Free Markets, Free People


20 months after taking office, Obama considers tax breaks to stimulate economic growth

All sorts of things to talk about under that title.  So that calls for a bit of a ramble.

First and foremost, the title tells the story.  Why is it we’re 20 months into this administration and we’re just now considering tax breaks to stimulate the economy?  Note the word – considering.  According to POLITICO, there’s been no decision at all made on doing such a thing – if you thought the administration dithered about its strategy change in Afghanistan, this makes that look like a snap decision.

Let’s review:

Last November, Obama announced that he would turn his attention to unemployment, calling it "one of the great challenges that remains in our economy." He declared the same intent two months later, telling House Democrats he would focus relentlessly on job creation "over the next several months." Senior aides went on television pledging that the mantra would become "jobs, jobs, jobs."

But other matters – health care, the BP oil spill – continually stole the limelight, creating the impression, some Democrats complain, that the president was barely focused on the economy at all.

And now, “suddenly”, two months before an election, he’s “focused like a laser beam”.  A soft weak lit laser that sort of doesn’t do much but emit, well, words a bit of light.

I mean, read this explanation and tell me those who offered this as proof of his attention to the economy aren’t both tone deaf and just plain politically stupid:

His advisers described his attentiveness – noting, for example, that he discussed the economy with New York Mayor Michael R. Bloomberg (I) for 15 minutes before golfing – but got little traction.

Really? What in the freaking world has NY Mayor Michael Bloomberg got to do with anything to do with the economy. I mean, oh, goodie, he spent 15 minutes being "attentive" before they hit the links. That’ll fix everything. Oh, and what “traction” was he seeking?

In reality what happened was Obama was sold a bill of goods by his economic advisors about the effect of government stimulus.  Congress got a hold of the idea and larded it up with pork.  Result: spectacular FAIL.

They’re reduced to justifying the stimulus like this:

Many economists say Obama’s policies have been reasonably effective at pulling the nation back from recession. Last year’s stimulus package – now estimated to cost $814 billion – protected as many as 3.3 million jobs, according the independent Congressional Budget Office.

“Many” economists say his policies have been “reasonably effective” because some computer model says it may have “protected” – note the new word – “3.3 million jobs”?  Really?

Back to the “this ain’t rocket science” theme, but even if that’s true (and it’s very suspect) that’s about $250,000 deficit funded dollars per job.  And most of those, if I were to guess (oh, wait – “according to my model”) would be found in the non-productive government sector.  Result?  9.6% unemployment, no growth and no jobs.

So why, you ask at this late juncture, is he and his economic staff finally considering tax cuts?

Well, common sense says that the way to immediately impact spending and consumption is to give consumers more money with which to consume.  Make sense?  Yeah, it made sense 20 months ago too.  And there’s another reason that finally has seemed to penetrate their thinking:

All the talk about taxes—whether to raise them to address the deficit or cut them to stimulate the economy—may be having its own effect on growth. Allan Meltzer, an economics professor at Carnegie Mellon University, said the economy wouldn’t fully revive until Washington resolved uncertainty surrounding business costs, including taxes.

"Companies are cutting their expenditures and not hiring because they’re very uncertain" about these costs, he said.

Precisely.  Why in the world – as we’ve been saying for months here – would any business hire and expand in the face of this government made market uncertainty?

Meanwhile the political battle rages with the expected blame-game in full swing:

"Obviously it’s going to be hard to get anything done before the election, but it’s really important for him to try, and to make the case to the American people that he’s trying to do something and the Republicans aren’t letting him," said Steve Elmendorf, a Democratic strategist. "We are at the final moments here."

What the GOP isn’t “letting” them do is wildly throw another huge amount of money we don’t have at the problem.

David Axelrod piles on:

"We’ll continue to do everything we can, understanding that recovery will require persistent effort. There are no silver bullets," senior Obama adviser David Axelrod said in an interview Thursday. "At the same time, we have to make clear our ideas and theirs, and the fact that the Washington Republicans, having helped create this recession, have attempted to block our every effort to deal with it."

Yet the bar to passing any of this may not be “Washington Republicans”.  POLITICO reports:

But the administration will have a tough time selling nearly any package to some Democrats who increasingly blame the president and his ambitious legislative agenda for their own dismal prospects this November. And further states:

White House press secretary Robert Gibbs has repeatedly said the administration would go small-ball with any plans to boost the economy — and that the Democrat-controlled Congress had no appetite for costly, sweeping measures two months before what promises to be a difficult election cycle for the party. >

Emphasis mine, but you get the picture.  Democrats aren’t sure they want anything but if they do, whatever it is it has to work and work quickly.  Reality, however, is much more stark for the Democrats:

"Substantively, there is nothing they could do between now and Election Day that would have any measurable effect on the economy. Nothing," said the Brookings Institution’s William Galston, who was a domestic-policy adviser to President Bill Clinton.

Indeed.  As I continue to watch the economic three-ring circus this administration has created, I’m reminded of the words of one of my favorite funny men, Oliver Hardy: “Well, here’s another nice mess you’ve gotten [us] into."

Next up, the Three Stooges do ObamaCare.

~McQ

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24 Responses to 20 months after taking office, Obama considers tax breaks to stimulate economic growth

  • First these are proposals.  Any of us can make the same or better proposals and have them go just as far.
    Second, as was pointed out by one of the MSNBC “talking heads” at lunch time, none of this will do any good before November.
    Left unsaid is that many of these “trial balloon” proposals were offered by the Republicans at that meeting where the infamous bipartisanship-ending “I won” was uttered.

  • High taxes are one thing; a hostile environment is another.  We have both in spades.  We have a President who has signaled that he detests and distrusts the capitalist system, regardless of his professions to the contrary.

    So, for him to offer a package of business tax cuts now…roughly sixty days before an election…would have the OPPOSITE effect it might have from anyone else.  From Obama it would be a crass, cynical political ploy. It would also be of very dubious duration.

    From Give The Dog A Bone

  • Many economists say Obama’s policies have been reasonably effective at pulling the nation back from recession. Last year’s stimulus package – now estimated to cost $814 billion – protected as many as 3.3 million jobs, according the independent Congressional Budget Office.

    It would be fun to play a drinking game, spotting all the lies in that paragraph…

  • His advisers described his attentiveness – noting, for example, that he discussed the economy with New York Mayor Michael R. Bloomberg (I) for 15 minutes before golfing – but got little traction

    >>> An apt description of the seriousness of his Presidency.

  • This might be a bit off topic, but apparently Eugene Robinson of the Washington Post will be the 2010 recipient of the Peter Jennings Memorial Electoral Temper Tantum Award.
    The spoiled-brat American electorate

    • Please, Lord, let the Collective keep writing stuff like this.  Please help them to find new names to call the majority of Americans.  Amen.

    • I think the spoiled brat was writing the article.   We’ll see a full blown, throwing himself on the floor, tantrum come the day after Election Day.

      It appears the disconnect of electing an unqualified, inexperienced, essentially affirmative action candidate into the most powerful office in the world didn’t register on his monitor, but he thinks it’s a disconnect for America to wake up to that mistake.

    • It’s a version of what we’ve heard from day 1 of the Obama reign – the “America is Ungovernable” meme that they roll out any time the Dems don’t get everything they want.

      I recommend suicide for Robinson if he’s that upset.

  • Not only is this proposal too late, it’s probably wrong.
    Here are my proposals.
    1. Extend unemployment benefits for an additional 26 weeks at 75% of the previous benefit level. I know this is a pretty controversial idea among conservatives, but it has the benefit of addressing a direct concern of about 15 million citizens. And unemployment insurance extensions would be cheap at about 20 billion dollars.
    2. Reduce income tax rates by giving every American who files a tax return a 20% tax reduction for the next two years. Roughly half is equal to the FICA and Medicare taxes everyone pays. You could adjust this based on the current FICA withholding capping at I think $106K where FICA cuts off. Anyone earning less than $106K would get the full benefit. The other half is a “bonus” to stimulate the economy. Whether it will or not doesn’t concern me. I would actually prefer people to use it to pay down debt. (We are after all in a balance sheet recession) I would not give companies a credit for FICA they pay, considering their marginal cost of employment, I’m not persuaded that reducing employment taxes by 20% will result in much more hiring if companies don’t anticipate in uptick in sales.
    3. Reduce capital gains taxes to 10%. Permanently!
     

    • 3. Reduce capital gains taxes to 10%. Permanently!
      I have some Apple stock I bought at 4 that I have to capitalize before capital gains tax goes from 15% to 25%

  • Anyone suppose these will be as effective and as well implemented as the budget cutting proposals Big-Ears mandated for various agencies around August of 2009?  Eh?  Eh?
     

  • McQ[C]ommon sense says that the way to immediately impact spending and consumption is to give consumers more money with which to consume.  Make sense?  Yeah, it made sense 20 months ago too. 

    I seem to recall that brainless gigolo leading intellectual light of the democrat party, Jean-Francois Kerry*, state that, in HIS experience, cutting taxes NEVER stimulates the economy.  I also remember a democrat member of Congress being (ahem) retired back in ’94 after famously blabbing that, if the government allowed the proles to keep their money instead of taking in in taxes, the proles would simply blow it on big-screen TVs.

    In other words, cutting taxes is simply contrary to the way that libs think believe the world works.  It’s as crazy to them as suggesting to a lawyer that he doesn’t need to look at any law books or precedents before trying a case, or to an engineer that he the whole design phase of a project is a total waste of time.  That anybody in the regime would publicly admit that they are even thinking about tells me that they are coming to believe what many people said at the beginning: The Dear Golfer’s economic policy simply won’t do a thing to help the economy.  “I’ve tried A!  I’ve tried B!  I’ve even tried C!  What else can I try????  Oh, no… Not THAT!  That CAN’T work!  Can it?”

    “Substantively, there is nothing they could do between now and Election Day that would have any measurable effect on the economy. Nothing…”

    I disagree.  IF The Dear Golfer and the other leaders of the regime would go on TV and humbly announce that they’ve learned their lesson; that they understand that their policies so far have done nothing to help and indeed have done much harm to our economy; that they realize that their statements and actions have cast a pall of fear over the business community that is the engine of American prosperity and the source of our individual jobs and our national wealth; and that forthwith The Dear Golfer, with the full agreement of the democrat majority, is going to sack his economic team and replace them with unmistakable free market types who will advise him about cutting taxes, eliminating wasteful, intrusive regulations, and reducing our budget deficit with an eye to balancing it before the ’12 elections, then I’d say they could turn things around very quickly.

    Once they passed a battery of drug tests, that is, because nobody would otherwise believe them if they said anything like the above!

    —-

    (*) Can anybody confirm the rumours I’ve heard that he served in Vietnam?  He’s never spoken of it.  Modesty forbids, I guess.

    • they understand that their policies so far have done nothing to help and indeed have done much harm to our economy

      That is some fairy tale.  In the “wag the dog” meme, this would be the equivalent of “putting the dog into convulsions.”  The obvious down side is that the electorate could just “shot the dog assuming it has rabies”

      • It’s like I said: even if The Dear Golfer and the rest said this, nobody would believe them!

  • A simple division and some astounding implications.
    $814 billion divided by 3.3 million?
    That’s a quarter of a million dollars per job.
    Five time the average annual wage.
    Worse, that is the magical cutoff point above which one is “filthy rich,”  and fair game to be taxed to death.
    How could any writer be so innumerate as to put those two numbers in the same article, much less the same sentence?

  • There are two trillion dollars sitting on the sidelines waiting to find out what the U.S. government is going to do. 

    So far, everything the Obama administration has done has been anti-business, moves that suppress rather than encourage hiring.  He has announced his intentions to raise taxes, regulate energy, force unionization, seize more of the private sector, massively increase the cost of the federal government and limit profits.  Why would anyone hire under these conditions?

    No one is going to invest until January, when this lame duck session is over and this reckless administration is under adult supervision.

  • The argument by the smart lefties is “Its actually lack of demand rather than uncertainty that is the main problem.” I have to say, I don’t disagree with that, but the uncertainty is part of the equation, and its the one thing government can help with.

  • ‘ He has announced his intentions to raise taxes, regulate energy, force unionization, seize more of the private   sector, massively increase the cost of the federal government and limit profits.  Why would anyone hire under  these conditions?’
    Um, they wouldn’t?  But this must be a response to Republican obstructionism, not the Golfer-in-Chief’s policies.

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