GDP

CBO issues another “fiscal cliff” warning

Back in May, the Congressional Budget Office (CBO) issued a stark warning to Congress that tax hikes scheduled to happen at the beginning of the year could trigger another recession. Since that time President Barack Obama and Senate Democrats have refused to act on extension of all current tax rates, which is the position of House Republicans. Instead, they’ve only pushed for one-year extension for individuals making $200,000 and families bringing in $250,000.

But yesterday, the CBO once again stressed that the looming tax hikes could hurt the economy if the stalemate doesn’t end:

In a fresh warning about the so-called “fiscal cliff,” the nonpartisan CBO reiterated that the U.S. economy will go into a recession next year if the Bush-era tax cuts expire and automatic spending cuts take effect. Read the CBO report.

In its latest report, the CBO predicts that the U.S. economy will grow at a 2.1% clip in 2012, but fall by 0.5% between the fourth quarter of 2012 and the fourth quarter of 2013 under the fiscal cliff scenario.

Previously, the CBO said growth would be 0.5% in 2013 under the fiscal cliff. In its new report it said the “underlying strength” of the economy is weaker.
[…]
The CBO said unemployment would jump to around 9% in the second half of 2013 from its current 8.3% if the tax increases and spending cuts play out.

Economy barely growing, Obama still pushing tax hikes

If you were hoping that the recent economic report would bring a change in direction from the White House on taxes, you were no doubt let down. The Commerce Department reported on Friday that gross domestic product (GDP) grew by only 1.5% in the second quarter of the year and consumer spending was down, once again showing the weakness of the economic recovery.

When pressed on whether or not the weak economic growth would bring a change in direction from President Obama, who is trying pushing tax hike proposal through Congress, White House Press Secretary Jay Carney insisted that tax hikes during a slow economy weren’t a bad idea. Alan Krueger, President Obama’s top economic adviser, also said that the reason the economy was lagging was because state governments need more stimulus spending.

It seems, however, that not only will the White House push more stimulus gimmicks, they are going to continue to push a tax hike that will have anywhere from a 1.3% to 2.9% contraction in the economy.

But Keynesians pushing a tax hike during tough economy times is question, one that would probably earn the ire of the man himself. Christina Romer, who served as an economic adviser to President Obama, once noted that tax hikes hurt the economy:

CBO report shows high-cost per stimulus job

President Barack Obama and Democrat have time and time again repeated the talking point that the $831 billion American Recovery and Reinvestment Act, passed in early 2009, helped save the economy, which was suffering the effects of a severe recession, and helped create jobs.

However, a new report from the Congressional Budget Office (CBO) via James Pethokoukis shows that the stimulus bill was largely wasteful considering its affects on unemployment, with a high cost for what jobs were created:

When [the American Recovery and Reinvestment Act] was being considered, the Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation estimated that it would increase budget deficits by $787 billion between fiscal years 2009 and 2019. CBO now estimates that the total impact over the 2009–2019 period will amount to about $831 billion.

By CBO’s estimate, close to half of that impact occurred in fiscal year 2010, and more than 90 percent of ARRA’s budgetary impact was realized by the end of March 2012. CBO has estimated the law’s impact on employment and economic output using evidence about the effects of previous similar policies and drawing on various mathematical models that represent the workings of the economy. …

On that basis CBO estimates that ARRA’s policies had the following effects in the first quarter of calendar year 2012 compared with what would have occurred otherwise:

– They raised real (inflation-adjusted) gross domestic product (GDP) by between 0.1 percent and 1.0 percent,

– They lowered the unemployment rate by between 0.1 percentage points and 0.8 percentage points,

Yes, the Stimulus Really Did Fail

I have to disagree with Dave Weigel here. He wrote on Friday in Slate that the stimulus bill really didn’t fail, although everyone is saying it is:

Veterans of the stimulus wars talk about it that way—as a war. They lost. The implication of the loss is that Keynesian economics are, arguably, as discredited with voters as neoconservative theories were discredited when the invasion of Iraq failed to turn its neighbors into vibrant democracies, highways clogged with female drivers.

This week, we got a concrete example of what it meant to lose. The Weekly Standard published a back-of-the-cocktail-napkin analysis of the seventh quarterly report on the stimulus, stipulating that every job created by its spending has cost $278,000. Republicans, who’d previously said the stimulus created no jobs, immediately started repeating the $278,000 figure. They kept doing it even after the magazine followed up, suggesting that the cost-per-job could have been as low as $185,000. $278,000, $185,000. $0.00? It didn’t really matter, because the White House and liberal response was perfunctory. As the stimulus winds down, with most of the money spent, everyone knows that it failed.

CBO long-term budget outlook shows nothing new

The Congressional Budget Office (CBO) released the 2011 Long-Term Budget Outlook yesterday. As you might expect, both sides are talking up the aspects of the report that play to their talking points. For example, if you listen to our progressive/liberal friends, they’re quick to point to charts in the report showing that budget deficits wouldn’t be as large if the 2001/2003 tax cuts hadn’t been extended. Of course, most, if any at all, don’t acknowledge that the CBO also says this in the report:

Changes in marginal tax rates (the rates that apply to an additional dollar of a taxpayer’s income) also affect output. For example, a lower marginal tax rate on capital income (income derived from wealth, such as stock dividends, realized capital gains, or the owner’s profits from a business) increases the after-tax rate of return on saving, strengthening the incentive to save; more saving implies more investment, a larger capital stock, and greater output. However, if that lower marginal tax rate increases people’s after-tax returns on savings, they do not need to save as much to have the same future standard of living, which reduces the supply of saving. CBO concludes, as do most analysts, that the former effect outweighs the latter, such that a lower marginal tax rate on capital income increases saving. A higher marginal tax rate on capital income has the opposite effect.

Podcast: House Health Care Reform, 3rd Quarter GDP, Oathkeepers, Guest: Adam Kokesh

Jason and Brett were joined by Chris Moody as they interviewed Adam Kokesh, a candidate for U.S. Congress in New Mexico’s 3rd district.

After interviewing Adam, all four discuss these issues:

You can download the podcast here (almost 66 minutes/60 MB). The intro music is “Jammin’” by Bob Marley.

Also, you can subscribe to the RSS of JUST our podcasts here.  We can also happily announce that it should also be appearing on iTunes sometime this week. We are now live on iTunes, and you can find our podcasts on iTunes here.

Quick Speculative Thoughts About Future Trends

In reading the daily commentary of the American Institute for Economic Research for April 29, 2009, my speculative little crystal ball began to light up.  AIER is the only serious business cycle analyst group that points out reality, and reality is that contraction is everywhere in the stats, in spite of the recent “good news” in the stock market.  (Desperate exuberance, anyone?)

So let’s think it over.

Saving $1.35

President Barack Obama held his first cabinet meeting today. He “made clear that relentlessly cutting out waste was part and parcel of their mission to make the investments necessary for recovery and long-term stability.” The ruthless fiscal disciplinarian called for his cabinet to cut a collective 100 million dollars in the next 90 days. The White House blog has the story here and the fact sheet can be found here.

Now, Obama has admitted already that this is a drop in the bucket. However, he did say, “cumulatively they would make an extraordinary difference… $100 million there, $100 million here, pretty soon, even in Washington, it adds up to real money.” How long would it take to add up to real money?

Barack Obama hates America — that’s the only conclusion you can draw after nearly six years of terrible economic policies

This is pretty douchetastic. In an Independence Day eve speech at the DC-based tech firm 1776, President Barack Obama — the worst president since World War II — suggested that Republicans don’t have enough “economic patriotism” to work with him to get the economy moving again:

“[W]e can make even more progress if Congress is willing to work with my administration and to set politics aside, at least occasionally, which I know is what the American people are urgently looking for,” Obama said Thursday at 1776. “It’s a sort of economic patriotism where you say to yourself, how is it that we can start rebuilding this country to make sure that all of the young people who are here but their kids and their grandkids are going to be able to enjoy the same incredible opportunities that this country offers as we have. That’s our job. That’s what we should be focused on. And it’s worth remembering as we go into Independence Day.”

What. The. Actual. Fuck.

Sorry, but this is ridiculous. President Barack Obama’s idea of working with Republicans is for them to do what he wants without asking questions. He doesn’t view Congress as a coequal branch of government, but rather a minor inconvenience that he can go around pretty much whenever he wants.

What’s more, if President Obama wants to start throwing around the term “economic patriotism” so loosely, then his own record should be open for discussion. The most recent recession, for example, officially ended six years ago, in June 2008.

Today in Liberty: IRS scandal is worse than we imagined; SCOTUS issues big win for cell phone privacy

“Our answer to the question of what police must do before searching a cell phone seized incident to an arrest is accordingly simple — get a warrant.” — Chief Justice John Roberts

— Oh, wow, the IRS scandal just got a lot worse: Emails released by the House Ways and Means Committee reveal that disgraced IRS official Lois Lerner targeted Sen. Chuck Grassley (R-IA), referring him to the agency for examination. “We have seen a lot of unbelievable things in this investigation, but the fact that Lois Lerner attempted to initiate an apparently baseless IRS examination against a sitting Republican United States Senator is shocking,” Chairman Dave Camp (R-MI) said in a press release. “At every turn, Lerner was using the IRS as a tool for political purposes in defiance of taxpayer rights.  We may never know the full extent of the abuse since the IRS conveniently lost two years of Lerner emails, not to mention those of other key figures in this scandal. The fact that DOJ refuses to investigate the IRS’s abuses or appoint a special counsel demonstrates, yet again, this Administration’s unwillingness to uphold the rule of law.” Basically, Lerner received an invitation to an event that was intended for Grassley, and it looks like Grassley received hers. The group sponsoring the event, the name of which was redacted, offered to pay for his wife to come along. Lerner suggested that it was inappropriate and wrote: “Perhaps we should refer to Exam?”

 


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