Another four years of Obamanomics and Argentina will be crying for us.
By Peter Ferrara
With a second term for Obama, the world-leading America we have
known and hoped to leave to our children will be gone. Last
Friday's jobs report confirms that Obama is well on his way to
transforming America into a third world country, with declining
living standards and perpetual economic stagnation.
Argentina enjoyed the world's fourth highest per capita GDP in
1929, on par with America at the time. But then the nation lost its
way in embracing a leftist, union allied government, which took
control of the economy and imposed wildly irresponsible taxes,
spending, deficits, and debt. After World War II, the hugely
popular Juan Peron came to power and institutionalized the madness.
It has been all downhill for Argentina ever since. Do you recognize
the pattern?
Today, Argentina ranks 53rd in the world in per capita GDP,
according to the International Monetary Fund, 57th in the CIA World
Factbook, at a level less than one third that of America. But its
national debt at 51% of GDP is actually less than that of the
United States under the Obama administration, where we are
rocketing towards 100% of GDP by the end of this year, and 200% in
25 years, according to CBO.
The Worst Economic Recovery Since the Great Depression:
Confirmed
Last Friday's jobs report indicated the
most commonly cited U3 unemployment rate remains stuck at 8.2%.
That makes 41 straight months of unemployment over 8%, which the
Joint Economic Committee of Congress confirms is the worst recovery
from a recession since the Great Depression almost 75 years ago.
The total number of Americans unemployed actually rose
over the last 3 months by 76,000, 54 months after the
recession started, and 3 years after it was supposedly
over. Since the Great Depression, and before this last recession,
recessions in America have lasted 10 months on average, with the
longest previously lasting 16 months.
Indeed, the last time before Obama that unemployment was even
over 8% was December 1983, when Reaganomics was bringing it down
from the Keynesian fiasco of the 1970s. It didn't climb back above
that level for 25 years, a generation, which is a measure of the
spectacular success of Reaganomics. That success was centrally
based on reducing tax rates, which our ignorant Marxist
President says was tried but didn't work.
Moreover, Obama's June unemployment rate was not much, much
higher only because over 7.2 million working people have given up
even looking for work as a hopeless waste of time under President
Obama, so they are not counted as unemployed in the U3 unemployment
rate. Including these workers, who still exist and still do not
have jobs, the unemployment rate would be 11%.
Besides the 12.7 million Americans who are counted as
unemployed, another 8.2 million were employed part-time for
economic reasons. "These individuals were working part-time because
their hours had been cut back or because they were unable to find a
full-time job," the Bureau of Labor Statistics (BLS) reported.
Another 2.5 million workers were marginally attached to the labor
force, as they "wanted and were available for work, and had looked
for a job sometime in the prior 12 months," but "[t]hey were not
counted as unemployed because they had not searched for work in the
[prior] 4 weeks."
That leaves the total army of the unemployed and underemployed
at 23.4 million Americans. Counting these workers, the BLS reports
the U6 unemployment rate as rising to 14.9% in June. If we add in
the long-term discouraged workers that the BLS does not even count
anymore, the Shadow Government Statistics website reports the total
unemployment rate increasing to 22.8% in June.
In contrast, Obama promised us when he first entered office that
if his nearly $1 trillion in stimulus spending passed, the
unemployment rate would never exceed 8%, and would decline to 5.8%
by May of this year, when in reality it was 8.2% and rising that
month. The peak of the Obama Presidency came in February 2009, his
first month in office, which is the last time he said something
correct about the economic recovery, predicting to Matt Lauer on
national television, "If I don't have this done in three years,
then this is going to be a one-term proposition." We are now well
past Obama's own self-imposed deadline.
The unemployment rate for African -Americans actually rose last
month to 14.4%, and it has remained at such depression era levels
for Obama's entire Presidency. Hispanics have suffered double digit
unemployment throughout Bush's Presidency as well, at 11% again
last month. For teenagers, the rate last month stood at 23.7%. For
black teenagers, unemployment rose last month to 39.3%. For
Hispanic teenagers, the unemployment rate rose to 31%.
Friday's labor report further indicated that the jobs picture
has only been worsening under Obamanomics. A million more workers
were suffering long-term unemployment of 27 weeks or longer in June
than at the supposed end of the recession 3 years ago.
Moreover, the median length of unemployment had risen to 19.8 weeks
in June compared to 17.2 when the recession supposedly ended.
How Stupid Do They Think We Are?
Obama
tells us that the 80,000 jobs created last month (25,000 were mere
temp jobs) were "a step in the right direction." A very tiny baby
step at best, as the working age population grew by 191,000 in the
same month. Moreover, 85,000 went on the disability rolls during
the month, fleeing the Obama economy for their only alternative,
taxpayer dependency. Another 275,000 applied for disability during
the month.
Obama's chief economic policy advisor Alan Krueger actually
boasted that private sector jobs have grown for "28 straight months
for a total of 4.4 million payroll jobs during that period." But at
the same point during the Reagan recovery, the economy had created
9.5 million new jobs.
Krueger thinks we are too stupid to know that job growth is the
norm and not the exception for the American economy. In the 62
years from the end of World War II in 1945 until 2008, jobs grew in
86% of the months, or 640 out of 744. His statement is just a
further example of the Obama administration's practice of
Calculated Deception.
Reagan's recovery produced job growth in 81 out of its first 82
months, with 20 million new jobs created in those first 7 years
alone, increasing the civilian work force at the time by 20%. That
grew into 50 million new jobs over the entire Reagan 25 year boom
from 1982 to 2007. Compare that to the disgrace of Obamanomics.
While Obama tries to claim 4.4 million new jobs created, total jobs
today are still half a million less than in January 2009 when he
entered office. Even George Bush oversaw 52 consecutive months of
job growth, including 8 million new jobs created after his 2003
capital gains and dividends tax rate cuts became effective (which
Obama is dedicated to reversing).
Krueger also solemnly told the public, "it is important not to
read too much into any one monthly report." But as
documented July 6 by Bryan Preston for PJMedia, the Obama
Administration has said the exact same thing for each of the last
30 months. Do ya think 2 ½ years might constitute a trend?
The Disgrace of Obamanomics
Obama's
tragic jobs record reflects the dismal economic growth under his
Administration's perverse economic policies. For all of last year,
the economy grew by a paltry real rate of only 1.7%, only about
half America's long-term trend. The average so far this year has
been no better.
In sharp contrast, in the second year of Reagan's recovery, the
economy boomed by a real rate of 6.8%, the highest in 50 years.
During the first 7 years alone, the economy grew by almost
one-third, the equivalent of adding the entire economy of West
Germany, the third largest in the world at the time, to the U.S.
economy. Real per capita disposable income increased by 18% from
1982 to 1989, meaning the American standard of living increased by
almost 20%. The poverty rate, which had started increasing during
the Carter years, declined every year from 1984 to 1989, dropping
by one-sixth from its peak.
But President Obama, following the exact opposite of the
policies of Reagan in every detail, is on exactly the opposite
course. The Census Bureau reports falling real wages under Obama,
kicking median family income back over 10 years. Census also
reports more Americans in poverty today than at any time in the
more than 50 years that Census has been tracking poverty. That is
why Obama can also boast an all-time record number of Americans on
food stamps, which is why Newt Gingrich has rightly labeled him
"the food stamp President."
Obama cannot explain away this disgrace of Obamanomics by
arguing that the economy has performed so poorly under his
Administration because the recession he inherited from Bush was so
bad. That is exactly what he is arguing when he says "there are no
quick fixes to the problems we face that were more than a decade in
the making." But the American historical experience is that the
worse the recession, the stronger the recovery, as the American
economy snaps back to its world-leading, long-term, economic growth
trend line. Based on this historical record, we should be enjoying
the third year of a raging economic recovery boom right now.
This historical experience was reflected by the surging Reagan
recovery boom from the deep 1981-1982 recession. And it is why
Obama was confident enough to tell Matt Lauer and the nation in
2009 that if he doesn't have the economy hopping after 3 years, he
is going to be a one-term President. If anything, because of the
severity of the recession, Obama should have been blessed with an
even more booming recovery than Reagan. But the dismal economic
performance we have suffered instead, with no real recovery from
the steep 2008-2009 recession at all, is the disgrace of
Obamanomics.
The Coming Crash of 2013
For
the first time on Monday, Obama indicated that the Bush tax cuts
may not be made permanent for those making less than $200,000 a
year. For why would he otherwise propose only a one-year extension
of those tax cuts? If he terminates those tax cuts after one year,
that would constitute yet another tax increase on the middle class,
besides Obamacare.
This partial one-year extension of the Bush tax cuts will not do
anything to promote the economy. Temporary tax relief does not work
in any event to advance economic growth, because it is discounted
by investors, consumers, and businesses as only a passing fad. But
extending the Bush tax cuts for those making less than $200,000 per
year would not be a tax cut from the current rates, but only an
extension of the same rates that have been in force for 10 years or
more. So there is no boost to the economy from that. Note that
these are the tax cuts adopted by Bush and the Republicans for
those making less than $200,000 per year, contrary to Obama's
claims that Bush and the Republicans only cut taxes for "the rich,"
which are only despicable, manipulative lies so dishonest that they
should disqualify Obama from office.
Indeed, instead of adopting tax cuts promoting the economy,
Obama's tax proposal on Monday would terminate the Bush tax cuts
for those making over $200,000. So it would only trash the economy,
because it would involve a huge tax increase on the nation's small
businesses, job creators, and investors. Counting the tax increases
of Obamacare that will also go into effect next year under current
law, the top two income tax rates would increase by nearly 20%, the
capital gains tax rate would increase by nearly 60%, the tax on
dividends would nearly triple, and the death tax would rise from
the grave with a 55% top rate. While Obama says only 3% of small
businesses would be affected, the tax increases would apply to
close to two-thirds of small business income, which is the
foundation for most jobs.
This is all on top of the corporate tax rate which under
President Obama is the highest in the industrialized world at
nearly 40%, counting state corporate rates on average. Even
Communist China offers a 25% corporate rate. The social welfare
states of the European Union are even lower on average, with
formerly socialist Canada now featuring a 15% corporate rate, and
economic powerhouse Germany not much higher.
American businesses are uncompetitive in the global economy with
this tax burden. But under President Obama, there is no relief in
sight. Instead, he has been barnstorming the country for the last
two years calling for still more tax increases. Under his so-called
Buffett Rule, which would double the capital gains tax, America
would suffer the fourth-highest capital gains tax rate in the
industrialized world, besides the world's highest corporate tax
rate.
When you add up all those multiple tax rate increases on top of
Obama's exploding regulatory costs, the result will be to push the
economy back into recession next year, with unemployment soaring
back over double digits, and the deficit soaring to new all time
records over $2 trillion, the highest in world history. It is
working people who will be hurt the most, because they are the ones
who will lose the jobs they need for their basic standard of
living. Even those with jobs will suffer further declining real
wages and incomes because of the shredded demand for labor.
There is no economic theory under which increasing tax rates
promotes economic growth and recovery, particularly rate increases
on job creators and investors. Even under Keynesian economics, such
tax increases are contractionary. Indeed, even Karl Marx would tell
you that such tax rate increases would bring a market economy down,
not up.
Obama falsely claims he is only restoring the Clinton era tax
rates. But Obama is well beyond that now, because he is imposing
the Obamacare tax increases next year as well, and he has been
proposing still further tax increases. The top marginal income tax
rates that drive the economy would consequently soar by well over
30%, probably close to 40% or more.
Obama says we tried the Bush tax cuts for "the rich" and they
didn't work. So let's review how exactly they did work out. Bush
cut the top income tax rate by 11.6%, from 39.6% to 35%, and the
second highest rate by about 8%, from 36% to 33%. But he cut the
lower rates by higher percentages, including slashing the bottom
rate by 33%, from 15% to 10%. Then in 2003, he cut the tax rates on
capital, reducing the capital gains tax rate by 25% from 20% to
15%, and the tax rate on corporate dividends to 15% as well.
These tax rate cuts first quickly ended the 2001 recession,
despite the contractionary economic impacts of 9/11, and the
economy continued to grow for another 73 months. After the rate
cuts were all fully implemented in 2003, the economy created 7.8
million new jobs over the next 4 years and the unemployment rate
fell from over 6% to 4.4%. Real economic growth over the next 3
years doubled from the average for the prior 3 years, to 3.5%.
In response to the rate cuts, business investment spending,
which had declined for 9 straight quarters, reversed and increased
6.7% per quarter. That is where the jobs came from. Manufacturing
output soared to its highest level in 20 years. The stock market
revived, creating almost $7 trillion in new shareholder wealth.
From 2003 to 2007, the S&P 500 almost doubled. Capital gains
tax revenues had doubled by 2005, despite the
25% rate cut!
Consequently, the Bush tax cuts helped to extend the Reagan boom
for 25 years, until 2008. By then, the government had induced the
financial crisis, through regulations looting the banks for
subprime mortgages demanded in the name of affordable housing for
the poor and minorities, and through the Fed's cheap dollar
monetary policies, which began the restoration of perverse
Keynesian economics. Punishment for the results is now long overdue
for the advocates of those policies.
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