Liedership by the Panderer in Chief

[Palm]

STP; that's not the point crooze is making.  This guy (like many businesses including the one I am involved with) is looking ahead to what's coming and saying it will get increasingly tough to fund BOTH Obamacare (Obama- "It's not a tax", Supreme Court- "It IS a tax.", increased business/personal taxes and deal with inflation when it comes (and it will come eventually).  What businesses and individuals that understand all of the pieces are seeing is that under the CBO's calculations after studying the proposed Obama 2013 budget (which has little support anywhere) deficits:

"In all, between 2013 and 2022, deficits would total $6.4 trillion (or 3.2 percent of total GDP projected for that period), $3.5 trillion more than the cumulative deficit in CBO’s baseline."

And:

"Federal debt held by the public would increase from $10.1 trillion (68 percent of GDP) at the end of 2011 to $15.2 trillion (77 percent of GDP) at the end of 2017 and then to $18.8 trillion (76 percent of GDP) at the end of 2022 (see Table 2). Under the assumptions of CBO’s current-law baseline, debt held by the public would increase more slowly, ending 2022 at $15.1 trillion; as a percentage of GDP, however, such debt would decline to 61 percent by the end of 2022."

That's insane.  He came into office promising to cut the deficit in half by the end of his first term and this is what we get.  A couple of comments from the CBO that show that this administration doesn't get it when projecting out how things will go.  Obama projects that even though all this will be heaped upon individuals and corporations, personal incomes and corporate profits will just go up and provide more tax revenues.  Wrong.  Per CBO:

"Specifically, CBO’s economic projections imply less revenue than the Administration’s do largely because CBO projects that wages and salaries—the most significant component of the tax bases for individual income and payroll taxes—will be about $3.2 trillion (or 3 percent) lower over the next 10 calendar years than the Administration projects. In addition, CBO projects that domestic economic profits—the main component of the tax base for corporate income taxes—will be $1.5 trillion (or 8 percent) lower than the Administration projects."

Yesterday Darden which is an owner of several restaurant chains, stated that it is testing out cutting a large part of its workforce to part-time status because of its projected effects of Obamacare (which the president stated in the debate he has grown to like that label).  This stuff is very real and most anywhere you look companies are saying they are holding off in hiring due to lack of enthusiasm from consumers and increased costs/taxes.  People are saying that corps are flush with cash and should be hiring more.  Guess what? Without consumer confidence about the economy companies don't project growth.  Without growth there is no reason to hire.  Corps look ahead and do not like what they see.  I live in an area of the US where things are pretty good, but when doing our recent projections for the next few years, we are projecting no growth, or very little.  And we base our projections on major industry forecasts for our state.

The future is bleak under these policies, and the change that was promised didn't happen, and it's not seen as happening, except for the worse.  Do you see otherwise?  He came in on a promise of change and deficits cut in half, also jobs for the young, etc.  That has not happened and is not even close.  Those youth are very disenchanted (My kids among them; even though they have jobs, they know many of their friends who are still searching) and many of them are saying they may not vote this time around.  I think he will be ushered out because he's far from delivered.  And wasn't it he that said that if he didn't deliver, he would be a one-term president (His quote)?  It's time he at least delivers on THAT promise.

[ArtM72]

When Republican leaders with their muses and followers repeat day after day Obama's stimulus failed I point them to the economic indicators from the Dallas Fed that show otherwise every Monday.

http://dallasfed.org/assets/documents/re...charts.pdf

When I hear we must resist cuts to our defense spending but increase spending 20% lest we undermine our armed forces I'll point them to this chart and ask why?

http://research.stlouisfed.org/fred2/graph/?s[1][id]=FDEFX

And when I hear everyone talking about how Romney won that first debate with Obama, considering the main stream media is so "in favor" of Obama (LOL) I ask why we celebrate liars in political venues when we don't tolerate cheats in baseball?

http://www.bloomberg.com/news/2012-10-04...check.html

And yes, the US government has had a problem stimulating economic growth as of late. We as a country did our best job of that back in the late 1950s under Ike when the tax rate for a couple earning over $400K/year was 91%. American businesses were plowing their profits back into their businesses rather than give it to the government. Today, we invest our profits overseas in Austrilasian gas wells. Just how does that help good old John Q Public?

http://taxfoundation.org/article/us-fede...d-brackets

The fact is that facts have a clearly liberal bias.

[admin]

Well, Petro, I'm an economist, not a politician. And as such, I can point out stuff like that the corporate tax intake in the US is hardly stifling, to put it mildly. I'm aware of the 'fiscal cliff' and the 'political divide', but these are issues largely outside of my remit

[ArtM72]

STP; that's not the point crooze is making.  This guy (like many businesses including the one I am involved with) is looking ahead to what's coming and saying it will get increasingly tough to fund BOTH Obamacare (Obama- "It's not a tax", Supreme Court- "It IS a tax.", increased business/personal taxes and deal with inflation when it comes (and it will come eventually).  What businesses and individuals that understand all of the pieces are seeing is that under the CBO's calculations after studying the proposed Obama 2013 budget (which has little support anywhere) deficits:

"In all, between 2013 and 2022, deficits would total $6.4 trillion (or 3.2 percent of total GDP projected for that period), $3.5 trillion more than the cumulative deficit in CBO’s baseline."

And:

"Federal debt held by the public would increase from $10.1 trillion (68 percent of GDP) at the end of 2011 to $15.2 trillion (77 percent of GDP) at the end of 2017 and then to $18.8 trillion (76 percent of GDP) at the end of 2022 (see Table 2). Under the assumptions of CBO’s current-law baseline, debt held by the public would increase more slowly, ending 2022 at $15.1 trillion; as a percentage of GDP, however, such debt would decline to 61 percent by the end of 2022."

That's insane.  He came into office promising to cut the deficit in half by the end of his first term and this is what we get.  A couple of comments from the CBO that show that this administration doesn't get it when projecting out how things will go.  Obama projects that even though all this will be heaped upon individuals and corporations, personal incomes and corporate profits will just go up and provide more tax revenues.  Wrong.  Per CBO:

"Specifically, CBO’s economic projections imply less revenue than the Administration’s do largely because CBO projects that wages and salaries—the most significant component of the tax bases for individual income and payroll taxes—will be about $3.2 trillion (or 3 percent) lower over the next 10 calendar years than the Administration projects. In addition, CBO projects that domestic economic profits—the main component of the tax base for corporate income taxes—will be $1.5 trillion (or 8 percent) lower than the Administration projects."

Yesterday Darden which is an owner of several restaurant chains, stated that it is testing out cutting a large part of its workforce to part-time status because of its projected effects of Obamacare (which the president stated in the debate he has grown to like that label).  This stuff is very real and most anywhere you look companies are saying they are holding off in hiring due to lack of enthusiasm from consumers and increased costs/taxes.  People are saying that corps are flush with cash and should be hiring more.  Guess what? Without consumer confidence about the economy companies don't project growth.  Without growth there is no reason to hire.  Corps look ahead and do not like what they see.  I live in an area of the US where things are pretty good, but when doing our recent projections for the next few years, we are projecting no growth, or very little.  And we base our projections on major industry forecasts for our state.

The future is bleak under these policies, and the change that was promised didn't happen, and it's not seen as happening, except for the worse.  Do you see otherwise?  He came in on a promise of change and deficits cut in half, also jobs for the young, etc.  That has not happened and is not even close.  Those youth are very disenchanted (My kids among them; even though they have jobs, they know many of their friends who are still searching) and many of them are saying they may not vote this time around.  I think he will be ushered out because he's far from delivered.  And wasn't it he that said that if he didn't deliver, he would be a one-term president (His quote)?  It's time he at least delivers on THAT promise.

"Darden, which operates more than 2,000 restaurants in the U.S. and Canada, employs about 180,000 people. The company says about 75 percent of its employees are currently part- timers"

http://www.heraldtribune.com/article/20121010/ARTICLE/310109985

So 75% of Darden's employees are already part time and thus unlikely to have any benefits today.  Kind of like the Walmart of food services.  Somehow though Darden is able to maintain a business in Canada even though all of their Canadian employees have health care.  I suspect Darden's announcement of record profits yet simultaneous decision to cut portion size is somehow something the First Lady can be blamed for as well.

[admin]

Ah, Palm, sorry, the flurry of activity in the forum has reached such dizzying speed all of a sudden that I missed your post (and Art's response) altogether. I did sort of response to another thread in this forum which addresses at least a few of these points (the post where I argue that the 2008 crisis was not a garden variety business cycle recession but a 'balance sheet' recession that usually takes longer to heal as it takes time for the private sector deleveraging to complete).

It's also clear that either taxes will have to go up, or public spending will have to come down, or a combination of both. The division of that is largely due to your personal preferences (and I acknowledge the spectrum of these is different in the US compared to my own country), but I can make a few general points here:
- As long as the private sector is deleveraging, one should not pursue budget balancing too vigorously because that will compound the reduced spending of the private sector (lessons from.. 1937, Japan 1997, Spain 2010-2012)
- Structural matters are way more important for the overall sustainability of public finances, that is, there should be a credible medium term plan to tackle the deficit but little immediate action (which runs the distinct risk of being self-defeating, look at these European countries chasing their own tail)

Hope that helps.

[Palm]

Agree to a point stp. I think most people (even the recent survey of CEO's done last month) agree that it has to be a balanced approach to solving the problem, and don't even mind a moderate tax increase AS Long as there is something done on the other side to curb spending. As of now there is nothing on the table to bring that balance and the CBO is projecting these continued deficits; much due to increased spending. Politics and sensible business seldom go together. It's a mess.

[Palm]

Art,
Fair point, but that was offered as an example of what businesses are wrestling with as they face what's coming. Now on your 91% tax rate of the fifties; how about using effective rates instead of tax bracket rates?

[admin]

The funny thing is, economics has surprisingly little to say about how that divide should be, which is why I left it to personal preference.

If one prefers a "John Galt" country, it could be all spending cuts. If one prefers something like "Denmark", it could be all tax hikes. There are a few Demarks (like Sweden, Norway, Austria, Germany, The Netherlands) out there that have significantly higher tax and public spending rates (compared to the US) while still having relatively well functioning economies.

But for every Denmark or Sweden, there is a France or Italy with similar tax and spending levels where the economy is struggeling. It's more the quality of the state that matters than the size, and that becomes more important the bigger the size is.

[Palm]

But in some cases still; size matters. Hohoho

[ArtM72]

Art, Fair point, but that was offered as an example of what businesses are wrestling with as they face what's coming. Now on your 91% tax rate of the fifties; how about using effective rates instead of tax bracket rates?

Here you go, Palm.  Best info I can come up with quickly.

http://www.whitehouse.gov/sites/default/files/microsites/economic-report-president-chapter-5r2.pdf

Scroll down to table 5.8 for your "effective tax rate".  Still double what we see today.  More importantly in my mind, the deductions applied to getting the average top bracket down were deductions judged to be those with a significant public interest component...government intrusion into the free marketplace if you will.

My major point remains:  We had far greater growth in the US when tax rates were substantially higher. That growth occured in the midst of, and perhaps because of, some huge federal programs including but certainly not limited to the interstate highway system.  Assets were employed by the federal government for common purposes which raised the collective wealth of the nation.  Not unlike what Abraham Lincoln supported when he was a Whig...but that I recall was canals and levees.

Today?  A massive buildout of natural gas fueling infrastructure for vehicles would be the very best application of American money currently employed in foreign securities. In the absense of such support companies like CLNE will just be another upstart that didn't make it, even while its mission was right.

Best regards,