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Posts tagged Economy
Never has an American President so clearly illustrated they are economically illiterate
Dec 15th
Never has Presidential economic illiteracy been so clearly defined as it has in the past couple of days in the statements President Obama has made in regards to the Banking industry.
The first statements came in the interview Obama gave on 60 minutes on Sunday.
In that interview, President Obama attacked saying:
“They’re still puzzled why is it that people are mad at the banks. Well, let’s see, You guys are drawing down $10, $20 million bonuses after America went through the worst economic year that it’s gone through in — in decades, and you guys caused the problem. And we’ve got 10% unemployment.”
Excuse me, Mr. President, but you are attacking the wrong “Guys”.
The “Guys” responsible for the current economic problems were primarily the politicians in Washington. Those “Guys” pressured these banks to give those loans, loans that the banks were reluctant to give out.
When they refused to give them out, you people accused them of being racist. (Remember the term “redlining?)
They starting giving those loans out to avoid bad publicity and lawsuits, and then rebundled them in an attempt to lower the risk.
Then those “Guys” in Washington change accounting rules, making those rebundled loans worth nothing for accounting purposes. Forcing the banks holding those rebundled loans to ignore the fact that only a portion of the loans were actually worthless.
You really think Washington telling banks to treat assets that had value as if they had none played no portion in the meltdown?
I can understand why you want to ignore Washington’s role in the crises, since you were in the Senate when President Bush tried to head it off and opposed his attempt to do so.
That means, Mr. Obama, YOU are one of those Guys responsible for the current economic problem.
This is doubly true when you consider the fact that you have been President for nearly a year. What economic policies have you enacted that would boost the economy and create jobs.
Mr. President, stop blaming other people for the problems that you are responsible for. It’s unpresidential.
To paraphrase the President from my home town, the buck stops with you.
Stop pushing the blame for the economy onto someone else. And stop telling them they are responsible for creating economic growth by giving out more loans. The reason they aren’t giving these loans out, is because they are risky. Stop telling bankers they are responsible for creating an economic disaster by giving out risky loans, then turn around and tell them to give out loans they consider risky in order to create economic growth. That is just shear idiocy.
Bankers are not responsible for stimulating the economy. The responsibility of Bankers is to ensure the safety of the money deposited in their financial institution. By insisting that they (again) give that money out in the form of risky loans (after all, if they weren’t risky they would already be giving these loans out) you are actually insisting that the abandon their responsibilities.
Mr President, the person responsible for creating economic growth, is you.
Clearly, you have absolutely no idea how to do this.
Hopefully your replacement will.
This is What the Democrats Call Stimulus?
Oct 4th
Democrats are currently debating extending parts of the “Stimulus” Package passed at the start of this year.
The provisions they are thinking of extending?
1) Extending Unemployment Benefits
2) Tax Credits under COBRA (purchasing Health Insurance when Unemployed)
3) The tax credit for first-time home buyers (and this one is unlikely to pass)
And that is all the Democrats are considering.
Think about that, we have just hit 9.8% unemployment, and all the Democrats are going to do about it is extend Government Unemployment provisions.
How about something to create jobs?
Of course, that would require provisions aimed at aiding the businesses that hire people.
When was the last time you heard of Democrats being in favor of helping businesses?
Tax and Spend approach to Government, this is change?
Aug 27th
The White House released its estimates for the total deficit over the next decade. That number is $9 Trillion in additional national debt.
The deficit for this year alone is over $1.5 Trillion. That’s 3 to 4 times last year’s deficit. The CBO predicts that the debt held by the public as a share of GDP will grow to 67.8% in 2019 from the current 40.8%. It keeps growing after that. For the non-economists, that’s like getting a new credit card every time you max one out. The amount you owe goes up faster than your income, and your ability to pay it off, does.
The increase in the deficit is largely due to increased spending, and the projections for increased spending are not credible. Actual spending is likely to increase at a much greater rate than the projections use, at least as long as the current people run Congress.
The projections are based on an increase in spending equal to the rate of inflation. This is laughable. Congress has never limited itself to the rate of inflation, even when the Republicans first took control in 1994. This was Congress at its most fiscally responsible. (The Republicans quickly learned about the joys of pork.)
Spending in 2009 has jumped by 47%. BTW, this spending increase would be AFTER Bush left office. Obama needs to stop blaming the previous administration for deficits caused by out-of-control spending. As stated above, his first deficit is 3 times larger than Bush’s last deficit. Stop blaming your predecessor for spending bills you signed.
Spending is slated to increase by 8% in 2010. Much larger than current inflation. Just ask those Social Security recipients that got no cost of living increase for the first time ever. Why no increase? No inflation.
Another absolutely astonishing prediction: spending falls between 2009 and 2012. This is as credible as the used car salesman telling you the car was only driven by some old lady on Sunday. Spending going down?
Another red flag, revenues as a percentage of GDP increases from 14.9% this year to 20.2% in 2019. In case you wonder what that means, it means the Federal Government will be taking more of the money made by the American people. In other words, tax hikes.
The prediction on revenues relies on ALL of the Bush tax cuts expiring (rich and middle class) PLUS 28 million middle-class tax filers being subjected to the Alternative Minimum Tax. The Democrats say they’ll prevent this, but that may be as likely as them decreasing spending from 2009 to 2012.
The problem gets worse if you factor in the drag on the economy that will result from proposed policies, especially cap and trade.
Taxes on tobacco have already been raised under Obama. An increase on alcohol is likely, followed by another possible tax on surgary drinks. Then there are the Bush tax cuts that expire in 2010. 55% of these taxes effect small businesses. Not continuing these cuts will increase taxes on small businesses. Increasing the cost of doing business results in fewer jobs and hurts the economy (which in turn lowers revenues).
Then there are the new taxes being proposed, most in conjunction with the Health Care Bill. There’s the proposed 1% surcharge on “the rich.” Then there’s the tax on people that don’t have health insurance. And in an act of government brilliance, a proposed tax on those that do.
There are also proposed taxes on companies doing business overseas, eliminating caps on the tax on Social Security benefits, and eliminating the deductions for charitable giving. Etc., etc., etc.
Then there’s the effect of “cap and trade”. This alone has the possibility (more like a dead certainty) of actually shrinking the economy.
A shrinking economy equals shrinking revenues. Shrinking revenues equal ballooning debt.
That $9 Trillion Debt over ten years could look like chump change compared to the actual number.
How Unexpected, Democrats Want to Raise Taxes
Jul 13th
Raise your hand if you saw this one coming: Democrats in the House of Representatives announced they were planning to raise taxes. Of course, they announce it late Friday afternoon in an attempt to ensure that the story gets missed by the media.
The tax hike targets high income tax earners and is slated to raise $540 Billion over ten years, in order to pay (in part) for Barack Obama’s Health Care Reform Plan. The rest of the money to pay for the $1 Trillion cost over ten years would come from cuts to Medicare and Medicaid.
The tax comes in the form of a surtax on higher income tax players, and was decided on after plans to tax health care benefits were scrapped due to the intense negative reaction. Other options discussed includes extended the Medicare payroll tax.
A White House aide said the surtax would be 1% for single tax filers earning over $280,000 a year and over $350,000 a tear for couples. The additional amounts for tax filers earning greater amounts (over $500,000 and over $1 Million) with an additional 1.5% for the first group and another 3% for the latter.
Charles Rangel, the head of the House Ways and Means Committee, has suggested that an additional surtax could be set to automatically occur if the Medicare and Medicaid savings failed to occur.
The surtax on higher income wage earners would be on top of the tax hike that will occur in 2010 as the tax cuts implemented under George Bush expire. The top tax rate would be 39.6% after the cuts expire and the surtax proposed by Rangle and his fellow Democrats in the House of Representatives could add an additional 5.5% on top of that. A total of 45.1% for the top wage earners. With a possibility of an extension of the Medicare payroll tax and an additional surtax in 2013 in there are no savings in Medicare/Medicaid.
There’s an additional problem for the Democratic plan. The numbers just don’t add up. If the proposed surtax had been implemented for the 2006 tax period (the last period there are numbers for at the IRS web site) the surtax would have raised roughly $38 Billion. That is $17 Billion short of the amount needed to raise $540 Billion over a ten year period.
What’s worse is that there has been a recession since those numbers were posted. Recession tend to reduce the amount of tax revenues generated by taxing high income wage earners. You also need to factor in the fact the wealthy individuals are those most able to determine what form the money they earn takes. Raise Income Taxes too much and they start having their money come in as Capitol Gains (if the economy is still strong) or as non-taxable income. (Ever heard of tax-free Munis?)
How hard are people going to work if the Federal Government takes half of what they earn?
Then there’s the economic impact of raising taxes, especially on the higher income earners. Many of the higher wage earners are business owners who report their company’s profits as personal income. Raising taxes on these people removes money from the company that it can use to hire new employees or to expand it’s operations. This slows economic growth, and if you raise taxes enough you can actually cause theeconomy to shrink.
Raising taxes at any time is usually a bad idea. Raising taxes on the people that produce jobs in the middle of a Recession is just idiotic.
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