26 | July | 2010 | The Homa Files

Archive for July 26th, 2010

Economy’s weak, so let’s spend and tax … huh ?

July 26, 2010

I continue to be dismayed by the Administration’s lack of business savvy, economic unorthodoxy (despite lack of success), and steaming contradictions …

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Excerpted from WSJ: Liberal Tax Revolt, July 23, 2010

Only in the age of Obama have Democrats convinced themselves that the best “stimulus” is higher spending and higher taxes.

There’s nothing like the prospect of an electoral rout to concentrate the incumbent mind, and so all of a sudden rank-and-file Democrats in Congress are saying maybe they shouldn’t let the 2003 tax rates expire after all.

The revelation that “as a general rule, you don’t want to be raising taxes in the midst of a downturn.” tax increases has recently been heard from Senators Evan Bayh of Indiana, Ben Nelson of Nebraska, and, most surprising, even from Kent Conrad of North Dakota. On a scale of unlikely events, this is like the Pope coming out against celibacy.

These are hardly supply-side conversions, but they’re a start.

As for Pelosi, Geithner and Obama, they remain prisoners of their spend-and-tax dogma.

Geithner declared that the tax increases will arrive as scheduled.

So the same Mr. Geithner who says the economy is weak enough that we must have new spending “stimulus” says it is strong enough to endure a huge tax increase.

Go figure.

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New data from, of all places, the Democratic-run Joint Committee on Taxation show that in 2011 roughly 750,000 taxpayers with net business income will pay the highest marginal rate of 39.6% or the next highest bracket of 36% (up from 33%) – that’s a higher rate than Goldman Sachs will be paying.

About half of the roughly $1 trillion of total net business income will also be reported on those returns.

In a stroke, that will make tens of billions of dollars unavailable to invest or to hire new workers.

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Full article:
http://online.wsj.com/article/SB10001424052748703467304575383233009284878.html?mod=WSJ_newsreel_opinion

Posted in Economics, Obama Administration, Taxes | Leave a Comment »

Why folks are feeling down …

July 26, 2010

Punch line: This has been the most egalitarian of all the 11 recessions since World War II.

In various ways, it has touched every social class through job loss, pay cuts, depressed home values, shrunken stock portfolios, eroded retirement savings, grown children returning home — and anxiety about all of the above.

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Excerpted from RCP: The Great Stranglehold, Robert Samuelson, July 12, 2010

A new study from the Pew Research Center confirms that Americans have become more frugal and changed life plans:

71 percent say they’re buying less expensive brands
57 percent say they’ve trimmed or eliminated vacations
28 percent of Americans under 65 borrowed money from family or friends
11 percent say they’ve postponed marriage or children
9 percent have moved back with parents.

The economic and spiritual damage extends much further, for many reasons.

First, the huge job loss: By most measures (length of unemployment, permanent firings versus temporary layoffs), joblessness is the worst since World War II. Younger workers change jobs more often and have higher jobless rates.)

Second, pay cuts: These have affected almost a quarter of workers, including nearly a fifth of those with family incomes exceeding $75,000. Some workers also have had to take unpaid leave or part-time work.

Third, the loss of housing and stock market wealth: This decline (more than 25 percent at its peak on an annual basis) has been concentrated among higher-income Americans, who own a disproportionate share of the wealth. A reverse wealth effect has gripped the upper middle class. Feeling poorer, people saved more and spent less. Their reluctance to make major purchase commitments (a new car or home) validates their pessimism by retarding recovery.

Full article:
http://www.realclearpolitics.com/articles/2010/07/12/the_great_stranglehold_106258.html