Experts are predicting a slow recovery for our economy because consumers aren’t spending enough.  I wondered why, so I asked John Q. Public who lives in Anytown, USA.  John calls himself the “new” American Consumer.  His remarks are below:

“I’m John Q. Public, the “new” American consumer and I’m a lot different than I used to be.  For months I held off purchasing a new car because the Federal Government was talking about giving me a rebate or tax credit.  They talked for months about an incentive for new car buyers.  The longer they talked, the longer I waited and the more auto-related jobs were lost.  Finally the Feds passed the legislation and I bought a new car with the help of my fellow taxpayers.  I would have bought a new car anyway and would have bought it a lot sooner, but I waited so I could get my government tax break.  It’s a new world for the American consumer!

For the last three months our politicians in Washington have been blabbing about a possible incentive plan for energy efficient appliances like refrigerators, dishwashers, stoves, and maybe even air conditioners.  The local guy down at the appliance store is going to have to wait a few months because even though I need a new fridge, my old one will do for a while!  He might lay off his salesman or even close his doors, but as long as the government is even “talking” about some kind of a rebate, I’m keeping my wallet in my pocket.

Yesterday I saw a news story indicating there’s talk in Washington about an extension of the $8,000 tax credit for first time home buyers.  The reporter said that some in Washington want to extend the deadline beyond November, 2009.  Get this; to revive the housing market they might even consider increasing the tax credit from $8,000 to $15,000 and make the tax credit available to all home buyers, no matter how many houses they own and regardless of income!

Our house is too small and we have the income and credit rating to “trade up” right now, but until I find out whether the government is going to extend or increase the home purchase tax credit, I’m sitting still.  That’s right; there will be no calling the realtor until I get even bigger incentives from the government!  The longer the government talks about it, the longer I’ll wait.

One good thing; I’ve been saving a lot of money lately by cutting back on my expenditures.  It’s nice to have some savings, especially since my 401K became a 201K.  The house needs maintenance, the washer is a little shaky, and the furnace is old, but I’m not buying anything until I find out what “goodies” the Government plans to give me first.  After all, who knows what other products and services might soon get some sort of government incentive?

Come to think of it, even if the politicians announced that all tax break and consumer incentive programs had ended, never again to be revived, I wouldn’t believe them.  I’d still hang on to my money for a while, just in case they were bluffing.

But it could be worse.  At least we still live in a free country.  After all, in some countries the government tells its citizens what to buy, when they can buy it, what companies will survive or die, and whether or not workers can get a raise.  I’d hate to live in a place like that.”

The International Olympic Committee will soon select the site of the 2016 Summer Olympic Games.  In the running are Rio de Janeiro, Madrid, Tokyo and Chicago.  While Michelle Obama is already scheduled to travel to Copenhagen for the October 2 announcement, I’m betting that Barak will be more than happy to take a short vacation from his troubled health care reform efforts to attend as well.  I’m also predicting that Chicago will receive the bid to host the 2016 Olympics.  While no one will ever know for sure how Olympic Committees make these decisions, I’m sure that Obama’s “rock star” status among foreigners has done enough to put Chicago over the top.

Hosting an Olympics will garner obvious benefits for Chicago.  There will be temporary construction jobs associated with the building of venues.  Providing the world economy holds up, literally hundreds of thousands of visitors will dump tons of money in Chicago for the two week duration of the games.  What city wouldn’t want to be showcased to the world?  Oh, what a grand party this will be!

Unfortunately, like Medicare, social security, healthcare, and TARP programs, the Olympics will be both expensive and unaffordable.  The Chicago 2016 Olympic bid committee initially projected that the $4.8 billion estimated cost would be paid for with contributions from wealthy donors, corporate sponsorships, television rights and ticket sales to ceremonies and sporting events.  Furthermore, the 2016 Committee has promised that “no Chicago taxpayer dollars” will be needed to host the Games.  84% of Chicagoans oppose the use of any taxpayer money for the Olympics and zero percent of them believe any statements coming from city hall.

On Wednesday, September 9, 2009 Chicago taxpayers’ suspicions proved well founded as the Chicago City Council voted unanimously in favor of a full governmental financial guarantee for Chicago’s bid to host the 2016 Olympic and Paralympic Games.  Keep in mind that this Olympic bid originates from a city that is so short of cash that it recently sold all of its 36,000 parking meters to a private firm for a one-time cash infusion of $1.2 billion.

Let’s look at some recent experiences that other cities have had with the honor of hosting the Olympics.  The most recent Olympics held in the U.S., Salt Lake City 2002, had actual costs 2.5 times the original budget.  The 1976 Montreal Olympics closed out at 11.9 times the original budget of $124 million. Both Vancouver (2010) and London (2012) may come in at 10 times their original estimates.  Spending over $12 billion on its 2004 Olympics, Greek taxpayers are distressed and most of the venues are closed and deteriorating after their two week “celebration”.

If anyone thinks that Chicago won’t spend multiples of the estimated $4.8 billion budgeted on the Olympics, they need only look at the Millennium Park project, which came in at $475 million while budgeted at $150 million. Even based on a three-time cost overrun, the Olympics could cost Chicagoans $15 billion.  Some say that the costs could escalate to $40 billion.

Nevertheless, Chicago will have its party in 2016.  Money won’t be an issue if Obama is re-elected in 2012.  By 2016, when Chicago’s billions of dollars of Olympic deficits are realized, the second term President will have plenty of time to arrange a big, fat Federal bailout for the windy city!

On Tuesday, September 8, 2009 our local newspaper ran a front page story about the first meeting of a group called the Winona Tea Party Patriots.  The event was advertised as non-partisan.  I decided to check it out.

As I chained my bike to the porch railing in front of the Country Kitchen Restaurant, I noticed a full parking lot.  There were even more cars parked along the frontage road.  Upon entering I was presented with a small pocket copy of the Constitution of the United States.  The meeting room was packed with about 125 people.  A couple of people gave brief remarks and a state representative from Wabasha, Minnesota gave a short speech.

What surprised me the most was the diversity of the group.  I’ve never seen a meeting or a group like this one.  None of the local “big wig” republicans were there.  The two young men who called the gathering were in their late twenties or early thirties.  They had not previously been politically active, saying that they called the meeting because they were concerned about the future for their children in an era where there seems to be no ending to government spending, debt, and coercion.

I didn’t know most of the people; it was like they came out of nowhere.  There were truck drivers, blue collar workers, university professors, retirees, business owners, and even government employees!  They were upset about cash for clunkers, unemployment, proposals to change health care, the bailout of wall-street bankers, Cap & Trade, and the government takeover of GM, just for starters.  They came as Americans, not Republicans or Democrats.  Many expressed that they felt betrayed by both parties.  They no longer respect political labels or stereotypes.  They unanimously agree on one thing; government is the problem, not the solution.

These Americans from southeastern Minnesota were particularly concerned about the debt and spending plans of the Obama administration.  “Particularly concerned” doesn’t adequately describe it…”mad as hell” would be a better description of the mood of these folks.  Keep in mind that virtually no one knew about this meeting until about 13 hours before the event.  There was no contrivance or manipulation here, just a bunch of citizens who realize that government at almost all levels is out of control.

Out in Washington, D.C. these people are represented by Democratic Congressman Tim Walz.  He’s in a relatively rural congressional district with a lot of sensible voters.  A full 14 months before he runs to keep his office he’s got a crowd of upset constituents at the Country Kitchen in Winona, Minnesota who are going to spend a lot of time and money to send him back to his teaching job at Mankato West High School.  I would be worried if I was Mr. Walz.  In fact, I think that Walz is toast come November 2010.

For me the meeting at the Winona Country Kitchen was my first hand realization that a political revolution is occurring in the United States of America.  The aloofness and outright stupidity of our elected leaders has reached a zenith.  The great silent majority are starting to awaken from their apathy, not willing to sleep or shut up.  At least for now, a new era of political awareness has begun.

As an economist I’ve heard plenty of criticisms about my profession, most of it well-deserved.  For example, “If you lined up all of the world’s economists end to end, it wouldn’t be a bad idea!”  Harry Truman once said, “I’m tired of economists who say, ‘On the one hand … and then on the other hand.’  Send me a one-armed economist.”

It is true that the practitioners of the “dismal science” often disagree, but you will be surprised to discover that there are many important issues on which the most economists agree.

According to a paper written by Alston & Vaughn in the American Economic Review in May, 1992 and an article by Robert Whaples in the November, 2006 Berkeley Press, there are significant areas of agreement by economists on the following propositions:

• A ceiling on rents reduces the quantity and quality of housing available.  (93%)

• Tariffs and import quotas usually reduce general economic welfare.  (93%)

• The United States should not restrict employers from outsourcing work to foreign countries. (90%)

• The United States should eliminate agriculture subsidies. (85%)

• A large federal budget deficit has an adverse effect on the economy.  (83%)

• A minimum wage increases unemployment among young and unskilled workers.  (79%)

By a large margin, economists support expanding competition and market forces in education.  61.7% of economists believe that parents should be given educational vouchers that can be used at government run or privately run schools, while only 30.5% disagree.

Economists agree (85.3%) that the gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. In addition, economists seem to be a moving toward the view that increasing the normal retirement age is the best way to deal with the Social Security funding gap.

Economists have not reached a consensus on the merits of universal health insurance—
45.8% favor the idea, but almost an equal number (38.7%) oppose it.

Marijuana legalization is favored by a sizeable majority of economists (62.2% favor, 17.0% oppose).

Sixty Three percent of economists favor increased reliance on nuclear energy as the best way to reduce greenhouse gas emissions.  Only ten percent of economists disagree with this position.