In case you missed the news, the recession is over. As of June 2009, no less. So say the economic sages at the National Bureau of Economic Research, the arbiter of these things. According to the NBER, the recession began in December 2007 and lasted 18 months — the longest since the Great Depression. That it’s over is good news, but there’s a “but.”
“On the other hand,” writes The Wall Street Journal, “the recession was only two months longer than the 16-month downturns of 1973-1975 and 1981-82, the two other most serious post-World War II periods of falling economic growth. The 2007-2009 downturn was painful but not extraordinary in historical context. What is different about this period is the relative weakness of the economic recovery.”
For years after 1982, GDP growth was at least 4 percent. Today, GDP remains below that of the fourth quarter of 2007. One difference is that in 1983, Ronald Reagan’s cuts in marginal tax rates were taking hold, while in 2010, the economy is bracing for trillions of dollars in tax increases in January. The current administration’s “recovery” policies have also been a major drag on economic growth, no matter how they may crow about their “success.”
Since January 2009, the economy has lost 3.2 million jobs, and the current 9.6 percent unemployment rate is higher than the 9.5 percent in June 2009 when the recession supposedly ended. U.S. household net worth fell by another $1.5 trillion in the second quarter, and is now $10.7 trillion less than at its high point in 2007. Foreclosures are at record highs.
Perhaps all of this is why some of the jobs now being shed are those of Barack Obama’s economic advisers. He may say on the campaign stump that Tea Party supporters are “misidentifying who the culprits are” for this economic trouble, but heads are rolling at the White House. “This is tough, the work that they do,” Obama said. “They’ve been at it for two years, and they’re going to have a whole range of decisions about family that will factor into this as well.” As in spending more time with family.
Lawrence Summers, chairman of the president’s National Economic Council, is heading back to Harvard. Apparently, the “Recovery Summers” is over. Other recent departures include budget director Peter Orszag and head of the Council of Economic Advisers Christina Romer. Meanwhile, Herb Allison, who took charge of the Troubled Asset Relief Program in April 2009, is stepping down. That leaves Treasury Secretary Timothy “Turbo Tax Cheat” Geithner as the lone remaining member of Obama’s original economic team.
We’ll say it again: In order to generate real economic growth, tax rates must remain level (or, even better, decline), regulation must ease and, in general, government must shrink. Of course, Obama and his refurbished economic team are unlikely to come to the same conclusion.
The hero of obamanites everywhere, had this to say… Read on.
Part-time Cuban leader and full-time despot Fidel Castro gave a long overdue tip of the hat to Econ 101 when asked recently whether Cuba’s economic model was “worth exporting” to other countries. His reply: “The Cuban model doesn’t even work for us anymore.” What a shocker — not that communist/socialist/progressive models don’t work, but rather that a dyed-in-the-wool communist would actually acknowledge the truth of that statement.
Not to worry, however: No sooner had Castro uttered these words than the damage control party hopped into its East German Trabant and mobilized (read: got out and pushed). Typical statements begin, “What Comandante Castro meant to say was…” In this case, apparently the meant-to-say piece included a name change, as well: “U.S.” for “Cuban.” “The reality is that my response means exactly the opposite,” explained the ancient communista. Well of course it does! By the way, can we have our copy of Orwell’s “1984” back?
Further elaborating, World Hero of Solidarity (the title conferred upon him by the UN in 2009) stated, “My idea, as the whole world knows, is that the capitalist system now doesn’t work either for the United States or the world.” Yes, we know. The American media have done a fine job of telling us just that.
Meanwhile, el Presidente is laying off 500,000 state employees. By next March, these workers will be on the street — um, “released to the private sector” — and looking for nonexistent jobs in Cuba. With 85 percent of its workforce — or roughly five million people — working for the Cuban state, such a layoff is no small matter either. That number will eventually increase to one million due to “efforts to increase efficiency in the state sector,” making fewer new state positions available to the unemployed masses. Needless to say, massive layoffs are always symptomatic of sound economic planning in Castro’s world.
In one sense, however, Castro has hit on an important point: Our own “Comandante,” Barack Obama, continues to blur the lines between the economic models of the two nations. If the Chosen One is able to maintain his assault on the U.S. economy unabated, Castro’s statement will ultimately apply to both nations without caveat.
Two separate attempts to repeal one terrible provision in the gargantuan ObamaCare law failed in the Senate this week, lighting up a serious issue for small business owners to consider when they vote in November. Anyone who is an independent contractor or owns a small business has likely seen a 1099 form. Pre-ObamaCare, the IRS required 1099s only for services purchased from vendors. In order to make ObamaCare “deficit-neutral,” the legislation requires that small businesses report any business-to-business transaction over $600 with a 1099. The amount of paperwork and accounting needed to maintain compliance with this bureaucratic nightmare will add immensely to operating costs for small businesses. In some cases, it will bury them.
Sen. Mike Johanns (R-NE) sponsored an amendment to repeal the provision, but even with the help of a handful of Democrats, the amendment failed 46-52. Sen. Bill Nelson (D-FL) crafted a weaker version that would have placed a $5,000 reporting threshold for 1099s and eliminated the requirement altogether for businesses with fewer than 25 employees. That failed to reach cloture, 56-42. This plan was little more than smoke, though, because it still would require businesses to monitor all their transactions for possible filing in case they reach the $5,000 threshold. It would also cause businesses to avoid hiring that 26th employee — it simply wouldn’t pay to grow.
The repeal of the 1099 provision failed this time, but ObamaCare is clearly under attack. The very Congress that passed it is now deliberating changes and repeals to the president’s signature agenda item, just in time for the midterms. On the legal front, U.S. District Judge Roger Vinson in Florida said that on Dec. 16 he would hear arguments on a lawsuit challenging the constitutionality of ObamaCare. Twenty state attorneys general claim the health care bill violates states’ rights and will force massive new spending. Unfortunately, they have to wait to state their case until Oct. 14, when Vinson will rule on the federal government’s dismissal motion. Legal analysts say that it’s likely the dismissal will be rejected since Vinson has already set a court date. There is little agreement among these same analysts on the outcome of the case.
Seems like the tea leaves are in fact being read. (Pun intended) However, I happen to think that these folks just might be jumping the gun. One should not count their chickens before they hatch!
Even before Christine O’Donnell handily defeated Rep. Mike Castle (R-Del.) in an epic upset Tuesday night, the Tea Parties, all of them, had already won. No matter what happens in the midterm elections on Nov. 2, the Tea Party has moved the Democrats to the right and the Republicans even more so, and President Obama’s agenda is dead.
Anger from disaffected conservatives who sat quietly through eight years of the surplus-to-deficit presidency of George W. Bush bubbled up immediately after Obama took office. All it took was the unprecedented $787 billion stimulus package, and before Obama could mark his first 100 days in office, a movement was born. Some of the already angry yet newly active were libertarian supporters of Rep. Ron Paul (R-Texas), and almost all of them were fuming over the Troubled Asset Relief Program of 2008, the bipartisan bailout of Wall Street that Sen. John McCain (R-Ariz.) voted for and that his running mate, then-Alaska Gov. Sarah Palin (R), supported.
“What would probably get the economy recovering fastest and most completely would be for the President of the United States and Congressional leaders to shut up and stop meddling with the economy. But it is virtually impossible that they will do that. … If the stimulus isn’t working, the true believers have to believe that it is only because it hasn’t been tried long enough, or with enough money being spent. There are always calls for the government to ‘do something’ when things are going bad. Those who make such calls have almost never bothered to check out what actually happens when the government does something, as compared to what happens when the government does nothing. It is not just free market economists who think the government can make a mess bigger with its interventions. … The history of the United States is full of evidence on the negative effects of government intervention. For the first 150 years of this country’s existence, the federal government did not think it was its business to intervene when the economy turned down. All of those downturns ended faster than the first downturn where the federal government intervened big time — the Great Depression of the 1930s. … There is another set of facts: The record that was set in 1929 for the biggest stock market decline in one day was broken in 1987. But Ronald Reagan did nothing — and the media clobbered him for it. Then the economy rebounded and there were 20 years of sustained economic growth with low inflation and low unemployment. Can you imagine Barack Obama doing another Ronald Reagan? I certainly wouldn’t predict that.” –economist Thomas Sowell
“On Thursday the non-partisan Congressional Budget Office (CBO) announced the federal budget deficit for 2010 will exceed $1.3 trillion. This is already on the heels of a 2009 budget deficit of $1.2 trillion and on top of a national debt of some $13.3 trillion. The word ‘trillion’ seems to have, almost overnight, crept into our standard economic parlance and by the looks of it is here to stay. And with the CBO’s forecast of more than $6 trillion in federal budget deficits accruing over the next nine years from 2010 to 2019, many are logically wondering if the United States has effectively crossed, or is fast approaching, a virtual economic point of no return — an economic Rubicon if you will.” –columnist Matt O’Connor
“[P]rogressively over these three decades the Republican party has exempted every material component of the budget from cuts, including middle-class entitlements, defense, veterans, education, housing, farm subsidies, and even Amtrak! Like Casey, the GOP has been in the anti-spending batter’s box for 30 years, and has never stopped whiffing the ball. The final proof is that the one GOP spending cut plan with any integrity — the ‘roadmap’ of Congressman Paul Ryan — has the grand sum of 13 co-sponsors, and I dare say half would call in sick if it ever came to a vote.” –former Reagan budget director David Stockman
“Why isn’t the economy recovering? After previous recessions, unemployment didn’t get stuck at close to 10 percent. If left alone, the economy can and does heal itself, as the mistakes of the previous inflationary boom are corrected. The problem today is that the economy is not being left alone. Instead, it is haunted by uncertainty on a hundred fronts. When rules are unintelligible and unpredictable, when new workers are potential threats because of Labor Department regulations, businesses have little confidence to hire. President Obama’s vaunted legislative record not only left entrepreneurs with the burden of bigger government, it also makes it impossible for them to accurately estimate the new burden. In at least three big areas — health insurance, financial regulation and taxes — no one can know what will happen.” –columnist John Stossel
“[T]he conviction that government no longer works for the majority of Americans is spreading like wildfire. That nearly all of President Obama’s major policies have gone against public will is fueling voter anger across the nation.” –columnist Michael Goodwin
“Most elected officials cling to their ideological biases, despite the real-world facts that disprove their theories time and again. Most have no common sense, and most never acknowledge that they were wrong.” –economist Lawrence Kudlow
Quote of the Day: “Tyranny, like hell, is not easily conquered; yet we have this consolation with us, that the harder the conflict, the more glorious the triumph. What we obtain too cheap, we esteem too lightly: it is dearness only that gives every thing its value. Heaven knows how to put a proper price upon its goods; and it would be strange indeed if so celestial an article as FREEDOM should not be highly rated.” – Thomas Paine, The Crisis, 1776
Congress is coming back for a brief session before the election. At the top of their to-do list is new taxes. They need your guidance . . .
You can borrow from or copy my sample letter . . .
I understand that Congress will be considering whether or not to extend the tax cuts passed during the Bush administration. Please be clear about this . . .
* The problem with our economy is NOT that we pay too little in taxes, but that we pay too much.
* The cure for our economy is NOT to raise taxes, but to cut government spending and all the meddling you guys do.
* In addition, please don’t think you’ll win praise from me by only raising taxes on the so-called wealthiest Americans. These are precisely the people who finance new products, services, and jobs.
* Yes, the deficit is a concern. Address the concern by CUTTING SPENDING, not by raising taxes.
Sorry epic failure, but no, we don’t talk to you like you are a dog. Simply put, it’s the economy stupid! It’s what you and your cronies are doing to the nation. It’s what you are doing to the Constitution that you swore to uphold and defend. It’s about the Bill of Rights. It’s about the rule of law, all laws, not just the cherry picked ones that you happen to like. It’s about you paying off your cronies in the unions and other places. Like the Joyce Foundation and others.
“Are you opposed to Obamacare or illegal immigration? You’re a racist. Are you opposed to gay marriage? You’re a homophobe. Did you oppose Elena Kagan’s appointment to the Supreme Court? You’re a sexist. After less than two years of complete Democrat control of government, there aren’t many Americas progressives haven’t accused of some sort of bigotry for simply having an opinion different from theirs. The politics of ‘hope’ and ‘change’ have devolved into exactly what those espousing them claimed they would end. Is this really Democrat’s plan to win votes in November?” –writer Derek Hunter
“The Democrats are going to get beaten badly in November. Not just because the economy is ailing. And not just because Obama overread his mandate in governing too far left. But because a comeuppance is due the arrogant elites whose undisguised contempt for the great unwashed prevents them from conceding a modicum of serious thought to those who dare oppose them.” –columnist Charles Krauthammer
“Those who mocked George W. Bush for openly declaring his faith in God and sharing that he prays to God for strength squawked about the horrors in Bush’s allowing his beliefs to influence his governance. Apart from the mockers’ misunderstanding of the proper intersection of faith and governance, let me pose another question. Are you more comfortable with a chief executive who, along with the overwhelming majority of Americans, humbly admits to reliance on God or one who projects the impression that he himself is messianic?” –columnist David Limbaugh
“Alan Simpson violated a taboo last week when he likened Social Security to ‘a milk cow with 310 million tits.’ But contrary to the dictionary-deprived critics who accused him of sexist vulgarity, the former Wyoming senator’s transgression had nothing to do with his use of a perfectly acceptable synonym for teat. Simpson’s real sin was ‘belittling a bedrock program,’ as the AARP put it — i.e., showing insufficient reverence for a sacred cow.” –columnist Jacob Sullum
“To those who say ‘I paid into Social Security for years and all I want is what I’m entitled to,’ I reply, ‘You’ve been robbed — get over it.’ If you want to know who robbed you, it’s called Congress. If you’re angry about that then go into the voting booth and throw them out. Meanwhile some poor young fry cook at McDonald’s is having his wages garnished to support the lifestyle of tennis playing Botox dowagers in Palm Springs. Is this right?” –venture capitalist Bill Frezza
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