4/23/2012
By Charles Payne

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Fanciful Facades?

Watching the Sunday talk shows, I heard "responsibility rewarded" as the catch phrase from everyone tied to the administration and reelection effort.  I got up around 7AM after about five hours of sleep to get a jump on work as to have some family time later.  Listening to Axelrod & Co suggest it's people like me that are sucking out oxygen in the economy and those that woke up much later Sunday morning as some kind of unsung heroes deserving of more of my earnings was sickening.  Suggesting the nation with the most millionaires, billionaires and the most mobile economy in the world is flawed was downright despicable. 

There are several facts that everyone knows in their heart, although political correctness may keep it from being uttered in public for fear of being labeled something antithetical to America.

• Making poverty more comfortable makes it harder to escape poverty.
• Raiding the hard-earned wealth of others in the name of the poor but redistributing that loot to your political backers is a lie and sin.
• So many people don't have the determination to make the kind of sacrifices necessary to move up the ladder.
• Jealously is a base emotion but easy to bring to the surface especially in a difficult economy.

The irony about using the word responsibility is those that actually have the least amount of money or even effort in the game are the ones to use more of the nation's public resources from police, fire departments, food, housing, health, and the list goes on.  That's fine except the rhetoric suggest those using the least amount of the nation's public resources are the ones not paying their fair share.  While this nonsense is going on, the nation is quietly slipping into the same conditions that sparked fears of a double dip recession last year.  Does the administration know we are facing a tidal wave and simply arming up the blame game as the only way to appeal for another four years?

The economic data has been disheartening at best.  In the last week seven of nine economic data releases missed consensus.  I can't remember the last time anything associated with housing came in better than expected, and yet, every day I read a prominent rag shout at how great the economy is doing.  I see commentators that know better but have gone in the tank to find silver linings to the point where some are now saying ignore the data, it simply feels better.  Hence, the game plan to baffle them until it's so obvious, and then point the finger.  I can't think of anything less responsible.   But in the real world, we are at a point where the solution is to allow America's greatness to shine and stop the mudslinging.

Friends Without Benefits

I read last week where 700,000 Americans will be off extended unemployment by June which is a shocking number.  The article suggested some people have been using the funds to buy consumer discretionary items, even Apple products.  I can tell you the program is flawed miserably along with food stamps and other programs.  I wasn't able to corroborate the 700,000 number, but it stands to reason the number is going to be significant (see sidebar).  

The point is while we are engaged in the blame game, the bigger issue is why the greatest economy the planet has ever known is not living up to its potential? 

Today, 15,000 Georgians will lose their extended unemployment benefits in part because their state's unemployment rate is below 10%.  So the people that thought and probably planned for twenty weeks may be done at five or ten weeks.   You don' hear about them, instead that GE will bring a few jobs back from China. 

We'll that's good, but the reason those jobs are coming back is because the job can be done as cheaply in this country.  It's not a lot of jobs and it's not the kind of organic growth that made America number one.

 I don't think we want to be the low-cost producers in the world? 

We want jobs and the way to get them is to be honest about our economic situation. Then reject the notion wealth can be taken from one person and given to another.   Sure you can take money, but not wealth of knowledge, wealth of determination, wealth of pride, nor wealth of appreciation for hard work.  You can't instill pride or unlock passion with confiscated wealth.  Almost four years of gimmicks and harsh rhetoric have only conspired to bring us to the brink of another summer of panic and worry.  It's only because we already have an economy built to last that we will not see a double recession.  But how long can we crawl, cheering the news that we can make things cheaper here than China?

The article I read talked about the EBT card.  A credit card with funds provided through two programs.  The food stamp program and unemployment benefits program.   The good news, according to the administration, is we will see more people on food stamps which will peak in 2014.  The bad news is a lot of people are going to go to the local bodega and find their EBT card is empty when they thought there was cash.   By the way, the current version of welfare reform which also puts money on those EBT cards is called Temporary Assistance for Needy Families created under the Personal Responsibility and Work Opportunity Act of 1996. 

This was the major welfare reform signed into law by Bill Clinton.

Raining Down Cash and Benefits

That welfare reform was a major success, forcing people on a path to lifelong welfare and food stamps to get into the workforce. 

We've leaded from the numbers that some people will collect benefits even in good economic times if they aren't forced to go to work.  You can see that when Bill Clinton signed the law, we had an army of welfare recipients that faded throughout the years, bottoming under George Bush, in 2008.  Now, the number is rising fast as is the poverty rate.  I think there is a school that believes these people will become so dependent on government checks and benefits that they become beholding to the person that sends them those checks and benefits.  Is this the Obama Money so many said was going to come raining down during his administration?

One thing is for sure, it makes it a lot easier to feed at the trough for government funding when you believe and embrace the idea your opportunities are stolen by a guy that got up at 7AM Sunday morning to study the market and prepare for the week.  Back when Clinton was pushed into doing the right thing, there was still a stigma attached to endless welfare and food stamps.  The war on poverty created millions of indentured servants to the hands that fed them, relegating good old fashioned values such as hard work and determination to the back of our minds.

Is it too late for Americans, out of work for years but still getting paid, to reach back into those dark recesses of the mind?  Or will they adopt the line of thinking that they are victims, not of circumstances or their own short-comings but to those so damn irresponsible they became American success stories?

Charles Payne
Wall Street Strategies