Good Morning –
On the 100th anniversary of Milton Friedman’s birthday, we remember the American Nobel Laureate economist once wrote of the Great Depression, “like most other periods of severe unemployment, [it] was produced by government mismanagement rather than by any inherent instability of the private economy.” Under President Obama’s mismanagement of the economy, Americans’ confidence in the prospect of economic growth continues to drop to historic lows. The President’s push to saddle struggling small businesses with a massive tax increase further jeopardizes job creation. As a new survey shows, 70% of small business owners say they will not be able to hire new workers in the coming months, despite the fact that many businesses are understaffed. That is why House Republicans will vote this week to stop the tax hike to return optimism and opportunity to small businessmen and women and working families.
This Day in History: In 1964, Ranger 7, an unmanned U.S. lunar probe, took the first close-up images of the moon—4,308 in total—before it impacted with the lunar surface northwest of the Sea of the Clouds. The images were 1,000 times as clear as anything ever seen through earth-bound telescopes.
Birthdays: Rep. Joe Wilson, J.K. Rowling, Wesley Snipes, Bill Berry, Mark Cuban and Bill Bennett
Here Are The Stories We’re Watching:
1. State Of Play: Economic Confidence Continues To Decline, Down To January Levels. Americans' confidence in the economy declined last week to -29, matching levels not seen since early January. The decline may be due to the estimate of slower-than-hoped second quarter GDP growth. Confidence had peaked at -16 in late May after a series of encouraging jobs reports, but when subsequent reports were less positive, Americans' confidence headed in the opposite direction. Still, confidence is higher now than it was in the latter part of 2011…Economic confidence has not been able to maintain the positive momentum seen during the first half of 2012. As the U.S. government's unemployment rate fell in late 2011 and early 2012, economic confidence improved. However, in recent months, unemployment has been stuck around 8.2% and the economy shows little sign of significantly improving in the near future. Americans may sense the lack of positive momentum, reflected in the growing majority opinion that the economy is getting worse, and thus, their confidence is declining. Democrats alone are somewhat upbeat in this regard, indicating that they feel the current administration still has the ability to turn the economic situation around. The jobs report that the U.S. Bureau of Labor Statistics releases on Friday will likely play an important role in economic confidence in August. If it is positive, it may counteract the disappointing GDP report. However, if it is negative, it may send economic confidence further downward. Gallup
2. Pro-Growth: President Obama’s Policies Are Hostile To Economic Growth, We Need A Climate That Helps Business Grow. President Obama's riff on small business—"If you've got a business, you didn't build that, somebody else made that happen"—has become a major controversy…The context of the speech indicates the president really did mean that "you didn't build that." But let's give him the benefit of the doubt; let's assume he merely meant that business is impossible without government institutions that create the infrastructure for the economy to operate. As Mr. Obama's deputy campaign chief Stephanie Cutter said, in clarifying his original remarks on July 24, "We build our businesses through hard work and initiative, with the public and private sectors working together to create a climate that helps us grow. President Obama knows that." But business is certainly not getting "a climate that helps us grow" from the current administration. That administration has instead created a hostile climate through its regulatory policies. The news media report almost daily about new regulatory burdens. More generally, according to an analysis in March by the Heritage Foundation, "Red Tape Rising," the Obama administration in its first three years adopted 106 major regulations (those with costs over $100 million), compared with 28 such regulations in the George W. Bush administration. Heritage notes that there are 144 more such major regulations in the pipeline…There are many other burdens placed on business. Example: The Americans With Disabilities Act is being interpreted by the Justice Department to require all hotel-based swimming pools to provide increased access to disabled persons. This will come at a high cost per pool. Many hotels and motels are small, family-run enterprises. This requirement will either lead to an increase in prices or to a decision not to have pools at all. Either policy will induce patrons to shift to larger chain motels. Interestingly, the application of this rule has been delayed for existing pools until Jan. 31, 2013, after the election. Families vacationing this summer will not notice the new requirement. If we accept the plain meaning of Mr. Obama's speech, it indicates that he does not believe in the importance of entrepreneurs in creating businesses. But if we accept the reinterpretation of his speech in light of his administration's deeds, it indicates a belief that a hostile regulatory climate poses no danger to economic growth. Either interpretation means that this administration is not good for business. Wall Street Journal
3. Small Biz: Economic Slowdown Under President Obama Keeps 70% Of Small Business Owners From Hiring, Despite Being Understaffed. Many small business owners are holding back on adding more employees in the coming months because of concerns about the economy — even as some report that their businesses are understaffed. That’s the main takeaway of a new poll of more than 500 small business owners along the East Coast by lender TD Bank. Seventy percent of the respondents said they plan to maintain their current employee levels. Only 21 percent said they plan to hire one or more workers in coming months. Among the respondents, 35 percent said they were somewhat or significantly understaffed, the bank said. Small businesses employ about half of all U.S. workers, so the survey findings don’t bode well for a pickup in the pace of hiring by the private sector. The U.S. gained an average of only 75,000 jobs in the April-June quarter, after averaging 226,000 in the first three months of the year. The slowdown in job growth has come as the U.S. economy continues to plod along at a sluggish pace, stoking concerns that employers may be holding back on plans to hire more workers. Associated Press
4. Jobs Numbers: Nearly Half Of Recent College Grads Are Unemployed, Most Don’t Believe Their Generation Will See Success. The share of American 18- to 24-year-olds who were employed fell to 54 per cent last year, the lowest since the labour department began tracking data in 1948, according to the Pew Research Center. The share who are in college has risen, but the researchers say this only partly explains the drop. The jobless rate for Americans age 16 to 24 is above 16 per cent, more than twice the national rate. Youth unemployment has reached crisis levels around the world, with almost 13 per cent of the global youth labour force out of work this year, according to the International Labour Organisation. But the problem has a unique flavour in the US, where the weak job market has collided with record levels of educational debt – about $25,000 for the average graduate…Young Americans are well aware of their precarious place in today’s economy, with only 16 per cent in a Rutgers University survey of recent university graduates believing their generation will have greater financial success than the one before. About half of the students surveyed had full-time jobs. This leaves a firmer economic recovery closely tied to the fortunes of a generation gripped by high levels of debt – and falling incomes from the jobs that require the education the debt buys. Financial Times
5. National Defense: Armed Services Chairman McKeon: The Danger Of President Obama’s Inaction And Failed Leadership On Sequestration. House Republicans, acting responsibly, have passed a plan that replaces the first year of cuts to military and domestic spending through reforms to entitlement programs. If Democrats still find that unacceptable, I hope they can at least use it as the basis for a compromise. That path involves using spending cuts and reforms that can attract bipartisan support in place of the impending cuts to our military. To date, the president has been unwilling to embrace this approach; such a plan would make the bipartisan savings unavailable to reduce the price tag of his ambitious slate of post-election spending. There is no reason that such a compromise can’t be reached in September or October. It might make larger agreements on taxes and domestic spending more difficult, but it would prioritize our obligation to national security and the men and women who provide it. In the meantime, the president and Senate Democrats’ inaction is doing damage. I fear the assessment one of our senior military leaders expressed privately is spot-on: America’s inability to govern ourselves past sequestration plays directly into the hands of those who spread a narrative of American decline and, ultimately, would thrust us into a more dangerous world. If the United States faced an external enemy who threatened to do this kind of damage to our national security, the president would have the primary obligation to resolve it. To avert these cuts is to intimidate our enemies, reassure our allies and keep faith with those who have sacrificed so much for so long. The commander in chief must act. Washington Post
6. New Video: Whip McCarthy: It Doesn’t Make Sense To Punish American Families And Small Businesses Already Struggling To Make Ends Meet. House Majority Whip Kevin McCarthy (CA-22) today released “Taxation Nation: Angelo’s Story,” a new video in which third generation restaurant owner-operator Michael Passalacqua tells the 73-year-old story of Angelo’s Restaurant, drawing the connection between the health of America’s restaurant industry with the local economies their business revenue goes to support and what effect President Barack Obama’s tax hike would have on communities like Washington, PA…This week, House Republicans led by Majority Whip McCarthy will vote to ensure that no American family or small business sees their taxes increased right now. “With the economy already at a near standstill, the President’s proposed tax hike on American small businesses comes at the work possible time for job creators,” Majority Whip McCarthy said. “Independent reports confirm that raising taxes on more than 900,000 small businesses threatens 710,000 jobs and would reduce economic output by 1.3%. It just doesn’t make any sense to punish American families and small businesses already struggling to make ends meet in this tough economy.” Whip McCarthy’s Office
7. Keeping Tabs: House, Senate Negotiators Back New Bipartisan, Bicameral Iran Sanctions. Congress is pressing ahead with a new package of crippling sanctions on Iran, expanding on financial penalties and targeting Tehran's energy and shipping sectors in the hope that economic pressure undercuts its suspected nuclear weapons program. House and Senate negotiators reached agreement late Monday on legislation that builds on the current penalties directed at financial institutions that do business with Iran's central bank. The new bill would impose sanctions on anyone who mines uranium with Iran; sells, leases or provides oil tankers to Tehran; or provides insurance to the National Iranian Tanker Co., the state-run shipping line. Lawmakers hope to vote on the bill this week before their month long August recess, with a House vote possible Wednesday. The measure has one crucial backer - the powerful American Israel Public Affairs Committee, the pro-Israel lobbying group - and extensive support from Republicans and Democrats. "This bipartisan, bicameral Iran sanctions legislation strengthens current U.S. law by leaps and bounds," said Rep. Ileana Ros-Lehtinen, R-Fla., chairwoman of the House Foreign Affairs Committee. "It updates and expands U.S. sanctions, and counters Iran's efforts to evade them. The bill sends a clear message to the Iranian regime that the U.S. is committed, through the use of sanctions, to preventing Iran from crossing the nuclear threshold. Associated Press
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