Free Markets, Free People

US economic policy – point fingers and hope the other guy gets blamed

Via Charlie Cook, some things you most likely know:

First, there’s Europe and the eurozone. It’s possible that the situation could be worse in Greece, but not that much worse. There’s a pretty good chance that country will be exiting the eurozone soon, but either way, Greece is putting enormous stress on its economy. Then there’s Spain, which has an economy larger than Greece, also in trouble. With Europe teetering on the edge of recession, there are limits to how much even Germany can do to keep the eurozone—now the world’s largest single economy—from going into a serious tailspin. Europe contributes 21 percent of global economic growth, so there is rather obvious significance for the U.S.

And something you might be somewhat aware of:

Then, there is China, whose economy is slowing. Acknowledging the problem, the Chinese government just announced that it was placing greater emphasis on economic growth. Its central bank is expected to lower rates soon. It’s unlikely that China will go into a recession, but don’t expect purchases of U.S. goods there to match those of the last few years.

Key point in last sentence.  We may buy a lot of stuff there, but we also sell a lot of stuff to China.  And, our other major trading partner is what?  The Eurozone.  So what Cook is pointing out is the real possibility of a major slowdown and the problem that would present for a fragile US economy at, if you’re a Democrat, exactly the wrong time.

So Cook lays this out for your consideration.  And while you may not agree with everything, read it through:

But it’s the fragile nature of America’s own economy—and questions about whether our political process is capable of coping with immediate and simultaneous challenges—that make things so much worse. The Federal Reserve Board has acted heroically to pump up the economy. As the International Strategy and Investment Group reports, the Fed’s efforts put the trade-weighted dollar at close to a record low, making it almost as competitive as it ever has been. But a weak world economy still limits the U.S. advantage to sell.

The term “fiscal cliff” has been rapidly entering the economic lexicon. People using the phrase may not know exactly what is scheduled to happen at the end of this year. Probably more than anything else, though, they may know that the George W. Bush-era income-tax cuts will be eliminated both for earners above and below the $250,000 level if not renewed by Dec. 31. They also may know that some significant spending cuts will automatically be made, unless Congress takes action, that will cut defense and nondefense funding pretty much evenly. Of course, Social Security, Medicare, and Medicaid, the real drivers in the increase of federal spending, are exempted from those cuts.

A few may even know that  the capital gains tax rates will go up unless Congress acts. According to ISI Group, the top rate on dividends would almost triple, going from 15 percent to 43.4 percent. Andy Laperriere, who heads up the ISI shop, said understatedly in a report to his clients, “We find investors to be interested in the many facets of the fiscal cliff, but we don’t believe investors have repositioned their portfolios yet. We suspect that will change late this summer and into the fall as investors begin to focus on the outlook for next year.”

Call me simple, but I think that means that people will start dumping their stocks.

Bingo.  He calls it a “fiscal cliff”.  I’d characterize it as a fiscal trainwreck.  Dale might bring up the red kangaroo and point to the fact that none of this is a surprise – we’ve been able to see it coming for miles.  And, as is the nature of politics and government, at least in this country, to date nothing of any significance has been done to address it.  Nothing.

The result, at least to now:

The danger, of course, is another stalemate over taxes and spending, but bigger this time. Policy moves that collectively could take an estimated 3.5 percentage-point bite out of the U.S. Gross Domestic Product are scheduled to kick in at the start of next year, hitting a very fragile economy. And let’s not forget the threat of another debt-ceiling showdown. We have the ingredients for enough economic uncertainty that it would be bizarre if many large companies and financial institutions didn’t freeze hiring, expansion, investing, borrowing, and lending. Individual investors would also probably head for the exits.

Sequestration, taxmageddon, the debt ceiling, a global economic slowdown, etc.  All looming large.  And about all that is happening is finger pointing.  If you wonder why business isn’t expanding, hiring and reviving the economy, look at this mess and wonder no more.  It’s because of policy – government policy.  Or the lack thereof.

Cook, naturally, tries to pass it off to the Republican House.  But let’s get real here.  All of this – all of it – could have been addressed in the first two years of Obama’s presidency when he had a fully Democratic Congress and told us he was focused like a laser on the economy.  But in reality he ducked it for ObamaCare.  He was more concerned about his legacy than the country’s economic problems.  And now, after the Democrats were spanked by the electorate in 2010 for their economic inattention, he’s stuck with having to compromise, something he’s refused to do to this point.

So yeah, the Charlie Cooks of the world will be spinning this as Republican obstruction – that’s a sort of knee jerk position for the left – but in fact, this is malfeasance by the Democrats and the President.  Their opportunity came and went and they did basically nothing.  The usual cure was tried – throwing trillions of debt ridden dollars at the problem – and it didn’t work.  Now they have this fiscal trainwreck coming and their solution is?

Blame the other guys.

But as we’ve been pointing out here, reality is reality.  And it is about to visit the finger-pointers in a big way.

Forward.

~McQ

Twitter: @McQandO

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29 Responses to US economic policy – point fingers and hope the other guy gets blamed

  • Charlie Cook is not stupid.  What fell force could make him write such STOOOOOOOOOOOOOOOoooooooooooooooooooopid crap?

    • Now they have this fiscal trainwreck coming and their solution is?  Blame the other guys.
      So the Republicans are to campaign on the slogan …

      If you’re going to blame us anyway, why not let us have the whole enchilada

  • How is the House GOP responsible when the Democrat Senate hasn’t passed a budget in YEARS? And the budgets proposed by Democrat Pres. Obama garner a grand total of ZERO votes?

    What am I missing here?

    • Business as usual, that’s what you’re missing ya big silly.   NOTHING is the fault of the Democrats, NOTHING….when in doubt, blame 43.
       
      These aren’t the droids you’re looking for……

      • Luke: I can’t understand how we got by those troops. I thought we were dead.
        Ben: The Force can have a strong influence on the weak-minded.

    • WASHINGTON — Senate Majority Leader Harry Reid says a tax deal is “impossible” before the elections, and here’s why: “Republicans’ blind adherence to tea party extremism.”

      Democrats blind adherence to socialistic spending increases are heading us for the “cliff.”

      • “Republicans’ blind adherence to tea party extremism.”
        AKA
        APPROACHING living within our means…and NOBODY is suggesting a very close approach, at that….

        • The EXTREME Democrats are just so EXTREME .. wouldn’t be prudent ..  EXTREME, EXTREME spending

  • This fiscal cliff is on the horizon and is threatening to hurt our economy further. And what does Obama want to do? More taxes and more spending.
    The CBO has reported that if laws remain unchanged the federal budget deficit for this year will be $1.1 trillion (http://1.usa.gov/xju6K9). That number is in addition to total debt over $15 Trillion and projections that by 2021 federal debt will be over $20 trillion (http://1.usa.gov/wt4DPi).
    We need to cut the spending and right out economy.

  • He calls it a “fiscal cliff”.
    Every time I heard Obama talk about that “economic ditch” he was getting us out of, I could only imagine that just to the side of that “economic ditch” was a cliff that he forgot to mention.

  • You say, “All of this – all of it – could have been addressed in the first two years of Obama’s presidency when he had a fully Democratic Congress and told us he was focused like a laser on the economy.  But in reality he ducked it for ObamaCare.”
     
    Are you saying that Obama and the Democratic Congress could have solved the problems of the economy while they had a majority?  Well, maybe so, but I feel that Obama thought the economy would somewhat resolve itself—after all, much of about economics is still a mystery, but it would improve (with the help of the bailout and stimulus) over time.  He probably felt this fact would give him the time to get some kind of a general healthcare plan through Congress—for the first time in US history.  (Besides, since the Democratic strategy for saving the economy is based upon some sort of neo-Keynsian plan, do you think the Republicans—the protectors against Socialism—would have allowed him to take the measures he felt necessary to saving the economy?)

    • Are you saying that Obama and the Democratic Congress could have solved the problems of the economy while they had a majority?  Well, maybe so, but I feel that Obama thought the economy would somewhat resolve itself—after all, much of about economics is still a mystery, but it would improve (with the help of the bailout and stimulus) over time.

      >>>>> Looks like the wheel came up 00 on that bet….

    • What did I say? Oh, yeah, they could have “addressed” it. So no, I’m not saying they “could have solved them”. Thanks for not putting words in my mouth. I have no faith they could have solved it given their usual methods. But they, as I point out, never even addressed them.

    • So your theory is this laser like thingie of Obaman’s was focused on……nothing…..because it was going to ‘resolve itself’, which is why we had the stimulus, because it was going to ‘resolve itself’.  It might actually have done that, well, except for the tremendous level of uncertainty his regulations and healthcare fiasco plan were engendering in the minds of businessmen and the population far and wide, but I mean, except for his entirely active efforts to undermine the economy, your idea that the economy would ‘resolve itself’ has some merit.
       
      But man, I do have to love that business of economics being a mystery.  Is that why we poured trillions of dollars into stimulus spending, because they didn’t REALLY know what they were doing?   Seriously, that’s your defense?

      • Obama was practicing on the economy the same tactic as Mags Bennett on the Justified finale last year.
         
        You poison yourself to get to “know the mystery”.  It worked about as well in both story lines…but it IS VERY, VERY EXPENSIVE!!!

        • Really, same medicine they seem to recommend for global warming – (hysterically shouting)  ‘DO SOMETHING!!!!’ and that somehow always translates to ‘spend lots of money!!!!!’

  • Are you saying that Obama and the Democratic Congress could have solved the problems of the economy while they had a majority?

    No, stupid.  What he said was that the Federal government COULD and SHOULD have produced a LEGALLY MANDATED budget.  This is not “solving the problems of the economy”, moron.  Is that the best straw-man you can manage?  And are you willingly trying to sell the notion that this was NOT predicted…???

    …after all, much of about economics is still a mystery…

    ALLLLLLLLLLLLLLLLLLLLLLLLLLLLLLL about economics is a mystery to you, pumpkin.  As you demonstrate here constantly.

  • As if this were some surprise or something …

    Breitbart News has established that Obama’s grades and Scholastic Aptitude Test (SAT) scores may have been even lower than those of his supposedly less capable predecessor, George W. Bush.

    The smartest man in an empty room

    • But that’s based on their assuming he was in the average part of the curve for that class.  Now, I’ll grant you, I think of him as something around the middle portion of average.  Coupled with his own admissions that he was a stoner and lazy the odds are excellent that his grades were fair at best, but I knew guys who were stoners and lazy who still did well academically (because, they really WERE smart…) so it’s not a certainty that his grades were bad, or lower than George’s.
       
      That particular sampling from the Breitbart staff was a reach.  If they have something to say, they ought to continue to say it with evidence, not with what amounts to hearsay.

        • “Not that there’s anything WRONG with that….”

        • “People with something to hide, and me, because, I value my privacy, you understand.  It ISN’T because I have anything to hide, like, maybe I DID get into college as a foreign student even though I was born in Hawaii.  And maybe I got some 2.x’s in class and I wasn’t exactly a Rhodes scholar (I considered being a Rhodesian Scholar, but Kenya was as close as I could get realistically)”
           
          If ever there was OR WILL BE a President who so personifies Professor Marvel  (Oscar Zoroaster) from the Wizard of OZ, it is truly Barack Obama.   If they re-wrote the story, they’d have to name the Emerald city BO instead of OZ out of humble respect to his genius at, (with apologies to Frank Baum), prevarication, fabrication, tergiversatiation and other manifestations of falsification known in the colloquial vernacular hereabouts as lying.

  • Colin Powell says Obama stabilized the economy.
    This guy is a wet dream for the GOP-hating mainstream media.

    • “In a hole” is stable.  What MORE could you ask of the man?!?!?

      • Hey, you interested in taking a hike to the top of Letterman’s net worth? I hear it’s twice as high as Mount Romney.

    • Note to self: Do not vote for Colin Powell – he may be a decent general, but clearly is in another world when it comes to the economy.