Thursday, August 2, 2012

Hope: Malaise or Worse Leaves Nothing Else

With the housing market bubble bursting and a bear market, Obama campaigned on hope and change in 2008. In 2009 he stepped in and took over. He asked Bush to release funds he was withholding in an effort to keep the deficit down. Obama spent those funds, increasing the deficit. Obama supported the Fannie and Freddie programs that gave mortgages to people who could not afford to pay them. He and the leftists then blamed the banks for asking people to actually repay their loans.

Since then, we have seen the auto-industry for all intents and purposes go bankrupt because of unions. We have seen gasoline prices skyrocket. We have seen good money thrown after bad for so-called "green energy producers", most of which have gone bankrupt since.

Hope is all Obama has left us with. We have hope that we will get back on track and prosper DESPITE his loyalty to a failed economic hypothesis (Socialism/Fascism). And we are going through our sofa cushions again looking for change that may have fallen there just so we can buy a gallon of milk.

Looking at the past two weeks unemployment numbers, it looks as though we are on the verge of yet another dip in this recession. First, the media proclaimed that new unemployment claims were not as dismal as anticipated. They tried to spin it as good news for the commisar-in-charge. 353k new claims may not have been as bad as anticipated. However, they were about 253k higher than anything near good news. Then, as usual, when last week's numbers came out, they also revised the previous week's numbers. After counting the ones they always seem to attempt to ignore, plus completing claims that the bureaucracy took too long to finish, the numbers turned out to be closer to 357k.

Then we look at last week's numbers. Given the pattern the Obama administration has set, they will be revised upwards next week when this week's claims are tallied. Last week's unrevised (low-balled) claims are at 365k. The anticipated numbers were over 370k. The media is calling it "good news" that the new claims jumped only 8k. However, if the numbers adjusted into the previous week's numbers were added into last week's instead, the jump was over 12k. In any case, in the last 15 days of July 2012, over 722k more people are unemployed than were on the 4th of July.

Hope, the one thing left after Pandora let all the other good stuff out of the box. The only changes made have been to interfere with the normal fiscal cycle, prolonging the recession, causing it to dip again. Now, it looks like it is about to take its third dip.

Then we have one little shiny spark, one glimmer. The US House of Representatives has voted to extend the "Bush tax Cuts". Instead of extending them, perhaps they should be made permanent. In fact, anybody who has taken the time to actually study some economics may want to look at Art Laffer's little curve and consider cutting some of those taxes even more, especially on the middle and higher tax brackets. In addition, they may want to help cut the deficit by increasing the tax base. 49% of Americans now have a 0% marginal effective tax rate.

Some may ask how they have a 0% marginal effective tax rate. The answer is simple:  they pay taxes, but receive government hand-outs, rebates, etc. in amounts that are equal to or greater than the amount of tax they pay on the last dollar they earn. To cut the deficit, you need two things. You need to cut dumb spending. If you are taping your saving each month and living paycheck to paycheck, you start cutting luxuries in your home. You use coupons, you eat out less, and you don't rent as many movies (or don't go to the theater as often). Well, the federal government needs a budgeting class. The second thing you need to cut the deficit is to increase the tax base. You need more funds to pay what you already owe. In your home, that may mean working extra hours (overtime), getting a part-time job, or a spouse going back to work. For the government, it means taxing people who are not being taxed. The top 10% are taxed, and taxed, and taxed already. It's that 49% that need to pay their fair share.

With more people unemployed, that also means fewer people paying income taxes. If you couple that with the steady increases of people who claim SSDI for depression and anxiety after being unemployed for 99 weeks, it means a heavier burden on that 51% who are actually paying a marginal effective tax rate. When you look at it, though, those claiming SSDI for those "ailments" have lost all that hope Obama promised.

Now our only hope is to change administrations to one that understands and appreciates and encourages American Exceptionalism instead of hamstringing and cursing it.