tax increases are targeting small businesses – the engines of job creation and economic growth – for much higher taxes starting next year, at a time when they are struggling just to meet payroll and the unemployment rate remains near 10 percent.
 
“By avoiding these crippling tax increases or imposing them, the direction of our American economy is at stake.” 

Rodney Frelinghuysen

Recommended Reading:  “ObamaCare’s Tax on Taxes” in Monday’s Wall Street Journal.

Unwelcome Health Care Surprise for Seniors

As if more than one-half trillion dollars in Medicare cuts included in the new health care law was not bad enough for seniors, an analysis released this week by a health care research firm estimates that 1 in 5 seniors could lose their Medicare Part D plan because of actions taken by President Obama’s Administration.

The Associated Press reported on Tuesday that these actions risk "undercutting President Barack Obama's promise that people can keep their health plans if they like them. And it could be an unwelcome surprise for many seniors who hadn’t intended to make a change during Medicare's open enrollment season this fall."
This unwelcome news comes on the heels of analysis by the Obama Administration that:

  •  as many as 7 out of 10 Americans with health coverage through their employer could lose their health plan because of the President’s new health law;
  • that 9 out of 10 seniors who have retiree drug coverage will lose it;

and

  •  millions of seniors will lose their Medicare Advantage plan that provides benefits not available in traditional Medicare. 

So much for being able to keep the health plan you have and like.

Read the AP story here.

The Good News and Bad News About South Korean Trade

There is no doubt that the U.S. companies and U.S. workers will benefit by greater access to overseas markets.  There also can be no doubt that northern New Jersey, home of the Port of New York and New Jersey, is well-positioned to take advantage of increased international trade.

The good news: The Obama administration is now pledging a major new push to ratify the U.S.-South Korean Free Trade Agreement. 

The bad news:  The U.S.-South Korean Free Trade Agreement has languished in Congress for three years since it was negotiated by the Bush Administration. 

The agreement will eliminate tariffs between the two countries. Because those levies are typically higher on the South Korean side, administration officials estimate the deal could mean more than $10 billion annually in increased U.S. exports to Seoul and tens of thousands of new U.S. jobs.
 
Recommended Reading III: Peter Eavis writing "Government Clouds the Value of Investments" in Monday’s Wall Street Journal.

New Administration Defense Posture: Postponement of Critical Investments in Army, Naval and Air Force Programs?

The Army announced this week that it was tearing up a contract proposal for a new Ground Combat Vehicle it has been working on for months, delaying the program for at least six months. This action comes days after the Navy announced it was postponing selection of a builder of a new high speed shallow water combat ship. Earlier this summer, the Air Force delayed a contract award for a new generation of aerial refueling tankers to replace the 50-year old aircraft that are now performing this critical mission.

For certain, the Defense acquisition process is broken.  Major weapons systems cost too much, take too long to field and may not ultimately accomplish the security task for which they were originally intended.

While we rightly must take a look at every part of the federal budget for savings, we also need to be mindful that potential foes (China, Iran, Venezuela, North Korea, Russia, etc.) are increasing their research and development in all of their military forces (land, sea, air and, in some cases, outer space).

For example, China has been concentrating on space research, for defense and nondefense purposes, while our President has all but scuttled NASA's human space flight program in order to rely on private companies and foreign nations to fill the gap.

While we find savings in the Defense budget, we must make sure our investments keep our warfighters qualitatively ahead of adversaries.

Wharton Canal Day

 "For a number of years I've attended the Borough's Canal Day for food, fun and a history lesson,” Rodney said.  “Last Saturday, I had the great company of Mayor Bill Chegwidden.  The borough has one of the best preserved sections of the famous Morris Canal -beautifully maintained with boating in summer and black ice in winter. It’s definitely worth a visit!"