Employers doubt Obama’s vow of less red tape

White House blitz called ‘a mirage’

**FILE** President Obama (Associated Press)

Businesses big and small aren’t buying President Obama’s claim that he’s reducing the burden of costly federal regulations, a major barrier to job growth.

“It’s a mirage,” said Dan Bosch, manager of regulatory policy at theNational Federation of Independent Business. “The final rules that are coming out in the last two years are worse.”

The U.S. Chamber of Commerce is sponsoring a nationwide tour this summer by former Sen. Evan Bayh, Indiana Democrat, and former BushWhite House Chief of Staff Andrew H. Card Jr. to call for “common-sense” regulatory reform. Among the states they will visit are Wisconsin, Georgia and West Virginia, as well as the president’s home base of Illinois.

And House Republicans held events in their districts last week focusing on their “Plan for America’s Job Creators,” featuring calls for lower business taxes and fewer regulations. At a meeting with local business leaders in his district, House Republican Conference Chairman Jeb Hensarling of Texas said firms are facing an “avalanche” of government rules.

“Entrepreneurship is currently at a 17-year low, not because of a lack of capital, but because of a lack of confidence,” Mr. Hensarling said.

In turn, the White House launched a publicity offensive in the past week to counter industry’s belief that the administration is failing to streamline regulations. Cass Sunstein, the president’s regulatory czar, gave a speech on Capitol Hill and wrote an Op-Ed, contending that the first two years of the Obama administration produced fewer regulations than the last two years of the presidency of Republican George W. Bush.

“We are eliminating unnecessary regulatory burdens and tens of millions of hours in red tape,” Mr. Sunstein said.

Bill Kovacs, the U.S. Chamber of Commerce’s vice president for environment, technology and regulatory affairs, said in a blog post thatMr. Sunstein’s claims of fewer regulations in the Obama administration are “disingenuous.”

Mr. Kovacs noted that the Government Accountability Office said there were 178 major rules reported to Congress in the final two years of the Bush administration, compared with 195 such rules in the first two years of the Obama presidency. And a Competitive Enterprise Institute study found 339 “economically significant” rules, defined as costing $100 million or more, in the last two years under Mr. Bush, but 408 such rules in the first two years of the Obama administration.

Mr. Obama declared at a news conference that a review he ordered of 30 federal agencies has “already identified changes that could potentially save billions of dollars for companies over the next several years.”

The issue of excessive regulation, a perennial debate, is gaining more attention now because Mr. Obama is trying to persuade industry to spend more of its $2 trillion in idle capital to create jobs. The unemployment rate in May was 9.1 percent, a level at which no incumbent has ever been re-elected.

Even as Mr. Obama tried to persuade industry last week that he is serious about cutting regulations, the president in the next breath seemed dismissive of business leaders’ complaints.

“Keep in mind that, the business community is always complaining about regulations,” Mr. Obama said. “When unemployment’s at 3 percent, and they’re making record profits, they’re going to still complain about regulations because, frankly, they want to be able to do whatever they think is going to maximize their profits.”

Economist Veronique de Rugy of the conservative Mercatus Center at George Mason University said the president implied there is something wrong with responsible businesses seeking to be as profitable as possible.

“That’s what entrepreneurs do — make money,” Ms. de Rugy said. “Imagine that.”

Cuba’s economic czar heads new generation of leaders

Raul Castro (Associated Press)

HAVANA — When Raul Castro acknowledged recently that it was time to hand over power to younger leaders, few were expecting the 80-year-old president to name somebody even older than himself as his No. 2.

But at least one figure from Cuba’s post-Revolution baby boom is on the rise: Marino Murillo Jorge has been charged with implementing make-or-break economic reforms designed to both loosen the state’s ironclad control and save Cuban socialism.

The blunt-talking, 50-year-old economist stands at the head of a very small class of relatively prominent, relatively youthful Cuban officials who have broken out of obscurity and taken up positions alongside the silver-haired generation that has ruled this island since 1959.

A stocky man in an XXL guayabera shirt, Mr. Murillo is more technocrat than charismatic orator, but he just might have a key role in the island’s post-Castro future — if he stays in favor that long.

Mr. Murillo’s age sets him apart from most of the other 14 members of the Communist Party’s ruling council, which is headed by Raul Castroand First Vice President Jose Ramon Machado Ventura, also an octogenarian.

Rapid ascent has sometimes been perilous under Fidel and Raul Castro. In 2009, two rising stars thought to be possible successors, Foreign Minister Felipe Perez Roque and Vice President Carlos Lage, were fired and shamed in the official news media before disappearing from the public eye.

Still, Raul Castro said at a Party Congress in April that the time is near when a new generation of leaders must take the reins, and he announced term limits for all political offices.

He said officials erred in the past by promoting the wrong young people, not by undercutting them, and that leadership changes could be in store at a party gathering in January.

“The very top level of government and party leadership remains almost entirely in the hands of the revolutionary generation, of the oldest generation,” said Philip Peters, a Cuba analyst with the Virgina-basedLexington Institute. “So the task remains to bring younger leaders into the top leadership.”

And yet the only two new appointments to the national party's ruling council in April are relatively young: Mr. Murillo and 46-year-old Havana Communist Party boss Mercedes Lopez Acea.

Up-and-comers in influential positions elsewhere include Lazaro Exposito, the 50-something regional party chief in Santiago de Cuba, and Miguel Diaz Canel, the 51-year-old higher education minister.

Both Mr. Exposito and Mr. Diaz took up those posts in 2009 in Raul Castro's government.

Mr. Murillo is Raul Castro’s economic czar, tasked with guiding Cubathrough what is arguably its greatest challenge since the “special period” of the early 1990s, when billions in aid and trade from Moscow disappeared along with the Soviet Union.

Few details about Mr. Murillo are a matter of public record, including basic questions such as where he lives, whether he’s married or if he has any children.

Multiple requests by the Associated Press to interview Mr. Murillo or other officials were not granted, and his bare-bones Communist Party bio gives only his date of birth, education and a brief rundown of his prior posts.

HSBC to Cut Jobs in France

BY MICHAEL HADDON AND MARGOT PATRICK

LONDON—HSBC Holdings PLC said it plans to axe nearly 700 jobs in France as it looks to improve efficiency and accelerate growth in the country.

The bank intends to cut 672 jobs in the country over a little more than three years through staff turnover and without any layoffs, a spokeswoman said Tuesday. The bank employs 10,150 people there through its retail, commercial and investment-banking operations.

Western Union Buys Travelex Unit for $974.6 Million

Western Union Co. (WU), the world’s largest money-transfer firm, agreed to buy a business-payments division of London-based Apax Partners LLP’s Travelex for 606 million pounds ($976 million).

The Travelex Global Business Payments unit handles transactions for 35,000 customers a year in 14 countries, Englewood, Colorado-based Western Union said today in a statement. The unit is expected to produce 150 million pounds in revenue this year, according to the statement.

“Adding Travelex Global Business Payments provides us immediate scale,” expanding on a 2009 acquisition that gave Western Union a start in business-to-business international payments, Chief Executive Officer Hikmet Ersek, 50, said in a telephone interview. “We are serving again here the underserved, these are small importers or exporters which have difficulties doing their cross-border payments.”

Western Union has relied on consumer-to-consumer services to generate 84 percent of the firm’s $1.28 billion revenue in the first quarter, according to the company’s financial report. Travelex has described its business-payments unit as the world’s largest non-bank provider of foreign exchange and risk solutions.

Ersek has been expanding Western Union’s operations in Europe. The company said last month it would buy the rest of Finint Srl, an Italian money-transfer firm. This year, it also spent $136 million to complete a takeover of Angelo Costa Srl, another Italian company that does money-transactions, according to a regulatory filing.

Founded in 1976, Travelex serves consumers through a network of more than 950 stores and 450 automated teller machines, according to a May statement on its website. It handles about 20 billion pounds of foreign exchange transactions annually.

Inside the Disappointing Comeback

By JON HILSENRATH And CONOR DOUGHERTY

Two years ago, officials said, the worst recession since the Great Depression ended. The stumbling recovery has also proven to be the worst since the economic disaster of the 1930s.

WSJ's Jon Hilsenrath takes a look at several facets of the economic recovery and points out the recovery period is one of the slowest on record. AP Photo/Orange County Register, Mark Rightmire

Across a wide range of measures—employment growth, unemployment levels, bank lending, economic output, income growth, home prices and household expectations for financial well-being—the economy's improvement since the recession's end in June 2009 has been the worst, or one of the worst, since the government started tracking these trends after World War II.

Disappointing Data

The economy's improvement since the recession's June 2009 end has been the worst, or among the worst, recorded across a wide range of measures since the government started tracking these trends after World War II.

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In some ways the recovery is much like the 1991 and 2001 post-recession periods: All three are marked by gradual output growth rather than sharp snap-backs typical of earlier recoveries. But this recovery may remain lackluster for years, many economists say, because of heavy household debt, a financial system still damaged by the mortgage crisis, fragile confidence and a government with few good options for supporting growth.

There are bright spots. Exports, particularly of manufactured and agricultural goods, are improving, in part because of booming developing-country economies and the weaker dollar. They are expected to pick up in the second half of the year as the temporary shock fades from Japan's earthquake and tsunami. In a hint of this, the Institute of Supply Management on Friday reported an uptick in manufacturing for June. Higher corporate profits, stock prices and business investment also are supporting the expansion.

Still, broader problems are holding the economy back.

Banks are less able or willing to lend than before the recession. Since the recovery started, banks have reduced money they make available through credit card lines from $3.04 trillion to $2.69 trillion and have reduced home equity credit lines from $1.33 trillion to $1.15 trillion, according to the Federal Reserve Bank of New York.

Policy makers, meanwhile, are reluctant to do more to stimulate economic growth. The Federal Reserve has already pushed short-term interest rates to near zero. Two rounds of quantitative easing that including purchasing $1.425 trillion in mortgage bonds and $900 billion in Treasury debt helped to stabilize the economy but failed to spur a vigorous recovery.

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Likewise, fiscal stimulus, either in the form of tax cuts favored by Republicans or spending increases favored by Democrats, looks unlikely given large federal deficits and the disappointing results of earlier efforts, including President Obama's $830 billion stimulus program of 2009.

The biggest problem may be household indebtedness. At the peak of the economic boom in the third quarter of 2007, U.S. households collectively had borrowed the equivalent of 127% of their annual incomes to fund purchases of homes, cars and other goods, up from an average of 84% in the 1990s. The money used to pay off that debt means less available for new spending. Households had worked their debt-to-income levels down to 112% by the first quarter, in part because banks have written off some debt as uncollectible.

Jurgen Schulz, owner of K-5, a San Diego area retailer that sells surfboards, skateboards and lifestyle apparel, sees more people living month-to-month. "Our sales trail way off the further it gets from pay period," he said. Mr. Schulz, in turn, didn't hire this year the six to eight seasonal workers his company usually brings on each summer.

Getting rid of debt could be a long and slow process.To get back to a 1990s debt-to-income ratio of 84%, households would either need to pay down another $3.3 trillion of debt, or see their incomes rise $3.9 trillion. That's equivalent to about nine years' worth of income growth in normal times, estimates Credit Suisse economist Dana Saporta.

Debt constraints are especially hard on consumers who before the crisis relied on credit cards or home equity lines to keep spending when they needed money. Now many of those lines have been limited or cut.

With less access to credit, many families are finding the only way to make ends meet is to cut spending.

"Every single month you're struggling, struggling, struggling," said Javier Toro, 49, a father of three. He makes $13 an hour as a customer service representative at a non-profit that administers a program offering free energy efficiency upgrades to homeowners. The program, funded by the 2009 stimulus law, ends in a few months as government funds dry up. He's paying about $100 a month to keep current on $3,000 in credit card debt, but making no headway paying down principal. To make ends meet, he's cut his cable and Internet service, and the fixed telephone line to his rented home.

He said, "You don't see when this is going to stop."

Debt and a dismal job market have hurt consumers' confidence, which further damps their willingness to spend. The University of Michigan finds that 24% of households expect to be better off financially within a year's time. That's the lowest this measure has been at this point in a recovery since World War II.

Austan Goolsbee, chairman of the Council of Economic Advisers, said job growth had been "significantly faster" than the recovery in the 2000s, though there was a long way to go. He added that recovering from a bubble-based expansion driven by consumer spending and housing toward more exports and investment was tough work. "We can't just go back to what we did before," he said.

Write to Jon Hilsenrath at jon.hilsenrath@wsj.com and Conor Dougherty atconor.dougherty@wsj.com

Are Obama and the Democrats Planning Economic Collapse?

Are Obama and the Democrats Planning Economic Collapse?

by Robert Flynn 

President Barack Obama continued to argue with Congress over raising the debt ceiling as the deadline for when the United States' must raise the debt limit or default draws near.

Backed by advice from former President Bill Clinton that the White should "not blink," it is plausible that the Democrats will not make any meaningful cuts in spending.

Believing that the current fight over the debt ceiling is akin to the government shutdown of the Clinton Era is a mistake that the President seems likely to make.

Senator John McCain summed up the opinion of the Republicans when he stated that "the American people do not want their taxes raised...They don't want compromise." But the Democrats refuse to acknowledge that the current levels of government spending are too much, and maintain the need to increase taxes.

This current impasse sets the stage for the destruction of the United States economy. If there is not resolution to the problem of government spending, the United States will default on its debt. The American economy will collapse and President Obama will be able to say that it was the fault of the Republicans.

He could even go so far as to say that the Republicans have purposefully sabotaged the U.S. economy by refusing to raise the debt limit. Senator Charles Schumer of New York has already laid the groundwork for this possible scenario by recently making that very claim.

Could Obama and the Democrats be planning to refuse to make the necessary cuts in spending so that the Republicans will be forced to not make a deal? Are the Democrats already planning for the aftermath of the collapse of the U.S. economy? Are they hoping to ride the "blame train" all the way to the 2012 elections? If so the American people are in for some serious economic hardships and social unrest.

Without a deal on the debt ceiling, Obama and the Democrats can stand back and watch as their Union allies and their millions of angry, violent "protestors" take to the streets causing chaos. Any future nationwide union organized unrest should make the recent Wisconsin union protests look like a picnic.

If this scenario is what the Obama and the Democrats are planning, and both Charles Schumer's and Bill Clinton's recent comments could be interpreted as evidence to suggest this, then it would be the President and the Democrats who are purposefully sabotaging the U.S. economy for their own political reasons.

This could make the 2012 election one of the most important in American history. If the American people have to suffer economic collapse, there will be a price to pay. And that price should be government hearings into purposeful manipulation of the economy for political purposes.

If the Democrats win in 2012, then it could be they who hold the hearings, but if Republicans are elected, then they can discover if President Obama and the Democrats in Congress are purposefully refusing to make cuts in government spending in order to collapse the economy and make political gains.