July 30, 2010

New turd in Obama's punchbowl..

The Economy?

..is this latest news that the Q2 economic growth was an anemic 2.4 percent, putting the economy a hair's breadth away from Code Blue and the ICU of a double-dip (emphasis added).

The recovery lost momentum in the spring as growth slowed to a 2.4 percent pace, its most sluggish showing in nearly a year and too weak to drive down unemployment.

Consumers spent less, companies slowed their restocking of shelves and the nation's trade deficit dragged more on the economy in the April-to-June quarter. In a separate report, the Commerce Department said the recession was deeper than previously estimated.

Together, the reports raise doubts about whether employers will hire enough and consumers will spend enough to invigorate the economy. As unemployment remains near double digits, Congress could feel pressure to pass more stimulus measures to speed the recovery. So far, Republicans and some Democrats have blocked additional spending because of their concerns about the size of the deficit.

So, work with me on this. They blew almost $800 Billions about almost 18 months ago that has produced zero -- zip, zilch, bupkis, nada -- and they want take more of our money and flush it down the terlet? Man, these folks are certifiable.

Cue the usual mantra about increasing the deficit while not creating anymore jobs and putting on a future strain on availability of funds for the private sector if the gummint bellies up to the trough and inhales capital through borrowing. Segue into a riff about success of past tax cuts and their successes..

..which brings me to the point I have been making since June that only now people are picking up on: the expiration of the Bush tax cuts and the two-edged sword that is for Obama and the clown troupe handling your and my financial affairs in D.C. Those puppies evaporate in December and come next January, your paycheck will be looking like you wished your over-indulgent, holiday-fatted body looked. They'll start taking it out of your paycheck, the profits from your business, your dividend income, and the capital gains when you sell your stocks. Forbes magazine has a good discussion how you will be affected:

The two major tax-cutting bills from the Bush era were the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) of 2001, and the Jobs and Growth Tax Relief Reconciliation Act of 2003.

These two laws cut taxes across the board for earned income, long-term capital gains and dividends. The legislation also expanded the child tax credit and made dozens of other changes and adjustments to the tax code, involving exemptions, deductions and the marriage penalty.

So, here's where it gets tricky for Obama and the Democrats: if they let the tax cuts expire, you, me, and businesses have to send more money to Washington and, therefore, have less to spend on goods and services or capital investment. Economic activity diminishes and the economy shrinks. Want to test that hypos thesis? Let's say you get $2,000 every two weeks from your employer and $300 is taken out for Federal taxers so you have $1,700 in which to pay the mortgage, the second, buy food, pay for the kids, gas, the car, etc. for that two weeks. Come January 1, 2011, let's say you owe the Feds $100 more -- or $300. Are you going to be spending more or less? Bueller? Bueller?

Same sh*t different numbers for businesses. And, with less money to spend, they sure are not going to be doing a lot more hiring, are they? (Hint: nod your head "yes".) Hell, I bet they cut a few jobs to make ends meet at the bottom. Only, in addition to having to give Uncle more of their loot, they're also receiving less of yours -- directly or indirectly -- because, as the exmaple above showed, you have less to spend.

Hey, I am just a dumb-assed computer programmer who has not taken any MBA courses nor have I received any special awards for economic smarts and, if I can figure this out, why can't those morons in Washington figure it out?

On the other hand, if the Dems help the GOP members of congress to extend the tax cuts and Obama does not veto it, then we are odds on favorite to have an economic rebound.

Want to test that hypothesis? Google the history of the effectiveness of tax cuts and read the pro-and-con. A lot of the stuff I read says -- and hsitorical data bears out -- that they tend to help. Reagan cut taxes in the early 80s and it fueled a recovery into the early 90s after having pulled us out of the Malaise morass that Carter I thrust us into. I submit that we were in the dumper around 2000 -- at least the IT sector was -- and it was about to be compounded by the effects of 9/11, fear of flying and all that. Let's face it, if OBL just wanted to send a political message, he would have confined his activities to D.C.

In any case, I think there are enough numbers around to bear up the fact that we were creating jobs 2001-2007 at a vastly more healthy clip that we are now. Pushed by a commenter, I will dig up once-researched figures to back up my assertions. But I an just some pathetic schlumpf micro-blogging ankle-biting civilian and ain't no one giving me dime one to research my stuff. Don't need doctoral thesis work, neither.

But I digress, The main point is this: Obama and those close to him are making sounds like the Bush tax cuts stop in January. Too bad; we suffer, business suffers, no one gets hired and that sack of camel afterbirth will find himself out ion the bricks in 2013.

..you listening, God?

-30-

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