On Friday, the Commerce Department released economic growth statistics for the third quarter of this year. Anyone hoping that the United States was seeing movement towards a quicker economic recover was no doubt disappointed at the tepid 2% growth reported:
Growth in the July-September quarter climbed slightly but was still too weak to stir significantly more hiring. The pace of expansion rose to a 2 percent annual rate from 1.3 percent in the April-June quarter, led by more consumer and government spending.
Consumer spending rose at an annual rate of 2 percent in the July-September quarter, up from 1.5 percent in the previous quarter. And a survey by the University of Michigan released Friday found consumer confidence increased to its highest level in five years this month. That suggests spending may keep growing.
Americans spent more on cars, adding nearly 0.2 percentage point to growth. Housing added to growth for the sixth straight quarter.
Sure, it’s better than the dismal numbers from the second quarter, but the economy generally sees much more substantial growth in a period of recovery. Take, for example, the recovery under Ronald Reagan. The economy was coming out of a deep recession, but grew at an annual pace of 5.7% and created millions of private-sector jobs.
During an interview on Face the Nation, Maryland Gov. Martin O’Malley was asked by Bob Schieffer if the country was better off today that it was four years ago. O’Malley, who is thought to be looking at a presidential run in 2016, stunningly admitted that it’s not:
No,” replied O’Malley, a prominent Obama surrogate, adding “but that’s not the question of this election.”
“Without a doubt, we are not as well off as we were before George Bush brought us the Bush job losses, the Bush recessions, the Bush deficits, the series of desert wars, charged for the first time to credit cards — the national credit card,” he added, according to a transcript.
At least part of his initial response was honest, that being that the country isn’t better off. He’s since backed off that statement. But look, there is not question that Bush is responsible for huge budget deficits, but President Obama hasn’t exactly done anything to put an end to the river of red ink flowing from Washington. If fact, with four years of $1 trillion budget deficits, he’s made it worse.
There is a reason that Democrats are focusing on just about any issue other than the economy. Despite promises that the unemployment rate would be 5.6% today with the passage of the 2009 stimulus bill, it’s actually at 8.3%. Many have pulled out of the labor market entirely and economic forecasts are constantly being revised downward.
With all of that, it’s odd that anyone from President Barack Obama’s campaign would claim that they’ve been good on jobs. It’s even more odd that Stephanie Cutter, a spokewoman for Obama’s campaign, would say that the current recovery is better than that of Ronald Reagan (emphasis mine):
Well, I think that worker probably has a good understanding of what’s happened over the past four years in terms of the president coming in and seeing 800,000 jobs lost on the day that the president was being sworn in, and seeing the president moving pretty quickly to stem the losses, to turn the economy around, and over the past, you know, 27 months we’ve created 4.5 million private sector jobs. That’s more jobs than in the Bush recovery, in the Reagan recovery, there’s obviously more we need to do, and as I said to Mika at the at beginning of the program, I think that unemployed worker probably sees one person in this race trying to move the country forward and that’s the president.
While President Barack Obama and Senate Democrats continue to play with fire on the economy, the House of Representatives yesterday passed a one-year renewal of existing tax rates for all income earners:
The House approved GOP legislation late Wednesday that would extend all current tax rates for another year, and also turned away a Democratic bill that would have allowed rates to rise for higher income earners.
The Job Protection and Recession Prevention Act was approved in a 256-171 vote that saw 19 Democrats vote with Republicans, highlighting division in the Democratic party over taxes. Only one Republican, Rep. Tim Johnson (Ill.), voted no.
Democrats voting in favor of the bill were Reps. John Barrow (Ga.), Sanford Bishop (Ga.), Dan Boren (Okla.), Leonard Boswell (Iowa), Ben Chandler (Ky.), Gerry Connolly (Va.), Jim Costa (Calif.), Mark Critz (Pa.), Henry Cuellar (Texas), Joe Donnelly (Ind.), Larry Kissell (N.C.), Dave Loebsack (Iowa), Jim Matheson (Utah), Mike McIntyre (N.C.), Jerry McNerney (Calif.), Bill Owens (N.Y.), Collin Peterson (Minn.), Mike Ross (Ark.), and Tim Walz (Minn.).
House Republicans allowed Democrats a vote on a proposal similar to the one the Senate approved, and predictably, it failed in a 170-257 vote, with 19 Democrats voting against their party. During debate, Republicans said the Democratic alternative would raise taxes on about one million small business owners with incomes at or above those levels.
They also noted that less than two years ago, many Democrats agreed to extend all the Bush-era tax levels, citing the harm any tax hike might do to the struggling economy.
There is no denying at all that Mitt Romney reverses positions as frequently as the wind changes. We can go through and cite numorous examples. But that doesn’t absolve or excuse President Barack Obama from his own reversals in matters of public policy, including his flip-flop on raising taxes during tough economic times.
During his weekly address on December 11, 2010, President Obama, who was pushing a two-year extension of existing tax rates, explained, “By putting more money in people’s pockets, and helping companies grow, we’re going to see people being able to spend a little more, we’re going to spur hiring - we’re going to strengthen our entire economy.” Obama also Truer words could not have been spoken.
Indeed, the strength of our economy rides on the back of small businesses. But they are currently being threatened by President Obama’s proposed tax hike, which has already cleared the Senate. But this is counter to what President Obama said in 2009, when he noted that “[y]ou don’t raise taxes in a recession.”
With a vote expected in the Senate tomorrow to extend income tax cuts those making under $250,000, some on the far left are urging Senate Democrats to let the economy to fall off the “fiscal cliff” if Republicans don’t go along with the crippling tax hike proposal. Take, for instance, Howard Dean, who, in a debate with Sen. Pat Toomey (R-PA), urged Congress to do the unthinkable:
Former Vermont Gov. and Democratic National Committee Chairman Howard Dean offered a characteristically blunt take on the “fiscal cliff” of looming spending cuts coupled with the expiration of the Bush-era tax cuts on Jan. 1: Let it happen.
“Let’s just go over the fiscal cliff,” he said Monday on CNBC’s “Squawk Box.” “Everybody’s going to bite the bullet. The Republicans are going to hate the taxes and the Democrats are going to hate some of the cuts, but it’s going to have to happen.”
Mr. Dean begged to differ, pointing to estimates from the nonpartisan Congressional Budget Office projecting that 60 percent of the deficit by 2019 will be a result of the Bush-era tax cuts.
He was also not optimistic about a bipartisan solution to fix the deal.
“If you think Democrats are going to agree to cuts in Medicare and Social Security while millionaires are getting big huge tax breaks, that’s insane,” he said. “Everybody’s going to have to put some skin in this game. This deficit was caused by all of us, and we’re all going to have to put something in the pot to fix this, and that includes tax increases and spending [cuts].”
Over the last four years, Americans have been told by President Barack Obama and Democrats that taxes need to be raised in order to close the budget deficit, which, for the fourth consecutive year, will exceed $1 trillion. Unless Congress acts before the end of the year, Americans may face what has been dubbed as “Taxmageddon,” which the Congressional Budget Office warns could cause another recession.
But would raising taxes really do much to close or balance the budget? In a new video from Learn Liberty, Professor Antony Davies looks the issue and shows what tax rates would be need to solve the deficit issue:
After the Supreme Court’s disappointing ObamaCare decision, many of us are wondering what political ramifications will follow. Just days of the the High Court handed down the decision, polls don’t show much of a bump for President Barack Obama and voters still favor repeal of the law.
And that’s exactly what Republicans say they plan to do if they manage to take control of Congress and take back the White House this fall. But over at the Washington Post, Chris Cillizza asks if the push for repeal is a good political move:
There is some initial data to back up that sentiment. In a USA Today/Gallup poll, a majority favored either total repeal of the law by Congress (31 percent) or repeal of some portions of the law (21 percent). Just 38 percent wanted to see Congress expand the law or leave it as is.
Despite that poll, Democrats insist there is ample evidence that suggests that voters, whether or not they like the health care law, do not want to re-litigate the political fight that led to its passage. That’s why virtually every Democrat in a swing or Republican leaning state — Bob Kerrey in Nebraska, Heidi Heitkamp in North Dakota — put out a statement after the ruling that condemned the partisan fight that has come to define the law, rather than getting into any specifics of the law itself.
Economic problems in Europe, which is experiencing record high unemployment in addition to sovereign debt crises, have caused a lot of concern in markets across the globe. And while our own economic growth in the United States has been less than pleasing, we haven’t felt the brunt of the Europe’s problems — though they are certainly offering a preview of what we can expect.
But there have been concerns that the United States may be slowly slipping into another recession, no doubt made worse by a dismal manufacturing report released yesterday:
The ISM manufacturing index for June came in at 49.7, lower than expected and signaling manufacturing activity has fallen back into contraction territory. That won’t help stocks much.
New orders crashed last month, falling to 47.8 from 60.1, and that’s probably a large part of why the index contracted, given that other measures looked better. As factory activity is often a leading indicator of overall economic momentum, this report is not a good sign for the outlook.
The Congressional Budget Office (CBO) warned back in May that failing to extend the 2001 and 2003 tax cuts would, in these very tough economic times, lead to yet another recession. Higher taxes would, according to the CBO, “discourage people from working and saving, further reducing output and income.” That would seem to most like a basic understanding of economics. Unfortunately, President Barack Obama is unconcerned and is leaving no one to believe that he is willing to make a deal to keep this from happening.
But another study shows that if taxes aren’t kept at current rates, that it will slow economic growth, taking the economy down a tumultuous path:
A new study released Friday shows that letting any of the Bush-era tax cuts expire will weigh heavily on economic growth and lead to millions of job losses, likely plunging the economy back into recession.
The report by the American Council for Capital Formation (ACCF) shows that if Congress fails to take any action and to address the so-called fiscal cliff, a combination of expiring tax provisions and automatic spending cuts, the economy will lose $855 billion from gross domestic product, more than 1 million jobs next year and up to 3 million in 2014 along with an average of $1 trillion in lost consumer spending.
Economic growth would drop by 2.6, 3.3 and 0.5 percentage points from 2013 through 2015.