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  • Obama's "Start-Up America" Initiative: Stalling Entrepreneurs

    “Entrepreneurs embody the promise of America: the idea that if you have a good idea and are willing to work hard and see it through, you can succeed in this country. And in fulfilling this promise, entrepreneurs also play a critical role in expanding our economy and creating jobs.” – President Barack Obama, January 31, 2011

    The recent White House announcement of a new government program to promote entrepreneurship must signify that the Obama Administration finally “gets it” about job creation and economic recovery, right? Certainly free-market conservatives can agree with the President’s inspiring words. But …

    The problems, as always, emerge in the details of the program. This “coordinated public/private effort” appears to be just another head-fake in the direction of capitalism with the intention of growing more government. Just look at the program’s goals:

    • “Expand access to capital for high-growth startups throughout the country”: An almost perfect definition of the government picking winners and losers and a sure-fire recipe for corruption. To add insult to injury, it turns out there is more than one federal agency in the game. Check out what the Small Business Administration is doing to identify “gazelle” (high-growth/high-impact) firms. The Department of Energy has been at it longer.
    • “Expand entrepreneurship education and mentorship programs that empower more Americans not just to get a job, but to create jobs”: New government spending opportunities here, for sure. The government cannot create jobs (at least not jobs that generate more taxes than they consume).
    • “Strengthen commercialization of the about $148 billion in annual federally-funded research and development, which can generate innovative startups and entirely new industries”: Does “commercialization” mean that the government is trying to use taxpayer funds to take “market share” away from private banks and venture capitalists?
    • “Identify and remove unnecessary barriers to high-growth startups”: Barriers like high taxes and over-regulation? Regulation is undoubtedly a hurdle to business growth and formation, which is an area this Administration could not disagree with more. The health care reform law of 2010 is the clearest example of this lack of understanding. Heritage papers point to the health care law impacting the business sector negatively—beyond the standard 1099 provision.
    • “Expand collaborations between large companies and startups”: Why does the government need to be involved in that?

    Looks like any funding for “Start-Up America” should be added to Congress’s bucket list of wasteful government programs ripe for pruning. As Heritage experts have reported, only private entrepreneurs, investors, and small businesses can truly “lay the foundation for a lasting economic recovery.” Government spending programs that do not increase demand for goods and services but simply redistribute demand within the economy – such as Start-Up America – should be the first to go.

    Posted in Economics [slideshow_deploy]

    6 Responses to Obama's "Start-Up America" Initiative: Stalling Entrepreneurs

    1. George Colgrove, VA says:

      Reckless Federal Spending

      March 2011 update


      February had an early frugal period, but by the end of the month, the federal workforce ended up driving America $63.83 billion deeper in debt. January and February showed reduced deficit spending. Spending was noticeably lower this month from last year as I think the effects of the republican controlled house and the tea party is starting to be seen. BUT we have a very long way to go. Kudos to the congress for cutting $4 billion from the budget. This is the first actual step – albeit a very very tiny baby step – in the right direction to reducing the size, scope, and cost of the federal government.

      From the recently released US Treasury “Monthly Treasury Statement” – Feb, 2011 and from the “Daily Treasury Statement” – Feb 28, 2011 and the interest summary at http://treasurydirect.gov/govt/reports/ir/ir_expe… here is the following debt update:

      (These numbers will need to be updated mid-month when the Department of the Treasury releases the next monthly report)

      So far, receipts are up over last year by $116.5 billion ($1,021.61 per taxpayer), however based on the rate the feds have collected so far, they may be higher by only $39.05 billion (+2%) for the entire year compared to last year it is still too early to predict for certain.

      FY11 Spending to date has decreased by $52.6 Billion from last year with spending now projected to be $96.9 billion below last year – so far. This is good news.

      The annual debt thus far has gone up by $482.6 billion in spending and $207.4 billion in interest (five months). At this rate, the annual debt for the year will likely be $1.54 trillion. Since the last report I wrote, the numbers for debt spending went down a little. So far this year 34% of the federal budget is covered by debt – this represents a 5% drop from the numbers I saw at the beginning of the year. Last year the overall debt percentage was 37%.

      At 34% debt spending and ignoring the interest expense, the figurative date the federal government runs out of real money during FY11 (Oct. – Sept.) is May 4th – 5 days sooner from my last report . After that date, all paychecks, entitlement checks, contract payments and all other expenditures from the federal government will add to the national debt.

      An example on how fast we are going into debt:

      As of 03-03-2011, we are going into debt by $1.54 Trillion this fiscal year FY11. This is at a rate of $128.35 Billion per month; $29.62 Billion per week; $4.23 Billion per day and $176.31 Million per hour. Every minute we are going into debt by $2.94 Million, and every second we are blowing through what a typical household that is doing comfortably, earns in a year – $48,975.20.

      A four hour congressional hearing to discuss federal budget cuts puts America $705.24 Million deeper in debt, with nothing to see out of it.

      FY 2011 [Monthly Debt spending - millions]

      October [140,432] – (lower by $35,931 from FY10)

      November [150,394] – (more by $30,107 from FY10)

      December [78,134] – (lower by $13,276 from FY10)

      January [49,796] – (more by $7,162 from FY10)

      February [63,830] – (*less* by $157,079 from FY10) * BIG Gold Star here!

      FY 2011 [Monthly Interest on Debt – millions]

      FY 2010 average monthly interest expense = $34,496 Million ($413.95 Billion annually – paid only $143 billion)

      FY00 – FY10 average has been $31 billion per month or $375 billion annually.

      October [24,142]

      November [19,396]

      December [104,700]

      January [21,123]

      February [38,003]

      Total interest charged in FY11 is $207.4 Billion – paid only $58.40 billion.

      Projected FY 2011 interest expense will be $497.7 Billion – budgeted to pay only $188.78 Billion.

      Current debt at the close of February 2011 is $14.142 Trillion ($124,055.54 per taxpayer)

      The Statutory Debt Limit is $14.294 Trillion (Set on Feb 12, 2010 by the 111 congress)

      Available Credit is $151.7 Billion.

      Average monthly debt spending thus far = $96.52 billion. Average interest charge is $42 billion.

      By the end of March 2011, the debt will likely be $14.238 trillion at that rate.

      By close of business April 13th, 2011, we will run out of debt at that rate.

      By the end of September (close of FY11), the debt will likely be $15.38 trillion (with added interest not paid). This is $1.09 trillion over the debt limit and represents $134,948 per taxpayer.

      It has been three months since the November Elections let us see what the federal workforce has done to honor the demands of the people.

      Current actions that reduce spending (does not include intent, planned reductions or pending legislation):

      - Obama: Freeze federal employee pay – countered by federal employees giving themselves merit bonuses, merit step increases and in seat promotions.

      Current actions that reduce the deficit (does not include intent, planned reductions or pending legislation).

      - In the 4/3/11 CR there were cuts totaling $4 billion in mostly onetime items. The annual budget has yet to be cut significantly.

      Required 2011 (no more debt) Budget for remaining 7 months of FY11:

      (This is an exercise in absurdity – provided to give an idea of what a balanced budget would look like)

      Expected Revenue = $2.20 trillion (based on receipts thus far)

      Spent thus far = $1.40 trillion (five months)

      Remaining available revenue = $801 Billion

      Mandatory Spending (entitlements) = $121 Billion

      Defense = $55 Billion

      Government Operations and domestic programs = $186 Billion (based on GOP impotent attempt to cut “non-security” government by 31% – yet to be enacted)

      National Debt Interest = $439 billion ($58 billion has been paid back)

      We are running out of money!

    2. Daniel, DC says:

      Excellent analysis Dr. Roberts. It amazes me that the Administration thinks it has the gravitas to be able to create growth by funding essentially start up companies without any knowledge of their growth potential. Start ups are already a risky game and it sounds like a lot of taxpayer money will be wasted at protecting businesses that are not turning profits.

    3. Pingback: Obama’s “Start-Up America” Initiative: Stalling Entrepreneurs

    4. Pingback: » Financial and World News Update – 03/03/11 NoisyRoom.net: The Progressive Hunter

    5. Kevin H, college par says:

      Obama administration finally gets it abotu job creation and economy? Where have you been?

      Do you not recall the the horrible tailspin the economy, jobs and markets were in in late 2008? We were losing 750,000 jobs amonth, GDP was in negative, S&P and DOW were in the dumps – and now – low what has happened since Obama and the Dems took over.

      They saved the country from a second great depression – we're adding hundreds of thousands of jobs (vast majority private sector) each month, GDP has grown each quarter, the DOW and S&P have doubled, nearly every economic indicator has been shooting up….and conservatives like Heritage and Mr. Roberts have the audacity to make a statement like 'Obama is finally getting it about job creation and economy'.

      All one has to do is look at the numbers and facts and it's simple to see who has the better economic policy for the country and Americans.

    6. Bobbie says:

      Yes, the Obama administration saved the irresponsible at the cost of those responsible instead of holding the irresponsible accountable. As they continue to protect the irresponsibilities of those they select for assurance of more government control.

      The government saved us ALL from government speculation! Wow! What a tremendous feat! oh, brother!

      What private sector jobs are being added? If government has to come in to hold hands, it makes it void from being "private."

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