Friday, January 13, 2012

Speaking the plain truth

In keeping with my previous couple of posts, here is some more economic analysis, this time from Peter Ferrara at Forbes. Ferrara goes through the real numbers on the recovery and provides the historical comparisons that demonstrate just how pititful--thanks to the policies of the current administration--the recovery has been. It's a long piece, but well worth the read. Some highlights:
As should have been long expected, Obama’s trillion dollar Keynesian stimulus did nothing to promote recovery and growth, and almost surely delayed it. That is because borrowing a trillion dollars out of the economy to spend a trillion back into it does nothing to promote the economy on net. Indeed, it is probably a net drag on the economy, because the private sector spends the money more productively and efficiently than the public sector.
A simple fact, yet one no one the left seems willing to acknowledge. More:
Obama apologists cannot argue that this is because the recession was so bad, because the historical record in America is the worse the recession the stronger the recovery. Based on historical precedent, we should at worst be finishing the second year of a booming recovery by now. 
Compare Obama’s lack of a recovery 2 ½ years after the recession ended with the first 2 ½ years of the Reagan recovery. In those years under Reagan, the American economy created 8 million new jobs, the unemployment rate fell by 3.6 percentage points, real wages and incomes were jumping, and poverty had reversed an upsurge started under Carter, beginning a long term decline.
And there is the heart of the matter. The attempts to "plan" growth by Obama and company have failed miserably, by any standard. In contrast, the simplicity of getting government out of the way and freeing up capital under Reagan resulted in phenomenal growth. Yet, we're still arguing with people--like Krugman--that want to double down on the failed policies and initiatives of Obama.

And finally:
Most people do not know that already enacted in current law for 2013 are increases in the top tax rates of virtually every major federal tax. That is because the tax increases of Obamacare become effective that year, and the Bush tax cuts expire, which Obama has refused to renew for singles reporting income over $200,000 per year, or couples reporting over $250,000 per year (in other words, the nation’s small businesses, job creators and investors, in plain English). 
As a result, if the Bush tax cuts just expire for these upper income taxpayers, along with the Obamacare taxes, in 2013 the top two income tax rates will jump nearly 20%, the capital gains tax rate will soar by nearly 60%, the tax on corporate dividends will nearly triple, and the Medicare payroll tax will leap by 62% for those disfavored taxpayers.
We're poised to roll into a buzzsaw of economic destruction. The only thing keeping it from happening is the natural movement of the business cycle, as the stalled recovery pushes back against the wrong-headed policies forestalling growth. And that will--in the end--lead to a lost decade for America, a prolonged period of economic malaise, all for the sake of combating the supposed evils of the capitalist system and striving for a nonsensical ideal of economic justice.

Cheers (?), all.

1 comment:

  1. I generally agree, but I always found the argument about the stimulus "just being taken from one place to another in the economy" a bit weak. In the long run? Sure. Even worse than taking a trillion from the economy and injecting it back, it is taking more (because of the interest) and injecting less (because of non-productive losses). But in the short run? It's just as a loan in the private sector. Sure, you hve to pay it back, but over the years, and in the short run you have a bunch of cash for a car, for example. Now, if you went and spent that loan on booze, than, well...